A Politician Speaks the Unspeakable

Germany’s Friedrich Merz says the current welfare state isn’t affordable

WSJ editorial. Excerpts:

"Friedrich Merz, the German Chancellor, said at a Christian Democratic Union conference on Saturday that “the welfare state that we have today can no longer be financed with what we produce in the economy.”"

"Nations have built welfare and entitlement states that are so large they have outstripped the ability of slow-growing economies to pay for them. Yet because the entitlement cushion is so broad and reaches deep into the middle class, it has become nearly impossible to reform." 

Expanding Medicaid Hasn’t Improved U.S. Healthcare

The coverage isn’t great, most enrollees don’t need it anyway, and they can easily re-enroll if they do.

By John C. Goodman. Excerpts:

"While it’s true that many people will lose insurance, that doesn’t mean a significant loss of healthcare."

"most of those who will lose coverage are almost certain to be healthy and not in need of medical care."

"Nearly five million of these are able-bodied people without dependents"

"if people who lose coverage later get seriously sick, they can easily re-enroll and get Medicaid to pay their bills retroactively. There’s a three-month look-back period for coverage." 

"The CBO estimates that 7.3 million people on the ObamaCare exchanges will soon be without coverage for two reasons: a Biden-era expansion of enhanced tax credits will expire at the end of the year, and the One Big Beautiful Bill’s increased administrative barriers to enrollment. Those who end up without insurance because of this will almost all be healthy, because they are the most likely to give up in the face of more paperwork. One of the reasons health insurers are announcing an 18% increase in premiums in next year’s exchanges is because they expect healthy people to leave, making the remaining pool sicker and more costly."

"If someone who drops out of ObamaCare gets sick, it isn’t difficult to get back on."

"he can qualify for immediate enrollment if there is a “qualifying event” such as getting married, having a baby or moving to a new ZIP Code."

"all that spending has resulted in very little benefit—including for enrollees."

"Those who had enrolled had less financial stress and were less likely to be depressed, but there was no significant improvement in their physical health."

Powell Flips the Fed’s ‘Framework’

The central bank abandons its 2020 idea that inflation above its target can be useful.

WSJ editorial. Excerpts:

"The Fed at that time adopted what it called “flexible average inflation targeting.” That’s Fed-speak for saying the central bank would tolerate inflation higher than its 2% target for a time to compensate for inflation that was lower than 2% for a period."

"inflation hit 9.1% at its peak in June 2022."

"The Fed said sayonara to this on Friday, returning to plain old “flexible inflation targeting”—with the target being 2% inflation."

"failure of the Fed to acknowledge its role in igniting the pandemic-era inflation that we haven’t fully recovered from."

"One question is why the Fed has an inflation target at all. Congress has given the Fed the duty to maintain stable money, and a 2% target over time means a steady decline in the dollar’s purchasing power."

"Why not a target of zero inflation? The fear at the Fed is that this could sometimes mean the economy falls into deflation. That’s a risk, but based on the historical record it’s a relatively small one."

"The era of quantitative easing, however needed during the panic, was supposed to be temporary. Instead the Fed has maintained its $7 trillion balance sheet and pays interest on reserves to the biggest banks. The Fed would do better to return to its previously more modest place in economic policy." 

Europe Is Losing

European nations have fallen far behind in economic dynamism and military clout. Will the continent that once ruled the world become a bystander to history?

By David Luhnow and Tom Fairless of The WSJ. Excerpts:

"The continent’s economies have been largely stagnant for about 15 years, likely the longest such streak since the Industrial Revolution, according to calculations by Deutsche Bank. Germany’s economy is 1% bigger than it was at the end of 2017, while the U.S. economy has grown 19%."

"Europe’s share of global economic output, measured in current dollars, fell from roughly 33% to 23% between 2005 and 2024, according to World Bank data. Much of that relative decline is due to the rise of China and India (and is less drastic using other measures of output), but the U.S. share of global output held up much better. Europe’s proportion of the global economy is now likely the lowest since the Middle Ages"

"European household wealth has grown by a third as much as Americans’ since 2009. Per capita GDP in the U.S. is now $86,000 a year, versus $56,000 for Germany and $53,000 for the U.K."

"Americans . . . have over 50% more living space on average per person. More than four in five Americans have air conditioners and clothes dryers at home, compared with between one-fifth and one-third of Europeans. Executive assistants in New York City earn around the same as specialist doctors in London."

"The average European is nearly 45 years old, compared with 39 for the average American, and the continent’s working-age population is predicted to fall by nearly 50 million by 2050"

"But Europe’s lack of economic dynamism has deeper roots, too. Taxes and regulations have risen inexorably; the volume of EU regulations has doubled since 2010. Sprawling rules protect old buildings, incumbent firms and aging consumers, limiting the creation of new infrastructure and industries. As Italy’s prime minister Giorgia Meloni puts it, “America innovates, China imitates, Europe regulates.”

Red tape in Britain is so bad that it took electricity firm Scottish Power 12 years to get permits for a high-voltage transmission line across Scotland. A project to build a new tunnel under the Thames river outside London has so far spent $340 million just on planning permits—documents that total 359,000 pages. Games Workshop, a fast-growing gaming company, is facing delays to build a new parking lot on its headquarters because a single bat lives there."

"In Germany, industrial electricity costs three times as much as in the U.S.; in the U.K., four times as much. Britons now consume less electricity per person than the Chinese, and Germany’s overall electricity consumption is lower than it was before the Berlin Wall fell. Yet Germany has banned nuclear energy, and the U.K. has scrapped new offshore oil and gas exploration."

"“In many sectors, Europe is uninvestable,” says Peter Huntsman, the CEO." [of Huntsman Corp., a Texas-based chemicals manufacturer]

"Ten years ago, four European companies ranked in the global top 10 by revenues. Today, the continent’s biggest company by market value, German software firm SAP, ranks 28th. America’s share of global stock market valuations has held steady at 48% since 2000, but the EU’s has fallen from 18% to 10%, and the U.K.’s from 8.3% to 2.6%"

"Mario Draghi, a former top European central banker, proposed a series of such steps in a landmark EU report last year, including pan-European capital, savings and energy markets; a lower regulatory burden on startups" [to "exploit economies of scale and unleash entrepreneurial vigor"]

"National trade unions and industrial lobbies often don’t want competition from neighboring European firms and workers, so they block the completion of Europe’s single market. While the EU has harmonized many regulations, national rules vary when it comes to business and professional licenses, taxes, and environmental and health standards. These frictions make it harder for a German consultant or electrician to work in France, for example, or for an Italian food producer to sell goods in Spain."

"Yet Germany’s roughly $1 trillion sugar rush of new spending won’t change the underlying dynamics of a manufacturing sector struggling with sky-high energy prices, greater competition from China and too much red tape. “You will get some splashy highways, but it’s not the treatment that will fix what’s wrong with the German economy,” said Robin Brooks, an economist at the Brookings Institution."

"the continent has been better at allowing in low-skilled asylum seekers and their families than high-skilled engineers and doctors."

"Tax revenue as a share of economic output is already around 38% in Germany, 43% in Italy and 44% in France, compared with 25% in the U.S."

