Voice For Liberty

Tag: Wind power

  • Clusters as economic development in Kansas

    Is the promotion by Kansas government of industry clusters as economic development good for the future of Kansas?

    The formula for creating these clusters is always the same: Pick a hot industry, build a technology park next to a research university, provide incentives for businesses to relocate, add some venture capital and then watch the magic happen. But, as I have noted before, the magic never happens. Most of the top-down cluster-development projects in the United States and around the world have died a slow death in relative obscurity. Politicians who held the press conferences to claim credit for advancing science and technology are long gone. Management consultants have cashed in their big checks. Real estate barons have reaped fortunes, and taxpayers are left holding the bag.

    The author is Vivek Wadhwa, writing in the Washington Post article Industry clusters: The modern-day snake oil.

    Wadwha is criticizing Harvard professor Michael Porter’s cluster theory, which he says has to do with how “geographic concentrations of interconnected companies, specialized suppliers, and service providers gave certain industries a productivity and cost advantage.” Wardwha describes the magical potential: “[Porter’s] legions of followers postulated that by bringing these ingredients together into a ‘cluster,’ regions could artificially ferment innovation. They just needed to build the right infrastructure and bring together chosen industries.”

    It’s something that Wichita and Kansas has embraced. We hear — continually — about the importance of the aviation cluster in south-central Kansas and its importance to our state’s economy. Talk of this becomes particularly intense each time the major aviation companies and their suppliers approach local governments for handouts in the form of economic development incentives.

    Wichita Mayor Carl Brewer wants to create a cluster of wind energy companies in and around Wichita, and he has traveled as far as Germany in this quest.

    Kansas Governor Sam Brownback has embraced the cluster concept. In June, Governor Brownback promoted one such cluster, saying “As a state, we must formulate strategies to achieve a successful economic cluster around the animal health sector.”

    Other clusters the state wants to promote include life sciences, tourism, and, as aleady mentioned, aviation. Brownback has held summits on most of these topics. A presentation titled Kansas Competitiveness: State and Cluster Economic Performance, billed as “Prepared for Governor Sam Brownback” in February by Harvard’s Porter analyzes Kansas and its business clusters.

    Evidence that backs up Wardwha’s criticism of clusters is found in the recent paper When local interaction does not suffice: Sources of firm innovation in urban Norway (Rune Dahl Fitjar and Andrés Rodríguez-Pose). Summarizing it, Wardwha wrote: “The study found that regional and national clusters are ‘irrelevant for innovation.’”

    In particular, the paper states in its introduction: “The results indicate that firm innovation in urban Norway is mainly driven by global pipelines, rather than local interaction. The most innovative — both in terms of basic product innovation and radical product and process innovation — firms are those with a greater diversity of international partners. Local and even national interaction seems to be irrelevant for innovation.”

    And from the conclusion: “Recent analyses of clusters and agglomeration have looked for the sources of innovation of firms in the combination of the multiple interactions of firms within the region and in the connections of certain firms in the region with the outside world. The story emerging was one of complementarity. Local interaction took place without much effort through frequent face-to-face interaction in high trust environments, while global pipelines implied a conscious and often costly attempt by individual firms to engage with external actors in order to generate greater innovation and reap economic benefits. … There is a dearth of analyses that have systematically addressed whether the complementarity of these two types of interaction holds across a large number of firms. This has been the main aim of this paper, which has looked at the sources of innovation of 1604 firms across the five main urban agglomerations in Norway. The picture which emerges from the analysis does not conform to that generally stemming from the theoretical literature and from case-studies.”

    Is the promotion and pursuit of business and industry clusters a misguided effort by Kansas politicians like Brewer and Brownback and the state’s economic development officials? To the extent that promotion of certain industries means the state is using a top-down, “active investor” approach to economic development — rather than being the caretaker of a competitive platform that encourages as much business experimentation as possible — yes, it is misguided. We run the risk of all the problems described in the opening quotation appearing in this article.

