Jodrell Bank radio telescope discovers faint radio echoes of last broadcasts from doomed ocean liner Titanic. World learns of hitherto unknown triumph of economic thinking with striking lessons for how to deal with global warming and predicted energy shortages!
By: Brendan “Lunchtime” O’Toady *
Images courtesy Wikipedia.
It is well known that the Hubble Space Telescope (that’s the one they have to keep fiddling with up in space with the Space Shuttle) has picked up the background microwave radiation of the Big Bang, and that it can peer back in time into the beginning of the Universe by analyzing light that has been traveling for billions of years up to 90% back in time.
Now, UK scientists from Kettering Grammar School, using the old black and white Jodrell Bank Radio Telescope (that’s the one the Govt let Sir Bernard Lovell build for helping win the war with radar) (Errr…. that’s enough wartime nostalgia – Ed.) has detected remnants of the last tragic Morse broadcasts from the doomed transatlantic liner Titanic.
Analysis by retired top Enigma Code experts (from Bletchley Park, the wartime decoding centre ) (Look I’ve already told you about this…cut it out…Ed.) of the faint radio signals still floating around in the ether, seems the disaster was more complex than previously realized.
In fact the captain knew he was sailing too fast through the ice berg field but this was because a leading group of economists from Harvard had correctly persuaded the ships owners that it would be far more economic on the basis of risk management and Monte Carlo analysis of the value of time saved to New York, to proceed at full speed, and sell the risk on by means of the on-board telegraph office to the New York stock exchange.
They proved this by launching a market in IRR – or Iceberg Risk Units. The theory was that the holder of the most IRRs could sell them for a vast profit in the event of a close approach or collision, since the value would go up as the iceberg approached, and stimulate the deployment of iceberg melting technologies. A massive market in IRRs grew with the total value of IRRs far exceeding the total value of the Titanic and her wealthy passengers thus stimulating them to bribe the engineers to make the doomed liner go ever faster.
Look outs were equipped with high powered binoculars and could see the fatal iceberg some way ahead (its quite wrong as has been suggested that the officer with the key to the binocular cabinet had left the ship at Southampton, leaving the lookouts without optical assistance).
However, when the fatal iceberg was spotted, the non-economics trained navigating officer displaying great lack of economic training, stupidly yelled out,” hard a-port” however he was fortunately countermanded by one group of economists from Chicago who argued it was wrong to have centralized control of steering to “pick winners” as they derisively termed it, and that a market solution would deliver the optimum combination of minimum deviation from course and minimum wear on steering gear. They launched a small private equity fund called the Titanic Optimum Course Fund with Board members delegating the Chief Financial officer to work out the optimum course which would just pass the berg with minimum loss of time and rudder wear.
Meantime a third group of economists had distracted the attention of the captain with another innovative scheme, arguing it was important to extract maximum economic benefit from the event and were auctioning Deck Chair Optimum Position Risk Credits DCOPRCs, to ensure a good view of the passage – these were to be sold forward and auctioned to passengers who wanted a good view of the passing of the berg. Various brokers floated different schemes to ensure optimum deckchair positions, taking into account berg viewing capabilities, aesthetics, proximity to bars and restaurants etc.
The free market quickly began offering impromptu deck chair arranging courses developing the basic concepts needed to understand the developing DAM . – Deckchair Arranging Market.
A bunch of Irish fishermen – emigrants from steerage class, who happened to be on deck screamed “By the Red Hand of Ulster and the Holy Mother, just turn the bloody wheel one way or the other!” but these were fortunately dismissed as uneducated oiks with no economic training.
Following the collision and sinking, the economists organized the allocation of the (insufficient) lifeboats on the basis of holdings of the various credits.
