Kevin Drum - April 2013

Scary Chart of the Day: Chinese Oil Demand Will Rise a Lot Over the Next Decade

| Mon Apr. 29, 2013 9:48 AM PDT

Stuart Staniford extrapolates China's demand for oil and comes up with the chart on the right. His conclusion:

That's another 15mbd in the next thirteen years or so. Just for China. If you compare this to things like the extra 4mbd you might hope for from tar sands in this time frame, or the 2mbd that global crude supply has increased since 2005, you can see that this is going to stress the global oil system a lot. Either the global crude supply is going to grow a lot faster than it has been, or OECD oil consumers are going to have to consume a great deal less than they are now, or China (and other rapidly growing consumers) are going to have to slow down a lot.

Whichever is the case, it's hard to see how any combination of the above happens on the necessary scale without prices a lot higher than the $100-$120 we've been paying in the last few years. The comparative truce in the oil markets during 2009-2013 seems like it cannot last forever.

Shale oil and tar sands are simply nowhere near big enough to keep up with this. From a climate change perspective, that's a good thing. From a global economic perspective, it's not so good. It means that demand for oil is now permanently pushing up against supply, and will be moderated in the future primarily by oil price spikes produced when economic expansions drive oil demand above supply constraints, thus producing global recessions. But you already knew that, right?

POSTSCRIPT: The more optimistic take on this is that sometime soon everyone will figure out that we've reached a point of oil-constrained growth, and this will drive huge new investment in renewable energy. The question is how long this will take. Permanently higher prices would certainly do the trick, but booms and busts have a different effect on investment and on confidence in future growth. So it might take a while.

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Wolfram|Alpha Confirms All Our Ageist Stereotypes

| Mon Apr. 29, 2013 8:46 AM PDT

Via Andrew Sullivan, Stephen Wolfram reports on the results of the Wolfram|Alpha Personal Analytics for Facebook project. Basically, it's an analysis of a million Facebook users, and the vast bulk of Wolfram's post is about the basic demographics of their sample space. It turns out, for example, that Facebook users tend to be fairly young, and the younger they are the more friends they have. This probably doesn't come as a surprise to most of you.

But some of it is interesting. It's impossible to tell how representative Wolfram's sample is of the broad Facebook universe, let alone the population at large, but let's forget about that for now. This is a blog, not a peer-reviewed journal. So with that in mind, here are some excerpts showing how certain topics trend with age:

Yep: old people really are tedious bores. As you get older, your Facebook updates tend to move away from interesting stuff like careers, music, and technology, and instead focus on political rants, stupid life affirming sayings, and the weather. On the bright side, old people tend to talk less about fashion, relationships, and their personal mood. All in all, it's kind of a wash. It turns out we're all tedious bores, we just like to bore our friends on different topics as we get older.

Quote of the Day: Quantifying the Idiocy of the U.S. Congress

| Mon Apr. 29, 2013 8:16 AM PDT

From Matt Steinglass, on the recent spate of proposals to defund funny-sounding research:

The most urgent research priority for American social science is the question of why so many congresspeople are boastful ignoramuses.

But would you use an instrumental variable approach or a natural experiment approach? What kind of scale would you use to measure boastful ignorance? Should you measure separately by gender? And what about other countries? Are their legislators boastful ignoramuses too? If not, what method do they use to keep them safely on talk radio, where they belong?

This is clearly a pretty complex project. Perhaps we should delegate it to the UN.

The Price of Healthcare Success: Losing Your Funding

| Mon Apr. 29, 2013 7:47 AM PDT

This came out over the weekend, but Ezra Klein has an interesting long piece up about the next frontier in health management. Just as control of infectious diseases was the story of the 20th century, control of chronic diseases may be the story of the 21st:

With chronic illnesses like diabetes and heart disease you don't get better, or at least not quickly. They don't require cures so much as management....Kenneth Thorpe, chairman of the health policy and management school at Emory University, estimates that 95 percent of spending in Medicare goes to patients with one or more chronic conditions — with enrollees suffering five or more chronic conditions accounting for 78 percent of its spending.

....Health Quality Partners is all about going there. The program enrolls Medicare patients with at least one chronic illness and one hospitalization in the past year. It then sends a trained nurse to see them every week, or every month, whether they're healthy or sick....Health Quality Partners' results have been extraordinary. According to an independent analysis by the consulting firm Mathematica, HQP has reduced hospitalizations by 33 percent and cut Medicare costs by 22 percent.

Others in the profession have taken notice. "It's like they've discovered the fountain of youth in Doylestown, Pa.," marvels Jeffrey Brenner, founder of the Camden Coalition of Healthcare Providers.

