Read Part I
Cap & Trade & Tax & Spend is not dead. It was never even ailing. It’s healthy and alert and standing in the corner, unnoticed. It has on its face a grin of the type we can’t mention on a family blog.
Senate Democrats worked with Al Gore, and he cobbled together a list of 2000 people (some scientists, some not) to sign a letter demanding action on “climate change”, a.k.a. global warming. In Part I, we saw that many of the letter’s signers were economists.
These economists are being shifted to the front line to mask the climatologists behind them. This is because climatologists have, over the past four months, received a series of black eyes; right now, they’re not too pretty to see.
Make no mistake: the main arguments you will hear shortly in support of Cap & Trade & Tax & Spend will be economic and not scientific ones. We therefore must understand the nature of these arguments.
Yesterday, we examined briefly how conditional probability should be used in unwinding economic predictions so that we can estimate their true likelihood. That is, usually economic statements are said to be true with a certainty far greater than warranted.
An economist might say, “If we don’t do something about global warming, then we’ll lose over three million jobs a year starting in 2020.” This sounds like certainty: we will lose at least that many jobs etc. It is not certain.
At the least, this prediction is conditional on the belief that harmful man-made global warming (HGW) is true. It is not. Even the IPCC says that HGW is only 90% certain. That simple fact means that our economist’s prediction can be no more than 90% certain, and is probably far less certain than that.
That prediction also relied on a string of assumptions of how job loss is related to temperature (and perhaps other climatological variables). None of these assumptions is certain. In other words, each assumption is only probable.
If each assumption is logically independent from each other assumption, then the probability that each assumption is true can be multiplied together. The resulting product will say how likely the entire prediction is.
For example, a typical economic model might have a dozen assumptions, plus the assumption that HGW is true. If we generously suppose each assumption is 50% likely, and since we’re nice people, we’ll only suppose there are four assumptions, then there is only a 5% chance that the prediction is true. This comes from 0.5 multiplied by itself four times and then multiplying that by 0.9.
The prediction, therefore, has gone from scarily true to probably wrong.
The situation is more complicated when each model assumption is not logically independent; which they usually are not. When they are dependent, the string of them is more likely than when they are independent. How much more so depends on the assumptions themselves. There is no general formula, of course, so each prediction must be handled individually.
However, since any economic prediction conditional on HGW will contain a large number of assumptions, the chance that any prediction is true is probably still small.
But what if there are dozens of predictions, each equally dire? Shouldn’t the sheer quantity of doomsday scenarios cause us to worry?
No. Uncle Mike in a comment to Part I presented an example, which I’ll modify here. We have a die which we’ll toss once. Given the usual premises, the chance that it shows a six is 1/6. Thus, if I predict a six will show, there is a 17% chance I’ll be right.
Now suppose that you and I both predict a six will show. What is the chance that at least one of us is right? It is still 17%. We are predicting the same thing and we are both using the same theory, by which I mean the same premises. You could equivalently say that we are using the same model. Or—yet one more way to say it, and one that uses the language of both parts of this article—we are both conditioning on identical information.
Our predictions are not logically independent: they are the same thing. The chance that at least one of us guesses correctly is still 17% if you and I and your mom also predicts a six. Or if a million people predict a six, or if every person on the planet does. The chance that at least one of us is right is never better than 17%.
So when we hear hair-raising predictions coming from all quarters, we can’t assume that the probability that at least one or more of them is true is high just because there are so many of them. While each horror has slightly different information than its brother, at base they are all conditioning on much the same information.
The voices in the choir are all singing the same song.
Read Part I
Love these Briggs, keep ’em up!
How is it you are able to explain statistics and probability so clearly yet my textbooks can’t say three words without becoming incomprehensible?
Really, it was Doug M.’s comment. He deserves the blame.
The 20th Century offers us more frightening examples of mass insanity. 50 million Germans willingly aquiesced to the ravings of a madman. 100 million Russians were willing to enslave themselves to a ruthless tyrant. A billion Chinese adopted group think in reeducation camps.
Mass insanity is alive and well. It is driven by greed and fear. It results in terrible deprivations and slaughters. There is no cure; none that I know of. The 2,000 will lead us unwittingly, insanely, into blood baths. That is the pattern. I give it a 99.99% probability.
Trying to persuade people that economists talk rubbish – probably not very difficult at the moment. Pre-2008, it might have been harder.
I love the talk of “green jobs” that Cap’n Trade will create.
If we make taxes more complicated, such that I now need an accountant to fill out my tax forms, has weath been created?
If the climate is 0.5 degrees warmer, what will that do for agriculture? I would guess that it would make for a longer growing season? And, since my heating bill is greater than my AC bill, my utility costs would drop. Slight warming would be a net economic gain.
