tag:blogger.com,1999:blog-1899606766246433608.post4045644747774275956..comments2023-11-08T12:09:20.020-05:00Comments on Prove Me Wrong: A Huge Win for OWSJonhttp://www.blogger.com/profile/10530680372103907969noreply@blogger.comBlogger42125tag:blogger.com,1999:blog-1899606766246433608.post-91123518503269755692012-01-11T14:40:51.845-05:002012-01-11T14:40:51.845-05:00Most economists would put the elasticity of oil at...<i>Most economists would put the elasticity of oil at nearly fully inelastic.</i><br /><br />I don't agree that most economists would say that.<br /><br /><i>In the short run, the supply of oil is inelastic as well</i><br /><br />I agree on this for the short term. You don't just turn a well off or drill a well instantly when the price fluctuates.<br /><br /><i>Can we agree that as the developing world rises economically (thanks to Bretton Woods!!!)</i><br /><br />You really think economic growth has accelerated world wide since Bretton Woods? Read Bad Samaritans, from Ha-Joon Chang. I'll read a comparable economics text that you recommend if you do.<br /><br /><i>Bottom line: If we don't use it, someone eventually will.</i><br /><br />Long term alternative energy sources could very easily be more viable, so we don't know that this is true.Jonhttps://www.blogger.com/profile/10530680372103907969noreply@blogger.comtag:blogger.com,1999:blog-1899606766246433608.post-65899110699274063192012-01-11T02:09:19.250-05:002012-01-11T02:09:19.250-05:00Yes, I stand by what I said earlier: "In the...Yes, I stand by what I said earlier: <em>"In the end, the roughly same amount of oil is being produced but in a less environmentally friendly way" . </em> <br /><br />Surprising? I don't know why. Most economists would put the elasticity of oil at <em>nearly</em> fully inelastic. I'm just taking it a slightly step further. Whether, say China, eats up 95% of the drop or 100%, that's still roughly ALL in my book.<br /><br />Don't trust economists? Fine, a quick google search returned <a href="http://www.cftc.gov/ucm/groups/public/@newsroom/documents/file/itfinterimreportoncrudeoil0708.pdf" rel="nofollow">this government study</a>: <br /><br />"In the short run, the supply of oil is inelastic as well" <br /><br />What about the long run, you ask? Well that depends. But we can all agree that "In the long run were all dead" (Global warming wise, that is). :-)<br /><br />Think about it this way:<br /><br />1. Can we agree that the amount of oil in the world is physically limited?<br /><br />2. Can we agree that absent artificial subsidies, oil remains one of the cheapest and most abundant energy sources the world has to offer?<br /><br />3. Can we agree that as the developing world rises economically (thanks to Bretton Woods!!! ), the demand for such cheap sources of energy will only increase?<br /><br />Bottom line: If we don't use it, someone eventually will. And chances are, that country will be less environmentally conscious. That was really the gist of my point.<br /><br />With that said, you can say that I am wrong about the inelasticity of oil. I admit, I take a bit of a harder line on this than many. But that is far different than saying I made an argument that betrays the supply and demand curve. And really, only someone who doesn't really understand the supply and demand curve can confuse the two.HispanicPundithttps://www.blogger.com/profile/10220166238164432290noreply@blogger.comtag:blogger.com,1999:blog-1899606766246433608.post-44304320686152271252012-01-03T09:55:36.662-05:002012-01-03T09:55:36.662-05:00If you define the supply of oil such that it can&#...If you define the supply of oil such that it can't change, then obviously the consumption won't change. That's going to be true whether the US uses more or less. No matter what happens, increases in one location are offset by decreases elsewhere and vice versa. Your statement becomes true by definition.