After my last post on how to define the physical pie making capacity, I realized that I was falling into the trap of most ecnometrics and baking-in a fairly narrow focus on information that's available rather than providing a tool to facilitate understanding and discussion. At their best, such numbers (like GDP) are useful for discussing constraints, but at their worst (US unemployment figures) are intentionally misconstrued to try and avoid discussion of structural problems.
Instead of trying to produce a single number, we're going to look at the problem in slices. Each slice will be broken into three parts: (a) the fundamentally important crust, (b) the almost-equally important filling and (c) the nice-to-have topping. If you disagree with any of them, please let me know. Several of these will be more subjective than a trained economist would prefer, but it's better to wear one's bias on the sleeve than to hide it in the formulation of "real" metrics.
The "filling" in most of these relates to the sustainability of the good provided by the "slice", but intentionally focuses on only a narrow aspect of that. My hope is to be able to compare technology and policy developments by looking at how they would impact the other dimensions of sustainability (economic, social, environmental, etc.), with the resulting change in the PMCIN "pie chart." Anyone who wants to contribute Java or spreadsheet calculations for any of these will get a fresh-baked pie the next time I see them.
Slice 1: Grain production.
Crust: (Total grain production)/(Population's caloric needs)
Filling: (Environmentally sustainable grain production)/( Population's caloric needs)
Topping: (Number of grain varieties grown today)/(Number of grain varieties grown before the industrial revolution)
Slice 2: Fruit production
Crust: (Total fruit production)/(Population's nutrition requirements)
Filling: (Environmentally sustainable fruit production)/(Population's nutrition requirements)
Topping: (Number of fruit varieties grown today)/(Number of fruit varieties grown before the industrial revolution)
Slice 3: Dairy production
Crust: (Total dairy production)/(Popultion's nutrition requirements)
Filling: (Environmentally sustainable dairy production)/(Population's nutrition requirements)
Topping: (Locally grown dairy)/(Total dairy needs)
Slice 4: Housing
Crust: (Total safe housing units)/(Needs of population)
Filling: (Median cost of housing)/(1/3 of median income) -->there's probably a better "affordability index" to use here
Topping: (Houses with good cooking facilities)/(Total housing units)
Slice 5: Energy
Crust: (Total power produced) / (Total required for society's standard of living)
Filling: (Environmentally sustainable power produced) / (Total required for society's standard of living)
Topping: (Locally generated power) / (Total required for society's standard of living)
Slice 6: Transportation
Crust: (Ton-miles of freight hauling capacity)/(Needs of the population at acceptable standard of living)
Filling: (Environmentally sustainable ton-miles of hauling capacity)/(Needs of the population at acceptable standard of living)
Topping: (Population with access to self-powered commutes)/(Total population)
Slice 7: Security
Crust: (People who feel their government can provide basic security)/(Total Population)
Filling: (People who respect their government as legitimate)/(Total population)
Topping: (People who feel certain of their standard of living)/(Total population)
Slice 8: Health
Crust: (Total population - disabled by injury/illness)/(Total population) -> would have to normalize this by "acceptable" ratio
Filling: (Number of people with access to non-emergency primary care)/(Total population)
Topping: (Average vacation availability per year)/(2 weeks)
Friday, August 27, 2010
Saturday, July 10, 2010
Physical Pie Making Capacity in a Nation
When I started this project, I thought it would be pretty straightforward to develop an automated means of computing how many people in a society could make a pie a week. Instead, this lead to a long and occasionally heated discussion about what exactly constituted "pie", how much work really goes into making one, and whether or not the data for such a thing exists.
About the same time, I stumbled across Dr. Easterly's Reinventing Foreign Aid, which is to econometrics what Michael Pollan's In Defense of Food is to nutrition science. It's not a refutation, exactly, but a serious study of both the assumptions and practice of analyzing complex systems. Meanwhile, a global financial crisis was busy re-ordering the world's economy and making a lot of econometric data about incomes, trade and production obsolete. Meanwhile, serious economists are asking questions of their own field about the validity of counterfactuals and ex post storytelling.
What I've learned from this is not to reject all economic measures outright, but to be very careful to keep the metrics as simple as possible and with very clear ties to the hypothetical narrative. If the story I'm trying to tell is wrong, then my metrics are suspect. If my metrics do not reflect what is actually happening in the world, then my narrative may be wrong as well. In this sense, it is possible to develop metrics that can serve as an aid to examine potential policy options, but they are only as useful as the assumptions underlying their basic narrative. For more on this epistemological approach, see Nassim Taleb's body of work. In short, a simple metric with few assumptions helps inform discussions of the impact of political and personal decisions, while complex models often contain hidden assumptions that make them dangerous to use.
