Pielke’s Problem
I generally admire the work of Roger Pielke Jr., a political scientist in the University of Colorado-Boulder’s Center for Science and Technology Policy Research. His new book on climate change is refreshingly honest and non-ideological, if a bit overly technophilic. His broader work offers the important insight that science alone cannot direct public policy, but rather it can only lay out possible results of different policy choices.
Given the quality of his work, I was disappointed by Pielke’s op-ed in today’s NYT defending Congress’s legislated obsolescence of the incandescent light bulb. He argues that government standard-setting is an important contribution to human welfare, and the light bulb standard is just part of that standard-setting (though he does suggest some minor policy tweaks to allow limited future availability of incandescents).
To justify his argument, Pielke points out the great benefit of government-established standard measures, as well as quality standards:
Indeed, [in the United States of the late 19th century] the lack of standards for everything from weights and measures to electricity — even the gallon, for example, had eight definitions — threatened to overwhelm industry and consumers with a confusing array of incompatible choices.
This wasn’t the case everywhere. Germany’s standards agency, established in 1887, was busy setting rules for everything from the content of dyes to the process for making porcelain; other European countries soon followed suit. Higher-quality products, in turn, helped the growth in Germany’s trade exceed that of the United States in the 1890s.
America finally got its act together in 1894, when Congress standardized the meaning of what are today common scientific measures, including the ohm, the volt, the watt and the henry, in line with international metrics. And, in 1901, the United States became the last major economic power to establish an agency to set technological standards.
Alas, this argument doesn’t support Pielke’s light bulb standard.
Gingrich & Woolsey on Energy
The other day, The Wall Street Journal provided a public service by lambasting Newt Gingrich for his absurd speech to the ethanol lobby in Des Moines last month (money line: ”Obviously big urban newspapers want to kill it because it’s working, and you wonder, ‘What are their values?’”). Today, Gingrich and fellow ethanol-maven James Woolsey struck back in those very same pages. In doing so, Gingrich provided yet more evidence that he’s intellectually unfit for office.
“It is in this country’s long-term best interest,” he said, ”to stop the flow of $1 billion a day overseas.” Really? So money sent overseas is gone forever. News to me. The only thing you can buy with dollars earned from oil sales to the U.S. is to buy things denominated in dollars or to exchange them so that someone else can. And we sell a lot of stuff to foreigners that are denominated in dollars (treasury bills for one) and that money comes right back to the good old U.S. of A.
But put that aside. If Gingrich really believes this, then why not just ban all imports all together? Is that what the GOP is about these days – rank gooberism on trade?
Preparing for Life as a Light Bulb Black Marketeer
I’ve decided the time has come to become an entrepreneur — as a black market operator.
Come next January, 100-watt incandescent light bulbs will be illegal, courtesy of Congress and President George W. Bush. Lower wattages will be banned the following year. As usual, politicians in Washington believe they know best and are determined to inconvenience the public in the name of saving energy.
No matter that incandescent lights offer a softer light and are a better value than fluorescent bulbs if turned on only briefly. And no matter that breaking a fluorescent light will spill mercury, creating what in any other circumstance would be considered to be a biohazard.
There are other consequences of the coming prohibition. Notes Tim Carney of the Washington Examiner:
- Citing this law, GE has closed its incandescent light plant in Virginia. For the coming years, while they’re still legal, Americans will be buying their GE incandescents from Mexico. This probably means less efficient manufacturing and more shipping.
- GE makes its CFLs in China. The factories are likely dirtier and less efficient, and certainly there will be more shipping costs.
- Because of the warm-up time for CFLs and the knowledge that they use less energy, people are more likely to leave them on for longer, I imagine.
- In northern latitudes, incandescents’ inefficiency is not wasted. Think about it: in Alaska, summer nights are very short and winter nights are very long. That means a vast majority of light-bulb time happens in the winter. The incandescents waste energy in the form of heat, but if it’s cold, that added heat slightly reduces your need to use a furnace.
And why stop there? I could become an incandescent bulb pusher once the prohibition takes effect. I don’t think drug prohibition makes any sense, but I have no desire to get into that market. Customers and competitors are an ugly lot and I really don’t want to go to prison. But selling light bulbs — now there’s something I could do!
I’d be even happier, however, if the new Congress dropped the coming prohibition. Fluorescent bulbs often are a wise choice, but not always. A supposedly free society should leave at least a few choices to people — like deciding which light bulbs to use.
Kerry and Lieberman Unveil Their Climate Bill: Such a Deal!
I see that my colleague Sallie James has already blogged on the inherent protectionism in the Senate’s long-awaited cap-and-tax bill. A summary was leaked last night by The Hill.
