Re: The Brown Underside of Green Technologies WAS: RE: vol 93, issue 22

[David Eric Smith]

Nick, hi,

No boxing of ears.  Your use of externalities is right on, and in the
spirit of the economists' use of that term in relation to
"competition".  Both, in this construction, are terms of art.

When ordinary people say "competition", perhaps we think of rugby, Go,
or Odyssean deception in order to win.  In economics, "competition" is
codified as the assumption of complete markets.  Meaning that, for
every action any agent can make, all possible consequences, to
everybody, in any states of the world, are known and rationally
valued, and are parts of the negotiation of the prices for the
contracts that permit that action, which include a complete set of
forward contracts for all possible eventualitites to all participants
in all states of the world into the indefinite future, whose
probabilities are also all correctly known and consistently valued by
all participants.  Moreover, the action can only be taken when the
contract is voluntarily accepted by all, and enforcement of this
restraint is sure and also costless.  This notion of compete contracts
is defined to have "Arrow-Debreu" securities, which is this
unimaginably huge and impossible portfolio described above.

In that context, then, "externality" is the term used to refer to any
consequence of a possible action that is not covered, known, or
negotiated within a system of complete contracts and self-consistent
preferences and expectations.  

After a lot of years of listening to the endless litany of objections
that can be (correctly) raised against this notion of "competition",
and also seeing that the economists know all this perfectly well and
yet (even the honest ones, not just political lackeys or disingenuous
ones) continue to speak as they speak, one comes to think that the
standardly-heard objections are somehow not responding to the right
point.  One can read Arrow or Samuelson, who make clear that they
understand all this wild unreality, but that they are after something
else in it, which they think they correctly capture in spite of the
formally absurd framing.  It's almost like Bertrand Russell says:
"[more or less] Why read philosophy, when all of it is wrong and most
of it goes beyond wrongness to the point of being wild nonsense?" and
then defends that the value is to capture something that one still
can't see through other lenses, and which may yet have some use.

I can't try to suggest a better point of engagement here, because I
don't think I could say anything that would be worth the space.  Only
to try to provide some grammatical fill-in so that the terms in the
discussion need not be stumbling blocks in themselves.  This entire
FRIAM thread seems to have been very much in the practical spirit of
trying to engage the question at its appropriate point, which involves
power, knowledge, and the difficulties of coordinated action, so who
could object to that?

All best to all,

Eric


============================================================
FRIAM Applied Complexity Group listserv
Meets Fridays 9a-11:30 at cafe at St. John's College
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[Pamela McCorduck]

Eric, thanks for the passage below. It illuminates a lot for me.

As for whether this formally absurd framing has actually captured something useful, we could probably have a long discussion--even economists were chastened by the outcomes of the last few years.

After a lot of years of listening to the endless litany of objections
that can be (correctly) raised against this notion of "competition",
and also seeing that the economists know all this perfectly well and
yet (even the honest ones, not just political lackeys or disingenuous
ones) continue to speak as they speak, one comes to think that the
standardly-heard objections are somehow not responding to the right
point.  One can read Arrow or Samuelson, who make clear that they
understand all this wild unreality, but that they are after something
else in it, which they think they correctly capture in spite of the
formally absurd framing.  It's almost like Bertrand Russell says:
"[more or less] Why read philosophy, when all of it is wrong and most
of it goes beyond wrongness to the point of being wild nonsense?" and
then defends that the value is to capture something that one still
can't see through other lenses, and which may yet have some use.

"Heroism breaks its heart, and idealism its back, on the intransigence of the credulous and the mediocre, manipulated by the cynical and corrupt."

