Make the Net Neutral Again

From The WSJ. Excerpts:

"Mr. Pai in a speech at Washington’s Newseum sketched out a plan to untangle the 2015 “net neutrality” rules that classified the internet as a public utility under the Communications Act, a law carbon-dated to the 1930s. The rules give the FCC broad authority to dictate whether broadband practices are “reasonable.” Liberal pressure groups like Public Knowledge and Free Press said that nefarious cable companies might someday, somewhere block websites or slow browsing. Years later, no one can drum up an example."

"the agency will vote in May on a proposal to designate the internet as an information service, the status quo of two years ago. The Supreme Court upheld this “light touch” framework in 2005, and Mr. Pai explained in his speech that government nonintervention helped spur $1.5 trillion of private investment that built high-speed internet pipes.

But then came the regulatory uncertainty of a government takeover of the internet. Between 2014 and 2016, Mr. Pai notes, capital expenditures on broadband from America’s 12 largest internet-service providers dropped 5.6%, or $3.6 billion"

"Among the losers are rural areas where profit margins are low: For instance, a provider that serves about 475 customers in northern Illinois recently delayed plans to rev up network speeds to 20 Mbps from 3 Mbps."

"Mr. Pai proposes to eliminate a 2015 rule known as the internet conduct standard. This is an arbitrary directive that he says gave the agency “a roving mandate to micromanage the internet,” sometimes going after wireless companies for the high sin of providing popular services. FCC launched a probe into plans that allow customers to stream unlimited videos or music."

"“bright-line rules” from 2015 that include a ban on “fast lanes” for content or “paid prioritization.” That ban forbids providers from charging more for carrying more content, which makes as much sense as telling FedEx that the company can offer two-day shipping but not overnight delivery."

"the government walls off future innovation by stipulating that cat videos must be treated the same as telemedical X-rays or Amber alert notifications. The irony is that Google and Facebook already offer faster delivery for services like “instant articles” that appear at 10 times the normal speed."

"The FTC’s enforcement power has long obviated the need for an FCC net-neutrality scheme."

Inequality Isn’t the Real Issue: Research suggests that people care most about fair chances, not the distribution of wealth

By Christina Starmans, Mark Sheskin and Paul Bloom. Frm the WSJ. Dr. Starmans is a postdoctoral associate in psychology, Dr. Sheskin is a postdoctoral associate in cognitive science, and Dr. Bloom is a professor of psychology, all at Yale University. Excerpts:

"we can find no evidence that people are, in fact, concerned with economic inequality for its own sake."

"Americans were unaware of just how unequal their society is: They thought that the bottom 40% had 9% of the wealth and the top 20% had 59%, while the actual proportions were 0.3% and 84%."

"people thought on average that, in the perfect society, individuals in the top 20% should have more than three times as much money as individuals in the bottom 20%.

A similar endorsement of inequality appears in studies done in 16 other countries, and it holds for men and women, people on the right and left of the political spectrum, and teenagers."


"Other research points to an even greater acceptance of inequality, with one study finding that people prefer for the richest 20% to have 50 times the wealth of the poorest 20%."

"In other studies, psychologists have been careful to separate concerns about equality from concerns about fairness. When you do this, both adults and children reject unfairly equal distributions in favor of distributions that are fair but unequal. For example, in a 2012 study published in the Journal of Experimental Psychology: General by Alex Shaw and Kristina Olson, 6- to 8-year-olds insisted on dividing rewards equally between two boys who both cleaned a room. When one boy was described as having done more work, however, the children demanded that the harder worker receive a larger reward." 

"few people worry about inequalities between the very rich and the very, very rich, even though the inequalities might be greater, both absolutely and proportionately, than the inequalities between the poor and the moderately well-off."

"we think that many of these equality-obsessives are in the grips of a false consciousness. They fail to distinguish worries about inequality from worries about unfairness. They are confused about what they really want. Human beings, the research suggests, are not natural-born socialists, but we do care about justice."

"When is it unjust to treat people the same—that is, which factors (hard work, skill, need, morality) are fair grounds for inequality and which are not? Which resources should be distributed on the basis of merit?"

"There is no consensus about what a perfectly just world would look like, but for most of us, it will be an unequal one."

Minimum wage increases lead to worse health outcomes among men

See Do minimum wage increases influence worker health? by Brady P. Horn, Johanna Catherine Maclean and Michael R. Strain. From AEI.

"Abstract:

This study investigates whether minimum wage increases impact worker health in the United States. We consider self-reported measures of general, mental, and physical health. We use data on lesser-skilled workers from the 1993 to 2014 Behavioral Risk Factor Surveillance Survey. Among men, we find no evidence that minimum wage increases improve health; instead, we find that such increases lead to worse health outcomes, particularly among unemployed men. We find both worsening general health and improved mental health following minimum wage increases among women. These findings broaden our understanding of the full impacts of minimum wage increases on lesser-skill workers.

Click here to access the published version of the paper
Click here to read the full paper."

Time to Repeal Special Interest 'Prevailing Wage' Laws

By Trey Kovacs of CEI.

"President Donald Trump has plans for $1 trillion in infrastructure spending as part of his administration’s plan to create jobs and spur economic growth. Democrats in the Senate announced a similar proposal earlier this year. Whether either of these are smart plans for jumpstarting the economy is up for debate. If Congress does pass such an infrastructure plan, however, it is imperative to ensure the best rate of return for tax dollars spent on these projects. The only way to do that is to repeal or exempt such infrastructure projects from existing “prevailing wage” laws that needlessly shield labor unions from competition and raise the cost of taxpayer-funded construction.

Prevailing wage laws act as an arbitrary wage mandate on federal, state, and local government construction projects. Although the specifics of the laws vary, the effects are the same—raising the cost of government infrastructure.

Prevailing wage requirements jack up costs because they peg the wages for specific occupations to the union rate in the area (rather than the average wage), impose burdensome paperwork on employers, and stifle competition. Foremost, setting prevailing wages at the union rate is misguided as only 13.9 percent of construction workers are members of a union. Additionally, setting the prevailing wage equal to the union wage suppresses competition. By forcing all contractors to pay the same, labor costs are shielded from competitive pressures.

Despite inflating the cost of public construction and harming competition, new polling data from the union-backed Smart Cities Prevail finds that voters actually support prevailing wage on government projects.

Normally, however, if you want to find out what people think, you ask them using neutral language. In the Smart Cities Prevail poll, they give the respondent the for-and-against argument in one question. This is not the best way to poll if you are looking for an honest answer.

One poll question states:

They [prevailing wage laws] require contractors on any government funded construction projects—like a road, bridge, or school—to pay workers at least the local market rate for their job where the project is being built.

It is disingenuous to say “local market rate.” For example, at the federal level, prevailing wage laws are significantly above the average local rate. According to Beacon Hill Institute research:

We found that on average the [Davis-Bacon Act] prevailing wage is almost $4.43 per hour, or more than 22%, above the [Bureau of Labor Statistics] average wage when wages are weighted according to the number of workers in each trade and each metropolitan area.

There is little doubt that the poll is politically motivated in order to stem the tide of lawmakers reconsidering the wisdom of prevailing wage laws.

Here is what taxpayers and voters really need to know about prevailing wage laws. The added costs associated with prevailing wage rules are massive. In December 2016, the Congressional Budget Office (CBO) estimated that repealing such requirements in the Davis-Bacon Act could save taxpayers $13 billion on federal construction projects between 2018 and 2026.

State governments also face increased costs caused by prevailing wage laws. For example, in Wisconsin, a state looking at repealing its prevailing wage law, the state and local governments could have saved $300 million on construction costs if not for prevailing wage laws, according to a report from the Wisconsin Taxpayer Alliance. 

Other states have realized significant savings from repealing or exempting certain projects from prevailing wage laws. In Ohio, legislation exempted school districts from prevailing wage requirements. Ohio’s Legislative Service Commission examined the impact of the exemption and found savings of over 10 percent.

Ultimately, prevailing wage laws are special interest legislation that exclusively benefit labor unions, not the public good. The real question that needs to be asked of voters is whether lawmakers should demand a good rate of return for taxpayers on public works projects. If the answer is yes, then prevailing wage laws ought to be repealed."

The French Economy Vs. The British Economy Since 1984

See Will France elect its own Barack Obama? by George Will.

