"Pod learning, like charter schools, has been criticized for contributing to school segregation. A public-school official in Atlanta wrote in the New York Times that pods “exacerbate inequities, racial segregation and the opportunity gap within schools.” But where is the evidence that black children need to sit next to white children to learn? Some of the highest-performing public schools in the U.S. are public charter schools with student bodies that are overwhelmingly black and Latino. If racial diversity is so essential to classroom learning, how do children in countries with essentially no such diversity, such as Japan and South Korea, regularly outperform American students on international tests?
In any other use of the word, these pods and charter schools wouldn’t be considered segregated to begin with because nothing besides personal preference is at play. If you go to the symphony and see few black people in attendance, you don’t conclude that the concert hall is segregated. But if someone starts a charter school or a pod in a heavily black neighborhood and nonblacks don’t enroll, school-choice opponents would have you believe that something nefarious is afoot."
Wednesday, November 30, 2022
Is racial diversity essential to classroom learning?
Two Replies to DeMuth’s Version of National Conservatism
"Usually sure-footed, Christopher DeMuth slips into error when he writes that “American conservatism became unduly attached to libertarian individualism, unfettered markets and free trade as ends in themselves—which helped set the stage for anything-goes cultural corruption.” (“America’s Right Confronts the 21st Century,” op-ed, Nov. 19).
First, far from being unfettered, free markets teem with the time-tested and honest fetters of commercial competition. This competition regulates firm behavior far better than do government bureaucracies, which, when they aren’t restricting firms from serving consumers better, are protecting firms from the competition that alone keeps them efficient and responsive, not to government, but to consumers and suppliers.
Second, corruption is fueled not by free trade but protectionism. Under free trade, government has no favors to sell to firms that crave relief from having to satisfy consumers. Firms thus compete for profits honestly rather than lobby for rents mendaciously. Because protectionist interventions must be sold to the public as patriotic and well-intentioned rather than what they really are—privileges for the few at the larger expense of the many—protectionism contributes to cultural rot as well.
Prof. Donald J. Boudreaux
Mercatus Center, George Mason U.
Fairfax, Va.
Mr. DeMuth’s latest tome defending and defining national conservatism remains less than compelling. Politics concerns man’s relation to the state. The Founders and later the framers sought to minimize that relationship, believing that the primary purpose of the state is to protect our liberty, freeing us to pursue happiness. Mr. DeMuth suggests that such liberty “set the stage for anything-goes cultural corruption.” It turns out that the complexities of an evolving society may be less “pristine than the one we imagine the Founders bequeathed to us.” You think? Mr. DeMuth views our contemporary society from 35,000 feet, offering sweeping national-conservative critiques but precious little in the way of national-conservative solutions.
Mr. DeMuth has two approaches in his program. First, after a convoluted discussion of equality, he suggests we “accept some contemporary claims and reject others.” Thanks so much. Second, he offers a few policy pointers: protect our borders, drop race from policy discussions, balance the budget and redirect welfare spending to infrastructure projects. Hardly a rallying call for a new approach to the 21st century. At least he left out the national conservatives’ infatuation with Europe’s budding authoritarian leaders.
Edward H. Crane
President emeritus, Cato Institute
Falls Church, Va."
Tuesday, November 29, 2022
WHO, CDC: A record 40 million kids miss measles vaccine dose
Another problem caused by COVID lockdowns. Parents could not go to doctors to get their kids vaccinated.
"The World Health Organization and the U.S. Centers for Disease Control and Prevention say measles immunization has dropped significantly since the coronavirus pandemic began, resulting in a record high of nearly 40 million children missing a vaccine dose last year.
In a report issued Wednesday, the WHO and the CDC said millions of children were now susceptible to measles, among the world’s most contagious diseases. In 2021, officials said there were about 9 million measles infections and 128,000 deaths worldwide.
The WHO and CDC said continued drops in vaccination, weak disease surveillance and delayed response plans due to COVID-19, in addition to ongoing outbreaks in more than 20 countries, mean that “measles is an imminent threat in every region of the world.”"
"“The record number of children under-immunized and susceptible to measles shows the profound damage immunization systems have sustained during the COVID-19 pandemic,” CDC director Dr. Rochelle Walensky said in a statement."
China’s Zero-Covid Reckoning
"Remember when China’s handling of Covid-19 was supposed to be a global model? Western public-health sages looked fondly on Beijing’s zero-Covid policy as an alternative to America’s messy democratic decision to live with the virus after the disastrous initial lockdowns. Well, so much for that.
As the third anniversary of the Covid outbreak nears, China is reporting record infections. The daily highs are surpassing April’s surge in Shanghai, which shut down for two months. Outbreaks are occurring across China, and cities are again imposing lockdowns. Nomura, the Japanese brokerage, estimates that more than a fifth of the country is under restricted movement.
The latest breakout was inevitable in a large continental nation given the increasing transmissibility of the virus as it mutates. China’s particular problem is that its draconian zero-Covid policy has left its people less protected with either vaccine or natural immunity. For nationalist reasons, the Communist Party refused to accept Western vaccines that are more effective than China’s homegrown shots. Long lockdowns mean fewer people have been exposed to the virus and developed natural immunity as they have in the rest of the world.
China’s aging population is especially vulnerable, since the country lacks the hospital capacity and ICU beds to deal with widespread serious illness. By one estimate a full reopening could lead to 5.8 million intensive-care admissions in a country with fewer than four ICU beds per 100,000 people. The designs of China’s rulers are opaque, but this may explain the Party’s dogged insistence in sticking with zero-Covid despite the global evidence that lockdowns merely delay the spread of disease while doing great economic and social harm.
President Xi Jinping’s other problem is political. An authoritarian regime can always do what it does best—surveil, coerce, lock down. But it lacks a mechanism to gain public support for the pain that could accompany the abandonment of zero-Covid. Democracies, for all their cacophony, have more flexibility to change policies and adapt when the public sees that the facts require it.
