Lexit: A Modest Proposal

In case you've been hiding under a rock, you should know that the United Kingdom voted last week to leave the European Union (said leaving is colloquially referred to as Brexit). 17.4 million Britons voted to leave. 16.4 million voted to stay. Now it is on the verge of falling apart. I say, as long as we are breaking up political unions, let's fucking do it. Balls to the wall. London ought to leave England.

Assuming that the Parliament actually petitions the E.U. to leave, Scotland will almost certainly leave the U.K. As the Scottish MP, Angus Robertson informs us, 62% of Scots voted to remain in the E.U. and they don't want to leave. The Scots voted down a referendum to leave Great Britain in 2014, but now they have an economic incentive to leave and rejoin the E.U. As part of the E.U. Scotland can be part of a $14 trillion free trade zone. As part of the a lonely United Kingdom, Scotland would only be part of a $2.6 trillion nation.

Northern Ireland voted to remain in the E.U. by but substantial majority of 57%. Now they will likely leave and rejoin the E.U. as well. There is even talk of Wales leaving the U.K. (even though Wales voted to leave). The United Kingdom will be neither United nor a Kingdom. It will just be sad little England and Wales (maybe) and some small scattered islands. Some of those islands might also leave.

London voted to remain by a hefty 60% to 40% margin. So why should the voters of London be penalized for having been born in London and not in Glasgow? The Scottish voters will get their way. The Scots will choose whether or not to leave the U.K. and rejoin the E.U. Why shouldn't Londoners have the same choice? If the Britons can Brexit, then London can Lexit.

At its heart, the Brexit vote is about direct democracy and self-determination. David Cameron promised to "give the British people a referendum with a very simple in or out choice to stay in the European Union ... or to come out altogether." Why stop there? London should have a choice. I think they should leave and rejoin the E.U. for the same reason that the Scots should. But at least give them a bloody choice.

London is certainly large enough to be its own city state. 8.6 million of England's 53 million people live in London . London has a GDP of approximately $572 billion. London would do better as part of the E.U. than as part of a neutered England.

London is the largest port in England and its financial capital. English importers and exporters finance their business in London and then ship goods through London. London is a transportation hub for the rest of England and provides a cosmopolitan venue in which to conduct business for England as a whole.

Of course, the rest of the English would be horribly harmed by the loss of London. But fuck them. London should enact high tariffs on English goods. It won't hurt Londoners much. They'll be able to buy cheap goods from the E.U. Most importantly, London should enact strict immigration controls. England's economy will certainly go straight into the toilet post Lexit. Londoners can't have filthy Englishmen coming in and undercutting the local wages, begging for handouts of the street. Even worse, some of the English could be terrorists bent on destroying the Londoner's way of life.

The English and the Welsh have shown that they are petty, small-minded, xenophobic fools. London cannot be saddled with such bumpkins. London is better off part of Europe than part of England. Lexit is the clear choice.

Note that some of these financial figures have likely changed due to the financial chaos in the wake of the Brexit vote. They are still more accurate than the Leave campaign's figures.

The Real Tragedy of Brexit

Last week, British voters voted to leave the European Union (referred to by the rather too catchy term Brexit). Since that time, the FTSE 350 (Britain's largest stock index, similar to the S&P 500) lost £140 billion of value. Britain's currency, the Pound Sterling dropped 11% against the dollar (and dropped a similar amount against every other world currency). The OECD predicts that British households will earn between £3,000 and £5,000 less per year in 2030 if Britain actually does leave the E.U. Every major organization that has examined the problem has predicted that Brexit will hurt Britain.

Namely these:

Despite that, the Britains voted to leave the E.U. The leave campaign was a mixture of scaremongering, xenophobia, misinformation, and flat lies. But I'm not going to talk about that. Jon Oliver does it better:

But the financial costs aren't the true tragedy of Brexit.

Now, the Scots are planning a new referendum on leaving the United Kingdom. Likewise, the Northern Irish will have theirs. Of course, this all makes sense, the Scots and the Irish voted overwhelmingly to remain in the E.U. They'll choose to leave Britain and rejoin the E.U. Strangely, the Welsh, who voted to leave the E.U., are now planning to have a referendum to leave Britain. Secession is contagious. Subdivisions continue.

Brexit will drive people apart.

Every boarder erected adds more distance between the people on either side. Expenses are higher. Profits are lower. Border guards must be paid. Families, friends, and lovers are separated by red tape.

