Margaret Wente, in the Globe and Mail this week, writes that we live in an era of big “blow ups” that cannot be stopped.

The problem, as I see it, is not that Wente’s smartest people in the world have no idea how to stop it.  It is a combination of:

• People who think they are the smartest, but are not, trying to control things they don’t understand or refuse to understand the law of unintended consequences…
• The smartest people being sidelined because they make the “not smartest people” fearful
• The smartest people being prevented from do what would solve the problems because of bureaucratic restrictions, fear of retribution, or fear of being second-guessed.

On the subject of economics, the problems of the last few years are not failures of free market capitalism.  They are failures of government regulation to foresee how the free market would react to such regulation.   Reducing interest rates to sub 5% levels for nearly 10 years, coupled with government policies to restrict housing development in many areas, coupled with government policies created to increase home ownership did two things – it drove up demand and reduced supply.  Prices rose – as should be expected under a free market.  The problem became that people, and businesses, believed that prices would continue to rise, and therefore boring at very low interest rates against such assets was a good idea.  And for those individuals, this was a perfectly rational decision – except that the party couldn’t continue, because there was too much debt piling up and interest rates can’t stay at zero forever.

If interest rates were set in the free market (solely), they would have risen significantly as the level of debt in society increased – because lenders would fear defaults and want a larger return for the larger risks they were taking.  But with the government setting interest rates and backstopping banks lending into the market, the free market was solely distorted.

On the subject of oil drilling and the safety and environmental issues, it is only in times like this that the engineers are tasked with the exciting job of “fix it now and cost is no object”.  The problem is that it should have been avoided.  But how many businesses will keep working with a piece of machinery that is dangerous because stopping to wait to replace it will have significant negative financial impacts.  And what if the person who should make that decision, to shut down the plant to replace the equipment, has their job on the line based on the financials?  In some cases, those individuals will take the risk on the unsafe equipment because the risk to themselves (their livelihood) is greater than the potential consequences of the failing equipment.   As many incidents have shown, both in industry safety and the financial markets, the human ability to quantify risks is skewed.  Very unlikely events with very bad consequences are often underestimated because of their low probabilities – if you ever hear someone say “but that will never happen”, they have done exactly that.  The history of industrial accidents is filled with such events.  The financial crisis and the Deepwater Horizon incident follow this pattern.

Sometimes, mathematically modeling can help – as it does in the case of real insurance in large markets.  It makes senses to buy insurance for some events because it is cheaper for all of us to pool the risk.  This is even the logic of the hedge funds that try to “hedge” out risk.  But if the risks are underestimated (or misunderstood), when they happen all hell can break loose.

But sometimes, you just need to rely on the smart people, be it the engineers, financial wizards, scientists – to be allowed to make a call and the rest of us have to accept they won’t always be right – but we might be better of than demanding they always be right and therefore are too frightened to speak out or act.

Yesterday, there was a report in the Winnipeg Free Press, quoting the Minister of State for Agriculture, Jean-Pierre Blackburn:

“There is a need for new markets for the food sector like any other sector,” he told The Canadian Press. “But at the same time we know some specific aspects have to be protected.”

He said supply management allowed dairy and poultry industries to remain among the most profitable and stable in Canada.

“Here in Canada, supply management works,” said the minister.

“If we open our borders there will be huge difficulties for these sectors. There would need to be changes for the way we do things. And we’re functioning very well in Canada.”

“It’s part of the Conservative government’s tradition, to be close to the farmers,” he said.

Coudl the good Minister please tell me how protecting Canadian consumers from lower prices is good?

Could the good minister please explain why protecting our farmers from competition and preventing them from competing on the world market is good?  Does he not know that when Australia and New Zealand ditched their supply management system, they became some of the largest exporters of these products?

Supply management doesn’t work for Canadians, unless you are a farmer already in the system.  And that seems like a small group of people benefiting at the expense of the rest of us.

PBS’s Frontline had a very good documentary this week, discussing the dispute that has raged for the last 12 years or so regarding the safety of vaccination, particularly with regard to the misguided belief of some people that autism can be caused by adverse reaction to the vaccines.  I commend Frontline for staying on the side of real science, and not the witch-hunting fears of those who think temporal correlation means causation…

Many people who are dealing with children who exhibit development problems are looking for someone to blame.  The fact that they began to see symptoms in their children after vaccination is an interesting correlation, but correlation does not equal causation.  That is why so many studies have been done looking at the relationship between the MMR vaccine and autism, or thimerasol and autism.  But the studies have found no correlation, let alone causation.  Failure to find correlation means it is EXTREMELY unlikely that there is any relationship at all.  And without correlation, causation is nigh impossible to find – especially if you have no idea what the causation pathway might be.

