Knowledge Problem

Lynne Kiesling

Some things catching my attention this morning:

1. The Kauffman Foundation’s Keith Mays reports on his time at the SXSW Interactive conference via Tim Kane at Kauffman’s Growthology blog. SXSW isn’t just a music festival; it’s a focal event for film and for digerati as well. In part he analyzes the role of Twitter, and I thought this observation was quite interesting:

Another way I saw Twitter being used was as a “backchannel” during sessions. While a presentation or conversation was happening on stage, there was also a dialog going on among attendees. Often, during one of the interview sessions, the facilitator would monitor this backchannel and selectively weave a question or comment from the audience into the conversation. This dialog could then continue on after the session was over, particularly if it had been lively or provocative. In this use, Twitter is a very efficient, low overhead technology for encouraging a mix of real and virtual conversation.

2. This NYT op-ed from Richard Moe, president of the National Trust for Historic Preservation, discusses the value of improving the energy efficiency of existing homes instead of tearing them down and building new ones. He argues correctly that renovation and improved energy efficiency can use fewer resources than demolition and new construction. Of course, as president of a nonprofit advocacy group his main incentive-changing weapon of choice is to inveigh against energy inefficiency and to use his public pulpit to implore homeowners to increase their energy efficiency renovations in old homes. His argument would have more impact in changing individual homeowner incentives and reducing energy use if he used his pulpit to argue for meaningful regulatory reform in retail electricity markets. Want a real incentive to insulate this old drafty house? Make electricity service costs more transparent to consumers, and enable them to choose retail products and services that reflect those costs, giving them incentives to reduce their electricity use overall and during peak periods and enabling them to pay the low overnight prices that reflect the low costs of electricity service at that time.

3. The new guard at Common Tragedies (Danny, Andrew, Josh) have been blogging up a storm about carbon offsets. Start with Danny’s 3 April post and follow the links. I’m glad that they are paying attention to this, because it’s a topic of great interest to me. Conceptually it’s great, right? Very Coasean, right? You pay for the harm you create, thus internalizing its cost into your own decision-making. Thing is, carbon offsets are great, except when they’re not. They have transaction costs, enforcement costs, and maintenance costs too, just like all other environmental harm mitigation approaches. My favorite story was when Coldplay was touring to support they X&Y album (which I found distinctly unimpressive, BTW) and they paid for enough trees to be planted to offset the carbon implications of all of their travel, lighting, etc. … or not. Almost all of the trees died, because they had not paid for maintenance. In his post Danny makes the important point that the administrative costs of managing carbon offsets can be large and cumbersome. I would add to his points that they also reinforce the already-too-subtantial self-aggrandizing enlargement incentives within the big federal government. In other words, government-administered carbon offsets are very likely to encroach on individual liberty in ways that I find insupportable. Private companies coming up with credible offsets, and the EPA serving as an information provider on available offsets, is one thing, and a proper public policy approach to offsets would focus on that. But with this Congress and this mood I am skeptical that they are capable of doing anything that reasoned and sensible.

4. I haven’t been writing about federal government policy, financial markets, the stimulus package, etc., largely because I’m a “glass is half full” girl, and I am trying to maintain my sunny demeanor in the face of federal binge-purge uncertainty-inducing policy announcements, increasing debt, rising taxes, and widespread bludgeoning of  our individual economic and civil liberties. I’ve also been forebearing because folks like Don Boudreaux at Café Hayek have been saying things with which I broadly agree. See, for example, his letter to the editor of the WSJ in response to Paul Singer’s argument that “free-marketeers should welcome some regulation”:

First, Mr. Singer ignores the possibility that errors made in the private sector – such as balance sheets leveraged too highly – were artifacts, not of too little government intervention, but of too much.  Double taxation of profits combined with deductibility of interest on debt; implicit government backing of Fannie and Freddie; and (most significantly) the Fed’s monopoly control over the money supply, are just some government policies that might have promoted the great bulk of the private-sector errors that Mr. Singer laments.

Second, even if today’s problems are at root the fault of the market, Mr. Singer writes as if he’s proposing new regulations to an apolitical and unbiased agency, one immune to interest-group pressures and to the weaknesses in human judgment that Mr. Singer himself believes contributed to the market’s implosion.  I dare say that no error in judgment is so dangerous as the one that leads Mr. Singer and others to regard government as being something akin to a god-like institution.