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« What on earth is Ewing doing? | Main | Climate change and academic oversell »
Monday
Nov092015

For discussion

Industrial scale evil can usually be traced to (a) perverse incentives and/or (b) use of low discount rates.

Discuss.

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Reader Comments (26)

............ AND.................

Nov 9, 2015 at 10:09 AM | Unregistered CommenterAnoneumouse

And any other source of market failure.

For example where a market doesn't exist (because perhaps the product is unaffordable) then the allocation of resources will be inefficient.
An example would be insurance premiums for a nuclear meltdown. No-one could pay for half of the UK being uninhabitable. So (although the probability is very low) no-one offers premiums to balance that risk and that risk is inefficiently assessed.

Another case would be where a cartel or special interest group has control of the market.
Example: Under the proverbial right-winger Ghenghis Khan, he had everything and no-one else did. He got to set the market price. And that was also inefficient due to a lack of competition.

This is far more probable to occur than is obvious, in the modern world.

With the percentage of the world's wealth held by the super-rich constantly increasing the market follows the capital and becomes less competitive. As the number of players with the capital are fewer and fewer.
In addition, they are bound together by a social class bracket that supersedes religions and nationality.

The proposition only refers to two forms of market failure. But there are others.

Nov 9, 2015 at 10:43 AM | Registered CommenterM Courtney

I think it would be more accurate to say that industrial-scale greed is fed (and therefore encouraged) by perverse incentives and low discount rates.
Evil takes many forms not all of them market-related.

Nov 9, 2015 at 10:58 AM | Registered CommenterMike Jackson

There is always a moral dimension though. When faced with perverse incentives you don't HAVE to act perversely. There is always the option of sticking your hand up and saying "Hey everyone - these incentives are perverse. Let's change the law here before bad things happen".

Nov 9, 2015 at 11:01 AM | Unregistered CommenterIan H

What on earth counts as 'industrial-scale' evil?

The CO2 scare has been very good to many people, has justified a lot of grant money, and stimulated a boom in an obscure sector of industry. Is this evil? We could certainly think of things we would have preferred to spend the money on, but the Chinese Photo-Voltaic and Mining industries are very happy.

I keep returning to that august tome, Charles Mackay's excellent book 'Extraordinary Popular Delusions and the Madness of Crowds'. In it he points out that mad panics in pursuit of idiotic aims is exactly how humans spend much of their time - they operate exactly as sheep in a herd. The whole fashion industry, for instance, is based on this fact. Is it evil? If so, humans are intrinsically evil, and there's not much point discussing the condition...

Nov 9, 2015 at 11:04 AM | Unregistered CommenterDodgy Geezer

M Courtney is right, there are plenty of ways mankind can work evil. In respect of 'perverse incentives', define peverse. Too often things seem like a good idea at the time and possibly what is lacking is a quick way of responding when you find out how any incentive is being abused.

Nov 9, 2015 at 11:25 AM | Unregistered CommenterTinyCO2

where did this question come from? No not our host.

Nov 9, 2015 at 11:44 AM | Unregistered Commenterjferguson

It's just the Golden Rule (those with the gold rule). Been that way for some time.

Nov 9, 2015 at 11:46 AM | Unregistered Commentercedarhill

mad panics in pursuit of idiotic aims is exactly how humans spend much of their time

This is exactly how I feel about CAGW. Whilst it is perverse and idiotic and a waste of resource, I don't fall into the 'reverse alarmism' that it's somehow the end of civilisation. People have always worried about crap, wasted time and resources on crap, pressured politicians to make stupid short-sighted investments in crap. At different times, the crap has been 'witchcraft', 'alcohol', 'the jews', etc and now it's 'climate'.

Nov 9, 2015 at 11:49 AM | Unregistered CommenterTheBigYinJames

People like to get something for nothing. me included.
The condition that we apply is that no one else gets hurt in any way.


when you thrown in a good cause and justify to yourself that the people getting hurt are not getting hurt or deserve to get hurt
that's when you go from mild selfishness to pure evil

Nov 9, 2015 at 11:53 AM | Unregistered CommenterEternalOptimist

Industrial scale evil can usually be traced to power hungry, status and greed.

Nov 9, 2015 at 12:28 PM | Unregistered CommenterMartyn

Perverse incentives. If perverse is taken to mean illogical, abnormal, unnatural, then paying people to grow crops to make fuel oil, rather than food, so people go hungry in a food shortage, whilst fuel can be obtained by drilling a hole in the ground, is evil on an industrial scale.

Blaming the resulting wars, strife, casualties, starvation, misery etc on everything else, simply compounds the perversion, with every year it persists.

'Green Capitalists' know that we are hugely dependant on energy, and are attracted by the perverse incentives that have been created by perverse politicians, relying on perverse science. Anyone who speaks out, is labelled perverse, or worse.

Apart from that, UK energy policy has been perfectly normal.

Nov 9, 2015 at 12:35 PM | Unregistered Commentergolf charlie

Define evil.

