How to Build Brands on the Internet

From Cheap Talk,

A major theme of the conference was market design and I heard a story repeated a few times by participants connected with research and implementation of online ad auctions.

Ads served by Yahoo!, Google and others are sold to advertisers using auctions. These auctions are run at very high frequencies. Advertisers bid for space on specific pages at specific times and served to users which are carefully profiled by their search behavior. This enables advertisers to target users by location, revealed interests, and other characteristics.

Not content with these instruments, McDonalds is alleged to have proposed to Yahoo! a unique way to target their ads and their proposal has come to be known as The Happy Contract. Instead of linking their bids to personal profiles of users, they asked to link their bids to weather reports. McDonalds would bid for ad space only when and where the sun was shining. That way sunshine-induced good moods would be associated with impressions of Big Macs, and (here’s the winner’s curse) the foul-weather moods would get lumped with the Whopper.

WNC Politics

I'd just like to point out that Heath Shuler, House Representative of NC 11, Western North Carolina, has voted against the health care bill. This follows his voting against several stimulus provisions. He is also against abortion, in favor of gun control, and against illegal immigration. And yes, he is a Democrat.

I imagine this is bad news for the 20% of his non-elderly adult constituents who are uninsured. But the broader picture here is that Democrats are finding it difficult to pass their agenda not (just) because of Republican intransigence, but because of loud opposition from Democrats representing conservative bits of the country. Rahm Emanuel's strategy of running culturally conservative moderates in red districts paid off huge electoral dividends, but these marginal legislators are much less favorable to a progressive agenda.

It also looks like Hendersonville's hotshot mayor, Greg Newman, is planning on running for this seat in 2010, the first of what looks to be a wave of local Republicans hoping to cash in on the coming 2010 Republican bonanza. This is, of course, another great reason for Shuler to vote against the Health care bill, lest Newman and company scare all the old people into thinking that their Medicare is going away.

Man, politics really is local. It's great reading the comments to some local story on a totally non-consequential issue, and seeing people get completely riled up about it.

Time Traveling Bandits

Surely you remember the Large Hadron Collider. It's a device built by physicists to test some theory none of us will ever understand, at the improbable cost of destroying the world. The device has so far failed to work. A while ago, some physicists came up with a reason why which centers on the role of... sabotage, from unknown time-traveling forces:

A pair of otherwise distinguished physicists have suggested that the hypothesized Higgs boson, which physicists hope to produce with the collider, might be so abhorrent to nature that its creation would ripple backward through time and stop the collider before it could make one, like a time traveler who goes back in time to kill his grandfather.

...According to the so-called Standard Model that rules almost all physics, the Higgs is responsible for imbuing other elementary particles with mass.

“It must be our prediction that all Higgs producing machines shall have bad luck,” Dr. Nielsen said in an e-mail message. In an unpublished essay, Dr. Nielson said of the theory, “Well, one could even almost say that we have a model for God.” It is their guess, he went on, “that He rather hates Higgs particles, and attempts to avoid them.”

This malign influence from the future, they argue, could explain why the United States Superconducting Supercollider, also designed to find the Higgs, was canceled in 1993 after billions of dollars had already been spent, an event so unlikely that Dr. Nielsen calls it an “anti-miracle.”

You'd think that this is the sort of nonsense which one could dismiss off-hand. But it looks like there's been some more trouble:

The Large Hadron Collider, the world's most powerful particle accelerator, just cannot catch a break. First, a coolant leak destroyed some of the magnets that guide the energy beam. Then LHC officials postponed the restart of the machine to add additional safety features. Now, a bird dropping a piece of bread on a section of the accelerator has, according to the Register, shut down the whole operation.

This is getting more embarrassing by the day. They really should get this thing working so at least the Universe will make some minimum amount of sense.

Unless that would destroy everything on Earth. In which case, these nebulous forces from the future should continue to do their job:

While it is a paradox to go back in time and kill your grandfather, physicists agree there is no paradox if you go back in time and save him from being hit by a bus. In the case of the Higgs and the collider, it is as if something is going back in time to keep the universe from being hit by a bus. Although just why the Higgs would be a catastrophe is not clear. If we knew, presumably, we wouldn’t be trying to make one.