The title of this post has nothing to do with epistemology, but I wanted to be sure I including that disclaimer at the beginning. Now, on to the narrative and its metric:
Narrative (aka hypothesis): The physical pie making capacity in a nation (P-PMCN) depends primarily on its internal food production. This is a mildly controversial statement, since a globalized world can, in theory, rapidly move food from where is it efficiently produced to where it is desperately needed. However, this assumes a much freer market for food than actually exists, and that someone will always be willing to pay to feed foreigners. Because these assumptions are specious, and because the countries doing the best job of providing food security are the ones that ignore classical economic analysis, while those that tried to follow "free market" advice have relied heavily on food aid. This makes my job easier, because food production numbers for a given region are pretty easy to find, and all evidence suggests that a country will feed its citizens first, regardless of their economic position.
So, how to compute P-PMCN? The answer, I think, is to find the limiting factor in a given national production system. To make a pie each week, one needs:
(1) Roughly 2000 Calories/day of food, consisting of .84kg of grains (assuming 70% of harvested grain becomes edible) and .053kg of proteins (active, 180lb young male). Suggestions for improving this "basic diet" model are welcome, please leave a comment.
(2) Enough fruit to make the filling. My pies generally use about 1-2kg (2-4lb) of fruit each, but I'll assume that an even 3kg (6.6lb) are required to allow for losses in travel and "sampling" by the pie maker and family. I don't plan to make any distinction between the types of filling, but this may change with time.
(3) Sufficient fuel to bake the pie. I have used a shovel and backhoe as cooking implements in the past, so I'm comfortable saying that the only thing you need for pie production is heat. For now I will assume this means either natural gas or electricity, and for the developed countries I'll assume that it comes from either natural gas not used for electricity or electric power at 80% efficiency. Further, I'll assume that a pie must be baked at 205C (400F) for 1hr, and that its internal temperature must be raised from room temperature at 25C (77F) to 100C (212F) to bring the fruit to a boil. Assuming 3kg of fruit, which is mostly water, this "internal heat" requirement comes to 941kJ (892BTU), which is to approximately .89 cubic feet of natural gas or .33kWh of electricity. Simply keeping the oven hot for that long consumes roughly 2.5kWh (8530BTU, 8.3 cubic feet of methane). I'd like to independently confirm those numbers, sources and suggestions appreciated.
For the US, we'll use the USDA numbers for wheat, corn and rice production provides a good estimate of the grain available to the population. Using the assumptions above, the US produces about 409billion kg of grain per year, enough to feed 1.3 billion people (roughly 4x the population). Protein production from beef, chicken, pork and cheese comes to 49billion kg, enough to meet the needs of 2.5billion people. P-PMCN is not limited by basic food production in the US, at least as long as the fertilizer, soil and irrigation systems hold out.
Fruit crops are probably also overabundant, although the statistics for them aren't as current in terms of raw production (I welcome alternative sources). However, given that fruit production is largely concentrated in central California, it's availability nationwide depends on keeping transportation costs low.
In terms of energy production, it's important to remember that the US does produce a lot of its own fuel. However, it also uses quite a lot of that fuel for transportation, air conditioning and lighting. What I plan to do is grab the numbers for those three items and subtract them from gross energy production to compute the amount of energy left over for pie making. If you have any suggestions about sources and/or methods, please let me know!
About the same time, I stumbled across Dr. Easterly's Reinventing Foreign Aid, which is to econometrics what Michael Pollan's In Defense of Food is to nutrition science. It's not a refutation, exactly, but a serious study of both the assumptions and practice of analyzing complex systems. Meanwhile, a global financial crisis was busy re-ordering the world's economy and making a lot of econometric data about incomes, trade and production obsolete. Meanwhile, serious economists are asking questions of their own field about the validity of counterfactuals and ex post storytelling.
What I've learned from this is not to reject all economic measures outright, but to be very careful to keep the metrics as simple as possible and with very clear ties to the hypothetical narrative. If the story I'm trying to tell is wrong, then my metrics are suspect. If my metrics do not reflect what is actually happening in the world, then my narrative may be wrong as well. In this sense, it is possible to develop metrics that can serve as an aid to examine potential policy options, but they are only as useful as the assumptions underlying their basic narrative. For more on this epistemological approach, see Nassim Taleb's body of work. In short, a simple metric with few assumptions helps inform discussions of the impact of political and personal decisions, while complex models often contain hidden assumptions that make them dangerous to use.