<br /><br />Does this mean you stand by your claim that if the US were able to flip a switch in 2012 such that we were able to consume 10% less oil going forward this would have no effect on the total quantity of oil consumed?Jonhttps://www.blogger.com/profile/10530680372103907969noreply@blogger.comtag:blogger.com,1999:blog-1899606766246433608.post-25740474776190443882012-01-03T00:10:03.647-05:002012-01-03T00:10:03.647-05:00So then, assuming my hypothetical (for now, anyway...So then, assuming my hypothetical (for now, anyway) were true, would you then say my statement here would also be true:<br /><br /><em>...say the United States does more of what environmentalists desire...we use more solar power, wind mills, etc...thus reducing our oil needs. What would happen? Because oil is traded on the open market this would put DOWNWARD pressure on the price of oil. Which means that it's even cheaper for places like China to consume oil. So they would likely consume MORE oil. In the end, <b>the roughly same amount of oil is being produced but in a less environmentally friendly way</b></em> (emphasis added).HispanicPundithttps://www.blogger.com/profile/10220166238164432290noreply@blogger.comtag:blogger.com,1999:blog-1899606766246433608.post-399235534637201502012-01-02T20:21:03.408-05:002012-01-02T20:21:03.408-05:00When I said the qty wouldn't change I meant th...When I said the qty wouldn't change I meant that as my answer. Put another way just make the supply curve a vertical line. The supply qty doesn't change regardless of the price. Shift the demand curve to the left. Qty stays the same. New equilibrium point is at a lower price.Jonhttps://www.blogger.com/profile/10530680372103907969noreply@blogger.comtag:blogger.com,1999:blog-1899606766246433608.post-12542279190883772532012-01-02T13:42:04.239-05:002012-01-02T13:42:04.239-05:00That's a different discussion. We can get into...That's a different discussion. We can get into that later. For now I want you to focus on my question: What would happen to the S-D curve if the supply of oil was completely inelastic?<br /><br />Please answer this question first.HispanicPundithttps://www.blogger.com/profile/10220166238164432290noreply@blogger.comtag:blogger.com,1999:blog-1899606766246433608.post-48717929409188024622012-01-01T09:57:22.760-05:002012-01-01T09:57:22.760-05:00Why do you want to explore hypotheticals that have...Why do you want to explore hypotheticals that have nothing to do with oil? The supply of oil does change with the price and the demand. A company is more likely to do expensive deep water exploration and drilling when the demand is higher because this pushes the price higher.<br /><br />What would happen if the supply quantity couldn't change? The quantity wouldn't change. But the supply quantity can change. The higher price creates more incentive to work hard to extract oil.Jonhttps://www.blogger.com/profile/10530680372103907969noreply@blogger.comtag:blogger.com,1999:blog-1899606766246433608.post-39277296367771886792011-12-31T13:52:54.332-05:002011-12-31T13:52:54.332-05:00Correction above: *supply of* oil was completely i...Correction above: *supply of* oil was completely inelastic.HispanicPundithttps://www.blogger.com/profile/10220166238164432290noreply@blogger.comtag:blogger.com,1999:blog-1899606766246433608.post-67022265176822724942011-12-31T13:50:10.364-05:002011-12-31T13:50:10.364-05:00Thanks for the clarification.
Question for you th...Thanks for the clarification.<br /><br />Question for you then: What would happen to the S-D curve if oil was completely inelastic?HispanicPundithttps://www.blogger.com/profile/10220166238164432290noreply@blogger.comtag:blogger.com,1999:blog-1899606766246433608.post-10235596836496021922011-12-31T09:43:39.328-05:002011-12-31T09:43:39.328-05:00Here's what led me to believe you don't un...Here's what led me to believe you don't understand an S-D curve. And I think you still don't understand it. You first made this statement which made me suspect you don't understand it.<br /><br /><i>say the United States does more of what environmentalists desire...we use more solar power, wind mills, etc...thus reducing our oil needs. What would happen? Because oil is traded on the open market this would put DOWNWARD pressure on the price of oil. Which means that it's even cheaper for places like China to consume oil. So they would likely consume MORE oil. In the end, the roughly same amount of oil is being produced but in a less environmentally friendly way.</i><br /><br />A drop in demand from the US causes China to consume more (true) and the result is in the end the same amount of oil is consumed (false). I wasn't sure if I'd understood you right because I thought you'd know better than this, but then you made the following statement after I had said that if the US cut back it's usage total usage would drop:<br /><br /><i>This is actually likely NOT true. What would likely happen is that the SAME amount will be used - only more so by poorer countries, with weaker regulations.