Voice For Liberty

Tag: Climate change

  • The Fallacy of “Green Jobs”

    Does climate change offer an opportunity to spend ourselves out of a possible recession? John Stossel doesn’t think so, and in his piece The Fallacy of “Green Jobs” he lays out the case.

    Key points:

    “The fallacy is the same in every case: Even if the program creates jobs building bridges or windmills, it necessarily prevents other jobs from being created. This is because government spending merely diverts money from private projects to government projects.” Stossel relies on Frederic Bastiat and his explanation of the broken window fallacy for support. This fallacy is expertfully explained by Henry Hazlitt, and I quote him extensively in my post Henry Hazlitt Explains Frederic Bastiat, or, A Broken Window Really Hurts No Matter What the New York Times Says. Hazlitt also has much to say about the folly of creating jobs through public works projects.

    “Governments create no wealth. They only move it around while taking a cut for their trouble. So any jobs created over here come at the expense of jobs that would have been created over there.” Advocates of government allocation of jobs usually claim that this control is necessary because of market failure. In other words, left to their own, investors can’t figure out where investment is most valued. Government “wisdom” is required.

    “Politicians have a lousy record trying to make ‘strategic investments.’ President Jimmy Carter’s Synthetic Fuels Corporation cost taxpayers at least $19 billion but failed to give us alternative fuels.”

    And this very important point:

    One reason decentralized markets are preferable to government central planning is that human beings are fallible. Mistakes are inevitable. Some investments will be errors. Mistakes in the market tend to be on a comparatively small scale. If one company invests in plug-in hybrids and it goes bust, only a relatively few people suffer. The assets of the bankrupt firm pass into more capable hands.

    But decisions by government, especially the federal government, affect all of us. When government makes a mistake, the bureaucracy can’t go bankrupt. Instead, it will use its failure to justify increased appropriations in the next budget.

    This is perhaps the most important insight in this article. Government programs tend to be monolithic, and once started are difficult to modify in light of changing conditions or things learned. We need entrepreneurs with their dynamic discovery process rather than government bureaucrats and politicians to guide this process.

  • A Change in Climate for Climate Change Policy

    From our friends at the Texas Public Policy Foundation, one of the many outstanding state-level research institutes working for liberty and free markets.

    A Change in Climate for Climate Change Policy
    By Kathleen Hartnett White
    November 5, 2008

    Come what dramatic political and economic changes may occur, a refrain persists within the media, industry, and the U.S. Congress that onerous federal mandates to regulate carbon dioxide (CO2) are inevitable. I don’t think so.

    In less than a year, many unanticipated developments have complicated the political dynamics of “ending the era of fossil fuels” through the enactment of carbon reduction mandates. Consider six such developments that may give pause to policymakers otherwise inclined to support these measures:

    • When the price of oil topped $4.00 a gallon and food inflation reached almost 8 percent, most voters got it: price and security first! At least a dozen recent polls show that three-fourths of likely voters put far more importance on the U.S. oil supply than global warming. This prevalent public opinion dissolved the U.S. Congress’ long and intransigent opposition to increased domestic oil production. In late September, the 30-year bans on offshore oil production expired. The rapid decline in the price of oil, as a result of economic slowdown, has not yet squelched broad support for more domestic oil production.
    • Energy independence has become a battle cry across the political spectrum. The painfully high price of oil increased the public’s recognition that there are no near-term, realistic alternatives to the dominance of fossil fuels in the U.S. energy supply. American dependence on unreliable, if not inimical, sources of foreign oil worries Main Street far more than it used to.
    • The European Union’s (EU) Emission Trading System (ETS), once the model for a U.S. program, continues to fail. Europe’s program is not reducing CO2 and has lead to higher energy costs. The U.S. has reduced more CO2 by market efficiencies and without any complicated cap-and-trade programs. Growing numbers of EU member countries, including Italy, now want to delay (read: scratch) the ETS because of economic woes approaching crisis proportions.
    • By the time the Lieberman-Warner bill (S.2191) made it to the U.S. Senate floor last summer, the veil on its staggering cost had been lifted. The world’s most ambitious, enforceable carbon regime to date, S.2191 would impose exorbitant costs and require unprecedented expansion of the federal control, but would yield no measurable effect on global climate unless China and India undertook similarly draconian programs.
    • Far more substantial climate science emerges and is a game-changer for the reigning science from the Intergovernmental Panel on Climate Change (IPCC). Observational evidence from NASA satellites indicates little to no heat-forcing effect from manmade CO2. This NASA data is empirical science, far superior to the uncertain IPCC computer models.
    • And the clincher: the specter of global recession. Worldwide financial turmoil presents the most hard-hitting obstacle to mandatory CO2 reduction. While figures may differ, no one doubts that CO2 reduction mandates would lead to far higher prices for fuel, power, food, and other basic consumer goods. Until the U.S. and global economies stabilize, the least prudent among us might delay CO2 regulations that would overturn our energy economy.