Now Medicare is thinking of shutting it off.

Read the rest to learn why nurse visits work, and why Medicare may be shutting them down.

Friday Cat Blogging - 26 April 2013

| Fri Apr. 26, 2013 11:45 AM PDT

I'm told that this quilt is an Amish pattern and uses Amish colors. However, it's the one quilt in the house that Marian didn't make herself (she won it as a door prize, I think), so we're not sure. In any case, the colors are so Domino-like that you might not even know she was there if I hadn't used Photoshop to brighten her eyes a bit.

Now then. Do you love Domino? Of course you do! Do you want me to continue Friday catblogging? Yes you do. Are you afraid I might stop if you don't help us out with our fundraiser this week? Maybe just a little afraid? I'm not saying I would stop, mind you. That would be wrong. I'm just saying.

Seriously, though: we do a lot of great journalism here at Mother Jones, and reader donations are a pretty important part of what keeps us going. If you can afford a few dollars, now's the time to make a contribution. Here are the links:

Thanks in advance. Believe me, your donations will be well spent.

Cap-and-Trade in Europe is Working Just Fine

| Fri Apr. 26, 2013 10:52 AM PDT

Several years ago Europe instituted a continent-wide cap-and-trade system for carbon emissions called ETS. It was decidedly imperfect, and has gone through several revisions since it started. Recently, however, energy demand has declined, which has left Europe awash in carbon permits. As a result, the price of carbon permits has dropped off a cliff, and they're now so cheap that they're having virtually no effect. So does this mean the whole program is a failure? David Roberts asks everyone to calm down:

First off, the ETS is not a mess/broken/dying, it’s working like it’s supposed to. The goal of a cap-and-trade system is not to create a high price on carbon, or a low price on carbon, or any particular price on carbon. It is to reduce carbon emissions along a pathway specified by a series of targets (17 percent by 2020, etc.). The EU is on that pathway. Emissions are expected to come in under the cap, which means the cap-and-trade program is working.

Now, as it happens, the recession is what did most of the work to put the EU on that pathway. Complementary clean-energy policies (renewable energy mandates, feed-in tariffs) also played a big role. That just didn’t leave much work for a carbon price to do. The EU doesn’t need a high price on carbon to stay on the emissions-cutting pathway, at least in the short term, so the short-term price on carbon is low. Presumably, when the EU economy picks back up, there will be more work for a carbon price to do. If so, the price will go up. Cap-and-trade programs are designed to be responsive to circumstances.

Lemme just emphasize: Insofar as you are happy with the carbon pathway your cap-and-trade system prescribes, the fact that carbon is cheap is good news. Who wants high prices for high prices’ sake?

Everyone has always known about the basic tradeoff between a carbon tax and a cap-and-trade system. The virtue of a tax is that it's predictable: everyone knows both the current and future tax rates and can make investments based on them. The downside is that you have to take a guess at what tax rate will produce the level of carbon emissions you want, and you might guess wrong.

Cap-and-trade is exactly the opposite. Its virtue is that it will unquestionably keep you below your carbon cap. The downside is that carbon prices will jump up and down depending both on energy demand and on technology advances. This makes business planning tricky.

I've always preferred cap-and-trade because I think the virtue of targeting the thing we actually care about—the amount of carbon emitted—is more important than guaranteeing businesses a known tax level decades into the future. Businesses already put up with large changes in the price of energy itself, and I suspect they can handle price changes in carbon permits too.

But I'll add one more virtue that David doesn't mention: cap-and-trade is countercyclical. During a recession, demand for permits will go down and therefore so will permit prices. This is good, because it has a stimulative effect on the economy. Conversely, during economic expansions, demand for permits will go up and so will permit prices. This is also good, because it will tend to cool down the economy a bit. In neither case will the effect be huge, but it's still a net positive.

I've got no problem with a carbon tax. The arguments between a tax and a permit trading plan strike me as pretty finely balanced. Nonetheless, the fact that permit prices have fallen during a recession isn't evidence that cap-and-trade doesn't work. On the contrary, it's evidence that it's working exactly the way it should.

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Pigford II and the Eternal Problem of How to Prove Discrimination

| Fri Apr. 26, 2013 9:23 AM PDT

The New York Times has an epic piece today about fraud in a government program originally designed to compensate black farmers who had been unfairly denied Agriculture Department loans in the 80s and 90s. The original compensation program, usually called Pigford after the class-action lawsuit that got it going, eventually led to a second settlement, Pigford II, that covered a broader class, including women, Hispanics, and Native Americans:

Some 66,000 claims poured in after the 1999 deadline. Noting that the government had given “extensive” notice, Judge Friedman ruled the door closed to late filers. “That is simply how class actions work,” he wrote.