Professor Milton Freeloader of the Belfast School of Economics (Note: The great beauty of economics nowadays is the numerous schools available, and today one can pick from the many schools which ever one suits your preconceptions, prejudices, or the particular theory which benefits your economic interests / industry / economic bloc / state, unlike – 100 years ago when there were only 3 or 4 to choose from) today stated “This is an untold story of one of the early great triumphs of economic thinking. Not only did this event stimulate early econometric modeling, it had a real practical value in that at least half the passengers, fortunately with the most advanced economic thinking, were saved. It was a great tragedy that the lessons learnt here have hitherto been unknown”.
He also pointed out that at least the accountants who oversaw the costs, and brilliantly cut out waste by ensuring that the water tight compartments did not go to the top deck and seal them (which is why the ship sank) and only fitted half the number of lifeboats needed for every passenger, nevertheless got the number of lifeboats exactly right – All the survivors were actually rescued from lifeboats!
Titanic was a huge advance on the earlier transatlantic crossing by one of Brunel’s ship – a hopelessly uneconomic vessel, which not only had fully water tight compartments, and two separate engine rooms, and quite over the top, a double hull. This massively over engineered vessel actually struck an iceberg, carried on to New York, the returned to UK to be repaired.
Prof Freeloader a leading light in the radical Belfast School of Economics (is he paying your for this? See you in the bar later…Ed) Went on to say that the Titanic experience points the way forward with current concerns about global warming and peak oil. “Lets just steam on ahead – excuse the pun – as fast as possible using up fossil fuels emitting carbon – as long as we have a proper market, (and we are just the people to design one for you – we worked on that Originate and Distribute model for dodgy loans in the US so we will get it right this time) in emissions, and so forth, then the market will magically, in the drop of Adam Smith’s pins, produce undreamt of economic solutions. It is quite mad to actually look around, notice the conditions and think you can pick a course slowly through the various technologies and then try and implement a solution in due time. Wildly uneconomic”.
None of the oiks made it onto the lifeboats.
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*Brendan “Lunchtime” O’ Toady* who built his glittering career in Fleet Street pubs by never questioning the press release. “Well its quicker and they wouldn’t invite me back next time if I asked awkward questions, even supposing I knew what they were! Cheers!”
See also The Birkenhead Disaster
I thought tomorrow was the First of January – not the First of April !!!
Good Oh !
Very funny. So much funnier than the reality, in which the arrogance and fallibility of engineers and the people in charge (management, law-makers, and ships’ officers) played the greatest part. But let’s not mention that on a site where people think that everything can be calculated with perfect foresight, and that we should rely on those in charge to determine the right course for everyone.
The reason the ship sank was of course because it was going too fast through an ice berg field – for reasons we will never know, but many of the other ships in the area had stopped that night.
The ship may not have sunk, or sunk so quickly if the water tight compartments had been – well – watertight as on Brunel’s earlier ship which survived an ice berg impact. Presumably this was not done to save cost by accountants not engineers.
The reason so many lives were lost were that the bare minimum of lifeboats were installed according to regulations which had not been updated to keep step with the huge growth in liner size. (underfunded government perhaps?)
The regulations were introduced because left to themselves the ship owners in the past had not bothered with enough lifeboats, and had to be forced by government to comply, kicking and screaming, in the same way that the railway had to be forced, kicking and screaming to fit proper brakes and signals.
Similarly the rudder was too small for vessel of this speed and size, although again it was the bare minimum required by law – again left to themselves ship owners didn’t bother with a proper rudder.
We can note the Plimsoll line – again introduced by govt reg to stop ship owners overloading their vessels.
Manifestly people on this site do not think we can rely on people in charge to settle on the right course of action wrt energy, that’s why we waste our time discussing and criticising government policy.
The proposal for massive insulation, wind turbines, chpdh and inter connectors (claverton briefing) etc do not at all imply perfect foresight – rather a recognition of the uncertainty and risks ahead, but at least it is a course of action which limits the risk, and can be changed ad hoc if anything better comes along with little financial regret or risk.