"In 1977, France’s gross domestic product was about 60 percent larger than Britain’s; today it is smaller than Britain’s. In the interval, Britain had Margaret Thatcher, and France resisted (see above: keeping foreigners’ ideas at bay) “neoliberalism.” It would mean dismantling the heavy-handed state direction of the economy known as “dirigisme,” which is French for sclerosis. France’s unemployment rate is 10 percent, and more than twice that for the young. 

Public-sector spending is more than 56 percent of France’s GDP, higher than any other European nation’s. Macron promises only to nibble at statism’s ragged edges. He will not receive what he is not seeking — a specific mandate to challenge retirement at age 62 or the 35-hour workweek and the rest of France’s 3,500 pages of labor regulations that make it an ordeal to fire a worker and thus make businesses wary about hiring. Instead, he wants a more muscular European Union , which, with its democracy deficit, embodies regulatory arrogance."

For all its costs, the Paris treaty will have almost no effect on global warming, and by depleting global income it will make it harder for countries to adapt and innovate in response to whatever changes occur

See The Case for Pulling the U.S. Out of the Paris Climate Accord by Ross McKitrick of Cato.

"EPA Secretary Scott Pruitt has argued that the Paris Agreement on Climate Change is a bad deal for the U.S. because it doesn’t bind China and India. But that implies it could be fixed by imposing the same ruinous terms on developing countries—which would in fact just spread the damage. The real reason for pulling of the Paris Accord is that it is a futile gesture based on empty and dishonest premises.

The first thing to note is that the same computer models that say global warming is a problem also say that Paris will not fix it. If one were to graph the standard warming projections over the next century with and without Paris, the two lines overlap almost exactly. Whatever greenhouse gas (GHG) concentration we would have reached in the year 2100 without Paris, we will reach it shortly thereafter with. For all its costs, the Paris treaty will have almost no effect on global warming, and by depleting global income it will make it harder for countries to adapt and innovate in response to whatever changes occur. Thus not only does Paris not solve the problem, it arguably makes it worse.
This, by the way, was equally true of the earlier Kyoto Protocol: all cost and no benefit. Under current technology and economic realities we have only two options: do nothing and adapt to whatever changes the climate will undergo over the next century, or take a lot of costly and futile actions today and adapt to whatever changes the climate will undergo over the next century. There has never been a third option involving costly actions today that stop the climate from changing.

Paris binds countries to meet their self-imposed Nationally Determined Contributions, or NDCs. The Obama Administration submitted an NDC that committed the U.S. to a twenty six percent reduction in GHG emissions below 2005 levels by 2025 through specific regulatory measures, all of which were enacted by Executive Order rather than by passing laws in Congress. It amounts to an attempt by one Administration to bind all future Administrations despite lacking legislative warrant. If the U.S. NDC was supposed to be legally binding then it should have gone through Congress. And now that some of those measures have been repealed by the current Administration, it is dishonest to keep the existing NDC as part of the Paris Agreement.

Paris embeds an inconsistency between calling for the use of the “best available science” while also prejudging what that science is allowed to say. The Accord’s preamble calls climate change an “urgent threat” even though mainstream climate science and economics does not imply this, instead placing global warming rather low on the list of problems confronting the world. The Agreement enshrines the ill-defined and arbitrary target of holding “the” global average temperature to 2^oC above pre-industrial levels while completely ignoring the critical question of how it should be measured. Nor does it say how much of the warming is natural and should not be counted against the 2^oC limit. This omission alone makes the overall target absurd, since it could bind the world to taking actions to prevent the sun from shining brighter.

The Paris Agreement also veers into absurdity by its political and ideological language, requiring countries to address extraneous themes like gender equity, biodiversity, poverty eradication, migrants, disabled persons, a “just transition of the workforce,” “creation of decent work,” and so on. Having larded the treaty with social justice slogans, its authors cannot be surprised if they become points of contention. It is not surprising that conservative governments will dislike these items, and if the authors respond that they can simply be ignored, then they should not have been in the treaty to begin with.

Finally, a proponent might acknowledge all these problems yet still defend Paris as a “good first step” in the expectation that later steps will yield big benefits.  But this is flawed reasoning. In any well-structured policy transition the first step yields the highest benefits at the lowest cost—the so-called low hanging fruit. Subsequent steps cost more and yield less, until the point is reached where costs exceed benefits and the process stops. Paris, like Kyoto, cost too much to implement while yielding unmeasurably small benefits. Subsequent steps will only be worse. It is a bad first step on a road to nowhere.

Pulling out of the Paris treaty would send a signal that the U.S. will not bind itself to bad deals based on hype and empty slogans. If this is the best global climate diplomacy could come up with then it is time to pursue other options."

We Might Not Need Steel Tariffs For National Defense Purposes

See The "national defense" argument by Scott Sumner.

"The Financial Times reports that the Trump administration is considering steel tariffs:

The US has set the stage for a global showdown over steel, launching a national security investigation that could lead to sweeping tariffs on steel imports in what would be the first significant act of economic protectionism by President Donald Trump.  The decision to use a 1962 law allowing the US government to limit imports that threaten its security readiness is intended to deliver on Mr Trump's campaign promises to bolster heavy industry and "put new American steel into the spine of this country", officials said on Thursday.

A few observations:

1. Congress erred in delegating to the executive branch the power to set national security tariffs. Almost any industry could be deemed essential for "national security".

2. The US steel industry currently produces about 80 million tons per year. That's more than enough to meet our essential military needs. And this doesn't even account for the fact that steel production could be increased, as we are not operating at capacity. Yes, it might take a bit of time to bring mothballed plants back online, but as the following quotation suggests, new weapons now take far longer to develop than they did back in WWII:

Civilian manufacturing capacity is now ALMOST ENTIRELY USELESS for defense purposes. Whereas in WWII, auto assembly lines could be used to make planes & tanks, and Singer made guns instead of sewing machines... Now all but the most basic defense products (personal firearms, sewing of uniforms, etc) must be made by specialized expert-firms. Super-weapons such as the F-22/F-35, M1A3 Abrams (it's under development now), and whatever we make when we finally field a next-generation artillery piece (cancelling the Crusader was a mistake, btw) require such a specialized knowledge-base & facilities, that they MUST be made by a dedicated defense industry - something we have (on a best-in-the-world level). Re-purposing a factory that built 2-ton SUVs to build 70-ton tanks just isn't happening. Even if it could, how much experience does your average auto-worker have in assembling uranium-ceramic-steel-composite armor properly, so as to maintain it's ability to take 125mm KE hits? A final point on this issue, is that modern war moves to fast to 'develop and manufacture new products after the fact, using civilian industries'. It's a 'run what ya brung' sort of affair

And this doesn't even account for the fact that the US would likely have access to steel produced in friendly countries such as Canada, Mexico, Brazil, Japan and Germany. Sure, one could construct scenarios where some of that steel is cut off in a war (i.e., Japanese exports are disrupted by a war with China, or German exports in a war with Russia), but unless the US is fighting the entire world at once, we'd surely have access to at least some markets. And if steel imports really were cut off, where would we get our iron ore? Today we don't need much iron because of our use of scrap metal. But if we stopped building cars during a war, then far less scrap metal would be available.

This also fails to account for the fact that warfare in the modern world tends to be asymmetric. The threat of nuclear annihilation means that we fight small countries, not large nuclear powers.
The development of missile technology tends to make steel-intensive weapons (such as ships and tanks) more of a "sitting duck" than in the old days. I recall that a single Argentine missile took out a British destroyer in the Falklands War--and that was way back in 1983. Think about today's cruise missiles, and also consider that the sort of powerful adversary that would require the US to have a massive steel industry would be far more militarily advanced than Argentina in 1983. I'm not expert on modern weapons, but I'd wager that in today's warfare a big steel industry is less important than back in WWII.

3. One possibility is that the national security argument is simply being used as an excuse to save jobs in the steel industry. As an analogy, recall that when Trump campaigned for President he promised to ban Muslim immigration. When Rudy Giuliani told him that this was a legally dubious proposal, Trump asked for a version of the plan that would be accepted by the courts. This led to the recent dispute over the ban on immigration from seven (later six) majority Muslim countries.

