The world is filled with Ph.D historians.  I just had the opportunity to read a long piece in the Chronicle of Higher Education by a historian named Geoffrey Parker as he writes about the long history of natural disasters and the risks posed by climate change.

Permit me to provide two direct quotes;

"Nevertheless, it took human stupidity to turn crisis into catastrophe. The meager French harvest of 1675 occurred just as the king raised new taxes to pay for his wars, with predictable results. Many people died of hunger, many more migrated in search of food, and in the west of France, many took part in the "red bonnets" revolts. Most striking were the signs of hardship written on the bodies of survivors. Government officials in France compiled data on each man who enlisted in the royal army, including his height; those born in 1675 stood on average just five feet tall, the shortest cohort of Frenchmen ever recorded."

"As the paleontologist Richard Fortey has observed: "There is a kind of optimism built into our species that seems to prefer to live in the comfortable present rather than confront the possibility of destruction," with the result that "human beings are never prepared for natural disasters." 

Is long run history relevant for thinking about how we will adapt to climate change?  I don't think so.   Our world economy is changing so rapidly that I learn little about our future ability to adapt from 16th century Europe.  That group of people were poor, they weren't educated and they didn't have the technology strategies we have today to cope with shocks and risk.

As I argue in Climatopolis, as our climate changes we will rebuild our cities in relatively safer locations.  We will build with materials and in ways that reduces risks from natural disasters.  We will price scarce resources such as electricity and water so that we use these scarce resources efficiently.  Our entrepreneurs will devise new products to help us cope with the new challenges.  Twitter and Facebook will educate people in real time about emerging challenges.    International markets in food and insurance will help those at risk to smooth risk and to allow people to consume even if their rural agricultural production declines (due to drought and heat waves).   While Dr.  Parker has some interesting things to say, he ignores the role that capitalism plays as an evolutionary force in helping us to adapt to new challenges. He ignores the innovative possibilities of modern capitalism.  By definition historians look to the past, but the economic view of people is that we are self interested and forward looking.  If we anticipate a challenge (or if only a subset of us anticipate that we face a challenge in climate change) then this is a start to finding solutions.   Dr. Parker ignores the facts that the death toll from natural disasters has been declining over time and income shields us from such disasters as urban populations are at lower risk.  He quotes "big damage" numbers but ignores that U.S GDP is $16 trillion dollars.   1 billion/16 trillion =  .000625!

UPDATE:  I see that there are historians who believe that their field is relevant for thinking about our future in the face of climate change.   I respect self pride and I understand self interest but let's do a simple case together.   Back in the 17th century what was the full set of available strategies available to French farmers and consumers of farm products? Compare that to the year 2013,  while I will not endorse GM crops, this provides just one example of the set of coping strategies we have that the French in the 17th century do not. Ongoing technological advance, international trade, and much higher incomes and better storage technology all make past tales of woe irrelevant for today.

Now, I will grant the historians one point in the case of adapting to climate change.  Historians do play a useful role in reminding today's entrepreneurs of these past tales because such misery creates new opportunities for the entrepreneurs who supply the solutions so that future misery doesn't happen.  In this sense, history doesn't repeat itself because people learn from history.   Turner's piece appears to embrace a behavioral economics view that were are doomed to make the same mistakes over and over.  He ends his piece with some optimism about resource constraints;

We should ponder Milton's vision as we debate whether it is better to invest today in preparing for extreme weather, or to face tomorrow the consequences of inaction. After all, unlike our ancestors in the 17th century, we possess both the resources and the technology to make that choice.

This is the strange time of year when only a handful of campuses are not on summer break.  Stanford, University of Chicago, Northwestern, UCLA and just a few others are on the quarter system.  My students appear to be well aware that it should be summer time.  Attendance is down and students seek to have some fun.  I'm trying to make some research progress on several projects but I keep hitting speed bumps.

I had intended that this blog post would focus on innovative ways that Facebook could simultaneously make money and further academic research.  I thought that I could think of some field experiment designs that Facebook could create.  For example, it could randomly choose people to receive different subsidies if they can recruit their friends to give money for a specific charity.  For example,  Facebook could write me and offer a 40% match on any money raised by my friends to find a cure for baldness.  Facebook could then claim some percentage of the total donations raised as a tax deduction to lower their IRS reported income.   The research design would simultaneously raise $ for good causes and would tease out which people in the population respond to charity incentives and who can be mobilized to convince their network to step up and give to a good cause.

