Lobbying and regulations have caused free entry to fail

See The Failure of Free Entry.

Germán Gutiérrez, Thomas Philippon

NBER Working Paper No. 26001
Issued in June 2019
NBER Program(s):Corporate Finance, Development of the American Economy, Industrial Organization, Public Economics, Political Economy, Productivity, Innovation, and Entrepreneurship

 

We study the entry and exit of firms across U.S. industries over the past 40 years. The elasticity of entry with respect to Tobin’s Q was positive and significant until the late 1990s but declined to zero afterwards. Standard macroeconomic models suggest two potential explanations: rising entry costs or rising returns to scale. We find that neither returns to scale nor technological costs can explain the decline in the Q- elasticity of entry, but lobbying and regulations can. We reconcile conflicting results in the literature and show that regulations drive down the entry and growth of small firms relative to large ones, particularly in industries with high lobbying expenditures. We conclude that lobbying and regulations have caused free entry to fail.

The Troubles Beneath the Surface of California’s Comeback

There’s a budget surplus, but also homelessness, lousy schools, expensive housing and even typhus

By Allysia Finley. Excerpts:

"So are we seeing the triumph of progressive policies in California? Have high levels of taxation and government spending at long last bought prosperity? Hardly. Californians are paying, one way or another, for their state’s liberal decadences.

Though the state is home to 12% of the U.S. population, nearly half of the nation’s “unsheltered” homeless now live in California. Last year the number of homeless rose 16% in Los Angeles and 17% in San Francisco. In Los Angeles the explosion of homelessness has given rise to a host of related problems: public defecation, rodent infestations and medieval diseases like typhus. Liberals blame a shortage of “affordable housing,” which notably is a function of local zoning and state environmental policies that for decades have limited development. As usual, the left believes the solution is more government spending."

"there’s no evidence more spending will produce better outcomes."

"Many homeless are on the streets because they suffer from mental-health problems. In 2004 California voters approved a 1% surtax on millionaires to fund mental-health treatment. Yet in 2016 the state’s Little Hoover Commission, an independent government oversight agency, reported that officials couldn’t account for how the government spent the tax’s $2 billion in annual revenues."

"Incarceration, like other social problems, is typically rooted in failing schools. Only 31% of fourth-graders in California are proficient in math, compared with 40% nationwide. Only 23% of Hispanic and 21% of low-income California fourth-graders score proficient in reading, about half as many as in Florida. California spends $3,600 more per pupil than Florida.

This year California will spend $102 billion on K-12 education, about 50% more than before voters raised taxes on the rich in 2012. Test scores haven’t improved, and much of the money has gone toward pensions for retired public employees."
"Californians pay twice as much for electricity than do residents of Washington and Oregon. As a regulated utility, PG&E is required to pay for system maintenance. But the utility apparently shortchanged spending on safety for years so it could spend more on green-energy mandates, with Sacramento’s tacit approval."

Contrary to Global Warming Predictions, Great Lakes Water Levels Now at Record Highs

By Roy W. Spencer, Ph. D. He has a Ph.D. in meteorology at the University of Wisconsin-Madiso.

"It is a truism that any observed change in nature will be blamed by some experts on global warming (aka “climate change”, “climate crisis”, “climate emergency”).

When the Great Lakes water levels were unusually low from approximately 2000 through 2012 or so, this was pointed to as evidence that global warming was causing the Great Lakes to dry up.

Take for example this 2012 article from National Geographic, which was accompanied by this startling photo:

The accompanying text called this the “lake bottom”, as if Lake Michigan (which averages 279 feet deep) had somehow dried up.

Then in a matter of two years, low lake levels were replaced with high lake levels. The cause (analysis here) was a combination of unusually high precipitation (contrary to global warming theory) and an unusually cold winter that caused the lakes to mostly freeze over, reducing evaporation.
Now, as of this month (June, 2019), ALL of the Great Lakes have reached record high levels.

Time To Change The Story

So, how shall global warming alarmists explain this observational defiance of their predictions?
Simple! They just invoke “climate weirding”, and claim that the climate emergency has caused water levels to become more erratic, to see-saw, to become more variable!

The trouble is that there is that there is no good evidence in the last 100 years that this is happening.

This plot of the four major lake systems (Huron and Michigan are at the same level, connected at the Straits of Mackinac) shows no increased variability since levels have been accurately monitored (data from NOAA Great Lakes Environmental Research Laboratory):

This is just one more example of how unscientific many global warming claims have become. Both weather and climate are nonlinear dynamical systems, capable of producing changes without any ‘forcing’ from increasing CO2 or the Sun. Change is normal.

