Money

By James Kwak

I was browsing for Christmas presents and came across a brilliant xkcd cartoon, “Money.” (Click on it to zoom in.) It includes all sorts of fun bits like this (this is just a small excerpt; you can buy a poster-size version of the whole thing):

But this was actually my favorite part:

I’ve written elsewhere about the government’s role in collecting hurricane data (including flying planes into hurricanes) and plotting their course and intensity. I think this is one of those things that we just assume the government should do—protect us from hurricanes—yet we conveniently forget about when we talk about evil big government spending.

The source for that data is a blog post by Jeff Masters, co-founder of the Weather Underground (and a former Hurricane Hunters pilot). In short, because of improvements in the way the National Hurricane Center forecasts hurricane paths, the NHC can issue much tighter forecasts than twenty years ago. In the case of Hurricane Irene (the one that hit the East Coast in late August), that meant that seven hundred miles of coastline in the Southeast (Florida, Georgia, and South Carolina) did not get official hurricane warnings; twenty years earlier, because the models weren’t as good, they would have gotten warnings. Masters cites an estimate that over-warning costs $1 million per mile of coastline, for a total savings of $700 million from one storm.

The $1 million per mile estimate is hard to pin down. The paper Masters cites is John C. Whitehead, “One Million Dollars Per Mile? The Opportunity Costs of Hurricane Evacuation,” Ocean & Coastal Management 46 (2003): 1069–83. But although Whitehead calls the $1 million per mile estimate “over-quoted,” he actually argues that it is too high.* Still, he estimates that a mandatory evacuation order for a category 3 hurricane (which I believe Irene was when it hit North Carolina) would generate $32 million in evacuation costs, in 1998 dollars, and a voluntary evacuation would cost $6 million (Table 9, p. 1080). Given the greater length of the Florida coastline, its much higher population density (see map below, which I grabbed from here), population growth since 2003, and inflation since 1998, it’s highly likely that the cost savings from avoiding over-warning run well into the tens if not hundreds of millions of dollars, even assuming just a voluntary evacuation. Whitehead’s estimate also excludes lost wages and presumably lost economic output (p. 1079); this is reasonable for his estimate of evacuation costs, but those costs should be included if you’re estimating the total costs of over-warning, not just the cost of evacuation. Including those potential costs makes the total cost savings even higher.

So when you pay your taxes, that’s one of the things you’re getting.

(I guess some libertarian will argue that this is an unjustified subsidy to people who live along hurricane-prone coasts. To which I would say that people value living on those coasts, and the incremental value they derive from living in Miami as opposed to, say, Oklahoma City, is probably far higher than the $20 million per year spent on hurricane forecasting research. This is different from the subsidy for federal flood insurance because, in that case, you could simply extract part of that incremental value by pricing the insurance appropriately; since hurricane forecasting ability is a public good, it would be harder to force people living on the coast to pay for it.)

* As an aside, I’m not sure that the $1 million per mile is “over-quoted” to begin with. Whitehead’s source is a personal communication. When you Google “‘one million dollars per mile’ hurricane,” mainly you get a lot of references to Whitehead’s paper. But it could just be that Whitehead’s paper swamped previous references to the rule-of-thumb estimate (which would indicate that it wasn’t that widespread an estimate to begin with).

31 responses to “Money

  1. Let me see if I follow your logic. The half-billion the government spends on hurricane research is good; therefore, all of the trillions of dollars that the government confiscates from its citizenry and spends is good. It is logically incoherent to be in favor of hurricane research and opposed to, say, Obamacare.

    Do I have that right?

  2. No – not at all. reductio absurdum

  3. When is it the role of the government to “protect us from hurricanes”? Have you lost your mind? If you want to be protected from hurricanes, move away from where they have a tendency to hit. If you value the coastline, that is a cost that you alone should bear, not those that don’t wish to bear it.

    Should the government “protect” us from earthquakes? too much rain? snow? Or should we use our own brains to minimize the risk to ourselves, our property and loved ones without confiscating other peoples’ property to do it?

  4. If you’re receiving Christmas gifts from James this year, be scared…. be very very scared. (JUST TEASING).

    XKCD is a great cartoon and I got it on my blog. The numbers are fascinating and a good wake-up call. But unless you’re a total freaking wonk with a high tolerance for depressing numbers I don’t think you’d want that hanging on the wall. It might be a good gift to send some Tea Party idiot who “didn’t want the government messing with their Medicare” or their social security.