I haven't heard this thrown around, but it should also be quantum suicide at play. Imagine you flip a coin and kill yourself if you hit heads. You flip a coin, and find yourself split into one world in which you survive and another in which you cease to be a conscious entity. But from the point of view of the non-dead copies of the you, it just came up tails. You can keep flipping coins. You'll die half of the time. But from your own point of view, because you can only observe the world in which you survive, it's always tails. You are, they say, immortal in a quantum sense.

Similarly; humanity may only survive in those states of the world in which the LHC fails to operate; so of course we are alive, look around, and find that the device does not work.

I should add that none of this makes sense to me. That's fine, as there's no reason to think that our intuitions--which evolved at non-relativistic speeds etc. etc.--need to match up to how the world works. But I still very much hope that physicists one day discover that we live in a reasonable universe.

V Review

ABC has a new show out called V, which is apparently a remake of some crappy 80s Sci-Fi series. It's not a great show, or even good; though I'm sure that it was better than the old series, and that fanboys will complain anyway.

What does seem to pop up again and again are allusions to Obama. A race of attractive aliens show up and promise us "universal healthcare", world peace, and lots of cool gadgets as long as we give them total devotion. The masses get suckered into it, while a brave few spread skepticism and doubts. The aliens turn out to have a hidden agenda, having engineered all sorts of catastrophes to pave the way for their triumphant welcome (there are some conspiracy theories out there, btw, that the market crash was orchestrated by Obama's Wall Street boosters). They manipulate the media to exchange preferred access for favorable coverage.

I can't imagine this was the show's intention (which looks like a fairly bland and conventional anti-totalitarian message), but it looks like Glenn Beck, Sean Hannity, and O'Reilly are boosting the show as anti-Obama.

What no one is picking up, though, is that there are a lot of parallels to Arthur C. Clark's Childhood's End--though this series is much less favorable to the aliens. Which is great--some of the big early Sci Fi guys were techno-optimist and pro-alien/pro-robot; and things have gotten much more cynical and depressing since them.

But seriously, don't bother watching it. Instead, think about the fact that the one Sci Fi show with decent character development and plot--Virtuality--was cancelled.

Jobs, Jobs, Jobs

After the latest set of elections, everyone is really harping on the "jobs jobs jobs" agenda. With unemployment crossing ten percent, this is an eminently reasonable approach to take.

Yet both Republicans and Democrats haven't a clue about how to actually generate jobs. Meanwhile, Europe's managed to keep the rise in unemployment fairly low, and some countries are actually recovering. And they've done so without a stimulus. Here's what The Economist has to say:

The United States has put in place a hefty fiscal stimulus, but relatively little of that money has gone into labour-market policies—schemes to slow firing, boost hiring or support the jobless. Although America has extended its (meagre) unemployment benefits, and is likely to do so again, Congress’s main response to persistently high joblessness has been a host of ill-targeted new stimulus proposals. The extension of a homeowner’s tax credit is imminent and a $250 payment to old people is being discussed.

Europe’s policymakers, in contrast, appear to have a more coherent strategy: one which uses government money to subsidise a shortened work week, cuts labour costs and, in a few cases, offers tax subsidies to support new jobs. The OECD says 22 out of 29 of its member countries have extended support for workers on furlough, and 16 have cut payroll taxes and other social contributions. The countries doing these sorts of things are disproportionately in continental Europe.

And The Economist's resident blogger:

As the piece notes, one wants to be careful putting in place policies that will lead to ossification of the current structure of the work force, particularly given the structural shifts underway in the American economy. But America's oblique approach to stimulus has meant fewer jobs saved per stimulus dollar. What's more, the fact that stimulus policies have not directly targeted unemployment (for the most part) has probably led to a waning of public confidence in the very idea of stimulus, thereby making it difficult to follow up the spring economic package with a booster shot. Tying stimulus more directly to hiring subsidies and payroll tax cuts would ensure a steady constituency for additional action. Washington should take note.

In fairness, I suppose I should say that the Republicans have been far more favorable to this type of European strategy--which is, after all, in many cases being implemented by the local right-of-center party. And, of course, parts of Europe still have plenty of structural problems generating chronic unemployment. As the graph shows, the type of unemployment now seen as catastrophically bad is more or less routine in Continental Europe.

The general point is that wage inflexibility is really bad. The reason why you see rising unemployment during recessions is that companies want to compensate workers less during bad times. But people don't tend to like wage cuts. So you see mass layoffs. The way to tackle this is not through massive spending somewhere else, but by altering the incentives of employers to hire and fire; by cutting payroll taxes, giving out credits for job creation, or ideally allowing employers to cut wages and have the government make up the difference.