We are hairless apes living on a tiny blue speck in a vast blackness. We are illuminated by a small star at just the right distance not to cook us or freeze us. A large rock from space could end the human race at any moment. We could end ourselves with nuclear weapons. We are in the process of ending ourselves with pollution. Truly, humanity is a delicate thing.

In the next fifty years, we must adopt sustainable energy and agriculture. In the next hundred years, we must reach an equilibrium with the rest of the Earth's ecosystem. In the next several hundred years, we must learn to deflect asteroids headed for the Earth. In the next billion years, we will need to find another planet to live on.

The E.U. benefits humanity.

We must all work together to solve the huge problems facing humanity. To this date, no two European Union members have fought a war. Instead, the nations of the E.U. have traded with each other. Citizens of member states have moved freely in order to make their lives better. Europe has welcomed refugees and participated in international space exploration. Most importantly, the E.U. has pushed hard for reducing CO₂ emissions to address climate change. The only truly effective carbon market is a cap and trade system that the E.U. has proposed.

Britain's exit from the European Union puts all that at risk. Britain is the third largest country in the E.U. by population and the second largest economy. It remains to be seen if Britain's exit presages the exits of other nations, but the E.U. is undoubtedly weaker. Britain is undoubtedly weaker. It's unlikely Britain will remain one nation.

When will we stop dividing?

There will always be those who wish to leave any political union, but when are such claims valid? Can ten men on ten acres declare independence from their nation? Can 10,000 men on 10,000 acres?

The human race needs to join together. Not split apart. Until leaving the Earth is an option, leaving political unions should not be.

Breaking: Britain Changes National Anthem

In a surprising move, Great Britain's House of Lords voted to change the country's National Anthem from God Save the Queen, a traditional hymn celebrating the Crown to Those Damned Blue Collared Tweakers, a hit by the 1990's alternative rock band, Primus, celebrating the rich tapestry of manual laborers who use methamphetamines.

The Crown issued a press release saying:

"Although God Save the Queen has served the empire for centuries, the empire is gone. Those Damned Blue Collared Tweakers better represents the new Britain and its strengths and challenges. Plus Primus is a bitchin' band and Les [Claypool] just shreds that bass."

Les Claypool, bass player and the composer of Britain's new anthem, said:

"Well fuckit. That's cool. I never wrote a national anthem before, but why not? Now we're negotiating with the French on the rights to Wynona's Big Brown Beaver."

Post Brexit Exclusive: May to become PM, England to Join New Free Trade Area

On Thursday, May 23rd, British voters voted 52%-48% to leave the European Union. The vote was derided in financial and political circles around the world. But what does it really mean? Yet Another Political Rant is pleased to publish an interview that sheds some light onto the future direction of the United Kingdom. Yesterday, I sat down with a Conservative member of parliament from England. He spoke with us on condition of anonymity.

YAPR: Many have suggested that another referendum will be held that could overturn the results of the last one. Or that perhaps parliament might not honor the referendum and instead choose to remain part of the EU. Do you think there is any way that the United Kingdom might decided to remain even still?

MP: Yeah, well, maybe. Everyone knows we fucked up, but it's too goddamned late. Merkel would have us back if we crawled to her on hands and knees and asked to toss her salad. We're out. That's it. Done.

YAPR: Do you have any inside information as to who might become the next prime minister?

MP: Yes. Theresa May will be the next prime minister of England.

YAPR: Excuse me, you mean, prime minister of the United Kingdom?

MP: Well, for a minute, maybe, but we jolly well pissed away the kingdom then didn't we? Scotland will hold another referendum and leave before you can wipe your ass. They'll join back up with the EU of course. Northern Ireland will probably join up with the rest of Ireland. I expect the Shetlands will join up with Norway and take all the North Sea oilfields with them. Of course the Falklands will be wanting to join with Argentina. Hell the Taffies might even leave and join up with the other sheep shaggers in the North.

YAPR: Is the situation really so grave for England?

MP: It sure as fuck is. Everyone knows the English are a bunch of racist arseholes who are too stupid to bother with. This Brexit vote is the most embarrassing thing since the Munich Agreement.

YAPR: So does England have a plan? How will England address the loss of such a large market for its goods and services.

MP: Oh there's a plan. I've been discussing this with Theresa. Everyone regrets pissing away our sweet trade situation, so we need to build another free trade zone.