The title of this post has nothing to do with epistemology, but I wanted to be sure I including that disclaimer at the beginning. Now, on to the narrative and its metric:
Narrative (aka hypothesis): The physical pie making capacity in a nation (P-PMCN) depends primarily on its internal food production. This is a mildly controversial statement, since a globalized world can, in theory, rapidly move food from where is it efficiently produced to where it is desperately needed. However, this assumes a much freer market for food than actually exists, and that someone will always be willing to pay to feed foreigners. Because these assumptions are specious, and because the countries doing the best job of providing food security are the ones that ignore classical economic analysis, while those that tried to follow "free market" advice have relied heavily on food aid. This makes my job easier, because food production numbers for a given region are pretty easy to find, and all evidence suggests that a country will feed its citizens first, regardless of their economic position.
So, how to compute P-PMCN? The answer, I think, is to find the limiting factor in a given national production system. To make a pie each week, one needs:
(1) Roughly 2000 Calories/day of food, consisting of .84kg of grains (assuming 70% of harvested grain becomes edible) and .053kg of proteins (active, 180lb young male). Suggestions for improving this "basic diet" model are welcome, please leave a comment.
(2) Enough fruit to make the filling. My pies generally use about 1-2kg (2-4lb) of fruit each, but I'll assume that an even 3kg (6.6lb) are required to allow for losses in travel and "sampling" by the pie maker and family. I don't plan to make any distinction between the types of filling, but this may change with time.
(3) Sufficient fuel to bake the pie. I have used a shovel and backhoe as cooking implements in the past, so I'm comfortable saying that the only thing you need for pie production is heat. For now I will assume this means either natural gas or electricity, and for the developed countries I'll assume that it comes from either natural gas not used for electricity or electric power at 80% efficiency. Further, I'll assume that a pie must be baked at 205C (400F) for 1hr, and that its internal temperature must be raised from room temperature at 25C (77F) to 100C (212F) to bring the fruit to a boil. Assuming 3kg of fruit, which is mostly water, this "internal heat" requirement comes to 941kJ (892BTU), which is to approximately .89 cubic feet of natural gas or .33kWh of electricity. Simply keeping the oven hot for that long consumes roughly 2.5kWh (8530BTU, 8.3 cubic feet of methane). I'd like to independently confirm those numbers, sources and suggestions appreciated.
For the US, we'll use the USDA numbers for wheat, corn and rice production provides a good estimate of the grain available to the population. Using the assumptions above, the US produces about 409billion kg of grain per year, enough to feed 1.3 billion people (roughly 4x the population). Protein production from beef, chicken, pork and cheese comes to 49billion kg, enough to meet the needs of 2.5billion people. P-PMCN is not limited by basic food production in the US, at least as long as the fertilizer, soil and irrigation systems hold out.
Fruit crops are probably also overabundant, although the statistics for them aren't as current in terms of raw production (I welcome alternative sources). However, given that fruit production is largely concentrated in central California, it's availability nationwide depends on keeping transportation costs low.
In terms of energy production, it's important to remember that the US does produce a lot of its own fuel. However, it also uses quite a lot of that fuel for transportation, air conditioning and lighting. What I plan to do is grab the numbers for those three items and subtract them from gross energy production to compute the amount of energy left over for pie making. If you have any suggestions about sources and/or methods, please let me know!
Tuesday, June 29, 2010
Using uncertain science in public policy
The relationship between science and society changed fairly dramatically in the 1970s, at least in the United States. Prior to that decade, almost all science served a notion of Progress. However, around that time, the consequences of progress could be felt by enough people and observed by enough scientists that the enterprise changed fundamentally. Instead of Making Progress Possible, a growing cadre found themselves in the role of ancient prophets, warning people they had gone too far.
Right now I'm listening to a fascinating discussion about carbon accounting by the CSIS, which has a great series of Energy and Climate Change. A big question asked right off the bat is how actually access how much carbon gets released, much less the impact of those emissions. It's a fascinating to hear a discussion of how to do things like determine the carbon footprint of a screwdriver.
