Have foreign targeted sectors actually achieved high returns on investment? No

From Cafe Hayek.

"from page 104 of Paul Krugman’s 1984 paper “The U.S. Response to Foreign Industrial Targeting” (which originally appeared in Brookings Papers on Economic Activity):

The essence of strategic industrial policy is that government intervention allows targeted industries to earn excess returns. Have foreign targeted sectors actually achieved high returns on investment? The answer may seem surprising. None of the most famous targeted sectors has been highly profitable, or indeed even of average profitability.

 
DBx: Of course, one can always sound the alarm by declaring that “This time it’s different! Unlike industrial policies pursued elsewhere in the past, China’s industrial policy today will succeed.”
Well, very little of what is possible is plausible, and even less is probable. Until and unless politicians and state mandarins not only become programmed not to behave politically, but also to gain knowledge of the all-important on-the-ground (“granular,” as is often said today) details – details that often change in unexpected ways – there is no real prospect of success of efforts by government officials to ‘grow’ their economies through industrial policy. And favored industries are too likely to become lazy and inefficient because of their reliance on subsidies, tariffs, and other special privileges.

…..

I can easily imagine horses evolving long horns jutting from their heads. Such an evolutionary outcome is possible. But I’ll not waste my time and energy worrying about being impaled by a rampaging unicorn. And for the same reason I recommend that we Americans stop worrying about being ‘defeated’ (whatever that really means) by the Chinese as a result of Beijing’s industrial policies."

The effect of banning payday loans

From Tyler Cowen.

"In November 2008, Ohio enacted the Short-Term Loan Law which imposed a 28% APR on payday loans, effectively banning the industry. Using licensing records from 2006 to 2010, I examine if there are changes in the supply side of the pawnbroker, precious-metals, small-loan, and second-mortgage lending industries during periods when the ban is effective. Seemingly unrelated regression results show the ban increases the average county-level operating small-loan, second-mortgage, and pawnbroker licensees per million by 156, 43, and 97%, respectively.

That is from Stefanie R. Ramirez, via the excellent Kevin Lewis."

Has Vermont Had It with Bernienomics?

The state’s voters love Bernie but not the results of his agenda.

By James Freeman of The WSJ. Excerpts:

"Maybe Democrats should have looked at the results in Vermont when Bernie’s home state tried to set up single payer. A Democratic Governor abandoned the idea in 2014 once he was looking at an 11.5% payroll tax, plus a 9.5% income tax, and more increases to come. Progressives couldn’t even get single payer up and running for about 625,000 people in a state with a decent health profile."

"But at the state level Vermonters are considering more death tax cuts. Last month Republican Gov. Phil Scott said in his annual budget address:

Tax professionals consistently tell me that because we are so far out of line with other states, the estate tax is a factor in retirees leaving.

In 2016 while Mr. Sanders was off campaigning against financial success, Vermont’s state lawmakers were limiting the bite of the state’s punitive 16% death tax by exempting the first $2.75 million. Now Mr. Scott wants to move the exemption up to $5.75 million. He understands that people who have worked and saved all their lives are free to retire in any state they choose. “Vermonters impacted by this tax are well-advised from tax professionals, and they are highly mobile,” says Mr. Scott."

"This month Gov. Scott explained what he calls a demographic crisis:

...from April 2009 to the time I took office, we had, on average, six fewer workers in our workforce every single day... from the start of 1997 to the time I took office, we had, on average, three fewer students enrolled in our K-12 schools every single day.

In December, University of Vermont economist Art Woolf shared more cheery news in the Burlington Free Press:

The number of Vermont women in their prime childbearing years has been falling which means the number of births will continue to fall. Couple that with one of the nation’s lowest fertility rates and it is almost guaranteed that deaths will outnumber births every year for the foreseeable future... since 2010, 10,000 more people have left Vermont than have moved in from other states.

To sum up, enacting just a portion of the Sanders agenda has been a crushing failure for Vermont."

Alexandria Ocasio-Cortez's Green New Deal Could Cost $93 Trillion, Group Says

By Ari Natter of Bloomberg. Excerpt:

"Representative Alexandria Ocasio-Cortez’s ambitious plan to fight climate change won’t be cheap, according to a Republican-aligned think tank led by a former Congressional Budget Office director.

The so-called Green New Deal may tally between $51 trillion and $93 trillion over 10-years, concludes American Action Forum, which is run by Douglas Holtz-Eakin, who directed the non-partisan CBO from from 2003 to 2005.

That includes between $8.3 trillion and $12.3 trillion to meet the plan’s call to eliminate carbon emissions from the power and transportation sectors and between $42.8 trillion and $80.6 trillion for its economic agenda including providing jobs and health care for all."

Airbus’s Lesson for Young Socialists

Its A380 debacle shows how hard it is for state planners to outguess markets.

By Holman W. Jenkins, Jr.. Excerpts:

"Socialism is currently in vogue. If the word means anything in today’s context, it means projects of unusual government ambition, built on our globally shared capitalist technological and commercial base. The A380 was exactly such a project. Underwritten by massive European government subsidies, the plane was an engineering sensation. Passengers loved the roomy jet. Yet now it’s kaput. What went wrong? Or to phrase the question more usefully, what technological and commercial realities would its sponsors have had to overrule to assure its success?

The list is not a short one. They would have had to overrule the desire of passengers to fly direct, bypassing the crowded hub airports (like London’s Heathrow) for which the A380 was built.

They would have had to overrule the preference of business travelers for frequent departures. With 535 seats to fill, the superjumbo was hopelessly matched against operators offering more convenient schedules by using smaller planes.

Most of all, they would have had to overrule the public’s appetite for lower fares. On a per-seat basis, a new generation of super-efficient twin-engine planes such as the Boeing 787 proved cheaper to operate even though the four-engine A380 could accommodate twice as many customers.

In the end, enough socialism could be mobilized to get the plane built, but not enough to make it commercially viable. Europe’s governments would have needed to extend their dominion beyond their own taxpayers who financed it. They would have needed to dictate to the world’s airlines and travelers and even the aerospace industry’s global supplier base, which proved unwilling to develop a new fuel-efficient engine for a plane with a doubtful future."

"When the end came, it came because the A380’s last dedicated customer, the government-backed Emirates Airline of Dubai, gave up on the superjumbo. Planes in pristine condition were lingering unsold on the used-plane market. A 10-year-old jet was recently retired by Singapore Airlines . Now it’s being broken up for scrap, proving once again socialism’s knack for making grown men cry.

Boeing’s management was vilified at the time for declining to compete with Airbus to replace its own fabulously successful 747 jumbo jet. But Boeing treated its business like a business. Its forecasts showed the market was likely to evolve in ways unfavorable to another very large passenger plane."

Problems when automation is subsidized

See Don’t Fight the Robots. Tax Them. Many companies invest in automation because the tax code encourages it, not because robots are more productive by Eduardo Porter of The NY Times. Excerpt:

"Daron Acemoglu, an economist at the Massachusetts Institute of Technology, explains that automation often produces benefits of dubious value to the business itself. More important, he suggests that the investment in technologies designed to replace workers has come at the expense of alternative investments that might find more productive uses for human labor. This may help explain the sluggishness in overall productivity growth across the economy. 

One powerful reason that businesses deploy so many robots, despite their sometimes questionable contribution to the bottom line, is that automation is subsidized. “Subsidies induce firms to substitute capital for labor even when this is not socially cost-saving, though it is privately beneficial because of the subsidy,” Professor Acemoglu and his co-author, Pascual Restrepo, wrote. 

The tax subsidies to robots are varied. For starters, machines don’t incur payroll taxes, which are used to fund Social Security and Medicare. For every worker replaced by a robot, the employer saves on payroll taxes. The federal tax code and many state governments allow companies to use “accelerated depreciation” for capital investments, which allows them to deduct the cost of their robots faster than they could deduct the wage of the payroll of the workers they replace.

This means that eliminating the tax break for robots would not hurt economic growth. It would, in fact, improve economic efficiency. By subsidizing capital investment, the government is encouraging businesses to use capital when they otherwise would not, to replace workers with machines. That might be rational for the individual business reaping the tax benefits. But as Professor Acemoglu put it, across the economy, this kind of spending on automation “shows up as a productivity loss.”"