"Sweden has quietly spurred economic growth by cutting back its welfare state—tightening government spending, revamping the pension system and slashing corporate and personal tax rates. Per capita incomes are now climbing, and the country has seen a burst of entrepreneurship. Sweden even moved ahead of the U.S. in the number of billionaires per capita, thanks to a thriving tech startup scene and a video-game industry"

"Europeans consistently vote for politicians who protect the status quo and expand the welfare state"

"In France . . . government spending is around 57% of GDP, compared with 36% for the U.S." 

About Those “Devastating” Welfare Caseload Reductions

By Matt Weidinger of AEI.

"Newly-elected President Barack Obama famously lectured opposition leaders that “elections have consequences.” That’s never been more apparent than in recent Republican-crafted changes projected to shrink welfare caseloads in the coming years. Democrats vilify the changes as “devastating,” never mentioning they will mostly shrink still-bloated welfare caseloads closer to pre-pandemic levels. And by focusing some of the biggest reductions on illegal aliens and able-bodied adults who may be unwilling to work, the reforms stand a strong chance of earning popular support.

Welfare expanded rapidly during the pandemic, and significant caseload expansions have continued even after it ended. Medicaid and the Children’s Health Insurance Program exploded from a pre-pandemic 71 million recipients to 94 million in March 2023, when pandemic-driven policy expansions started to unwind. While down, current caseloads remain over 78 million, still 10 percent above pre-pandemic levels. Food stamp caseloads similarly spiked, rising sharply from 37 million to over 43 million in the first months of the pandemic. Today’s caseload remains just off that peak and still 14 percent above the pre-pandemic level. 

New reforms are projected to notably reduce both Medicaid and food stamp caseloads, returning them closer to pre-pandemic levels. The biggest reductions are projected to result from expanded work requirements included in Republicans’ One Big Beautiful Bill (OBBB). Work requirements are widely supported by the public and contributed to remarkable results in the past. For example, Republican welfare reforms signed into law by Bill Clinton featured work requirements for welfare checks that contributed to more parents working, poverty falling, and cash welfare caseloads plummeting 85 percent.

The OBBB dusts off that playbook by applying similar “community engagement requirements” to able-bodied adults on Medicaid, expecting them to perform 80 hours of work, education, or community service in at least two months per year. Nondisabled childless adults on Medicaid spend an average of 125 hours per month watching TV or playing video games, so most should have ample time. The Congressional Budget Office estimates this part-time, part-year requirement will save taxpayers $325 billion over the next decade while removing 4.8 million able-bodied adults from the Medicaid rolls. The new law similarly strengthens work requirements for food stamps, saving another $70 billion while reducing that caseload by three million able-bodied adults.

Other recent changes focus on specific groups, such as the Trump administration’s July 10 regulations ending illegal alien access to Head Start and postsecondary education subsidies. Additional changes in the OBBB will end child tax credit payments to households headed solely by illegal aliens.

Medicaid and food stamps were not the only programs that expanded significantly in the pandemic. Several other massive temporary programs and benefit expansions have come and gone, even as Democrats call for reviving them in the future. One fraud-riddled program paid unemployment checks for the first time to 15 million out-of-work independent contractors and self-employed individuals. Another provided unprecedented $600-per-week unemployment supplements to tens of millions, leaving two-thirds better off not working. And child tax credits were temporarily expanded for 39 million households, including those headed by nonworking adults for the first time. One liberal supporter branded that change simply “Goodbye, Clinton welfare reform. Hello, child tax credit.”

Combined, those temporary programs reflect Democrats’ vision for the future of much bigger caseloads and benefit checks, payable even to those who never worked to earn them. That vision of “guaranteed income” suffered a body blow last month, when the New York Times reviewed a rigorous study of guaranteed income checks paid in several states on a trial basis to parents of young children. Liberals have long touted such no-strings-attached welfare as a cure-all, while rarely admitting the trillion-dollar cost of a new nationwide program. Meanwhile, the study “found that years of monthly payments did nothing to boost children’s well-being, a result that defied researchers’ predictions and could weaken the case for income guarantees.” As study author Greg Duncan of the University of California, Irvine, bluntly summarized, “The money did not make a difference.”

It’s no surprise when Democrats who support massive welfare expansions attack Republicans over policies designed to reduce benefit dependence, even just back to former levels. But hardworking taxpayers in both parties often take a very different view. To them, reducing benefit receipt by requiring work by able-bodied adults or ending benefits for illegal aliens makes perfect sense, especially in an era of outsized dependence and fast-growing debt. That suggests Republicans’ caseload-shrinking policies stand a good chance of being embraced by the public, just as past welfare reforms have been."

A Lawsuit Waiting to Happen: The Use of Non-Financial Metrics by the Investment Industry

By Bryce Tingle. He is the N. Murray Edwards Chair in Business Law, University of Calgary.

Click here to read the full study.

• Environmental, Social and Governance (ESG) scores are sold to investment fund managers to assist them in making investment decisions. The scores are generated by a large industry of third-party firms and embedded in ratings, rankings, and indices.
• The various elements in ESG scores stand in contrast to the traditional financial metrics relied upon by previous generations of investors.
• Can investment fund professionals, who manage the wealth of other people, legally rely on ESG data in making their investment decisions? Over 88% of fund managers overseeing US$3.16 trillion of investment funds purport to use these ESG scores, a problem if the scores are inaccurate.
• A decade of careful investigation in dozens of empirical studies has found:
  • ESG funds market themselves as advancing environmental and social objectives, but the ESG ratings those funds depend on are explicitly not about protecting the earth and society from the impact of corporate behaviour, but protecting the corporation from society.
  • Turning the welter of complex criteria into the simplistic ratings sold to investment funds requires judgement calls about what is material for a company or industry, and how to weigh various factors in coming up with a final score.
  • ESG ratings of the same company vary widely from one rating agency to another, demonstrating low validity and suggesting the ratings are not measuring anything real.
  • ESG ratings fail to predict future environmental and social performance, such as the exposure of a company to government fines, labour actions, or pollution violations.
  • ESG ratings of companies do not predict future operating performance or the trajectory of stock prices.
  • ESG ratings do not correlate with reduced investment risk.
  • Corporate disclosure of ESG-favoured information seems, ironically, to be connected to less ethical and more self-interested managerial behaviour.

 

The Fiscal Consequences of Banning Compensation for Organ Donors

By Caleb Petitt of The Independent Institute.

"Could lifting restrictions on organ sales help ease the burden of America’s current fiscal crisis? Surprisingly, allowing kidney donors to get paid for their donation, even through the form of tax benefits, could have a significant impact on federal spending. The federal government pays a significant share of the costs involved in providing dialysis, and nearly half of all patients on dialysis use Medicare.

In 2019, nearly 395,000 Medicare beneficiaries were dialysis recipients who had their treatment covered by fee-for-service (FFS) plans. The average cost per patient for Medicare/Medicaid FFS patients with end-stage renal disease was $98,985 annually. That means that American taxpayers spent about $39 billion on dialysis alone in 2019, making up 4.9 percent of Medicare’s expenditures and roughly 0.9 percent of total federal expenditures in 2019. Dialysis has not been cheap for the American taxpayer.