What is abnormal is blaming every change in nature we don’t like on human activities. That’s what happened in medieval times, when witches were blamed for storms, droughts, etc.
One would hope we progressed beyond that mentality."

Trade reforms that significantly reduce import barriers lead to faster economic growth

By Douglas A. Irwin.

Does Trade Reform Promote Economic Growth? A Review of Recent Evidence

NBER Working Paper No. w25927

53 Pages Posted: 11 Jun 2019

Douglas A. Irwin

Abstract

Do trade reforms that significantly reduce import barriers lead to faster economic growth? In the two decades since Rodríguez and Rodrik’s (2000) critical survey of empirical work on this question, new research has tried to overcome the various methodological problems that have plagued previous attempts to provide a convincing answer. This paper examines three strands of recent work on this issue: cross-country regressions focusing on within-country growth, synthetic control methods on specific reform episodes, and empirical country studies looking at the channels through which lower trade barriers may increase productivity. A consistent finding is that trade reforms have a positive impact on economic growth, on average, although the effect is heterogeneous across countries. Overall, these research findings should temper some of the previous agnosticism about the empirical link between trade reform and economic performance.

Why Job Growth Is 80% Stronger in Low-Tax States Than High-Tax States Since December 2017

Americans are voting with their feet by moving to states where the politicians are taking less of their income.

Daniel J. Mitchell.

"When I wrote a few days ago that the Trump tax reform was generating good results, I probably should have specified that some parts of the country are not enjoying as much growth because of bad state tax policy.

As illustrated by my columns about Texas vs California and Florida vs New York, high-tax states are economic laggards compared to low-tax states.

This presumably helps to explain why Americans are voting with their feet by moving to states where the politicians are (at least in practice) less greedy.

State Taxes and Growth

Let’s look at some new evidence on the interaction of federal and state tax policy.

Writing for Forbes, Chuck DeVore of the Texas Public Policy Foundation shares data on how and why lower-tax states are out-performing higher-tax states.

Job growth has been running 80% stronger in low-tax states than in high-tax states since the passage of the Tax Cuts and Jobs Act of 2017 in December 2017. Understanding why holds important lessons for policy, economics, and politics. The new tax law scaled back the federal subsidy for high state and local taxes.

…As a result of limiting the SALT deduction to $10,000, income tax filers in high-tax states saw a relatively smaller tax cut, losing out on about $84 billion since the tax code was changed. With $84 billion less to invest, the pace of job creation in the 23 high-tax states has slowed relative to the low-tax states, with the data suggesting a shift of almost 400,000 private sector jobs may have occurred.

Here are some of his numbers.

Prior to the tax reform’s enactment, annualized private sector job growth was 1.9% in the low-tax states from January 2016 to December 2017 compared to 1.4% in the high-tax states, giving the low-tax jurisdictions a comparatively modest advantage of 35% more rapid job growth over the 23-month period. Now, 17 months of federal jobs data suggest that the Tax Cuts and Jobs Act has increased the competitive advantage of 27 low-tax states where the average SALT deduction was under $10,000 in 2016 as compared to 23 high-tax taxes with average SALT deductions greater than $10,000.
Private sector job growth is now running 80% faster in the low-tax states, 2% annualized compared to 1.1%, up from just a 35% advantage in the prior 23 months. …For California, the lost employment opportunity adds up to 153,000 positions since December 2017… New York’s employment growth was about 128,000 less than might have been the case had the SALT deduction not been capped.

And here’s his data-rich chart.

Based on previous evidence we’ve examined, these numbers are hardly a surprise.

High-Spending vs Frugality 

Chuck suggests the right way for high-tax states to respond.

…if political leaders in states accustomed to taxing and spending far more than their more frugal peers wish to participate in higher rates of job creation, they should reform their own fiscal houses, rather than expect their neighbors to subsidize their high-spending ways.

Sadly, this doesn’t appear to be happening.

Politicians in high-tax states such as Illinois and New Jersey are trying to make their already-punitive systems even worse.

Based on what we’ve seen from Greece, that won’t end well."

Bernie Sanders' #CancelStudentDebt Is a Dangerous Scam

The world doesn't owe you a dream college or a dream house or a dream job.

By David Harsanyi.