Women in Norway were not helped by a requirement for 40 percent female board membership

See Stop Counting Women: Quotas and tallies won't bring real progress on gender parity by Katherine Mangu-Ward, editor in chief of Reason magazine. Excerpt:

"In Norway, where a requirement for 40 percent female board membership became law in 2008, there’s some evidence that strict quotas may be counterproductive. Fewer companies chose to undertake initial public offerings in the period after the policy took effect and there was no measurable change in the affected companies’ performance or improvement in the prospects for women lower on the corporate hierarchy."

A Partial Payday Reprieve

The CFPB moves to help people get cash in a pinch.

See WSJ editorial. Excerpts:

"Yet some 40% of Americans say they can’t cover a $400 unexpected expense, according to a Federal Reserve survey. Many can’t get bank credit, and a payday extinction would leave them bouncing a check or resorting to loan sharks.

The bureau didn’t consider the alternatives because the outcome was predetermined. One example: The CFPB rule relied heavily on a single study of one payday lender in five states by Columbia professor Ronald Mann. Mr. Mann disputed the bureau’s characterization of his findings and said his results showed that those who take out payday loans tend to be realistic about when they’ll be able to repay."

"The biggest misconception is that payday lenders are a wild-west business that will extort people if the CFPB doesn’t intervene. Payday lending is already regulated by states. More than a dozen have banned payday lending and dozens more allow it with conditions.

Take Indiana, which sets a maximum loan amount of $550. The state sets a maximum interest fee, the conditions for a repayment plan, and a “cooling off” period for those who have taken out several loans. The CFPB in its new proposal notes that more state regulation may be why consumer complaints to the bureau about payday loans are on the decline—a mere 2,900 in 2017 versus 37,300 for mortgages and 26,700 for credit cards."

"Don’t buy the hype that the Trump crowd is “weakening” rules and leaving Americans susceptible to dangerous practices."

Why State Tax Rates Don’t Guarantee Good Services

When I moved from Tennessee to Illinois, I was delighted by the higher quantity and quality of public services such as parks, libraries and education.

By Steven Malanga, a senior editor of City Journal. Excerpts:

"People in states with high taxes are more likely to say they are eager to move elsewhere, and polls show residents increasingly questioning whether they are getting value for government “investment.”

Seven of the eight states with the highest percentages of people who want to move elsewhere are solidly Democratic in party affiliation, according to Gallup polling. Most are high-tax environments. “Even after controlling for various demographic characteristics including age, gender, race and ethnicity, and education, there is still a strong relationship between total state tax burden and desire to leave one’s current state of residence,” Gallup concludes.

When Monmouth University’s poll asked New Jersey residents why they wanted to leave, 30% listed taxes. But 24% said the overall high cost of living soured them on the Garden State, and 28% listed quality-of-life issues, including corruption, traffic and lack of economic opportunity.

In most polls, infrastructure—roads, bridges and airports—ranks high among the basics that citizens and businesses expect government to provide. This should be an area in which rich, high-tax states vastly outperform their peers, but the opposite is true. In CNBC’s annual ranking of the best and worst states for business, seven high-tax states were among those ranked lowest in infrastructure quality—Connecticut, Hawaii, Maryland, Massachusetts, New Jersey, New York and Rhode Island.

Even more startling, Texas ranked as having the best infrastructure. Also scoring high were Tennessee, which has the third-lowest tax burden as a share of state personal income, and Florida, ranked fourth-lowest in taxes. There seems an almost inverse relationship between the resources that state governments take in and quality of infrastructure."

"A major driver of these failures is the alliance between left-leaning politicians (mostly, but not exclusively, Democrats) and public unions."

"Infrastructure building costs have become stratospheric thanks to union-friendly policies. While Europe and Japan typically build rail and subway tunnels for between $160 million and $480 million a mile, according to calculations by Israeli transit writer Alon Levy, New York’s Second Avenue subway line cost $2.8 billion a mile, and its No. 7 subway-line extension cost $2.1 billion a mile."

"Metro markets where residents are most dissatisfied with the availability of affordable housing are overwhelmingly high-tax Democratic locations, including Los Angeles, New York and San Francisco, according to demographer Wendell Cox. Blame regulations. “High prices have little to do with conventional models with a free market for land,” wrote Harvard economist Edward Glaeser and Wharton’s Joseph Gyourko in a 2002 paper. “Instead, our evidence suggests that zoning and other land use controls, play the dominant role in making housing expensive.”"

"High-tax Democratic states spend from 50% to nearly 100% above the national average per student in public schools."

No correlation between company-specific tax breaks and a region’s wage and unemployment levels

See Amazon, New York and the End of Corporate Welfare: Special tax breaks do little to spur the economy. Now they’re becoming politically unpopular too by Mene Ukueberuwa of The WSJ

"Since the first boom of company-specific tax breaks in the U.S. during the early 1990s, there has been no correlation between such incentives and a region’s wage and unemployment levels, according to a comprehensive 2017 study by economist Timothy J. Bartik. Luring a big company to town with tax breaks often produces meager results even when the company hires and spends as much as expected, explains the Tax Foundation’s Jared Walczak. “All of these new costs are being subsidized by existing incumbent taxpayers,” he says. Residents and other businesses bear a disproportionate burden of added public costs."

More Americans Have High-Speed Internet Access Than Ever

Preliminary FCC report claims the number of Americans with high-speed connections grew by 20 percent in 2017.

By Nick Gillespie of Reason.

"For all the drama over the repeal of Net Neutrality and continuing fears about a "digital divide" between online haves and have-nots, the number of Americans with high-speed access to the Internet continues to grow, says a preliminary report from the Federal Communications Commission (FCC).

The report covers development in 2017, the latest year for which data are available. From an FCC press release:

The number of Americans lacking access to a fixed broadband connection meeting the FCC's benchmark speed of 25 Mbps/3 Mbps has dropped by over 25%, from 26.1 million Americans at the end of 2016 to 19.4 million at the end of 2017. Moreover, the majority of those gaining access to such high-speed connections, approximately 5.6 million, live in rural America, where broadband deployment has traditionally lagged.

The private sector has responded to FCC reforms by deploying fiber to 5.9 million new homes in 2018, the largest number ever recorded. And overall, capital expenditures by broadband providers increased in 2017, reversing declines that occurred in both 2015 and 2016.

Other key findings of the report include the following, based on data through the end of 2017:

• The number of Americans with access to 100 Mbps/10Mpbs fixed broadband
  increased by nearly 20%, from 244.3 million to 290.9 million.
• The number of Americans with access to 250 Mbps/50 Mbps fixed broadband grew by
  over 45%, to 205.2 million, and the number of rural Americans with access to such
  service more than doubled.

"For the past two years, closing the digital divide has been the FCC's top priority...We've been tackling this problem by removing barriers to infrastructure investment, promoting competition, and providing efficient, effective support for rural broadband expansion through our Connect America Fund," said FCC Chairman Ajit Pai in the press release, which is available as a download here."

You Cannot Control Health Care Costs By Pushing Down Prices

By John C. Goodman.

"One of the very first things all students learn in their first economics course is the meaning of the word “cost.”

They come to economics thinking that the cost of something is the price you must pay. Sometimes the two are equal. Often, they are not.

In a field such as health care, cost and price are almost never the same. They are usually not even connected.

It follows logically that if you try to control one of these variables by controlling the other, you will fail. And fail miserably.

The social cost of any good or service is its opportunity cost. If the only two goods were guns and butter, the cost of one more gun would be the value we place on the amount of butter we must give up in order to produce it. The cost of one more unit of butter is the value we place on having fewer guns.
The same principle applies to health care. What is the cost of training and employing a new doctor? It is the value we place on not having one more engineer or one more accountant or one more PhD in computer science. Similarly, the cost of one more hospital bed or one more piece of diagnostic equipment is the value we place on the alternative uses of the resources needed to produce them.

This simple truth, which every freshman student learns on the very first or second day of class in Econ 101, has not been discovered by some very bright people. They include some of the top health economists, the editorial writers at the New York Times and the paper’s Nobel laureate economics writer Paul Krugman.

