Technology vs. Nature

When the NY Times soon starts its “pay per click” system, will bloggers actually be forced to write something interesting rather than merely being lazy and linking to another story?   The OP-ED I just linked to reviews the recent history of how Japan has used engineering investments to counteract Mother Nature. It hints that Japan was  lulled into complacency by technological optimists who believed that engineering investment could protect the coast.  

 To economists, there are at least two interesting questions here.  First,  what is the “optimal” amount for a rich nation to invest in its coastal defenses?  Second, what are the unintended consequences of such investments?  If people are lulled into feeling safe, then can such investments actually increase risk exposure as individuals reduce their own private self-protection efforts?  In econ jargon, does  government investment in protection “crowd out”  private self protection? If a benevolent government anticipates this behavioral response, how should it design its coastal defenses?

Author: Matthew E. Kahn

Professor of Economics at UCLA.

10 thoughts on “Technology vs. Nature”

  1. I am quite disturbed by the number of blogs that link to stories by the mass media. They don’t understand that there is no “news,” only propaganda. All major outlets are controlled totally by the oligarchy. Al Jezzera is almost a “news” organization. I have only caught them lying by omission once. If I lived next door to the feudal country of Saudi Arabia, I would probably ignore a story or two.

    Economists are not people that can understand things. They mouth platitudes about what “they” know. It is all BS. They don’t have a clue as to what is really going on. When they find a way to put corruption, criminal gangs, monopolies and the american black market into their “equations,” then I believe that I might start to feel that they have a clue. They don’t even address the simple problems of “Fair Trade.”
    There are only a couple of economists that have spent time examining the tariffs of the United States and its protectionist underpinnings. To the best of my knowledge, the entire Savings and Loan debacle from deregulation to disaster has never received the attention that it deserved.
    That enormous fraud and corrupt practices don’t fit the economists format.

    They don’t understand that if xx millions of people are out of work and unable to pay the rent, the cellphone and food, they migrate to the black economy. Once they get absorbed, the odds of them ever stepping back into the tax paying life is somewhere between none and zero. That market is a lot closer to the concept of capitalism than any of the pipe dreams of economists. It extracts rents only until someone else enters the market. Then the black market levels out again. A free and balanced market that ignores the origin of goods. Stolen cars and hijacked trucks don’t just disappear. The “illegal” drug trade is a more supply and demand driven economy than the “legal” drug dealers, who manipulate the market and the laws to reward themselves with extortionate rents.

  2. First, what is the “optimal” amount for a rich nation to invest in its coastal defenses?

    Optimal? [insert Danny Thomas spit take here.]

    Why consider the optimal case?
    We’ve fallen many flights of stairs below that…
    Better this question: What is the minimal possible investment in coastal defenses for a country torn into sclerotic halves by Limbaugh and Murdoch?
    But then again even that asks too much effort from your countryman: Because if the early tsunami warning system (chump change) isn’t worth investing in, what is? Do you think the USA has sea walls in it? Building rehabilitation? Bridge re-fortification? Warning sirens?

    Your question Matthew is totally academic because your economics is dismally dated.
    If you haven’t noticed yet: Your country is cannibalizing itself piece by piece by piece…
    I here tell there are going to be 60 Detroit students per teacher.
    That’s your country defined in one sentence.
    That’s not the stuff of empires thinking optimally…
    That’s the stuff of 400 super rich families and the 50 oligarchic plantations they own making do with failure and obsolescence…

    Indeed I’d like to suggest a campaign slogan for both parties for the next presidential election: Yes we can’t.
    Because America can’t…
    And it won’t.
    And it is high time to just get that low news out there and deal with it.
    Then maybe, you academics could come up with an economics that matches the needs of an empire in decline.
    And tailored to fit a nation with such deservedly low self esteem…

  3. Paul Krugman, at his blog, answers the initial question:

    12. Can I still access articles through Facebook, Twitter, search engines or my blog?

    Yes. We encourage links from Facebook, Twitter, search engines, blogs and social media. When you visit through a link from one of these channels, that article (or video, slide show, etc.) will count toward your monthly limit of 20 free articles, but you will still be able to view it even if you’ve already read your 20 free articles.

    When you visit by clicking links in search results, you’ll have a daily limit of 5 free articles. This limit applies to the majority of search engines.

  4. “will bloggers actually be forced to write something interesting rather than merely being lazy and linking to another story?”

    This is an insulting and stupid statement, exactly the sort of mindset that got the NY Times (“home of Judy Miller, and your source for all things WMD”) into the trouble it is in today. You’re an economist, Matthew, so apply some of that economic reasoning to why people have CHOSEN, of their own free will, to read blogs RATHER THAN the NY Times, even when the NY Times is free? Doesn’t this suggest that blogs are providing something that people want which is NOT being provided by the NY Times?
    You’d be far better off dropping this attitude and reading what Felix Salmon (blogger) has had to say on paywalls in general, how similar paywalls have played out in other circumstances, and on the value added to the NY Times by people being able to link to them.