YAPR: If England is so reviled how will you be able to sign trade deals?

MP: Well, we have to start at the bottom. To that end, I am working on a deal to for a free trade zone with North Korea, Myanmar, and the Central African Republic. We hope to add countries such as Sudan and Somalia soon.

YAPR: Do you have an other inside news to share with us?

MP: Sure. I need a dirty whore and some nose candy. Sod off.

The Cost of Getting Rid of Fossil Fuels

The climate change narrative goes something like this:

The burning of fossil fuels such as coal and oil emits large quantities of CO₂. That CO₂ traps heat from the sun that would otherwise be radiated into space. The trapped heat is causing higher temperatures on average as well as more intense droughts and storms. The changing climate is causing extinctions, diseases, and deaths. Glaciers and polar ice caps are melting and will flood our coastal cities unless we do something. We have to stop burning fossil fuels in order to avoid flooded cities, huge storms, terrible droughts, and other terrifying consequences. The economic costs of changing our energy infrastructure will be huge, but we have to save our coastal cities and ecosystems.

This climate change narrative is wrong.

Melting icecaps and droughts are predicted by the most recent Intergovernmental Panel on Climate Change Report. This report is based on sophisticated computer models which use more than a century of weather data. It was extremely thoroughly peer-reviewed and vetted. I'm not arguing with that.

We should stop burning fossil fuels because it will help the economy.

A revenue neutral carbon tax would both help stop global warming and improve the economy. A carbon tax is a tax on CO₂ emissions. Those are the emissions that cause global warming. A revenue neutral tax is a new tax which is offset by a decrease in other taxes. In the case of a revenue neutral carbon tax, the government would refund an equal share of the tax revenue to each American.

Coal miners and S.U.V. mechanics would lose their jobs, but solar technicians would gain jobs. So where does that leave us economically? According to Keynesian fiscal multiplier theory (review your macroeconomics 102 here), right back where we started. The carbon tax would depress economic output (lost jobs in the coal industry). Americans would spend their carbon tax refund checks disproportionately on solar and wind power (more jobs in those industries). Because the amount of the tax is equals to the amount of the refund, the effect on economic output (GDP) is neutral.

The carbon tax and tax refund puts money into the pockets of Americans who produce less CO₂ than average (those who consume fewer carbon intensive goods and services) and takes money from those who produce more CO₂. On average, the wealthy produce more CO₂ than the poor (when is the last time you saw a poor man with a private jet). The poor spend more of their income than the wealthy who save more. The monetary redistribution of the carbon tax and refund would stimulate the economy, increasing GDP and with it employment.

But we can do better. There will need to be improved energy infrastructure necessary to support the changes in energy production. Someone will have to build a new energy grid. Because the grid will support the new power sources that will sustain everyone, it makes sense that the government should pay for it. And low and behold, the government has a great source of revenue in the form of the carbon tax. It could take a portion of that tax and use it to build an improved grid. The increased spending would stimulate the economy even more than refunding the entire carbon tax. (Some percentage of the refunded tax is saved. That saved portion does not stimulate the economy.)

Have you seen the flaw in my argument yet? On its own, a carbon tax would make American industry less competitive. A factory in India would be able get its energy from the cheapest source possible (assuming India does not also implement a carbon tax) whereas a factory in Ohio would have to pay a carbon tax or buy more expensive clean energy. Companies would move production overseas. The carbon tax would be exporting both jobs AND pollution. Bad news. But it's easily fixed. The U.S. could simply slap onerous tariffs on goods from countries whose carbon emissions policy was not at least as progressive. As the largest consumer market in the world, every country will fall in line and adopt a carbon tax or something similar.

So there you have it. Of course, climate change is a great reason to implement a carbon tax. The scientific consensus is clear. Humans are causing the climate to warm and that warming will have dire consequences. We will have to address climate change in order to preserve our way of life. But if you don't believe that, fine. No problem. We should tax carbon emissions anyway. It will help the economy. The climate skeptic's economic argument falls flat on its face. Getting rid of fossil fuels won't cost us money. It will be a huge boost to the economy.

Hillary's Clinton and the Labor Market

Hillary Clinton has had a rough time so far. Trump has accused her husband of being a rapist and said that she's an "enabler." Berners have accused her of everything from the genocide to sticking chewing gum to the underside of the table.