The problem here is that the general public do not have sufficient understanding of the scientific method or statistics.  It is easy to see relationships, even where none exist – that is a human cognitive feature.  And when we are dealing with a single case (anecdote), many people fail to realize that this CANNOT show causation, without a lot more information of exactly how that cause/effect relationship is organized.  It is IMPOSSIBLE for medical science to prove beyond all doubt that a vaccine or drug is safe – but they can show that the benefits outweigh the risks.   Prior to the introduction of the measles vaccine in the US in the 1960s, hundreds of thousands of cases PER YEAR were reported, and the death rate was often in the hundreds.  Considering no scientific study has shown vaccines to have a such significant downside, we must side with real science and accept vaccination as a safe technology.

So please, have your children vaccinated – the need for herd immunity is great.

And remember, the only way we can ever discontinue a vaccine is if we eradicated the disease from the human population – as was done with smallpox in the 1970s.  We should have eradicated measles and polio by now, but fear-mongering has scared too many people away from vaccines, both in the developed world (in the case of measles) and the developing world (see Nigeria).

Prof. Ignatieff is proposing that the government get MORE involved in the production and sale of food in Canada, to help farmers, help Canadians eat healthier, and improve exports…

Wait, one of the reasons why many Canadian agricultural products aren’t exported is because of the supply management systems that make Canadian dairy, poultry and eggs uncompetitive on the world market.

And past government “help” for farmers has meant higher prices for Canadian consumers – so I want no part of this.

And Kevin Libin showed months ago in the National Post that local produce often has a higher GHG footprint than food from distant locales simply because growing some produce in Canada is inefficient.

Mr. Ignatieff – get out of the way and let the free market do the job it does best.

I do not often agree with Jeffrey Simpson, but he is bang on with his polemic against supply management and how Canada is being shut out of international free trade negotiations by our fanatical defense of poultry, egg and dairy farm protection.

As I have always said, supply management simply protects Canadians from lower prices.  It is time for Ottawa to banish this from the land.  New Zealand and Australia have shown the way to greater prosperity for these industries by allowing them to compete on the world stage.

Today, there is an open letter to President Obama from two of the twelve men who walked on the Moon and a third who was supposed to but instead survived perhaps the most harrowing ordeal of them all:

The United States entered into the challenge of space exploration under President Eisenhower’s first term, however, it was the Soviet Union who excelled in those early years,” the letter begins.”Under the bold vision of Presidents Kennedy, Johnson, and Nixon, and with the overwhelming approval of the American people, we rapidly closed the gap in the final third of the 20th century, and became the world leader in space exploration.

When President Obama recently released his budget for NASA, he proposed a slight increase in total funding, substantial research and technology development, an extension of the International Space Station operation until 2020, long range planning for a new but undefined heavy lift rocket and significant funding for the development of commercial access to low earth orbit.

Although some of these proposals have merit, the accompanying decision to cancel the Constellation program, its Ares 1 and Ares V rockets, and the Orion spacecraft, is devastating.

America’s only path to low Earth orbit and the International Space Station will now be subject to an agreement with Russia to purchase space on their Soyuz (at a price of over 50 million dollars per seat with significant increases expected in the near future) until we have the capacity to provide transportation for ourselves. The availability of a commercial transport to orbit as envisioned in the President’s proposal cannot be predicted with any certainty, but is likely to take substantially longer and be more expensive than we would hope.

It appears that we will have wasted our current ten plus billion dollar investment in Constellation and, equally importantly, we will have lost the many years required to recreate the equivalent of what we will have discarded.

For The United States, the leading space faring nation for nearly half a century, to be without carriage to low Earth orbit and with no human exploration capability to go beyond Earth orbit for an indeterminate time into the future, destines our nation to become one of second or even third rate stature. While the President’s plan envisages humans traveling away from Earth and perhaps toward Mars at some time in the future, the lack of developed rockets and spacecraft will assure that ability will not be available for many years.

Without the skill and experience that actual spacecraft operation provides, the USA is far too likely to be on a long downhill slide to mediocrity. America must decide if it wishes to remain a leader in space. If it does, we should institute a program which will give us the very best chance of achieving that goal.

