Catch Share Design, Part 3: Available Resources

         After deciding on the projects goals, the specific resource components must be chosen.  First and foremost, the decision must be made whether or not the target species will be managed by itself, in a single species program or in a multi-species management plan.  In general, the decision to create a multi-species fishery can be determined by the fact that many species are often caught together.  For example, many kinds of groundfish are caught together.  This is why the US west coast groundfish trawl managers have implemented an ITQ system that distributes quota for 64 species of rockfish, 14 species of flatfish, 6 species of roundfish, 6 species of sharks and skate, and others, totaling over 90 species in all.  The reason to create a single species program is when fisheries that result in relatively minimal bycatch are isolated geographically or in some other way, such as species specific gear (crab traps).

            The spatial nature of the fishery is also of critical importance to its management.  Often times the same species can be harvested in disparate areas where local populations must be taken into account, just as overall populations are considered.  If this is the case, what the CSDM calls “zones” can be established to further regulate the fishery over spatially different regions.

            Next in the management development is determining the catch.  With biologically based data, an economic assessment of effort is conducted to determine where current practices operate, a point called “open access”, and where the final goal will lie.  A typical American goal is maximum sustainable yield (MSY), which operates at a point where the rejuvenation of the stock is equal in any given year to the harvest and where this stock growth is maximized.  Some managers do set the goal where resource rents are maximized at maximum economic yield, but it is difficult to convince fishermen to decrease effort and accept a lower harvest than MSY because it often means fewer fishermen participating.

The Medicare Challenge

 The final words from an editorial this morning about Medicare:
 "[This article] is in no way an argument for inaction. It is an argument for serious, unhurried analysis in a less polarized climate. That is the only way to fix this vital program."

If we do not have starting point for discourse, how do we expect to have any serious and lasting changes to our less than perfect political system?

What a wonderful world it could be

Written in Chinese for a Chinese audience, this New York Times op-ed piece "How China Can Defeat America", if taken to heart, could change the way global and national politics is waged.  If countries led from the humane authority approach espoused in the article, support would be given through genuine love and admiration.  Development aid is not given out in dollars, but in advice and case studies of how a responsible government improved the lives of its citizens.  This would be a world where citizens of developed countries attempt to erase world poverty by first starting in their own slums and forgotten counties, where credit is a term bestowed from previous success, not previous debt, and where information is true, accurate and consumed because it is understood to be so.

The author, Yan Xuetong, is writing to inform future Chinese leaders of the characteristics they must adopt if they desire a global competitive advantage.  It is ironic, then, that what I take from his writing was not the nervousness of a challenge or the anger of a foe but a comfort and (dare I say) hope of future that could be compassionate and robust.  We all need dreams, right?  Well, what a wonderful world it could be.

Keynes vs. Hayek

http://www.youtube.com/watch?v=d0nERTFo-Sk&feature=share

Our Philosophers

NPR's Morning Edition reported this morning on the second installment of a 3 part series on philosophers who have influenced politics and the study of Economics itself.  Yesterday the story was Ayn Rand, today it was Friedrich Hayek, both notable for their approaches to laissez-faire government policy.  Check out tomorrow's story on the current champion of the western world, John Maynard Keynes.

The Place of Monetary Policy

What I have been missing in national politics for as long as I have been alive is legitimate discourse.  The challenge of ideals with ideas and serious debate.  What seems to be slightly easier to find are well reasoned debates between influential economists.  Because it relates directly to what we have learned recently in Macroeconomics, this post by Paul Krugman on monetary policy is the most current repartee in a century old argument over monetary policy.  Granted it may have no effect in a liquidity trap, a temporary condition is no reason to scrap an entirely useful tool.

Catch Share Design, Part 2: Project Goals

Broken into three categories for improvement, the first chapter looks at the biological, economic, and social makeup of the fishery.  Goals are then set to either solve the purported problems, or maintain positive aspects of the fishery.  Overfishing is most often a problem to be addressed, as are diminishing profits for the historical users.  At the same time, these historical users may also wish to maintain the structure of the fleet and current participants.