In the past, I've explained why I was supporting Hillary. I've ripped on Bernie (he deserves more criticism). I've eulogized Ted Cruz. Donald Trump makes fun of himself.

But I haven't praised Hillary Clinton. She deserves more praise. And a foot rub. I'll leave the foot rub to Bill.

The Labor Market

Unemployment is at 5%, the lowest rate we have seen since the recession. Wage growth is improving but lackluster. Recently Business Insider published an interesting piece on the labor market. The number of unemployed people in the U.S. per job opening is down to pre-recession levels (about 1.5 workers per job). The average time to fill a vacancy is up to 26 days. That's the longest it has been this century. Notably the number of job openings per hire has skyrocketed.

So what to make of this? Either employers are being overly selective, or there aren't enough workers with the skills that employers want. Actually, those are two ways of looking at the same problem. There are enough un/underemployed people to file the job openings, but the job-seekers don't match the job openings. In short, there is a skills gap.

So how should we bridge the skills gap?

Hillary Clinton plans to give a tax credit to companies that employ apprentices. The tax credit will incentivize companies to create apprenticeship programs where they otherwise wouldn't. Companies will only hire apprentices for jobs where they have a need. The company hiring the apprentice has a need, it means there is a skill shortage in that area. Other companies are likely to have such a need. I.e. the skills the apprentice gains will likely be transferrable. The apprentice will contribute to bridging the skills gap.

Climate Change? An Easy Solution!

Okay a Relatively Easy Solution

Okay an Incredibly Hard Solution That's Better Than All the Alternatives

Recently I posted some simple math showing why we need to address climate change. But how, you ask? Big thorny problem, right? Well, yes and no. The solution looks like this:

STEP 1: Move to a carbon neutral economy

STEP 2: Remove greenhouse gases from the atmosphere

STEP 3: (Maybe) employ other cooling mechanisms

As usual if you want to skip to the to TL;DR Summary, I won't begrudge you your sloth.

A Carbon Neutral Energy Economy

Step 1 is the easy part. Humans emit lots of greenhouse gases, primarily as a result of food and energy production and transportation. We need to move to carbon neutral ways to heat our homes, commute to work, and grow our food. All of human activity should produce little to no greenhouse gases. We will likely have to use solar power, nuclear power, electric cars, non-traditional fertilizers, and many other technologies. In fact, we don't know what technologies will advance fastest or if there will be new technologies that we can't imagine. The government could subsidize these technologies, but it might choose the wrong technologies or the wrong companies.

A Carbon Market

We should let the market choose the technologies that will save the planet. Friedrich Hayek showed that markets (usually) allocate resouces and set prices more efficiently than central authorities, so we'll let the a market save the planet.

Hippies may claim we can save the planet by sitting in unheated mud huts and adopting a diet of grubs and grass, but they can fuck off. No one will do that. The politics of asceticism are a dead-end. The market has been an amazing driver of technological advancement, but those advances aren't guaranteed to be green. Government can fix that by providing the right incentive: a carbon tax.

Tax carbon dioxide emissions and net carbon emissions will decrease. People will find less carbon intensive ways to do whatever they need to do: light their homes, power their cars, grow their food. It really is that simple. Of course you'll need to tax equivalent activities as well (emitting a ton of methane is equivalent to emitting 25 tons of CO₂). There's a downside of course, climate deniers say. A new tax would severely stunt our economy and a lot of people would lose their jobs, right? Not if the carbon is offset with tax credits. At a macroscopic level, an increase in tax receipts decreases economic output, but we won't increase tax receipts. Instead, we will refund every American an equal share of the carbon tax collected. As an added bonus, this will be welcome relief for the poor who (for the most part) are engaging in less carbon intensive activities. Carbon intensive economic industries will suffer. However, the tax used to discourage the activity will be refunded, so low carbon industries will make up the difference. Simultaneously, firms that pollute less will prosper. Firms that pollute more will change their ways or go out of business.

Much of the world already puts a price on carbon emissions either through the carbon tax I just described or through more complex cap and trade system (which works more like the stock market of pollution). I prefer a carbon tax, but a properly implemented cap and trade schema can also work. Skip to the end for more discussion.

What would the tax rate be? It should start low and increase. Not too slowly, but not too quickly. This will give industry time to develop innovative energy solutions. Politicians should NOT be given control over the rate. That would be a recipe for disaster. If Congress ever grows big enough balls to implement a plan like this, they should protect it from future politicians by creating an independent council of economists and climatologists.