For example, in a lengthy editorial  the Times declared that there are only two ways to bring down health care costs: deny people care or negotiate better prices. This is wrong on many counts, but the second option is especially wrong. The most common argument for single payer health insurance is the idea that if government were the only buyer, it could lower health care costs by using its monopsony power to bargain for lower prices. This idea has appeared numerous times in Krugman’s editorials.

Why negotiate? Why not just freeze all medical fees by edict? Answer: when it comes to health care, people on the left are incredibly unimaginative.

That said, I don’t know of any government in the world that negotiates prices in health care. In our own country, Medicare and Medicaid do not negotiate anything. They dictate prices on a take-it-or-leave-it basis. Increasingly, doctors are opting out – refusing to take new patients, especially in Medicaid. But there are no negotiations.

The only negotiations I know of are in the private sector. Walmart, for example, has negotiated fees with centers of excellence for certain types of surgery. Physician-run Medicare Advantage plans negotiate – usually asking for a different bundle of services in return for a different type of fee.
In many markets the price you are charged is equal to the social cost of producing the item you buy. That is one of the things we expect to happen in competitive markets. In medicine, however, things are different.

In this country and in just about every other country in the world, the market in health care has been so systematically suppressed that none of us ever sees a real price for anything. Every price we face is a phony price. And that is why international comparisons of health care systems are so misleading
The way national income accounting is done, the green eyeshades tally up all the health care transactions at their phony prices and arrive at one big phony number. There is not much to be gained by an international comparison of phony numbers, however.

That’s why first-rate health economists turn instead to a comparison of real resources. (How many doctors? How many nurses? How many hospital beds?) On this score, the U.S. does not spend more than other countries. In fact, we are in the middle of the pack. See this recent study.

Mark Pauly is a health economist at Wharton who made all the points I am making here  more than 25 years ago in an article in Health Affairs. Plus, Pauly actually estimated the opportunity cost of medical labor (doctors, nurses and technicians) in the various OECD countries. By one estimate, the U.S. shows up near the middle of the pack. But by another very plausible set of assumptions, we are near the bottom.

Here is what confuses many people – on the right and the left. We do pay our doctors more. But those payments do not reflect the true opportunity cost of medical care. If we put a 30% surtax on physicians’ incomes in the U.S., there would probably be very little change in health care delivered – at least in the short run. In the long run, the profession might attract less able medical students and we might end up importing more foreign medical school graduates. So, there might be long-run effects on quality.

Now let’s turn to solutions.

If you believe that people on the supply side of the market are making too much money at the expense of patients and taxpayers, there is an easy solution to that problem and there is a dumb solution. The easy solution is to impose a surtax on the providers and rebate the funds to everyone else.

The dumb solution is to have government set 6 billion physician fees, which is what Medicare is doing on any given day. When government sets that many prices – or even a small fraction of that many – it’s going to get a great many of them wrong. Specialties which are relatively over-paid will attract doctors and develop surpluses. Specialties that are relatively underpaid will develop shortages.

Also, when individual prices are set by the political system, they will be determined by the ebb and flow of special interest pressures, rather than the  needs of patients.

And what is true of physician fees is also true of hospital fees and prices for drugs.

Prices drive behavior. Interfere with them artificially (and stupidly) and you will get perverse behavior."

Ronald Bailey of Reason Says It Is Not 'Time to Panic' Over Climate Change

See It's 'Time to Panic' Over Climate Change, Asserts New York Times Op-Ed: That's wrong. Promoting fear hinders more than helps environmental progress.

"Unabated man-made climate change would likely pose problems, many significant, for humanity during the course of this century. But is it "time to panic" about it, as David Wallace-Wells writes in a recent New York Times op-ed?

"The age of climate panic is here," declares the author of the forthcoming The Uninhabitable Earth: Life After Warming. Although he thinks it's not nearly enough, Wallace-Wells suggests that the newly proposed Green New Deal is "what the beginning of a solution looks like."

To support his call for panic, Wallace-Wells cites the so-called Doomsday report, which the United Nations Intergovernmental Panel on Climate Change (IPCC) issued last fall. That special report aimed to analyze the impacts of global warming of 1.5°C above pre-industrial levels. It projected that if no policies aimed specifically at reducing carbon dioxide emissions are adopted, average global temperature will rise by 3.66°C by 2100, resulting in a global GDP loss of 2.6 percent from what it would otherwise have been. (In the 2°C and 1.5°C scenarios, global GDP would be reduced by 0.5 percent or 0.3 percent, respectively.)

The global GDP currently stands at about $80 trillion. Growing at 3 percent annually, it would rise to $903 trillion by 2100. A 2.6 percent reduction means that it would only be $880 trillion by 2100. A 0.3 percent decrease implies a global GDP of $900 trillion. The IPCC report recommends that the world spend more than $45 trillion between now and 2035 in order to endow $2.7 trillion more in annual income on people living three generations hence.

Assuming the worst-case loss of 2.6 percent, that would mean that a world with a population of 10 billion would have to scrape by on an average income of just $88,000 per year. (The average global GDP per capita now is $10,500.)

Meanwhile, the worst-case scenario laid out in the appropriate chapter of the federal government's Fourth National Climate Assessment indicates that Americans living in 2090 would be about $500 billion poorer than they would have been without climate change. Citing the even more dire projections of outside researchers, the assessment suggested that at 10°F of warming, the U.S. economy would be about 10 percent smaller than it would otherwise have been. For context, consider that today's $20 trillion GDP, growing at a 3 percent rate, would rise to $226 trillion by 2100.

Pondering both worst-case climate scenarios, GDP would instead rise to either $225.5 billion [it's possible that is supposed to be trillion, not billion-CM] or $203 trillion. Americans living at the end of this century would be about 10 times richer on average than we are now, albeit in a much warmer world.

These numbers, derived from integrated assessment models that combine econometric and climate projections for the next eight decades, need to be eyed with enormous skepticism. Nevertheless, neither suggests that climate change will make the earth uninhabitable by the end of this century.
An intriguing sidebar to Wallace-Wells' op-ed helpfully provides three examples that aim to illustrate what happes when environmentalist rhetoric succeded in ratcheting up fear. These cases of panic promotion "marked turning points on major environmental issues and inspired change." The moments? Silent Spring, Love Canal, and Three Mile Island. The "inspired change" stemming from these cases has not, shall we say, been wholly beneficial.


"Fear can mobilize, even change the world. When Rachel Carson published her landmark anti-pesticide polemic Silent Spring, Life magazine said she had 'overstated her case,' and The Saturday Evening Post dismissed the book as 'alarmist,'" Wallace-Wells writes. "But it almost single-handedly led to a nationwide ban on DDT." He's quite right about the DDT ban, but as history has now shown that Life's assessment was largely correct.

In Silent Spring, Carson described the choice humanity faced as a fork in the road to the future. "The road we have long been traveling is deceptively easy, a smooth superhighway on which we progress at great speed, but at its end lies disaster," she declared. "The other fork of the road—the one 'less traveled by'—offers our last, our only chance to reach a destination that assures the preservation of our earth." As Wallace-Wells' op-ed amply shows, this kind of apocalyptic rhetoric is now standard fare in environmental policy debates.

Carson was correct that the popular pesticide DDT disrupted reproduction in some raptor species and that some insect pests were developing resistance to it, making it less useful for protecting crops and preventing insect-borne infections in people. But Carson's most worrying claim was that exposure to trace amounts of synthetic chemicals like DDT would set off a cancer epidemic. For a time, cancer incidence rates did indeed rise, but largely as a result of an increase of Americans living past age 65 and the residual effects of extensive tobacco use and hormone replacement therapy.

The most recent American Cancer Society report on cancer trends finds that U.S. cancer incidence and death rates have fallen to a 25-year low. Nevertheless, hypercautious Environmental Protection Agency regulations aiming to protect consumers from supposed cancer risks posed by slight exposures to synthetic chemicals continue to multipy. Whether the benefits outweigh the costs of EPA regulation is an ongoing controversy.

What about Love Canal? In 1978, residents of that neighborhood outside Buffalo, New York, found that their homes had been built on top of an area where a chemical company had sequestered and sealed tons of toxic wastes in an abandoned canal. The company, under threat of eminent domain, had sold the land for $1 to the local school board warning that it should never be developed. The chemicals began leaking out only after local and state agencies willfully breached the dump site's clay seal as part of a development scheme. Obviously, none of us wants toxic chemicals leaking into our basements, so it was entirely reasonable for the residents to react with alarm when that happened to them.