But I'm optimistic about this. Given the huge importance of job creation to politician survival--I think it's fair to say that the Democrats will win or lose in 2010 and 2012 based almost solely on the strength of the labor market--you'd expect them to take seriously ideas which have a proven track record of generating jobs very cost-effectively. And you'd expect the crack economic team advising the White House to be aware of these types of policies and their performance internationally.

And if it doesn't happen--well I guess I'll be there to write an angry blog post in response. It would really be very short-sighted and horrible for the US not to follow suit with useful policies to generate jobs.

Privatized Flying Armies of Robotic Killer Assassins Found Problematic

This week's New Yorker is actually pretty good. Gladwell's piece on football and dog fighting has gotten a lot of attention, but Jane Mayer also has a good article on the Predator Drone program:

It’s easy to understand the appeal of a “push-button” approach to fighting Al Qaeda, but the embrace of the Predator program has occurred with remarkably little public discussion, given that it represents a radically new and geographically unbounded use of state-sanctioned lethal force. And, because of the C.I.A. program’s secrecy, there is no visible system of accountability in place, despite the fact that the agency has killed many civilians inside a politically fragile, nuclear-armed country with which the U.S. is not at war. Should something go wrong in the C.I.A.’s program—last month, the Air Force lost control of a drone and had to shoot it down over Afghanistan—it’s unclear what the consequences would be.

There are some ethical questions here, and a tradeoff between security and the consequences of extrajudicial assassination. As well as interesting psychological problems created by having people go to war during the day and come home to their families at night.

But what's also interesting is that using air power to conduct counterinsurgency is not new; it's not even new in Afghanistan. From Wikipedia:

Following the end of World War I and the accompanying British defence cuts, the newly-independent RAF took up the task of policing the British Empire from the air. It was argued that the use of air power would prove to be a more cost-effective way of controlling large areas than by using conventional land forces. Sir Hugh Trenchard, the Chief of the Air Staff, had formulated ideas about the use of aircraft in colonial policing and these were first put into practice in 1920 when the RAF and imperial ground units defeated rebel Somaliland dervishes. The following year, in 1921, the RAF was given responsibility for all British forces in Iraq with the task of 'policing' the tribal unrest. The RAF also saw service in Afghanistan in 1928, when following the outbreak of civil war, the British Legation and some European diplomatic staff based in Kabul were cut off. The operation to rescue them, the Kabul Airlift, was the first evacuation of civilians by air.

Arguably, the pacification of these areas by the British shows how purely air-based strategies can work. On the other hand, the fact that America is still fighting in tribal conflicts in Somalia, Afghanistan, and Iraq--essentially, taking over previous British entanglements--suggests that these are not good long-term solutions.

WTF Story of the Day

The Reddit headline for this story goes "We’ve secretly replaced this couple’s alarm clock with a Chevy Malibu. Let’s see if they notice the difference."

CNN has the full take. What's great is that CNN has to use the word "allegedly" in front of any crime. So you get reporting that goes:

With motor fluid spraying their faces and the weight of a car numbing their bodies, two Nevada college students struggled to stay calm after a drunk driver allegedly tore into their home, ripping them from their slumber.

Kristin Palmer and Trent Wood were asleep in their home last week when a motorist allegedly drove into their bedroom around 4 a.m., mistakenly believing it was his ex-girlfriend's home.

Allegedly? I think the photos of the car inside the house, the ER calls, the testimony from the College students, etc. all add up to a fairly convincing story.

I wonder what the protocol is for this type of tone. If a bombing goes off somewhere, should they say it's an "alleged" bombing? If there is a suicide bomber involved; did he "allegedly" cause the explosion? Or do you only need to use "allegedly" if there is a criminal case involved? In which case; it's a little odd that the factual circumstances behind an event must be discussed with an ambiguous tone as soon someone investigates the case.

I mean, if we can't be sure about whether or not someone drove a car into a home; what basis does CNN have for any of their stories?

Counterfactual: Confederacy Survival

Attention Conservation Notice: Only of interest if you like long and rambling posts on counterfactual history.