"This week, Rep. Alexandria Ocasio-Cortez (D–N.Y.) claimed that it was "literally easier" for her to win the congressional election than pay off her student loan debt—which says something unfortunate about both the cost of college and the electorate's choices.

Ocasio-Cortez was commenting on Sen. Bernie Sanders' (I–Vt.) new plan to eliminate $1.6 trillion in student debt and transform higher education into a "free" and "fundamental right." "This proposal will make it possible for every person in America to get a college education no matter what their financial situation," Sanders explained.

This might surprise some people, but every person in America can already get a college education, no matter his financial situation. Most poor Americans, in fact, can attend college for a relatively reasonable price tag. Sanders' socialization of the university system would be far more helpful for high-earning individuals. One Georgetown University study, for example, finds that a bachelor's degree is worth $2.8 million on average over a lifetime, which tells us that college is often a pretty good investment.

Then again, around two-thirds of people in the American workforce have no college degree. Some Americans have no interest in higher education. Many don't need university degrees for the vocations they pursue. They can, I suppose, go to college and earn a useless degree in journalism or comparative literature for kicks. Or, maybe, they could enter the workforce and start subsidizing people like Heather Gautney.

"I am $180k in debt. I have a PHD and am a tenured professor—my students are in the same boat, sinking in debt," Gautney, a senior policy advisor for Sanders, tweeted. "I pay $1100/month in student loan debt, half of my rent. We MUST #CancelStudentDebt."

This tweet, more than perhaps any political argument made about "free" college, encapsulates the fundamental injustice of student loan cancellation. Because above all else, Sanders' plan rewards people who overpaid for degrees or made bad fiscal choices.

Why should those who've worked to pay off their loans—and perhaps even their children's loans—subsidize Gautney's doctorate in sociology? Why should Americans who skipped college and went straight to work to start businesses and families help pay the $2,200 rent of tenured professors who live in expensive areas like New York (where Gautney teaches)? Why should conscientious kids who weighed the economic tradeoffs of the situation, and went to reasonably priced colleges, or community colleges, bankroll the careers of socialists who do not?

If Ocasio-Cortez feels underpaid at $170,000—approximately $110,000 above the average American's salary—she is free to go out into the meritocratic world and find a vocation where her talents will be more fairly remunerated.

Sanders' plan will ostensibly be made "free" by taxing all trades, and putting fees on bonds and derivatives from the universally reviled institution of Wall Street. For one thing, the cost of all of this will be passed through to investors and businesses, not CEOs, who, I assure you, will continue to send their kids to the very best schools.

Of course, the idea that Sanders (or Elizabeth Warren) is accurately calculating the price of a government entitlement is, to be charitable, highly unlikely. History tells us the cost is sure to skyrocket. The Government Accountability Office reported that loan-forgiveness programs will already cost taxpayers $108 billion over the next 10 years. And Sanders has already underestimated his Medicare for All idea by tens of trillions of dollars. There's nothing more expensive than "free."

None of this is even accounting for the moral hazard caused by "free college"—or "free" anything, for that matter. We've seen some of this in play since the Obama administration took over responsibility for college loans. Progressives want to create a system without risk, where students aren't responsible for their debt and schools aren't responsible for their costs. Once colleges know that prospective students can get any loan for any major they desire, incurring no risk whatsoever, what motivation do these institutions have to offer degrees of value?

And, in the end, forgiveness does nothing to lower costs. Then again, when the state takes control of private institutions, it inevitably turns to price controls and all the usual tools that destroy industries.

Then there is the ethical matter. In her speech, Ocasio-Cortez shared the story of a young woman she mentored who would have needed $250,000 in debt in order to attend her dream college. "She got into her dream college but her dream college offered her no scholarships, just loans," claimed AOC.

The world doesn't owe you a dream college or a dream house or a dream job. You have no right to someone else's labor and time. If you want to attend free college, ask professors to offer you their lectures gratis or ask school administrators who run massive endowments to open their doors to everyone.

Or, maybe, ask them to bring down their tuition prices."

The Myth of Medicare's 'Low Administrative Costs'

By Avik Roy.

"Many people wrongly believe that Medicare is more efficient than private insurance; that view was often stated by champions of Obamacare during the debate preceding the law's enactment. These advocates argued that Medicare's administrative costs — the money it spends on expenses other than patient care — are just 3% of total costs, compared to 15% to 20% in the case of private, employer-sponsored insurance. But these figures are highly misleading, for several reasons.