Well, we now have the real “discussion draft” of “The American Power Act” [APA], sponsored by John Kerry (D-NH) and Joe Lieberman (I-CT). Lindsay Graham (R-SC) used to be on the earlier drafts, but excused himself to have a temper tantrum.
So, while Sallie talked about the trade aspects of the bill, I’d like to blather about the mechanics, costs, and climate effects. If you don’t want to read the excruciating details, stop here and note that it mandates the impossible, will not produce any meaningful reduction of planetary warming, and it will subsidize just about every form of power that is too inefficient to compete today.
Earth Day Links
Today is the 40th anniversary of Earth Day, a time to highlight and discuss ways to work toward a cleaner planet. Cato’s energy and environment research promotes policies that would help protect the environment without sacrificing economic liberty, goals that are mutually supporting, not mutually exclusive.
- Why we should thank capitalism for environmental gains: “It is businessmen — not bureaucrats or environmental activists — who deserve most of the credit for the environmental gains over the past century and who represent the best hope for a Greener tomorrow.”
- Finding the right balance: “Today, America’s environment is cleaner—and Earth Day has indeed helped ensure that. …We should renew our promise to keep the environment clean—without adding to human misery or stalling improvements in the human condition.”
- Want clean air? Try this.
- Is high-speed rail really an environmentally friendly alternative to driving and air travel? “Planners have predicted that a proposed line in Florida would use more energy and emit more of some pollutants than all of the cars it would take off the road.”
Washington Rakes in the Money
The Washington Post launches a new weekly today, Capital Business, covering business in the Washington area. The cover of the first edition is striking:
As the cover line exults, “There’s a wave of government money headed our way — bringing opportunities in health care, green energy, cybersecurity and education.” Of course, it’s not actually “government money” — it’s money taxed or borrowed from those who produce it in the 50 states and then sprinkled liberally around the Washington area, which now contains 6 of the 10 richest counties in America.
If the Capital Business cover image had a few more arms, it would look like the logo for this year’s Cato University, “Confronting Grasping Government“:
Atomic Dreams
Last week I was on John Stossel’s (most excellent) new show on Fox Business News to discuss energy policy — in particular, popular myths that Republicans have about energy markets. One of the topics I touched upon was nuclear power. My argument was the same that I have offered in print: Nuclear power is a swell technology but, given the high construction costs associated with building nuclear reactors, it’s a technology that cannot compete in free markets without a massive amount of government support. If one believes in free markets, then one should look askance at such policies.
As expected, the atomic cult has taken offense.
Now, it is reasonable to argue that excessive regulatory oversight has driven up the cost of nuclear power and that a “better” regulatory regime would reduce costs. Perhaps. But I have yet to see any concrete accounting of exactly which regulations are “bad” along with associated price tags for the same. If anyone out there in Internet-land has access to a good, credible accounting like that, please, send it my way. But until I see something tangible, what we have here is assertion masquerading as fact.
Most of those who consider themselves “pro-nuke” are unaware of the fact that the current federal regulatory regime was thoroughly reformed in the late 1990s to comport with the industry’s model of what a “good” federal regulatory regime would look like. As Oliver Kingsley Jr., the President of Exelon Nuclear, put it in Senate testimony back in 2001:
The current regulatory environment has become more stable, timely, and predictable, and is an important contributor to improved performance of nuclear plants in the United States. This means that operators can focus more on achieving operational efficiencies and regulators can focus more on issues of safety significance. It is important to note that safety is being maintained and, in fact enhanced, as these benefits of regulatory reform are being realized. The Nuclear Regulatory Commission — and this Subcommittee — can claim a number of successes in their efforts to improve the nuclear regulatory environment. These include successful implementation of the NRC Reactor Oversight Process, the timely extension of operating licenses at Calvert Cliffs and Oconee, the establishment of a one-step licensing process for advanced reactors, the streamlining of the license transfer process, and the increased efficiency in processing licensing actions.
It’s certainly possible that the industry left some desirable reforms undone, but it seems relevant to me that the Nuclear Energy Institute — the trade association for the nuclear energy industry and a fervent supporter of all these government assistance programs — does not complain that they’re being unfairly hammered by costly red-tape.
For the most part, however, the push-back against the arguments I offered last week has little to do with this. It has to do with bias. According to a post by Rod Adams over at “Atomic Insights Blog,” I am guilty of ignoring subsidies doled-out to nuclear’s biggest competitor — natural gas — and because Cato gets money from Koch Industries, it’s clear that my convenient neglect of that matter is part of a corporate-funded attack on nuclear power. Indeed, Mr. Adams claims that he has unearthed a “smoking gun” with this observation.