But it was not how politics worked. The next nine years brought a concerted effort to allow the late filers to seek awards....Legislators from both parties, including Mr. Obama as a senator in 2007, sponsored bills to grant the late filers relief.

....Congress finally inserted a provision in the 2008 farm bill allowing late filers to bring new lawsuits, with their claims to be decided by the same standard of evidence as before. The bill also declared a sense of Congress that minority farmers’ bias claims and lawsuits should be quickly and justly resolved.

Congress overrode a veto by Mr. Bush, who objected to other provisions in the bill. But as Mr. Bush left Washington, Congress had appropriated only $100 million for compensation, hardly enough to pay for processing claims.

Within months of taking office, President Obama promised to seek an additional $1.15 billion. In November 2010, Congress approved the funds. To protect against fraud, legislators ordered the Government Accountability Office and the Agriculture Department’s inspector general to audit the payment process.

The problem here is one that's common in discrimination cases: even after you've agreed that illegal discrimination happened in general, how do you decide which individuals were discriminated against? Proving individual discrimination is incredibly hard, because in most individual cases there are plenty of plausible reasons for the discriminatory action. This was doubly hard in the Pigford cases because the Agriculture Department simply didn't keep records of lots of the loan applications in questions, and there were never any applications in the first place for people who were flatly turned down before they could even apply.

Given that, you have two choices. You can either set a high bar for evidence of discrimination, knowing that it will unfairly deny compensation to lots of people who were treated wrongly. Or you can set a low bar, knowing that this will unfairly give money to lots of people who don't deserve it. Roughly speaking, it sounds like the government chose the second course, and lots of money has been paid out to people who never farmed, never applied to farm, and never had any intention of farming. But it was raining money, so they put out their hats.

It's hard to know what to think of this. Obviously it's hard to understand why the Agriculture Department didn't adopt a stricter standard, one that wouldn't have paid out thousands of fraudulent claims to people who didn't deserve it. At the same time, it's hard not to think of the flip side: all the valid discrimination cases that have been brought over the years, but tossed out because the evidentiary bar was too high and it was impossible to prove that discrimination actually took place. Those kinds of cases don't get a lot of headlines, but they're every bit as bad.

So I don't know. You'd think there would be some kind of reasonable middle ground, but we sure do seem to have a hard time finding it. And while there's obviously plenty to criticize about how Pigford II has been handled, I have to say that I'm sure not looking forward to the inevitable ugliness this is going to generate.

Chart of the Day: Unfortunately, GDP Growth is Right on Target

| Fri Apr. 26, 2013 8:06 AM PDT

Analysts were hoping that GDP would grow about 3.5 percent last quarter. Instead, it grew 2.5 percent. Should we be surprised? Take a look at the chart below and decide for yourself.

Today in Conservatism

| Fri Apr. 26, 2013 7:33 AM PDT

Apparently this is serious, not just some weird leftover from April 1:

The Heritage Foundation and Franklin Center for Government & Public Integrity presented the second annual Breitbart Award to Michelle Malkin, syndicated columnist and Fox News Channel contributor....The Breitbart Award honors those who advocate for the truth — a quality that Malkin exemplifies. As the founder of three successful conservative blogs — michellemalkin.com, Hot Air (now owned by Salem Communications), and Twitchy — has changed the way Americans consume media. Malkin dedicates her life to tackling the issues others often shy away from.

So there you have it. Michelle Malkin is now officially one of the best and the brightest of conservative journalism. Seriously.

Keep it Short

| Thu Apr. 25, 2013 3:01 PM PDT

They say brevity is the soul of wit. Austin Frakt says it's also the soul of persuasion. To prove it, he points us to Tim Harford, who summarizes an experiment in which various versions of a letter were sent to people who might qualify for a refund on a product they bought:

[Four] tweaks had substantial effects: first, cutting a paragraph of waffle that had helped to bury the message about the refund; second, pointing out that a five-minute phone call would suffice to make a claim; third, sending a follow-up letter. And twice as large as any of these effects was adding a couple of bullet points in bold at the top with the key message: you may deserve a refund; if so, call us.

Of course, we already knew this, right? It's why journal abstracts exist. It's why blogs exist. It's why haiku exists. Come on! We're busy people around here.

On the other hand, it doesn't explain the appeal of those endless, rambling, conspiracy theory laden letters that people like Glenn Beck and Ron Paul send out. What's the deal with those, anyway?