Wanted: Criticism

As I have mentioned here before, I have been working on a critique of a recent Nature article that finds a very high value for the social cost of carbon, the net cost from now to 2300 produced by an additional ton of CO2. I argue that the article greatly exaggerates the cost by errors which should be obvious to a careful reader, one of them being the implicit assumption that there will be no improvement in most of the technologies relevant to the costs, including medicine, for the next three centuries.

 

The implication of my critique, if it is correct, is that the enterprise of producing estimates of the costs of climate change is broken. The important point is not that this particular article makes mistakes but that it makes obvious mistakes, should never have gotten through peer review in its present form. If an article with obvious mistakes, all of which increase its estimate of the cost of carbon, can get published in a high status scientific journal and be considered by the EPA as a possible basis for regulatory decisions, it follows that the mechanisms that are supposed to filter out bad scientific work are not working in this context, hence that none of the published estimates can be trusted.

 

That is a strong claim and it might be wrong, but if it is right should be a serious problem for people who accept the current orthodoxy with regard to climate. I am therefor inviting anyone interested, especially anyone inclined to accept current views on the effects of climate change, to look over my critique and tell me what is wrong with it. 

 

Hostile reviewers are more useful, for my purposes, than friendly reviewers.

My Next Europe Trip

I plan to attend the SFL Libertycon in Lisbon on April 22nd and 23rd and am interested in setting up other talks in Europe. My usual policy is to limit speaking trips to about two weeks. Libertycon could be at either the beginning or the end, so possible dates are from April 10th to May 4th.

Let me know if you are interested either by a comment here, an email to ddfrATdaviddfriedmanDOTcom, or a message on FB.

Technology and the Cost of Carbon: A Second Try (revised)

 One of my chief criticisms of Rennert et. al. 2022 is that it calculates the cost imposed by an additional ton of CO2 by summing costs from now to 2300 while almost entirely ignoring technological change, in effect assuming technological stasis. That raises the question of how one ought to model technological change in trying to calculate costs over a long period of time. My initial response was that you can't do it, that any estimate of effects centuries in the future is a wild guess, science fiction not science. But that started me thinking about how, if I had to do it, I would. 

Here is my answer.

Step 1: Create a simplified procedure for deducing the Social Cost of Carbon (SCC) from your preferred climate change scenario using causal relationships, such as the effect of temperature on mortality or on crop yield, calculated with data from a single decade. The causal relationships should take account of variables other than technology, such as income, that can be expected to change over time.

Step 2: Use the procedure to produce a value for SCC using data from the most recent decade for which suitable data are available, say 2010-2020. Call this SCC(2010).

Step 3: Repeat step 2, using data from the previous decade. Call this SCC(2000).

Step 4: Calculate the ratio R1=SCC(2010)/SCC(2000)

This is essentially what Lay et. al. 2021 did for the effect of technology on temperature-related mortality.

Suppose R1=.9. That implies that changes over the decade were reducing the social cost of carbon implied by your climate change scenario at about 1%/year.

Step 5: You now abandon your simplified procedure and substitute whatever you consider the best way of calculating SCC. But instead of discounting at the discount rate you discount at the discount rate plus 1% (or whatever R1/10 turned out to be). You have now allowed, as best you can, for the reduction in cost over time due to technological change.

It is not a very good solution to the problem but better than assuming stasis. One problem with it is that it ignores the fact that, the farther into the future you go, the more uncertain your estimate of the effect of technological progress. To solve that you need ...

The Improved Version

Step 3a: Repeat step 2 using data from each earlier decade for which the necessary data exist, generating SCC(1990), SCC(1980), ...

Step 4a: Calculate R2=SCC(2000)/SCC(1990), R3=SCC(1990)/SCC(1980), R4=  ...

If you are willing to model the effect of technological progress as a constant rate of decrease of costs, use the average of your ratios R1, R2, ... instead of R1 alone to estimate the rate at which cost is being reduced due to technological change. Alternatively, if you think the rate of change due to technological change is itself changing over time and you have enough ratios, you could try fitting them to a function linear in time and use that. 

In either case, use the variation of the ratios (from the average or from the linear fit) to calculate by how much you should increase the uncertainty in cost for the later years. If you estimate the rate as 1% when it is really 2% that will have little effect on costs in the near future but produce a large overestimate of costs a century or two later.

Actually doing all of this would be a large and complicated project. Even turning my verbal sketch into a precise mathematical formulation would be quite a lot of work. I don't propose to do either, but perhaps someone more ambitious could. Having been done once, the result could be applied to a variety of different approaches for estimating future costs — from CO2 or anything else.

