Tuesday, April 30, 2019

Incentives and Disincentives; Superfreakonomics (2009)

    Superfreakanomics (2009) Another excursion into the obvious but oddly unappreciated fact that humans, like other animals, respond to incentives. But it’s not aways obvious what the incentives are, in part because a policy proposer by definition doesn’t think like most people, and when most people propose or back a policy, they usually misunderstand both the problem and the solution. The former is shown in campaigns to eliminate prostitution (most prostitutes are in the business because it’s the best-paying work they can get); and the latter in the design of child safety seats for cars (for 3-year-olds an up, the adult seatbelt does as good a job as the safety seat).
Steven D. Levitt & Stephen J. Dubner.
     Nevertheless, the implicit thesis is worth placing front of mind: If you want to know whether a proposed policy will work, ask what the (dis)-incentives are. Thus, Ford installed seatbelts as a safety feature, but buyers balked: they didn’t want to be reminded that driving a car is dangerous. But after several decades of ubiquitous seatbelts, buckling up has become second nature. The incentive is conformity to a social norm.
     The last chapter deals with global warming, which 10 years ago could still be considered not well enough understood for making sound policy. The doomsayers of the time have turned out to be correct: it’s real, and we should have begun mitigation and adaptation decades ago.
     A fun read, which gently teaches you to check the numbers and think hard about what people actually want. We humans rarely have simple wants: we generally want to have it all, which is impossible. So we need to compromise. Understanding the problem comes first, and that requires knowing the numbers and doing the math. ***

Monday, April 22, 2019

Another 1950s picture book about Austria

    Langewiescher Verlag, compiler not named. Österreich (1957) Franz Nabl, a prizewinning author, supplies a text summarising the landscape of the country. He writes a dense and convoluted prose, intended to be archly amusing. The pictures cover the same ground as Breidenstein’s book, but with more emphasis on architecture.
     The book is one in the series of Blaue Bücher, picture books that originated in 1902, and were intended to provide a concentrated summary of some topic, via a short but authoritative text and masses of pictures. The printing was excellent, since the books began as advertising for Langewiesche’s printing and publishing business. Their dark blue wrapper became their trademark. But the format was much imitated, and evolved into the standard tourist souvenir book that we love to bring home with us.
     A good overview of Austrian landscape and architectural monuments. Nabl laments the reduction of the empire into the small (but still world-class!) country illustrated in the photos. He’s a believer in the mystical connection between landscape and psyche. **

Words, words, words.

    Jane Farrow, ed. Wanted Words (2000) The CBC ran a delightful short program about words for those things, events, and (usually) annoyances that we labour to describe. It was almost entirely listener-driven. Listeners supplied the wants and the words, and many anecdotes, some even about the event that caused the coinages.This eponymous book collects some of the best, along with short lists of alternative suggestions. None of the listed words has enterd the general lexicon.
     For example, Motorola-mouth for those annoying people who not only answer their cellphones in public, but ensure that we hear their side of the conversation. An alternative suggestion: Cell-droids, which would do very well for people incapable of surviving more than a couple of minutes without checking their screens. Now that texting has superseded voice, we may be entertained by demonstrations of the perils of texting while walking, and terrified of becoming a participant in a demonstration of the perils of texting while driving.
     Aneurythm was proposed for “a song that sticks in your head”, but earworm appeared later and became the fairly common term for this annoying brain-glitch.
     A pleasant read. **½

Thursday, April 18, 2019

Austria: A Nice Place to Visit (1952 photo album)

     H. Breidenstein et al, eds. Österreich: Landschaft, Menschen, Kultur (1952) (Austria: Landscape, People, Culture) A photo album, with an introduction by K. H. Waggerl and a preface by Dr. Eduard Widmoser, an academic. Heavy on landscape (especially mountains covered in snow), light on people and culture. I suspect that many of the photos are prewar, since the city and town images show no war damage, which in 1952 was still extensive. It took Austria a long time to rebuild. The selection creates the impression that Austria is a country of wilderness and farmland. In fact it’s one of the most urbanised nations on the planet.
     Which raises the question, who is the intended audience? The photo captions, in German, English, and French, suggest the book was aimed at tourists. The hard cover, and the excellent printing on very good paper imply a high price, higher than most Austrians could afford at the time. The book aims to make Austria out to be a very nice place inhabited by very nice people creating very nice cultural artifacts.
     An interesting socio-political document, I think it’s part of the campaign to deny Austria’s complicity in the rise of Naziism. **

A corpse disguised: Dressed for Death by Donna Leon.