    I don’t know though how much good that research does you, when you have a bureaucratic idiot like Michael Brown running the show. Michael now has a job on clown radio 850koa in Denver. It’s Republican’s way of rewarding campaign boosters who cause the suffering and starving of blacks during a natural disaster. Maybe some flunky with no ability in Newt Gingrich’s campaign can take Michael Brown’s job on 850 KOA Denver when Mr. Brown gets tired of playing clown boy for Denver commuters.

  5. It is a useful service of government to provide impartial and accurate information as part of the commons that will enable us as self-interested indviduals to make informed decisions as to our best course of action. I consider that things like weather prediction, sea state monitoring, public health research, drug and food testing, and oversight of financial products and services are all things that increase the transparency of markets and maximize market efficiency, robustness, fairness, and individual opportunity.
    James’ use of the word “protect” may have been unfortunate here; the role of the NOAA is to inform and advise impartially, and I suspect he knows that.

  6. As far as what does local and federal government do for people, this might be a slightly better case to make than the example of hurricanes:

    http://www.thenation.com/article/164062/local-governments-slash-funding-domestic-violence-survivors

    http://www.huffingtonpost.com/2011/10/12/domestic-violence-topeka-kansas_n_1007357.html

    http://vtdigger.org/2011/11/30/leahy-crapo-introduce-bipartisan-bill-to-reauthorize-landmark-violence-against-women-act/

    How many of these domestic cases are prosecuted in your average year??? How about in the last decade?? Newsflash: Those services are not free (although they are provided at what would be considered a low salary by many lawyer’s standards). These things are not handled by the private sector, nor should they be. Now if you’re a woman (maybe some Tea Party toothless female holding her President Obama poster with Hitler mustache accessory) the costs of these things which are NOT going to be provided by Rupert Murdoch, GE, Cisco, or Bank of America, might be important to you or children who’ve been bashed in the face or thrown up against the wall a few times.

    You might not care about domestic abuse services if your life is “Ozzie and Harriot” or 1980’s “Family Ties” version of suburban bliss. But here is another Newsflash: A high percentage of Americans do not live in that world.

    I might add, we have heard lots of reports of the police costs of OWS protests lately, but very little about the costs to local police of going to homes and investigating domestic abuse calls. Much less heard the costs of lawyers, clerical work, and judges which again will not be provided by Newt Gingrich and friends as they make promises of “no new taxes” year after year after year to toothless idiots who take advantage of domestic abuse services and apparently believe those municipal government services fall free out of the sky together with their Medicare “before”…. “the government touches their Medicare”.

  7. I’m going to break off topic here, but maybe we could consider this related to the topic in the sense that Government sometimes is there to benefit society as a whole. Government should not be there to create tax breaks for the top 1%, tax loopholes for the rich, and government should not attempt to create a nonexistent reality by distorting the English lexicon to make corporations into people. Even the extreme arrogant asininity of “Justices” Scalia, Thomas, and Alito couldn’t delude us into that Steve Jobs type “distortion field”.

    I think the Occupy Movement largely embodies this view of a government being there to benefit the majority, or if not “benefit” the majority, at least be fair and provide justice for the majority. This is Norman G. Finkelstein at Occupy Movement of Boston. He starts off slow but it’s actually a good speech given extemporaneously. I wish we could get Teacher Finkelstein to speak at Oklahoma City’s Occupy Movement. As Mr. Kwak is so kind to point out, Oklahoma City doesn’t have the joys of the seaside. Oklahoma City is also missing a needed supply of articulate Democrat speakers.

  8. I know I’ve “bogarted” this comment thread, and I apologize for that, but one last thing. I want to know how anyone can listen to this very kind, compassionate, considerate, broad-minded Mr. Finkelstein and call him “anti-Semite” or “self-hating J.e.w.”??? He is nothing of the kind. Shame on extreme right-wing J.e.w.s for propagating this LIE</b.

  9. Great Money chart. Thanks James.

  10. David - Little Rock

    >When is it the role of the government to “protect us from hurricanes”?

    Technology evolves, like humans and the ability to warn against disasters is not only possible, it is part of the congressionally mandated charter of the National Weather Service. You should read a little more about the history of the country you live in, then you would not be asking people if they had lost their mind.

  11. David - Little Rock

    “and for giving notice on the northern (Great) Lakes and on the seacoast by magnetic telegraph and marine signals, of the approach and force of storms”

    Disaster – The critical line you were probably unaware of from the 1870 joint resolution of Congress.

