WWID: Recognizing high dimensionality

In Chapter 6 of What Works in Development, Ricardo Hausmann makes, in commentator Ross Levine’s words, an “imaginative, provocative, and substantive” argument that much work on economic growth willfully ignores the complexity inherent in the classical development formula (“peace, easy taxes, and justice” in Adam Smith’s words, or trade openness, sound finances, and property rights, to paraphrase Larry Summers). Providing the right public inputs, particularly regulation, to enable a nation to develop new productive capabilities is a very “high dimensional” problem, which Hausmann compellingly illustrates with the myriad policy elements required to enable an efficient real estate market.

The necessary information to determine optimal policies is highly dispersed, Hausmann continues, and in such a context central planning is bound to fail. Unlike a product market, the market for public inputs lacks mechanisms to aggregate information (prices), incentivize action (profits), and allocate resources (capital markets). Hausmann then hypothesizes that in the United States, the open political architecture allows lobbyists may play a market-making role in the provision of public inputs. (Not without some rent-seeking, of course, but this is a necessary tension “in the absence of an omniscient and benevolent social planner.”)

How, then, to incorporate broad input into the provision of public inputs in developing countries? He doesn’t have all of the answers, and neither do commentators Nava Ashraf (who suggests looking to social enterprise for systems) and Levine (who uses the example of racism to argue that institutions themselves evolve in response to underlying incentives, and their change cannot be mandated independently of those incentives). But I find the question alone quite profound.

Very interesting stuff… I will have to let it marinate for a while, and hope to have further reflections at some point.

Coal industry behind climate lobbying fraud

Didn't take long to figure out who was behind letters forged by Bonner Associates urging Congressmen to vote against Waxman-Markey. That's right, from the same genius that brought you chart-topping hits like "Frosty the Coalman"...

Exxon outspends entire clean energy industry on climate lobbying

By almost 25%, in fact:

Exxon still managed to spend more money on lobbying efforts for the climate bill than the entire clean energy industry combined... $14.9 million over the last six months. As Bloomberg points out, that's a solid 23% more than the $12.1 million clean energy companies spent all told. Altogether, oil and gas companies spent $82.2 million on Washington lobbyists, dwarfing the wind, solar, and biofuel companies that nonetheless spent more than ever before.

One wonders where it all ended up...

Climate fight gets fraudulent

This was bound to happen with the stakes involved.

As U.S. Rep. Tom Perriello was considering how to vote on an important piece of climate change legislation in June, the freshman congressman’s office received at least six letters from two Charlottesville-based minority organizations voicing opposition to the measure.

The letters, as it turns out, were forgeries.

“They stole our name. They stole our logo. They created a position title and made up the name of someone to fill it. They forged a letter and sent it to our congressman without our authorization,” said Tim Freilich, who sits on the executive committee of Creciendo Juntos, a nonprofit network that tackles issues related to Charlottesville’s Hispanic community. “It’s this type of activity that undermines Americans’ faith in democracy.”

The faked letter from Creciendo Juntos was signed by “Marisse K. Acevado, Asst Member Coordinator,” an identity and position at Creciendo Juntos that do not exist.

The culprit is Bonner Associates (slogan: "Strategic Grassroots/Grasstops support to help you win"), which claims to have fired the two associates involved in sending the letters.

With Edmund Markey already publicly indignant, expect a lot of noise around this, but lobbying firms are protean creatures and this will not change how business gets done in Washington. It is a black eye for the anti-climate movement, though.