Davos, world hunger and Felix Salmon

After a conversation with Dan Barber of Blue Hill Farm (a phenomenal restaurant, by the way), Felix Salmon is convinced that the Davos approach to solving world hunger is broken:

No one talked about creating relatively small and self-sufficient agricultural communities: the model is still very much that you sell your one crop for money, and then use that money to buy whatever other food you might need.

Here’s my comment in response:

Felix, I love that you posted on this, but I don’t think where you’re coming out is specific enough to the rural smallholder farming households who make up most of the world’s hungry. They are food-insecure because they can’t produce enough to feed their families and/or they don’t make enough money from selling their surplus crops to buy enough food to close the deficit. “Creating relatively small and self-sufficient agricultural communities” is a nice goal, but we can’t get there in poor countries without figuring out the “how” of improving smallholder productivity.

Staple crop monocultures for these smallholders aren’t necessarily as dumb as they might seem from afar. Which staple crop often varies according to local growing conditions (e.g., in Ethiopia, some regions grow mainly maize, others mainly wheat, teff, or sorghum). And if you’re struggling to grow enough to feed your family on your single hectare of land, focusing on the most productive staple crop – perhaps with a small plot of a cash crop like tomatoes or onions on the side – makes sense.

Agricultural innovation (like, say, flood-resistant rice or drought-tolerant corn, or yield- and sustainability-enhancing crop rotation techniques for that matter) is critical not so the developed world can produce more to ship to the developing world, but rather so poor farmers in developing world can produce enough food to feed themselves.

Good ideas, but truncated RSS

That's my initial take on the FT's Energy Source blog, which I subscribed to hoping it would fill the big shoes left vacant by the untimely demise of Environmental Capital.

For example, this is a pleasantly non-lazy line of thought:

One of our favourite counter-intuitive ideas on this blog is that China’s massive and growing appetite for fossil fuels might end up being a good thing for the environment, as it could drive big efforts on renewables, electric vehicles, and even energy efficiency.

The rationale is that China takes forward planning much more seriously than many large economies; so unlike other countries that are simply ambling towards some kind of climate/security/supply (choose your favourite) crisis, China will put significant effort into energy alternatives. Of course, the buying up of long-term fossil fuel supply deals with various countries around the world doesn’t necessarily support that.

And if the local press is anything to go on, anxiety over energy security is indeed pretty high in China at the moment.

On the negative side, Energy Source's RSS feeds are truncated. This is not only incredibly annoying for a reader, but as Felix Salmon has described many times, doesn't even make financial sense for the publication!

Update: Unsubscribed. Don't love the style and not worth it with the truncated feeds.

Felix Salmon, model blogger

All self-effacement aside, my favorite finance blogger Felix Salmon richly deserves this lengthy profile in Big Money. Here was my favorite part:

But every writer scribbles with an ideal reader in mind. Salmon is no exception. He may not covet the biggest audience but he does yearn for the best and most influential reader: "It’s a known fact," he says, "that Larry Summers reads a lot of blogs."

If that sort of audience is what he’s after, I ask, why not become a regular on CNBC? "Because Larry Summers doesn’t watch CNBC and say, 'Oh my God, that’s interesting, I should actually think about that when conducting economic policy.’ CNBC is people shouting at each other. If we were to get into a screaming match about health care reform, it doesn’t matter how smart we are, we’re not going to be shedding any light. Whereas the blogosphere is really good at drilling down very quickly to the nub of the question. People talk about it like it’s the best graduate seminar ever invented."

The "seminar-like" quality of the blogosphere is certainly what drew me to it, first as an avid reader and now as an extremely peripheral contributor (I optimistically estimate my current regular readership at approximately four people). And by articulating the qualities that make Felix a good blogger, this article helped me realize that in a way he is my blogging role model (perhaps along with Tyler Cowen) for the elegance and punchiness with which he uses the format. I think I have probably learned more about how to blog from reading him than anyone else, and while I still have a long way to go, it certainly helps to have someone great to model oneself after.

Outsourced responses to cap-and-trade originator

Greg Mankiw and Environmental Capital both pointed quickly to an article in the WSJ citing one of the originators of the cap-and-trade idea, Thomas Crocker, who is now in favor of a carbon tax. But Felix Salmon (my favorite finance blogger, mind you) shows his versatility by turning Crocker's arguments on their head:

Let’s take Crocker’s arguments one by one, with the proviso that they’re coming second-hand, via the WSJ, rather than directly from Crocker himself.

First, Crocker says that a carbon tax “would be easier to enforce” than a cap-and-trade system. But it’s hard to see why that should be the case: both of them involve measuring the same carbon emissions. It’s certainly easier to enforce when you measure upstream rather than downstream, but that applies equally to carbon taxes and to cap-and-trade.

Crocker then gets into the meat of his argument:

Mr. Crocker sees two modern-day problems in using a cap-and-trade system to address the global greenhouse-gas issue. The first is that carbon emissions are a global problem with myriad sources. Cap-and-trade, he says, is better suited for discrete, local pollution problems. “It is not clear to me how you would enforce a permit system internationally,” he says. “There are no institutions right now that have that power.”