  12. When there is a natural disaster (eg, hurricane, earthquake, flooding, forest fires) the (1) government has to step in to provide relief and the (2) cost of insurance premiums for everyone goes up.

  13. http://apod.nasa.gov/apod/ap110403.html

    Imagine how many zeros are in NGC 6872’s *budget*…!

    Numbers are less dazzling when *cosmic* :-) and not just *fiat*

  14. The major issue with all government spending, on a case-by-case basis is, what is the “return on investment” which seems, perhaps to be the point of this article. The real question in the case of weather related research, as will all research, do we benefit more economically than we pay? I believe that what James has offered is a valid argument that such is true in the case of hurricane related research (assuming ad arguendo, that the methodology is effective AND efficient in terms of expenditures, or is there a more effective and efficient alternative). There are lots of areas of governmental expenditure which cannot be argued as being efficient and effective alternatives to other competing possibilities. I have just finished reading a very scary and amazing book: Top Secret America, by Dana Priest and William Arkin. Unlike the obvious argument we may have about the advisability of spending amounts to theoretically save lives and money from hurricanes, which are a statistical fact of life and which have distinct defined costs in both areas, the national security, counter-terrorism budget is completely and utterly out of kilter under any possible argument.

    Let’s consider the expenditures for the sixteen agencies tasked with protecting us from terrorism (some with other purposes, but not many), which is somewhere in excess of $300 billion. Consider that one could argue that not included in that number is an amount of military spending essentially dedicated buy not identifiable as serving that specific purpose. Consider that, in our history, we have lost less than 5,000 lives (not counting troop losses in Afghanistan, but only civilian lives). Compare that expenditure to protect us against losing about 400 to 500 lives a year from terrorism, with the expenditures and losses related to illegal drugs. I would suggest that we spend about 10% or less of that $300 billion annually to protect ourselves from illegal drugs, and that the loss in terms of lives and economic losses would be an order of magnitude greater than that from terrorism. The contrast of competing priorities is truly striking and is reaching the point of absurdity. Why can’t we have only three agencies related to terrorism beyond the military? I say that the FBI, CIA and Homeland Security should be plenty (and one could argue that in this case, Homeland Security is superfluous beyond the FBI, which should have total authority to control “internal” terrorism and terroristic threats. As an example, Abdulmutalleb (the underwear bomber) was missed due to a purely administrative SNAFU between multiple agencies. The problem with national security is that it has fostered its own “complex” which overlaps with and corresponds with the Military-Industrial Complex, such that now that we have created it, its lobbies have become so powerful that we not can hardly discuss limiting it without the oligarchs associated with this spending massively to counter any such actions, and succeeding. As an example, we now have nearly a million citizens with Top Secret clearances, and a two year backlog to get them. We have an agency which will soon be able to monitor the daily lives of almost every American in multiple ways.

    I completely agree with any efforts to restrict government expenditures to justifiable tasks at justifiable levels, and that what we need is some oversight on the overseers who are now bought at auction by special interests in every election at every level. In this atmosphere, democracy simply can’t happen, and what we spend for our government will continue to be less and less efficient and effective.

  15. @waterbury – Logically, how is a “Top Secret America” with 1 million top secret special people supposed to be anything resembling a *government*? And I don’t care which government, in any country, throughout history, that the *devil’s advocate* coughs up for debate as an example…

    snippet from *government* on wiki:

    “In most Western societies, there is a clear distinction between a government and the state. Public disapproval of a particular government (expressed, for example, by not re-electing an incumbent) does not necessarily represent disapproval of the state itself (i.e. of the particular framework of government). However, in some totalitarian regimes, there is not a clear distinction between the regime and the state. In fact, leaders in such regimes often attempt to deliberately blur the lines between the two, in order to conflate their interests with those of the polity.”

    Unless they can make themselves invisible, also – meaning that they no longer need to partake of human activity like breathing and maintaining a human animal body’s atomic cohesion – they’re not *secret*, are they?

    And if the 1 million secret security clearance people all have to sign a Norquist-like pledge – and we don’t even know what that could be – LOGICALLY, where are we? They can be 100% stark raving mad and on a *secret* mission – yikes!