I don't have strong views either way on whether Trump's immigration ban was legal. But I will say that the legal argument for protecting the US steel industry on national security grounds seems far less plausible than the claim that the immigration ban protects national security (and I'm dubious of even that claim.) So you might expect the courts to question the steel tariffs on exactly the same grounds they challenged the immigration ban---Trump is on the record favoring this sort of action on entirely different grounds---jobs. On the other hand, courts have tended to show more deference to the government on economic regulation than on civil rights/equal protection issues, so I'm not making any predictions here.

4. It is likely that a suitably high steel tariff could save some jobs in the US steel industry. However, it seems much less likely that this would serve Trump's broader goals of restoring jobs in manufacturing. Tariffs protect industries by driving up the price of the commodity being imported. But if steel prices rise, then this puts other American manufacturers (cars, white goods, etc.) at a competitive disadvantage to imports. Mexican firms making cars or washing machines would be able to buy steel more cheaply than American manufacturers, and this would cost jobs in other sectors of the US economy. The net effect on the total number of jobs in manufacturing is likely to be pretty trivial, and could be either positive or negative.

5. Policies based on metaphors that romanticize and/or anthropomorphize the economy are unlikely to be wise:

The decision to use a 1962 law allowing the US government to limit imports that threaten its security readiness is intended to deliver on Mr Trump's campaign promises to bolster heavy industry and "put new American steel into the spine of this country", officials said on Thursday.

Sorry folks, those days are long gone"

Low-wage workers tend to commute away from minimum wage increases rather than towards them

See Some Links from Cafe Hayek.

"Terra McKinnish’s new paper finds evidence that minimum wages do indeed destroy jobs on net for low-skilled workers – and, it appears, also evidence against the assertion that low-skilled workers in America are generally victims of monopsony power.  (HT Frank Stephenson)  Here’s the abstract:

The 2009 federal minimum wage increase, which compressed cross-state differences in the minimum wage, is used to investigate the claim that low-wage workers are attracted to commute out of state to neighboring states that have higher minimum wages. The analysis focuses on Public Use Microdata Areas (PUMAs) that experience commuting flows with one or more neighboring state. A difference-in-differences-in-differences model compares PUMAs that experienced a sizeable increase or decrease in their cross-border minimum wage differential to those that experience smaller change in the cross-border differential. Out-of-state commuting of low wage workers (less than 10 dollars an hour) is then compared to that of moderate wage workers (10–13 dollars an hour). The results suggest that an increase in own state’s minimum wage, relative to neighbor’s, increases the frequency with which low-wage workers commute out of the state. The analysis is replicated on the subset of PUMAs that experience commuting flows with more than one neighboring state, so that the estimates are identified entirely within PUMA. As a whole, the results suggest that low-wage workers tend to commute away from minimum wage increases rather than towards them."

Markets work with altruism, too (they make philanthropy more efficient)

By Chris Freiman. He is an Associate Professor of Philosophy at the College of William & Mary. Posted at "Learn Liberty," which is produced by the Institute for Humane Studies.

"As Adam Smith and many others have emphasized, a great virtue of the market is its ability to channel self-interest toward the public interest. For instance, Walmart sells a smartphone for under $30 that has specs comparable to the original iPhone, which sold for $499 in 2007 (about $600 in today’s dollars). Does Walmart produce functional, low-cost phones because it’s an altruistic public benefactor? Probably not; it sells phones for less than its competitors to win more business and earn more money. So the market channels Walmart’s self-interest toward the public interest. But the market channels altruism effectively, too — indeed, far more effectively than states.

To see why, think of a donation choice as a kind of consumption choice. Let’s go back to the phone example for a minute. If I’m trying to buy a phone for everyone in my family within a $200 budget, I’ll shop around to find the store that will sell me the most phones for $200. Since stores have to compete for my business, they have an incentive to be as efficient as possible so they can offer me the biggest bang for my buck. A store that sells 2 phones for $200 will lose business to the store that manages to sell 3 (comparable) phones for $200.

Similarly, if a philanthropist wants do to as much good as she can with $1 million, she has an incentive to shop around to find the charity that can help the most people for $1 million. Since charities have to compete for her donations, they have an incentive to be as efficient as possible. A charity that saves 400 lives for $1 million will lose her business to the charity that saves 500 lives for $1 million. The philanthropic “consumer” has an incentive to shop around for an efficient charity because she gets to decide which charity her donations will go to. If she discovers that a given charity isn’t doing much good, she can take her money elsewhere.

Contrast this situation with that of the philanthropic voter. Unlike the philanthropic consumer in a market for charity, the philanthropic voter can’t change anything if a state-run redistribution program is operating inefficiently. He might want to withdraw his tax dollars from it and send them somewhere that helps more people, but he’s not allowed to do that.

The most he can do is vote for better candidates who promise better programs, but his single vote isn’t going to change anything. So even those voters with sincere philanthropic motivations have comparatively little incentive to monitor the efficiency of public welfare spending. As a result, public welfare programs have comparatively little incentive to operate efficiently — that is, to do as much good as they could.

This hypothesis seems to be borne out in the data; consider economist Jeffrey Miron’s report on the inefficiency of the federal government’s anti-poverty programs: “If the $1.45 trillion in [the United States federal government’s] direct anti-poverty spending in 2007 had been simply divided up among the poorest 20% of the population, it would have provided an annual guaranteed income that year of more than $62,000 per poor household.”

Along similar lines, total government anti-poverty spending in 2011 amounted to $61,830 per poor family of three — a family for whom the poverty line was $18,530. (Of course, we wouldn’t want the government to directly distribute $62,000 to each family below the poverty line because that would create a perverse incentive to drop below the poverty line. The point is that the government’s anti-poverty spending doesn’t do a cost-effective job of targeting poverty.) By contrast, a top private charity, GiveDirectly, transfers 80-90 percent of its donations to extremely poor recipients in Kenya and Uganda.

Even philanthropists with causes other than maximizing welfare gains per dollar spent can do better in markets than politics. Suppose your child was born prematurely and you feel a strong obligation to support neonatal research. If the government fails to spend your tax dollars on this cause, there’s nothing you can do about it. But a market in charity allows you to fund your “niche” cause without needing the support of the electorate. Indeed, think of how well markets accommodate atypical preferences in general: you can buy soy Buffalo wings from vegan restaurants and tickets to atonal punk concerts even though most of your compatriots don’t share your values.

Socialist philosopher G.A Cohen expresses the conventional view when he says it is “the genius of the market that it recruits low-grade motives to desirable ends.” He’s right that the market can route low-grade motives toward the common good. But he’s wrong that this is the genius of the market. It recruits high-grade motives to desirable ends, too."

Jonathan Newman of The Mises Institute On Neil deGrasse Tyson And Science

See Neil Ty, The Scientism Guy.

"Neil deGrasse Tyson has released a new video aimed at a what he sees as a growing anti-intellectualism problem in the United States. It was released at the same time as the March for Science and many Earth Day demonstrations. He reflects on what he thinks made America great and what’s stalling progress today. Science used to be respected, but today, there is a growing crowd of science-deniers who threaten our “informed democracy.”

The real anti-intellectual move, however, is conflating science, the scientific method, and truth to be one and the same. Fundamentally, science is any human attempt at discovering truth. What is true exists independently from what humans believe to be true or how humans arrive at truth claims. The scientific method, the process of using repeated experiments in an attempt to validate or falsify the conclusions of previous experiments, is but one way humans attempt to discover truth.

The purpose of the video was to call out the obstinate, ignorant voters who deny what many regard as certain truths handed to them by a body of elite, trustworthy scientists. Yet Tyson and the marchers border on an equally dangerous view: scientism.

Scientism isn’t scientific

Scientism is the over-reliance on or over-application of the scientific method. Scientism has many forms, one of which is the use of empirical methods to do economic science, or the dismissal of claims not based on experiment results that question other claims that are based on experiment results. Mises dealt with scientism repeatedly, and closely guarded the boundary between economics and other sciences.

The scientific method is not universally appropriate. Consider an extreme case: if you measured a few right triangles and observed that the sides did not correspond to what the Pythagorean theorem says, would you toss the Pythagorean theorem, or would you reexamine your measurement method? Would you dismiss the logical geometric relation in favor of the scientific method?