</i><br /><br />So I've got your reasoning. The drop in price causes them to consume more. Of course. But how much more? Not enough to offset the quantity reduction that occurred in the US. So let me answer your question:<br /><br /><i>Are you arguing that there is not a situation where an artificial reduction in demand in one country (say USA) could result in an equal level of increased demand in the other (China) - with regard to oil?</i><br /><br />All other things being equal the answer is yes. Supposing we had to choose in 2012 between flipping a switch and using solar in a way that reduced our oil consumption 10%. The world wide price would drop. Other countries would use more. But the total consumed will be less than it otherwise would have been if we didn't flip that switch. This is simple supply and demand. Find any economist and they'll tell you this is true.Jonhttps://www.blogger.com/profile/10530680372103907969noreply@blogger.comtag:blogger.com,1999:blog-1899606766246433608.post-19680509630568982212011-12-30T21:34:43.500-05:002011-12-30T21:34:43.500-05:00Or here, let me put it another way. What exactly l...Or here, let me put it another way. What exactly lead you to believe that I may not understand a supply and demand curve?<br /><br />You made the claim. I am asking you to elaborate on that specifically. Not just my statement but what you concluded from my statement that violates a supply and demand curve.HispanicPundithttps://www.blogger.com/profile/10220166238164432290noreply@blogger.comtag:blogger.com,1999:blog-1899606766246433608.post-2966513541943931372011-12-30T21:27:12.281-05:002011-12-30T21:27:12.281-05:00Can you please give me a simple yes/no answer? I k...Can you please give me a simple yes/no answer? I know our disagreement - I just want to make sure it's a REAL disagreement. <br /><br />Let me shorten the question for you: Are you arguing that there is not a situation where an artificial reduction in demand in one country (say USA) could result in an equal level of increased demand in the other (China) - with regard to oil?<br /><br />I THINK this what you are arguing. Your preceding comments seem to affirm it. But I don't want to give you any wiggle room this time. So I want you to fully commit to it, one way or the other. <br /><br />Yes, or no? And please elaborate.HispanicPundithttps://www.blogger.com/profile/10220166238164432290noreply@blogger.comtag:blogger.com,1999:blog-1899606766246433608.post-31139594839927015952011-12-30T20:35:21.546-05:002011-12-30T20:35:21.546-05:00Insofar as China is a command economy you can'...Insofar as China is a command economy you can't strictly know, but based the S-D curve the expectation is the quantity consumed would reduce. Here's what you had said when I said the drop in demand produces a reduced total consumption (Rule 2 of S-D):<br /><br /><i>This is actually likely NOT true. What would likely happen is that the SAME amount will be used - only more so by poorer countries, with weaker regulations. </i><br /><br />You say it's likely not true and I say based on S-D it likely is true. A commissar can ignore pricing info, but even he feels pressure to reduce consumption because of the price.Jonhttps://www.blogger.com/profile/10530680372103907969noreply@blogger.comtag:blogger.com,1999:blog-1899606766246433608.post-16841892025783830712011-12-30T19:45:34.003-05:002011-12-30T19:45:34.003-05:00Btw, I could be a little clearer here. When I say ...Btw, I could be a little clearer here. When I say elasticity, I am referring to the supply of oil, specifically.HispanicPundithttps://www.blogger.com/profile/10220166238164432290noreply@blogger.comtag:blogger.com,1999:blog-1899606766246433608.post-75563814379947619172011-12-30T18:38:14.311-05:002011-12-30T18:38:14.311-05:00I see where you are going - again, for the most pa...I see where you are going - again, for the most part we agree. Our disagreement is subtle. I want to draw light upon that. So please answer my question:<br /><br />Are you arguing that two different economies - with different levels of supply, demand, regulations...basically elasticity - could not produce a situation where an artificial reduction in demand in one country (say USA) could result in an equal level of increased demand in the other (China)?