Garbage In, Money Out
In my Forbes column this week, I discuss the incredible similarity between the computer models that are used to justify the Obama stimulus and the climate models that form the basis for the proposition that manmade CO2 is causing most of the world's warming.
The climate modeling approach is so similar to that used by the CEA to score the stimulus that there is even a climate equivalent to the multiplier found in macro-economic models. In climate models, small amounts of warming from man-made CO2 are multiplied many-fold to catastrophic levels by hypothetical positive feedbacks, in the same way that the first-order effects of government spending are multiplied in Keynesian economic models. In both cases, while these multipliers are the single most important drivers of the models' results, they also tend to be the most controversial assumptions. In an odd parallel, you can find both stimulus and climate debates arguing whether their multiplier is above or below one.
t m colon:
Keynesian Eco-nomic Stimulus
To fight climate alarm deflation apply the Keynesian multiplier of 3.14 to increase the velocity of rising temperatures. Float this number into the academic atmosphere to achieve the correct pi-in-the-sky results. The overheated forecasts will be strongest centered around college campuses and government bureaucracies creating the urban myth island effect. This is little felt in the rest of the country because non-experts confuse falling temperature with cooling when they should confuse it with warming.
Meanwhile the government runs a temporary deficit of evidence by selling carbon credits, a type of climate bond or government insecurity. Carbon credits are redeemable in Nobel prizes and government grants which power the green economy.
The trick is to hide the decline in prosperity from the public with ciro-stimulus clouds formed in the upper strata of acedemia. This is accomplished with carefully constructed computer programs using HMML (Hansen-Mann Made-up Language) showing things were always worse than they really were. This appears-reviewed process generates positive feedback in the press against CO2 ensuring, whether temperatures rise or fall, climate justice saves or creates jobs offset from the private sector to the government.
Forty-nine percent of Keynesian climate experts are certain 50% of the above is true. Therefor it is 99% settled that climate stimulus will relieve currently depressed environmentalists preventing their bubbles from busting.
July 23, 2010, 12:48 pmRetardo:
Objectively speaking, "multiplier" is a much more scientific word than "fudge factor". That makes it scientific. I'm a virgo, so I know science when I see it. Stop politicizing the science!
July 25, 2010, 7:30 amHenry Bowman:
As I recall, Keynes stated that the multiplier for government spending was 4. Keynes, though, was a person loathe to examine actual economic data; the number 4 was literally pulled from his imagination. Politicians love it, as such a number provides cover for additional government spending.
Most actual studies indicate that the multiplier is probably less than 1.0. In other words, a net loss.
July 25, 2010, 9:01 amMark:
I think the real problem with the Keynsian models is
1: They assume government runs at the same efficiency as everyone else.
2: They don't take into account the cleansing effect of having a turndown - where bad companies and bad investment ideas are allowed to go bust. This increases the dead wood in our corporate society to the point where even 2 - 3 trillion in stimulus spending can no longer accomplish anything.
July 27, 2010, 8:06 am