Medicare is partially administered by outside agencies

First, other government agencies help administer the Medicare program. The Internal Revenue Service collects the taxes that fund the program; the Social Security Administration helps collect some of the premiums paid by beneficiaries (which are deducted from Social Security checks); the Department of Health and Human Services helps to manage accounting, auditing, and fraud issues and pays for marketing costs, building costs, and more. Private insurers obviously don't have this kind of outside or off-budget help. Medicare's administration is also tax-exempt, whereas insurers must pay state excise taxes on the premiums they charge; the tax is counted as an administrative cost. In addition, Medicare's massive size leads to economies of scale that private insurers could also achieve, if not exceed, were they equally large.

Administrative costs are calculated using faulty arithmetic

But most important, because Medicare patients are older, they are substantially sicker than the average insured patient — driving up the denominator of such calculations significantly. For example: If two patients cost $30 each to manage, but the first requires $100 of health expenditures and the second, much sicker patient requires $1,000, the first patient's insurance will have an administrative-cost ratio of 30%, but the second's will have a ratio of only 3%. This hardly means the second patient's insurance is more efficient — administratively, the patients are identical. Instead, the more favorable figure is produced by the second patient's more severe illness.




Medicare has higher administrative costs per beneficiary

A more accurate measure of overhead would therefore be the administrative costs per patient, rather than per dollar of medical expenses. And by that measure, even with all the administrative advantages Medicare has over private coverage, the program's administrative costs are actually significantly higher than those of private insurers. In 2005, for example, Robert Book has shown that private insurers spent $453 per beneficiary on administrative costs, compared to $509 for Medicare. (Indeed, Robert has written the definitive paper on this subject, from which the above figure is taken.)

Remember these points the next time someone tries to tell you that Medicare is “more efficient” than private insurance.

UPDATE 1: Tim Worstall points out in the comments that we should also count the deadweight costs of tax collection as part of Medicare's administrative costs (say, 20% of the amount collected).

UPDATE 2: Benjamin Zycher has also written extensively about Medicare's administrative costs, as exemplified by this paper for the Manhattan Institute."

Under New York’s New Rent Control Law Nobody Wins

By Peter Van Doren of Cato.

"Earlier this month New York State enacted a new rent regulation bill. The bill applies to the entire state but has a significant impact on New York City where 2.4 million people live in close to a million regulated apartments. The City’s two regulatory frameworks, rent control and rent stabilization, differ on which units qualify and the rules that govern rent increases, but in general they both cap the amount that a landlord can increase rents each year leading to rents that are much lower than the market rate. The new law creates permanent regulations that severely limit the ability of landlords to raise rents in special circumstances (for example, after tenants move out or landlords invest in building improvements) and to deregulate units.

As my colleagues have argued time and time again, rent regulations are counterproductive. Though the rules aim to address a lack of affordable housing, setting the rent below market rates creates a supply shortage that exacerbates the problem. Traditionally, economists have understood rent control to benefit current tenants, who pay lower rents, at the expense of future tenants, who have more difficulty finding affordable apartments.

This view accurately captures the future supply shortages created by rent controls but misses the negative impact the rules have on current tenants. In the winter 2018-2019 issue of Regulation, Richard McKenzie and Dwight Lee explain how current renters are made worse off by the strategies landlords use to respond to the decreased rent and reduced competition as demand outpaces supply.

Without any rent regulations, landlords balance the rent they receive with the features and amenities they offer to tenants, including things like maintenance and air conditioning, in order to compete for prospective tenants. Limiting the amount landlords can charge and the competition they face incentivizes them to reduce the amenities and features they offer.

In the longer-term, this means landlords may allow apartments to deteriorate and newly built apartments will be of lower quality. Even in the short run, landlords can institute new rules (such as limiting the number of tenants in each unit), withhold maintenance, remove or restrict access to amenities, or convert units to condos to offset their lost revenue. The value of the diminished apartment quality nullifies tenants’ reduction in rent and, accounting for the decrease in quality, tenants may end up paying a higher effective rent than they would have paid without rent controls.

A shortsighted response to this could be to prohibit these sorts of strategies. But this discounts the ability of landlords to find creative ways to recoup their losses. They can always create new fees (such as charging for repainting or the use of amenities like a pool or gym) or find opportunities to reduce costs, even in ways that no regulation can address (for example, saving time by being less responsive and helpful to tenants). Even if a particular prohibition does succeed in limiting landlords’ ability to make up for their reduced rent revenue it simply further compounds the supply shortage.