This is a very important question,and any international agreement on managing the transition to a sustainable economy depends on getting this right. However, when science and policy collide like this, uncertainty quickly becomes wiggle room, and wiggle room quickly leads to acrimony by those genuinely worried and "junk science" accusations by those who are not. How is the non-scientist to approach this?
For a partial answer, I recommend reading Michael Pollan's book "In Defense of Food." In it, he quite aggressively attacks the practice of nutrition science, itself not much older than climate science, for pursuing molecules instead of foods, and in so doing allowing themselves to be caught by "regulatory capture" as food manufacturers use their work to selectively add or remove nutrients. We've known that the western diet high in grain-fed meats and highly refined grain products is the best way to encourage heart disease, diabetes and most cancers, but our "science based" policy on food has encouraged trying to find the right balance of molecules instead of encouraging people to eat the whole plant-based foods that kept generations healthier (well, until they died of infections before we figured out penicillin)
Likewise, I recommend a similar approach in discussing climate science and its relationship to public policy. Carbon dioxide absorbs infrared radiation in the wavelength that the Earth radiates out into space, but does not affect the rate at which the Earth receives higher frequency radiation from the sun, resulting in a positive net heat flux, or, put simply, wrapping the planet in a blanket as it spins around its heat-lamp. The precise effect of this is hard to determine, but it's pretty well understood now that the climate is a "meta-stable" system, kind of like a marble on a rough surface. We know that we like were that marble is, and that we probably won't like any of the places it would roll to if we poked it too hard.
The goal of climate policy must be be to limit that poking. The gritty details of exactly how hard a poke we can stand, how to account for the carbon cost of a hammer, and who or what groups gain and lose in the trade off are worthless if we lose sight of that goal. We don't know exactly what will happen if we give the planet over to full-scale human modification, but given how we've treated out bodies, the answer is certainly not going to be good.
Right now I'm listening to a fascinating discussion about carbon accounting by the CSIS, which has a great series of Energy and Climate Change. A big question asked right off the bat is how actually access how much carbon gets released, much less the impact of those emissions. It's a fascinating to hear a discussion of how to do things like determine the carbon footprint of a screwdriver.
This is a very important question,and any international agreement on managing the transition to a sustainable economy depends on getting this right. However, when science and policy collide like this, uncertainty quickly becomes wiggle room, and wiggle room quickly leads to acrimony by those genuinely worried and "junk science" accusations by those who are not. How is the non-scientist to approach this?
For a partial answer, I recommend reading Michael Pollan's book "In Defense of Food." In it, he quite aggressively attacks the practice of nutrition science, itself not much older than climate science, for pursuing molecules instead of foods, and in so doing allowing themselves to be caught by "regulatory capture" as food manufacturers use their work to selectively add or remove nutrients. We've known that the western diet high in grain-fed meats and highly refined grain products is the best way to encourage heart disease, diabetes and most cancers, but our "science based" policy on food has encouraged trying to find the right balance of molecules instead of encouraging people to eat the whole plant-based foods that kept generations healthier (well, until they died of infections before we figured out penicillin)
Likewise, I recommend a similar approach in discussing climate science and its relationship to public policy. Carbon dioxide absorbs infrared radiation in the wavelength that the Earth radiates out into space, but does not affect the rate at which the Earth receives higher frequency radiation from the sun, resulting in a positive net heat flux, or, put simply, wrapping the planet in a blanket as it spins around its heat-lamp. The precise effect of this is hard to determine, but it's pretty well understood now that the climate is a "meta-stable" system, kind of like a marble on a rough surface. We know that we like were that marble is, and that we probably won't like any of the places it would roll to if we poked it too hard.
The goal of climate policy must be be to limit that poking. The gritty details of exactly how hard a poke we can stand, how to account for the carbon cost of a hammer, and who or what groups gain and lose in the trade off are worthless if we lose sight of that goal. We don't know exactly what will happen if we give the planet over to full-scale human modification, but given how we've treated out bodies, the answer is certainly not going to be good.
Sunday, May 23, 2010
The joys of "stuff"
Last post, I was riffing on the story of how commercial banking got replaced by investment banking. I implied that it was bad that this happened, and the great crash of the last few years has largely confirmed this model. Unfortunately, I wasn't clear on the real ontological problem: "stuff" and money have become disconnected in the financial world.
Consider bank capital. What is it? Sophisticated investors, regulators and scholars fundamentally disagree about what should be counted and how to count it. So the fundamental building block of bank, and thus finance, regulation is something that bankers try to inflate, regulators cannot measure and investors just have to hope is real.