A staple of the counterfactual history genre is the possibility of the Confederacy succeeding in breaking away from the Union. Most people focus on what sorts of military tactics or strategy would be needed for that success to happen, or follow domestic politics for a few decades. I'm going to assume that the Confederacy could indeed have broken away had things gone only slightly different, and would have survived.

Now consider the impact on WWI, and WWII if that still happens. The Confederacy would have been strongly pro-Allied--given its long-standing trade links with France and Britain and their tacit support during the Civil War (which would have been greater if not for especially fortuitous harvests).

The North would have been more split. You have a larger German-American population. On a strategic level, the country would have been sandwiched between a British Canada and British-leaning Confederate states. Whatever the Anglophile inclinations of elites, the incentives would have been to balance against neighboring Allies and embrace the Axis. Britain, after all, did burn down the US capital.

That is; America, by virtue of being undivided and secure, had the luxury of idealism in foreign policy. America viewed itself as an exceptional empire, rather than a full participant within a system of competing equals--yet this was predicated on geographical unity at home. A rupture after the Civil War would have raised the potential of bringing Europe-style state divisions, and Europe-style realpolitik to the Americas. The plausible corollary is that a European-style system of entangling alliances is not out of the question.

By this point of course, the North would have left the South far behind on industry and manpower. It's hard to say what would happen. Perhaps the North could use global war to re-unite the country by force; or else the South could hold off the North through Boer-style guerrila tactics. Either way--the US would probably not be contributing troops to Europe on net, and trans-Atlantic trade in supplies and goods would be badly strained. Especially by 1917, when Germany made peace with Bolshevik Russia and redeployed troops west; American reinforcements were the crucial ingredient stemming that tide and turning the war around. Without those critical inputs, it's easy to imagine Germany coming out ahead in WWI.

And then all of that feeds into WWII, etc. etc. A Germany without resentment would probably not have gone towards the Nazis; the Russians would presumably still go Soviet. It's tough to guage what would happen to the defeated Western Allies. An early loss of the colonies seems likely, probably with no partition in India. Their eventual status of the Western democracies would depend on the coming fight between Germany and the USSR, and they would then either be drawn into a Germany-dominated European Community, or live as Soviet client states.

All of this is speculation, but I think there's some value to this type of counterfactual thinking. To the extent that we can plausibly connect small changes in the past to enormous changes today--that highlights the precariousness of history as dependent on contingent events. Things didn't have to turn out the way they did. This is Niall Furgeson's take on counterfactual history; it's an account which prizes the importance of particular people, happenstance events, and the like.

Alternately, we may find that things end up roughly where they are now. This would be the determinist take on history, which has a long lineage going back to the materialists and Marxists. This is the harder type of counterfactual history to model. It's a lot easier to change one event and extrapolate forward; it's a lot harder to think of what the counter-moves and responses would have been from other involved people.

In particular, what you get at in this scenario is the huge importance of extra-European and extra-Eurasian powers in maintaining a balance on the continent. Powers in Europe have a natural tendency to try to seize hegemonic power, which Rome alone managed to pull off. The Hapsburgs, Bourbon French, Napoleonic French, the Second Reich, the Third Reich, and then the Communists--all saw their only hope of security through continent-wide domination. In all cases, this tendency was checked and prevented through a shrewd pattern of alliances sewn up first by Britain, and then America acting in concert with Britain.

But that type of balancing was very contingent. It required a unified Britain, secure behind a navy, being an economic powerhouse an possessing a strategic interest in European events. And then it required an America which was unified and which identified with the British containment mission. The first counterweight is pretty much there by virtue of geography. It's the second, American, counter which was much more iffy, but was also essential for a European balance of power. Without these counterweights, land wars in Europe would probably have continued until either the logic of atomic warfare kicked in, or one state dominated the rest.

As long as I'm wildly speculating anyway, I'm going to go ahead and say that this balance of power was pretty crucial to Europe's success. Being divided into numerous, non-hegemonic states propelled the incentives for innovation and growth in ways more absent in the Middle East, India, and China--all of which were for significant periods dominated by one autocratic sovereign.

Bruce Bartlett Review

Bruce Bartlett is one of the original architects of Reagan's Supply-Side Revolution. Recently, he's come out with a new book defending that movement, while arguing for higher taxes today in the form of a VAT, or consumption tax.

I don't buy it. I don't think adding extra consumption taxes would further either conservative or liberal goals.