Meanwhile, signs are growing that the latest Covid breakout and lockdowns are meeting more public frustration and resistance. The protest this week at the Foxconn facility that makes Apple’s iPhones in the central city of Zhengzhou is one example that has made it to the international press. There are surely many others in such a large country with no avenue to register public complaints.
The new lockdowns will slow China’s economy, with growth estimates falling for the fourth quarter and the year below 3%. That’s assuming Chinese officials aren’t gilding the books. China’s official GDP target for this year had been 5.5%.
China’s Covid and economic struggles may explain in part China’s recent less belligerent appearance on the global stage. But the U.S. can’t assume that will continue. The larger lesson of China’s Covid reckoning is that lockdowns don’t work, and authoritarian regimes aren’t models of public health or anything else that too many Americans imagine them to be."
Biden Puts Your 401(k) to ESG Work
"The Biden regulatory machine doesn’t rest, even in Thanksgiving week. On Tuesday the Labor Department finalized a rule that empowers retirement plan sponsors to invest based on environmental, social and governance (ESG) factors and put your 401(k) to progressive political work.
The Labor Department casts its rule as a mere clarification of the 1974 Employee Retirement Income Security Act (Erisa), which requires that retirement plan sponsors act “solely in the interest” of participants and beneficiaries. A Trump Labor rule barred retirement managers from considering factors that weren’t material to financial performance and risk.
Asset managers and union pension plans claimed the Trump rule limited their discretion to consider such ESG factors as climate, workforce diversity and labor relations. The Biden DOL says it created a “chilling effect” on ESG investing. Its replacement rule gives plan sponsors nearly unlimited discretion and legal protection to invest based on these often political considerations.
“A fiduciary may reasonably conclude that climate-related factors” including “government regulations and policies to mitigate climate change, can be relevant to a risk/return analysis of an investment,” the rule says. Ditto workforce diversity, inclusion and labor relations since they may affect employee hiring, retention and productivity.
Government climate policies can no doubt affect financial performance, but not necessarily in the way that ESG investors say. Fossil-fuel producers are reaping enormous profits as Western governments seek to restrict supply. A pension plan that divests from fossil fuels would be less diversified and probably produce lower returns over the long term.
Many ESG investing strategies take into account future policies that would be needed to meet the Paris CO2 emissions targets but which may never be implemented because the economic costs are higher than society is willing to bear. Is it prudent for retirement plan managers to shun companies that don’t plan for a “net-zero” world that may never arrive?
DOL offers a long list of debatable theories and studies to support its claim that social and governance factors might be important investment considerations. “Labor-relations factors, such as reduced turnover and increased productivity associated with collective bargaining, also may be relevant to a risk and return analysis,” the rule says.
The main point of the Biden rule is to give legal protection to retirement plan fiduciaries that invest based on ESG. A secondary goal is to steer more retirement savings into ESG funds that often charge higher fees by allowing retirement sponsors to offer them as default options in 401(k) plans. Workers automatically enrolled in default funds can opt out, but they usually don’t.
Workers will have to cover 401(k) shortfalls if ESG strategies don’t pan out. That means they may have to increase their contributions or retire later. In the case of union pension plans, taxpayers might bear the cost. Democrats authorized some $86 billion in their Covid relief bill last March to shore up distressed multi-employer pension plans.
Since these pension plans enjoy a taxpayer backstop, unions will be more inclined to leverage worker retirement savings to promote progressive causes even if they result in lower returns. In sum, the Administration is politicizing retirement savings and putting taxpayers and workers on the hook for the costs. No wonder it released the rule right before Thanksgiving."
In D.C., the Bus Fare Is Merely a Polite Suggestion
"Today’s sorry lesson about crime and impunity in America’s cities comes courtesy of Washington, D.C., where the farebox on the bus is more like an offering plate. More than a third of the bus trips now being taken involve fare evasion, but last week the Washington Metropolitan Area Transit Authority said it will crack down beginning in November.
The Metro transit authority says free riders are committing a criminal offense if they’re in the Virginia and Maryland suburbs that surround the capital. But some four years ago, the D.C. City Council decriminalized fare evasion over a mayoral veto. Within city limits, fare dodgers face a mere $50 civil citation. In the old days they might have been staring down a $300 fine and 10 days in jail.
That hasn’t been the only problem. Here’s an amazing line from Metro’s statement last week: “Tickets are provided by each jurisdiction and until recent action in the District establishing an adjudication and appeals process, Metro did not have tickets to use in the District. Therefore, Metro did not have the ability to issue fare evasion citations in the District.” Stop for a moment to remember that this is the capital city of the world’s richest and most powerful country.
Metro says that D.C. is getting its act together, but the lack of consequences has created a boom for lawbreakers. Halfway through fiscal 2022, riders had skipped payment on some nine million bus trips, or 34%. Compare that to fiscal 2018, when riders evaded fare on 9% of bus rides. Yet transit police took enforcement actions against only 297 fare dodgers in 2021, down from more than 12,000 in 2018.
Proponents of decriminalization say fare evasion is a victimless crime, but Metro is facing a budget shortfall of nearly $185 million. The transit authority said last week that it “conservatively estimates revenue losses due to fare evasion totaling $40 million in fiscal year 2022 or 22 percent of the total upcoming budget gap.” Incentives matter, and if fare dodgers don’t face consequences, taxpayers will be the passengers who really get taken for a ride."
Monday, November 28, 2022
Recent pause in the growth rate of atmospheric CO2 due to enhanced terrestrial carbon uptake
"Abstract
Terrestrial ecosystems play a significant role in the global carbon cycle and offset a large fraction of anthropogenic CO2 emissions. The terrestrial carbon sink is increasing, yet the mechanisms responsible for its enhancement, and implications for the growth rate of atmospheric CO2, remain unclear. Here using global carbon budget estimates, ground, atmospheric and satellite observations, and multiple global vegetation models, we report a recent pause in the growth rate of atmospheric CO2, and a decline in the fraction of anthropogenic emissions that remain in the atmosphere, despite increasing anthropogenic emissions. We attribute the observed decline to increases in the terrestrial sink during the past decade, associated with the effects of rising atmospheric CO2 on vegetation and the slowdown in the rate of warming on global respiration. The pause in the atmospheric CO2 growth rate provides further evidence of the roles of CO2 fertilization and warming-induced respiration, and highlights the need to protect both existing carbon stocks and regions, where the sink is growing rapidly.