The scientific method is particularly suited for the natural sciences. It’s hard to recommend a different method than experimentation and observation to answer questions about chemical reactions, astrophysics, quantum mechanics, and biology.

The scientific method is unnecessary or even ill-suited in other areas, however. Consider these questions, and what sort of approach is appropriate to answer them: What is 17 divided by 3? All else held equal, what are the effects of an increase in demand for blue jeans? Who should I invite to my party? What are the effects of expansionary monetary policy on employment, prices, incomes, production, consumption, and borrowing? How should I treat people?

Of course, Neil deGrasse Tyson wouldn’t recommend using the scientific method to answer all of these questions (hopefully), but the point is that empiricism and experimentation are limited in their appropriate applications. The scientific method does not have a monopoly on truth.

Always open to falsification

The scientific method has another large limitation: conclusions derived solely by experimentation are always susceptible to falsification by just one aberrant observation. For this reason and others, even wide consensus among scientists should be met with at least some skepticism before the heavy hand of the government gets involved.

In 1992, the government, backed by the scientific community, told you that you needed 6-11 daily servings of bread, cereal, rice, and/or pasta to maintain good nutrition (and that saturated and animal fats are to be avoided). Many government policies and public school food offerings were based on this recommendation, including, suspiciously, agricultural subsidies and import tariffs. But then, years later, new information revealed this to be terrible advice, after a big jump in diabetes diagnoses and obesity rates.

Or, consider the government’s attempts at alleviating malaria. The National Malaria Eradication Program sprayed DDT in 4,650,000 homes and overhead by aircraft. Later, it was realized that DDT is carcinogenic and the spraying had a severe effect on the environment and wildlife, birds in particular. Birds of prey like the bald eagle are not considered endangered species anymore, and the ban on DDT is considered a major factor in their recovery. Even this conclusion is in question, including whether or not DDT is carcinogenic for humans, but the point is that the government itself backtracked on its own science-based solution to a problem. It banned a chemical it once sprayed indiscriminately.

Since the climate is such an important issue for Tyson, consider also the claims and predictions of various scientists around 1970. Earth Day had just started, and scientists were predicting rather apocalyptic scenarios, similar to what we are hearing today from climate scientists. To be clear, just because these predictions turned out to be “spectacularly wrong”, it doesn’t necessarily mean that modern claims are wrong. But it might explain a lot about the modern layperson’s skepticism, as opposed to sheer stupidity as Tyson suggests.

Sites like retractionwatch.com document the increasingly frequent cases in which academic journals must retract published research because the peer review process was a sham or when other fraudulent activity comes to light. A recent entry reports that Springer had to retract 107 papers on cancer due to fake peer reviews. Surprisingly, retraction doesn’t always mean fewer citations, as this top 10 list of most highly cited retracted papers demonstrates.

Skepticism and science are good friends

These examples reveal another larger issue with Tyson’s argument. Tyson says, “every minute one is in denial, you are delaying the political solution.” The problem is that sometimes delays and denial are exactly what is needed. The scientific method requires time and attempts at falsification.

There is an inherent contradiction and arrogance in Tyson’s video. In one breath he is praising science and the way the scientific method works: “I get a result. A rival of mine double checks it, because they think I might be wrong.” But in the next breath, he declares to the doubter who also thinks some scientific conclusion might be wrong: “You don’t have that option! When you have an established, scientific emergent truth, it is true whether or not you believe in it.”

So the rival scientist is allowed to question the conclusions of other scientists because the conclusions might not be true, but nobody else is. We may not all be equipped with a laboratory, but we are all equipped with reason, experience, preferences, common sense (some more than others), gut instincts, some ideas about what is morally right and what is morally wrong, and our own areas of expertise. Surely these are not meaningless when it comes to judging the claims of a politically-connected technocratic elite and their policy recommendations.

Political connections bias science

Like the food pyramid, political interference in the scientific process led to terrible consequences in scheduling various drugs. Marijuana, which is now widely accepted to be virtually harmless, is still scheduled with heroin and ecstasy, and higher than cocaine and methamphetamines. Yet researchers and agencies produced enough of Tyson’s “emergent truths” (which we are not to doubt) over the years to keep it that way. The effects of this prohibition have been devastating, including a prison system bursting at the seams, militarized local police, violent organized crime (legal and illegal), and more deaths than marijuana itself could ever cause on its own.

Indeed, when the government does or funds research, it seems to always arrive at the conclusions which involve the government getting larger in size and scope. To question these expansions is to question the science, and to question the science is to mark oneself a stubborn idiot.

Tyson is trying to convince these stubborn idiots to learn some science. Only then, he says, will they become the informed citizens this democracy needs. But what if the skeptics aren’t stupid? What if their skepticism is due to the perceived track record of the scientific community over the years (especially when the government is in the mix)?

Most of what Tyson perceives as anti-intellectualism may not be a problem with people's ability to think, but an inability to trust a politically-connected scientific community that has led them astray in the past. Besides, if he really thinks too many Americans are too stupid, then he ought to look no further than the public education system that produced this alleged mass of illiterate science-deniers.

Name-calling over debate

But I don’t think Tyson views the American electorate as 51% dumb and 49% smart. I think he knows that there are a few outliers with truly unscientific ideas and who will not be convinced of even the most obviously true scientific conclusions.

The implication in the video is that if you don’t go along with this one idea, you are just like those wacky outliers. Those who have a healthy skepticism of what the government and the intelligentsia claim are lumped together with the outliers as a rhetorical strategy.

In practice, however, even those who are on board with the science but disagree with the government solution to the problem, are also added to the same group of idiots.

It’s a rhetorical strategy that may not work for him. Having been in my fair share of debates, I know that insulting my opponents isn’t the best way to have them see things from my point of view.

Suppose I come across a minimum wage proponent. Should I call them an ignorant economic-theory-denier, or should I just keep trying to convince them of the effects of minimum wage legislation? Should I treat them the same way I might treat somebody who holds to the completely debunked labor theory of value or somebody who thinks the economy is subject to the whims of lizard-people?

The end goal: bigger government

At the end of the video, Tyson’s real interest becomes apparent. He wants the government to battle with the climate, stick everybody with the same vaccinations, and teach every student a materialistic explanation for the origins of the universe and human and animal life.

Tyson implies that scientific conclusions give way to political solutions, when often what is best is to simply inform the people of some new "emergent truth" and allow individuals and firms to change their behavior in light of and to the extent that they buy in. Top-down, universally enforced "solutions" often cause more problems than they solve and don't have the flexibility, effectiveness, or economic viability that they need.

In the beginning of the video, Tyson asks, “How did America rise up from a backwoods country to be one of the greatest nations the world has ever known?” I would argue that the impressive accomplishments of the United States are in spite of and not because of government intervention. The economic development of the United States is due to a wide range of factors, including an early adherence to relatively laissez-faire economic policy, the industrial revolution, only the occasional war instead of the state of perpetual war we find ourselves in today, a relatively individualistic culture, an “entrepreneurial spirit”, and abundant natural resources and farmable land.

Certainly scientific and technological innovations played a major role. But my questions for Neil deGrasse Tyson are these: what made those scientific and technological innovations possible? Do you want Americans to be more scientifically literate as an end or as a means to establishing a political agenda? Does the government really need to get involved for us to solve all of our problems? What harm is there in further experimentation and further attempts at convincing the population of your ideas before resorting to silencing the unconvinced by labeling them “science deniers”?

Telling people not to question their government or a politically-connected scientist-class is dangerous. It’s throwing the baby out with the bath water, and it seems to run against his own values. Indeed, Neil deGrasse Tyson is frequently featured on a popular YouTube channel called “Question Everything”. We should encourage a healthy skepticism, especially when the government is involved.

When it comes to political solutions to Tyson’s list of problems, it means scarce resources must be employed toward some goal. This puts him outside of his jurisdiction, natural science, and into my jurisdiction, economics. Dare I tell him to not question my conclusions?"

Trump’s ‘Hire American, Buy American’ Is Redistribution by Another Name

By Ben Shapiro. In The National Review. Ben Shapiro is the editor in chief of the Daily Wire.