Nov 9, 2015 at 12:35 PM | Unregistered CommenterIvor Ward

And academic scale evil can be traced to the misuse of terminology to imply evil where it does not exist.

Nov 9, 2015 at 12:52 PM | Registered CommenterMikeHaseler

I don't see how that explains Al Qaeda or Isil or Putin for that matter, or most equivalent or worse evil doctrines that cursed us before they appeared.

Nov 9, 2015 at 12:57 PM | Unregistered CommenterJamesG

I just wish I was in the position to take advantage of almost free money from a central back at a 0.5% interest rate.

I'd take out a huge whack ostensibly to start, or invest in, some green-company which promises the earth but will never deliver anything of real value, pay myself very handsomely for several years, and then when it goes tits-up, say "Yeah, well. Sorry about that."

Nov 9, 2015 at 1:35 PM | Unregistered Commentermichael hart

michael hart 1:35 isn't that ENRON Economics? It has proved very successful, again, and again, for people looking at the short term investment.

Nov 9, 2015 at 1:57 PM | Unregistered Commentergolf charlie

Michael Hart, even better, borrow masses at 0.5% and re-invest in something paying 1.5%.......looks like a 300% profit to me .....or, if you are clever enough to know how to hedge so the underlying stock price hardly matters, borrow masses at 0.5% and use that to buy SHell B shares currently paying 7% OMG thats 1400% a year no wonder the rich really get richer...

Nov 9, 2015 at 2:06 PM | Unregistered Commenterbill

golf charlie

Enron economics can be defined by a sentence that ends 'short and curlies'

Nov 9, 2015 at 2:15 PM | Unregistered Commenteresmiff

Junk bonds financed traders' lifestyles plus some beneficial ventures but stole from everyman
Mortgage backed securities financed traders' lifestyles and stole from everyman.
Carbon trading finances traders' lifestyles and steals form everyman.
Each time, the pols seem to get more heavily invested in the cash flow stream, making the path to correction much longer.
Politician-Incentive Scam Schemes.

Nov 9, 2015 at 2:16 PM | Unregistered CommenterMark Fraser

Using the term "evil" means exploring the ethical and religious dimensions of the climate change movement. It is also important to recognize the human journey regarding morality.

Climate Ethics and Religion

The ethic of Good vs. Evil is a teleological paradigm, going all the way back to Plato, but still a reference for some today. This model asserts that values can be determined as eternal truths, applicable in all times and places.

Most people have moved to an ethic of Right vs. Wrong, a legal paradigm. Here morality is relative to a society that determines what is morally acceptable or not. And of course, there are variations both among different places, and within a single society over time.

Modern ethics has taken an additional step to an ethic of Responsibility vs. Irresponsibility, a contextual paradigm. Now moral behavior seeks the largest possible context: β€œthe greatest good for the greatest number.” This can lead to some strange choices, such as suicide bombers or pro-life advocates who justify murdering abortion clinic doctors.

It should be clear that when climate alarmists appeal to saving the planet for future generations, they are applying contextual ethics. Less obvious is the ancient religious notion that by making sacrifices, we humans can assure more favorable weather. These days, fossil fuels have become the sacrificial lamb required by Mother Nature to play nice with human beings.

Nov 9, 2015 at 2:32 PM | Unregistered CommenterRon C

If we take "industrial scale" to mean large scale rather than industrial per se, I think large scale evil can occur due to ideology combined with ignorance. This is what is behind the lights almost going out in Britain result from. When your ideology prevents you from seeing that the wind doesn't blow all the time and you can't store the electricity....blackout.

Nov 9, 2015 at 3:19 PM | Unregistered CommenterCraig Loehle

Souls suborned into collective obdience by soulless corporations, can and do raise Cain. Non -proft corporaation and quangos included.

Nov 9, 2015 at 4:21 PM | Unregistered CommenterRussell

The question needs to be rephrased ^.^
The words "industrial scale" really mean large scale but could imply industry.(Craig Loehle)
The rest: "(a) perverse incentives and/or (b) use of low discount rates." mean both big business and high finance.
Taking everything into account, I would disagree with a and b and agree with Martyn; it all stems from greed (for power and status) for power and from power all else flows.

Nov 9, 2015 at 7:25 PM | Registered CommenterDung

What discount rate was used in the Stern report? I seem to recall it was 0.1%, but I'm happy to be corrected.

Nov 9, 2015 at 8:15 PM | Unregistered Commenterrubberduck

It was 1.4% which was pretty low at the time. BY picking a low number it makes it seem cheaper to act now rather than later.

About this actual post : I don't know what the Bish is on about.
And he wanted us to understand he would have given us more info ..maybe it's some kind of weird test.
I'll wait for someone to explain it to me... I guess people who work with economics would know more.

I do know that the terms "low discount rate" "perverse incentives" & climate, come up in a PDF file about the thoughts of Jeremy Grantham This Time is Different March 20, 2012 by Michael Edesess ..Google it

Nov 10, 2015 at 5:29 AM | Unregistered Commenterstewgreen

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