    Amidst the current economic maelstrom, some congressional leaders perversely cling to carbon regulation as a new federal revenue source to compensate for a reduced tax base. The Congressional Budget Office estimates that the federal government’s auction of carbon allocations, e.g., power companies forced to buy permission to keep generating electricity, could generate trillions in revenue. Inconvenient facts, however, may have changed the political climate necessary for major CO2 reduction programs absent available control technology.

    In the last year, many policy makers and voters have learned some hard facts about energy and the economy. If an ounce of reason might prevail, climate change policymakers would acknowledge that mandates are premature and impracticable. Immediate steps should be toward extending the new empirical climate science and market-based development of energy efficient technologies.

    Natural variability — or change, simply speaking — is the hallmark of climate and politics; not easy to predict and never inevitable.

    Kathleen Hartnett White is Director of the Center for Natural Resources at the Texas Public Policy Foundation, a non-profit, free-market research institute based in Austin. She is the former Chair of the Texas Commission on Environmental Quality.

  • Climate change resource center launched

    When evaluating the claims of radical environmental extremists, people need accurate and reliable information about global warming and climate change. To this end, I’ve started a Climate Change Resource Center page, where readers can find links to reliable sources of information.

    If you know of other sources or articles that should be listed, please send them to me.

  • Climate change alarmism in Kansas is expensive

    Today’s Wichita Eagle reports on the high cost of climate change mitigation. (Climate cleanup costs could trickle down) Before Kansans commit to expensive courses of action that will be ineffective, we need to consider the wisdom of this action.

    As reported in the article, “there is the worry that regulation will drive up costs and push industry and jobs to other places.” Climate change alarmists treat these yet-to-be-passed regulations as a given, and are sure that they’ll be implemented. These regulations, however, are bad public policy, and there’s no reason why we should base current decisions on the threat of bad regulations being passed in the future. In fact, to do so would be highly irresponsible.

    Reported as a counterbalance to the huge costs of complying with bad regulation is “But others argue that regulations will spur innovation, creating more jobs.” It’s true that a forced move to a “green” economy would necessitate the need for workers to do things. What’s really important, however, is whether these jobs would increase the wealth of our country. That depends partly on the validity of the threat that climate change presents, and that threat is disputed. If the threat is not real, or if the effect would be minor, then these “green” jobs have all the characteristics of “make-work” jobs. They put people to work, but produce nothing of value.

    Furthermore, we might find ourselves spending huge sums to reduce greenhouse gases when other countries are increasing their emissions rapidly. Melissa Cohlmia of Koch Industries got this exactly right when she mentioned countries that “will not participate in efforts to limit greenhouse gases.” I’ve written about this before in relation to efforts in Kansas to reduce our greenhouse gas emissions. A little arithmetic tells us that anything we as Kansans do is just a drop in the ocean. In fact, as I report in KEEP’s Goal is Predetermined and Ineffectual, “even if Kansas stopped producing all carbon emissions, the effect would be overcome in about 16 months of just the growth in China’s emissions.”