    Look, I get it. Those *peace keepers* who cleared out Zuccotti park were not the milk man guys putting your bottle of fresh milk from the Amish on your stoop (good morning, Bud!) businessmen – they’re definitely much more video war game fashion attire and vacant eyes – so they don’t look *secret* to me…just sayin’…t

    It’s gonna get good now – that whole nice IBM (Italian Business Man) mafia guy next door who only asked that you mind your own business and he will definitely not get into yours is SO OVER…

    We’re going to the mats now :-)) Oh what a LAUGH (pathetic, really) that they STILL are expecting everyone to BELIEVE that they hold the moral high ground in every *business* situation….that’s just so nutz, I am momentarily paused to consider whether to show *mercy* – darn that “genetic” noblesse oblige, worse than bad eyesight :-))

    So, they’re really nuts and/or uneducated (ie. the whole hurricane funding gnat) – right?

    Talk us down here, waterbury :-) It was a good post….

  16. Thanks for the post James. I think I’ll buy a poster from that site.

  17. I just tried to make the point that if the government can misspend on these things (hurricane’s and terrorism), fail to budget for a couple of wars (what two trillion liability, unpaid for — note that the “pay fors” on the Republican side have suddently found religion illogically asking that a stimulus, i.e. the payroll tax cut and unemployment be paid for — no logic there, only a couterbalance that is idiocy), and lots and lots of pet stuff which gets added to bills as riders (Republicans claimed that they wouldn’t add non-germaine riders to bills until they decided that the Keystone pipeline was a fine exception to give to their petroleum oligarch friends), then we are (and we REALLY ARE FOR SURE) completely screwed until there is a massive move by the electorate to throw out 95% of Congress in a year (we should be so lucky). Annie, we all need to dream of a better day, and then take action to make that happen. Don’t ask me how, but know that we must, or the piper we will be paying will bear a serious relationship to the REAPER.

  18. Soon you should all see that the current gvt (mostly the military) is simply one big disinformation campaign, bent on serving their own interests at the peril of the country’s future. They honestly believe they are doing the correct thing, and as such, have no intention of relenting to anyone. Translation, is their way or the highway folks, get used to it, it will be around for a spell.

  19. @waterbury – if you know that the reaper is coming – what have you got to lose by putting elbow grease into your *dream* NOW – it’s all a HEAD GAME…

    Economic and civil disobedience is happening, no one is organizing around the political $$$$ astro turf, and they’re leaving D.C. for the winter break :-))

    Facts are facts – there ARE very very very very very very EVIL people wandering around (well, I guess they might be in the *secret* buildings doing *secret* things) and all that 4 trillion hardware isn’t working in *protecting* whatever sanity is left – genetically – in the human species.

    There is no HOPE for a rabid raccoon…greed kills.

    It’s all about being genius enough to KNOW how to turn the swords back into ploughshares – but in this case, even Caesar doesn’t want what is Caesar’s – he’s turned his attention towards wanting YOUR heart, lung or kidney…

    But since no one is ALLOWED, for a decade, in USA to *dream* about anything but death because of internal *religious* Inquisitors CENSORING love, kindness, generosity, etc. – they TOOK AWAY PERMISSION, via gubermint and religion, for anyone to be *good* in the FINAL ANALYSIS…

    and the WORLD hates the *white man* and his *dreams* –

    might be time to watch the 1990 collection of *dreams* released as a movie called – “Akira Kurosawa’s Dreams” – prophecy that DID come true – go figure…

    I kept saying in the 1980s that *armageddon* was the PROCESS of building *stuff* to prevent it…

    Impossible to come up with a rational explanation for WHY the natural gas that is tapped when drilling for oil is NOT being captured as *fuel* and is instead being *burned off* – that is SCIENTIFICALLY retarded – but the retards do have a lot of $$$ to look for *god particles* in Switzerland and funding from Grandpop Lobby-ist….

    TRYING to give back to Caesar what is Caesar’s :-)

  20. Here, I do not actually think this is likely to have success.

  21. Wow……. First Christopher Hitchens, now an even bigger light that shown through a deep and suffocating darkness leaves us. Sometimes it seems the really great ones would drop off in 3s. Or maybe we just notice it more. I tried to find the PBS NewsHour interviews in youtube to post, but I couldn’t find them. Slowly they are taking away the great gift of internet, and try to make it into one block of “premium content”. I imagine one day we will look on the times of roughly 1997—2011(????) as the golden age of the internet surfing experience, before charges and fees. Anyway I digress. This is still a good one. Vaclav Havel. Enjoy!!!!!

    http://grahambrokethemold.blogspot.com/2011/12/where-is-chinas-vaclav-havel.html

  22. The most important thing about the spending is that it was recouped at least twice from just one huricane. There were many huricanes. So the actual pay back is hundreds of times more than the cost.

