No blogging for a while
I’ll be on blog hiatus for an indeterminate period due to a major family health crisis.
Deadline
The first milestone for a book I’m writing is approaching rapidly, so I’ll be on blog hiatus till the middle of next week. See y’all then.
Credits
Warning: mild spoilers from the movie Cars below. Also, this is my first rant, so the tone is a bit more, well, unhinged than my usual posts.
I love all the Pixar movies, so today I joined several small children (and their parents) to see their newest offering, Cars. On the whole, I enjoyed it very much, though, as with most popular entertainment, the economics sucked. (I am probably the only person in the world who cares about the economics in movies. Pixar is good for the most part, but they’re not perfect: The Incredibles irritated me with their demonization of insurance companies, while Cars missed the boat by blaming an interstate highway for the decline of a small town on Route 66.) But that’s not what this rant is about. It’s about: what the fuck is wrong with you people.
As with A Bug’s Life, one of its Pixar predecessors, Cars was funny all the way through, but the funniest part happened after the credits started to roll. In A Bug’s Life, it was a selection of hilarious “outtakes” that had me rolling in the aisles. With Cars, there were several amusements, but the best by far was a scene showing the cars from the movie (who exist in a world where there are no people, only cars) watching Pixar movies with cars playing the characters in those movies: A Car Toy Story, a Monsters, Inc. parody, and A Bug’s Life starring, of course, a Volkswagen bug. The best part was that the scenes they showed from the previous movies all involved characters voiced by Pixar good-luck charm John Ratzenberger—with the character Ratzenberger voiced in Cars watching, and commenting on how—wait a minute!—they were just using the same voice in all the movies! It was rad, rad, rad, I tells ya.
So what’s wrong? What’s wrong is that people started leaving as soon as the credits started to roll, even though the movie never stopped for even a second. These people had just paid good money to sit through twenty minutes of previews, a cartoon short, and a whole movie—but as soon as the credits started to roll it was as if someone yelled “fire” in, well, a crowded theater. Exactly the same thing happened when I saw A Bug’s Life.
What the fuck is wrong with you people? Apparently, they are so conditioned to associate credits with “the end” that they leave even though the movie is still going on right in front of them.
I should mention, as an aside, that Cars also had an Easter egg, to be found only when the credits were over. I never leave during the credits of any movie, even when it looks like it’s just the credits, because I love Easter eggs, and I love the smug sense of superiority that comes from being the only one in the theater left to see them—recent examples include a tasty little treat at the end of Pirates of the Caribbean (the first one; I don’t know about Dead Man’s Chest yet, but I bet it has one, too), a flipping hilarious wedding at the end of Napoleon Dynamite, and a crucial scene that you are all complete morons for missing at the end of X-Men III.
I sort of understand why people don’t sit around and wait for Easter eggs, though I suspect most people are just ignorant. But leaving when the movie is still going? I just don’t get it. Fire? There’s a fire? Gotta get out of here!
Ah, that feels better. Now, time to take my meds.
Rants
To best of my abilities, I maintain an even tone on this blog, especially when addressing particularly contentious and controversial issues (and when am I not?). I find that convincing people of anything is extraordinarily difficult in any case, but it’s virtually impossible if your tone is strident, your writing flippant, or your attitude patronizing or condescending.
I can get worked up with the best of them, though, and even I need to let off some steam from time to time. I therefore introduce this new category. Of course, ranting on blogs is as old as writing on blogs. It would hardly be a blog without a rant or two, right?
Warning: these aren’t your mama’s rants—unless your mama swears a lot.
Speculators and peak oil 3
In my previous post on oil depletion, I claimed that markets are well-equipped to deal with the problem of peak oil. A common objection to this—typically made by those who favor a government solution to the problem—is that markets are not good at long-range thinking. Indeed, this is a common objection to markets in general. The argument with respect to oil goes like this: oil prices might rise as oil becomes scarce, but what if it doesn’t rise fast enough to cause solutions to be invented in time? Since we can see right now that it’s going to be a problem, we can use the government to institute a “Manhattan project” to come up with an appropriate alternative energy source. The central claim, in other words, is that government has better foresight than markets. The secondary claim is that government is better-equipped than markets to discover the solution. Let us examine these claims in turn.
Perhaps out of confusion with Wall Street’s reputation for focusing on short-term earnings, many people are unaware of how good markets are at long-range thinking. I’ll use oil as a concrete example, but the general idea should be clear. The mechanism is simple: if oil is running out, then it will be more valuable in the future. This means that if you buy oil now you can make a profit by holding the oil until its price rises. Of course, the future price is not the only relevant variable; it also matters how long until the price is reached, since money has time value. The higher the future price relative to the current price, the farther in advance it makes sense to buy oil and put in storage (or, more plausibly, simply leave it in the ground). Now comes the key: if many people buy oil in anticipation of its higher future price, this will increase its current price by restricting the current supply available. In other words, the current price is a reflection of its future scarcity. It’s through the price system that markets are able to anticipate the state of the world even in the far future. If there is an approaching apocalypse, it is already reflected in current prices.
The price system only functions if those who anticipate future scarcity are allowed to act on their beliefs; such people are called “speculators”. Unfortunately, those who underestimate the ability of the price system to anticipate future events are among the most likely to decry those who would buy oil in hope of future profits, maligning speculators as “hoarders”. Somehow, people’s intuition tells them that buying oil when it’s plentiful and then selling it when it’s scarce is morally suspect; after all, nobody likes a “price gouger”. And yet, as argued above, speculators perform a vital service; if you think about it, what they’re really doing is transporting oil from a place where it’s not needed to a place where it is. That these “places” are actually at different times is irrelevant. That their motive is (at least partially) profit is also irrelevant; as Adam Smith noted more than 200 years ago, as much as the baker might enjoy his work, it is not due to his better nature that we expect him to rise every morning to bake us bread.
Let’s consider now the preferred solution of many peak oil worrywarts: massive government action, sometimes called a “Manhattan project for alternative energy”. The analogy with the Manhattan project is utterly misleading, since not only did the quest for an atomic bomb require the utmost secrecy, but the drive to develop nuclear weapons was not motivated by a market need. For an energy Manhattan project, even the best possible scenario involves government-appointed “experts” allocating huge amounts of resources for alternative energy projects, with no real guide as to which sources of energy are the most promising—or, at least, no real penalty for guessing wrong.
The Manhattan project analogy is also based on the dubious expectation that the “answer” for our energy needs involves a single technology, or at most a few. And even if the experts were spectacularly lucky in identifying the right technology, the government has the wrong incentives for implementing it. With such a huge amount of money sloshing around, we could surely expect there to be massive political influence. It is depressingly likely that the most “promising” sources of energy would happen to involve large projects built in the districts of powerful congressman and in the states of powerful senators.
Markets, on the other hand, are more flexible, able to consider many different possible solutions in a massively parallel fashion. The penalty for guessing wrong is losing your investment or losing your business. If there is a single “solution”, the profits to be had from finding it would be enormous, so there is every reason to expect that the market would find it. If, as is more likely, there are many overlapping answers, involving reduced energy use and a spectrum of new energy sources, the market is well-equipped to find those as well. Indeed, saying “the market is the answer” is really simply an admission of ignorance—an admission that we don’t know the answer, or that there may not even be a single answer.
The solution to peak oil is simple: let the price system—with its heroic if greedy speculators—work its magic.
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