While this may seem like a simple place to start, a main focus of the chapter was tradeoffs that must be made in order to preserve aspects that are most important.  For example, it is not always possible to preserve the makeup of the fleet while at the same time maximizing profits.  The underlying issue could be that too much effort is being applied, in which case the fleet’s structure may have to be drastically altered in order to meet the paramount biological goals and the secondary profit-maximizing goal.

            How will the manager determine what course of action to take?  We must read on…

http://www.nytimes.com/2011/11/13/opinion/sunday/the-new-progressive-movement.html?_r=1

Interesting article by a respected economist, fits the theme of the blog so far.

Inside Job

Speaking of a letter to the President, I would express my disappointment in the status quo policy regarding Wall Street. I understand that real policy changes are difficult considering the lobbying efforts of the financial services industry and its expansive arsenal. Over the past decade, there has been more than $5 billion worth of political contributions made from this "industry." Equally concerning, there are some highly influential, decorated academic economists who don't seem to be bothered by this either. If you haven't seen the documentary Inside Job, I would definitely recommend it, especially given that the events of the 2008 financial crisis are no less relevant now and... Branson's text isn't going to spend much time discussing these issues.

Here's a particularly memorable clip in the film with Glen Hubbard, Dean of the Columbia University Graduate School of Business (the title is great). He also served as chairman of the Council of Economic Advisors from 2001 to 2003, helping to lay the groundwork for some financial deregulation. He surely wasn't alone and maybe he deserves some credit (though I don't think so) for even agreeing to interview for this film, given the long list of economists/bankers who declined to interview including but not limited to, Larry Summers, Tim Geithner, Hank Paulson and Laura Tyson.



Three years after the crisis, no significant legislation surrounding lobbying, derivatives or corporate compensation has been enacted. After watching Inside Job, I would argue that some of the Occupy movement be shifted towards academia and the role that some prominent economists have had in shaping policy, or the absence of policy.

When asked about the economics profession (macroeconomics specifically), Charles Morris, author and former banker, posited "It has no relevance to anything really. Indeed, I think it's an important part of the problem." While I disagree with parts of this statement, it is telling in that it speaks to the dark, twisted incentive conflict between policy and personal interests.

Letter to the President

Last night I had a bad bout of insomnia, and in an attempt not to go insane I wrote a quick letter to president Obama about a change in how taxes are distributed.  Check it out:

Hello Mr. President,

My name is Daniel Holder, I’m 24 years old and I am having difficulty understanding how our representative democracy operates.  I get the gist: the people come together every so often and vote for candidates to represent us, but if we the people are the government, why are we dissatisfied with it?

As quick to blame as anyone, I want to place the majority of the fault on us the voters.  ....  I would consider myself more informed than the average American, and I would give myself an F in civics at the moment: this does not bode well for the country at large.

Truth be told, I became disinterested in politics because like many voters I feel disenfranchised and ignored by those who claim to represent me.  This letter is a step toward changing this feeling, toward taking responsibility for the 6 years that I have been a voter and the many more to come.

What I believe causes citizens the most indignity is the tax structure and the use of taxpayer funds.  While there have been many suggestions to make taxes “fair,” I firmly believe that Americans would be less reluctant to pay taxes if they had greater faith in how that money was being spent.  As of now, I see two ways that citizens can choose how their tax dollars are spent: those who are tax savvy take advantage of deductions and credits, but when it is time to file taxes, the only choice I had this past January was to donate a couple of dollars to the election campaign fund.

My suggestion for a more transparent and democratic tax system is to allow citizens to choose exactly where their taxes are allocated each year.  Every company provided a subsidy or every non-profit that is given government funding would have to lobby the taxpayers, not the representatives.  I guarantee that our military would shrink, the education system would be better funded and if anyone had grievances about the distribution of tax dollars, they need only petition their neighbors.

Some arenas would be provided with a minimum balance, such as the court system and national defense, but above and beyond that, taxpayers would choose the general departments that receive their tax revenue and which do not.  Overall, the values of the country would be reflected and change would come from the ground up.

Thank you,

Daniel

I omitted a sentence that was a bit personal, but it doesn't change the overall message of the letter.  What are your thoughts?