A local Environmental Protection Agency administrator declared this "one of the most appalling environmental tragedies in American history." Happily, it turned out not to be such an "appalling environmental tragedy" after all, at least with respect to the former residents' health. The New York State Health Department tracked about 6,000 former residents. In its last report issued in 2009, the agency found that their "overall mortality rates were similar to those of New York State and Niagara County." More specifically, the final report noted, "For cancer incidence, the results of the external comparisons indicated that the total number of cancers observed among Love Canal residents was within the range expected for New York State and Niagara County." The report also found that "rates of preterm and small-for-gestational age (SGA) births among [emergency area] women were similar to those in New York State and Niagara County, and the rates of low (LBW) and very low (VLBW) birth weight tended to be lower." The department did report a slight change in the sex ratio of births, favoring girls over boys.

"The nightmare led to the creation of the federal Superfund program to clean up Love Canal and other toxic waste dumps around the country," the Times sidebar notes. Like many policies driven by panic, this has proven less than optimal. The Superfund program has pleased neither environmentalists nor industry. The litigation that it sparks both boosts costs and slows cleanups. One 1999 study estimated that Superfund remediation would on average avert less than 0.1 case of cancer per site, and that the cost per cancer case averted is more than $100 million.

The third moment of panic that supposedly led to progress was the partial meltdown in 1979 of a nuclear reactor at Three Mile Island in Pennsylvania. "Thousands fled the area around the plant," notes the Times sidebar, "and though very little radiation escaped, the accident hurt the industry and raised public apprehension about nuclear power." Indeed it did.

The accident did release a very small amount of radionuclides into the environment. These consisted of radioactive isotopes of the noble gases krypton and xenon and a bit of iodine, all of which have half-lives measured in days. Whatever amount did escape decayed into background undetectability within a few weeks.

The Pennsylvania Health Department monitored the health of a cohort of nearly 60,000 local residents between 1982 and 1995. Its final report, released in 2011, found "no evidence of an increased risk for all malignant neoplasms." A more recent study using very subtle molecular techniques reports that a slight increase in thyroid cancer rates among former residents might be attributed to the radiation exposures.

Although the U.S. nuclear power industry was already pulling back, due largely to increasing regulatory pressure, the Three Mile Island accident basically ended the construction of new nuclear power plants in the U.S. for the next three decades. In the 1960s, the Atomic Energy Commission had anticipated that more than 1,000 nuclear reactors would generating electricity in the United States by the year 2000. By now that number would have replaced all coal and natural gas power generation, and U.S. carbon dioxide emissions would be 34 percent lower than they are currently

The Australian economist Peter Lang calculates that nuclear power would have outcompeted most fossil fuel generation at one-tenth of nuclear's current cost. Folks concerned about global warming—and I include myself among them—may reasonably conclude that the panic over nuclear power did not result in overall environmental progress.

Wallace-Wells ends by asking, "What creates more sense of urgency than fear?" Nothing. But as those three examples of past panic suggest, fear doesn't produce clear thinking either. It thus may actually hinder rather than help environmental progress."

 

How Economic Freedom Has Benefited Women

By Chelsea Follett of humanprogress.org.

"Economic freedom and resulting competitive markets empower women in at least two interrelated ways.

First, market-led innovation has improved the lives of women even more so than for men. For example, women have reaped greater benefits from health advances financed by the prosperity created by free enterprise: female life expectancy has risen faster than men's and today women outlive men almost everywhere. Women are also less likely to die in childbirth.

Labor-saving household devices have also freed women from the burden of housework. Thanks to time-saving kitchen appliances, in the United States cooking has gone from consuming the same hours as a full-time job, to taking up only around an hour a day. And thanks to laundry machines, in rich countries washing has gone from taking up a full day each week to less than two hours a week on average. This freeing of women's time is ongoing as appliances spread throughout the world. Market competition and the profit motive incentivized the invention of labor-saving household devices and continue to motivate their ongoing marketing to new customers in developing countries. Countries that liberalize their economies often see rapid economic progress, including more households able to afford modern conveniences. China’s economy has grown dramatically since it adopted policies of greater economic freedom in 1978. In 1981, less than 10 percent of urban Chinese households had a washing machine. By 2011, over 97 percent did. As women spend less time on household chores, more choose to engage in paid labor.

Second, labor market participation offers women economic independence and heightened societal bargaining power. Factory work, despite its poor reputation, empowered women in the 19th century United States by helping them achieve economic independence and social change. It also softened attitudes about women engaging in paid labor. Today, the same process is repeating in the developing countries.

Consider China and Bangladesh. In China, factory work gave rural women a chance to escape the dire poverty and restrictive gender roles of their home villages and has dramatically slashed the suicide rate among young rural-born Chinese women, once among the highest in the world. Social mobility is high and most economic migrants never return permanently to the countryside: they settle in their adopted cities or eventually move to towns near their home villages and set up stores, restaurants or small businesses like hairdressing salons or tailoring shops. Many become white-collar workers. Very few go back to farming. Similarly, in Bangladesh factory work let women renegotiate restrictive cultural norms. The country’s women-dominated garment industry transformed the norm of purdah, or seclusion, that traditionally prevented women from working beyond the home, walking outside unaccompanied by a male guardian, or even speaking in the presence of unrelated men. Today, in Dhaka and other industrial cities, women walk outside and interact with unrelated men.

Research by social economist Naila Kabeer of the London School of Economics found that “the decision to take up factory work was largely initiated by the women themselves, often in the face of considerable resistance from other family members.” Tragedies like the Rana Plaza building collapse garner a lot of press, but the garment industry’s wider-reaching effects on the material wellbeing and social equality of women in Bangladesh receive less attention. The same applies to other industrializing countries.

By freeing women's time from household drudgery and offering women the economic bargaining power that comes with new employment opportunities, markets heighten women's material standard of living and foster cultural change. Women's empowerment in many developing countries is in its early phases, but the right policies can set women everywhere on a path toward the same prosperity and freedom enjoyed by women in today's wealthy countries."

Lessons from the Golden State (on a high-speed rail)

By Scott Sumner.

"In many ways, California is the ideal place to build a high-speed rail line. The state has two giant metro areas, separated by 380 miles, which is the “sweet spot” for high-speed rail. A high-speed rail line could (theoretically) cover that distance in less than 2 hours, which makes it competitive with air travel.  (The actual proposal was much slower.)

California has many other advantages as well. Governor Jerry Brown was an enthusiastic advocate. The state is completely dominated by the Democratic Party, with the environmental wing of the party being especially powerful. California is home to the world’s wealthiest industry (tech) and is able to impose very high income taxes on the rich without suffering a mass migration to cheaper states, due to its enviable climate and lifestyle.  They’ve got enough money.

California is an almost perfect place to build high-speed rail.

And yet it will probably never happen. The new governor has put most of the project on hold, and most experts seem to think this is just a polite way of pulling the plug on the project.

“Right now, there simply isn’t a path to get from Sacramento to San Diego, let alone from San Francisco to L.A. I wish there were. However, we do have the capacity to complete a high-speed rail link between Merced and Bakersfield.”

There are important lessons here for progressives, who have been pushing for exactly this sort of infrastructure project. In short, progressives have not faced up to a number of difficult choices:

1.  The choice between strict environmental regulations for major construction projects, and the goal of building environmentally friendly infrastructure.

2.  The choice between pro-union labor policies and building affordable infrastructure.

3.  The choice between high levels of spending on human services and building infrastructure.
4.  The choice between wildly excessive safety regulations, and efficient transport services that are “safe enough”.  For instance, it took decades for our transportation regulators to approve lightweight rail cars that had been used in Europe for many years. Penn Station’s Amtrak station has long lines due to utterly useless passenger checks in the terminal, even as “terrorists” could freely board the same train without any ID checks a few miles down the road in Connecticut.)

A society often makes a choice by not making choices.  The progressives have chosen to keep intact some wildly excessive regulatory burdens on getting environmental approval for new projects, instead of limiting the environmental review to no more than 6 months.  They have chosen to use expensive American union labor and inefficient US builders rather than more efficient foreign builders using labor from China and Bangladesh.  They have chosen to spend lots of money on human services, leaving little money for building infrastructure.  By making these choices, progressives have implicitly revealed that infrastructure is not a high priority to them.  We are not Singapore.

