Milton Friedman’s advice about climate models

Fabius Maximus website

Summary: The vital public policy debate over climate change is deadlocked. This is the sixth in a series about ways to restart the debate — and resolve it. This post gives Milton Friedman’s advice — the key is testing climate models so that a majority of the public has confidence in their predictions.

“For such a model there is no need to ask the question ‘Is the model true?’. If ‘truth’ is to be the ‘whole truth’ the answer must be ‘No’. The only question of interest is ‘Is the model illuminating and useful?'”

— G.E.P. Box in “Robustness in the strategy of scientific model building” (1978). He also said “All models are wrong; some are useful.”

Milton Friedman Milton Friedman.

The debate about public policy for climate change has deadlocked. There are many factors at work, but two stand-out as unnecessary problems — “own goals” by scientists. They didn’t…

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Implicit tax on returning to work for a 2nd earner in ordinary US, Danish, British, New Zealand, Australian, Canadian, German and French families

Not a lot of point for a 2nd earner in an ordinary family going back to work in the English-speaking countries once you consider the childcare fees for a 2-year-old and a 3-year-old. These calculations were released today in Paris in the OECD’s Going for Growth 2016.

Source: Economic Policy Reforms: Going for Growth – OECD (2016).

North West Europe, 16,000 years ago

Will there be poverty on the Starship Enterprise?

A Facebook photo by Mary Ruwart reminded me of the question I posed in previous blog posts about whether there will be poverty on the Star Trek enterprise. Those security officers in the red tunics get a really bad deal, especially if they beam down to the planet with Captain Kirk.

Larry Summers on Piketty


Larry Summers has an excellent review of Thomas Piketty’s Capital in the Twenty-First Century. In many ways, his reaction is similar to Greg Mankiw’s. He agrees completely with the factual record but does not fully endorse Piketty’s proposed explanation for the patters or Piketty’s policy recommendations. Some excerpts that caught my eye …

On Piketty’s argument that the returns to wealth are “largely reinvested”:

The determinants of levels of consumer spending have been much studied by macroeconomists. The general conclusion of the research is that an increase of $1 in wealth leads to an additional $.05 in spending. This is just enough to offset the accumulation of returns that is central to Piketty’s analysis.

On the prevalence of inherited wealth among the ultra-rich :

[…] the data […] indicate, contra Piketty, that the share of the Forbes 400 who inherited their wealth is in sharp decline.

On the role…

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Belinda Carlisle – Heaven Is A Place On Earth

@Twitter is now a #safespace so #RIPTwitter

Source: Someone on Twitter is engaging in abusive or harassing behavior. | Twitter Help Center.

The rapid emergence of Generation Rent in the UK and New Zealand

Utopia, you are standing in it!

I thought I should reproduce this chart for New Zealand to show the extent to which a Generation Rent has emerged in New Zealand in the last 10 years.




Source: 2013 Census QuickStats about housing.

Might be more interesting to breakdown the pie charts as a single time series for 25 to 29 and 30 to 34 year-olds as the latter are more likely to be settling down and buying a house.

generation rent

Source: 2013 Census QuickStats about housing.

The number of New Zealanders who own or partly owned their residence  in the really 30s has dropped from almost one in two falling towards one in three since 2001. Generation Rent is very much the majority of New Zealanders aged 30 to 34.

For those New Zealanders aged 25 to 29, instead of one in four at least partly owning their residences, as was the case in 2001, the…

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Austerity and the Greek Depression


The NY Times has a nice feature that compares the Greek economy from 2007-2012 to that of the US from 1929-1934. Besides the disturbing similarity, the most notable feature of this figure is how different the government spending response has been. Although it is hard to know the exact counterfactual, austerity really does not seem to be working.


HT: Dmitri Koustas

UPDATE: Jeremie Cohen-Setton, whom you should be following via Bruegel and now twitter @JCSBruegel, pointed out that government consumption isn’t an ideal measure of fiscal support since it hides what’s going in the background with government revenues. Here’s a slide from the Romers’ presentation on the New Deal, which shows both expenditures and revenues of the US government in the 1930s. The US ran modestly sized deficits in this period (and also had the infamous premature contraction of 1937).


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Senator Sanders’s Proposed Policies and Economic Growth by Christina Romer and David Romer

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