Anybody else reminded of their mother nagging, “Well, if your friends all jumped off the bridge, would you do it, too?” Because that’s basically the effect – if millions of others hold the opinion “x”, well, that MUST be right because so many people hold the opinion, right?
Mike D,
Put the blame on me?! Yah, okay, I’ll confess. I was having a little fun with numbers. But, it shows that a few equations, if the math is “right” and misapplied, can do alot of dammage.
The chance of 6 on a die is always 17% because each toss is independent. When you start talking about the assumptions of an economic theory, they may not be independent and I totally agree. Perhaps another way to think about it is: if one of the assumptions is false, all those that follow are extinguished and are meaningless. For example: the heat will cause California tomatoes to rot and the farmers will lose their farms. These are totally dependent but there are other possible actions that farmers may take to prevent the first problem and cause the second to be moot. It is also possible that both could happen even if there is no warming. I’m not sure how one would go about calculating the probabilities in this case. I think it all goes back to “we are all too sure of ourselves.”
Mike D.: “Mass insanity … is driven by greed and fear”
I think you are making a big assumption about the quality of the common man there. I think people desire change from their situation without really knowing what things were like in the past. Our freedoms are being gradually taken away, similar to boiling a frog in a pot, where if you raise the temperature slowly enough, before long the frog doesn’t notice what’s wrong before it’s too late. Our generation have no idea of what the Great Depression really was like, just like our younger generation may not fully understand the Great Recession and how to deal with it.
The book “The True Believer” by Eric Hoffer offers some insight into mass movements that I find useful in understanding them.
But this choir has well over 2000 voices; among them Noble laureates, sacred scientists, ecologically-sensitive economists, regal rock stars and paternalistic politicians. The music they create has to be good, and true, and relevant. To believe otherwise is to be a “denier”. So take those numbers and bend ’em a little till they fit the narrative. That’s what “statisticians” are supposed to do.
You’ve been going about this all wrong. Now click your heels together three times and say, “There’s no place like Copenhagen”. Help us make it all come true.
Here is another analysis that looks at the low probability inherent in a chain of independent assumptions: http://www.carlineconomics.com/archives/711
Perhaps I’m still too naive, but I think that now the cat’s out of the bag, and the publics’ focus is on the pocketbook, and Copenhagen and Gore are just comedy–the 2,000 windbags will just fan the flames that are engulfing the climate change scam.
dearieme says:
26 March 2010 at 10:23 am
Aren’t economists those people who never carry umbrellas, because supply will always meet demand?
So, speculations of the effects of a slighlty warmer climate are… speculative. Who knew?
Lookit, the world has been warming since the end of the little ice age (200 years, give or take). Can someone plot human prosperity versus temperature? Atmospheric CO2 has been increasing for 100 (or so) years. Can anyone plot human prosperity versus CO2?
Given those highly relevant observationals, can Briggs construct a model to predict the effects on human prosperity of a world slightly warmed by CO2?
just sayin’
Here is the logical progression:
Cap & Trade & Tax & Spend will lead to huge economic dislocations, disparities, and desperation.
Disenfranchised people will eventually revolt in various ways.
Revolts will end up giving inhumane madmen extensive powers.
The madmen will unleash massive bloodshed, far in excess of that seen in the revolts, which will not be all that bloodless in the first place.
That progression has happened again and again throughout history. Our species has not learned any lessons from history and has not advanced beyond that recurrent social pathology.
I was involved in a farming partnership for 14 years. The best crop yields we had during that time, and the best net income, was 1988. The temperature was a tad high, and Yellowstone was on fire, but we prospered. By 1998 I was out of farming, but I’ll wager we would have done well.
When temperature declines, the human race suffers. A few examples? Perhaps the black death, the Irish famine, the forced union of Scotland with England.
Briggs is right. Cap & Trade & Tax & Spend is no deader than Obamacare ever was.
C&T&T&S is not about science: it’s about money (taxes for the government; profits for carbon traders), and power for anti-industrialists and control freaks (environmentalists, lawmakers, and regulatory bureaucrats).
In the carbon scam there is too much money and too much opportunity for pushing people around for the CO2 racket to ever go away.
Mike D.: I do tend to agree with your “logical progression.” One point that Hoffer makes is that to provoke a mass movement you must break up the things that keep people from wanting change. A good economy keeps families together, keeps people occupied so they don’t tend to think too much about their problems and makes them less willing to join some radical cause. What better way to get our population fired up than to get them dependent on unemployment, then cancel it and then pass more laws designed to kill productive enterprises. The new health bill was designed to not raise deficits too much but just yesterday we start to see it sucking money out of corporations (AT&T $1 billion). I’m sure that’s going to make them want to hire more employees. It sure looks like this administration is hell bent to destroy what little is left of the economy.