A Problem with Georgism

Henry George and his modern followers propose an LVT, a land value tax, a tax on the site value of land equal to what the rent on the land would be in the absence of any improvements. From an economic standpoint, the chief attraction of the LVT is that, since it is taxing something in perfectly inelastic supply, taxing it does not lead to any inefficient economic decisions. The site value does not depend on any decisions made by its owner, so a tax on it does not distort his decisions, unlike a tax on income or produced goods.

I believe I have discovered an error in that argument, an inefficient incentive produced by a Georgist LVT. Suppose there are two adjacent plots of land, one suitable for apartment buildings, one for a shopping center. Further assume that, due to administrative diseconomies of scale, the two plots will be worth more with different owners, would be owned by different people if there were no LVT.

I buy and develop one, you buy and develop the other. My conveniently nearby shopping center raises the rent you can charge for your apartments hence the site value of the land under them, so your LVT goes up. Your nearby apartments raise the rent I can charge tenants of my shopping center, hence the site value of the land under it, so my LVT goes up.

If, however, I bought both plots and developed them the increase in income from both plots would be income from improvements — so the LVT would not go up. Hence it may be in my interest to buy both even though they would be more productive, tax aside, with separate owners. 

More generally, the LVT is an incentive for inefficient integration of land holdings, makes a company town more profitable than a bunch of separately owned plots even if, in the absence of an LVT, it would be less profitable.

Technology and the Cost of Carbon

As mentioned in previous posts, I am working on an article criticizing Rennert et al., a recent Nature piece that calculates a cost of carbon by summing costs from now until 2300. One of my criticisms is that, given the rate of technological change in recent centuries, we have almost no idea what the world will be like in 2300, what features of the climate will be costs or benefits and by how much.

My initial idea was to cut off the calculation at some earlier date, perhaps 2100, but that introduces an arbitrary discontinuity as well as ignoring technological change earlier than that. A better and continuous solution, since the paper is producing a probability distribution rather than a single value, is to have the uncertainty of the costs increase over time. If the estimate, before allowing for technological change, is that cost in year t has a mean of Ct, a standard deviation of Ut, replace that with a mean of Ct, a standard deviation of Ct*e**(A*t), where A is a measure of how fast you believe uncertain technological change increases the uncertainty of the cost.

That would leave the mean of the total cost unchanged but increase the variance. If you think, as I do, that technological change will tend to reduce costs, for example because improved medicine reduces the effect of temperature on mortality, put in an additional factor of e**-(B*t).

How do you pick A and B? For B you could try to see how fast each category of cost calculated for a given amount of warming has decreased over time. Lay et. al., for example, reports the effect of calculating the mortality cost of a given amount of warming using numbers calculated with data from two periods thirty years apart; one could do something similar for other costs. 

I don't have a good idea of how to calculate A, save that it should not be zero, as it implicitly is in Rennert.

This is a first pass at the problem. Perhaps commenters here can suggest a better way of incorporating uncertain technological change into a calculation of the social cost of carbon.

Inflating the Cost of Carbon 2

In my previous post I sketched my criticisms of Rennert et. al. 2017, a recent Nature article that attempts to calculate the total cost imposed by an additional ton of CO2. I have now written an article on the subject that I plan to submit to the EPA in response to their request for comments on Rennert and have webbed the current, I think almost final, draft. 

Comments welcome.

Inflating the Cost of Carbon

Comprehensive evidence implies a higher social cost of CO₂  is a recent article in Nature which claims to calculate how much worse off humans will be for each additional ton of CO2 released.  The costs are summed over a period of almost three hundred years, from now to 2300. As best I can estimate from Extended Data Figure 2, about two thirds of their social cost of carbon is incurred after 2100. 

This raises serious problems. To begin with, CO₂ output as a function of GNP depends on the technology for producing power. An order of magnitude reduction in the cost of either nuclear power or storage would almost entirely eliminate the use of fossil fuels, as would the development of cheap fusion power, either of which could happen in the next fifty years. That makes any estimate of CO₂ output over the next three centuries a guess about unknowable technological change.

Almost all of the article’s estimated cost of carbon is from either increased mortality or reduced agricultural output. Mortality from increased temperature depends on medical technology, home insulation and cooling technology, and probably other technologies. Agricultural yields depend on agricultural technologies. We have no way of predicting those effects.

