Forecasts Are Worthless

I'm reading a book called The End of Oil, by Paul Roberts. It's about our struggles with energy. It had rave reviews, but is less good than I expected. He's American, and the perspective shows. Even as he is skeptical of the neo-conservatives, he shares some of their key assumptions.

One assumption is that it matters who owns oil. If the Iraq war had gone exactly as they wanted, and Exxon-Mobil had rights to Iraq's fields, instead of the Russians and the Chinese, Americans would still pay the same price as everyone else.

Things like that aside, the book does do a decent job of covering a vast topic, how we get our energy. It was published in 2004. Reading it turns out to be an excellent demonstration of how bad we are at predicting the future.

For instance, he talks about the incredible growth of the Chinese car industry. It started from nothing not that long ago, and they were producing 2 millions cars in 2000. Roberts wrote that while growth would surely slow, they could get to 3.5 million per year according to Beijing's ambitious plan.

Well, it's 2010 now. Here's a handy chart of China's car production, from wikipedia:

Automobile production by year

Year	Production (in million units)
1992	1.0
1999	1.2
2000	2.07
2001	2.33
2002	3.25
2003	4.44
2004	5.07
2005	5.71
2006	7.28
2007	8.88
2008	9.35
2009	13.83

His prediction for six years into the future was off by a factor of four.

He predicted that by 2020, China might surpass the United States in C02 emissions. How's that going?

Rank	Country	Annual CO2 emissions[8][9] (in thousands of metric tons)	Percentage of global total	Per Capita[10] (metric ton)	Reduction needed to reach world per capita average	Emissions intensity[11] (kg of CO2 per $1 GDP (PPP))
-	World	28,431,741	100.0 %	4.4[12]		0.48[12]
1	China	6,103,493	21.5 %	4.62	4.8 %	1.03
2	United States[13]	5,752,289	20.2 %	18.99	76.8 %	0.45
-	European Union[14]	3,914,359	13.8 %	8.07[7]	45.5 %	0.42[7]
3	Russia	1,564,669	5.5 %	10.92	59.7 %	0.86
4	India	1,510,351	5.3 %	1.31	-236 %	0.56
5	Japan	1,293,409	4.6 %	10.11	56.5 %	0.33

I'm not sure why everyone talks about China and India when they speak of developing country Carbon emissions.

Again, that prediction was made six years ago. This is one of the points that Nassim Nicolas Taleb hammers on in his book, the Black Swan (which everyone should read). We're really bad at this. In fact, it's so complicated that we can't be good at this.

1. We're trying to predict an incredibly complicated system. There are too many variables, including some which can't possibly be known, yet are consequential enough to throw everything off.

2. Predicting the future requires knowing the technology of the future. And if we knew the technology of the future, we would know it today. Ergo, we would have it today. Yet we don't have it today. Hence, we can't know the technology of the future.

Yet we keep predicting anyway. And there are virtually no penalties for getting it wrong, in most fields. No one bothers to check past predictions.

Before I start reading a new author who's in the business of analysing our situation today, and making guesses about our future, I like to read some of the things they wrote in the past. If you want to know if you should trust Thomas Friedman Today, read Thomas Friedman, Yesterday (conclusion: don't read Thomas Friedman).

Some people actually are better than others. Mostly this is because they avoid making the sort of definite predictions that no one can make. Sometimes there are things we can guess accurately: eg. We are going to keep emitting some large amount of C02 in the near term, at least.

We can draw consequences from these predictions: This will block some outgoing radiative energy from exiting the atmosphere, increasing the net energy content of the earth system.

We can then attempt to describe the possible consequences that will have, while staying humble about what it's actually possible for us to know. You shouldn't trust any extremely definite predictions.

Alberta Foolishly Cuts Oil and Gas Royalties

This is a very dumb move. They'll earn more money and make people happy in the short run, but lowering royalties is a very silly way to deal with your non-renewable resources.