Start with the conservatives. Bruce makes all of the conventional arguments against the Bush tax cuts: they didn't magically boost the economy, etc. etc. From the point of view of a bipartisan, maximize GDP perspective, these are fair points. In many ways, he repeats claims made by Jonathan Chait a few years back, when he denounced the extreme views of supply-siders as crackpot economics. What both miss is that the tax-cutting agenda is not driven purely by a motivation to boost "the economy." Transferring income away from the government towards people doesn't show up in GDP, but has an enormous impact on family welfare and the role of government in a free society.

To a substantial extent, the supply-siders are driven by the genuine desire of ordinary Americans to keep more of their hard-earned money. The rationalizations supply-siders offer for that goal are often dubious. But refuting those claims doesn't answer the broader question of how much government do we want, and what level of taxation would we like. This is very much a political and ideological question; yet Bartlett largely sidesteps that issue in favor of a broadly technocratic lens.

His diagnosis is that government is set to rise due to an entitlement crisis; that current economic problems are now ones of deflation and deficient demand; and that the only contribution of supply-side analysis is to pave the transition towards a larger government as smoothly as possible. His champions the VAT as a relatively efficient way to raise revenue.

Look, it would be one thing if we needed more taxpayer dollars to pay for some sort of Whiggish program of internal improvements, and a VAT was the only way to pay for that. But that's not the case. The long-term drivers of government spending are the entitlement programs--health care and social security--along with defense. Who benefits from these programs?

Social Security is distributed to everyone over 65--a population that has spent a lifetime earning and accumulating assets, and is rather well-off in aggregate. Medicare similarly benefits all the elderly, regardless of wealth, while its reimbursement program is riddled with fraud, and is a major driver of overtreatment and rising medical costs (Contributing 40 percent of the recent rise in medical costs by one estimate). Defense spending post-War on Terror is also insane. The US spends somewhere around $700 billion a year on defense; not only is this substantially more than any other country, it's also about twice what was spent during the 90s. Once Afghanistan and Iraq wind down, military spending could easily be cut in half with no discernible loss in welfare to the ordinary household.

This is to say: The drivers of higher government spending are basically wasteful and unnecessary spending, much of it consisting of transfers to the wealthy. This doesn't strike me as a cause worth funding through burdening the poor and working classes--who would be disproportionately hit by a tax on consumption.

There's an alternative here: slashing payroll taxes for poor workers and instituting flexible wages. Two of the biggest economic problems today are that wages are stagnant for many low-skill workers and unemployment looks to be persistently high. Both of these can be controlled by policy. By cutting regressive taxes on the poor, we can make wages rise as fast as we like--while attacking the real and growing disincentives for work. Bartlett is right to suggest that this may not have much of an impact as a "stimulus" or on economic aggregates. But this is to mistake GDP for human welfare. Families struggling to pay bills benefit tremendously with more after-tax income. It's precisely for this reason that many liberals worry so much about wages, even though the share of labor compensation doesn't have an impact on GDP.

We can cure unemployment as well. Singapore and France, along with other European countries, have implemented Edmund Phelps' policy of flexible wages. The idea is to allow employers to cut back on compensation during downturns, and have the government make up the difference. This allows labor markets to clear while keeping unemployment low. It's hard to think of any government spending that would further family welfare as much as keeping wage growth as high as we like, and unemployment as low as we want. Indeed, it's hard to think of many proposals that do so much to advance liberal goals. But fundamentally, this agenda relies on lowering the tax base and making it more progressive. Bartlett's VAT would move America in the opposite direction on both counts, while doing little to help struggling households.

I'll agree with Bartlett that Republican orthodoxy is sniffling the debate on many of these issues. Treating any defense cuts as tantamount to treason, and any cuts in Medicare as out of bounds entirely, doesn't do much to advance the debate on how to deal with a looming entitlement crisis. Republicans have done little during their time in office to tackle the long-term fiscal situation, and have placed too much emphasis on income tax cuts rather than dealing with chronic economic insecurity. But higher taxes on the poor won't help either.

That's the tradeoff we face. We can continue spending on wasteful and unnecessary transfers and spending, much of it going towards the rich, and balancing the cost on the already-burdened working and middle classes. Or we can solve the central economic problems of the day by addressing ballooning spending front-on. But that will require both more committed conservatives than Bartlett, and more devoted liberals than those in office.