Catch Share Design, Part 1: SEASALT

I'm currently in a Marine Economics course, and one main question that we hope to answer over the term is, "how do we compensate for uncertain property rights?"  The phrases individual transferrable quotas (ITQs) and Pigouvian tax are introduced as potential answers to the question, but these are attempts at answering the question and each come attached with a slew of other questions, some of which are impossible to determine precisely (such as the actual value of harvest before it is docked).
While perusing the EDF blog today, I happened upon this Catch Share Design Manual published in Nature.  The stated purpose of the manual is to assist fishermen and managers in implementing and maintaining catch share programs that set specific catch limits based on scientific data and have the flexibility to adapt as new information arises.  I have a dual purpose in writing about this manual: to track the applications of course material and to further enhance my own understanding of this massive topic of marine management.
If you noticed that this post is Part 1, you probably wondered what it is part 1 of.  Well, my project will be to digest the manual section by section and write about it, adding outside information and the occasional editorial.  This time, I'll discuss the acronym SEASALT.  The proposed purpose of this mnemonic is to convey in general terms the most important facets of a successful catch share program, and in the following paragraphs it will be broken down  and analyzed.
Secure- the holder of a catch share will be able to maintain rights to the share for a long enough time to benefit in the future from potential sacrifices today.  Many current programs have licenses or quotas that are not guaranteed, so the holder of that permission has minimal incentive to act in a way that considers future profit.
Exclusive- market goods are ideally rival and excludable, which means that one person's use diminishes everyone else's future use (rival) and the owner can prevent someone else's use (excludable).  Since technology in most fisheries is at the point that harvest is rival, a fishery must also become exclusive in order to properly realize its economic benefits.
All Sources- the catch limit includes both landed and discarded fish.
Scaled- whether at the national, state, regional or local level, managed fisheries must include appropriately scaled biological models, social systems and political factors.
Accountable- built into the fishery's management must be a system to hold the participants accountable, for obvious reasons: without oversight, individuals will put immediate individual gain before shared future benefits.
Limited- catches are set at scientifically appropriate levels.  Hopefully the manual delves into the topic of choosing the appropriate catch even if the biological data is known, based on other variables such as discount rate and long term goals.
Transferrable- what is ownership if you cannot sell it? By allowing quotas to be transferrable, the managers not only improve overall welfare by encouraging efficiency, they allow for third parties such as environmental groups to purchase catch shares if there is concern of overfishing.

From this definitional introduction, the manual will expand to determining and assigning rights, maintaining administration and providing case studies such as the example of managed Chilean mussels.

occupied

Even in our humble Corvallis there are "Occupy Wall Street" demonstrations, but what would you expect from the town that has the longest running Iraq Peace Protest?  An opinion piece written by economist Russ Roberts broke the movement's voice into two statements, "we are the other 99%" and, "end Wall Street cronyism."  Roberts set aside the attack on the 1% as unfounded because there are many of entrepreneurs such as Mark Zuckerberg who bring the world much good and are justly rewarded for their advances.  On the other hand, he argues that federal guarantees to the creditors of failing institutions and assurances that failure is not an option, a.k.a. "Wall Street cronyism", is a legitimate claim.

The question I have is not about why the movement has come to this well educated, left leaning, politically active town but rather the implications of the protest and wishes of the protesters.  By not allowing failed institutions and ideas to bid adieu, the United States has instead created a haven for gamblers that bet with everyone's money but their own and their friends'.  We could agree that something needs to be done, but how far should regulations change?  If creditor's money isn't insured, companies will be much more risk averse, but how far down will the blame ultimately fall?  Will the simple savings accounts of thrifty citizens lose their insurance?  After all, it is the customers that supported the unstable system to begin with.  Citizens who place their money in financial institutions should keep better informed about how their money is being spent, but in all honesty, my mom was probably one of very few people that pulled her money from J.P. Morgan Chase because she was dissatisfied with the bank's role in the meltdown.

What option other than total withdrawals does the populous have to show their dissatisfaction? Oh yeah, protest.

Statement of Existence

This is intended to be two things:
1. An outlet for the thoughts of a class of grad students in Applied Economics, both well reasoned and newly inspired.  All too often good ideas are lost in the alley behind deadlines or simply discarded before given a chance to become deeds.  This is a place where uncertainty is met with more questions and many more after that until at least a couple of answers are found.
2. A record of our philosophical stances as we learn and change over time.  We aren't yet certain, and neither are you, so talk with us and maybe we can understand.