There is a finite amount of oil to be found in Alberta. With a royalty, Alberta gains a certain portion of the profits. Now they will have a smaller portion of the profits on that finite amount of oil. That is the downside. The upside is that there will be more investment in the short term.

More investment means that their oil resources will run out faster. They'll make more money in the short term as investment goes up, but less money overall, and they'll run out of it sooner.

Stupid, stupid, stupid. Why is it so difficult for people to understand that oil is non-renewable? They talk about oil "production". The word really should be "extraction". No one produces it. They just find it, and remove it from the ground. Then it is gone. The Alberta government will get royalties from the oil, once. They have just settled for a smaller royalty.

It shouldn't make a difference to Alberta how fast oil extraction occurs, because they'll get their royalty whenever it does get pumped. The oil that is economical to be pumped will get extracted sooner or later. Now they will get a smaller royalty.

*caveat: There is one way this could possibly make sense. If the world ever gets around to banning fossil fuels, then obviously Alberta will have been at an advantage if they manage to pump more of their oil out of the ground before that happens. But I don't expect that to happen anytime soon, if ever.

I doubt the Alberta government does either. This is just about short term politics. Bizarrely, a policy design to give less money to Albertan citizens over the long run, and more to the oil companies, seems to be popular.

How Right Wingers Make Democrats Do Their Bidding

Joe Biden visits Israel. He declares America's everlasting commitment to Israeli security, and that "there is no space" between the two countries. His goal for the visit is to restart the "peace process". This doesn't really mean anything, but the Obama administration wants something to point to, so that it can claim it has a policy.

More or less, he's doing what Netanyahu wanted him to be doing. What did Netanyahu decide was the correct response?

It turned out to be a swift kick to the groin. While he was visiting, the Israeli government announced it was building 1600 new settlement units in East Jerusalem. This means that the Americans can't even pretend there is a fake peace process ongoing. Biden only wanted Netanyahu to give him empty gestures, and he didn't even do that. Instead he spat in his face.

As punishment, Biden showed up 90 minutes late to a state dinner. I don't expect any more lasting change in America's Israel policy.

This is part of a larger pattern. Netanyahu is an Israeli right winger. He seems to have learned well from American right wingers how to deal with Democrats. No matter what they do, kick them in the crotch. If they do something you don't like, called them "communist Nazis" (Republican version), or accuse them of being against Israel. If they do something you like, slap them in the face. If they ask you to do something, refuse, and make a demand of them.

It's a test, to see how far you can go. If they don't resist, then you can push them further next time.

This works, because the Democrats have no self confidence, and no ideas of their own. On American issues, they are convinced that the Republicans are right, and that Republican ideas are popular. No matter how many seats they might win in an election, this attitude persists.

Thus the Democratic health care plan is very similar to the plan passed by Republican Mitt Romney in Massachusetts, or that proposed by the Republicans in 1994. They've tried to win Republican support by making concessions. When the Republicans snarled back at them, they watered it down further.

They filled their stimulus with tax cuts, and cut its size, to try and when Republican support. For this, the Republicans called them communists. They kept trying harder to please the Republicans after that.

Secretary of Defense Robert Gates is a Republican. Chairman of the Fed Ben Bernanke is a conversative Republican. The Democrats didn't feel confident putting people of their own in place. They have more confidence in Republican ideas.

Barack Obama has continued most of Bush's policies, except with a more pleasant, erudite tone.

Regarding Israel, "there is no space"* between the two countries. They agreed with everything the most right wing Israelis say, and try their darnedest to make them happy.

Originally, Obama asked Netanyahu to make concessions. Netanyahu snarled. Obama backed down. This was a sign to the Israeli leader that he could push harder. If the Americans let this latest snub go, then it will be a sign that they can push for more in the future.