Introduction
The oceans and the terrestrial biosphere remove about 45% of the CO2 emitted by human activities each year1. The rate of CO2 uptake is not constant, however, and varies greatly from year to year in response to changes in the atmosphere (for example, El Niño events, volcanic eruptions and natural climate variability). The largest component of the year-to-year variability in CO2 uptake is contributed by processes on land2,3. Any increase or decrease in terrestrial uptake thus generates a feedback to the atmosphere4, which affects the growth rate of atmospheric CO2, and the rate at which the climate warms.
Over the past 50 years, the amount of CO2 absorbed by the oceans and terrestrial biosphere annually has more than doubled1,5,6,7,8. The enhanced carbon sink has been attributed to increased ocean9 and terrestrial uptake1,6,7,8,10, and has occurred despite an increase in the severity and intensity of regional disruptions to ecosystems in recent years, such as extensive droughts, wildfires and insect damage11,12,13,14. On land, reports suggest a decline in the tropical sink15,16, increased plant mortality17,18 and decreased plant productivity due to droughts and extreme events19,20. In contrast, others report that elevated CO2 has led to increased photosynthesis8 and a greening of the biosphere21,22. The relative contributions of the different processes involved in the terrestrial sink enhancement remain unquantified. Global warming over vegetated land notably slowed since the start of the twenty-first century23, while atmospheric CO2 concentrations continue to rise, providing an opportunity to test the relative roles of various processes in the enhancement of terrestrial carbon uptake, and examine the implications of enhanced carbon uptake for the growth rate of atmospheric CO2.
Here we use extensive ground observations of earth–atmosphere CO2 exchange, atmospheric CO2 observations and satellite observations of vegetation, along with an ensemble of 10 prognostic dynamic global vegetation models (DGVMs), and a diagnostic process-based modelling approach, to examine the causes of the long-term enhancement of terrestrial carbon uptake and consequences for the growth rate of atmospheric CO2. Our analysis suggests that enhanced carbon uptake is due to the combined effects of rising CO2 on photosynthesis (the CO2 fertilization effect) and, in the past decade, a slowdown in the rate of warming on global respiration. The continued enhancement of the terrestrial carbon sink during the recent slowdown in global warming led to a pause in the atmospheric CO2 growth rate, and a decline in the fraction of anthropogenic emissions that remains in the atmosphere.
Results
Slowing of the growth rate of atmospheric CO2
Changes in the residual terrestrial carbon sink affect the proportion of anthropogenic emissions that remain in the atmosphere (the airborne fraction), and thus the growth rate of atmospheric CO2. Our analysis suggests that the airborne fraction increased steadily from the 1960s to the 1990s (1.8% per year, P=0.03; Fig. 1b), albeit with large interannual variability reflecting year-to-year variability in the terrestrial sink4. Since the start of the twenty-first century, however, the airborne fraction has been declining (−2.2% per year, P=0.07; Fig. 1b), despite the rapid increase in anthropogenic emissions (Fig. 1b). Changes in the airborne fraction are reflected in the atmospheric CO2 growth rate. For the three decades from the start of the measurement record in 1959, the atmospheric CO2 growth rate increased from 0.75 to 1.86 p.p.m. per year (Fig. 1a). However, for the period 2002–2014 there has been no significant increase in the growth rate of CO2 (Fig. 1a and Supplementary Fig. 1). The decline in the airborne fraction since the start of the twenty-first century has therefore been sufficiently large as to result in a pause in the rate of increase of the atmospheric CO2 growth rate (Fig. 1a). Atmospheric growth rates have deviated significantly from predictions of a linear model of atmospheric CO2 concentrations and anthropogenic emissions since 2002 (Supplementary Fig. 1), suggesting a nonlinear increase in the global sink strength."
The latest data indicates a clear link between trade integration and falling global inequality
See The globalisation elephant has left the room by CHRIS GILES of The Financial Times. Excerpt:
"Since the 2008 financial crisis, the incomes of the poorest families have risen the fastest, with annual real income growth of the poorest tenth of the world’s population at about 7 per cent. That falls to 6 per cent for households with middle incomes and under 2 per cent a year for the global elite."
Trade Protectionism Failed for Ronald Reagan, Too
"Dan DiMicco correctly reports that Ronald Reagan sometimes compromised in his opposition to protectionism (Letters, Oct. 8). But he incorrectly insists that Reagan’s compromises are evidence of protectionism’s wisdom.
Consider the three examples of President Reagan’s protectionism that Mr. DiMicco applauds. The 1983 tariff on motorcycles meant to save Harley-Davidson were, as described by leading trade economist Douglas Irwin, “completely ineffectual.” These tariffs applied only to bikes with 700cc or larger engines, while Harley’s engines were 1000cc to 1300cc. Japanese manufacturers adjusted easily to the tariff by producing for the U.S. market motorbikes with 695cc and 699cc engines.
Even worse were the “voluntary export restraints” that, starting in 1981 under Reagan administration pressure, the Japanese used to restrict their exports of automobiles to America. A 1984 FTC report estimated that these VERs annually cost U.S. consumers $1,109.2 million (in 1983 dollars), nearly 10 times as much as the $115.3 million of annual gains reaped from these VERs by U.S. auto makers. The annual cost per job created was $216,137—nearly 13.5 times the average annual earnings ($16,068) of the American worker in 1983.
Finally, Mr. DiMicco praises the 1985 Plaza Accord for boosting U.S. exports. But it attempted to do so by devaluing the dollar—that is, by reducing Americans’ purchasing power. While a few domestic producers might have gained from the resulting dampened competition from imports, we Americans as a whole can only have lost from that engineered reduction in our ability to acquire on global markets consumer goods, inputs for businesses here at home and investment opportunities.