Neil Armstrong - Commander, Apollo 11  (aka the first man on the moon)

James Lovell - Commander, Apollo 13

Eugene Cernan - Commander, Apollo 17 (aka the last man on the moon)

Now I don’t agree that The Constellation Program was the right program, but it was better than nothing…

It was nice to see thousands of people protesting tax increases in the streets of Quebec this weekend, but I am suspicious about what they really understand:

Participants called for the government to clean up its own spending before imposing new taxes

But, like the protestors in Greece a few weeks ago – do these people understand that Quebec cannot afford it’s social programs?  When they say “clean up its own spending”, do they understand real cuts are necessary, or are they hoping for “efficiencies” that have never before been found in a government bureaucracy?

Once again, I am frustrated by the mainstream media’s insistence on turning every science story into a crisis or disaster.  The Globe and Mail today has the headline:

BPA Widespread in Ocean Water and Sand

containing such gems as:

Japanese scientists testing ocean water and sea sand have found widespread contamination with high levels bisphenol A, a chemical used to make plastic that’s able to mimic the female hormone estrogen in living things.

Its presence in sea water comes from the breakdown of the plastic trash being dumped into the sea and from the use of the compound in anti-rusting paints applied to the hulls of ships. BPA is man-made and does not occur naturally in the environment.

and:

Because BPA is able to stick to substances, the highest levels detected were in sand, at a staggering 28,000 times Environment Canada’s proposed limit for water.

Many scientists have been concerned about BPA because it has a shape that allows it to fool the body’s cells into viewing it as the same thing as naturally occurring estrogen.

The problem is, this isn’t entirely true.  In a recent months, the editor of Chemical & Engineering News (subscription required), the weekly magazine published by the American Chemical Society, has written the following:

1 March 2010 : The fact is that the evidence linking BPA with adverse health effects is weak. Many studies have been carried out, and the results have been contradictory. This is why FDA has acted cautiously with regard to BPA and why the chemical and food-packaging industries resist stringent regulation of it. FDA announced earlier this year that it has “some concern” about the potential health effects of BPA in infants and children, but also said that more research is needed to fully assess the safety of the chemical.

Nevertheless, the drumbeat against BPA continues. Once suspicion of any kind has been leveled against the safety of a chemical, watch out. No amount of contrary evidence will ever convince some chemophobic environmentalists that use of the chemical should continue. Ban it. Period. It’s no wonder the chemical industry shudders at the mere mention of the precautionary principle.

A front-page story in the Feb. 23 Washington Post, “Replacing BPA in Cans Gives Foodmakers Fits,” carries on in that tradition. Despite the fact that it calls BPA a “synthetic estrogen,” which it isn’t (BPA exhibits weak estrogenic activity, but it is not related to estrogen structurally), the story is, for the most part, factually accurate. Its underlying premise, however, is that exposure to BPA is dangerous. Running throughout the story is the assumption that BPA should be removed from all food containers.

No one has shown that adults exposed to BPA at the levels that leach from food container liners suffer any harm. Potential replacements for BPA don’t work as well and very likely will pose risks of their own. BPA and the polycarbonate plastics and epoxy resins that are made from it are useful chemicals that are getting a bum rap from people who don’t know what they are talking about.

And previously:

20 July 2009 :  Another bad idea, in my view, is the agitation to remove the bisphenol A-based epoxy resin liners from food and beverage containers. This is one of those hysterical overreactions that give environmentalism a bad name.

The main problem, writes Senior Editor Melody Voith, “is the lack of a ready replacement for epoxy that meets the canned food industry’s needs. Epoxy liners have been used in cans since the 1950s, helping preserve everything from peas to tomatoes to soda. Existing food-grade substitutes are not popular because they cannot be used as broadly, are more expensive, or both.”

It probably makes sense to have removed BPA from baby bottles; infants are a particularly susceptible group and should receive an extra level of protection from substances that can harm them. But the science pretty strongly suggests that BPA at the levels humans are exposed to from epoxy liners in food cans is safe. Safer, probably, in a holistic sense than whatever substitute can be found.

Emphasis in blue is mine.  My opinion on this matter is that BPA is getting driven from the market based on supposition, overblown media reports and fear.  But not science.  Science doesn’t really show that this stuff is dangerous.