Yes, cap-and-trade is better suited for local pollution problems than it is for global pollution problems. But that doesn’t mean that a carbon tax is better for global pollution problems than cap-and-trade is. Indeed, the opposite is true. In theory, once a number of jurisdictions implement a cap-and-trade system, carbon traders will start arbitraging the various different carbon permits, and we will end up with something approaching a global system. Carbon taxes, by contrast, are ever and always local. Crocker is right that a US cap-and-trade system wouldn’t necessarily slow global carbon emissions if China and India refuse to play ball. On the other hand, neither would a carbon tax. But at least a cap-and-trade system has the ability to scale into China and India.

But moving on:

The other problem, Mr. Crocker says, is that quantifying the economic damage of climate change — from floods to failing crops — is fraught with uncertainty. One estimate puts it at anywhere between 5% and 20% of global gross domestic product. Without knowing how costly climate change is, nobody knows how tight a grip to put on emissions.

In this case, he says Washington needs to come up with an approach that will be flexible and easy to adjust over a long stretch of time as more becomes known about damages from greenhouse-gas emissions.

Agreed, 100% — which is exactly why we need a flexible cap-and-trade system rather than an inflexible carbon tax. A cap-and-trade system can be tweaked much more easily than a carbon tax, both in terms of the level of the cap and in terms of the proportion of the permits which is auctioned off rather than given away. Crocker says it’s hard to adjust a cap once it’s in place — but he neglects to mention that it’s harder still to adjust a tax once it’s in place.

John Whitehead at Environmental Economics arrives at the same conclusions, noting sagely that:

Unfortunately, there is no good solution to the global nature of the problem. Protectionism, voluntary agreements and war are three ways to enforce international "policy."

... and the interesting factoid that

Crocker, a 2008 AERE Fellow, won the 2001 AERE Publication of Enduring Quality Award for his work on cap-and-trade.

The versatility of cap-and-trade is such that it's hard to come up with arguments against it that don't apply to a carbon tax as well - other recent failures include admin costs and the distortionary effect of taxes.

Blogging how-tos

Felix Salmon on monetization and Tyler Cowen on how to give compliments.

P.S. I am embarrassed to say that my first guess of who Tyler was referring to was wrong (Robin Hanson); the correct answer is here.

Quantity vs. quality in blogging

Felix Salmon, one of my favorite bloggers, has posted some notes on blogging which are well worth reading in full for anyone interested in blogging.

I noticed in particular some advice which runs somewhat counter to my last change of direction on People and Resources (a commitment to "spend more time on fewer posts and use that time to provide more value-added original commentary"):

As always, there’s a trade-off between quantity and quality. Should you write more, with lower quality, or less, with higher quality? Fortunately, the blogosphere has been around for long enough that we have a simple empirical answer to this question: given the choice, go for quantity over quality. You might not like it — I certainly don’t — but I defy you to name a really good blogger who doesn’t blog frequently.

Often bloggers are the worst judges of their own work; I can give you hundreds of personal examples of blog entries I thought were really good which disappeared all but unnoticed, and of blog entries I thought were tossed-off throwaways which got enormous traction and distribution.

"Bloggers are the worst judges of their own work" rings particularly true to me (especially given the feedback I've received thus far).

A commenter adds a very interesting quote:

The quantity over quality spiel reminds me of the art and fear quote about potmaking:

“The ceramics teacher announced on opening day that he was dividing the class into two groups. All those on the left side of the studio, he said, would be graded solely on the quantity of work they produced, all those on the right solely on its quality. His procedure was simple: on the final day of class he would bring in his bathroom scales and weigh the work of the “quantity” group: fifty pound of pots rated an “A”, forty pounds a “B”, and so on. Those being graded on “quality”, however, needed to produce only one pot -albeit a perfect one - to get an “A”. Well, came grading time and a curious fact emerged: the works of highest quality were all produced by the group being graded for quantity. It seems that while the “quantity” group was busily churning out piles of work - and learning from their mistakes - the “quality” group had sat theorizing about perfection, and in the end had little more to show for their efforts than grandiose theories and a pile of dead clay.”

Effort expended attempting to produce high quality works is not the same as actually producing high quality work.

So... I guess the pendulum should swing the other way and I will be looking for that happy medium...

Pat on the back

Forgive my amateur excitement, but a day after my post on Robert McNamara Philip Delves Broughton posted on the same section of his book, and then today Felix Salmon - probably my favorite finance blogger, highly recommended - excerpted the exact same quote I used.

For a brief, exhilarating moment I thought Felix had actually read my blog. Turns out not, but it is gratifying enough to know that I'm thinking along the same lines as someone I admire highly.

Their conclusions are both worth repeating. PDB:

One way of diagnosing an individual or institution suffering from the McNamara Syndrome is to observe how they respond to criticism. Do they accept it and try to make use of it? Or do they lash out contemptuously, sneering at those who dare criticize them? It’s a good test at which many businesses, individuals and even educational institutions do poorly.

And Felix:

When Wall Street quants fail to account for model risk, they can end up losing hundreds of billions of dollars. But that’s an improvement over what happened when McNamara failed to account for model risk: those losses were much worse.