Even in the hands of Ronald Reagan, protectionism is economic alchemy.
Prof. Donald J. Boudreaux
Mercatus Center, George Mason U.
Fairfax, Va."
Debating Marijuana and Crime After Biden’s Pardon
"William Bennett and Seth Leibsohn’s op-ed “Biden’s Marijuana Pardon Will Drive Crime Higher” (Oct. 8) makes the dubious assumptions that criminalizing cannabis use and incarcerating offenders will lead to a decrease in usage. To the contrary, states that have legalized cannabis have seen a reduction in use in essential populations. Colorado has seen a marked decrease in youth use of cannabis since legalization.
Second, blaming violent crime on cannabis use follows a long line of debunked myths. No study has proved a causal link between cannabis use and violence. “Just say no” and excessively roping people into the criminal-justice system is a thing of the past. Today, 69% of Americans support cannabis legalization and over 100 million of us live in a state with legalized, adult-use cannabis.
Greg Walden
Co-chairman, Coalition for Cannabis Policy, Education, and Regulation
Hood River, Ore.
Mr. Walden, a Republican, was a U.S. representative (1999-2021)."
A Pension Fix to Help Fund Police Departments
In California, police officers can retire at age 50
"In California, police officers can retire at age 50. The average cop retires with 22 years of service and collects a pension of almost 70% of final pay with annual cost-of-living adjustments. Because of a flood of retirements, cities are forced to ramp up wages to attract recruits and pay bonuses to steal officers from other agencies (“Cities Dangle Bonuses to Fill Police Ranks,” U.S. News, Oct. 1).
California has more cops retired than working, and pension costs are sinking city budgets. Congress should allow states to modify defined-benefit pension formulas for current public workers, similar to what is allowed in the private sector. Requiring police officers to work five years longer will cut pension costs substantially, retain experienced officers, reduce our backlog of unfinished investigations and reduce lateral-transfer upheaval.
Marcia Fritz
California Fdn. for Fiscal Responsibility
Sacramento, Calif."
Sunday, November 27, 2022
Why DeSantis’s Covid Policy Remains Relevant
By Holman W. Jenkins, Jr.. Excerpts:
"Columbia University’s Jeffrey Shaman and colleagues produced a study in 2016-18 showing that only 5% of cold-symptom sufferers and 21% of people with flu-like symptoms sought medical attention.
Had the data been available in the pandemic’s earliest days, it would have reinforced what should have been everybody’s first assumption after reflecting on their own medical behavior. If most people with mild symptoms weren’t seeing doctors, not only was Covid less deadly than being reported, it was likely already out of the bag globally and unstoppable even in countries where it had yet to be formally identified.
And any epidemiologist would have told you as much in the first weeks, before it became systematically necessary to pretend something else for political reasons. You can still see the results in certain journalistic accounts three years later, framed by a presumption that only the terrible incompetence and failure of our leaders allowed Covid to spread at all. In his latest book, the Washington Post’s Bob Woodward portrays himself demanding of then-President Donald Trump, our failing national daddy, “Do something!”
The story of Florida’s Gov. Ron DeSantis is the story, in contrast, of a grown-up. After initially adopting stringent measures, he returned to first questions. Was the virus stoppable? Would trying materially pay off in terms of reduced mortality and suffering? No, he concluded. As a result, Florida experienced roughly the same Covid outcomes as other states while piling on fewer of the costly, impotent gestures that were adopted elsewhere mainly to show that politicians were very, very concerned."
"As the Atlantic Monthly delicately put it long after the fact, “Do strict lockdowns simply fail the cost-benefit analysis?” The accumulating answer appears to be strongly: “Yes.” Our authoritarian heroics only left communities poorer, more crime-ridden, and with the next generation’s prospects damaged by interrupted schooling."
Lancet Won’t Defend Climate Statistic It Hyped
"A poor Lancet study made climate headlines across the world by telling us that rapidly rising temperatures now kill 68% more older people (65+) than they did in the early 2000s. This claim is misleading, as I demonstrate in my op-ed “Climate Change and the Lancet’s ‘Heat Death’ Deception” (Nov. 5). Almost the entire heat-death increase is due to the number of older people increasing by 60%.
The Lancet’s reply (Letters, Nov. 12) delivers lots of sciency-sounding verbiage but, surprisingly, offers no effort to numerically defend its claim. It handwaves that it “disaggregates the effect of demographic changes,” but this is clearly untrue for its central claim: the 68% is an increase in the total, global number of heat deaths in older people. It remains unadjusted for a rapidly expanding, older population. Yet the Lancet’s 68% claim comes first in its summary and it was central for all the climate stories everyone read in the press.
Claiming that temperature rises kill 68% more is based on an amateur statistical error. But with the Lancet’s failure to even remotely defend—or apologize for—its claim, it appears the 68% is not only misleading but, unfortunately, intended to deceive.
Bjorn Lomborg
President, Copenhagen Consensus
Malmö, Sweden"
Saturday, November 26, 2022
Protectionist History Repeats, Again
"A couple years ago, I took to this blog to remind then‐candidate Joe Biden of the numerous problems that “Buy American” laws, which require U.S.-origin materials in federal procurement projects, caused back when he was vice president and overseeing implementation of the 2009 American Recovery and Reinvestment Act’s infrastructure projects. Taxpayer costs were high; projects were delayed (if not scuttled); and uncertainty reigned, eliciting numerous complaints from American companies and local officials trying to carry out the federal government’s plans.
My warning, unfortunately, was ignored by now‐President Biden, who has repeatedly trumpeted his efforts to insert Buy American mandates into major pieces of legislation and to tighten existing local content restrictions by executive order. But, as detailed in a recent Route 50 piece, his brushoff hasn’t stopped history from repeating itself:
The Biden administration is pushing state transportation departments and their contractors to use more U.S.-made materials as they build new infrastructure, but many industry groups worry the federal government is rolling out the changes too quickly.