Meanwhile, equity markets have fallen from their "assured 11% growth" that was promised to your piemaker by a man in a sharp suit in 2004. I was told that day that betting against the NYSE was "betting against America!" Turns out I would actually have been betting against algorithms playing arbitrage games with exchange order books and Congressmen with insider information (h/t to Dan Carlin). To this day I'm not sure if the man in the suit was foolish or disingenuous, but his passion and intensity convinced me that he did not work in a rational market.
Normally, when money and "stuff" go their separate ways, there's hyperinflation. Indeed, the price of gold (~$1200/ounce as of this writing) would seem to bolster this claim. Unfortunately for large debt holders, the rest of the economy is extremely deflationary. Housing prices are such that homes financed after 2005 (give or take a couple years depending on the market) cannot even be rented at a high enough rate to cover the mortgage. Those same houses are now unaffordable to the people who would buy them until three years ago, and people with highly mobile careers (essentially the whole upper-middle class) have been taught the hard way that equity can be an anchor instead of an asset.
Meanwhile, globalization's march to ever cheaper labor helps ensure that there will not be too many dollars chasing too few goods. Quite the opposite, as imports continue to hold steady or rise slightly and the effective monetary destruction of housing debt defaults and write-downs (Planet Money's "pet" Toxie tells this story well). So instead, too few dollars wind up concentrated in the hands of relatively few people and companies with declining incentives to invest in the face of uncertain regulation and government action.
Clearly something has to give. The question is are we Turning Japanese, or going medieval? I'm not sure how the world's reserve currency can hyperinflate when the second largest economy intentionally devalues itself, and the other major currencies face similar (or worse) economic pictures.
Is there a brighter future? Quite possibly. The loss-making rentals I mentioned aren't so bad when the Mortgage Interest Tax Credit is taken into account. There is simply not enough oil that can be extracted at $70/barrel to keep up with demand for the next several years, and so there will be innovations in transportation and infrastructure. Where and how that happens depends on the policies of various countries, but we have the cash and expertise to take the lead in the US. Support your favorite climate legislation and encourage investment in "stuff."
Consider bank capital. What is it? Sophisticated investors, regulators and scholars fundamentally disagree about what should be counted and how to count it. So the fundamental building block of bank, and thus finance, regulation is something that bankers try to inflate, regulators cannot measure and investors just have to hope is real.
Meanwhile, equity markets have fallen from their "assured 11% growth" that was promised to your piemaker by a man in a sharp suit in 2004. I was told that day that betting against the NYSE was "betting against America!" Turns out I would actually have been betting against algorithms playing arbitrage games with exchange order books and Congressmen with insider information (h/t to Dan Carlin). To this day I'm not sure if the man in the suit was foolish or disingenuous, but his passion and intensity convinced me that he did not work in a rational market.
Normally, when money and "stuff" go their separate ways, there's hyperinflation. Indeed, the price of gold (~$1200/ounce as of this writing) would seem to bolster this claim. Unfortunately for large debt holders, the rest of the economy is extremely deflationary. Housing prices are such that homes financed after 2005 (give or take a couple years depending on the market) cannot even be rented at a high enough rate to cover the mortgage. Those same houses are now unaffordable to the people who would buy them until three years ago, and people with highly mobile careers (essentially the whole upper-middle class) have been taught the hard way that equity can be an anchor instead of an asset.
Meanwhile, globalization's march to ever cheaper labor helps ensure that there will not be too many dollars chasing too few goods. Quite the opposite, as imports continue to hold steady or rise slightly and the effective monetary destruction of housing debt defaults and write-downs (Planet Money's "pet" Toxie tells this story well). So instead, too few dollars wind up concentrated in the hands of relatively few people and companies with declining incentives to invest in the face of uncertain regulation and government action.
Clearly something has to give. The question is are we Turning Japanese, or going medieval? I'm not sure how the world's reserve currency can hyperinflate when the second largest economy intentionally devalues itself, and the other major currencies face similar (or worse) economic pictures.
Is there a brighter future? Quite possibly. The loss-making rentals I mentioned aren't so bad when the Mortgage Interest Tax Credit is taken into account. There is simply not enough oil that can be extracted at $70/barrel to keep up with demand for the next several years, and so there will be innovations in transportation and infrastructure. Where and how that happens depends on the policies of various countries, but we have the cash and expertise to take the lead in the US. Support your favorite climate legislation and encourage investment in "stuff."
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