Proponents of rent controls don’t anticipate both the supply shortages the rules create and the ability of landlords to make up for lower revenues by reducing quality. The best way to address the need for affordable housing is to loosen regulations to allow more housing units to be built and encourage increased competition, not to introduce more counterproductive regulations."

Expansion of paid parental leave may work against intended goals

Study from France analyzes the effects on household specialization and children's well-being

From The IZA - Institute of Labor Economic.

"Currently, the United States is the only high-income country that does not have nationwide paid parental leave. This is in stark contrast to European countries which provide new parents with generous periods of benefits. Between 2013 and 2015, the median duration of leave among developed countries was 60 weeks.

While a large body of literature documents significant gains from relatively short leaves (see the IZA World of Labor for an overview), it is less clear how extended periods of benefits affect household behavior and child well-being. A new IZA discussion paper by Serena Canaan provides some of the first evidence that offering lengthy leaves can have detrimental effects on a range of family outcomes.

Cash benefits for up to three years

The paper focuses on a French gender-neutral leave program, which offered parents a fixed monthly cash benefit to take up to three years of time off from work after the birth of a child. Leave take-up was conditional on the parent either working part-time or exiting the labor force, with the latter option yielding a greater amount of benefits.

Upon its introduction, the leave was reserved for parents of three or more children. Benefits were then extended to parents whose second child was born or after July 1, 1994. To identify the causal effects of leave extension, the study compares the outcomes for families with children born just before or after this date-of-birth cutoff.

Revival of traditional gender norms


The findings indicate that leave eligibility induces mothers to take the maximum amount of benefits by exiting the labor force. Barely eligible women are around 16 percentage points more likely to be out of the labor force compared to those who are barely ineligible. Fathers, in contrast, do not alter their leave-taking behavior but provide an additional 2.5 working hours per week on average. Since men’s earnings are unaffected, additional results suggest that fathers could be spending more time at work in order to boost their chances of promotion and raise future earnings.

With regard to responses in the marriage market, the analysis provides no evidence of leave expansion affecting divorce or couple separation. However, cohabiting mothers who benefited from the reform are around 10 percentage points less likely to marry within the next four years. According to the study, this reduction in marital surplus could be driven by couples spending less time together due to household specialization.

Leave eligibility harms children’s verbal development

Finally, the study documents that leave eligibility harms children’s verbal development at ages 5 to 6. The author suggests several mechanisms that could explain this finding. Children could be adversely affected through a reduction in their social interactions if maternal care is substituting for other childcare arrangements. The documented couple instability could have also hurt child development. Since the program does not offer full income replacement, loss of household income could be another potential channel driving the results.

Some of the main arguments for parental leave programs are that they can help narrow the gender gap in the labor market as well as promote family stability and foster child well-being. Thus, the results suggest that parental leave programs can work against their intended goals. “Indeed, leave-induced specialization can play a key role in exacerbating gender inequalities in the labor market,” Canaan writes.

Extensive leave expansions may increase inequality

Furthermore, the documented negative effect on child development is important in light of evidence that childhood circumstances can shape future outcomes and that early interventions can be critical for reducing initial inequalities.

The author stresses that the extent to which these results can be generalized to other settings largely depends on the design of other parental leave programs. Nonetheless, her findings imply that extensive expansions in the duration of parental leaves can have significant negative consequences."

Why Climate Activists Threaten Endangered Species With Extinction

By Michael Shellenberger. Excerpts:

"wind energy has emerged as one of the greatest threats to endangered bird and bat species, as well as insect populations, around the world. 
 
Wind Energy’s War on Nature

In many countries, wind turbines pose the single greatest threat to bats after habitat loss and white-nose syndrome. In some places such as Texas, where white-nose syndrome, a deadly fungus, has only recently arrived, wind turbines are the single greatest threat to bats.

And scientists say wind turbines are the single greatest human threat to migratory bats, which live in different habitats during summer and winter months. Some, like the hoary bat, fly south to Mexico during the winter as insects become more scarce in North America.

In 2017, a team of scientists warned that the hoary bat, a migratory species, could go extinct if the expansion of wind farms continues.

“Unprecedented numbers of migratory bats are found dead beneath industrial-scale wind turbines during late summer and autumn in both North America and Europe,” writes Paul Cryan, a research biologist with the US Geological Survey.  

Come on, you might be thinking. Surely there are greater threats to migratory bats than wind turbines?
 
There aren’t. “Wind energy facilities kill a significant number of bats far exceeding any documented natural or human-caused sources of mortality in the affected species,” writes Cryan.