A second new business for Facebook would be for FB to begin to suggest potential spouses for people using their "likes" correlations.  FB could make a number of life suggestions for people such as what they should eat at their next meal. Now I must admit that I'm confused about how FB would be paid for this advice but perhaps they can call McKinsey to provide some advice on how to monetize their advice?

Greg Mankiw's blog nudged me to read Marty Weitzman's PBS presentation.  Marty's work is fascinating but note that there is no spatial component to his work.  He never discusses economic geography. In particular, he implicitly assumes that catastrophic climate change equally impacts every inch of the globe.   Shocks always create "winners" and "losers" and comparative advantage always exists.   The whole world (7 billion people) could live in a geographic area the size of Texas.   We are always building and rebuilding our cities. We continue to use international markets to produce and trade food products.   We continue to invent new storage technologies that allow us to insure against climate shocks. Marty underestimates capitalism's ability to step up to provide solutions to anticipated challenges.   Spatial competition and urban growth is key adaptation strategy.   This is the key reason I wrote Climatopolis.   I also suggest that you papers by Desmet and Rossi-Hansberg, Pindyck, and Costello et. al. 

Over the last couple of weeks, I have been re-reading the roughly 2600 blog posts I have written since 2005.  I owe everyone an apology.  Only 15% of them are good.  Too many of the posts are self serving, and/or silly.    The reason I sat down to read through all of them is that I knew that I did post some good material related to environmental and urban economics and I've now extracted that material and I'm rewriting it into a new free e-book I will release on environmental and urban economics.

From now on, I will be posting less silly stuff.

Two "serious" points about cities.

1.  The Pew Center has posted an intriguing paper quantifying that suburbanites are the big winners from mortgage interest deduction.   The Geographic Distribution of Mortgage Interest Deduction  .  Center city residents are  more likely to be renters (because people live in multi-family buildings and such buildings are more efficiently run by single owners).   So, the tax code is subsidizing suburbia.  If suburban living has a higher carbon footprint, then the IRS is subsidizing climate change.

2. For teachers teaching urban economics, take a look at the LA City Budget Calculator. My proposal increased the deficit.  Maybe I'm a Keynesian!

Until this afternoon, I haven't jumped into the Pacific Ocean for at least 40 years.   I'm taken the plunge in Carlsbad, California.  From our beach hotel, I've been watching the ocean and the sunset.  If you are a mildly contemplative person who is seeking to relax, then this is the place to be.  Watching my son battle the waves allowed me to travel back in time to when it was my turn to battle the currents of the Atlantic Ocean back on Fire Island off of Long Island.   My son's FLL Lego Robotics North American Championship has brought us here.  This has been a good mini-vacation for me.  At Lego Land today, I had the opportunity to admire hundreds of different tattoos decorating the skin of different men and women walking around in shorts and bathing suits.  Perhaps I'm getting old but I believe that it is time for the U.S to show some class and cover up.

My mother asked me why I haven't been blogging.  As I stated in an earlier post, I'm burned out.  I'm trying to focus my attention on finishing a large number of papers that I have up and going. I'm very excited about finishing my book manuscript (joint with Siqi Zheng) on China's cities.  This book is quite good.  I'm also quite excited about the open source set of lectures I'm developing on environmental and urban economics.  We will find out if UCLA students are as smart as they claim to be as I employ dozens of them to work with with me on this book.  We will see.

The LA Times reports that the entertainer Chris Brown is making some enemies in his neighborhood.  His wall art is scaring local children and may strike some adults as tacky.  The photo below displays a luxury sports car parked outside of his house and some pop art on his property.


Residential communities are interesting entities as separate households have independently chosen to live in that area (and thus must have similar preferences) but most neighbors have zero interactions with each other.

With Kobe out of the NBA Playoffs and nobody following the LA Mayorial Election, the LA Times has devoted a front page article to the "big story" that  two excellent brain scientists have moved (and taken their huge labs) from UCLA to USC.   Two thoughts.

1. Competition is a good thing!  When I was an Assistant Professor back in the 1990s, I taught at Columbia University.  Back then,  Columbia was a complacent place celebrating that it was the only Ivy League school in the world's best city.  This perceived monopoly power allowed it to coast along.  An unintended consequence of the rise of NYU starting in the early 1990s was that Columbia shaped up and became a serious place again.  The fear of being upstaged by the upstart NYU nudged Columbia to wake up from its stupor.  The rise of USC may trigger a similar effect at UCLA.   During the recent ongoing budget crisis, it does not appear that my esteemed school has not thought hard about our priorities.  What do we really want to be excellent at?  Can we do everything?  If this discussion has taken place, I haven't heard it.