Wise Words

Here's Scott Sumner,

It seems to me that the human race is rapidly approaching a crossroads where we need to decide whether we will continue to pretend to be innocent creatures inhabiting the Earth, like bunny rabbits, or whether we will forthrightly acknowledge that for better or worse we basically control the fate of the Earth from here on out. No matter what, whether we decide to use geoengineering or not, we will decide where global temperature will be 100 or 200 years from now. We will increasingly decide which species become extinct, and which species that would have gone extinct (even without humans existing) that we will artificially save. Within 100 years we will be able to prevent any future asteroid impacts on Earth. We have already created nuclear technologies that require us to watch over nuclear waste for 10,000 years. I don’t think it makes sense to use intuition about not fooling with Mother Nature any longer.

The McCain Health Plan, Again

I noticed about a year ago that McCain actually had a decent health plan. It called for taxing premiums for insurance to pay for coverage for those without. The idea is that the tax-exclusion privileges wage compensation that comes in the form of health benefits, encouraging a general rise in healthcare costs. At the same time, the fact that this benefit only applies to employer-provided insurance contributes to a world in which millions of people without employer-coverage can't get health insurance. I noticed how prominent Obama economists had in fact called for exactly such a plan to reign in out-of-control healthcare spending while expanding coverage.

Obama was very opposed to the idea at the time. He denounced it as a new tax, and spent millions on ads convincing people it was a bad idea. The wonkish liberal blogosphere joined in attacking the plan. Here is Matt Yglesias:

One issue that hasn’t gotten nearly the widespread attention it deserves is that in the context of John McCain’s overall policy for steep tax cuts for high-income Americans he’s also proposing a very significant tax increase on the broad group of people who receive health insurance through their employers

As a result of that kind of fear-mongering, Democrats have found it very hard to impose any kind of tax on health care plans in current bills. The bills they plan cement the link between employment and health insurance and do little to tackle the fundamental drivers of escalating health costs. Well, here's Yglesias now:

by artificially subsidizing health care consumption by the relatively prosperous, [the tax exclusion] drives prices up for everyone, including the not-so-prosperous. And because it’s a tax-side subsidy, the subsidy does little-to-nothing for the poor.So scrapping or curbing the subsidy makes sense in general. And it especially makes sense as a way of raising money to finance progressive policy like ensuring that health care is affordable for the poor and the lower-middle class.

You can argue about whether McCain's plan for redistributing the revenue from the tax--in the form of a refundable tax credit--was the best way to expand coverage. A lot of the criticism there said something like "poor people don't pay taxes, so they won't benefit." But a refundable tax credit will effectively act as a subsidy for people who don't pay much in taxes. In fact, Wikipedia tells me that some conservatives and libertarians oppose such credits exactly for this reason.

But instead of having a debate about the particulars, we effectively shelved one of the best tools for health reform off the table about a year ago. In a world in which the financial crisis hit a few months later--say the Bush team decided to save Lehman--McCain would probably have been elected President. It's intriguing to imagine if McCain could have teamed up with Wyden-Bennett to produce a bipartisan health plan by now. One suspects not, but everyone is entitled to their own counterfactuals.

Geoengineering and Freakonomics

I remain perpetually impressed at the degree of outrage and shock that Krugman and company can put out. I can only hope that one day, I can channel my own cranky impulses as productively.

Anyway, the latest controversy is over Levitt and Dubner's latest book, Superfreakonomics, which isn't out yet. Fortunately, I've managed to find a bootleg copy of the climate change chapter which is generating the outcry.

I have to say: it's actually pretty interesting. I've talked about geoengineering before, and it's a fascinating topic. Levitt and Dubner take the position that a carbon tax would be great, but faces many global coordination problems, so it's worth thinking about more radical solutions in case things get really bad. They outline some cheap and feasible solutions which could reverse the rise in temperature. For instance, coal plants put out a lot of sulphur. Volcanoes put out sulphur at a higher atmosphere, and that seems to lower temperature without any downsides. It seems reasonable to try redirecting the sulphur we already produce at a higher altitude and see what happens.

This has caused utter and complete outrage. Brad DeLong replies that all his friends at Berkeley disagree on geoengineering and global coordination on carbon taxes is totally possible. To which I can only reply: 1) I don't have access to Berkeley faculty, 2) Nothing is stopping you from putting in carbon taxes with a geoengineering backstop, and 3) Twenty years of failed global coordination on this issue should say something.