The only way to get someone off of dialysis is for them to get a kidney transplant. Chronic Kidney Disease (CKD) patients with a successfully transplanted kidney can stop dialysis and begin living a normal life.

Kidneys, however, are in very short supply. There were nearly 90,000 people on the organ transplant waiting list for a kidney as of September 2024, but just over 27,000 kidney transplants were performed in 2023. The average wait time for a kidney transplant is between three to five years. That means nine to 15 hours a week of being reliant on a machine for three to five years for each person on the waitlist, and the average cost to the federal government of $296,955 to $494,925 per patient. Our current system of getting kidneys for people who need them is incredibly costly for patients and taxpayers.

Increasing living kidney donors would help CKD patients and taxpayers. If a patient finds a willing living donor, they can get a transplant within 6 months, assuming the donor’s evaluation shows they can safely donate. Living kidney donations are also more effective at helping the patient, since doctors can run more tests and screen for more potential problems with a living donor compared to a deceased donor.

But finding living donors is very difficult. Of the 27,500 kidney transplants that were performed last year, fewer than 6,500 were from living donors. Of living kidney donors, about 96 percent of the donations are directed to a specified friend or family member. Since family and close friends of someone who needs a kidney are often already willing to see if they are a viable donor, the way to increase living kidney donations is to increase donations from strangers.

Many economists have proposed a free market for organs to increase their availability, but such proposals are frequently dismissed as being radical, unrealistic, or unethical. Fortunately, such a dramatic step is not the only way to improve our current system.

In 2024, the bipartisan End Kidney Deaths Act was introduced to Congress, and the bill was reintroduced this year. If passed, it would grant a fully refundable $50,000 tax credit to undirected living kidney donors (meaning that the recipient is not specified) in 5 annual $10,000 increments, which could go a long way in encouraging living kidney donations. As long as the average wait time for a kidney fell by just six months, the program would pay for itself.

Medicare and Medicaid made up 20 percent of federal expenditures last year, and it is nearly impossible to cut funding for those programs. If the federal government is trying to improve its fiscal health, and it desperately needs to, it needs to look for ways to make those programs run more efficiently. Allowing for financial compensation for living organ donations, especially kidneys, would improve the lives of people on dialysis and improve America’s fiscal health."

Chinese Gaming Regulations Largely Failed to Achieve Their Goals

By Jeffrey Miron of Cato.

"In 2019, Chinese authorities restricted minors to 90 minutes of video games on weekdays and 3 hours on weekends, while also banning gaming between 10:00 p.m. and 8:00 a.m. Authorities further tightened regulations in 2021, permitting play only from 8:00 p.m. to 9:00 p.m. on Fridays, Saturdays, and Sundays. While these policies might be well-intentioned (seeking to reduce addiction and improve public health) and have received widespread parental support, their practical impact tells a different story.

The public health effects of the regulations remain unclear. Although official sources claimed reductions in addiction, improved sleep, and less myopia, independent evidence is lacking. This study found no causal link between playtime regulations and improved health outcomes, as well as a 14 percent higher chance for gamers to play heavily during any given week. Additionally, minors circumvented the regulations: a survey revealed that 77 percent of minors used other people’s identities, such as that of a parent or older friend, when registering for game accounts. Others switched to alternative digital platforms. Notably, 59 percent of teen gamers simply turned to Douyin (China’s version of TikTok), which only regulated users under 14 as compared to the under-18 limits for video games.

The economic consequences of these policies have also been severe. China’s gaming market, the largest in the world, relies mainly on two firms: Tencent (~50 percent market share) and NetEase (~17 percent market share). Following regulation modifications in 2021, Tencent’s stock dropped by over 8 percent while NetEase’s stock dropped by ~11 percent. The mere proposal of further regulations in December 2023 tanked Tencent’s stock by 12.3 [ercent and erased ~$100 billion from the Chinese gaming market. Economic damages also spilled over globally, with companies like Prosus and Ubisoft experiencing stock declines.

Finally, and predictably, a black market for game accounts formed. Sellers offered unregulated accounts to minors, often at inflated prices. One documented case from December 2021 reported that scammers tricked nearly 3,000 minors out of more than ¥86,000 (about $18,500 at the time).

In summary, the strict gaming regulations that the Chinese government imposed largely failed to achieve their intended goals. Little evidence shows that public health improved, and the regulations caused significant economic damage to both game developers and gamers. More broadly, these policies illustrate recurring features of consumption regulations: they restrict individual choice, typically prove ineffective, and when excessively strict, encourage evasion and black markets, with the standard unintended consequences.

Cross-posted from Substack. Eric Jin, a student at Southridge School, co-wrote this post."

Why Americans Should Fear Washington in Intel’s Boardroom

Turning Intel into a government partner undermines competition and national prosperity.

By Vance Ginn. Excerpts:

"But once government crosses the line into equity ownership, the game changes. It’s no longer about setting fair rules of the road—it’s about Washington joining the race as a participant. That undermines competition, politicizes corporate decisions, and exposes taxpayers to risks they never agreed to take."

"Every dollar the government spends buying shares is a dollar it cannot use to reduce taxes, retire debt, or provide genuinely public goods. 

The resources are scarce, and putting them into Intel stock means less available for other, possibly more valuable, uses. Economists from Adam Smith to Milton Friedman have warned that when governments redirect capital for political reasons, the result is misallocation."

"Private investors demand efficiency because their money is on the line. Government officials, by contrast, make decisions based on politics. If Intel falters, will Washington push for restructuring and accountability—or will politicians double down to save face? History suggests the latter. 

From Amtrak to Solyndra, government ownership often locks in inefficiency rather than driving improvement."

"Once government owns part of a firm, special interests swarm. Lobbyists push for favorable regulation, subsidies, and procurement contracts that tilt the playing field. This breeds cronyism—where success depends on political access instead of innovation. 

Thomas Sowell put it plainly: “The first lesson of economics is scarcity. The first lesson of politics is to disregard the first lesson of economics.”"

"This kind of industrial policy is not new. Japan’s Ministry of International Trade and Industry (MITI) famously tried to steer the country’s industries in the 1980s, funneling state resources to “strategic sectors.” Yet the results were mixed at best. Japanese chipmakers, once dominant, fell behind precisely because competition gave way to cozy relationships with bureaucrats.

Closer to home, the federal government nationalized passenger rail with Amtrak in 1971, promising efficiency and profitability. Fifty years later, Amtrak still relies on billions in subsidies and remains unable to compete with private alternatives where they exist. 

Similarly, the 2009 federal bailout of GM and Chrysler made taxpayers temporary shareholders. The firms survived, but at the cost of distorting the bankruptcy process and politicizing capital allocation."

"Conservatives long criticized Democrats for pursuing industrial policy through the CHIPS and Science Act. Yet now, under Republican leadership, we see the same tactics—only bigger. 

If the right normalizes government equity stakes in the name of security, they will have no credibility left to oppose similar measures when the left expands them to other industries."

David Splinter on how much tax billionaires pay

From Marginal Revolution. 

