Yochai Benkler on the End of Universal Rationality

How the myth of wholly self-interested individuals is holding us back

Edge is one of my favourite online newsletters, and I really wish I had more time to read each issue. Issue 279 has a great essay/video by Yochai Benkler, co-direcetor of the Berkman Center for Internet & Society. He discusses the gradual (though far from complete) abandonment of the self-interest-maximizing homo economicus over the last fifteen to twenty years, focusing on sociology, management practices and poli-sci (in addition, obviously, to economics).

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Canada: a brief history of failed GHG reduction policies

Attended a talk entitled Getting Climate Policy Right yesterday, presented by Mark Jaccard and co-sponsored by University of Toronto’s School of Public Policy & Governance and the Centre for Environment. Jaccard is a leading expert, not just in Canada but internationally, on climate change policy and economic modelling, and delivered an informative, stimulating and engaging presentation.

Some of the key take-aways:

  • Energy efficiency is expensive – economists who model energy efficiency policies and programs often still fail to take into account a variety of factors that make investment in energy-efficient technologies much more costly.
  • Information programs are not enough – governments have 4 (or five) policy levers to reduce greenhouse gas emissions: information campaigns (e.g. the Rick Mercer one-tonne challenge), subsidies, regulations, financial penalties (taxes), and cap and trade schemes (a combo of numbers 3 and 4). We need to see much more of numbers 3-5.
  • Offsets are not working the way they’re supposed to – in the EU cap and trade scheme (or at least ETS1), companies can achieve 15% of their targets via offsets which go to clean development mechanisms as subsidies to developing countries for advanced, cleaner technologies from developed countries. Jaccard showed the audience a slide demonstrating how China is taking advantage of this as a “free-rider,” using the CDMs for hydroelectic projects that would already have been done anyway, and thus failing to have any mitigating impact on their GHG emissions from coal-fired plants.
  • Targets don’t matter – while I think the language used here is a bit too strong (of course targets matter), what Jaccard is saying is that we’ve been setting great targets for years, but have consistently failed to meet them. According to Jaccard, we need clear plans for meeting our targets, absolute caps and minimal or no offsets. Which brings me to…
  • Canada has been failing at greenhouse gas reduction policies since the late 80s – first introduced by the Mulroney government, Canada has gone through more than five policies to reduce GHGs, all of them failures. By the reckoning of Jaccard’s team, the current plan under the Conservatives will have some effect (good news) but not nearly as much as is claimed or needed.

As Jaccard said, Canada has clearly demonstrated it is a follower and not a leader in this area. We should expect to see more action once the US has got implemented some serious GHG reduction policies, which will hopefully be happening soon.

Greenspan’s mea culpa

Alan Greenspan reflects on how his ideological belief in the ability of markets to self-regulate has been shaken. Henry Waxman, Chairman of the Oversight [pun?] and Government Reform Committee is on a bit of a self-righteous crusade and is obviously looking for a sound bite from Greenspan (which he gets). But it’s an effective approach, and they’re questions that need to be strenuously pursued. And then followed by formal censure.


Ontario launches anti-poverty plan amidst economic turmoil

The Ontario government has launched a comprehensive anti-poverty plan that is receing warm reception from advocates like the 25in5 Network for Poverty Reduction. The fact that this has taken place during particularly bad times for Ontario’s economy is all the more impressive, and makes me proud to be an Ontarian–not something that happens every day. As is recognized today by nearly everyone, from economists to G20 leaders, now is actually a fairly auspicious time for large-scale government investment, not just in physical infrastructure but also in “social infrastructure,” of which poverty reduction is a key componenent.

In related news that makes this development even more timely, a study from UC Berkeley has found that the negative effects of poverty on children’s brains can in some cases be so severe that they resemble the impact of a stroke.

Some worthwhile reading on the economic meltdown and what comes next

Christopher Hitchens for Vanity Faire: “American the Banana Republic“:

Now ask yourself another question. Has anybody resigned, from either the public or the private sectors (overlapping so lavishly as they now do)? Has anybody even offered to resign? Have you heard anybody in authority apologize, as in: “So very sorry about your savings and pensions and homes and college funds, and I feel personally rotten about it”? Have you even heard the question being posed? O.K., then, has anybody been fired? Any regulator, any supervisor, any runaway would-be golden-parachute artist? Anyone responsible for smugly putting the word “derivative” like a virus into the system? To ask the question is to answer it.

Harper’s Magazine‘s October issue carries a collection of essays from the likes of Joseph Stiglitz, James K. Galbraith, Bill McKibben and others. The Galbraith piece is available online in its entirety; the rest, for subscribers only.

In “Amid the rubble of global finance, a blueprint for Bretton Woods II,” Jeffrey Sachs advocates

  • a Tobin tax that would go to the IMF
  • an international carbon tax, instead of the “enormously cumbersome emission-trading system concocted and championed by the same financial engineers who brought us our current banking crisis”
  • the World Bank focus entirely on helping the world’s poorest countries meet the Millennium Development Goals
  • A new global trade agreement that would help the poorest countries be more productive, and promote environmental sustainability

Reason 3 not to vote for the Conservatives: who cuts literacy funding?

We could be doing worse, but research does show that Canada has a literacy problem.

So, if that’s the case, why would the Conservatives cut $17.7 million CDN from adult and family literacy programs? This is old news, but it made no sense then, and it still doesn’t. Adult literacy has a very direct and measure impact on the economy. From ABC Canada:

A rise of one per cent in literacy scores relative to the international average is associated with an eventual 2.5-per-cent relative rise in labour productivity and a 1.5-per-cent rise in Gross Domestic Product (GDP) per person, according to Statistics Canada.

So as Canada is possibly heading into recession, might it not make sense to restore some of this funding to its previous level, if not increase it? Unfortunately, the Conservatives have been fairly consistent in their disregard for evidence-informed policy and common sense.