December 2006 Archives

"In science you want to say something that nobody knew before, in language that everyone can understand. In poetry you are bound to say... something that everybody knows already, in words that nobody can understand."

--P.A.M. Dirac

I have recently been faced with a surprising problem. You may have seen my blog posts gradually shrink to smaller and smaller lengths. Superficially, this has been an interesting experiment to test how people respond to shorter posts, in comparison with the longer ones that I authored in the early years of my blogging existence. In point of fact, the anecdotal evidence suggests that shorter posts generate far more comments than longer ones; I suspect people are just too lazy to read a post requiring them to scroll down and down and down. More accurately, this change in the length of my recent posts was driven primarily by a lack of time and a desire to become more concise in my writing style.

However, as time passes and my winter break withers away, my drought of blogging has continued. I am inexplicably faced with a lack of topics to explore. I simply don't know what to write about. You can tell person is desperate when the only interesting thing that they can write about is how they have nothing to write about--although that is not even interesting. On the other hand, if I have already digressed to topics that are uninteresting, then the damage is already done: I may as well continue being uninteresting at will. So, there are two entirely unrelated and entirely uninteresting claims to consider.

Proposition 1: The US should stop subsidizing oil firms for the purpose of increasing domestic oil production.

I have often endorsed more radical versions of this claim (hopefully I will be more analytic in this post), but first consider a preliminary fact that I recently read: the US government will spend something like $48 billion over the next 40 years on incentives for oil companies to drill for more oil domestically and the US currently spends billions of dollars each year on such incentives [1]. It is unclear whether this expenditure is economically viable. Irrespective of economic viability or cost, defending this proposition requires a philosophical argument for why such subsidies are inherently bad in generality. So, this is what I shall offer.

Given the political rhetoric surrounding such subsidies, we must assume that the chief objective of this subsidy is to reduce dependency on foreign oil and to ultimately increase the robustness of the economy. We also assume that the government should take whatever action best accomplishes this goal. Thus if there is a perfect or near-perfect mutually-exclusive substitute for subsidies, then subsidies are undesirable because a superior opportunity would be foregone.

We must first investigate how subsidies inadequately accomplish their objectives. Firstly, consider the case of an oil company that just starts producing more oil domestically because of a subsidy. In this case, the amount of oil on the market increases suddenly by an amount x, lowering the price by an amount P. Importantly, this doesn't actually decrease the amount of foreign oil consumed. But okay, fine, it decreases the percentage of our oil from foreign lands. But there's a crucial problem here. These subsidies just act to increase the overall quantity of oil that the US consumes by lowering the price. There's no significant substitution that occurs because consumers don't care where their oil comes from. But since the long-run price is lowered through the introduction of more capacity, consumers change their consumption calculus to favor more oil consumption in the long-run. They buy less efficient cars, and the transition to alternative energy is slower. Because of the uncertainty associated with oil exploration, this additional consumption may very well require the importation of more oil to feed demand. This neither deals with the problem of foreign oil very well, nor does it increase the robustness of the economy. We are still faced with relatively high oil prices, particularly in the long run. We are still exposed to the vagaries of the oil market.

Considering substitutes for these subsidies renders them more unattractive. What if we spend money on subsidies for renewable technology? There are two considerations. The price of oil is unaffected and higher than it would be if subsidies were given to oil companies. Investment in alternative energies ultimately lowers their cost. This means that the probability of adopting alternative energy is highest when the oil companies are unsubsidized and alternative energy is subsidized. When 1 watt of alternative energy replaces 1 watt of oil energy, we actually reduce both the quantity of oil we import and the percentage of our energy that comes from foreign oil. This clearly comes with environmental benefits, and more effectively reduces our foreign oil dependency in percentage terms. Because alternative energy is independent from the oil market, it can actually be substituted for foreign and domestic oil, while domestic oil does not generate this same substitution effect (this statement is an idealization that is slightly imperfect due to transportation costs, I think). Furthermore, this fosters the creation of technology which is economically beneficial in many ways.

Strictly speaking, these two plans are not mutually exclusive--the government currently does both today. But they are rationally mutually exclusive: only a very, very stupid agent, like the government, would consider doing both. Doing both is actually counterproductive because oil subsidies lower the price of oil and therefore reduce the incentive to adopt alternative energy, which the government is also paying for. In the absence of unique and significant advantages to subsidizing oil companies in this fashion, we should cease all such subsidies.

Proposition 2: There were some more propositions, but I forgot them and didn't care enough to remember.

[1] http://www.nytimes.com/2006/12/22/washington/22royalty.html

Cannot focus: disturbances.

I'm up late working on a paper that I have been doing for two days straight. The revisions aren't done yet, but it isn't due until 2 PM tomorrow. At 3:30 AM I decide that I can sleep until 7 AM, and then go back to work.

Before I leave my computer, I check Facebook for lack of something better to do. Nothing new, so I click on Jonathan Kadish. Then it hits me, the vast majority of comments on Jonathan's wall are from females. Then I look on my wall. The vast majority of posts are by females. Then I look on the walls of the people who have posted on my wall: almost all posts are by females. For what it's worth, Kimberlee is the only distinct outlyer in this trend.

So the question is: do females use Facebook "significantly" (whatever that means) more than males? Perhaps they just comment more often? Interesting, but not necessarily surprising, I suppose.

Just 25 more hours...