"Here is his comment on the paper presented here:

Summary: The U.S. tax system is highly progressive. Effective tax rates increase from 2% for the bottom quintile of income to 45% for the top hundredth of one percent. But rates may be lower among those with the highest wealth. This comment starts with the “top 400” tax rate estimates by wealth in Balkir, Saez, Yagan, and Zucman (2025, BSYZ), and adjusts these to account for Forbes family wealth being spread across multiple tax returns, to avoid double-counting capital income, to include missing taxes, and to apply standard tax and income definitions. This results in “top 400” effective tax rates exceeding overall tax rates by 13 percentage points. Still, the “top 400” tax rate is lower than for the top hundredth of one percent, suggesting a modest decline in effective tax rates at the very top when ranking by wealth. However, this is an unsurprising deviation from progressive rates because the tax system targets income, not wealth. Compared to the annual estimates in BSYZ, longer-run estimates are more appropriate for top wealth groups, which have volatile wealth and concentrate charitable giving into end-of-life bequests. End-of-life giving suggests long-run top 400 effective tax-and-giving rates could exceed 75%.

The full link."

New Studies Explain Why Housing Is So Expensive And Why It Is So Hard To Make It Cheaper

ByAdam A. Millsap. Excerpts:

"the cost-price relationship has weakened over time. This suggests that something besides building costs is having a growing impact on housing prices."

"one such factor could be regulations that prevent additional supply in high-demand areas."

"giving people $100,000 towards the purchase of a house raises prices and worsens affordability when supply is unable to respond to the additional demand the subsidy creates."

"the subsidy increases rents, too, since some wealthier people who are indifferent between renting and buying at the higher price enter the rental market and bid up rents. The result is that most people end up worse off."

"only policies that raise supply (or decrease demand) will make housing more affordable."

"Adding supply to the bottom of the market generates better results than the $100,000 subsidy and makes lower-quality housing more affordable, but the best policy according to the model is adding supply to the top. Adding supply to the more expensive end of the market reduces rents and prices across the entire housing-quality distribution. This may seem counterintuitive, but it makes sense. When more expensive housing is added to the market, wealthier people no longer compete with middle- and lower-income people for lower-quality housing. This decrease in demand for housing in the middle and lower end of the market leads to lower prices." 

Renowned climatologist Dr. Judith Curry says it is very tough to make the case of warming becoming dangerous

See INTERVIEW. Dr. Judith Curry on Global Warming: Where Is the Danger? by Hannes Sarv.

"“People used to call the warm periods the optimums, the climate optimums, because ecosystems and people thrived in these warmer climate optimums,” says Dr. Judith Curry, professor emeritus at the Georgia Institute of Technology. “We talk about two degrees of warming, things like that, but the part that they don't tell you is that the baseline is the period between 1850 and 1900. Since that period, we've already seen 1.3 degrees of warming,” she says. And each of us can see for ourselves if human life on planet Earth has gotten better or worse during that time, while the population has been increasing along with agricultural productivity. “The lives lost per 100,000 people from weather and climate extremes have dropped by two orders of magnitude. So, you know, we've managed to do quite well during the first 1.3 degrees of warming. So if we were to see another 1.3 degrees of warming, which is the current best estimate from the UN climate negotiators by 2100, is there any reason to think that would be any worse than the first 1.3 degrees of warming?” Curry asks a simple question.

Many widely held beliefs, such as the notion that a climate crisis or global warming is causing more extreme weather, are simply false. The sea level rise is insignificant. “So where is the danger?” Curry asks.

Curry also points out that until we better understand natural climate variability, we can't be very confident about stating how much of the warming is human-caused. According to her we don't have a good enough understanding of a number of issues, e.g. how big is the Sun’s influence on climate, or what is the effect of ocean circulations etc. Therefore the widely used narrative of 97% of scientists agreeing that we are facing a man-made climate crisis is, according to Curry, simply a joke. “Scientists do not agree on the most consequential issues,” she explains.

"The global climate models are very sophisticated models. And they've been very useful to climate scientists for research to try to test various ideas and change parameters and things like that in the models. However, they do not adequately treat natural climate variability, for starters. They do not adequately resolve extreme weather events. So, the things that we're most interested in, how much warming is being caused by humans, we don't know. There's uncertainty by a factor of three in terms of how much warming these different climate models produce. The so-called climate sensitivity to carbon dioxide varies by a factor of three among these different models. This is the most basic parameter, and we don't really understand what it should be. And so climate models produce a range of predictions. If the climate sensitivity is on the low end, then we don't need to worry about it very much. If the climate sensitivity is on the high end, we could be approaching a catastrophe. But as I understand it, the evidence supports it being a climate sensitivity to carbon dioxide on the low end. But these climate models just are not fit for most of the purposes for which they're used."

"There's a worldview that didn't like fossil fuels. They wanted to get rid of fossil fuels, didn't like capitalism. Sort of the early ideas, which are now encapsulated in the World Economic Forum, for example. The globalist view that we need non-governmental world control for these big environmental climate, and health problems"

"They're not increasing [extreme weather events]. This is the issue. They're not increasing. Even the most recent IPCC assessment report, the only thing that they found that was a detectable change that was above and beyond natural variability was more heat waves and fewer cold waves. That's the only thing that they found with any kind of confidence. Nothing about floods, nothing about droughts, nothing about hurricanes, nothing about tornadoes, nothing about any of these things. They vary, but it's really within the bounds of natural climate variability." 

"there have been detailed studies in the US looking at long-term data. They see heat waves increasing in the eastern part of the US, but decreasing in the western part of the US. Even though the average temperature is increasing, the extremes aren't increasing in the West. So, you know, none of these things are simple. The US is one of the places where they have long data records that you can look at. But in a lot of places in the world, the data records are pretty sparse or short-term."

"If you look at a short data record, say since 1970, you might find a trend, and then you can say: oh, it must be fossil-fueled warming. But if you go back to the 1950s or the 1930s, you can see the extreme events were even worse."

"Between 1945 and 1976, the temperature was actually decreasing a little bit. So to claim that warming started in 1950 when the fossil fuels picked up, well, it wasn't really warming during that period. There was really a shift around 1976, 1977, and that's when the warming took off. So we're looking at a warming spike that's less than 50 years. But if you look back in the record, especially the paleoclimate record, far enough back, you don't have good resolution. It's maybe 300 or 500 years. So if there was some sort of spike, 2,000 years ago or 3,000 years ago, like this, we wouldn't know it because we can't resolve it from the paleoclimate proxies."

"In the first part of the 20th century, say from about 1905 to 1945, you saw a rate of change, 40 years, that was comparable in rate to this warming since the 1970s. And that had almost nothing to do with CO₂ emissions. It was mostly the Sun and large-scale ocean circulations, and a lack of volcanic eruptions."

"The other game that they played was to use this extreme emissions scenario to force these climate models with a huge amount of CO₂ to get a huge amount of warming. And the UN climate negotiators have now dropped the extreme emissions scenario, saying it's not plausible. You'd have to increase coal burning by 600%, these kinds of scenarios. And so they've dropped the extreme emission scenario" 

Powell Plans U-Turn on an Economic Strategy That Soured

The Fed unveiled a strategy five years ago for worries that the economy outgrew. Now, it will formally reset.