How does the article deal with technological change? As best I could tell, it ignores it. It is predicting the effect of temperature changes on mortality over the next three centuries on the assumption that they will be dealt with using the medical technology of today, and similarly for other relevant technologies. It is predicting the effect of climate change on agriculture with the same assumption.

Even with fixed technologies, individuals can, given time, alter their behavior to optimize against a changed environment — dike against sea level rise, change what crops they grow and where, how well they insulate their houses. The article explicitly includes adaptation in their calculations of costs due to sea level rise and concludes that the result is only about 1% of their total but, as far as I could see, it says nothing about the effect of adaptation of human behavior to higher temperatures on mortality. The agriculture piece mentions adaptation, but it was difficult to tell what forms of adaptation it was considering or how the effects were calculated. It says nothing about effects of progress in agricultural technologies to deal with the changed environment.

One of the things that affects mortality due to climate is income. Poor people have to go out in hot or cold weather more than rich people, are less able to afford well insulated houses or in other ways protect against the effects of climate. The rate of growth of per capita GNP assumed in the article's modeling, shown on Figure 1, implies that average incomes will have roughly tripled by the end of this century, by 2300 increased about eleven fold. As best I could tell, the calculation of mortality due to climate change entirely ignored that.

There is a second possible problem with the mortality calculations, although I am less certain of it since it is not entirely clear how they were done. The paper refers to the effect on mortality of unit increases in ambient temperature. That might mean increasing temperature throughout the year by one degree, it might mean increasing the average temperature over the year by one degree with whatever pattern of increase over the year they found in their data.

Hotter summers increase mortality, milder winters decrease it. Temperature increase due to greenhouse warming is greater in cold times and places than in warm, a pattern that can easily be seen in the IPCC projections of how much warming will occur where and its tables and graphs of change in minimum and maximum temperatures with global warming.

The article on which the Nature article bases its cost of mortality finds an average ratio of reduction in mortality to increase in mortality of .36. The IPCC report shows the ratio of the increase in minimum temperatures to the increase in maximum temperatures varying by regions, as high as three in some. If the article is assuming a uniform increase, correcting that error would sharply reduce the net mortality, in some regions to zero.

All of the errors I have described result in increasing the social cost of carbon. The article spends two paragraphs on things that might make the SCC higher than its estimate, says nothing I could find about things that might make it lower. For the effect of the new calculations on EPS policy, see The US Environmental Protection Agency Introduces a New Social Cost of Carbon for Public Comment.

Which Books of Mine Should I Publish in Hardcover?

KDP is again willing to do business with me and now offers a hardcover option, so it occurred to me that I might want to publish some of my books in hardcover as well as paperback, kindle, and audiobook formats. I plan to start with The Machinery of Freedom and thought it would be worth collecting opinions here on which, if any, of my other books I should bring out in a hardcover version.

My self-published books:

The Machinery of Freedom 

Price Theory

Hidden Order

Legal Systems Very Different from Ours

Salamander

Brothers

A Miscellany

How to Milk an Almond, Stuff an Egg, and Armor a Turnip

Should I Be Mad at Amazon/KDP?

My previous series of posts describes the sequence of events. They sent me an email saying that, because I had multiple accounts and my accounts were connected with one that had violated their guidelines, they were terminating my account, would not permit me to open another, would not pay me royalties accumulated between the last payment and the date when the account was terminated. All of the books of mine that I had self-published vanished from Amazon.

I wrote multiple replies, pointing out that so far as I knew I had done none of those things and asking what connection they thought I had to what account. The only response I got was to be told that they had reviewed the case and my account was still suspended. All their messages were form letters. When I received two identical form letters responding to two quite different emails of mine, one sent three minutes after the other, both purportedly by the same person, I concluded that I was interacting with software, not humans.

Today I received an email telling me that my account had been restored. There was no explanation and the tone of it — "you must review your catalog and remove any other titles currently available for sale on Amazon that do not comply with the KDP Content Guidelines" — implied that I had done something wrong, although they were willing to forgive me if I behaved myself in the future.

The natural reaction to that behavior is to be angry at them, advise anyone who asked me about self-publishing to avoid KDP, and put up my books using one of the other services, something I had already started to do.

That would be the appropriate response to a human being who treated me that way but I am not sure it is appropriate here. KDP is not a human being. It is a firm that deals with a very large number of authors, some of whom probably do things that violate their rules — the obvious two being copyright violation and pornography. They ask for reports of violations. It would be nice if every time a violation was reported to them a competent staff member spent the time to carefully check out the report, but competent staff members are expensive. It may make more sense, from their standpoint, to use software to look for possible violations of their rules in accounts reported to them, even if the software doesn't do a very good job. 