Cryan is emphatic on this point. “There are no other well-documented threats to populations of migratory tree bats that cause mortality of similar magnitude to that observed at wind turbines.”  

Another leading bat expert, Patricia Brown, agrees. More than a decade ago she warned California energy regulators that wind turbines could be the “nail in the coffin” for some migratory bat species.
Aren’t bats protected from wind turbines by government agencies enforcing the Endangered Species Act and other conservation laws? They're not.

“None of the migratory bats known to be most affected by wind turbines are protected by conservation laws,” writes Cryan, “nor is there a legal mandate driving research into the problem or implementation of potential solutions.” 

Wind turbines have also emerged as one of the greatest human threats to many species of large, threatened and high-conservation value birds, after habitat loss from agriculture. 

Wind energy threatens golden eagles, bald eagles, burrowing owls, red-tailed hawks, Swainson’s hawks, American kestrels, white-tailed kites, peregrine falcons, and prairie falcons, among many others. 
The expansion of wind turbines could result in the extinction of the golden eagle in the western United States, where its population is at an unsustainably low level. 

Any additional mortalities to the golden eagle threatens the species with extinction, scientists with US Fish and Wildlife warned 10 years ago, before the last decade’s massive expansion of wind farms.

For decades the wind industry has put out a steady stream of grossly misleading information about its wildlife impact. It continues to claim that the impact of wind turbines is relatively low, and compares the bird deaths it causes to those of housecats, or buildings.

But where many of the birds killed by wind turbines are large, threatened, and of high-conservation value, most of the birds killed by house cats, and from collisions with buildings are small, unthreatened, and of low-conservation value, like robins and sparrows. 

And because big birds have much lower reproductive rates than small birds, their deaths have a far greater impact on the overall population of the species.

For example, golden eagles will have just one or two chicks in a brood, and usually less than once a year, whereas a songbird like a robin could have up to two broods of three to seven chicks a year. 

Wind Turbines And The Insect Die-Off

The decline of insect populations may be worsening the threat to endangered bird and bat species.
“There is strong evidence that many insect populations are under serious threat and are declining in many places across the globe,” notes Extinction Rebellion. “A 27-year long population monitoring study in Germany revealed a dramatic 76% decline in flying insect biomass.”

What Extinction Rebellion does not mention is that scientists in Germany say wind turbines appear to be contributing significantly to what it calls the “insect die-off.”

Germany’s leading technology assessment research institute published a study last October concluding that the rapid expansion of wind farms threatens insect populations.

Wind turbines in Germany alone are resulting in a “loss of about 1.2 trillion insects of different species per year,” concluded Dr. Franz Trieb of the Institute of Engineering Thermodynamics, which “could be relevant for population stability.”

The German wind insect death toll is an astonishing one-third of the total annual insect migration in southern England, a comparison that the scientists say “shows that losses of a trillion per year certainly have a relevant order of magnitude.” 

Because insects migrate, the impact of German wind farms is “not limited to local populations, but includes species like the Ladybird beetle (C. septempunctata) and the Painted Lady butterfly (V. cardui) that travel hundreds and even thousands of kilometers through Europe and Africa.”

Insects, birds, bats, and wind farm developers are all attracted to the same thing,  Trieb notes: high winds. “Wind-rich migration trails used by insects for millions of years are increasingly seamed by wind farms." 

Dead insects on wind turbine blades are as visible as dead insects on a car windshield. Scientists have reported the significant build-up of dead insects on wind turbine blades for three decades and in different regions around the world.

In the 1990s, the wind industry claimed its turbine blades were too high to threaten flying insects. It also claimed insects flew too slowly to be impacted. Both claims turned out to be completely wrong. 

Researchers calculated in 2001 that the build-up of dead insects on wind turbine blades can reduce the electricity they generate by 50%. 

Insects cluster at the same altitudes used by wind turbines. In Oklahoma, a major wind energy state, scientists found that the highest density of insects is between 150 to 250 meters. Large new turbine blades stretch from 60 to 220 meters above the ground.

And wind turbines may be killing insects during a “critical, vulnerable period” because “a strong lever action is applied on total insect population by killing a mature insect during migration just before breeding, as hundreds of potential successors from the next generation will be destroyed.”

While some of the media coverage has blamed the expansion of industrial agriculture, it is notable that the biggest insect population declines are being reported in Europe and the United States, where the land area dedicated to agriculture has declined but wind turbines have spread rapidly over the last two decades.