By Nick Timiraos of The WSJ. Excerpts:

"The 2020 changes involved two main shifts. First, the Fed said it would allow inflation to run modestly above its 2% target for periods to make up for times when it had fallen short. Second, officials said they would focus only on the unemployment rate being too high, rather than also worrying about the rate being too low, removing some urgency to pre-emptively raise rates and prevent the economy from running too hot."

"But when inflation took off in 2021, the Fed’s commitments to maintain low rates to spur a faster labor-market recovery put officials in a bind. Economic conditions could have reasonably called for rate increases later that year, but the central bank didn’t begin raising rates until March 2022.

By that point, inflation had reached levels not seen in four decades. The “raging inferno,” as one Fed official put it that year, was nothing like the modest overshoot of the inflation target the central bank had in mind.

The delay has sparked a debate among economists about what went wrong. In a detailed study last year, economists Christina Romer and David Romer at the University of California, Berkeley, argued that the 2020 framework itself was a reason the Fed acted so slowly. They concluded that officials became too focused on getting unemployment as low as possible.

“Arguably, this asymmetry contributed to a delayed response to the inflation surge of 2021-22,” said Donald Kohn, a former Fed vice chair, at a conference last year." 

Others "fault significant forecast errors made by the Fed and many outside economists in 2021—that inflation would prove so short-lived that the Fed shouldn’t adjust rates in response."

"The Fed misjudged how the U.S. economy’s capacity to produce goods and services had declined, and as a result “it kept in place an exceptionally accommodative monetary policy longer than it would have,” said Richard Clarida, who was Fed vice chair in 2020, in a lecture." 

The Phantom Patients of ObamaCare

Nearly 12 million enrollees don’t bother to use their subsidized insurance. Health insurers get the benefit.

WSJ editorial. Excerpts:

"Democrats in 2021 sweetened subsidies for buying insurance on the ObamaCare exchanges. Enrollment has since doubled while taxpayer costs rose by 150%. Spending on ObamaCare subsidies has increased faster than Medicaid or Medicare since 2020, if you can believe it."

"More than a third of all enrollees generated no medical claims last year, according to Paragon’s analysis. That includes 40% of those in plans that are fully subsidized."

"tens of billions of dollars in subsidies for these 11.7 million enrollees “went to insurers and middlemen without funding a single medical service.” After individuals enroll in plans, the government pays monthly premium subsidies directly to the insurers."

"insurance brokers have been fudging incomes of people in order to enroll them in government-subsidized plans for which they aren’t eligible"

"about 6.4 million people this year were improperly enrolled in exchange plans." 

"1.6 million Americans each month last year were enrolled in both Medicaid and subsidized ObamaCare plans."

"ObamaCare requires them [insurers] to spend at least 80% of premium dollars on medical care."

the "circumvented this by increasing payments to providers, pharmacies and middle-men they own." 

Elon Musk Wants to Give You Money for Nothing

Artificial intelligence is the latest justification for supporting the bad idea of ‘universal basic income.’

By Jason L. Riley. Excerpts:

"It’s often forgotten that in the early days of the country’s “war on poverty,” the general understanding was that you alleviate privation by reducing dependency on the government and creating incentives to become more productive. The goal was “to help our less fortunate citizens to help themselves,” President John F. Kennedy said. “We must find ways of returning far more of our dependent people to independence.”"

"In the 1960s and ’70s, as welfare-state programs proliferated, the number of people receiving public assistance more than doubled."

"Nor do we have any reason to believe that issuing no-strings-attached cash stipends to poor families works as intended. “Significant but indirect evidence has suggested that unconditional cash aid would help children flourish,” the New York Times reported last month. “But now a rigorous experiment, in a more direct test, found that years of monthly payments did nothing to boost children’s well-being, a result that defied researchers’ predictions.”"

"The study, titled “Baby’s First Years,” concluded that after four years of monthly payments of $333, children whose parents received money “fared no better than similar children without that help.”"

"other research involving larger stipends has concluded they can negatively affect work habits. Last year, the National Bureau of Economic Research published a working paper on the employment effects of guaranteed income, which was described as the most comprehensive study of its kind to date. Researchers found that families who received $1,000 monthly payments for three years worked fewer hours."

"“Nearly 7 million men in the prime of life—over a tenth of the 25-to-54 age group—are neither working nor looking for work these days,”" 

End of a Green Delusion

Flummoxed as always, environmentalists may yet get a carbon tax thanks to Trump

By Holman W. Jenkins. Excerpts:

"Though it does nothing for the climate given the shrinking global significance of U.S. emissions, U.S. “net zero” is still a “moral imperative”—never mind that U.S. net zero would be achieved mainly by shifting U.S. emissions overseas."

"veteran of Democratic politics and top Biden official visited our offices in 2022. I launched my usual critique of clean-energy subsidies, and he finished my sentence, adding, “I have to believe that putting a price on carbon” will return to center stage."

"In other words, at the highest levels of the Democratic Party, a climate realist was already drumming his fingers waiting for the green-subsidies preference falsification to pass."

"Richard York of the University of Oregon, no apologist for capitalism or fossil fuels, has also shown why green energy doesn’t displace fossil fuels. French energy historian Jean-Baptiste Fressoz’s previous book decried the anthropocene—i.e., humanity’s effect on the planet. His new best-seller explains the fraudulence of the so-called energy transition."

"Last year the prestigious journal of the American Association for the Advancement of Science should have closed the verdict on this faulty experiment. It found virtually all the world’s climate policies to be failing. Why? They mistook concessionary funding of green energy for cutting emissions."

"In Foreign Affairs, Obama brain-truster Peter Orszag delivers the coup de grace: “Rather than replacing conventional energy sources, the growth of renewables is coming on top of that of conventional sources.”" 

The Nationalization of Intel?

A 10% federal stake in the computer chip maker would be another dive into corporate statism.

WSJ editorial. Excerpts:

"The Biden Administration tried to ride to the rescue last year with up to $8.5 billion in direct grant funding and $11 billion in low-cost loans for Intel from the Chips Act. But as always with government largesse, it came with political strings attached. The Commerce Department press release touted in great detail Intel’s plans to expand child care for its workers. Scant mention of its plans to improve manufacturing.

Most of Intel’s award hasn’t been disbursed because the company has slowed its expansion plans amid weak demand for its chips. Biden Commerce Secretary Gina Raimondo tried to drum up demand from tech companies but found few takers."

"Intel ran a $18.8 billion loss last year and $3.8 billion during the first six months of this year."

"The company cut 15,000 jobs last year and plans to slash more than 20,000 this year."

"the Administration’s conditions for the equity investment may also make it harder for Intel to undertake needed changes to become more competitive. Politicians don’t like to preside over plant closures or employee layoffs. See Renault, the French car maker, for that political lesson."

"See the antiquated air-traffic control system, which Canada has shown could be better managed by a private operator. Or consider Amtrak, which has struggled to end money-losing routes owing to opposition from Members of Congress in rural areas."  