"But there is a broader ideological critique that is simply false: the notion that America benefits as a country by heavily restricting its labor base rather than by expanding the pool of qualified applicants. There is a strong case to be made that in a welfare state, we should curb any program that increases the domestic unemployment rate, because the taxpayers absorb the burden of the increased number of the unemployed. But there is no evidence that high-tech visas increase the unemployment rate, since high-tech companies will simply shift production overseas to take advantage of lower wages there and similar job qualifications; this deprives American companies of jobs.

The goal of an economy is to create better products and services at a lower price, thereby creating new cycles of supply and demand. The goal of an economy is not to freeze the available pool of labor, thereby confiscating wealth from employers on behalf of employees lucky enough to be born inside the United States. It’s difficult to understand why people who think that we should have a closed immigration system in order to preserve jobs don’t also think that we should have dramatically higher minimum wages or forced price controls.

Why should taxpayers foot the bill for cement made in Pennsylvania rather than China, absent some political payoff from politicians? Second, Trump’s program of ensuring that government contracts go to American companies makes little sense, given that this is merely a government subsidy of popular political interests. Why should taxpayers foot the bill for cement made in Pennsylvania rather than China, absent some political payoff from politicians? And in fact, Trump’s new program allows widespread waivers for government contracts if the government decides that product or pricing is insufficient from American suppliers. As Kevin Williamson wrote earlier this week: “In practice, that means if you have the right friends and make the right donations, the Buy American rules may be used to steer contracts your way. If you don’t, they won’t.”

Finally, Trump’s program of producing everything in America is economically illiterate. Earlier this year, (alleged) White House chief of staff Reince Priebus stated, “We can make everything here, or our goal should be to try to make everything we can in the United States so that the money gets put in the pockets of Americans.” That’s not only untrue, it’s simply nutty. Subsidizing domestic industry and cutting off imports in order to “help” the economy is a fool’s errand. Back in the 1930s, Nazi Germany embarked on a course of “autarky,” assuming that they could strengthen the domestic economy through a combination of subsidies and tariffs. The result, which Hitler actually wanted: a requirement for territorial expansion, since trade enriches countries with resources beyond their own borders. North Korea is autarkic today. So is Venezuela. Both are impoverished. Trade enriches both sides; banning trade indirectly taxes certain domestic parties in behalf of others.

But this is the truly tyrannical side of “economic nationalism”: the idea that your freedom as an individual to engage in commerce must be made subservient to a sort of collectivist loyalty test. In its own way, it is no different than Joe Biden’s statements some years ago that paying higher taxes made you more patriotic. But patriotism isn’t about restricting your freedom and prosperity to help someone in a dying industry. It’s about upholding a system of freedom for everyone, even those who benefit more from those freedoms."

Archbridge Institute Releases Optimistic New Research on Economic Mobility

Ryan Young of CEI.

There is a new think tank in town: the Archbridge Institute, led by Gonzalo Schwarz, formerly of the Atlas Network. Their work focuses on economic mobility around the world. They recently released a study by Scott Winship, the first in a three-part series examining the issue. His primary finding is that relative mobility in the U.S. isn’t very strong—children born into middle class families tend to stay middle class, and children born into poor families tend to stay poor. But what about absolute mobility? The executive summary states:

[R]oughly three in four adults—and the overwhelming majority of poor children—live better off than their parents after taking the rising cost of living into account.

That’s good news. The remaining tasks are to make sure the one in four who aren’t better off than their parents become so, and to keep the process going. This approach pairs well with Iain Murray’s and my 2016 papers on inequality, People, Not Ratios and The Rising Tide. If the goal is to make the worst off better off, markets must be free enough to allow people to make that happen.
The Archbridge approach also ties into what scholars ranging from Steven Pinker to Deirdre McCloskey to Matt Ridley to Angus Maddison to Angus Deaton to Julian Simon have been saying for decades: people will make themselves better off over time, if they’re allowed to.
There have been starts and stutters, and advances and reversals. Nobody knows what will happen next. But the long-term trajectory is up. It has been for two centuries and counting. This is to the benefit of the poor. Even if they remain relatively poor compared to the rich—remember that every statistical distribution must have top and bottom percentiles, giving more job security to Piketty-style academics than tenure itself—real people are becoming better off, ratios be damned.
For example, the chart pictured here shows per-person GDP in the U.S. over a 70-year period, 1947 to now. People wax nostalgic about the 1950s. But if the choice was actually presented, most people would rather have today’s medical technology, social tolerance, air conditioning, HDTVs, communications technology, restaurants, travel opportunities, and most everything else, over what our 1950s ancestors had. Where would you rather live? Interested readers can find a lot more on this point in The Rising Tide.

Economic mobility is important. Anyone with an idea should be able to build a business around it, whether they were born rich or poor. One of modernity’s greatest achievements is ending the old feudal Great Chain of Being, where everyone had their place and could never leave it.
After all, the whole point of going into business is to provide value for other people. Why stop people from helping each other, even if they were born poor?
The best way to encourage more economic mobility is to foster a cultural and regulatory environment where innovation, openness, and change are encouraged, not crushed. I look forward to seeing the next papers in Archbridge’s series. The first paper is here.

Some issues economists tend to agree on and they lean towards less government intervention

See News Flash: Economists Agree by Greg Mankiw from back in 2009.

"The recent debate over the stimulus bill has lead some observers to think that economists are hopelessly divided on issues of public policy. That is true regarding business cycle theory and, specifically, the virtues or defects of Keynesian economics. But it is not true more broadly.

My favorite textbook covers business cycle theory toward the end of the book (the last four chapters) precisely because that theory is controversial. I believe it is better to introduce students to economics with topics about which there is more of a professional consensus. In chapter two of the book, I include a table of propositions to which most economists subscribe, based on various polls of the profession. Here is the list, together with the percentage of economists who agree:

1. A ceiling on rents reduces the quantity and quality of housing available. (93%)
2. Tariffs and import quotas usually reduce general economic welfare. (93%)
3. Flexible and floating exchange rates offer an effective international monetary arrangement. (90%)
4. Fiscal policy (e.g., tax cut and/or government expenditure increase) has a significant stimulative impact on a less than fully employed economy. (90%)
5. The United States should not restrict employers from outsourcing work to foreign countries. (90%)
6. The United States should eliminate agricultural subsidies. (85%)
7. Local and state governments should eliminate subsidies to professional sports franchises. (85%)
8. If the federal budget is to be balanced, it should be done over the business cycle rather than yearly. (85%)
9. The gap between Social Security funds and expenditures will become unsustainably large within the next fifty years if current policies remain unchanged. (85%)
10. Cash payments increase the welfare of recipients to a greater degree than do transfers-in-kind of equal cash value. (84%)
11. A large federal budget deficit has an adverse effect on the economy. (83%)
12. A minimum wage increases unemployment among young and unskilled workers. (79%)
13. The government should restructure the welfare system along the lines of a “negative income tax.” (79%)
14. Effluent taxes and marketable pollution permits represent a better approach to pollution control than imposition of pollution ceilings. (78%)

If we could get the American public to endorse all these propositions, I am sure their leaders would quickly follow, and public policy would be much improved. That is why economics education is so important.

Note that the proposition about fiscal policy (#4) does not distinguish between taxes and spending as the best tool for purposes of macro stabilization. Maybe that question should be added in a future poll. I doubt, however, that the answer would make it onto this list of widely agreed upon propositions."

State certificate-of-need programs limit the introduction and expansion of a wide variety of medical services and equipment

See Certificate-of-Need Laws: Are They Achieving Their Goals? by Matthew D. Mitchell, Director, Project for the Study of American Capitalism. Excerpts:

"In 1986—as evidence mounted that CON laws were failing to achieve their stated goals—Congress repealed the federal act, eliminating federal incentives for states to maintain their CON programs. Since then, 15 states have done away with their CON regulations."

"A majority of states still maintain CON programs, however, and vestiges of the National Health Planning and Resources Development Act can be seen in the justifications that state legislatures offer in support of these regulations. Policymakers claim CON regulation is intended to

1. ensure an adequate supply of healthcare resources,
2. ensure access to health care for rural communities,
3. promote high-quality health care,
4. ensure charity care for those unable to pay or for otherwise underserved communities,
5. encourage appropriate levels of hospital substitutes and healthcare alternatives, and
6. restrain the cost of healthcare services.

Research, however, shows that CON laws fail to achieve these laudable goals. In fact, by limiting supply and undermining competition, CON laws may undercut each of these aims."