<br /><br />Remember, were not talking about the same country - but cross country. Where, yes, different elasticities are exhibited (My main point). <br /><br />Do I understand you correctly?HispanicPundithttps://www.blogger.com/profile/10220166238164432290noreply@blogger.comtag:blogger.com,1999:blog-1899606766246433608.post-61708828595021641532011-12-30T17:20:29.121-05:002011-12-30T17:20:29.121-05:00I feel like I have to be very cautious with these ...I feel like I have to be very cautious with these types of questions from you because I know what will happen if I fail to qualify my answer up down and sideways. You are being very abstract, and I think that can lead to confusion. Let's talk about oil.<br /><br />The price of oil fluctuates based on the demand. Some people avoid traveling during certain times of the year when travel is generally higher because the price goes up. So the amount consumed is lower than it would be if the price hadn't changed at all. Those on the margins modify their behavior.<br /><br />On these conditions a basic supply and demand curve shows that if a major user stops consuming we've just had a drop in demand. This leads to a drop in price. Some wells on the margins are profitable at a higher price, but not at a lower, so they could be shut down. They stop producing oil and less oil is consumed.<br /><br /><a href="http://en.wikipedia.org/wiki/Supply_and_demand" rel="nofollow">Look at Law 2 for the supply and demand curve</a>. This is exactly the opposite of what you say. You say it's likely NOT true that the quantity consumed would drop if the US consumed less oil. Are you saying Law 2 is wrong for oil?Jonhttps://www.blogger.com/profile/10530680372103907969noreply@blogger.comtag:blogger.com,1999:blog-1899606766246433608.post-74428328352130202722011-12-30T16:21:57.202-05:002011-12-30T16:21:57.202-05:00Paul,
Jon recently pointed to this post from a mo...<strong>Paul</strong>,<br /><br />Jon recently pointed to this post from <a href="http://bigwhiteogre.blogspot.com/2011/12/is-peter-schiff-parasite.html" rel="nofollow">a more recent post</a>. I hadn't noticed that you had responded until coming back to it now. Let me answer your question:<br /><br />I call myself conservative instead of libertarian for two reasons. First, I do have social conservative leanings. Though I favor legalized prostitution, drugs, and even, to some degree, suicide, I disagree with abortion and to a lesser degree, gay marriage.<br /><br />Second, and really more importantly, I view conservativism as a somewhat practical libertarianism. Libertarians, IMHO, are dogmatists. They care first and foremost about theory and theoretical consistency. I don't - atleast not as much as "what works". I am perfectly fine with supporting regulations, taxes, or government interventions where it works. My beliefs are more of a starting point than an end goal. Hope that clarifies it.<br /><br /><strong>Jon</strong>,<br /><br />I've re-read our exchange and it looks like the closest I could come to 'not understanding a supply curve' is where I wrote this:<br /><br /> <em>Think about it this way: China is already using the most oil they can AT A GIVEN PRICE. If the price drops further, they dont stay the same - they increase consumption until the price hits the same equilibrium.</em> <br /><br /> You responded with:<br /><br /> <em>I imagine you understand a basic supply and demand curve. Shift the demand curve to the left and not only does the price drop. The total quantity consumed drops. The new equilibrium point is a lower price and lower total quantity consumed. But because of the non-linear nature of the curve our reduction in consumption is partially offset by the rise in consumption of others. Total consumption is down.</em><br /><br /><br />Oh the irony. When I first read this, back when we were having the exchange, I wanted to point out your error and/or misunderstanding. But I was time limited and you had been berating me for treating you like an economic novice. So I let it go. It was after all, not germane to our point and the charitable thing to do. So what do I get for this? Later <a href="http://bigwhiteogre.blogspot.com/2011/12/is-peter-schiff-parasite.html?showComment=1325270714988#c2172274214255981875" rel="nofollow">you point it out as me possibly not understanding a basic supply and demand curve</a>.