Trump Forces D.C. to Get Real About Homelessness

He’s right to treat it as a problem of mental illness and bad behavior, not one of housing and inequality

By Devon Kurtz. He is director of public safety policy at the Cicero Institute. Excerpts:

"In the largest survey of homeless Americans ever conducted, only 4% cited high housing costs as the primary reason they were homeless. Significant majorities said they had mental-health issues, had used illegal substances and had been to jail or prison for extended periods."

"Almost 3% of America’s homeless population dies on the street each year. Between 2011 and 2020, overdose deaths among homeless people increased by 488%, rising to just under 1% of the homeless population annually."

"horrible violence associated with homeless encampments, in which homeless people often victimize other homeless people."

"homeless people were about a dozen times as likely as average Americans to be victims of serious crimes, but they were hundreds of times as likely to be perpetrators."

"in as many as eight states, more than half the people living on the street are registered sex offenders; nationally, the median is 1 in 5."

"One homeless encampment in Austin, Texas, produced 655 tons of trash in a sprawling underpass tent city."

"a recent systematic review by an interdisciplinary group of researchers found no evidence that shelters in the U.S. have elevated rates of violence compared with the street. Prisons are far safer than the streets, with a mortality rate less than one-tenth that of the homeless population."

"for Americans from high-crime neighborhoods, prison reduces age-adjusted mortality by as much as 57% compared with peers living in the general community."

"providing subsidized housing with no required sobriety or treatment, can actually increase violence"

"the Housing First group had a 50% higher mortality rate than the control group." 

The Defunct Economist Who Shapes Trump’s Trade Policy

Robert Triffin’s ‘dilemma’ didn’t pan out, but it holds sway over some of the president’s key advisers

By Joseph C. Sternberg. Excerpts:

"Clocking the precise relationship between the current-account deficit and foreign demand for dollars is difficult because economists first must try to estimate what the current-account deficit “should” be. This is a perilous econometric procedure vulnerable to bad modeling and dubious data.

Economists nonetheless often conclude the U.S. current-account deficit is larger than theories predict. Yet this mysterious “extra” deficit doesn’t appear to be correlated with periods of more rapid foreign dollar-reserve accumulation. Sometimes foreign governments amass dollar reserves faster while the U.S. trade deficit is narrower. At other times the U.S. trade deficit becomes larger while foreign reserve accumulation of dollars slows."

"Foreign official accumulation of Treasury debt has slowed to a trickle since 2015. During the same period the current-account deficit deepened. Nor is there a global dearth of safe assets that an unwilling Congress must ameliorate by running fiscal deficits against lawmakers’ will (ha!). Holdings of Treasurys in foreign-government reserve funds have fallen for a decade, to around 16% of the total float held outside the Federal Reserve from a peak of about 40% in the aftermath of the 2008 financial panic." 

"The central fact of the global economy is that the U.S. is an engine of productivity growth and attracts investment to match. These capital inflows, which enrich the U.S., also allow America to run trade deficits that it can finance relatively cheaply." 

Trump’s Approach to Antitrust Is as Bad as Biden’s

The president is handing a weapon to trading partners who feel they’ve been bullied into trade deals

By Phil Gramm. Excerpts:

"Progressive Era regulation rose as improved transportation and the growth of nationwide markets allowed economies of scale in production at levels never before achieved. Such efficiency not only increased wages and delivered a cornucopia of increasingly affordable goods and services, it also unleashed a wave of creative destruction as small, inefficient producers were rendered noncompetitive. By attempting to protect noncompetitive producers, Progressive regulation stifled technological change, raised prices and hurt consumers."  

"President Jimmy Carter and Sen. Ted Kennedy led a comprehensive effort to promote American competitiveness by lifting the regulatory burden that Progressive Era regulation had imposed on the economy. The Carter deregulation unleashed competition in transportation and communications while focusing antitrust enforcement solely on consumer welfare. Efficiency improved dramatically, prices fell, and the American economy to this day dominates the world in transportation and technology."

"Unconstrained by any need to show that consumers were being harmed as a condition for antitrust intervention, the government [un der the Biden administration] was given a license to engage in industrial and social policy under the guise of antitrust enforcement." 

"Since Ms. Khan left, things haven’t gotten much better. Chairman Andrew Ferguson’s views on antitrust echo hers."

"Congress never granted the FTC authority to set the nation’s censorship, political, labor, environmental or social-justice policies."

"Europe’s experience with antitrust enforcement and regulation imposed on the tech industry demonstrates the consequences of pursuing antitrust action without focusing on consumer welfare. With around 100 tech laws, enforced by more than 270 regulators, European growth, especially in the tech industries, has lagged. Since 2011 U.S. gross domestic product has grown twice as fast in real terms as the economies of the European Union." 

In France, Sweltering Is a Climate Virtue

Paris wants you to use a fan and limit the AC to a single room

WSJ editorial. Excerpts:

"This summer the French government suggested air conditioning should be used mainly by those “who are very sensitive to heat (elderly people, etc.),” or who can’t open the window at night because it’s too loud outside. The advisory urges the rest of the public to opt for a fan instead, draw the blinds, and limit heat emissions from ovens, computers and game consoles.

The government added that if you must use AC, don’t set it below 78 degrees Fahrenheit, and air condition only one room. While it may be “tempting to set your air conditioning to a very cool temperature to cool down quickly,” the French state said that’s a green faux pas that “results in excess electricity consumption.”"

[France's plans call for] "“intelligent building control systems” that ensure nobody’s setting the temperature lower than authorities want."

 and

"encouraging children to “wet their skin” to cope with the heat"  

 

Mini Weather Stations Are Protecting Companies From Heat Waves, Hurricanes

Businesses are tracking meteorological patterns to prepare for looming threats to their sites and infrastructure

By Clara Hudson of The WSJ. Excerpts:

"Companies are eager to keep track of everything from high winds to icing events, said Sarah Kapnick, global head of climate advisory at JPMorgan, who was previously chief scientist at the National Oceanic and Atmospheric Administration. There’s very specific information businesses want to gather, for example if there’s a microburst that creates a lot of rain in a short period of time in a small location, she said.

“If they want the best data possible, and if they want control over their data, they should make their own,” Kapnick said.

Specific industries have different needs. The agricultural space, for example, needs to know what’s happening at the soil and plant level. Utilities have to be aware of the potential for downed power lines. 

Duke Energy said it has recently been preparing for another hurricane season by expanding “self-healing” technology to automatically detect power outages and reroute power to other lines to restore service “often in less than a minute.” The technology uses sensors, switches, reclosers and other equipment to isolate a problem, whether that’s a tree on a power line or a broken pole."

Trump and the Secrets of College Admissions

His transparency order will make real the Constitution’s ban on affirmative action

By Edward Blum. He is a visiting fellow at the American Enterprise Institute. Excerpts:

"some have adopted opaque scoring systems that appear to use racial proxies—seemingly neutral factors that effectively correlate with race and can be used to achieve the same racial outcomes as explicit preferences."

"Examples include giving extra weight to ZIP Codes or census blocks with heavily minority populations or awarding large boosts for attending certain majority-minority high schools. Other proxies include “neighborhood wealth index” scores and targeted recruitment from racially homogeneous areas."