Meanwhile, American liberals haven't learned how to play the game. They focus on what can be done, and criticize those who call for better proposals as being "unrealistic". This means Obama faces no pressure from his left. So he tries to win the support of the frothing mad Republicans who accuse him of being a foreign born communo-Nazi-muslim-terrorist who is not being tough enough on security, and should be torturing more people.

Obama then makes concessions to the Republicans, to show that he's not like that at all. Really.

"Gee whiz, I'm really the sort of guy you should like, I swear. Please, please won't you tell me you like me? I'm doing all of these things you said you wanted."

The liberals need to learn the lesson that the Republicans and the Likud seem to have learned long ago. If you want a man with no self respect to do what you want, treat him like dirt. Make him try harder and harder to please you, and never, ever act satisfied. Maybe dangle a few hints that you'll do what he wants if he does something you want, first. Then once he expects you to return the favour, do it all over again.

It seems to work with Obama. The Democrats are the party of nerds. Republicans the party of the jocks and school yard bullies.

* If you want an example of how deep is Biden's true belief, here's a telling anecdote from Pat Lang, a former high official with the DIA:

" I was there with my Arab employer to visit the senator. the Arab didn't want anything except to meet Biden. He was foolish enough to think that an acquaintance with such people is a kind of talisman. It is not. The Arab made some pro forma positive reference to the "peace process." Biden flew into a rage, grew red in the face and shouted that this was an insincere lie and that his guest knew that it was only Arab stubbornness that prevented "little Israel' from living in peace. His "guest" sat through this with what dignity he could manage. I would have walked out on him if I had been alone."

He'll probably go back to his attitude that "there is no space between the two countries" soon enough, once he forgets about how angry he felt on this trip.

http://turcopolier.typepad.com/sic_semper_tyrannis/2010/03/joe-biden-is-a-flunky-for-natanyahu-co.html#comments

Will we understand what happens to us?

I had a conversation about climate change denial with an older, wiser friend a little while ago. He didn't know much about it, so I told him how the public increasing believes that either the earth is not warming, or that it is warming, but we aren't to blame. I said this was the result of a well-organized and well funded propaganda campaign to sow confusion as to what scientists are actually saying.

I thought that eventually people would figure out that the climate was changing, and that we were causing it, decades in the future. By that point, runaway feedback effects would mean it would be too late to do much about it. It may already be too late now.

He had a different take. He told me about visiting the Galapagos. It was then, he said, that he realised just what effects we humans have on our environment. The whole world used to be full of large animals, but now they only remain in large numbers in those areas which we don't use for our civilizational purposes.

But by and large, people don't realise this. They look at things around them, and take that for normal. The same could well happen with a changing climate. It's changing rapidly by the geologic standards, but its still a fairly gradual shift as measured by a human lifetime. And we humans can forget how things were just a few short years ago. Does anyone remember what life was like before Google? I think it's quite possible that the climate will be changing, measurably, yet people will be quite uncertain about it.

If people don't understand what scientists are saying now, who's to say they will in the future? We can already measure the melting of the ice in the Arctic. If this doesn't convince people now, why should we be so sure future events will convince them? Toronto had a very warm winter this year. There was very little snow. The children of today and tomorrow may well simply accept this as the new normal.

Most people don't have the tools to understand scientific data, and to figure out what is credible information and what is not. People are increasingly inclined to disbelieve authorities of all kinds, including scientists. Let's not be idealistic about this. People absorbed the past findings of science largely on the weight of authority, not the way they're "supposed" to (ie. learning about the scientific method, and judging for themselves). Some smart looking nerd in a lab coat said it, so it's true. It often was true, because the things the guy in the lab coat said were informed by the results of the scientific process.

But this was a fragile foundation. People are not so trusting of scientific authority anymore. This is not because they have developed a better method, or are judging the facts for themselves. They simply don't believe authorities as they used to. In some ways this is good, in others bad. But one of the bad effects is that when scientists do figure things out using the scientific method, people are less inclined to accept their results, particularly if they're inconvenient for their pre-conceived beliefs, or hold unsettling implications for their way of life.

