Read what a Nobel Prize winner says about deficit reduction

by thaigov
Joseph Stiglitz’s Deficit Reduction Plan
[Via Daily Ideafeed | Big Think]

In the next few weeks, the United States will be focused on deficit reduction. Analytically, the task of deficit reduction is simple: cu!ing expenditures and raising taxes. Politically, the task of deficit reduction is enormously difficult, for each cut in expenditure or increase in taxes hurts someone, and typically, some powerful group. … What matters is not the deficit itself or the short-run national debt, but long-run levels of the national debt. The country should be looking at its national balance sheet. Debt reflects only the liability side. In assessing the economic strength of a firm, no one would look just at its liabilities; they would also look at its assets. The single-minded focus on deficits and short-run debt is thus fundamentally misguided.

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He starts off with three points.

Given the enormous increase in inequality that has occurred in the United States over the past three decades, any measure that harms those at the bo␣om should also be unacceptable, and measures that impose undue burdens on the middle class should receive careful scrutiny.

Over the last 30 years, and especially the last 10, policies have been focussed on allowing the wealthy to grow their incomes, to the detriment of most Americans. Their median incomes have actually decreased while 65% of the income growth the last 10 years went to the top 1%.

There is a further principle which should guide deliberations: what matters is not the deficit itself or the short-run national debt, but long-run levels of the national debt.

The long term debt is what will drag down the economy and put our children in the hole from day 1. In addition, though, short term increases can have long term payoffs, especially when dealing with education, infrastructure or technology.

This conclusion is reinforced by the observation that what matters for debt sustainability is not the absolute value of the debt but the debt-GDP ratio.

It is the balance between debt and total GDP that is most important.

While I may not agree with all the proposals he makes, I do agree with these three points. If these were the real focus of either political party, I would be happy. We might have a useful debate and ceate a good plan of attack.

Unfortunately, I think I am doomed to be sad, given how poorly the discussion is going on right now.

Something to make you smile

While many are unbelievable but one is truly astounding. Wait for the last one, which surely must have been faked. Right?

Oil in the Gulf still present and affecting ecosystems

Latest Gulf data shows persistent shoreline oiling & lingering subsurface plume
[Via Deep Sea News]

This public press release from Roffer’s Ocean Fishing Forecasting just appeared in my inbox, offering the latest summary of oil fate in the Gulf. You can see from these NOAA photographs that there are many shoreline areas that still show heavy shoreline oiling (red color) as of two days ago, including Breton National Wildlife Refuge.

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While not a wide-ranging as some scenarios, it looks to be a persistent part of the Gulf for years.

Two hundred year doughts in 5 years along the Amazon

by Newport Geographic

Amazon rainforest recovering from its second 100-year drought in 5 years
[Via Dr. Jeff Masters' WunderBlog]

Life-giving rains have returned over the past two months to Earth’s greatest rainforest–the mighty Amazon–after it experienced its second 100-year drought in five years this year. The record drought began in April, during the usual start to the region’s dry season, when rainfall less than 75% of average fell over much of the southern Amazon (Figure 2.) The drought continued through September, and by October, when the rainy season finally arrived, the largest northern tributary of the Amazon River–the Rio Negro–had dropped to thirteen feet (four meters) below its usual dry season level. This was its lowest level since record keeping began in 1902. The low water mark is all the more remarkable since the Rio Negro caused devastating flooding in 2009, when it hit an all-time record high, 53 ft (16 m) higher than the 2010 record low. The 2010 drought is similar in intensity and scope to the region’s previous 100-year drought, which hit the Amazon in 2005, according to Brazil’s National Institute of Space Research. Severe fires burned throughout the Amazon in both 2005 and 2010, leading to declarations of states of emergencies.

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The reason this is worrisome is that the amazon is a carbon dioxide sink during normal conditions – about 2 billion tons of carbon dioxide. But in severe drought periods like this year, it emits closet to 3 billion tons, a 5 billion ton swing.

And these last two droughts were also like none other in the last 100 years or so. Droughts then happened about every 12 years during an El Niño year, when the Pacific is warmer. The drought in 2005 and 2010 did not happen in El Niño years. In fact, 2010 was a La Niña.

The last two droughts appear to have been caused by unusually warm Atlantic Ocean waters. And modeling from before this year suggested that major droughts would happen once every 20 years. Yet we have had two in 5 years. This indicates that there is a positive feedback loop in place here that is already moving faster than expected.

One researcher said “I’m genuinely quite alarmed by this. In some ways it kind of reminds me of when they figured out than the Greenland ice sheet was melting much faster than the climate models predicted it would.” If the Amazon is releasing more carbon dioxide than expected due to droughts, then that would be alarming.

Here’s hoping that this is just an example of a stochastic series of events occurring rather than a deterministic link due to increasing carbon dioxide. The nonscientific words would be that I hope these two events are due to random events and not to increasing carbon dioxide.

[Listening to: O Valencia! from the album "O Valencia! - Single" by The Decemberists]