"CON programs limit the introduction and expansion of a wide variety of medical services and equipment, such as rehabilitation centers, nursing home beds, and medical imaging technologies. The process for obtaining a CON can take years and tens or even hundreds of thousands of dollars. By definition, CON programs restrict supply, making them unlikely to ensure an adequate supply of healthcare resources. Research on the supply of dialysis clinics and hospice care facilities finds that CON programs do, indeed, restrict the supply of both.

George Mason University Professor and Mercatus-affiliated scholar Thomas Stratmann led the most recent comprehensive study of the effect of CON programs on the supply of medical equipment. Stratmann and his coauthor, Jacob Russ, report that there are on average 362 hospital beds per 100,000 people in the United States. Controlling for other factors, however, they find that states with CON programs have about 99 fewer hospital beds per 100,000 people than states without these regulations. Moreover, they find that CON programs that specifically regulate acute hospital beds are associated with an average of about 131 fewer hospital beds per 100,000 people relative to non-CON states. Furthermore, they find that CON regulations reduce the number of hospitals with MRI machines by one to two hospitals per 500,000 people and that states that regulate MRI machines have, on average, 2.5 fewer hospitals providing MRI services than non-CON states. Taking Michigan as an example, this means the state may have between 20 and 40 fewer hospitals offering MRI services than it would if it had no CON program.

In separate research, Stratmann and his coauthor Matthew Baker find that patients in states with CON programs are more likely to travel longer distances in search of health care, a fact that has been documented by others. Finally, they assess the effect of CON regulations on nonhospital providers such as ambulatory surgical centers (ASCs), finding that—controlling for other factors—there are significantly fewer nonhospital providers of MRI and CT scans in CON states than in non-CON states. This may explain why hospital providers have a stronger market share in CON states than in non-CON states. It may also explain why hospitals tend to support CON regulation."

 "As they are today, policymakers in 1974 were concerned about healthcare price inflation, and Congress hoped that CON regulations would address the problem. Today, many states explicitly name cost control as a goal of their CON programs. The Virginia Certificate of Public Need Program’s website, for example, states that “the program seeks to contain health care costs while ensuring financial viability and access to health care for all Virginia at a reasonable cost.”

Cost is a per-unit concept. It refers to the amount of money needed to produce one unit of a product or service. Economic theory predicts that a supply restriction such as CON regulation will increase per-unit costs by reducing supply. As economists Jon Ford and David Kaserman put it, “To the extent that CON regulation is effective in reducing net investment in the industry, the economic effect is to shift the supply curve of the affected service back to the left. . . . The effect of such supply shifts is to raise . . . [the] equilibrium price.” The empirical evidence on how CON regulation affects cost has been consistent with economic theory, showing that CON regulation tends to increase the cost of healthcare services."

How FDA Rules Made a $15 Drug Cost $400: For many older medicines, government forces the original, name-brand version off the market

From the WSJ.

"All these prescription drugs fall under a category known as DESI drugs, named for their inclusion in an FDA program called Drug Efficacy Study Implementation. These drugs came to market before 1962, when getting FDA approval for a drug required proving its safety but not its efficacy. Such drugs, manufactured under expired patents, are used by millions of Americans today.

But once the FDA approves a new-drug application for a DESI drug, the existing drug can be pulled from the market. The “new” drug is treated as a material advance because it underwent testing for safety and efficacy—even though the DESI version was proved safe and effective over decades of actual use. The developer of the new drug may also get a new period of market exclusivity that lasts three years.

This makes little sense. Market exclusivity should let pharmaceutical companies recoup their often enormous investments in genuinely new drugs. Giving monopoly protection for what is essentially a generic version of a DESI drug merely enriches sharp-dealing companies while injuring patients."

"a generic-drug application can cost as much as $15 million. This high upfront cost is part of why would-be manufacturers of generics often pass on the opportunity to compete against branded drugs with smaller markets. This has allowed many pharmaceutical companies to raise prices with impunity.

"The Drug Quality and Security Act of 2013 was designed to ensure that companies can quickly respond to a drug shortage by allowing a new type of drug maker, called an “outsourcing facility,” to enter the market. It copies an FDA-approved product, regardless of exclusivity, provided that it manufactures the drug in an FDA-registered and -inspected facility using FDA-approved ingredients. American companies, including mine, have invested in such facilities.

Yet the potential of this legislation remains untapped. The FDA should clearly define “drug shortage” to include a lack of access due to abnormally high prices. With this simple change, FDA-registered outsourcing facilities could quickly bring sky-high prices for monopoly generics with expired patents back to earth."

"the Trump administration should authorize Medicare and Medicaid to pay for compounded drugs made in outsourcing facilities, which currently aren’t covered. Right now government policy forces Medicare to pay Turing Pharmaceuticals, the brainchild of the notorious “pharma bro” Martin Shkreli, $750 for a single Daraprim pill."

California’s Wasted Winter Rains: The drought is over but the greens keep sending the water out to sea

From the WSJ.

"Hydrologic records indicate that this year could be the wettest on record in California."

"Most of the major reservoirs in the north are full, and some are releasing hundreds of billions of gallons of water to prevent flooding and make room for the melting snowpack this spring.

While farmers and communities downstream can capture some of the discharges, millions of acre-feet will invariably flow into the ocean due to lack of storage capacity and rules to protect endangered fish species. One problem is that while the state population has increased 70% since 1979, storage hasn’t expanded."

"five proposed reservoirs could add four million acre-feet of storage capacity at a cost of $9 billion. Yet environmentalists have opposed every significant surface storage project for three decades. The state is even razing four hydroelectric dams on the Klamath River that green groups complain impede fish migration.

Ah, the fish. Regulations intended to protect smelt and salmon have limited pumping at the Sacramento-San Joaquin River Delta. As a result, some seven million acre-feet of water that was once available for Central Valley farmers and Southern California is flushed into San Francisco Bay each year.

Meanwhile, a 60-mile dry riverbed on the San Joaquin River that hasn’t borne fish since the 1940s is being restored at a cost of $1.7 billion to farmers and state and federal taxpayers. The river restoration is expected to divert an additional 170,000 acre-feet each year, but it could be more since the Chinook salmon that environmentalists want to revive require cool temperatures—meaning more water—to spawn and survive."

"While the state board’s plan would cause more farmland to be removed from production, the main casualties would be low-income and Hispanic communities like Merced that rely on groundwater recharged by the tributaries."

"Communities and farmers have drilled deeper wells and pumped more groundwater to compensate for reduced imports from the delta, leading to severe land subsidence."

"San Joaquin Valley is sinking at a rate of nearly two inches per month in some areas."

Portugal And Greece Make Budget Cuts And There Economies Don't Go South

See Public sector expenditure cut when economies are not already imploding from Tyler Cowen.

"Portugal slashed its public sector deficit by more than half in a single year, when measured as a proportion of GDP, the national statistics bureau has said, taking the shortfall comfortably below euro zone limits.

The deficit dropped to 2.1%  of gross domestic product in 2016, a staggering reduction from its 4.4%  level a year earlier.

This confirms Finance Minister Mario Centeno’s prediction last month that the deficit would be “not more than 2.1%”, its lowest share of GDP since the advent of democracy in 1974.

Euro zone members are required to keep their public deficits to below 3% of GDP, but some are struggling to do so.

Portugal’s public deficit shot up into the double digits during the global economic crisis, and despite an international bailout it had difficulty bringing it back down to 4.4% in 2015.

Portugal’s economy expanded by 1.4% in 2016, the national statistics institute said in February, after growing by 1.6% the previous year on the back of stronger exports and private consumption.

Here is the full piece, here is a useful Bloomberg piece on Portugal.  Furthermore, by one estimate:

Greek gov’t makes a 6.8%/GDP fiscal adjustment in a single year, without any decline in country’s GDP.

You can quibble over those numbers, and yes I do agree this is bad and also not sustainable, but still people this is not exactly the Keynesian model at work."

Ban on neonicotinoids has done more harm than good

European Commission buries science on bees by Matt Ridley.

"Is the European Commission determined to dim the Enlightenment? I ask this because its behaviour in one specific instance goes so utterly with dogma and against evidence as to suggest that there is no longer even a pretence of respect for reason left in Brussels. It concerns bees.