"Harvard . . . consistently downgraded Asian-American applicants on subjective “personality” ratings while giving large boosts to black and Hispanic applicants with lower academic scores."

You Can’t Break the Laws of Economics

Supply and demand invariably overcome any effort to defy or outsmart them

By Brian Albrecht. Excerpts:

"When Mr. Trump imposed steel and aluminum tariffs in 2018, the University of Chicago surveyed dozens of top economists."

"Not one of them thought that Americans would be better off because of the tariffs."

"Study after study—using customs data, retail prices and scanner data from stores—has found that American businesses and consumers bore virtually 100% of the tariff burden."

"about half of U.S. imports are used as inputs in the production of other goods."

"because of the 2018 tariffs, downstream American industries . . . lost jobs, swamping any gains to aluminum producers."

"After egg prices roughly doubled at the start of this year, Sen. Elizabeth Warren (D., Mass.) urged the Justice Department to investigate price gouging."

"The supply side collapsed when avian flu killed more than 100 million birds. When supply shrinks and consumers aren’t very price-sensitive . . . the price will rise significantly." 

"a high price for eggs is an incentive to do two things: import eggs and rebuild the supply of chickens. The latter can’t happen immediately."

"Economists’ prediction of recovery through imports and restocking has come true, with egg prices"

The Founders Would Be Appalled by Trump’s Tariff Policy—Even Hamilton

Tariffs aren’t just economic tools—they’re a test of America’s constitutional limits.

By Iain Murray of the Competitive Enterprise Institute. Excerpts:

"the founders warned that emergencies provide dangerous pretexts for executive overreach. The Federalist warned in various places that, while powers to deal with crises were necessary, they must be subject to checks and balances like all other executive powers.  So, Congress must control the purse and, alongside the judiciary, guard against executive abuse of emergency power. 

Power of the purse is central to a second aspect the Founders warned about – the Executive must not have the power to tax. That is squarely a Congressional duty to reflect the consent of the governed to taxation (the President, though elected, is more remote from the people.) Nor did the Founders think a tariff was something different from a tax, as some of the President’s supporters maintain. In Federalist 35, for instance, Alexander Hamilton asks what if the power to tax was constrained to import duties (as some anti-federalists were demanding), plainly viewing tariffs as a subset of taxation powers. 

The corollary of this is that the President can have no separate source of revenue from that directed by Congress. In Federalist 58, Madison states clearly, “The House of Representatives cannot only refuse, but they alone can propose the supplies requisite for the support of government.” The idea of a President directing a sovereign wealth fund with monies provided by foreign governments falls manifestly outside this constitutional design. 

Indeed, the Founders were worried about Presidential patronage power in general. They constrained the President’s appointment power with the consent of the Senate and, as Madison said in Federalist 48, “The legislative department alone has access to the pockets of the people,” thereby dissuading “projects of usurpation” by the Executive in this way. 

Congressional silence on the President gaining control over a foreign-funded trillion-dollar fund to dispense patronage would be exactly the sort of thing Madison warned about when he said “a mere demarcation on parchment of the constitutional limits of the several departments, is not a sufficient guard against those encroachments which lead to a tyrannical concentration of all the powers of government in the same hands.” 

A President declaring a “national emergency” over a trade imbalance or overcapacity in foreign markets, leading to his imposing taxes on Americans without Congressional deliberation or scrutiny, and possibly gifting him a massive pool of funds he could use for patronage, is exactly the sort of thing the Constitution was designed to prevent. It violates the separation of powers, eludes democratic accountability, and fits the pattern of emergency overreach our Founders repeatedly warned against throughout the constitutional debates. Even the biggest fan of an energetic executive, Alexander Hamilton, wanted to make sure that most of these powers remained firmly under Congressional control. 

Indeed, Hamilton, supposedly the father figure of American protectionism, made many of the same arguments that free market economists make today about the abuse of tariffs as a revenue source. In the aforementioned Federalist 35, Hamilton says explicitly that “the consumer is the payer,” recognizing that the tax burden falls not on the foreign exporter, but on the American consumer. Indeed, this is why he recognizes that tariffs cannot be the only source of revenue for the federal government, as their burden would fall inequitably on the poor. 

Hamilton recognized the problem of dispersed costs of tariffs — while they may initially seem painless because consumers don’t see the tax obviously, the total cost can become “oppressive.” In other words, tariffs are regressive. They are also therefore self-limiting, deterring imports, and thereby further revenue, when set too high. This provides another reason for the power to tariff to be confined to the legislature, which, as the people’s representative, can quickly respond to economic problems affecting specific sectors.

One final point is worth making about Hamilton. In the “Report on Manufactures,” the ur-text of American protectionism, the tariffs Hamilton proposed were modest by comparison with the President’s proposals, perhaps in consideration of the points he had made during the ratification debates. Indeed, the Report suggests that in many cases subsidies (or “bounties”) were preferable to tariffs as a means of encouraging industries, although Hamilton admits they may become the object of corruption, making it “necessary to guard, with extraordinary circumspection, the manner of dispensing them.” The President’s trade policy goes well beyond any of this. As Samuel Gregg has argued, the Founders wanted America to be a commercial republic. The President’s tariffs and the manner in which they have been used suggest not only a hostility to commercial trade, but to a republic with an executive constrained by co-equal powers. Congress, so far, has failed to guard its privileges. The Courts may not be so quiescent."

Power plant greenhouse gas emissions don’t contribute significantly to ‘dangerous air pollution’

By Daren Bakst & Marlo Lewis, Jr. of CEI. Excerpts:

"No commercial utility-scale natural gas CCS plant exists today. Only one small-scale facility was ever built: Florida Power & Light’s 40-megawatt CCS gas plant in Bellingham, Massachusetts. When the unit closed in 2005, Bellingham had a population of 15,750. A single, small, long-defunct natural gas CCS power plant provides no evidence that a 90-percent carbon capture system is adequately demonstrated for new natural gas power plants serving large metropolitan areas, industrial centers, and new data centers in an era of rising electricity demand."

"the fact that a source category contributes significantly to dangerous air pollution is no guarantee that a specific type of pollutant emitted by the category contributes significantly. In a statute requiring the EPA to take cost into account, it would not be reasonable for the EPA to regulate emissions that do not contribute significantly to dangerous air pollution." 

"It is impossible to judge whether a source category contributes significantly to dangerous air pollution without first analyzing the specific pollutants emitted by the category and their potential effects on dangerous air pollution."

"Pollutant-specific significant contribution findings were the very basis for the EPA’s decisions to list coal and natural gas power plants as CAA § 111 source categories in the first place. In August 1971, the EPA listed coal power plants because of the category’s significant contribution to three types of dangerous air pollution: particulate matter (PM), sulfur dioxide (SO₂), and nitrogen oxides (NO_X) (36 FR 15704). In October 1977, the EPA listed natural gas power plants because of the category’s significant contribution to two types of dangerous air pollution: SO₂ and NO_X (42 FR 53657).