“AASHTO is still concerned that the quick implementation of Buy America requirements for such a broad range of materials will cause delays in project delivery while states, contractors, manufacturers, and suppliers continue working to determine how best to track and verify these materials,” wrote Roger Millar, Washington state’s secretary of transportation and the president of the American Association of State Highway and Transportation Officials, in a letter to federal officials.
“Delays and costs will likely increase, at least in the short term, as contractors are forced to shift material purchases to domestic suppliers, who in turn may struggle with availability due to limited quantities and high demand,” he added.
AASHTO isn’t the only group complaining. The American Public Transportation Association, which represents transit agencies, recently told the Biden administration that, “[g]iven the current supply chain constraints, moving to all U.S.-sourced construction materials will inevitably lead to project sponsors paying a premium to meet [Buy American] requirements. The question then becomes whether the market/industry can absorb a doubling, tripling or even a quadrupling of costs for construction materials.”
Given cost, timing, and other practical considerations, transportation agencies from numerous states, including North Carolina, Idaho, Montana, North Dakota, South Dakota, and Wyoming, have asked for a broad waiver from the Buy American mandates. The latter five recently explained that strict Buy American rules would jeopardize federal projects and, in turn, their local economies:
As relatively rural states that may be considered ‘small market’ by vendors of some materials and products, we are particularly concerned that the burden of an absence of waivers could fall heavily on us, as scarce Buy America qualified products tend to be sent to more populous areas…
The blow to program delivery, local jobs, and transportation benefits that would entail could well be magnified by the short construction season in our northern, high elevation states – where even short delays and project disruptions can push project completion into the “next construction season.”
The Airports Council International – North America echoed these sentiments, noting that denying its members a broad‐based waiver “is short‐sighted and unnecessarily risks reducing the number of airport construction projects and associated U.S. construction jobs.”
If only someone could’ve warned us."
Housing Supply and Property Taxes
"In many cities, a shortage of housing supply has led to high housing prices. One problem is that strict zoning rules have undermined the construction of multifamily housing.
Property taxes are another barrier to increased housing supply. The Wall Street Journal has an interesting piece suggesting that taxing buildings as much as, or more than, land induces landlords to hold onto land undeveloped, rather than pushing ahead with building projects.
The article highlights land in New York City near the U.N. that is zoned for construction of 1,500 apartments but has been empty for 17 years while the “owner has paid relatively little in taxes on the property because it doesn’t contain any buildings.” Apparently, “U.S. cities are littered with vacant or sparsely built sites like this one. New York City alone has more than 77,000 lots that are either vacant or have a building that is less than half the size of what zoning allows.”
All taxes distort, but the argument is that property taxes on land distort less than property taxes on buildings. The article continues:
Some economists and housing advocates say there is a common factor behind all this vacant land: a property tax system that combines low taxes on land with high taxes on buildings.
Lawmakers in Detroit, Philadelphia and Richmond, Va., have proposed reforms that would fundamentally change the way property taxes are calculated. When Andrew Yang ran for mayor of New York in 2021, he called for a higher tax on vacant land.
“There can be no doubt that if you shift the tax off of buildings and onto land, you will encourage buildings and discourage land speculation,” said Nicolaus Tideman, a professor of economics at Virginia Tech.
Perhaps shifting tax costs onto land and away from buildings would boost investment. But I would point to two other tax problems. First, many local governments—such as New York’s—are bloated and inefficient, thus requiring excessive taxes overall. Second, most governments impose higher taxes on apartment buildings than single‐family homes, thus tilting investment toward lower‐density housing development.
The Lincoln Institute of Land Policy publishes a comparison of effective property tax rates by property type in the largest city in each state. Across the cities, the institute finds that the effective property tax rate on apartment buildings is 36 percent higher, on average, than the rate on owner‐occupied residences (p. 40). New York City has one of the largest gaps between its high taxes on apartments and lower taxes on owner‐occupied residences.
I’m not an expert on urban issues, but I think we want lean local governments funded by uniform property tax rates on all residential, commercial, and industrial real property. There should be no carve‐outs for particular industries or companies, and the single tax rate kept as low as possible."
Friday, November 25, 2022
Proposals for a Windfall Profits Tax Are Damaging Even if Never Enacted
"In the wake of the midterm election results, President Biden has made it clear that “I’m not going to change,” in particular with respect to his view that “the oil companies are really doing the nation a real disservice.”
Accordingly, it is easy to predict a continuation of the incoherence of the Biden stance toward conventional energy: a policy environment reducing investment in future discovery, production, and ancillary capital assets (e.g., pipelines), on “net-zero” climate grounds, combined with a desperate pursuit of increased production and lower prices in the here and now, on political grounds. Biden repeatedly has demanded that the fossil fuel producers cut their prices, and has threatened to seek to impose a “windfall profits” tax on them should prices remain high.
Put aside the observation that the earlier Biden argument was that high energy prices are the fault of Vladimir Putin, and that, therefore, the fossil fuel producers are engaged in “war profiteering.” Now that the midterm elections are past, with an overall outcome vastly more favorable to Biden and his political allies than commonly predicted beforehand, it is not difficult to predict that the priority of lower prices in the short term will decline relative to that of the administration’s climate obsessions.
Which brings us to the threat to seek a “windfall profits” tax on the fossil fuel producers. It has disappeared from the news reports, largely because of a widespread (and correct) perception that it would never pass Congress, and that, therefore, it is irrelevant.
Not so fast. Because “profits” in Beltway-speak are an accounting artifact — they have little to do with “profits” (that is, returns to investment) as defined in a rigorous economic sense — a windfall “profits” tax in reality would take the form of an excise tax on crude oil, natural gas, and other fossil fuels the prices of which are deemed by Beltway politicians to reflect some sort of “windfall.” That was the reality for the “windfall profits” tax enacted during the Carter administration, which was an excise tax of up to 70 percent of the difference between market prices and a lower price specified in the law. By the time it was repealed in 1987, revenues from that tax totaled about $80 billion in then-year dollars, or roughly $185 billion in year 2021 dollars.