My interaction with them was irritating and it lowers my opinion of KDP, but I am not sure that if I were running things I could do better.

Amazon/KDP Has Reinstated My Account

I conjecture that the case finally reached a human being, whether due to my efforts, someone else's efforts, or random chance. The response is still a form letter, given the reference to other titles that do not comply with the KDP content guidelines. The previous messages never claimed that any of my titles did not comply with their guidelines. 

They have not told me whether they are paying me the royalties accumulated between the last payment and the termination of the account, which their previous messages said would not be paid — my guess is not.

I am mostly through the process of putting Legal Systems Very Different from Ours up on Barnes and Noble and plan to complete it and see if I can, as I think is the case, publish with B&N and have the book on Amazon as well. I expect I will put the rest of my books back up with KDP.

My kindles appear to be back up on Amazon. It looks as though I have to republish the paperbacks but the information is still there, so it's just a matter of clicking through the pages. I am doing it for Machinery, will see if that works.

Amazon's Catch 22

The email from Amazon/KDP telling me that they had terminated my account said:

We are terminating your account effective immediately because you have multiple accounts, which is a violation of our Terms and Conditions. Also, this account is related to an account that was terminated due to violations of our Content Guidelines.

As part of the termination process:
• We will close your account
• You're no longer eligible to receive any outstanding royalties
• You'll no longer have access to your accounts. This includes, editing your titles, viewing your reports and accessing any other information within your account
• All of your published titles will be removed from sale on Amazon

Additionally, as per our Terms and Conditions, you aren't allowed to open any new KDP accounts.

You can find our Terms and Conditions, here: https://kdp.amazon.com/terms-and-conditions

(bolding mine)

I cannot find the terms and conditions there. When I go to https://kdp.amazon.com/terms-and-conditions it says:

 a link to all rules and policies for participating in the Program provided on the KDP website at http://kdp.amazon.com/ and http://kdp.amazon.co.jp/ ("Program Policies");

When I click on http://kdp.amazon.com/ it takes me to a page that wants me to sign in. When I click on the sign in button, it takes me to a page which says "This account has been closed" and contains no information on terms and conditions.

As best I can tell, KDP terminated my account with the claim that I had violated their terms and conditions and once my account is terminated I can no longer see what those terms and conditions are.

Which I think justifies the title of this post.

Do I Have a Legal Case Against KDP?

A number of people have suggested getting a lawyer, perhaps demanding arbitration. My first reaction was that I didn't think I had, or should have, a case. One suggestion was that Washington state law might restrict Amazon in terminating the relationship. But while that's possible I wouldn't want to rely on such a law since I believe in freedom of contract. 

A better basis for a claim is detrimental reliance, that I bore the costs of spending time formatting my books for KDP in reliance on what they said their rules were, hence if they terminated my account with a false claim that I had violated their rules they owed me damages or a restoration of my account. So far I haven't found their rules, probably because the fact that I no longer have a KDP account prevents me from logging in for any purpose other than appealing my termination, but I can get someone else to do it.

A second question is whether it is worth the cost. Arbitration apparently would cost me two thousand dollars plus the cost of a lawyer. That's not a serious barrier in terms of my assets, since at this point we are pretty well off, but it's probably more than the monetary benefit of being on KDP instead of an alternative. As best I can tell, only KDP can get kindles of my books on Amazon, but other services can get print copies on Amazon and non-kindle ebooks on other platforms. 

There is also the cost of my time and effort to consider. Putting my books on Barnes and Noble would take some time too but so would putting them back on KDP if they let me, since they have apparently wiped all of the relevant files. 

Opinions?

Why You Can't Get Most of My Books

I recently discovered that most of my self-published books were no longer available on Amazon. Apparently KDP, Amazon's self-publishing arm, terminated my account in September, sending me a message I missed. They claim I had multiple accounts, why I have no idea, and also that "this account is related to an account that was terminated due to violations of our Content Guidelines."

No explanation other than that. 

I have replied to them asking what is going on. Assuming they don't restore my account, the alternatives are either to find another self-publishing firm or to put up all my books on my web site in both pdf and ebook formats for free — although that doesn't provide print copies.

Any opinions? Any of you  have experience with KDP competitors? Apple books does ebooks, but I don't think they do print books.