Normally, I would ignore attacks like this. This particular post, however, offers the proverbial “teachable moment” that should not be allowed to go to waste.
Thursday Links
- A few things you might not know about rail travel: “Automobiles in intercity travel are as energy efficient as Amtrak. Cars are getting more energy efficient, while boosting Amtrak trains to higher speeds will make them less energy efficient.” The list goes on…
- Quiz Time! Which was the only country in the 27-nation European Union to register economic growth without going through a recession last year? The answer might surprise you.
- Unionized teachers refuse to work 25 minutes more a day, so Rhode Island town fires all of them.
- Arnold Kling on Haiti, poverty, and capitalism.
- Podcast: This is what happens to American jobs when you have one of the highest corporate tax rates in the world.
Wednesday Links
- Is there a place for gay people in conservative politics? We’ll be discussing it today at Cato. Watch here live at 12 PM EST.
- President Obama announces $8 billion in loan guarantees to build a new nuclear power plant in Georgia. But are government subsidies for pet energy projects a good idea?
- What happens when the Olympics don’t go completely according to plan.
- Podcast: “Lessig, Schumer and Citizens United” featuring John Samples.
A Shortage of Sand?
In Soviet times people used to say that if the Communists took over the Sahara desert, there’d soon be a shortage of sand.
Which I guess explains why there’s an energy crisis in energy-rich Venezuela.
Mainstream Media’s Trade Gap
In a post at the Enterprise Blog two days ago, economist Mark Perry deftly parodies a typical mainstream media account of trade protectionism by editing the story in redline to contrast its original presentation with its true significance. I recommend reading the whole thing, but here’s the first paragraph:
WASHINGTON POST (Reuters) – A U.S. trade panel gave final approval on Wednesday to duties taxes ranging from 10 to 16 percent on cost-conscious firms in the U.S. who purchase low-priced Chinese-made steel pipe rather than high-price domestic pipe, in the biggest U.S. trade case to date against China American companies (and their shareholders, employees, and customers) who shop globally for their inputs and find the best value in China.
Perry’s point—and I share his frustration—is that the mainstream media typically fail to convey even a sense of the costs of U.S. protectionism to U.S. interests even though Americans (and non-Americans living in the U.S.) bear the greatest burden of that protectionism. When the U.S. government imposes duties on Chinese steel, it is imposing taxes on U.S. consuming industries, their employees, their shareholders, and their customers.
Spending Our Way Into More Debt
Huge deficit spending, a supposed stimulus bill, and financial bailouts by the Bush administration failed to stave off a deep recession. President Obama continued his predecessor’s policies with an even bigger stimulus, which helped push the deficit over the unimaginable trillion dollar mark. Prosperity hasn’t returned, but the president is persistent in his interventionist beliefs. In his speech yesterday, he told the country that we must “spend our way out of this recession.”
While a dedicated segment of the intelligentsia continues to believe in simplistic Kindergarten Keynesianism, average Americans are increasingly leery. Businesses and entrepreneurs are hesitant to invest and hire because of the uncertainty surrounding the President’s agenda for higher taxes, higher energy costs, health care mandates, and greater regulation. The economy will eventually recover despite the government’s intervention, but as the debt mounts, today’s profligacy will more likely do long-term damage to the nation’s prosperity.
Some leaders in Congress want a new round of stimulus spending of $150 billion or more. The following are some of the ways that money might be spent from the president’s speech:
- Extend unemployment insurance. When you subsidize something you get more it, so increasing unemployment benefits will push up the unemployment rate, as Alan Reynolds notes.”
- More infrastructure spending. This will lead to misallocation of resources since only markets can allocate resources efficiently. Governments allocate capital on the basis of politics instead of economics.
- “Cash for Caulkers.” This would be like Cash for Clunkers except people would get tax credits to make their homes more energy efficient. Any program modeled off “the dumbest government program ever” should be put back on the shelf.
- More Small Business Administration lending. A little noticed SBA program created by the stimulus bill offered banks an “unprecedented” 100 percent guarantee on loans to small businesses. The program has an anticipated default rate of 60 percent. Small businesses need lower taxes and fewer regulations, not a government program that perpetuates more moral hazard.
- More aid to state and local governments. State and local government should be using the recession to implement reforms that will prevent them from going on another unsustainable spending spree when the economy recovers. Also, we need fewer state and local government employees – not more – as they’re becoming an increasing burden on taxpayers.
The president said his administration was “forced to take those steps largely without the help of an opposition party which, unfortunately, after having presided over the decision-making that led to the crisis, decided to hand it to others to solve.” Mr. President, nobody has forced you to do anything. You’ve chosen to embrace – and expand upon – the big spending policies that were a hallmark of your predecessor’s administration.
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