That the threat of a “windfall profits” tax was seen as a political winner by the Biden administration, even given the near-zero prospect that it actually would be enacted under current political conditions, reflects the larger reality that the prospects for such a tax at some unknown future time are not trivial, in particular given that just such a tax was enacted and maintained for years within living memory. Can anyone fail to see that the more such a tax is threatened the greater the disincentive to make investments in the here and now?
Notice also that no one advocates a “windfall losses” subsidy for fossil fuel producers when “profits” (or prices)are low due to market conditions. (The common argument that fossil fuel producers receive large subsidies is a lot of hooey, in particular in contrast with unconventional energy.) The threat of “windfall profits” taxes combined with the absence of proposals for “windfall losses” subsidies means that expectationally there is a reduction in upside price potential for the fossil fuel producers, but no corresponding reduction in downside price risks. In other words, the entire statistical distribution of expected net prices — returns to investment — shifts downward.
The net effect is a decline in investment and therefore a decline in future production, with a corresponding increase in future prices. Because existing reserves can be produced during the current time period or a future one, an increase in expected future prices creates an incentive to produce less currently in anticipation of higher prices later, thus increasing prices immediately, so that the expected price path rises at the market rate of interest.
And so we arrive at a conclusion subtle but obvious: The threat to seek a “windfall profits” tax on fossil fuel producers is damaging in terms of future energy availability, and therefore prices both current and prospective. Aggregate production from existing oil and gas wells declines at roughly 6 percent per year; continuing investment is needed to preserve the supply of conventional energy. That energy, by the way, is a form of national wealth; once produced, that wealth is shared among investors, workers, landowners, and governments in rough proportion to competitive market evaluations of their respective contributions to productivity.
Many Beltway policymakers — in particular those with constituencies benefiting from the production of the national wealth embodied in fossil fuels — understand this reality, even if only instinctively. Such proposals as the windfall profits tax are purely punitive, and because they have the effect of reducing national wealth and the size of the aggregate economy, the punishment will not be limited to the producers of fossil fuels."
Fiscal Crises in American Cities
By Vance Ginn. Excerpts:
"Many cities across the nation are facing a fiscal crisis. While pandemic-related problems that were self-induced or otherwise play a part, many of these issues have plagued cities for a long time. A serious cultural shift concerning finances among local governments is critical if people want to flourish in cities.
I recently interviewed Mark Moses who is a municipal government expert and author of the recently published book The Municipal Financial Crisis: A Framework for Understanding and Fixing Government Budgeting. He contends that “many local governments are on track for bankruptcy.” And this downward trajectory can be expected to continue as municipalities fail to restrain their spending and overreach, crowding out opportunities for the private sector to work.
We’re seeing this play out in places like New York City, where city-funded expenses have been asked to be cut by 3% and on track to be slashed more in response to their recently reported $10 billion deficit.
Moses says that “there’s a lack of economic understanding in lots of municipalities.” This absence of understanding often results in collecting more taxes to fund more “solutions” as a band-aid to the broken system and struggling local finances. As he puts it, “local governments give up trying to balance budget sheets.”
But failing to assess and address the tangled economic approach that’s led them to a place where more taxes and regulations seem like the only answer leads to long-term issues and a path that’s difficult to leave.
Local governments must limit their scope and focus on core issues. That means letting new initiatives and departments take a back seat while they get spending under control.
This is difficult, however, especially after the 2021 American Rescue Plan Act that gave $45.6 billion to municipalities, which temporarily and artificially inflated local finances. More money under lousy management is a weak fix. And now, with rising inflation and energy costs, these municipalities are ill-equipped to thrive in a recession that wasn’t helped by the huge bailout package.
A good start to overcoming these challenges would be to get government out of the way in most cases so that the the private sector can solve key issues, which has proven to be the best antidote for most problems throughout history.
Overinflating their role instead of sticking to limited governing, such as property rights and a few public goods, is a trap that many cities fall into and that comes at a huge cost. But philanthropic and other private-led solutions tend to be crowded out through higher taxes and regulations when city hall makes promises they can’t fulfill.
Moses describes this as municipalities “seeing themselves as an end to themselves,” which is why many local governments resist spending limits or find ways around them.
This is an ongoing issue in Texas which is contributing to an affordability crisis.
Texas is blessed to have constitutional amendments against state-controlled personal income taxes or property taxes, so all property taxes are local in Texas. While there have been attempts recently by the state to limit their growth, property taxes have increased by 169% in the past 20 years compared with an increase of 104% in the rate of population growth plus inflation. This indicates that property taxes are growing well above the average taxpayer’s ability to pay for them.
Some argue that Texas has high property taxes because it has no personal income taxes. But the reality is that it is really from excessive local government spending.
For example, Texas has the 6th most burdensome residential property tax according to the Tax Foundation but other states without a personal income tax like Florida and Tennessee rank 26th and 36th, respectively. This is because the latter two states do a better job restraining spending.
The best way to get budgets and taxes back on a fiscally conservative track is through a strict spending limit that covers the entire budget and grows no more than the rate of population growth plus inflation. This would help cities, and all local governments, stick to just addressing what’s in their purview.
A city’s scope shouldn’t be evaluated from one council meeting to the next but should be assessed in the long term if its local government hopes to see future success and a prosperous economy.
The same principles of economic success apply to all government institutions; people flourish where liberty is preserved, and that’s best achieved under limited government whereby politicians’ interventions remain inside their limited scope so that free markets and free people can innovate and thrive.
Just as we’re witnessing with this recession, there’s always a trade-off to overspending and unbalanced budgets. The sooner local governments realize that and reel in their spending, which is the ultimate burden of government, the sooner financial crises will be averted."
Wednesday, November 23, 2022
The Pilgrims’ Real Thanksgiving Lesson
By Benjamin Powell of Texas Tech University.
"Feast and football. That’s what many of us think about at Thanksgiving. Most people identify the origin of the holiday with the Pilgrims’ first bountiful harvest. But few understand how the Pilgrims actually solved their chronic food shortages.