In 2013, you may recall, the European Union banned some uses of neonicotinoid insecticides to save bees. The verdict on this policy has now come in, from the commission’s own Joint Research Centre (JRC), whose job is to provide independent scientific advice to support EU policy. I have seen the commission’s internal report plus a PowerPoint summary that was shown privately to MEPs. Its conclusion is that the ban has been disastrously counterproductive, resulting in an increased use throughout the continent of more damaging pesticides, mainly pyrethroids, which are sprayed on rather than seed-treated (worse for non-pests) and are especially harmful to aquatic life. It finds the ban has had no benefit at all for bees.

In Britain, for example, the study finds that farmers have more than quadrupled the number of insecticide applications on oil-seed rape (from 0.7 to 3.4 per growing season), but pest pressure has increased. Meanwhile, recent studies have demonstrated that declines among wild bees are driven mostly by land use changes and have not increased since neonics were introduced in the 1990s. In fact, a 2015 study published in Nature Communications found that those wild bees most often found in agricultural areas — and probably most exposed to neonics — are “common” and “dominant”.

This makes sense because neonics are mostly used as seed dressings, absorbed into the plant from germination, rather than sprayed on a growing crop. This makes them more lethal to pests such as flea beetles that eat the crop but less dangerous to innocent bystanders, including bees that collect pollen and encounter lower doses. (To declare an interest, I own a farm, which does not grow oil-seed rape but does use neonics to protect wheat. My pride and joy is to have created a new 40-acre wildflower meadow, which is buzzing with bees all summer.)

What has the commission decided to do in response to the news that its policy has been bad for wildlife? Suppress the JRC report and double down, of course. It is refusing to release the report and has (I hear) told the JRC that the centre will have to publish it itself in a journal, which would take months and, crucially, delay publication until after an appeal against the ban at the European Court of Justice is concluded. The commission fears it will lose the case, so it has leaked to friendly reporters at The Guardian and Politico (via the activist Pesticide Action Network) that it intends to push forward with a full ban on neonics, except in greenhouses. The original 2013 ban was on seed treatments and other uses on bee-attractive crops. The leak suggests the full ban would be imposed in May — months before the final decision was to be made this autumn. It apparently wants to get the ban in place before the evidence that it is mistaken reaches the public. The leak was probably intended to keep pressure on the ECJ to rule in the commission’s favour.

Last week Bernhard Url, executive director of the European Food Safety Authority, appeared before the European parliament’s agriculture committee and said that “on the request of the European Commission”, the neonic policy would be based instead on the so-called Bee Guidance Document, even though he admitted this has not been adopted by EU countries. This was a bizarrely one-sided piece of politicised science, written mainly by activist researchers with a conflict of interest, that forces regulators to rely on lab studies often using absurdly high doses of the pesticides while ignoring the many large field studies that overwhelmingly concluded that neonics had no hive-level effect on bees. The document has been reputationally shredded in court.

As background, the German MEP Markus Pieper recently drafted a report for the European parliament budgetary committee calling for more transparency about what is sometimes called sock-puppet commission funding of NGOs. He was gobsmacked by the realisation that the commission pays wealthy green NGOs to lobby the parliament. “I can’t get my head around that sort of thing,” he said. Revealingly, Bart Staes, a Belgian Green MEP, responded with fury to his draft.

David Zaruk, a Brussels-based academic, has been documenting the extent to which Europe has become a playground for American green NGOs. European policy is based on hazard, not risk; it measures whether something can cause harm no matter what the exposure. That, along with an extreme interpretation of the precautionary principle (to consider the hazard, but not the benefit, of any innovation), makes it much easier to get things banned in Europe than in America, where lawyers put up a fight. Hence the way US activists now start their campaigns in Europe. Zaruk says: “If you can ban your target substances (glyphosate and certain neonicotinoids are the flavours of the month) in the influence-rich but lawyer-weak left-leaning European Commission, you then take that feather in your cap back to DC and try to build regulatory momentum.”

Perhaps the European Food Safety Agency should drop the pretence that its regulatory decisions are based on science and admit that EU regulations on the environment and health are political determinations driven by whoever can create the most pressure on bureaucrats and politicians, which is almost always these days anti-science NGOs with their vast and subsidised budgets. For those who would prefer we do without insecticides altogether: great idea, but we missed that bus 20 years ago when we turned our back on genetically modified crops. Insect-resistant GM cotton and maize have boomed elsewhere, but work on European crops largely ceased at the behest of the environmentalists.

It is tragic that this is happening in Europe, home of the Enlightenment, birthplace of the scientific method, where the human race began to climb out of its solitary, brutish and short-lived natural state. The fact that the commission is using a corrupt document and suppressing its own report showing that the ban has been a counterproductive failure — and that few in Brussels appear to give a damn — suggests that Brexit cannot come soon enough.

Post script:

The following letter appeared in the Times the next day from a farmer:

Sir, Matt Ridley (“Europe’s age of unreason harms its wildlife”, Comment, Apr 17) perfectly sets out the facts surrounding the scandalous suppression of scientific evidence and the pandering to illogical non-governmental organisation pressures, by the EU, and how this has led to a ban on the use of the use of neonicotinoid seed dressings in oil seed rape crops. On my farm this environmentally friendly technique prevented the use of any insecticide sprays on any of the farm for more than ten years. This enabled me to encourage a wide spectrum of insects in crops and specially created habitat areas. It is a vital part of the food chain for a multitude of wildlife species.

The ban on the neonic seed dressing has now forced me to spray my rape crops, three times, with broad-spectrum insecticide, so as to achieve the same insect control. Sadly, we have undone ten years of environmentally friendly work. It is infuriating that this outcome should have been brought about by pressure and distorted information from so-called environmental groups and against the wishes and better judgment of bee keepers and farmers alike.

Richard Harvey

Owston, Rutland"

The Rich Aren't Getting Richer

From Greg Mankiw.

"This  paper by Fatih Guvenen and Greg Kaplan is worth a read by anyone interested in inequality trends.  An important excerpt:

Since 2000, different measures of top income inequality have exhibited very different trends. Top income shares based on measures of total income show a continued rise, whereas top income shares based on wage and salary income show no increase in inequality post-2000. The most important difference between these two measures of income is the income that accrues to S-corporations.... 

But interpreting trends in the S-corporation component is extremely difficult. Feenberg and Poterba (1993), Gordon and Slemrod (2002), and Cooper et al. (2016) warn that much of the recent increase in S-corporation income is income that previously accrued to C-corporations. Such income is not “new” income earned by top earners but is simply income that was previously labeled as corporate income rather than household income."

Thus, the Canadian corporate tax raises relatively more than the U.S. tax—even though the rate is less than half the U.S rate

See Corporate Tax Cuts: Canada’s Experience by Chris Edwards of Cato.

"President Donald Trump and congressional Republicans are proposing to cut the corporate tax rate. With any tax cut, members of Congress want to know how much revenue the government may lose from the reform. I do not think that cutting our 35 percent federal corporate tax rate to 20 percent or so would lose the government any money over the long term. U.S. and foreign corporations would invest more in the United States, which would boost our economy, and corporations would avoid and evade taxes less.

Canada provides us with a real-world trial run of corporate tax cuts, and new budget data includes the latest revenue estimates. The nation slashed its federal corporate tax rate from 38 percent in the mid-1980s, to 29 percent by 2000, to 15 percent by 2012, as shown in Chart 1 below. Has the government lost revenue?

You be the judge. Chart 2 shows that corporate tax revenues in Canada have fluctuated with the ups and downs in the economy—revenues fell, for example, during recessions in the early 1990s and 2009. But even with the modest Canadian economic growth of recent years, revenues have held up under a much lower rate. Corporate tax revenues are 2.1 percent of gross domestic product (GDP) today, which is a bit higher than in the mid-1980s when the rate was more than twice as high.

Let’s compare to the United States. While Canada’s 15 percent federal corporate tax will raise 2.1 percent of GDP this year, the 35 percent U.S. federal corporate tax will raise just 1.7 percent. Thus, the Canadian corporate tax raises relatively more than the U.S. tax—even though the rate is less than half the U.S rate.




Canada historic tax revenues here. New Canadian budget data here."

18 spectacularly wrong predictions made around the time of first Earth Day in 1970, expect more this year

From Mark Perry.