And it’s not just progressives.  The long environmental review process caused conservative Orange County to abandon a much needed airport project that had previously been approved by the voters.
In previous posts, I’ve argued that it would be foolish for the federal government to spend lots of money on infrastructure, partly because America no longer knows how to build infrastructure.  After the recent California high-speed rail fiasco (which used federal funds), perhaps my critics will better understand my argument."

Who’d a-thunk it? NYC minimum wage hike to $15 an hour is causing pain for many of the city’s restaurants?

From Mark Perry.

"An article in the New York Eater (“Restaurateurs Are Scrambling to Cut Service and Raise Prices After Minimum Wage Hike“) highlights some of the suffering New York City’s full-service restaurants are experiencing following the December 31, 2018 hike in the city’s minimum wage to $15 an hour, which is 15.4% higher than the $13 minimum wage a year earlier, and 36.4% higher than the $11 an hour two years ago. For example, Rosa Mexicana operates four restaurants in Manhattan and estimates the $15 mandated wage will increase their labor costs by $600,000 this year. Here’s a slice:

Now, across the city, restaurant owners and operators are reworking their budgets and operations to come up with those extra funds. Some restaurants, like Rosa Mexicano, are changing scheduling. Other restaurateurs are cutting hours and staffers, raising menu prices, and otherwise nixing costs wherever they can.
And though the new regulations are intended to benefit employees, some restaurateurs and staffers say that take home pay ends up being less due to fewer hours — or that employees face more work because there are fewer staffers per shift. The bottom line is, we have to reduce the number of hours we spend,” says Chris Westcott, Rosa Mexicano’s president and CEO. “And unfortunately that means that, in many cases, employees are earning less even though they’re making more.”
In a survey conducted by New York City Hospitality Alliance late last year, about 75% of the more than 300 respondents operating full-service restaurants reported they’ll reduce employee hours this year because of the new wage increases, while 47% said they’ll eliminate jobs in 2019.

Note also that the survey also reported that “76.50% of respondents report reducing employee hours and 36.30% eliminated jobs in 2018 in response to mandated wage increases.” Those staff reductions are showing up in the NYC full-service restaurant employee series from the BLS, see chart above. December 2018 restaurant jobs were down by almost 3,000 (and by 1.64%) from the previous December, and the 2.5% annual decline in March 2018 was the worst annual decline since the sharp collapse in restaurant jobs following 9/11 in 2001. As the chart shows, it usually takes an economic recession to cause year-over-year job losses at NYC’s full-service restaurants, so it’s likely that this is a “restaurant recession” tied to the annual series of minimum wage hikes that brought the city’s minimum wage to $15 an hour at the end of last year. And the NYC restaurant recession is happening even as the national economy hums along in the 117th month of the second-longest economic expansion in history, and just short of the 120-month record expansion from March 1991 to March 2001.

Here’s more of the article:

“There’s a lot of concern and anxiety happening within the city’s restaurant industry,” says Andrew Rigie, executive director of the restaurant advocacy group. Most restaurant owners want to pay employees more, he says, but are challenged by “the financial realities of running a restaurant in New York City.” Merelyn Bucio, a server at a restaurant in Soho that she declined to name, says her hours were cut and her workload increased when wage rates rose. Server assistants and bussers now work fewer shifts, so she and other servers take on side work like polishing silverware and glasses. “We have large sections, and there are large groups, so it’s more difficult,” she says. “You need your server assistant in order to give guests a better experience.”
At Lalito, a small restaurant in Chinatown, they used to roster two servers on the floor, but post wage increases, there’s only one, who is armed with a handheld POS (point of sale) system, according to co-owner Mateusz Lilpop. Having fewer people working was the only way for him to reduce costs, he says. Since the hike, labor costs at Lalito have risen about 10 percent — from 30 to 35 percent to 40 to 45 percent of sales, he says.
These changes get passed onto the diner, some restaurateurs argue. Service can suffer due to fewer people on the floor, or more and more restaurateurs will explore the fast-casual format over full-service ones. Some restaurants are also raising prices for customers. According to the NYC Hospitality Alliance’s survey, close to 90 percent of respondents expect to raise menu prices this year. Lalito’s menu prices have increased by 10 to 15 percent. Lilpop says,and it’s not just the cost of paying his staff driving prices up — it’s a ripple effect from New York-based food purveyors’ own labor cost increases.
“If you have a farmer that has employees that are picking fruit, he has to increase his labor costs, which means he has to increase his fruit prices,” Lilpop says. “I have to buy that fruit from him at a higher rate, and it goes down the chain.”

MP: A few economic lessons here.

1. A reduction in restaurant staffing that results in a decline in customer service (e.g., longer wait times, less attentive wait staff, etc.) is equivalent to a price increase for customers.

2. The increases in the city minimum wage to $15 an hour, in addition to directly increasing labor costs for restaurants, also affects the labor costs of companies that supply food, liquor, restaurant supplies, menus, etc. and causes a ripple effect of indirect higher operational costs throughout the entire restaurant supply chain as described above.

3. Even for workers who keep their jobs, a higher minimum wage per hour doesn’t necessarily translate into higher weekly earnings, if the reduction in hours is greater than the increase in hourly wages. For example, 40 hours per week at $13 an hour generates higher weekly pre-tax earnings ($520) than 33 hours per week at the higher $15 an hour ($495).

Prediction: This will be a rough year for full-service NYC restaurants as they try to navigate a future with significant economic headwinds and significantly higher labor costs from the city’s $15 an hour minimum wage."

Venezuela Isn’t Just a Failed State. It’s a Failure of the Left. Conservatives are not wrong when they say socialism deserves some blame for the nation’s collapse.

From Tyler Cowen. Excerpts:

"…rates of change are important. The Venezuelan figure of about 40 percent [govt. spending/gdp] is up from about 28 percent in 2000, a very rapid increase. By boosting government spending so quickly, the Venezuelan government was sending a message that the key to future riches is courting government favor, not starting new businesses.

Or consider exports, which for most developing economies play an especially critical role. They bring in foreign exchange, provide contacts to foreign markets, and force parts of the economy to learn how to compete with the very best foreign companies. Yet over 90 percent of Venezuela’s exports are oil, and those resources are owned and  controlled by the government. For this all-important growth driver, Venezuela comes pretty close to full socialism — to its detriment.

…nationalizations under Chavez were numerous — encompassing much of the oil sector plus parts of the agriculture, transport, power, steel, telecommunications and finance industries. Even though many of those nationalizations were small in scale, the threat of further encroachments on private property rights discouraged investment and sent the wrong signal about where the nation was headed."

The rise of markets in North Korea’s lies at the root of all the country’s economic development over the past few years

See Shopping in Pyongyang, and Other Adventures in North Korean Capitalism by Travis Jeppesen in The NY Times. Excerpts:

"Usually translated as “market grounds,” jangmadang is the word for the unofficial markets that emerged during the Arduous March, which is the regime’s official name for the famine that blighted the country throughout the middle and late 1990s. These were illegal markets, to begin with, that sprang up as a result of the collapse of the public food-distribution system that all North Koreans had previously relied on for their monthly rations. During the later years of Kim Jong-il’s reign, the government began to grudgingly accept their existence and took steps toward regulating them: charging rent for stalls, controlling prices and monitoring what goods were for sale. Under Kim Jong-un, the restrictions against this form of private enterprise have been all but lifted, and jangmadang has transcended the cramped market stalls of its birth to refer to the vast array of legal, illegal and semi-legal markets that exist for all sorts of goods in North Korea. Among recent defectors and expat residents, it is said that now, as long as you have money, you can buy anything you want in North Korea. But since the government still hasn’t figured out a way of publicly reconciling with this nascent form of capitalism, it was considered taboo to discuss the jangmadang with foreigners.

Which is a shame, because the rise of the jangmadang is arguably the most significant milestone in North Korea’s recent history. It lies at the root of all the country’s economic development over the past few years."