    Rate increases in utility bills are burdensome to customers. When the local electric utility proposed raising monthly bills by $10 for the average consumer, ratepayers protested vigorously. When the City of Wichita proposed adding perhaps $3 or $4 to monthly residential water bills, council member Lavonta Williams expressed concern that this would be a hardship for many of the residents in her district. Whenever forecasts call for higher natural gas prices, we’re warned that some people will not be able to heat their homes.

  • Untruths about carbon and its regulation at the Wichita Eagle

    The Wichita Eagle’s recent editorial by Rhonda Holman takes a few Kansas legislators to task for statements regarding regulatory uncertainly in Kansas (No ‘regulatory uncertainty’ in Kansas, October 28, 2008 Wichita Eagle). She claims their statements “don’t reflect reality” and that their untruths are harming Kansas’ ability to bring in business.

    I want to remind Ms. Holman of reporting in the Topeka Capital-Journal from earlier this year which investigated some of the issues surrounding the denial of the permit for the expansion of Holcomb Station. As reported in my post Rod Bremby’s Action Drove Away the Refinery, the Secretary of the Kansas Department of Health and Environment absolutely created a very confusing situation. He denied a plant solely for its level of carbon emissions, and then said that a proposed plant that emits even more carbon would not be a problem.

    Who would trust a public official who speaks like that?

    Besides this, Ms. Holman says the Holcomb plant is bad for Kansas, as it exports power “while leaving Kansas with 100 percent of the carbon dioxide.” I know of no authority — not even Al Gore — that believes that carbon dioxide pollution is a problem in the local vicinity of a power plant. To the extent that carbon emissions are a problem — and that’s a mighty big “if” — it’s a problem on a global scale. Why else would climate change alarmists be concerned about carbon emissions from power plants in China?

  • How a Sub-prime Lender Influences Kansas Energy and Environment Policy

    In an American Thinker article titled How allies of George Soros helped bring down Wachovia Bank, you can read about the business activities of Herbert and Marion Sandler:

    Herbert and Marion Sandler, a New York lawyer and Wall Street analyst respectively, bought a small California thrift in 1963 and built it into GDW [Golden West Financial] — one of the largest thrifts in the nation. The company’s business was built on adjustable rate mortgages (ARMs. These were mortgages offered at low “teaser” rates that ratcheted upward as interest rates increased. They were often sold aggressively to unsophisticated home buyers who did not comprehend the vast financial risks they were taking, or who assumed that housing prices would rise high enough to provide a profit to them when they sold their houses. They were targets for lenders peddling mortgages that should have been stamped with a skull and crossbones, for these were among the most seductive and dangerous types of mortgage. …

    The Sandlers knew their business far better than any other person could. Not only were they the founders and major owners, they famously ran the company as a husband and wife team for all these years.

    Vilifying makers of sub-prime mortgages is not necessarily news. So what’s the link to Kansas?

    Currently, Kansas is undergoing an evaluation of energy and environmental policy. Kansas governor Kathleen Sebelius created the Kansas Energy and Environmental Policy Advisory Group (KEEP) for this purpose.

    Here’s the link: in the Governor’s press release Sebelius prevents and reduces pollutants with veto, executive order, we’re told that “The process will be facilitated by the Center for Climate Strategies (CCS). Their work is supported by the Energy Foundation and the Sandler Family Supporting Foundation …”

    There’s the connection.

    In 2006, the Sandlers donated $1.3 billion of Golden West Financial stock to their foundation, the Sandler Family Supporting Foundation. It is this money that supports the formulation of Kansas energy and environmental policy.

  • Rhonda Holman’s Kansas Energy Policy: Not Good for Kansas

    Wichita Eagle editorialist Rhonda Holman writes “[Kansas Governor Kathleen] Sebelius gets it. Too bad the Kansas Chamber does not.”