Atoning For Our Past Sins

Temperature increases lag CO₂ increases, so stopping CO₂ emissions isn't enough to avoid the worst effects of climate change. We must also remove CO₂ from the air. There are a number of possibilities for doing this. We could bury caron underground in the form of biochar. We could capture it from the air and convert it to methanol. We could fertilize the oceans and let algae do the storage for us. Here's the scary part. We need to reduce atmospheric carbon dioxide by 592 trillion kg (592,000,000,000 kg) to get back to pre-industrial levels. Current carbon capture and storage costs are around $40 per metric ton (1,000 kg). This would give us a cost of $23.7 trillion to return to pre-industrial levels of CO₂. However, that price is likely low for three reasons. First, current carbon capture technology is designed for power plant. Essentially, it's a fitting on a smokestack. Filtering carbon dioxide from the air would be much harder. Second, current carbon storage technology injects CO₂ gas deep underground. There's no way we could inject trillions of pounds of gas underground. We'll likely have to pull the carbon out of the CO₂ and use it for something or bury it. Third, as we suck CO₂ out of the atmosphere, the ocean will start to give off CO₂ gas. This is a good thing. There's too much of it there and it's causing ocean acidification, but we don't know how much is there and we'll have to capture and store a lot of that, too. We can only hope that technology will make it cheaper to deal with our CO₂ problem, but we can assume that the cost will be on the order of worldwide GDPs.

Unfortunately, bringing down the CO₂ levels might not be enough! Temperature changes lag CO₂ changes. We will likely have to employ additional cooling methods. We could seed clouds or stimulate volcanic eruptions to reflect more sunlight. Or we could do something even more creative. These are drastic actions not to be undertaken lightly, but we probably won't have much choice. It is going to be expensive, but I'm not even going to venture a guess how expensive.

Of course, we will have transitioned to an economy based on clean, renewable energy, so these global scale projects will benefit from extremely cheap energy, but they will still be expensive. The sooner we stop spewing CO₂, the less CO₂ we will have to remove and the less the greenhouse effect will heat the Earth. Thus, the sooner we move to a carbon neutral economy (we can do this for free), the cheaper it will be to remove the CO₂ from the atmosphere and cool the planet (if need be). Let's save ourselves some pain and adopt a carbon tax now.

TL;DR Summary

1. Transitioning to a carbon neutral economy can be done for free
2. Sucking the CO₂ out of the air and cooling the Earth will be VERY expensive
3. The sooner we transition to a carbon neutral economy, the cheaper it will be to fix the CO₂ balance and fix the climate

Cap and Trade Vs. Carbon Tax

In a carbon cap and trade scheme, a governmental body allocates or sells a limited number of permits to emit certain quantities of CO₂ (or equivalent polluting activity) per year. Polluters are required to hold permits in amount equal to their emissions. Polluters that want to increase their emissions must buy permits from others willing to sell them.

There are several problems with such schemes. First, during recessions, demand for goods and services decreases. This decreases the price of permits and polluters can pollute cheaply. This increases the competitiveness (such as coal fired power plants) of polluters against non-polluters (such as wind-power farms). Secondly, it is easier to set up a carbon tax. Any given activity (emitting methane, cutting down a tree of a given size, tilling an acre of silage) can be taxed at a rate equivalent to emission of a given amount of CO₂. It would be much more complicated to set up a comprehensive exchange. It would require farmers, brewers, power plants and many, many other businesses predict their expected carbon output and trade permits with each other. A carbon tax also has the advantage that it allows polluters to pollute above the level that they predict. Put another way, in a cap and trade scheme, there are a fixed number of permits, so the power plant that exceeds its demand late in the year is screwed. There may be no permits left. In a carbon tax system, that power plant simply pays the tax. Of course, the government directly control the amount of pollution under cap and trade, but I feel that it is better to provide economic flexibility (you wouldn't want your mom's pacemaker to shut off because all the permits were used). The tax can always be raised next year if industry exceeds a given level of pollution.

Quantity of CO₂ to Remove

The Earth's atmosphere is 5.15×10¹⁸ kg of gas. Presently 0.04% of the atmosphere is CO₂. In 1850, the atmosphere was 0.0285% CO₂. Thus we need to remove 5.9225×10¹⁵≈592 trillion kg CO₂ to return to pre-industrial levels.