Many people believe that after suffering through a severe winter, the Pilgrims’ food shortages were resolved the following spring when the Native Americans taught them to plant corn and a Thanksgiving celebration resulted. In fact, the pilgrims continued to face chronic food shortages for three years until the harvest of 1623. Bad weather or lack of farming knowledge did not cause the pilgrims’ shortages. Bad economic incentives did.
In 1620 Plymouth Plantation was founded with a system of communal property rights. Food and supplies were held in common and then distributed based on “equality” and “need” as determined by Plantation officials. People received the same rations whether or not they contributed to producing the food, and residents were forbidden from producing their own food. Governor William Bradford, in his 1647 history, Of Plymouth Plantation, wrote that this system “was found to breed much confusion and discontent and retard much employment that would have been to their benefit and comfort.” The problem was that “young men, that were most able and fit for labour, did repine that they should spend their time and strength to work for other men’s wives and children without any recompense.” Because of the poor incentives, little food was produced.
Faced with potential starvation in the spring of 1623, the colony decided to implement a new economic system. Every family was assigned a private parcel of land. They could then keep all they grew for themselves, but now they alone were responsible for feeding themselves. While not a complete private property system, the move away from communal ownership had dramatic results.
This change, Bradford wrote, “had very good success, for it made all hands very industrious, so as much more corn was planted than otherwise would have been.” Giving people economic incentives changed their behavior. Once the new system of property rights was in place, “the women now went willingly into the field, and took their little ones with them to set corn; which before would allege weakness and inability.”
Once the Pilgrims in the Plymouth Plantation abandoned their communal economic system and adopted one with greater individual property rights, they never again faced the starvation and food shortages of the first three years. It was only after allowing greater property rights that they could feast without worrying that famine was just around the corner.
We are direct beneficiaries of the economics lesson the Pilgrims learned in 1623. Today we have a much better developed and well-defined set of property rights. Our economic system offers incentives for us—in the form of prices and profits—to coordinate our individual behavior for the mutual benefit of all; even those we may not personally know.
It is customary in many families to “give thanks to the hands that prepared this feast” during the Thanksgiving dinner blessing. Perhaps we should also be thankful for the millions of other hands that helped get the dinner to the table: the grocer who sold us the turkey, the truck driver who delivered it to the store, and the farmer who raised it all contributed to our Thanksgiving dinner because our economic system rewards them. That’s the real lesson of Thanksgiving. The economic incentives provided by private competitive markets where people are left free to make their own choices make bountiful feasts possible."
The Latest Green Energy Flaws and Failures
By Jane Shaw Stroup of The Liberty and Ecology Blog.
"In the news:
- Big British solar company goes bankrupt. Owns 53 solar farms; borrowed £655 million over the past four years.—ZeroHedge on Oil Price. [Britain is not a very sunny place.]
- “Skyrocketing fossil fuel energy prices are driving the deforestation of Europe as citizens try to keep warm.” —Pierre L. Gosselin on NoTricksZone.
- Biden won’t re-open a Virgin Islands oil refinery, one of the largest in the world, because it lacks a PSD (Prevention of Significant Deterioration) permit required by the Clean Air Act. —Eric Lendrum on ClimateChangeDispatch. [Do they have such a rule in Saudi Arabia or Venezuela?]
- “Electric vehicles and gas-powered pickups are the least reliable vehicles sold in America, whereas hybrids and gas-powered sedans are the most reliable, according to Consumer Reports 2022 Annual Auto Reliability survey.”—Pras Subramanian in Yahoo!Finance.
. . . Meanwhile, “[T]he 270 gigawatts of new coal-fired capacity China plans to build in the coming years would vastly exceed the entire fleets of the biggest other coal-using countries.”—David Blackmon, Forbes"
Tuesday, November 22, 2022
Negative Externalities, ESG and Democracy
"Al Gore and David Blood’s op-ed “ESG Investing Is Consistent with Fiduciary Duty” (Nov. 9) includes two examples that highlight the best way to handle externalities, the economic term for costs imposed on others.
According to these examples, dumping toxic waste and using dirty fuels can incur “significant liabilities” or run afoul of government regulations. Indeed, the people, represented by the executive or legislative branch of government, should set the standards, laws and rules regarding at least the “E” for environment in ESG. CEOs must then abide by these directives and be held liable if they don’t. We shouldn’t empower CEOs or investment managers, however, to set priorities, goals and trade-offs for issues that affect us all. That’s the job of our elected officials.
Prof. S. Abraham Ravid
Yeshiva University
New York"
The Flawed EPA Theory That Won’t Go Away
The claim that particulate matter kills, parroted by the Lancet, was never credible
"The Lancet response (Letters, Nov. 12) to Bjorn Lomborg’s op-ed (Nov. 5) states, “A zero-carbon future brings many health benefits. Our conservative estimates suggest 1.2 million deaths annually could be prevented with no exposure to fossil-fuel-derived small-particulate-matter air pollution.” I conservatively call that claim false.
“Small-particulate-matter air pollution” wasn’t thought to kill anyone until the Clinton Environmental Protection Agency and the researchers it funds started claiming it did in the 1990s to advance the EPA’s regulatory agenda. I first criticized the claim on these pages 25 years ago. Although a more thorough debunking is beyond the scope of this letter, panels of outside and independent science advisers to the Clinton- and Trump-era EPAs criticized the claim as without scientific evidence in 1996 and 2019, respectively.
When the Biden administration came to town, though, the Trump-era advisory panel was unceremoniously fired, by email, so that the Biden EPA could establish a new panel of advisers more friendly to its policy agenda. That panel is now the subject of litigation because it has been stacked with researchers beholden to the EPA for tens of millions of dollars in grants.
The EPA’s claim that particulate matter kills, parroted by the Lancet, was never credible. Rigging the peer review hasn’t helped.
Steve Milloy
JunkScience.com
Potomac, Md."
Why Are H-1B Visas Apportioned by Lottery?