2.  All faculty are replaceable.  The two faculty members who have moved to USC are ages 60 and 41.      There always is a silver lining to losing faculty.    This is an opportunity for this unit to become younger and perhaps more diverse.  Were these guys really such monopolists that there aren't at least  three other rising 35 year olds who can use the resources that are now available to do something big?  As I argued in an earlier blog post, every university faculty must aspire to become younger not older!

Here are the Chancellor's remarks on this issue.   I would simply have wished them goodbye and good luck and used the freed up resources and space to pursue a new initiative.  

We all know that "political economy" is hot stuff these days.  In this blog post, I will succinctly state my recent efforts on this subject.   You will be relieved to know that all of my work has been empirical.  I will discuss this work in random order.

Paper #1;  In joint work with Stuart Gabriel and Ryan Vaughn, we use a unique micro data set to study a major subprime lenders' loans between 2003 and the end of 2006.  We document that this bank played favorites in terms of Congressional Geography.  Borrowers who lived in Congressional Districts where the Representative was a Congressional Leader, or this bank had previously made campaign contributions to the Representative, received "sweeter deals".  This is especially true if the borrower was black.  We argue that the subprime bank was seeking to win "political capital" with key members of Congress that it could cash in at a later date.

Paper #2;  In joint work with Siqi Zheng and Sun and Luo, we study the promotion of Chinese Mayors and the role that environmental criteria play in the central government's promotion criteria. We argue that relative to Mao's time that the new generation of mayors have much stronger incentives to seek to mitigate urban pollution externalities and hence to supply "blue skies".  This is a major theme in my new book manuscript (joint with Zheng).

Paper #3;  In joint work with Cragg, Zhou and Gurney, we study Congressional Voting on greenhouse gas mitigation legislation such as the 2009 ACES bill. We document that 3 attributes of Representatives (district per-capita carbon emissions, district per-capita income, and the Representative's overall ideology) do a very good job explaining the propensity to vote in favor of low carbon legislation.

Paper #4; In ongoing joint work with Matt Holian, we examine California household level voting on low carbon legislation including AB32 and the California High Speed Rail.  We document that both ideology and self interest are key determinants of voting patterns.  Center City residents (relative to suburbanites) are more likely to vote in favor of low carbon legislation both due to "selection effects" and "life style effects".

Watch out academic NSF award recipients!   The American Public will soon be searching for you at this website.  If you do "silly work" that has been funded with public $, then  you may receive a lot of thumbs down and social shame.  While I am a big fan of the NSF system, this doesn't strike me to be a crazy exercise.   Academics should be held accountable for our work.  There are many Departments at my University where I would like to know what their faculty do all day long.  This new austerity process may nudge some of these academics to make a short case for why they and their field matters in 2013.    Here is a quote;

"First, we will take a look at the National Science Foundation (NSF) - Congress created the NSF in 1950 to promote the progress of science. For this purpose, NSF makes more than 10,000 new grant awards annually, many of these grants fund worthy research in the hard sciences. Recently, however NSF has funded some more questionable projects - $750,000 to develop computer models to analyze the on-field contributions of soccer players and $1.2 million to model the sound of objects breaking for use by the video game industry. Help us identify grants that are wasteful or that you don't think are a good use of taxpayer dollars."

My mother has always hoped that I would be a "public intellectual".   While I have failed, many noteworthy academics at Harvard are willing to step up.  In recent years, Harvard's scholars have provided many big ideas for which they made national news.  Here are three famous examples;

1.  Today,  Ferguson on why Keynes was so focused on the short run.

2.  Reinhart and Rogoff and the critical 90% debt ratio.

3.  Larry Summers on women and hard math.

There are at least two interesting questions here.  What is the socially optimal amount of provoking the populace?  Second, does holding Harvard stationary cause excellent scholars to "cross the line" or does Harvard seek out and aggressively recruit scholars that are more likely to engage in this activity?

On the first point, in this age of Paul Krugman --- I feel that my friends at the University of Chicago have under invested in engaging with the public.  John Cochrane and Casey Mulligan are writing strong blogs but Professor Krugman is winning the applause and the public debate as my Chicago friends are free riding and ducking stepping into Milton Friedman's large shoes.