"With food scarce and the government unable to provide through its rationing program, North Koreans began turning away from the official, centrally planned economy. Markets sprang up all over the country, selling everything from food, cigarettes and household goods to illegal foreign media. According to Daniel Tudor and James Pearson’s book “North Korea Confidential,” the stalls were generally operated by middle-aged married women who were compelled to pay a “stall tax” to their local party cadre, “making the state complicit in marketization” — uncomfortably so. In 2009, under Kim Jong-il, the government implemented a disastrous currency reform, tried to close down the markets and forbade market activity within the country. This resulted in wide public discontent, and a high-ranking Workers’ Party official was executed as a scapegoat for the government’s decision. Still, the regime had failed in its promise to feed its citizens, and the gray markets of the jangmadang had, to some extent, filled in the gaps."

"According to one survey, some 90 percent of all household expenditures are said to take place in these markets; they are so pervasive that people speak of a Jangmadang Generation that grew up knowing nothing else. Under Kim Jong-un, market activities have not only been tolerated; they have slowly crept into the official sector, as I witnessed firsthand in my visits to the country."

"The South Korean economist Byung-Yeon Kim is among the first to offer hard data about what this transformation looks like, in his 2017 book, “Unveiling the North Korean Economy.” The average worker in North Korea’s informal economy, Kim reports, earns 80 times more than at an official job. Approximately 23 percent of employees at state-run enterprises are simultaneously involved with some unofficial form of business. At least 58 percent of all companies in North Korea employ so-called 8/3 workers, who pay a fee in order to be absent from work and engage in unofficial market activities; these funds are an important form of revenue for these companies, helping them to continue paying the salaries of their regular employees."

"“The socialist economic system of North Korea has virtually collapsed,” Byung-Yeon Kim wrote."

"the state had issued new rules, lifting restrictions on the utilization of “order contracts,” so long as it agrees with the state’s objectives. Order contracts, Ward explained on a recent podcast, involve state-owned enterprises setting their own prices in consultation with customers. They are, in other words, market forces"

Four year olds are rational

Young Children Make Good Scientists: Even 4-year-olds are able to use evidence to change their beliefs about how the world works by Alison Gopnik. Excerpts:

"Over the past 15 years, my lab and others have shown that, to a surprising extent, even very young children reason in this way. The conventional wisdom is that young children are irrational. They might stubbornly cling to their beliefs, no matter how much evidence they get to the contrary, or they might be irrationally prone to change their minds—flitting from one idea to the next regardless of the facts.

In a new study in the journal Child Development, my student Katie Kimura and I tested whether, on the contrary, children can actually change their beliefs rationally. We showed 4-year-old children a group of machines that lit up when you put blocks on them. Each machine had a plaque on the front with a colored shape on it. First, children saw that the machine would light up if you put a block on it that was the same color as the plaque, no matter what shape it was. A red block would activate a red machine, a blue block would make a blue machine go and so on. Children were actually quite good at learning this color rule: If you showed them a new yellow machine, they would choose a yellow block to make it go.

But then, without telling the children, we changed the rule so that the shape rather than the color made the machine go. Some children saw the machine work on the color rule four times and then saw one example of the shape rule. They held on to their first belief and stubbornly continued to pick the block with the same color as the machine.

But other children saw the opposite pattern—just one example of the color rule, followed by four examples of the shape rule. Those children rationally switched to the shape rule: If the plaque showed a red square, they would choose a blue square rather than a red circle to make the machine go. In other words, the children acted like good scientists. If there was more evidence for their current belief they held on to it, but if there was more evidence against it then they switched."

"A new paper in PNAS by Gordon Pennycook and David Rand at Yale shows that ordinary people are surprisingly good at rating how trustworthy sources of information are, regardless of ideology. The authors suggest that social media algorithms could incorporate these trust ratings, which would help us to use our inborn rationality to make better decisions in a complicated world."

Gas Shortages Give New York an Early Taste of the Green New Deal

The state is dependent on imports even though it sits atop the abundant Marcellus Shale

By Robert Bryce. He is a Manhattan Institute senior fellow. Excerpt:

"Consolidated Edison , an energy utility that provides gas and power to the New York City area, announced last month that beginning in mid-March it would “no longer be accepting applications for natural gas connections from new customers in most of our Westchester County service area.” The reason for the shortage is obvious: The Cuomo administration has repeatedly blocked or delayed new pipeline projects. As a Con Ed spokesman put it, there is a “lot of natural gas around the country, but getting it to New York has been the strain.”

New York policy makers have also killed the state’s natural-gas-drilling business. In 2008 New York drillers produced about 150 million cubic feet of natural gas a day—not enough to meet all the state’s needs, but still a substantial amount. That same year legislators in Albany passed a moratorium on hydraulic fracturing, the process used to wring oil and gas out of underground rock formations. In 2015 the Cuomo administration made the moratorium permanent. By 2018 New York’s gas production had declined so much that the Energy Information Administration quit publishing numbers on it.

New York now imports nearly all of its gas even though part of the Marcellus Shale, one of the biggest and most prolific sources of natural gas in the country, extends into the state’s Southern Tier region. To get an idea of how much gas the state might have been able to produce from the Marcellus, New Yorkers can look across the state line to Pennsylvania, which now supplies about two-thirds of the gas consumed in New York. At the end of 2018, Pennsylvania drillers were producing about 18 billion cubic feet of gas a day. That’s more gas than Canada now produces.

By keeping its natural gas in the ground, New York has lost out on jobs and tax revenue. By 2015, some 106,000 people were directly employed by Pennsylvania’s oil and gas industry, making it a bigger employer than the state’s famous steel sector. This year Pennsylvania’s state government is expected to take in some $247 million in gas-related fees."

$1,973 LEDs and the Green New Deal: How many union workers does it take to screw in a light bulb?

WSJ editorial.

"The Green New Deal that Democrats unveiled last week has a grand ambition to eliminate fossil fuels in 10 years, retrofit every building in America, and guarantee high-paying jobs in the bargain. If you want to see how that works in the real world, consider the public housing projects near Rep. Alexandria Ocasio-Cortez’s New York office.

The New York City Housing Authority (Nycha) has a more modest goal of a 30% reduction in greenhouse-gas emissions by 2027. As part of its plan, Nycha is switching to LED lighting, which lasts longer than incandescent bulbs and consumes less energy. Sounds smart, until you see how many union workers it takes to screw in a light bulb.

One recent project focused on 23 housing developments, and changing the light bulbs and fixtures there cost $33.2 million. Supplies account for a fraction of that cost. Under Nycha’s Project Labor Agreement, electricians make $81 in base pay and $54 in fringe per hour, and overtime is usually time and a half. Add administrative and contracting expenses. All in, Nycha paid an average of $1,973 per apartment to install LEDs.

For Ms. Ocasio-Cortez, sky-high labor costs are part of the plan. Her Green New Deal resolution would create “high-quality union jobs that pay prevailing wages” and reinforce “the right of all workers to organize, unionize, and collectively bargain.” It also mandates upgrades for “all existing buildings in the United States” to “achieve maximal energy efficiency.” In this worker’s paradise, there’s a $1,973 LED in every socket.

Ms. Ocasio-Cortez’s proposal also states that a Green New Deal “must be developed through transparent and inclusive consultation, collaboration, and partnership” with both labor and low-income families. But if she visited the Nycha homes, she may find those mandates are at odds.

“I can buy LED myself,” said Barbara Jones, 69, who has lived in Cypress Hills since her 20s and is dismayed by the disrepair. Others we interviewed said they’d rather see money go first to getting rid of vermin, mold and lead paint, tidying filthy premises, or improving safety.

Nycha also updated the heat and hot water systems in addition to upgrading the lights at these 23 developments, and the total cost for the energy-efficiency overhaul was $68.7 million. A Consolidated Edison grant covered $8.25 million, but Nycha took out a loan to cover the rest. The housing authority has three similar projects in construction at other developments, and the total cost for all four is $271.8 million.

LED lights and other energy-efficiency upgrades may drive Nycha’s utility bills down, but those savings aren’t directly passed on to taxpayers for as long as 20 years. Under the federal Energy Performance Contracting Program, the federal Department of Housing and Urban Development continues to reimburse Nycha for utilities at pre-LED levels. Public housing authorities must spend a minimum of 75% of their savings on servicing the loan and other project costs, but they have more discretion over the rest.