    This is the end of her lead editorial from today titled Kansas Chamber protecting past. In it, she claims that the Kansas Chamber of Commerce is out of touch with the reality of global warming, and by extension, that our governor isn’t.

    Ms. Holman cites a study showing that green investment in Kansas could add many jobs to our economy. That’s no doubt true. But these jobs have all the characteristics of public works jobs, meaning that for each job created, one is lost somewhere else. That’s because these jobs don’t add to the wealth of Kansas, as we already are producing electricity. These new jobs simply shift Kansas to using a different form of power generation, one that Ms. Holman prefers.

    Now if this shift was necessary to save our planet, that might be one thing. But the consensus behind man-made global warming is not as strong as Ms. Holman claims. And even if true, it might be best to learn to deal with the changing climate rather than try to stop the change.

    Even if global warming is due to man’s activity, there’s very little we in Kansas can do to stop it. As illustrated in the article KEEP’s Goal is Predetermined and Ineffectual, Kansas is just a tiny speck on the Earth. Other countries overwhelm anything we can do in Kansas:

    So even if Kansas stopped producing all carbon emissions, the effect would be overcome in about 16 months of just the growth in China’s emissions. This doesn’t take into account the huge emissions China already produces, or the rapid growth in other countries.

    That’s right. Even if we stopped all carbon emissions in Kansas, the growth of emissions in China would very quickly negate our extreme sacrifice.

    That’s the reality of the arithmetic of carbon emissions. But Ms. Holman thinks this is okay.

    One of the comments left in response to Ms. Holman’s editorial argued in favor of solar and wind power and stated “Zero energy cost forever and zero drawdown of the Ogallala [sic] aquifer — what’s not to like?” This comment writer might want to take notice of impending expiration of the wind production tax credit, which gives money to subsidize the production of these two types of power. Without this subsidy, supporters of wind and solar power concede that investment in these forms of energy will likely cease. Furthermore, our local electric utility is asking for a rate increase, in part due to the expensive cost of wind power. See Tax incentive for wind energy producers set to expire and Kansas Electric Rates Increase Because of Wind Power Generation.

  • A Free Market for Electricity in Kansas?

    A letter in today’s Wichita Eagle makes the case for a free market in electricity. An excerpt:

    I am among a growing number of Americans who are skeptical about the human impact on climate change. I do not believe there is sufficient evidence that our behavior is causing the changes many environmentalists tend to blame on humanity. So it seems wrong to force me to pay higher electric rates because of unproven theories about our impact on the environment.

    I think those people who support such theories should pay the higher rates for electricity, since their beliefs are driving costs higher. Instead of charging all customers higher rates, only charge those customers who want to use alternative energy sources. This policy could easily be implemented by sending all ratepayers a ballot so they can decide which energy source they prefer to use.

    A market-based solution to part of this rate increase makes perfect sense. People who believe humans are responsible for climate change can pay for it, and those of us who are skeptical can continue to enjoy lower energy bills.

    Deregulation of electricity markets has been tried — sort of — recently, and it didn’t work out as well as it could have. The problem was that it was only partial deregulation, as explained in Short-Circuited, an article at the Cato Institute. California’s Troubles Not Caused by Deregulation explains the situation in California.

  • Tax incentive for wind energy producers set to expire

    Kansas Liberty posts Tax incentive for wind energy producers set to expire.

    This post explains that without subsidy, wind power generation facilities will likely not be built. Supporters of these tax credits, which are payments from the federal government through the tax system. These payments, termed “incentives” by their supporters, make wind power economically feasible. Without it, wind power wouldn’t be built.

    These incentives come with a cost. Calling them tax credits makes it seem, to many people, that there is no cost in granting them. But there is. See Wind Production Tax Credits Aren’t Free of Cost.

    Further, even with the production tax credits, wind power costs. Westar, our local electric utility, is requesting a rate increase partly because of the costs of wind power generation. See Kansas Electric Rates Increase Because of Wind Power Generation.