     Donna Leon. Dressed For Death (1994) The dead man seems to be a transvestite whore. But he’s really a bank manager, very respectable. Brunetti and his team uncover subtle inconsistencies which show that the dead man was not what he dressed up to be. But corruption at the highest levels of Venetian society prevent a simple arrest. Additional murders almost obscure the trail completely, until a random accidental witness undoes the protective charade the criminals have devised.
Well plotted, nicely done ambience, and a believable because flawed cop make for a good entertainment. I like the Brunetti books and am happy whenever I find one in a 2nd-hand book store. There are fewer and fewer of those, unfortunately. Recommended. ***

Friday, April 12, 2019

Alberta and Oil, or Subsidies Forever!

On April 9th of this year, the Toronto Star reported on the estimated future costs of cleaning up decommissioned and abandoned oil and gas wells in Alberta. The Alberta Liabilities Disclosure Project estimated between $40 and $70 billion, based on data supplied by the Alberta Energy Regulator (AER). The AER’s official public estimate is about $30 billion. But internal documents suggest including the oils sands cleanup costs could boost the bill to $260 billion.

There is very little incentive or pressure on the oil industry to clean up after themselves, In fact, a couple of loopholes encourage well-owners to abandon them. So far, the Alberta government has collected about $1.6 billion from the oil and gas industry to be applied to the clean-up.

Big Question #1: How much is that in real money? In other words, how much will it cost me, the average Canadian?

Let’s start with the $40 billion figure. There are about 33,000,000 of us. So that comes to about $1,200 per person in Canada. There are about 140,000 direct jobs in oil and natural gas extraction in Alberta. That means the clean-up cost per job is about $285,000. If the $260 billion is more realistic as a total clean-up cost figure, the cost per person is about $7,150, and the cost per job is $1,850,000. [1]

Big Question #2: Who will pay this cost?
The Alberta NDP and Liberals want to put timelines in place to force timely clean-up by the industry. The United Conservatives want Ottawa to provide tax incentives and financial support.

Of course in  the end we will all pay the total cost, one way or another. It will be paid in direct and indirect subsidies, and in the cost of everything we buy. [2] [3]

So should we pay up front, in the price of gas and oil? Or should it be back-end payment, after the oil and gas are consumed?

If we pay up front, the price of oil and gas will increase. That will make Alberta oil and gas more expensive and harder to sell. If we pay after the wells are dry, we will either pay higher taxes, or spend less on government services, or both. The bill would likely be financed by borrowing, so debt servicing would increase, too. Any pressure on the industry to pay a higher share will lead to more abandoned wells.

And some combination of these things will happen, along with the inevitable unintended consequences.

[1] The job numbers count people directly employed by the oil and gas industry. The median pay for Alberta oil industry workers is about $80,000/year. The average length of time worked in the oil patch is about 7 years. So the possible clean-up cost per job could go as high as 3 times the total average earnings per worker. So we could end up subsidising the average oil patch job at three times what the average worker actually earns.

[2] We pay directly at the pump, of corse, but any tax rebate or government financial incentive for clean-up is a subsidy. We also pay in other ways, because all prices include the energy costs of the goods or services we buy. A large part of those costs are for gas and oil.

[3] Canada exports a large chunk of the oil and gas it produces. If the prices charged include the clean-up costs, one could argue that foreigners will be paying a large chunk of the total bill. This is unlikely to happen, since the higher prices would reduce exports. Besides, foreigners pay for our exports by selling us goods and services in return. Their prices would have to include the cost of the oil we sell them, else they couldn’t afford to buy the oil from us. So one way or another, we pay.

Update 1 May 2019: Jason Kenney, leader of the United Conservative Party of Alberta and its new Premier since yesterday, has already indicated where his heart lies: as prmised, he loves the oil and gas industry. He's threatened to cut oil and gas shipments to B.C, since that Province has opposed the extension of the Transmountain Pipeline. IOW, he's already shown that he wants the Rest of Canada to subsidise Alberta's lifestyle. This will not end well.