  • Pickens criticism illustrates divide between free markets and intervention

    Last week’s criticism by energy investor T. Boone Pickens of U.S. Representative Mike Pompeo, a Wichita Republican serving his first term, continues to illustrate the difference between those who believe in economic freedom and free markets, and those — like Pickens — who invest in politicians, bureaucrats, and the hope of a government subsidy.

    Pickens is pushing H.R. 1380: New Alternative Transportation to Give Americans Solutions Act of 2011, or NAT GAS act. The bill provides a variety of subsidies, implemented through tax credits, to producers and users of natural gas. The goal is to promote the use of natural gas as the fuel the nation uses for transportation.

    In his op-ed in the Wichita Eagle, Pickens was critical of Pompeo for his stance in favor of free markets and in opposition to subsidies. His criticism, however, was inconsistent and contradictory. Further, Pompeo’s position on this issue is clear, as part of a resolution he introduced reads: eliminate existing energy subsidies.

    There was another target of Pickens’ criticism. He didn’t mention the company by name, but there were several thinly-veiled references to Wichita-based Koch Industries. Charles Koch and his brother David Koch have emerged as prominent defenders of economic freedom and the freedom and prosperity it generates. Charles Koch, in particular, has been outspoken in his criticism of the type of subsidies that Pickens seeks. Koch’s op-ed, also in the Wichita Eagle and on Koch Industries website at Advancing economic freedom, was pointed in its criticism of corporate welfare: “Our government made a point of reforming its welfare policies for individuals but not for corporations. … Unfair programs that favor certain companies — such as the current well-intentioned but misguided suggestion that the natural-gas industry should receive enormous new subsidies — don’t just happen. They are promoted, in large part, by those seeking to profit politically, rather than by competing in a market where consumers vote with their wallets.”

    In a statement on the company’s Viewpoint website, Dr. Richard Fink, Executive Vice President of Koch Industries, continued to explain the harm of government intervention, saying “Koch has consistently opposed subsidies that distort markets. We maintain that the marketplace, while not perfect, is the best mechanism for allocating resources to consumers. People deciding what fuels to purchase, instead of the government, is best for consumers and our country. Likewise, if natural gas vehicles are truly advantageous and economically efficient, then consumers will demand that they be developed without political mandates that exhaust more taxpayer dollars.”

    Fink continues, “We do not question T. Boone Pickens’ intentions or integrity in this debate. We recognize his experience in the energy markets and take him at his word that he thinks this is a good idea. However, we believe history has demonstrated over and over that these subsidies end up undermining the long term prosperity of the country. For these principled reasons, we oppose this bill to give tax incentives to buyers and makers of natural gas-powered vehicles and related infrastructure. We also consistently oppose subsidies for all other fuels whether or not we benefit from them.”

    Pickens would probably object to the use of the term “subsidy,” as the legislation he pushes grants “credits,” a term that sounds fairly benign. Timothy P. Carney, writing in the Washington Examiner, provides an explanation of the difference: “Pickens draws two dividing lines in the piece: tax credit vs. grant, and permanent versus temporary. A temporary subsidy is certainly better than an indefinite or permanent one. The tax credit question is trickier. Many free-market champions support every tax break ever proposed (Ron Paul, for instance). Other free market types (like me, probably) think that tax credits act as subsidies which distort the market, and ultimately lead to tax hikes on others. One of the bad things about tax credits is that they reward businesses for following political signals rather than market signals, but they do it in a way that allow the beneficiaries, like Pickens, to act as if they’re not on the public dole. Sure, a tax credit (most of the time) isn’t a handout, but the favored product (like ethanol or natural gas) only succeeds because its competition is taxed at high rates. So tax credits are the socially acceptable form of corporate welfare.” (emphasis added)

    While Carney usually gets things just right, I’ll disagree with him that the question of tax credits is tricky: They have the same economic effect as a grant or subsidy. They engineer the behavior the government wants. But Carney is right about the confusing appearance of tax credits, allowing them to be “the socially acceptable form of corporate welfare.” Unless we really think about it, that is.

