I started this blog many years ago on the idea of sustainability. This involved the issue of the resources we use on planet Earth, the effect on its living beings and what can business do. In the subsequent years the whole thing has revolved around climate change or global warming. It was about carbon credits, cap and trade, taxes by government and other things.

I have come to an understanding in the past year or so that there are more important things to worry about than climate change for the time being because of their impact on humans and the world like malaria or extinction of species.

However, the emails from East Anglia in the UK which are called Climategate now and the continuing work of many skeptics around the world on the works of Pachauri, the head of IPCC, the glaciergate issue of the Himalayas etc has proved that there is a bigger problem of deceit and data manipulation going on.

I will be going on February 4th (incidentally my wedding anniversary) to listen to Lord Monckton in Adelaide. He is a sharp eye who has done some great work around distilling the science and punching a whole in Al Gore’s work and others.

The tide is changing and I think I am not longer worried about climate change. There are many environmental issues to worry about and there are some great things to be achieved by business and technology.

This whole exercise has taught me many things about “so called experts”; politics; environmental groups; data manipulation; mass marketing…etc.

I am not sure where the focus of this blog will go in the coming weeks and months.

I want to leave with this graphic from a presentation by Burt Rutan. Rutan is the winner man behind SpaceshipOne which was the first private funded aircraft to go into space and come back twice within 2 weeks. His design is behind Virgin Galactic.

Charlie Munger in his speech on Wordly wisdom to Stanford students. He was explaining the importance of psychology and more importantly how more than one principle of psychology can interact and multiply and become a powerful force. The first thing that comes to my mind reading this is the corruption in India and how it continues.

It can’t be emphasized too much that issues of morality are deeply entwined with worldly wisdom considerations involving psychology. For example, take the issue of stealing. A very significant fraction of the people in the world will steal if (A) it’s very easy to do and (B) there’s practically no chance of being caught.

And once they start stealing, the consistency principle—which is a big part of human psychology—will soon combine with operant conditioning to make stealing habitual. So if you run a business where it’s easy to steal because of your methods, you’re working a great moral injury on the people who work for you.

Again, it’s obvious. It’s very, very important to create human systems that are hard to cheat. Otherwise, you’re running civilization because these big incentives will create incentive-caused bias and people will rationalize that bad behaviour is OK.

Then, if somebody else does it, now you’ve got at least two psychological principles: incentive0caused bias plus social proof. Not only that, but you get Serpico effects: If enough people are profiting in a general social climate of doing wrong, then they’ll turn on you and become dangerous if you try and blow the whistle.

It’s very dangerous to ignore these principles and let slop creep in. Powerful psychological forces are at work for evil.

[…]

You must stop slop early. It’s very hard to stop slop and moral failure if you let it run for a while.

In the wake of the earthquake in Haiti and the expected death of tens of thousands economists around the world are examining it from a economic point of view and coming to some amazing conclusions. In the case of catastrophic global warming; it is important to remember these conclusions.

Economic growth with strong institutions are the solution to catastrophic natural disasters.

Matthew E. Khan, a professor at UCLA, writes on his blog the damage in Haiti is connected to unenforced building codes and low quality cement and suggests his paper on this subject. In it, I found this gem of a graph. As seen below in the graph, the richer a country (right on the X axis) the lower the death raters per disaster (on the Y axis). This is incredible and it comes down to the money, building regulations, and equipment etc to manage it.

Another economist, Don Boudreax writing on Cafehayek writes this,

Re “Tens of thousands feared dead” (Jan. 14): The ultimate tragedy in Haiti isn’t the earthquake; it’s that country’s lack of economic freedom. The earthquake simply but catastrophically revealed the inhuman consequences of this fact.

Registering 7.0 on the Richter scale, the Haitian earthquake killed tens of thousands of people. But the quake that hit California’s Bay Area in 1989 was also of magnitude 7.0. It killed only 63 people.

This difference is due chiefly to Americans’ greater wealth. With one of the freest economies in the world, Americans build stronger homes and buildings, and have better health-care and better search and rescue equipment. In contrast, burdened by one of the world’s least-free economies, Haitians cannot afford to build sturdy structures. Nor can they afford the health-care and emergency equipment that we take for granted here in the U.S.

These stark facts should be a lesson for those who insist that human habitats are made more dangerous, and human lives put in greater peril, by freedom of commerce and industry.

Sincerely,

Donald J. Boudreaux