Tyler Cowen and Krugman suggest that global coordination on geoengineering will be hard. To put it mildly, this is insane. Suppose that the costs of cutting back on carbon went down to $20-50 million, the cost of some geoengineering proposals. Do you think this would make global coordination harder or easier? Coming to a global coordination may still be hard. But right now, it seems hard enough. I think most reputable IR specialists would agree.

I think it's hard to avoid the point that Levitt and Dubner raise--that geoengineering proposals never get anywhere because people think about the environment through a secular religious lens. We sinned and destroyed the environment, and now have to repent and sacrifice to make up for it. Geoengineering is like gastric bypass when you should be dieting.

That doesn't mean these proposals are a great idea either. It's pretty easy to imagine them turning out pretty badly. But that's why they're best seen as "in case of emergency" options. If you really believe serious global warming is a possibility, and you observe countries right now doing little about the problem; you should consider some radical solutions. Again, we can still try the global coordination route. But after hearing Jairam Ramesh--India's environmental envoy--talk; I have to say the odds for a global deal don't look good.

Frankly, the fact that geoengineering proposals are being pursued by cranks like Dyson and out-there Venture Capitalists, rather than environmental engineers, is a problem. The fact that widespread adoption of cheap and clean nuclear energy largely remains the preserve of Republicans rather than environmentalists is a problem. We need a rational environmentalism that acts according to a cost-benefit analysis to maximize impact, and doesn't give a hoot about "raising awareness."

Some Pessimism for Optimists

Forecasting is impossible unless you're this guy; everyone else looks at an uncertain world and makes some prediction with error. The optimists think things will get better; the pessimists that it will get worse.

The optimists have been overwhelmingly correct over the past few hundred years. Health, wealth, and freedom have all gone up; poverty, intolerance, and malaria have all gone down.

Yet people keep praising the pessimists. Pessimists are graded on the strength of their best prediction; optimists on their worst.

Compare Fukuyama with Roubini. Fukuyama's prediction--that liberal, free-market democracy would rule the world--was bold if not entirely innovative. But it's held up enormously well. Global conflict is down; freedom and free markets have spread. Yet Fukuyama gets absolutely no respect. People focus on the flaws in his call--there is still some conflict in the world; some countries are still repressive. Successes in optimistic predictions, no matter how large or important, are ignored as representing flukes or are else seen as "unsustainable". More generally, optimists are taken as terminally deluded captives of some authority. They're sellout shrills, and deserve no respect. Serious people are eternally critical.

Then there's Roubini. He's spent the last ten years warning about disasters that have never happened. A dollar crisis, balance of payments crisis, and so forth. Most of those disasters have still not happened. Then he got to doomesdaying on the housing market late. But everyone only remembers this last prediction, and calls him a prophet. He goes around New York with a bevy of hot twenty-somethings; Fukuyama doesn't get the same treatment.

The lesson is clear for future prognosticators. If you say things will get better; you'll be denounced as wrong if it doesn't hold up, and a suck-up even if they do. If you say they'll get worse; just wait until something bad happens and you get hailed for your prescience.

Vietnam Revisionism, Iraq, and Afghanistan

Lexington reminds me to bring up a vastly under-discussed topic: Vietnam Revisionism.

Counterinsurgency broke the news after Petraeus and McChrystal, but it was actually very big in the popular and military imagination during the '60s as well. Mao's success in China sparked a huge discussion of how to conduct and defeat insurgency. For obvious reasons, the Vietnam War continued this trend.

Reading A Better War, a classic revisionist account of Vietnam, is like looking at Iraq all over again. The initial commanders in both wars--Westmoreland in Vietnam, Tommy Franks and others in Iraq--were basically clueless about how to tackle local insurgency. Westmoreland, for instance, focused on body counts and firepower. He threw artillery and air power at guerrillas, and focusing on winning battles. He exuded optimism and threw out made-up statistics during press conferences. As in Iraq, this led nowhere.

Then you had new generals in both wars. In Vietnam, General Abrams came in. He replaced "search-and-destroy" missions with ones focused on "clear-and-hold" to implement a policy of civilian defense. He focused more on training native Vietnamese units. This coincided with Nixon's "surge" strategy of escalating the conflict to leave on better terms. The dramatic change in policy as a result of following counterinsurgency doctrine and the dramatic change in the outcome of the war in America's are not in question. Needless to say, the surge under Petraeus and Odierno, and the shift in American doctrine towards COIN, was a similar story.