German research scientist Trieb is adamant that the impact of wind farms is significant: “there is no evidence that the impact of wind power generation on flying insect population is negligible.”

Hiding The Truth About Wind Energy

Governments rarely stop wind projects or require changes in wind turbine locations or operations.
Where government agencies routinely require permits for development near wetlands, in order to protect bird species, they rarely require the same for wind farms, even though the wildlife impacts can be far greater.  

Nor do governments require that wind developers disclose when they kill birds and bats, or count the dead. Wind developers have even sued to prevent the public from accessing data about bird kills. 

Incredibly, wind developers are allowed to self-report violations of the Migratory Bird Treaty Act, the Endangered Species Act, and the Bald and Golden Eagle Protection Act.

Only Hawaii requires bird and bat death data to be gathered by an independent third party and to be made available to the public on request. 

The “US Fish and Wildlife Service has encouraged wind developers to avoid prosecution for killing eagles by applying for licenses to cover the number of birds who might be struck by wind turbines,” reports Joseph Goldstein in The New York Times.

In the rare circumstances when governments require the wind industry to mitigate their impact, such as by setting aside land elsewhere, there is often little to no enforcement, scientists say. 

In other circumstances, wind developers do not follow through on their promises and in some cases lie. 

When wind developer “Apex submitted its application to [New York] state in late 2017 to build the wind farm, it said there were no known bald eagle nests on the island, according to public documents reviewed by The Times.”

Later, Apex flew a helicopter over the eagles nest, even though doing so posed a direct threat to the birds. “They destroyed an active eagle’s nest,” said a local conservationist.

While the wind industry has hyped technical fixed, none have proven successful at even demonstration levels. 

Curtailment, which is the intentional halting of turbine blades, is the only proven way to reduce the killing of birds, bats and insects. 

For example, scientists have found that curtailing wind turbines when wind speed is low can reduce bat fatalities 44% to 93%. 

However, very few wind farm developers are willing to commit to curtailment as a means of reducing their impact on the environment, notes Scott Cashen, a biologist that has been reviewing wind farm applications over the past decade.

One US government study found that curtailment levels are lower than 5% of total wind energy generation.

And curtailment often isn’t enough to stop the killings. “In fact, red-tailed hawk fatalities peaked at the 50% of turbines that never operated during the three years of monitoring,” reported Sean Smallwood, another leading scientist studying the impact of wind turbines on bird populations. 
Smallwood calls the most-studied wind farm in California, Altamont Pass, a “population sink for golden eagles as well as burrowing owls.”

While Smallwood helped improve the siting of wind turbines to modestly reduce their death toll, he also discovered that scientists had been significantly undercounting bird deaths, in part because scavengers like coyotes quickly eat them, and because body parts were outside the search radius.

“I recently found two golden eagles mortally injured by modern wind turbines just after I had been watching them,” wrote Smallwood in an extensive ritique of the methods relied upon by the US Fish and Wildlife Service. Both eagles “ended up outside the maximum search radius, and both left no evidence of their collisions within the search radius.” 

As such, the mainstream practice of limiting death counts to search radii “is analogous to excluding highway fatalities,” he writes, “when fatalities are found beyond the road verge.”"

"Extinction Rebellion and Greta Thunberg, for their part, continue to promote industrial scale wind farms, even though they require around 400 times more land than do nuclear power plants, which have never threatened any endangered species."

Federal Job Training: Boondoggle Since the 1930s

By Chris Edwards of Cato.

"Many studies over the years have found that federal job training programs create few discernable benefits to the economy. Taxpayers have funded these programs for decades and Congress occasionally tweaks them, but nothing seems to work. Federal job training programs have been known for their wastefulness since the New Deal when the word “boondoggle” was adopted to describe them.

Dan Murphy and I note that people looking for jobs and training these days rely on personal connections, the Internet, temporary help agencies, private education firms, and other market institutions. There is no obvious market failure indicating a need for federal intervention.
A report out by the Trump administration appears to come to similar conclusions. The Wall Street Journal reports:

As U.S. employers struggle to fill near-record-high job openings, government training programs aimed at solving that problem are coming up short, according to President Trump’s economic advisers.
“Government job-training programs appear to be largely ineffective and fail to produce sufficient benefits for workers to justify the costs,” said Tomas Philipson, a member of the Council of Economic Advisers, in an interview with The Wall Street Journal.
Most federal job-training programs produced insufficient data to be clearly evaluated, and the ones that were studied weren’t producing the desired results, White House advisers said in a paper released Monday, an overview of previously completed evaluations of training programs.
There were more than 40 federal worker-training programs spread across nine different agencies serving more than 10 million Americans in the 2017 fiscal year, according to the White House.
… However, even if additional spending improved outcomes, the council’s paper said, “it would take a large improvement for the benefits to outweigh the higher costs.”
The report said the Job Corps youth-employment program and programs intended to put formerly incarcerated people back to work were producing weak results relative to their cost.
The paper also found that the Labor Department’s largest program, in terms of number served, did little to help workers who were dislocated due to international trade, automation or other factors. Dislocated workers received “no significant effect on earnings from training” from the program, now known as Workforce Innovation and Opportunity Act or WIOA, several studies showed.

In sum, federal employment and training programs do not fill any critical need that private markets cannot fill and experience suggests that the programs are ineffective. Given today’s large budget deficits, these programs would be a good target for elimination."

Minimum wage increases could devastate restaurants and food jobs. NYC may be the ‘canary in the coal mine’

From Mark Perry.

"From an op-ed in today’s Wall Street Journal by Alabama-based restaurant owner Larry Fox titled “The $15 Minimum Wage Will Put Me Out of Business: My employees already make $22 an hour with tips. A new bill will force me to fire them all“:

Want to earn a living wage in Alabama? Try working in a full-service restaurant. I’m a restaurant franchisee with nine locations throughout Alabama and Florida, and my tipped employees report an hourly wage between $18 and $28, inclusive of base pay and gratuities. That’s more than the living wage for a single adult in Alabama, as calculated by the Massachusetts Institute of Technology.

Unfortunately, some well-meaning members of Congress are trying to pass a minimum-wage bill that would destroy my business model. Tipped employees are currently paid a lower base wage and are legally guaranteed to earn at least the minimum wage with tips included. My employees average roughly three times the relevant minimum wage when tips are accounted for.

But Rep. Terri Sewell (D., Ala.) has introduced one of several bills that would upend this system. Under her bill, employees would have to earn at least the minimum wage before tips. A handful of states—Alaska, California, Minnesota, Montana, Nevada, Oregon and Washington—have adopted this approach. Were it to take effect in Alabama, it would represent as much as a 600% increase in the hourly cost of paying a tipped employee to work for me. In pursuit of a “living wage,” Ms. Sewell could cause my employees to lose their incomes entirely by forcing me to shut down my business.

Despite the widespread popularity of restaurants the public has surprisingly little understanding of how the business works. At my restaurants we sell a six-piece plate of chicken wings for $10. Customers typically assume we keep $6 or $7 in profit from that sale. In fact, our profit on that six-piece is closer to 50 cents, after accounting for food and labor costs, rent, overhead and other expenses.

My employees actually make more money from a sale than I do. I earn 5% on each customer check, while they earn 20% or more of the check in tip income. If that doesn’t seem shocking to you, consider this: labor costs are about a third of a restaurant’s budget. Now, imagine if a household expense that takes up a third of your income—maybe a mortgage payment or rent—increased by 600%. You’d probably be panicking. So am I.

 

MP: To see what might happen to restaurant jobs in states like Alabama if the minimum wage increases to $15 an hour and if the tip credit is eliminated, the chart above shows shows some of the fallout in New York City for jobs at full-service restaurants. The significant loss of food jobs in the Big Apple over the last few years are partly at least, if not mostly, a direct result of the negative impact of the $15 an hour minimum wage law that went into effect on December 31, 2018. The increase to $15 an hour at the end of last year followed three annual $2 an hour increases starting at the end of 2016 that increased the city’s minimum wage by 67% from $9 an hour in 2016 to $15 an hour at the end of last year.

Based on employment data released yesterday by the Bureau of Labor Statistics, jobs at New York City full-service restaurants fell by 4,000 from last May, or by 11 jobs lost every day over the last year. The job losses in New York City over the last few years have been much worse than during the Great Recession, and even slightly worse than the loss of food service jobs during the 2001 recession and the devastating effects of the 9/11 terrorist attacks that year. New York City could be the “canary in the coal mine” that predicts what happens when politicians force significantly higher labor costs on restaurant owners that put restaurant jobs at great risk as well as jeopardizing the financial profitability and long term viability of restaurants.

We hear a lot about the living wages of unskilled, low skilled and limit-experienced workers, but what about the “living profitability” of small business owners and restaurateurs like Mr. Fox who may not survive a 600% increase in their labor costs?"