One of my readers has asked a question about climate risk.  Recently, statements have been made in various publications, ranging from Scientific American, Discover and The Economist positing that:

Action on climate is justified, not because the science is certain, but precisely because it is not.

This is a combination of the precautionary principle and the logic of buying insurance.

The fundamental problem with applying this to the climate change issue is that the likely magnitude of the problem is not very large (if it exists at all), and the costs to mitigate the supposed source is ridiculously high.

One buys fire insurance for your house because that while the risk of fire is small, the consequences are catastrophic.  But you do it because the cost of insurance is low.  If the cost of fire insurance was, say 10% of the replacement cost of the house on an annual basis, you wouldn’t buy it.  You’d bet that you wouldn’t have a fire.

With regard to the climate, while the IPCC has claimed very wide ranges of potential temperature increases, 1.4°C to 6.4°C, the probabilities lean much more to the bottom end of the range.  This must be particularly considered as the data of the last 12 years indicates a leveling off of global temperatures, even with increasing CO2 concentrations.

The question of whether such risks are catastrophic must be compared to past temperature changes and the impact on the civilization and ecosystems.  As there is significant evidence that the Roman and Medieval Warm Periods were warmer than today and the consequences for civilization was good, I would posit that attempting major changes to our economic structure in the name of “maybe things are going to go bad” seems awfully foolish.

Second, the cost of the such mitigations efforts must be compared to the risk.  Capture of CO2 costs >$100/tonne.  For Canada alone, this would be >$100 Billion just to reduce emissions by 17% from 2006 levels to by 2020.   This will result in us being 7% poorer than if we do nothing.  Are we willing to pay that much for that little change in emissions.  Atmospheric concentrations will still be rising…  To begin to reduce atmospheric CO2 and actually “stop” the suspected warming will cost a lot more.

Plus there is the question of whether it is even possible.  Replacing fossil fuels with wind and solar isn’t going to work unless there is a major improvement in PV cell technology and cost.  Nuclear could do some of the work, but environmentalists don’t like that and the regulatory structure makes it expensive – and the projects take too long.   Replacing 100 years of infrastructure isn’t going to happen in 40 years while still growing the economy.  This is why I used the cost of carbon capture as the yardstick – only it will be able to happen fast enough…

We must also look at whether adaptation is the better path.  People have adapted to climate change before – just not with the population we have.  But they also didn’t have the advantages of modern technology or free market forces that will create incentives and opportunities.

The “act now” crowd are responding to a statistically small risk with an exaggerated consequence – much like a lot of the health insurance programs in the United States – they cost too much for what they really do.

The real problem with the proposals to “act now” are that this action is to be arranged and operated by inefficient and corrupt government and supranational agencies, like the UN.   Adaptation will happen at the level of the individual, village, city, and nation, with entrepreneurs figuring out how to turn challenges into opportunities and profit.

So say no to “act now” and prepare to adapt if things do change.

While this issue has been hashed over a lot, I felt it was necessary to put in my view.

The Own the Podium program has been a huge success, with Canada winning more gold medals than any other country has ever won at the Winter Olympics.  While we didn’t win the most total medals (the USA and Germany bested us there), who cares which country that won the most bronze medals?

The Own the Podium program was successful for exactly the reason apologies were being offered a week ago.  The push to be the best is what gave us success.  I suspect that Canadians and the Canadian Olympic Committee are happier today with this success than anyone predicted.

While it was heartbreaking to see Mellissa Hollingsworth break down after her failed attempt at skeleton, one cannot fault her dedication to succeed.  Sometimes you have to put everything on the line to win, and in endeavours where hundredths of a second count it doesn’t always work.  Ms. Hollingsworth, Devon Kershaw (50 km x-country) and the alpine team’s failures to win medals wasn’t because they didn’t try.  It was because they were unwilling to settle for anything less than a gold.  I have great pride in all our athletes at these games (and all the volunteers who made it successful).

I am disappointed in those commentators and officials with the COC who felt it was necessary a week ago to apologize and be critical of our performances to that point.   From the beginning, the expectation was that Canada’s best chances for medals were in the final days.  Did they have to be so stereotypically Canadian that we had to question our motives and methods before the job was even done?  We are the greatest country in the world.  We have the potential to be better.  We won more gold medals at the Winter Olympics that Germany and the United States, who have 3 and 10 times our population respectively.

We owned the podium.  Stop apologizing.