The disputed part about Vietnam Revisionism is whether Abrams' efforts were enough to win the war in the long run. North Vietnam enjoyed enormous support from Communist states, while Congress eventually killed all military aid to South Vietnam. In the Revisionist counterfactual, limited military aid would have allowed an insurgency-free South Vietnam to sustain direct attacks from North Vietnam.

I think a fairly convincing argument can be made for that scenario. But in any event; there are better and worse ways of fighting insurgencies, and it takes a while to develop the competency and leadership capable of fighting them.

The success of counterinsurgency in Vietnam and Iraq doesn't imply that it will work in Afghanistan, a very different country. Nor will it tell you if Vietnam, Iraq, or Afghanistan were ultimately worth fighting. Just because a given tactic can win a war doesn't mean the war is worthwhile.

But from the point of view of South Vietnam, at any rate, it probably was. South Vietnam remained mired in poverty for twenty years after its war, while it enjoyed growth under a free market before the war, and would probably have enjoyed even greater success had it won the war--something like a North Korea/South Korea analogue (I might even go so far as to say that if you think the Korean war was worth fighting, than you should have supported South Vietnam in 1975, even if you opposed sending troops in during the 60s).

Some Optimism

orgtheory brings up what I'll dub the cassandra litany: America doesn't manufacture things anymore because all the jobs are going to China, while the US keeps declining in relative influence. Life will be horrible for the next generation.

You hear these things often enough that it's worth pointing out that these claims are misleading at best.

Start with manufacturing. America produces more manufacturing goods than ever before. Even the share of manufacturing goods, as a percent of GDP, has remained roughly constant over time at about ten percent. The recession obviously has hit manufacturing, as have every previous recession, and particular states--Michigan--may have lost some manufacturing plants for good. But other, Southern, states will likely pick up the slack in the coming years, as they have in the past.

It's true--manufacturing jobs are disappearing, even as manufacturing remains strong. But this is a worldwide phenomenon happening not due to trade, but because technology allows for capital to replace people in factories. China is losing millions of manufacturing jobs. So are Japan, Brazil, and many other countries. Don't take my word for it--ask that incorrigible conservative Robert Reich.

Ultimately, this is why things like tire tariffs and industrial policy are wrongheaded. Not because they're bad ways to keep manufacturing jobs in America--though that's true, too. But because in the long run, factory jobs are going the way of farm jobs. Sometime in the next few decades, we'll need about five percent of the population to produce all our food and goods. Everyone else will need to become a service worker, in one way or another, no matter what we do now.

Nor is the US doomed to obsolescence. America has declined in global economic importance, but the big hit was after WWII. At the end of that conflict, America controlled something like half of the world economy. That went down to about a fifth of world output until after Japan and Western Europe recovered. But the US share of output has held up remarkably well since then.

The real story, as the Economist helpfully shows, is that the economic rise of Asia has been parallel by a corresponding fall in Europe's relative position.

If you're a Republican, you say that Regan's tax cuts and deregulation kept America going while Europe started to lag. High immigration and high fertility (the result of big homes, an easier work-life balance for working mothers, and a more abundant economy) have also given America a demographic boost enjoyed by only a few European countries. In fact, most European countries, were they were American states, would rank among the bottom in living standards.

This is likely to remain so for the future. As long as America hosts the world's best Universities, attracts the world's best talent, remains innovative and so on--it will likely not only keep growing, but keep up with the world in relative terms as well. We don't need Summers and his technocrat buddies to figure out where new jobs--green or otherwise--are going to come from. Despite all their progress, India and China would love to have America's problems rather than the ones they currently have. The news tends to focus on growth rates, so it's easy to forget that America's per capita GDP is sixteen times higher than China's, with a similar level of income inequality.

People still focus on the stagnating middle class, two Americas, etc. Leaving aside the issue of whether that's an accurate description, there's a real issue here. Class mobility is low, and the collapse of manufacturing has left fewer good jobs for unskilled workers. But CEO pay and income tax cuts for the rich are minor points in this story. To the extent that policy can fix any of these issues, education reform and encouraging family stability have to top the list.

But we'll make more progress on the tough stuff by doing less China India hysteria, less angst about trade, less nostalgia about manufacturing, and less doomsday talk about what is, after all, the world's best system for wealth creation.