  5. apply some of that economic reasoning to why people have CHOSEN, of their own free will, to read blogs RATHER THAN the NY Times, even when the NY Times is free?

    I’m pretty sure there is a considerable number of people who still read the NYT. When I’m traveling it is a requirement.

  6. Well, we are antiques here: we actually subscribe to three deadtree newspapers, delivered to our door in the morning: WaPo, NYT, and WSJ. We do notice that plastic bags of newspaper are less frequent up and down our street than they were ten years ago. The Times is worth reading, though it lost a lot of ground for us when its coverage of the local sniper seemed far less good than the Post’s (and turned out to have been written from a bar in Brooklyn) and lost ground as well for its utter failure to get the story on Duke lacrosse. We are encouraging our children to read papers, as well. So the Times pay wall, for me, will mean that I have to figure out how to get the password to which I’m entitled as a subscriber, or get the paper to recognize my computer’s address.

  7. As far as the government investment part goes, maybe it would be wise to look at the US history o coastal flood insurance. For a while the insurance went with rules against building certain kinds of thing in certain places (often the best coastal defense), but then moral hazard triumphed.

  8. Paul beat me to it. I was going to mention the Flood Insurance program, which makes below market rate flood insurance available to properties in flood-prone areas (not just the coast) which would otherwise be uninsurable and unbuildable. The outcome of this program has been continued building and re-building in flood-prone areas even after multiple incidents of property destruction by flood. It is a well known and certainly one of the largest and most obvious examples of counterproductive subsidies in action.

  9. Maybe, what is wrong with economics is the poor quality of the questions asked. “What is the ‘optimal’ amount for a rich nation to invest in its coastal defenses? “What are the unintended consequences of such investments?”

    Really?!? Those are the “interesting” questions?

    I don’t know much, in general, about the economics of prevention. I’m not sure anyone does. I know a little bit about investments in safety, which, like most practical questions, is mostly about finding ways instituting control regimes. The universe has infinite variety to throw at us; we can only invest in our ability to respond. I do know that the “optimal amount to spend” is rarely, if ever, an interesting question from a practical standpoint. When the universe destroys, it costs what it costs; it’s not your choice. What’s interesting is your strategy for response. The “optimal” size of the investment is a secondary or tertiary question, that mostly turns on how good a strategy you come up with.

    With the Japanese nuclear plant design, what was the “optimal amount” to invest in preventing catastrophic failure? I suppose one could ball-park some sort of amount — a budget — based on “economic rents” or “consumer surplus” or some such, associated with the value of the electric power generated. But, the interesting question would seem to be, given that you could afford to finance such a sunk-cost investment, to give you a better response-capability in the event of disaster, how should you spend the money? What’s your strategy going to be?

    The Japanese nuclear engineers and architects clearly spent a large amount on redundant systems to prevent catastrophe: battery backups, diesel generators, educational credentials and elaborate management organization and emergency procedures. They spent the money idiotically, which is now clear in hind-sight; if they spent the “optimal amount”, does that have any interest, any importance? The safety design was thoroughly defective, and that, not the amount of resources allocated to it, would seem the relevant, “interesting” question. How do we motivate and organize professional competence in designing and managing sunk-cost investments for once-in-a-century events?

    This is a problem of control by feedback, something economists deliberately ignore, in order to focus on the allocational efficiency problem, Professor Kahn unaccountably finds “interesting”.

    It is a tough problem. We learn, literally and only, from error. How do we learn more, from less error? I do not think we had to have this particular catastrophe, in order to learn how to design a nuclear plant. The errors of architectural design were too glaring, for this excuse to work. But, I don’t know how we organize the professions to do their jobs competently. The big idea from economists in this area was signalling; we invest in educational credentials, to signal competence, rather than to build it, or require it.

  10. Since Englishmen started tacking up printed broadsheets in coffee shops, journalism has teetered on the doubtful balancing act of editors and publishing cooperating to deliver eyeballs to businessmen, as news was offered as a public good. The editor had to figure out how to attract readers; the publisher had to figure out how to make money, crapping up the publication with propaganda.

    Information wants to be free, or so I’m told. And, “free” isn’t.

    I do not think the NY Times will be successful in getting readers to pay, but if the readers ever did displace the advertisers as financiers of journalism, the journalism, itself, would change. If you don’t want corporate propaganda, don’t take a “free” product paid for by corporate business; buy your own.

    This is my idea of an interesting question in economics: the problems of organizing private industry to produce a public good.

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