All that would happen if we pursued this course is that we may face slightly more expensive electricity, but still affordable, use less of it, and have rebuilt our manufacturing base.
We will have insulated ourselves to an extent from price swings in fossil fuels so damaging to the economy.
Dave A
And where is the place where they have most successfully insulated themselves from fossil-fuel swings in this way? Sweden.
And did they do it through a massive programme of government-picked winners? No, they did it by putting a sensible price through taxation on carbon emissions, and leaving it up to people how to respond.
As you note, the regulators were as much at fault as the owners and the ships’ officers. But you still want to fix our problems by having your own scheme enforced from above, despite all evidence that it is best not to rely on people in authority.
No Bruno,
I think you are making wrong assumptions about my views.
I am perfectly happy with market solutions up to a point.
But I think there should generally be some plan behind them based on an intelligent assessment of where it is we need to go based on a quasi independent open, democratic and technically based, assessment of the options – based on something like interlock research; http://tx1.fcomet.com/~claverto/cms/energy-experts-online/interlock-research
rather than civil servants and ministers being persuaded in a variety of undemocratic ways to suit the interests of the big energy players, whose only aim is to sell more energy, not less, and the house builders who want to build more and cheaper houses, and couldn’t care less about the energy consumption. So yes decide where you want to go then devise a market solution where appropriate.
So yes taxing energy / carbon is a good thing; likewise incentivising energy investment as in Denmark and Germany targeted at specific, “winner picked” renewables is a good thing in my view.
The overly market based ROC system is by comparison an abject failure, in that with the best wind resource in Europe we have proportionally very little compared to the canny Danes or Germans. Had we followed the Danes, we could have been a world leader with 18 month waiting list for our wind turbine exports. Although ROCs of course has made Sumerleaze a fortune via land fill gas ROCs which as you will know wasn’t really needed to justify the investment – but few waste companies bothered without it.
One can also say, that no matter what energy or carbon tax is imposed in UK, most of the people with the most uninsulated houses, and the highest per capita percentage energy spend, ie the poor and those in rented accommodation, simply will not invest in insulation because they can’t afford it. Many well off householders won’t invest either because they may move.
So clearly here, proper insulation requires government regulation, and for it to be properly implemented, as is happening right now in Germany, rather than being watered down by the large house builders who in some mystical way, no doubt by thought transference, have successfully prevented such measures since it will eat into profits.
The Swedes will tell you it was one of the 17C Swedish Kings who caused the Swedish kakelugn, high efficiency masonry stove, still widely used today, to be chosen/developed since he was fed up with the Swedes chopping all the forest down. He apparently delegated one of his wise men to figure out the best way of burning wood and then imposed it. Picking winners again.
Problem is we don’t have wise men in this country advising policy makers, or at any rate not enough, or with enough power, we have economists who float between the government and big players and consultants to the latter. We have a first past the post, non coalition government system, which means there is only one government to nobble, whereas in Germany and Denmark. everyone gets a say, and you have to nobble several parties including the Greens.
Do you think it was economically stupid of the Danes to impose massive new CHP / DH based on coal and biomass in the 70s? Do you think they were stupid to invest enough money to get about 20% of their power used generated by wind turbines and are aiming at 50%? (accepting that a lot presently gets exported but is sold for foreign exchange)
In my view, and many others we should have CHP DH in this country, but there is no market mechanism that can cause it to happen – it will have to be picked and enforced by government – but it won’t happen whilst Govt dances to the big player’s tune – since they would sell less energy. It was shown 20 years ago that this was an economic investment but it was blocked by British Gas who obviously would sell less gas.
I do agree with you that I wouldn’t trust the governmental mechanisms here to come up with a realistic policy – they have no mechanism. Countries like France, Denmark, Germany, do have a much larger clique of technical experts who can give meaningful unbiased (ok less biased ) advice to governments. That mechanism is sadly lacking here.
Dave A