In the private economy, $1,973 could go a long way toward improving a dilapidated apartment. Only in the world of green government spending is replacing light bulbs for two grand a unit a cost-saving measure."

The Unrealistic Economics of the Green New Deal

Saving planet, creating jobs are noble ideas—but by combining them, Democratic plan exacts too high a cost

By Greg Ip.

"replacing the 83% of current U.S. generation that is not renewable with solar photovoltaic, wind and biomass would cost $2.9 trillion—nearly a full year’s tax revenue.

This excludes any cost for interest, operations, maintenance, new transmission lines or compensation to private investors for writing off natural-gas and coal plants with plenty of useful life left. It assumes cheap battery storage that doesn’t yet exist. Even so, this works out to $83 to avoid one metric ton of carbon dioxide."

"the federal government paid an average of $4,585 each to weatherize homes in Michigan. Extrapolate that to 95 million homes nationwide, and the bill tops $400 billion. The cost of avoided carbon dioxide: up to $285 per ton."

"Barack Obama’s economists put the economic harm of a ton of CO ₂ at $50. Or that you can pay a power producer just $6 to reduce emissions by one ton in New England, $15 in California, and $25 in the European Union, based on emission permit prices in those jurisdictions"

"The U.S. is now close to full employment and its debts are far higher [than in 1941]. Even in today’s world of low inflation and low interest rates, the scale of deficit spending the Green New Deal implies would likely push both higher."

"Germany’s experience is illustrative. In 2000 it began targeting subsidies to renewable power and by 2017, renewables’ share of power consumption had risen fivefold to 38%. Because renewable generation was initially so small, the subsidies weren’t that burdensome, says Michael Pahle of the Potsdam Institute for Climate Impact Research. The priority, he says, was spurring innovation to drive down costs. But, he says, as renewables became much larger, cost became much more worrisome.

In 2015 Germany introduced reverse auctions, in which producers bid to supply energy at the lowest possible subsidy. By attracting the lowest-cost supply, this has driven solar photovoltaic prices down by half. Some bids have required no subsidy at all.

Even so, because Germany is phasing out nuclear power and hasn’t targeted transport, industry and agriculture emissions, it is behind on its emissions reductions. This underlines the need for an economywide carbon price, Mr. Pahle says. That is a lesson Americans should learn now, not after they’ve spent trillions on a Green New Deal."

A Sensible Climate Change Solution, Borrowed From Sweden (Nuclear)

Book review from The New York Times. By Richard Rhodes. He reviews A BRIGHT FUTURE: How Some Countries Have Solved Climate Change and the Rest Can Follow by Joshua S. Goldstein and Staffan A. Qvist. Excerpt:

"For Goldstein (an emeritus professor of international relations) and Qvist (a Swedish engineer), the only possible solution to this double dilemma is a rapid, worldwide expansion of nuclear power. No other source or collection of sources of energy, they argue, is positioned to meet these challenges in time. Without growth in nuclear power, replacing fossil fuels with renewables simply decarbonizes the existing supply. It doesn’t deal with the increased demand coming from the developing world.

One of the countries that have “solved climate change,” as the book’s subtitle has it, is Sweden, Qvist’s homeland. Much as France did before it, Sweden achieved this by expanding its electrical supply with nuclear power rather than fossil fuels. Its concern at the time, in the 1970s, wasn’t global warming but reliability: Further hydropower development was environmentally undesirable, and the oil crises of that decade made petroleum an unpredictable source.

Between 1970 and 1990, Sweden built a dozen nuclear power plants on four sites, eight of which continue to operate today. They supply 40 percent of Sweden’s electricity, equal to its hydropower. Wind and biofuels supply the rest. As a result, electricity in Sweden is cheap, clean and reliable. Serendipitously, the authors point out, “Sweden became the most successful country in history at expanding low-carbon electricity generation and leading the way in addressing climate change.”

Goldstein and Qvist contrast Sweden’s experience with Germany’s. That country decided to switch to renewables, mostly wind and solar, while eliminating nuclear power. By doubling renewables while cutting nuclear, “it just substituted one carbon-free source for another, and CO₂ emissions did not really decrease at all.” Today, 40 percent of Germany’s energy comes from dirty brown coal; six of Europe’s 10 most polluting power plants are German.

After this initial view of two contrasting European programs, “A Bright Future” is largely devoted to debunking the many attacks nuclear power has weathered over the years. “The antinuclear movement has progressed through reasons to oppose nuclear power,” the authors write, “one after another.” It was too dangerous. Then it would lead to weapons proliferation. Then it was uneconomical, an argument still made, one the authors debunk when it comes to countries like Sweden and South Korea that haven’t experienced the strangulating effect of heavy government regulation and antinuclear litigation.

Then it was unnecessary because it was argued that renewables could do the job. “But in every case where nuclear power was shut down, renewables have not filled the gap and CO₂ emissions have gone up, whereas in places such as Ontario that expanded nuclear power, emissions went down.”"

Tax cuts can boost revenue by stimulating job creation and economic growth

See Europe Settles Some Tax Scores: Finally, glimmers of a new old way to account for tax cuts and growth. WSJ editorial. Excerpt:

"A new paper in the Journal of Policy Analysis and Management aims to bring the dynamic method to Europe. Economists from the European Commission and the IFO Institute, a German think tank, combine elements of two economic models already used by policy makers to create the first major dynamic-scoring model for the whole EU. By simulating a tax-rate cut in Belgium as an experiment, they find that tax cuts can boost revenue by stimulating job creation and economic growth.

An important virtue is that their model can estimate different effects from cutting or raising different kinds of taxes. In their Belgian hypothetical, they examine social-welfare payroll taxes and find that revenue and employment changes depend on whether one cuts the employer or employee portion. Such insights come not a moment too soon as Europe faces mounting dangers of an economic slowdown."

Americans are moving to cities with more economic freedom which have more prosperity

See Why Do Some Local Economies Thrive While Others Struggle? Liberals Won't Like The Answer by Dean Stansel. Excerpt:

"While economic freedom varies across states within the U.S., it also varies within states, as my new study published by the Reason Foundation shows.

The "U.S. Metropolitan Area Economic Freedom Index" uses nine different measures of state and local government policies to produce an overall score for each of the nation's 382 metropolitan statistical areas (MSAs). For purposes of rankings, the 52 largest with over a million residents were examined separately.

In California, for example, San Jose, home to many of the tech companies in Silicon Valley, ranked in the middle of the pack (at 27^th), but Los Angeles ranked in the bottom 10 and Riverside ranked last (52^nd).

Similarly, in Tennessee, Nashville scored well, ranking as the 6^th most free metro area, but Memphis was only 20^th.

This variation within states helps explain why some areas within a state can thrive while others struggle.

From 2012 to 2016, San Jose's metro area population grew by 4.4%, while Los Angeles' grew less than half as fast (2.1%).

Nashville's population grew by 8% while Memphis' barely budged (0.2%).

Overall, the five most-free large areas were Houston, Jacksonville, Tampa-St. Petersburg, Richmond, and Dallas-Fort Worth. The bottom five were Riverside, Calif.; Rochester, Buffalo and New York City in New York state, and Cleveland.

The study shows that population grew four times faster in the freest areas. The most-free areas were also more prosperous, with per-capita personal income 5.7% above the metro area average, while the least free were 4.9% below average.

That means per capita income was nearly 11% higher in the freest areas. (See nearby chart.)
The positive relationship between economic freedom and economic prosperity at the local level is similar to findings at the state and country levels.

Over 200 articles by independent researchers have examined this relationship at the state level using the Fraser Institute's annual Economic Freedom of North America report.

In one recent study, economists at West Virginia University and Louisiana State University found that a 10% increase in economic freedom was associated with a 5% increase in real per capita gross state product (a measure of the total output of the economy per person).

At the local level, researchers have found that metro areas with higher economic freedom tend to have greater net in-migration of population, more entrepreneurial activity, higher levels and faster growth of per capita income, faster population growth, higher female labor force participation rates, and better local government bond ratings."

To achieve ‘Green New Socialism’ we would have to trash all existing environmental laws

From Mark Perry.