"In the May 2000 issue of Reason Magazine, award-winning science correspondent Ronald Bailey wrote an excellent article titled “Earth Day, Then and Now” to provide some historical perspective on the 30th anniversary of Earth Day. In that article, Bailey noted that around the time of the first Earth Day in the 1970, and in the years following, there was a “torrent of apocalyptic predictions” and many of those predictions were featured in his Reason article. Well, it’s now the 47th anniversary of  Earth Day, and a good time to ask the question again that Bailey asked 17 years ago: How accurate were the predictions made around the time of the first Earth Day in 1970? The answer: “The prophets of doom were not simply wrong, but spectacularly wrong,” according to Bailey. Here are 18 examples of the spectacularly wrong predictions made around 1970 when the “green holy day” (aka Earth Day) started:

1. Harvard biologist George Wald estimated that “civilization will end within 15 or 30 years unless immediate action is taken against problems facing mankind.”

2. “We are in an environmental crisis which threatens the survival of this nation, and of the world as a suitable place of human habitation,” wrote Washington University biologist Barry Commoner in the Earth Day issue of the scholarly journal Environment.

3. The day after the first Earth Day, the New York Times editorial page warned, “Man must stop pollution and conserve his resources, not merely to enhance existence but to save the race from intolerable deterioration and possible extinction.”

4. “Population will inevitably and completely outstrip whatever small increases in food supplies we make,” Paul Ehrlich confidently declared in the April 1970 issue of Mademoiselle. “The death rate will increase until at least 100-200 million people per year will be starving to death during the next ten years.”

5. “Most of the people who are going to die in the greatest cataclysm in the history of man have already been born,” wrote Paul Ehrlich in a 1969 essay titled “Eco-Catastrophe! “By…[1975] some experts feel that food shortages will have escalated the present level of world hunger and starvation into famines of unbelievable proportions. Other experts, more optimistic, think the ultimate food-population collision will not occur until the decade of the 1980s.”

6. Ehrlich sketched out his most alarmist scenario for the 1970 Earth Day issue of The Progressive, assuring readers that between 1980 and 1989, some 4 billion people, including 65 million Americans, would perish in the “Great Die-Off.”

7. “It is already too late to avoid mass starvation,” declared Denis Hayes, the chief organizer for Earth Day, in the Spring 1970 issue of The Living Wilderness.

8. Peter Gunter, a North Texas State University professor, wrote in 1970, “Demographers agree almost unanimously on the following grim timetable: by 1975 widespread famines will begin in India; these will spread by 1990 to include all of India, Pakistan, China and the Near East, Africa. By the year 2000, or conceivably sooner, South and Central America will exist under famine conditions….By the year 2000, thirty years from now, the entire world, with the exception of Western Europe, North America, and Australia, will be in famine.”

9. In January 1970, Life reported, “Scientists have solid experimental and theoretical evidence to support…the following predictions: In a decade, urban dwellers will have to wear gas masks to survive air pollution…by 1985 air pollution will have reduced the amount of sunlight reaching earth by one half….”

10. Ecologist Kenneth Watt told Time that, “At the present rate of nitrogen buildup, it’s only a matter of time before light will be filtered out of the atmosphere and none of our land will be usable.”

11. Barry Commoner predicted that decaying organic pollutants would use up all of the oxygen in America’s rivers, causing freshwater fish to suffocate.

12. Paul Ehrlich chimed in, predicting in 1970 that “air pollution…is certainly going to take hundreds of thousands of lives in the next few years alone.” Ehrlich sketched a scenario in which 200,000 Americans would die in 1973 during “smog disasters” in New York and Los Angeles.

13. Paul Ehrlich warned in the May 1970 issue of Audubon that DDT and other chlorinated hydrocarbons “may have substantially reduced the life expectancy of people born since 1945.” Ehrlich warned that Americans born since 1946…now had a life expectancy of only 49 years, and he predicted that if current patterns continued this expectancy would reach 42 years by 1980, when it might level out. (Note: According to the most recent CDC report, life expectancy in the US is 78.8 years).

14. Ecologist Kenneth Watt declared, “By the year 2000, if present trends continue, we will be using up crude oil at such a rate…that there won’t be any more crude oil. You’ll drive up to the pump and say, `Fill ‘er up, buddy,’ and he’ll say, `I am very sorry, there isn’t any.'”

15. Harrison Brown, a scientist at the National Academy of Sciences, published a chart in Scientific American that looked at metal reserves and estimated the humanity would totally run out of copper shortly after 2000. Lead, zinc, tin, gold, and silver would be gone before 1990.

16. Sen. Gaylord Nelson wrote in Look that, “Dr. S. Dillon Ripley, secretary of the Smithsonian Institute, believes that in 25 years, somewhere between 75 and 80 percent of all the species of living animals will be extinct.”

17. In 1975, Paul Ehrlich predicted that “since more than nine-tenths of the original tropical rainforests will be removed in most areas within the next 30 years or so, it is expected that half of the organisms in these areas will vanish with it.”

18. Kenneth Watt warned about a pending Ice Age in a speech. “The world has been chilling sharply for about twenty years,” he declared. “If present trends continue, the world will be about four degrees colder for the global mean temperature in 1990, but eleven degrees colder in the year 2000. This is about twice what it would take to put us into an ice age.”

MP: Let’s keep those spectacularly wrong predictions from the first Earth Day 1970 in mind when we’re bombarded in the next few days with media hype, and claims like this from the 2017 Earth Day website:

Global sea levels are rising at an alarmingly fast rate — 6.7 inches in the last century alone and going higher. Surface temperatures are setting new heat records about each year. The ice sheets continue to decline, glaciers are in retreat globally, and our oceans are more acidic than ever. We could go on…which is a whole other problem.

The majority of scientists are in agreement that human contributions to the greenhouse effect are the root cause. Essentially, gases in the atmosphere – such as methane and CO2 – trap heat and block it from escaping our planet.
So what happens next? More droughts and heat waves, which can have devastating effects on the poorest countries and communities. Hurricanes will intensify and occur more frequently. Sea levels could rise up to four feet by 2100 – and that’s a conservative estimate among experts.

Reality Check/Inconvenient Facts:

1. From the National Oceanic and Atmospheric Administration’s (NOAA) Annual Report for 2016, we’re actually in the longest major hurricane drought in US history of 11 years (and counting):

The last major hurricane (Category 3 or stronger) to make landfall in the US was Wilma on November 24, 2005. This major hurricane drought [of 11 years] surpassed the previous record of eight years from 1861-1868 when no major hurricane struck the coast of the United States. On average, a major hurricane makes landfall in the U.S. about once every three years.

2. The frequency of hurricanes in the US has been declining, see top chart above that shows the hurricane count (all Categories 1 to 5) in the first seven years of each decade back to the 1850s, based on NOAA data here. In the seven years between 2010 and 2016, there were only eight hurricanes (all Category 1 and 2), which is the lowest number of hurricanes during the first seven years of any decade in the history of NOAA’s data back to 1850. It’s also far lower than the previous low of 14 hurricanes during the period from 1900 to 1906.

3. What you probably won’t hear about from the Earth Day supporters is the amazing “decarbonization” of the United States over the last decade or so, as the falling CO2 emissions in the bottom chart above illustrate, even as CO2 emissions from energy consumption have been rising throughout most of the rest of the world. Energy-related carbon emissions in the US have been falling since the 2007 peak, and were at their lowest level last year in nearly a quarter century, going back to 1992. And the environmentalists and the “Earth Day” movement really had very little to do with this amazing “greening” of America. Rather, it’s mostly because of hydraulic fracturing and the increasing substitution of natural gas for coal as a fuel source for electric power, see related CD post here.

Finally, think about this question, posed by Ronald Bailey in 2000: What will Earth look like when Earth Day 60 rolls around in 2030? Bailey predicts a much cleaner, and much richer future world, with less hunger and malnutrition, less poverty, and longer life expectancy, and with lower mineral and metal prices. But he makes one final prediction about Earth Day 2030: “There will be a disproportionately influential group of doomsters predicting that the future–and the present–never looked so bleak.” In other words, the hype, hysteria and spectacularly wrong apocalyptic predictions will continue, promoted by the “environmental grievance hustlers.”"