I came to being a libertarian because of the math. I started with the idea that if we start with microeconomics, game theory, and then formally aggregate a group of individuals we can come to macro economics. I did this by mirroring Gibbs approach to deriving statistical mechanics. Translated into econo-jargon, a society is just a bunch of people added together. Thus statistical economics was born. When I explored the consequences of this framework in environmental ethics, I saw I had no choice other than to accept libertarian principles. There is more that needs to be done, and so here we go. Continue reading
I am in the process of reading John Rawls’ A Theory of Justice. What strikes me is his assumption of the world being fixed. That individuals do not change with time as they grow and experience more. His distribution of wealth is similarly fixed in time and is bequeathed by random chance. The purpose of his conception of justice is to nullify “the accidents of natural endowment.”
In a statistical economic framework, individuals maximize their entropy-freedom, based upon the constraints that they are given. When we look at the society from a wider veil of ignorance, one where we as the framers of the society are unable to uniquely identify the individual members, we treat those individuals the same. They have different knowledge, characteristics, and allotment of resources. They act with their full knowledge, the sort that Hayek calls practical knowledge. What is uniform is our ignorance of their specific and uniquely identifiable features. This is very different from Rawls. He assumed that we ignored our ability. We are here allowing it, not denying it. This has some fundamental impacts on the outcome. Continue reading
I had a revelation last night about the electrical grid. I was responding to an old friend’s comment where he stated that we needed distributed generation. I could have used the example of Mao’s Great Leap Forward with the blast furnaces in everyone’s yard, but I wanted to maintain our friendship, and stuck to Riccardo’s comparative advantage argument instead.
Then it hit me. Prior to 1970, electric generators were located very close to the point of consumption (I am talking US here). This minimized the line losses. Interconnects were put in to allow for some power sharing especially in the event of a forced outage. In general, the system was stable and one outage in one location would not necessarily affect another. It was also characterized by a larger number of smaller generators, this applied to every thermal generator. Continue reading
A thermodynamic paper on a renewable energy source on an economics blog? Seriously? Yes seriously.
The paper is my first attempt at applying the principles of statistical economics into other fields. I model the consumption and production of various sources of electricity. Electricity is a pure human creation for human use and is the defining characteristic of modern life. So yes, it is all connected.
The results shocked me when I saw them. The power of the method is readily apparent and starts to lay bare our understanding or lack thereof of energy production and consumption.
I look forward to your comments.
I recently wrote a post about using property rights to avoid the tragedy of the commons. Jesse Jenkins, of The Energy Collective, responded to my draft post that he thought my idea of allocating property rights based off of land use was too complex. I assured him that it was not and gave a logical and concise rebuttal. However, his challenge to me left me thinking about how to simplify the regulatory approach. This post is my effort to sketch out such a simplified approach. Continue reading
The short answer is, it depends. But on what? The purpose of this post is to etch out how we can estimate what level of government we need. The recent actions of my government (United States) restricting our civil liberties in the name of security got me thinking about the subject. I ranged from reflecting back on my socialistic youth to contemplating the consequences of anarcho-libertarianism. The answer came contemplating Hayek’s notion of emergent social order and trying to understand why and where that social emergence comes from. Continue reading
In the essay below, I explore the consequences of current energy and environmental policy and suggest an alternative set of solutions based on private property rights to resolve cost externalities and foster innovation. The essay is a little longer than I hoped. It is in two parts, the first identifies the failures in current policy, and the second part identifies how we can implement a more enlightened environmental policy.