<br /><br />So let me see if I understand you correctly. Are you arguing that two different economies - with different levels of supply, demand, regulations...basically elasticity - could not produce a situation where <em>an artificial</em> reduction in demand in one country (say USA) could result <em>in an equal level</em> of increased demand in the other (China)?<br /><br />I'm really itching to jump more into this. But I want to get you to commit, one way or the other, to certain things first. I don't want to give you the opportunity to just say, "you misunderstood me". So please answer the question first.HispanicPundithttps://www.blogger.com/profile/10220166238164432290noreply@blogger.comtag:blogger.com,1999:blog-1899606766246433608.post-6242268516779847752011-11-16T16:35:13.341-05:002011-11-16T16:35:13.341-05:00HP -
Why do you think of yourself as a conservati...HP -<br /><br />Why do you think of yourself as a conservative instead of a libertarian?<br /><br />How do *you* distinguish the two?Paulhttps://www.blogger.com/profile/14278834635241999491noreply@blogger.comtag:blogger.com,1999:blog-1899606766246433608.post-37805069296994777612011-11-16T13:20:36.250-05:002011-11-16T13:20:36.250-05:00What I'm really interested in is these so call...What I'm really interested in is these so called "ridiculously absurd" arguments from leftists on economics. There's the one you made a big deal of on living wage. They said increases in compensation WOULD come out of profits and they should have said COULD come out of profits, but may be compensated for in other ways, like price hikes. But I had never heard of these people anyway. Where are all these ridiculous arguments from the left? Anything from Chomsky? I'd love to see it. So much harping from you about how ignorant and absurd he is. Yet never a single example.<br /><br />And remember, you disagreeing is not the same as them being ridiculously absurd. Nor is it absurd if they don't talk about what you think they should talk about or focus on what you think they should focus on. Let's see some transparently false and ridiculous claims. The kind of stuff that's easy to find with Sowell and Williams. And if Chomsky doesn't make these kinds of errors, but obviously Sowell and Williams do, maybe you should read more Chomsky and less Sowell or Williams.Jonhttps://www.blogger.com/profile/10530680372103907969noreply@blogger.comtag:blogger.com,1999:blog-1899606766246433608.post-10216271826841031122011-11-16T12:41:38.450-05:002011-11-16T12:41:38.450-05:00Maybe I should have said conservative. I am conser...Maybe I should have said conservative. I am conservative first...which makes me SOMETIMES vote Republican. :-)HispanicPundithttps://www.blogger.com/profile/10220166238164432290noreply@blogger.comtag:blogger.com,1999:blog-1899606766246433608.post-12985694041906226772011-11-15T22:05:14.030-05:002011-11-15T22:05:14.030-05:00Die hard partisan lefties are ridiculously absurd ...<i>Die hard partisan lefties are ridiculously absurd on economic issues</i><br /><br />I'm curious what comes to your mind here. Can we see an example?<br /><br /><i>I'm a Republican because I focus on the high level intellectual debates.</i><br /><br />Have you seen any of the Republican debates? High level and intellectual is not how I'd describe them.Jonhttps://www.blogger.com/profile/10530680372103907969noreply@blogger.comtag:blogger.com,1999:blog-1899606766246433608.post-21602686970830592732011-11-15T17:59:01.617-05:002011-11-15T17:59:01.617-05:00It's a full debate. You should follow it throu...It's a full debate. You should follow it through...Manzi spanks them IMHO. <br /><br />Regarding Sowell and Williams: it's part of being partisan, I guess. Die hard partisan lefties are ridiculously absurd on economic issues, righties on environmental issues. Doesn't mean you throw it all out. <br /><br />I expect, for example, environmentalists to get the economics wrong with an environmental bent. Same in the reverse: I expect economists to get the environment data wrong, with an economic bent. I'm so used to it now I usually just read experts on whatever topic I am investigating. I don't trust any one person to know it all - only fields.<br /><br />But there is real debate. If you follow environmental economists the discussion becomes alot harder and debatable than the low level stuff lets on.