				Christopher Hitchens

============================================================
FRIAM Applied Complexity Group listserv
Meets Fridays 9a-11:30 at cafe at St. John's College
lectures, archives, unsubscribe, maps at http://www.friam.org

[Vladimyr Burachynsky]

Speaking as a Troll , Eric is correct and careful with his words,

 and also paraphrasing Bertrand Russell , Humanity is notoriously bad at
anticipating the consequences of its actions. But, and these are my words
now , we are very expert at making up fairy tales to explain away our
misdeeds. Peggy has indeed found something odd that has potential to involve
many other nations.

http://fmso.leavenworth.army.mil/documents/rareearth.pdf

As well Investors are marshalling funds globally to do something and exactly
what is unclear. Simultaneously Canada is opening new iron ore deposits some
of the largest on the planet in the High Arctic.( It was well known but was
always assumed to be absurd because of Polar Ice which is now thinning)
Greenland and the Danes are expecting to open their own REE mines next door
in the south west of Greenland. The Chinese are investing in Arctic
shipping and the Russians are already or shortly will be  shipping LNG over
the top of Siberia. It all converges in the Bering Strait. The link between
Iron Ore bodies and REE is unclear. Australia has been of interest to the
Chinese for metallurgical Coal, and Iron ore as well as REE.

It seems the Chinese are already finding ways to curtail the Neodymium issue
by exporting the externalities.  Now that is going to force a re-examination
of the Fairy Tales now that another Power is playing with the same game
rules.

BHP is trying to corner the global minerals industry and Potash was only a
recent misadventure. Lithium, Scandium as well as Neodymium are all
attractive investments.  The commercial exploitation of unusual materials
appears to be a global free for all, recall Coltan for cell phones in the
Congo. War and human atrocities seem to follow these Gold Rush phenomena.  I
recall something from the past about Rubidium in the Antarctic.
When BHP entered Saskatchewan their intention was to create and enormous
stockpile close the smaller mines, lay off workers and wait till the price
of Potash climbed. In some sense they expected to handle potash like a drug
dealer dispenses heroin.  


Neodymium appears very much like a runaway  Coltan
http://www.cellular-news.com/coltan/ nightmare made much worse by Western
demands for consumer products. Is This a classic case for dismantling the
Market Place Wisdom Fables?. One could just as well conclude that the entire
North African Revolt is linked to Cell phones . It is a fairy tale to expect
costs to stay with the polluter, unless we account for all the innocent
victims having absolutely nothing to do with the industry it is a Farce of
Awesome proportions. That is so it seems exactly ,the purpose of economic
theory, to hide the real costs. Thankfully in time all empires collapse
under the weight of delusions and the problems resolve themselves. Not
necessarily the way we expect, however.

Peggy had a concern and unfortunately I now agree it is valid globally. But
the tax concept seems dubious and I suspect something much bigger is
required.  In the pdf , which I added I was staggered to see the enormous
physical territory included within China. One has to wonder  when ,
exploiting REE as an opportunity, would threaten the food production when
every dollar gained in one sector would simply reflect permanent losses in
others.


Vladimyr Ivan Burachynsky PhD


[hidden email]



120-1053 Beaverhill Blvd.
Winnipeg,Manitoba, R2J3R2
Canada
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-----Original Message-----
From: [hidden email] [mailto:[hidden email]] On Behalf
Of Eric Smith
Sent: March-25-11 9:24 AM
To: The Friday Morning Applied Complexity Coffee Group
Subject: Re: [FRIAM] The Brown Underside of Green Technologies WAS: RE: vol
93, issue 22

Nick, hi,

No boxing of ears.  Your use of externalities is right on, and in the spirit
of the economists' use of that term in relation to "competition".  Both, in
this construction, are terms of art.

When ordinary people say "competition", perhaps we think of rugby, Go, or
Odyssean deception in order to win.  In economics, "competition" is codified
as the assumption of complete markets.  Meaning that, for every action any
agent can make, all possible consequences, to everybody, in any states of
the world, are known and rationally valued, and are parts of the negotiation
of the prices for the contracts that permit that action, which include a
complete set of forward contracts for all possible eventualitites to all
participants in all states of the world into the indefinite future, whose
probabilities are also all correctly known and consistently valued by all
participants.  Moreover, the action can only be taken when the contract is
voluntarily accepted by all, and enforcement of this restraint is sure and
also costless.  This notion of compete contracts is defined to have
"Arrow-Debreu" securities, which is this unimaginably huge and impossible
portfolio described above.