We who accept the evidence for anthropogenic climate change tend to believe that in the long run, everyone will come to understand the evidence as well. It's not so clear to me that this will inevitably happen.

Edit: This process is not limited to climate change. On most topics, you'll find that the conventional wisdom is often either inadequate or flat out wrong. I think this will only increase in the future. Contrary to initial expectations, the internet has proven to be excellent at spreading disinformation. While it is incredibly useful for informing yourself if used correctly, misinformation actually seems to be rising on a number of topics in the "information" age.

Long term unemployment is terrible

The New York Times has a pretty good article on long term unemployment. There are millions of people in America who simply can't find jobs, because they don't exist right now. As a result, they're going into debt, and facing extreme hardship.

Attempting to fix this should really be a no brainer for the Democrats. If people keep suffering, they won't get votes. Right now, a lot of the long term unemployed in America are receiving unemployment insurance benefits, but the article says that will stop for many of them in the coming months unless Congress approves an extension which Obama is asking for.

They really, really should do that. It will of course make them more popular. But also, if people stop receiving unemployment benefits, they will buy less. The economy is already suffering from depressed demand, as people cut back on spending since they lost so much of their housing wealth. Giving money to the unemployed is one of the easiest ways to boost demand, as they need it to live.

So if the Democrats are dumb enough not to approve the extension, then not only will the beneficiaries be annoyed with them, but the economy as a whole will be worse off, which also bodes ill for them.

The article follows one woman who has been unemployed for two years, Jean Eisen. She and her husband depleted their savings, and now have 15,000 in credit card debt. This is a good example of the insanity of the modern american credit system. It doesn't sound like they'll ever be able to pay that off. I'm sure there are a lot of people in the same situation.

Banks are currently listing that sort of debt as "assets". On their balance sheets, they presume that this sort of debt will be paid back. It looks to me like a lousy assumption, about as lousy as assuming that the subprime mortgages were going to be paid back.

Obviously, that credit system should be reformed (it probably won't be). But in the short term, it would make sense for the government to keep providing unemployment benefits to these people, so they don't have to go into debt.

You can look at the lifestyle, choices or lack of skills like Jean Eisen, and think that it's her "fault" that she's in the situation she's in. Maybe she could learn how to cook pinto beans, of which she has ten bags. They're nutritious! And she might lose some of that weight she complains is keeping her from getting a job. And maybe they could move to a place with cheaper rent.

But this sort of speculation is the wrong way to go about it. Whatever you might think individuals should do differently, the problem is structural. People like her used to be able to get jobs. And, they did a good enough job to earn the money they received. Now, no matter how hard they look, they can't because the jobs aren't there. In a weak economy like this, if one person does better and does find a job, that means another doesn't. Better individual choices won't do much to solve a collective problem. Its a miserable situation. Welfare is not much help, because thanks to Clinton's reforms it's much harder to get, and you're often required to be working to qualify.

I had very low expectations for Obama and the Democrats. But one of the things that surprised me was their reluctance to do things very clearly in their self-interest, such as improving the social safety net for the long-term unemployed.

It would help them in the polls, and it would help the economy, which would also help them in the polls. They've done a bit to help, but really they should have done a lot, lot more, purely from self interest.

They haven't. They cut a lot of good things to help the poor from the stimulus, and replaced them with tax cuts. Tax cuts don't help Jean Eisen very much. And they wonder why a Republican took Kennedy's seat.

People are suffering, and the guys in power don't seem to be fixing things, so they vote for the other ones. It might not make sense, but the American two party system doesn't make sense. A competent political party (ie. not the Democrats) would have recognized that if they don't make simple fixes like more unemployment insurance to aid to those suffering in the downturn, people will vote for the other guys, even if they're frothing, raving lunatics. It should be a simple choice, not something they debate and waver about.

Democrats: mendacious, and stupid.