We’re bringing in less productive people than we could
"I was surprised to see that the H-1B debate (“Should the U.S. Expand the H-1B Visa Program?” Journal Report, Nov. 9) didn’t address the key element of the program driving the controversy: the lottery we use to select winners. Awarding visas more selectively will improve the caliber of workers in the program, even if caps aren’t raised.
In the spring of this year, employers filed 484,000 petitions for a mere 85,000 H-1Bs. The lottery has no mechanism to award those visas to the most promising candidates. A Ph.D. with a six-figure offer has effectively the same odds of entry as an entry-level worker.
This means we’re bringing in less productive people than we could, and it causes massive uncertainty for employers who can’t reliably hire needed talent and must buy expensive lottery tickets instead. The result has been the increased use of the program by lower-paying outsourcing companies.
Replacing the lottery with a points system or salary-based ranking should unite H-1B skeptics and advocates. If one thinks the H-1B is a source of cheap labor to undercut natives, awarding visas to the most productive applicants should end abuse overnight. If one thinks a few sensationalist stories are unfairly giving a good program a bad name, then ending the lottery will improve the visa’s reputation and value.
Jeremy Neufeld
Institute for Progress
Washington"
Monday, November 21, 2022
When a Union Busts a Union
By Michael Saltsman and Charlyce Bozzello.
"The Service Employees International Union likes to say that “union busting is disgusting”—but that same union is allegedly union-busting in its negotiations with its own staff.
SEIU Local 2015, one of the union’s largest chapters in California, represents more than 400,000 healthcare workers. The local has been in a contract battle with its staff, represented by Chapter 15 of the Pacific Northwest Staff Union since 2021. The staff is mainly concerned about wage scales and healthcare costs.
After making little progress in negotiations, 95% of the staff voted to authorize a strike this past October. Apparently that threat wasn’t enough, and the staff went on strike on Nov. 1, marching in picket lines in Los Angeles and Sacramento. The strike ended on Sunday, with a public statement that declared a “culture of toxicity” at Local 2015.
According to Local 2015 organizer Alex Sanchez, SEIU management tried to intimidate workers on the picket line, becoming antagonistic. Far from showing union solidarity with its unionized staff, the SEIU apparently took union-busting a bit too literally. The SEIU’s human-resources manager had a hit-and-run charge filed against her after she was seen driving her pickup truck into Mr. Sanchez on the picket line. According to Mr. Sanchez, other vehicles driven by SEIU management have “aggressively crept” through the throng of picketers.
There also are allegations that SEIU managers recorded the protest, a potential violation under the National Labor Relations Act. An email from SEIU management to staff was seen as an attempt to get workers to become scabs, crossing the picket line. The union also listed several job postings on UnionJobs.com, which was interpreted by the striking staff as an attempt to replace them.
According to PNWSU, this union staff strike is one of the largest in history, spreading down California from Oakland to San Bernardino.
But it’s not the first time the SEIU has faced criticism from its own staff. In 2019 staff at the union’s Washington headquarters accused the SEIU of union-busting behavior. According to staffers, the SEIU had been outsourcing union jobs, eliminating work for staff members and misclassifying employees. Staff even hung a banner outside the union headquarters that said “Stop Union Busting.” Staff members represented by Office and Professional Employees International Union Local 2 begged union managers to “practice what they preach.”
Apparently, the lesson didn’t sink in. SEIU management claims it is “committed to bargaining in good faith” and listening to workers’ concerns. But the union has been quick to call out private companies, including the coffee giant Starbucks, that participate in similar back-and-forth negotiations. Union-friendly baristas regularly take to Twitter to criticize Starbucks management for milder tactics than those the union’s own management has engaged in.
Labor unions are employers too. And they don’t mind flipping the script when it’s their own staff at the bargaining table."
A Covid Emergency Surprise
The Senate votes to end the justification for student-loan cancellations
"Politics is full of surprises, even some pleasant ones. On Tuesday 62 Senators, including 12 Democrats, voted to end the Covid national emergency declaration that the Biden Administration is using to justify its student loan write-off.
President Biden declared the pandemic “over” two months ago, but he has yet to lift the national emergency that Donald Trump declared on March 13, 2020. Why not? Probably because his Administration claims the 2003 Heroes Act allows the Education Secretary to waive any financial student aid provision during a national emergency, including the requirement to repay debt.
Continuing the national emergency serves no vital public-health purpose, which may be why 12 Democrats voted for Kansas GOP Sen. Roger Marshall’s resolution terminating it. Seven face re-election in 2024, including Tim Kaine (Va.), Amy Klobuchar (Minn.), Joe Manchin (W. Va.), Chris Murphy (Conn.), Kyrsten Sinema (Ariz.), Jon Tester (Mont.), and Jacky Rosen (Nev.).
Most surprising, Majority Leader Chuck Schumer joined the emergency terminators. Maybe now that he’s won re-election he feels liberated to risk the wrath of Rep. Alexandria Ocasio-Cortez. More likely, he wanted to give cover to Democrats in his caucus who are trying to demonstrate independence from the President. They can’t bet their re-elections on Republicans nominating awful challengers again in 2024, though no doubt many Republicans will try.
The Administration is trying to block consideration of the resolution in the House by threatening a veto. “While COVID-19 is no longer the disruptive threat that it once was and we have made tremendous progress in combating the virus, the virus continues to pose a risk to the American people and our health care system,” the Administration stated. By that justification, the emergency could last forever.
The national emergency is distinct from the public-health emergency, which provides flexibility for healthcare providers and Medicare. Under a March 2020 law, the public-health emergency also increases Medicaid reimbursements to states on condition they don’t kick people off their rolls and limits work requirements for food-stamp recipients.
Last week the Health and Human Services Department indicated it will extend the public-health emergency at least through mid-April. Ending it will be a priority for House Republicans when they return in January assuming they win the majority.
Still, it’s notable that a dozen Senate Democrats repudiated the Biden Administration’s legal justification for its student-loan cancellation. That executive diktat has already suffered two legal setbacks in a week, and the Senate vote won’t make the Administration’s defense in court more persuasive."