"As John Hinderaker commented in a post (“The Trouble with Solar“) on the Powerline Blog “If the Democrats are serious about the Green New Socialism, they will have to trash pretty much all existing environmental laws,” and then points to these comments from Myron Ebell on the Competitive Enterprise Institute blog:

Achieving the Green New Deal’s objectives in ten years—or in 20 or 40—is clearly impossible. Even if hundreds of thousands of windmills, tens of millions of solar panels, and hundreds of millions of car batteries could be fabricated, the grid cannot operate on 100% intermittent and variable power—or even 50%.
One aspect of covering the landscape with hundreds of thousands of square miles of windmills and solar panels is that to do so would require suspending federal, state, and local environmental statutes, permitting procedures, and land use plans. Forget about the Endangered Species Act’s habitat protections and prohibitions on killing endangered birds and bats. The Clean Water Act’s wetlands protections will have to be overlooked. Environmental impact statements that now take years to prepare, years to move through the permitting process, and more years to litigate, are out the window. Wind and solar projects will have to be permitted in days.

Then John finishes with a variation of Perry’s Principle (“Leftists don’t value people [or the environment] as much as they value power over people.“):

But leftists don’t care about the environment any more than they care about the economy. Their sole goal is the power to bully the rest of us. Everything else is a fraud."

No, Climate Change Is Not Wiping Out the World’s Insects

By James Delingpole of Breitbart.

"If you believe the Guardian and the BBC, the world is on the brink of Insectapocalypse: A mass extinction of creepy crawlies that threatens the “collapse of nature.”

But if I were you, I’d take these claims with a big pinch of salt, especially if they include the words “climate change.” That is because the most dramatic, oft-quoted study that links insect loss with climate change turns out to be flawed to the point of uselessness. It is so bad that the Global Warming Policy Foundation has sent a formal complaint to its publishers calling for its withdrawal.

The study by Brad Lister and Andres Garcia was published last year by Proceedings of the National Academy of Sciences of the United States of America (PNAS). Titled Climate-driven declines in arthropod abundance restructure a rainforest food web, it appeared to tell a very worrying story about a precipitous decline in the number of insects in Puerto Rico’s Luquillo rainforest.

According to the study’s abstract, climate change is to blame:

From pole to pole, climate warming is disrupting the biosphere at an accelerating pace. Despite generally lower rates of warming in tropical habitats (1), a growing body of theory and data suggests that tropical ectotherms may be particularly vulnerable to climate change.

Climate change is killing insects in the rainforest because they don’t like it when it gets hotter?? Really???

Still, somehow it got past the peer review stage and, thence, straight into the pages of the left-wing media, which can’t get enough of these “planet is dying and it’s all our fault” stories.

“‘Hyperalarming’ study shows massive insect loss,” shrieked the Washington Post.

“Insects, biodiversity, and mass extinction: an alarming new study,” screeched Vox.


“Insect collapse: ‘We are destroying our life support systems,'” sobbed the Guardian.

Naturally, the study’s co-author Brad Lister had no problems ramping up the apocalyptic significance of his findings. He told the Guardian:

“We are essentially destroying the very life support systems that allow us to sustain our existence on the planet, along with all the other life on the planet,” Lister said. “It is just horrifying to watch us decimate the natural world like this.”

The story was eagerly recounted by one of the Guardian‘s resident eco-loons, Damian Carrington. Here is the bit that really should have sent Carrington’s alarm bells ringing:

Since Lister’s first visits to Luquillo, other scientists had predicted that tropical insects, having evolved in a very stable climate, would be much more sensitive to climate warming. “If you go a little bit past the thermal optimum for tropical insects, their fitness just plummets,” he said.
As the data came in, the predictions were confirmed in startling fashion. “The number of hot spells, temperatures above 29C, have increased tremendously,” he said. “It went from zero in the 1970s up to something like 44% of the days.” Factors important elsewhere in the world, such as destruction of habitat and pesticide use, could not explain the plummeting insect populations in Luquillo, which has long been a protected area.

Can environment journalists really be this stupid? When, exactly was this “very stable climate” in which insects evolved? And if they are really that hypersensitive, how come they survived all the previous periods of warming, such as the Minoan, Roman, and Medieval warming periods?

Anyway, as you’ll have guessed, the study’s authors had made a major boo-boo. Perhaps they were right about the insect population collapse. But they were completely wrong about it being caused by dramatically rising temperatures. That is because the data sets they used were compromised. The apparent dramatic increase in temperature was the result of a thermometer in the weather station being moved, not of “global warming.”

Had the authors visited the station’s website, they could have found this out for themselves:




We all make mistakes. Climate change researchers especially. But despite several articles pointing out the study’s error — including this by Paul Homewood and this at Watts Up With That? — the study is still being used as the basis of sundry scaremongering articles in the mainstream media.
It is referenced everywhere from this piece in the Guardian to this piece by Tim Stanley in the Telegraph.

But the study is bunk.

This is the problem with so much of what we’re told about “climate change.” The mainstream media’s insatiable appetite for global warming scare stories mean that any new study promoting the appropriate doomsday narrative is bigged up by environmental correspondents as yet further evidence that climate change is real. When the papers turn out to be flawed, though, no one is much interested in running the correction.

As my old Fleet Street colleagues used to say: “A big lie is halfway round the world before the truth has got his boots on.”

This is bad for public understanding of science; bad also for science itself. I am quite prepared to believe that there is a problem with declining insect populations, which we should do our best to address. But if, as in the case of this study, we are being fed the wrong information as to the cause of the loss, how are we supposed to get a proper sense of what needs to be done?"

Robert P. Murphy on the "Green New Deal"

See Flaws with a “Green New Deal,” Part 2 of 2. Excerpt:

"The Green New Dealers’ desire for top-down regulations and massive new spending programs not only shows the futility of a carbon tax deal, it also underscores just how wasteful the program would be. Even if one believed in a “negative externality” from greenhouse gas emissions, there is no reason to suppose that policymakers have the knowledge or the incentives to correctly pick the proper ways in which the economy should adapt.

Especially when we are realistic about the political process, it should be obvious that funneling more than one trillion dollars in green “investment” spending through Washington will involve a gross misallocation of resources. For example, the draft text’s call for “retrofitting all buildings to be energy efficient” is a blank check to funnel money into the coffers of politically powerful groups in the construction industry. Anyone who thinks these funds will be spent according to the “social cost of carbon” needs to watch a few episodes of House of Cards.

Stringent Fuel Economy Standards Cause Automobile Fatalities

In his recent endorsement of the Green New Deal, Paul Krugman confirms that “it should emphasize investments and subsidies, not carbon taxes.” Ironically, Krugman and I for once agree that a political deal between conservatives and progressives is a no-go. As he puts it: “[C]laims that a carbon tax high enough to make a meaningful difference would attract significant bipartisan support are a fantasy at best, a fossil-fuel-industry ploy to avoid major action at worst.”

After throwing carbon taxes under the bus, Krugman moves on to argue why top-down regulations and spending programs can achieve significant emission cuts without imposing too much pain on ordinary Americans.

How is this possible? Krugman explains:

The majority of U.S. greenhouse gas emissions come from electricity generation and transportation. We could cut generation-related emissions by two-thirds or more simply by ending the use of coal and making more use of renewables (whose prices have fallen drastically), without requiring that Americans consume less power. We could almost surely reduce transportation emissions by a comparable amount by raising mileage and increasing the use of electric vehicles, even if we didn’t reduce the number of miles we drive each year.

Krugman is quite flippant in his above quotation with the word “simply,” as if eliminating coal—which in 2017 provided thirty percent of U.S. electricity—is no big deal. Krugman says we can simply “mak[e] more use of renewables,” without telling his readers that in 2017 (non-hydro) renewables accounted for less than 10 percent of electricity.

Regarding fuel economy, the simple fact is that in order for vehicles to achieve more miles to the gallon, automakers must make them more expensive, but also lighter and smaller. That means more Americans dying in car accidents than would otherwise be the case. How big a deal is this? Reputable studies have estimated that CAFE standards have caused anywhere from 40,000 – 125,000 excess vehicle fatalities.

Of course, proponents of stricter CAFE standards could quibble with these numbers, but the more significant point is that neither Ocasio-Cortez nor Krugman even admit that there is a tradeoff. They speak of cranking up mileage standards as if it’s a mere technical problem, without reckoning the tremendous human cost."