    This is what government is for, so that the people without individual resources can gather together to do together what they cannot individually. The point is that this is not welfare for the rich or poor. It benefits all equally, even those in Kansas, because the Kansans get tornado forcasting and those in the river flood plains get flood forcasting.

    And the point is also that government sometimes wastes. But the benefits far outweigh the costs. People and government officials are not perfect. They both have to be watched or one of the least perfect of them will shop lift.

  23. This here is some good stuff, and follows the depopulation theory I have cooking in the works for rich politicians, enjoy.

    http://oilprice.com/Energy/Crude-Oil/A-Severe-Decrease-in-Oil-Supply-Could-Devastate-the-World-Population.html

  24. http://www.msnbc.msn.com/id/37560195/#45728646

    “….it’s called stealing…”

    I’m 100% behind a *depopulation* scenario…

    It’s scientifically retarded to *believe* in oil as the future…as always, owen owens provides proof that Global Crime, Inc. is targeting for elimination the gene pool who KNOW more about *science* of energy,

    (and they’re coupling that monkey brain delusion with religious persecution)

    because that is what *oil* needs – human blood – to stay *alive*….

  25. Antigovernment message: the government was over-warning for every hurricane prior to Irene. We were losing as much money as the chart claims we saved every single hurricane… and we still didn’t spend the money to improve our forecasting methods, because that came out of the government budget and the costs of complying with warnings came out of citizens.

  26. Thanks for the great article.

    For those who raise the argument “why should we pay for them to live on the coast?”, I would answer; weigh the costs and benefits of every dollar spent and do nothing more. If I ride a bike instead of a car, should I have the right to say, “I don’t want my tax money wasted on roads!”? Probably not, because roads benefit many, justifying the costs. The time to protest is when the government spends money to rebuild a city which is set 30 feet below sea level and has many entry points whence water can pour, ruining the city overnight. The costs probably don’t outweigh the benefits in this case.

  27. But hurricane forecasting is not a power enumerated in the constitution.

  28. Just a footnote about “evil big government spending”:

    “The list of institutions that received the most money from the Federal Reserve can be found on page 131 of the GAO Audit and are as follows..

    Citigroup: $2.5 trillion ($2,500,000,000,000)
    Morgan Stanley: $2.04 trillion ($2,040,000,000,000)
    Merrill Lynch: $1.949 trillion ($1,949,000,000,000)
    Bank of America: $1.344 trillion ($1,344,000,000,000)
    Barclays PLC (United Kingdom): $868 billion ($868,000,000,000)
    Bear Sterns: $853 billion ($853,000,000,000)
    Goldman Sachs: $814 billion ($814,000,000,000)
    Royal Bank of Scotland (UK): $541 billion ($541,000,000,000)
    JP Morgan Chase: $391 billion ($391,000,000,000)
    Deutsche Bank (Germany): $354 billion ($354,000,000,000)
    UBS (Switzerland): $287 billion ($287,000,000,000)
    Credit Suisse (Switzerland): $262 billion ($262,000,000,000)
    Lehman Brothers: $183 billion ($183,000,000,000)
    Bank of Scotland (United Kingdom): $181 billion ($181,000,000,000)
    BNP Paribas (France): $175 billion ($175,000,000,000)
    and many many more including banks in Belgium of all places.”

    http://www.unelected.org/audit-of-the-federal-reserve-reveals-16-trillion-in-secret-bailouts

  29. Well that’s what you get for having to pay 30 E-bonds at @15% with today’s near zero returns.[do the math folks] We were desperate for money in the early 80’s, and those kids of the day are a payin today, with today’s politicians promising everything for today, and today’s youth will pay tomorrow. Now you can try to call me crazy, but something don’t add up here. We are just as desperate in the today, but with no buyers we had to take the money now, to roll the dice later. its a lose-lose scenario, it can’t well. Now Eurpoe wants to reduce its dollar denominated debt from a superhyper-inflated currency, which no politician wants to address. ceptin one maybe.

  30. “Is it possible that the ESF, located conveniently at the nexus between US monetary policy, foreign policy and last but not least, a promoter of the interests of the US military-industrial complex, is precisely the organization that so many have been trying to expose for years? Watch and decide for yourself.”

    http://www.zerohedge.com/news/presenting-exchange-stabilization-fund-5-parts-real-plunge-protection-team