<br /><br />I'm a Republican because I focus on the high level intellectual debates...if I was stuck in the pundit aspect of it, who knows what I'd be.HispanicPundithttps://www.blogger.com/profile/10220166238164432290noreply@blogger.comtag:blogger.com,1999:blog-1899606766246433608.post-7367344580819128722011-11-15T16:31:45.967-05:002011-11-15T16:31:45.967-05:00I hadn't read the Manzi article until now. Ye...I hadn't read the Manzi article until now. Yeah, I think that's a good discussion. I totally agree with you that we have to evaluate what our policy response should be. And we do that by assessing the risks and costs associated with mitigating them.<br /><br />On the right wing generally though you get disinformation that prevents you from even having that reasonable discussion about what should be done in light of the agreed upon facts. Take Chad's arguments from Walter Williams. Take Thomas Sowell. These people are wasting everyone's time muddying the waters. If you can't even agree on the basic facts then discussion about how we might mitigate risk doesn't even happen. And so Exxon is very pleased. There's no risk that they will be constrained. That's AEI's job. By hook or by crook you block any restrictions on Exxon's behavior. That's what they get paid to do and they do it well.<br /><br />With Manzi though I'd look not just at GDP but other risks. If GDP stays nice and high but 25% of living species go extinct, is that acceptable? If only Somalis or poor Africans die, maybe some Haitians, then GDP may not drop a lot. These are poor people. They don't contribute as much to global GDP. But they could starve. That's a huge deal too.Jonhttps://www.blogger.com/profile/10530680372103907969noreply@blogger.comtag:blogger.com,1999:blog-1899606766246433608.post-34376815991025779712011-11-15T16:01:31.629-05:002011-11-15T16:01:31.629-05:00Did you read the Manzi article I linked to? It put...Did you read the Manzi article I linked to? It puts a consensus cap on alot of the doom and gloom you mention here. Wondering what you think of it.HispanicPundithttps://www.blogger.com/profile/10220166238164432290noreply@blogger.comtag:blogger.com,1999:blog-1899606766246433608.post-17427324917941551162011-11-15T15:04:21.043-05:002011-11-15T15:04:21.043-05:00Do you know why China might have colluded with the...<i>Do you know why China might have colluded with the United States to thwart these international agreements?</i><br /><br />The disincentives to curb emissions is essentially the same for all countries. In the short term it hurts. A gallon of oil has more utility in China since they are poor than it does in the US. So the amount of pain differs, but the fact that it is painful is the same for all. The question is, what is the long term pain?<br /><br />China has indicated that they are prepared to make sacrifices. What they have requested is that they be permitted an increase in consumption initially as they industrialize since they are so far behind. Basically some catch up credit. So that means some increase permitted for China, but a reduction for the US. They say it's not fair that we burned it up for so long, got to a prosperous state, then kicked away the ladder now that we are at the summit. Makes some sense to me and I think it's reasonable. The US has of course refused and so China reacts in kind. They will not curb at any faster rate then they deem necessary based on their own development.<br /><br /><i>This is TODAY. They can't think about tomorrow.</i><br /><br />But the first people to suffer from the effects of global warming are the poor. People that rely on glacial runoff to water their crops. You can afford to just pick up and move as the waters rise, but a lot of people in India and China can't.<br /><br /><i>Think about it this way: China is already using the most oil they can AT A GIVEN PRICE. If the price drops further, they dont stay the same - they increase consumption until the price hits the same equilibrium.</i><br /><br />I imagine you understand a basic supply and demand curve. Shift the demand curve to the left and not only does the price drop. The total quantity consumed drops. The new equilibrium point is a lower price and lower total quantity consumed. But because of the non-linear nature of the curve our reduction in consumption is partially offset by the rise in consumption of others. Total consumption is down.Jonhttps://www.blogger.com/profile/10530680372103907969noreply@blogger.com