Tellingly, the 1977 rulemaking for natural gas power plants expressly declined to propose new source standards for emissions of hydrocarbons (HC), carbon monoxide (CO), and PM. The EPA explained that, even at peak operating load, gas combustion turbine HC and CO emissions are “relatively low,” and PM emissions from the source category “are minimal” (42 FR 53782, 53783)."

"before the EPA may establish GHG emission standards for fossil fuel power plants, the agency must make the “predicate” finding that GHG emissions from such sources contribute significantly to dangerous air pollution (90 FR 25752, 25754)."

"the Obama EPA found “GHG emissions from domestic fossil fuel-fired EGUs ‘significantly contribute’ to dangerous air pollution based exclusively on the volume of GHG emissions from the source category” (90 FR 25752, 25767).

That was the Obama and Biden EPAs’ supposed “rational basis” and logic for regulating power plant GHG emissions. In fact, it was an arbitrary basis.

A volume threshold comparing domestic power plant GHG emissions to total global emissions does not tell us whether those emissions make any material difference to the “air pollution” or the danger it poses to public health or welfare. Under this volume approach, a significant contribution could be claimed even if the emissions don’t have any detectable effect on the danger level of the air pollution. Given the purpose and language of the Clean Air Act and Section 111(b), which is to protect the public’s health or welfare from dangerous air pollution, not analyzing these effects is unreasonable.

The Proposed Rule rejects “a purely quantitative measure of significance resting on the absolute volume of emissions from a source category.” Ironically, relying solely on a volume threshold would likely work in the favor of the EPA’s current argument that there is no significant contribution. After all, US electric power sector GHG emissions are steadily declining and in 2022 accounted for just three percent of total global emissions. But to its credit, the agency isn’t taking this volume-based approach.

Determining whether there has been a significant contribution requires sufficient reasoning consistent with the requirements of the statute. Section 111(b) expects the Administrator to use his judgment to figure out whether the emissions contribute significantly to dangerous air pollution. This requires assessing the effects the emissions have on air pollution that may reasonably be anticipated to endanger public health or welfare. If the emissions in no way (or in a very small way) affect the danger level from the air pollution, then it would be unreasonable to claim that the emissions contribute significantly to the dangerous air pollution."

"the first link in the chain of endangerment attributed to rising GHG concentration, the first step in determining whether US power plant GHG emissions significantly contribute to that danger is to calculate their effects on global warming.

A recent study by Brent Bennett of the Texas Public Policy Foundation offers a reasonable estimate based on conservative inputs.

• Bennett uses the US government’s standard climate-policy impacts calculator, a model called MAGICC. He runs MAGICC with its mid-range climate sensitivity estimate, namely, that each doubling of atmospheric GHG concentration increases global average surface temperatures by 3.0°C. Note, recent research suggests sensitivity “values between 1.5°C and 2°C are quite plausible.”
• He uses the UN climate panel’s mid-range baseline emission scenario, known as SSP2-4.5. Recent research suggests the world is on a lower emissions path.
• He assumes the US global share of GHG emissions (currently 13 percent) will hold steady through the end of the 21^st century, even though the US share has been declining for the past 25 years.  

Under those assumptions, MAGICC estimates that eliminating all US power plant CO₂ emissions by 2030 would avert 0.015°C of warming by 2050. That is 10.6 times smaller than the National Ocean and Atmospheric Administration’s margin of error (+/-0.08°C) for measuring changes in global average surface temperature.

A temperature effect below margin of error is too small to be detected or verified. The US power sector’s contribution to global warming is, therefore, insignificant.

But if the warming effects of US power sector GHG emissions are undetectably small, even more so are the putative second and third order effects of those emissions. Therefore, US power sector CO₂ emissions do not contribute significantly to dangerous air pollution." 

Mamdani and the False Promise of Rent Control

Rent control promises relief but delivers scarcity, higher costs, and fewer homes

By Sam Jenson & Jonathan Hofer of The Independent Institute. Excerpts:

"In 1994, San Francisco instituted rent control for buildings built before 1979. This rent control referendum ignited an eviction explosion; filings for eviction shot up 83 percent and wrongful eviction claims rose to 125 percent. Landlords were incentivized to evict tenants so they could charge new renters an updated market price; as the markets shifted, rent did not. 

The supply of rental housing in the city fell by 15 percent, and landlords removed their listings from the market or converted them to condos. A 2018 Stanford Business paper found that the city’s rent control expansion led to a 5% increase in city-wide rents. Further research highlights how rent control causes other negative externalities to the city and nearby residents, including reducing amenity values and indirectly raising other costs on nearby markets. 

San Francisco continues to be an example of rent control failing in a populous city; evictions shot up, and a housing shortage has ensued."

"Ireland, and particularly Dublin, has especially felt the consequences of its rent control laws. Empirical research has noted that rental supply in the country worsened after the introduction of rent stabilization in 2016. Ireland has declared that the entire country is a Rent Pressure Zone (RPZ), in which rent cannot be increased by more than 2 percent per year. 

Previously, only certain parts of the country were designated as RPZs, but this designation is national until February 2026. RPZs are not working; since the beginning of 2024, rent in the country has increased by 8.1 percent for new properties and 5.9 percent for existing housing. Landlords in the country know that they will be capped by this two percent rule, so they will continue to charge higher upfront prices to new tenants."

"Construction has stalled, and the nation is facing a yearly shortage of 20,000 units." 

"Buenos Aires is another example. In 2020, the “Lipovetzky Law” was introduced to control rent. Under this law, landlords could only adjust rental prices once a year and began receiving payments in the Argentine Peso, a currency that was rapidly losing value. Inflation in the country rose to 211.4 percent in 2023. 

Landlords increased the cost of rent, leading to an explosion from a monthly average of 18,000 pesos in 2019 to 334,000 pesos by January 2024. At the height of rent control, one in seven homes in Argentina sat empty. In 2022, 200,000 properties sat empty in the capital city. Some landlords completely pulled their properties off the market; the incentive to rent was gone.

When Javier Milei, president of Argentina, took office in 2023, he repealed the Lipovetsky Law and the effects were instantaneous. The number of available rental units increased by 170 percent and the price of rentals dropped 40 percent, compared to early 2023 levels. In Buenos Aires, “the real price of renting fell almost 27 percent in the first seven months after deregulation occurred.”"

"Austin [TX] has streamlined the permitting process, promoted mixed-use development, and upzoned swaths of the city. This influx of new construction has alleviated some of the competitive pressure in the rental market, which was previously driving prices up. Rent prices in Austin have dropped 9% since the city’s two-year high, the best in the nation."

"As Art Carden et al. previously covered, investors are not likely to finance housing projects when rent control is in place; the opportunity cost is too high. As currency inflates, investors earn less on returns. For example, current 12-month treasury yields sit at 3.91 percent. Treasury yields are generally considered low-risk because the US has never officially defaulted on its obligations (the United States government has previously had four episodes of seemingly bad-faith repayments, or at least, evasion of the spirit of the bargain; the Congressional Research Service disputes these instances as actually qualifying as defaults). Housing projects already entail enormous risk for investors, but with rent control, the desirability of pursuing these types of projects diminishes relative to other asset classes."