In that context, then, "externality" is the term used to refer to any
consequence of a possible action that is not covered, known, or negotiated
within a system of complete contracts and self-consistent preferences and
expectations.  

After a lot of years of listening to the endless litany of objections that
can be (correctly) raised against this notion of "competition", and also
seeing that the economists know all this perfectly well and yet (even the
honest ones, not just political lackeys or disingenuous
ones) continue to speak as they speak, one comes to think that the
standardly-heard objections are somehow not responding to the right point.
One can read Arrow or Samuelson, who make clear that they understand all
this wild unreality, but that they are after something else in it, which
they think they correctly capture in spite of the formally absurd framing.
It's almost like Bertrand Russell says:
"[more or less] Why read philosophy, when all of it is wrong and most of it
goes beyond wrongness to the point of being wild nonsense?" and then defends
that the value is to capture something that one still can't see through
other lenses, and which may yet have some use.

I can't try to suggest a better point of engagement here, because I don't
think I could say anything that would be worth the space.  Only to try to
provide some grammatical fill-in so that the terms in the discussion need
not be stumbling blocks in themselves.  This entire FRIAM thread seems to
have been very much in the practical spirit of trying to engage the question
at its appropriate point, which involves power, knowledge, and the
difficulties of coordinated action, so who could object to that?

All best to all,

Eric


============================================================
FRIAM Applied Complexity Group listserv
Meets Fridays 9a-11:30 at cafe at St. John's College lectures, archives,
unsubscribe, maps at http://www.friam.org


============================================================
FRIAM Applied Complexity Group listserv
Meets Fridays 9a-11:30 at cafe at St. John's College
lectures, archives, unsubscribe, maps at http://www.friam.org

[Eric Charles]

To bring us back towards free markets and competition...

There are clever (and possibly true) arguments about how free markets and open competitions create situations that benefit most of the people involved. So far as I know, all of these clever arguments rely on informed consumers and a relatively level playing field between the competitors. The problems in these brown-green-energy situations, then, are that consumers are not informed, and the playing field is not level. Nick's jokes, about exposing company executives and consumers directly to the pollution their "green" technology is built on, are having fun with the first requirement. The second requirement, the level playing field, is the problem with "exported externalities" (jargon even George Orwell might admire). The cost of purchasing a product should (under the clever-and-possibly-true arguments), reflect the full cost of production. A company that shifts the cost of cleaning up its mess onto tax payers, or future generations, is "cheating" primarily in the sense that it is selling a product for less that the cost of production.

That is, it is not a problem that companies are finding cheaper and cheaper means of production (for example, by building factories where labor is cheaper). Rather, it is a problem when the company finds cheaper means of production by delaying and avoiding the actual costs associated with their product. If the toxic lake in Mongolia will never be cleaned, and created no economic damage, the company is (at least relative to these clever theories), just fine. If, on the other hand, some government will one day clean that land, or pay higher medical costs as a result of the pollution, then the company should (if the market is functioning properly) be charged a cost, which will then be reflected in the amount that the product costs consumers.

Of course, we can always reject the clever pro-capitalism arguments, but that is a totally different discussion. My point is: Even people who buy the clever pro-capitalism arguments, and promote free markets, should recognize this type of behavior as unacceptable. You can chastise just based on the economics, you do not even need the morality.

Eric
(or "Eric C", as there seem to be two of us in this discussion)

============================================================
FRIAM Applied Complexity Group listserv
Meets Fridays 9a-11:30 at cafe at St. John's College
lectures, archives, unsubscribe, maps at http://www.friam.org