    In any discussion of Pickens and natural gas, we must recognize that he is an investor in gas and another energy technology related to gas: wind power. In 2008 Pickens ordered 667 wind turbines worth $2 billion from General Electric with plans to build a large wind power plant in Texas. Wind power is highly dependent on government subsidy, with supporters claiming the industry will be devastated unless Congress continues to renew the subsidies.

    At one time Pickens wanted to use wind power to generate electricity, and the natural gas saved would be used to power transportation. But there’s another relationship between wind power and gas, and it stems from the unreliability and variability of wind power. It’s difficult to quickly adjust the output of most power plants. But natural gas turbine plants are an exception. Kansas recently saw one of its major electric utilities complete a new natural gas power plant. The need for the plant was at least partly created by its investment in wind: A document produced by Westar titled The Greenhouse Gas Challenge noted the “Construction of the 665 MW natural gas-fired Emporia Energy Center, providing the ability to efficiently follow the variability of wind generation.” In another document announcing a request for a rate increase it stated “Our Emporia Energy Center is excellent for following the variability of wind production.”

    At the time of these investments by Pickens and Westar, the price of natural gas was high. Now it is low — so low, and the prospects for future low prices certain enough that Pickens has abandoned his wind farm projects. Even with all the subsidy granted to wind power, it’s cheaper to generate electricity with gas.

    (Pickens has been left with many wind turbines he can’t use. According to the Wall Street Journal: “He’s hoping to foist them on ratepayers in Canada, because that country has mandates that require consumers to buy more expensive renewable electricity.” In other words, relying on some other country’s government intervention to relieve him of his mistake.)

    So we see Pickens moving from one government-subsidized industry — wind power — to another: the subsidized market for natural gas-powered vehicles he hopes to create. The distinction between political entrepreneurs and market entrepreneurs couldn’t be clearer.

  • Kansas and Wichita quick takes: Wednesday March 23, 2011

    Health information campaign. What happened to an all-star group that was to promote President Obama’s health care plan? Politico reports: “Democrats are under siege as they mark the first anniversary of health care reform Wednesday — and they won’t get much help from the star-studded, $125 million support group they were once promised. Wal-Mart Watch founder Andrew Grossman unveiled the Health Information Campaign with great fanfare last June. … But nine months later, the Health Information Campaign has all but disappeared.”

    Eisenhower book author to speak in Wichita. At this Friday’s meeting (March 25) of the Wichita Pachyderm Club, David A. Nichols, Ph.D. will speak on his new book Eisenhower 1956: The President’s Year of Crisis — Suez and the Brink of War . Nichols is formerly of Southwestern College in Winfield. Copies of the new book will be available for purchase at the meeting. The public is welcome and encouraged to attend Wichita Pachyderm meetings. For more information click on Wichita Pachyderm Club. … Upcoming speakers include Derrick Sontag of Americans for Prosperity on April 1, Deputy Public Defender Jama Mitchell on April 8, Kansas Senator Chris Steineger on April 15, Friends University Associate Professor of Political Science Russell Arben Fox on April 22, and Wichita State University Political Scientist Ken Ciboski on April 29.

    Kansas agencies mum on travel spending. From Kansas Policy Institute: “State agencies, boards and universities in Kansas claimed they did not have to disclose details on $21.4 million in spending on various forms of travel and entertainment in FY 2010, according to a Kansas Policy Institute (KPI) analysis of the state’s checkbook.” According to KPI president Dave Trabert: “$39 million is a lot to spend on travel in any year, and especially so when some agencies say they are being forced to cut services. Maybe the Kansas Bureau of Investigation needs some discretion when conducting investigations, but the breadth and volume of these confidentiality claims are incomprehensible.” While the Kansas Open Records Act (KORA) has many categories of information that are exempt from disclosure, agencies have discretion as to which information to disclose. None of the exemptions mention travel. Says Trabert: “State checkbook records don’t indicate which exemption from disclosure is invoked on travel spending, but disclosing the names of hotels, airlines and restaurants that received taxpayer money would not be an unwarranted invasion of anyone’s personal privacy. It is, however, an unwarranted invasion of taxpayers’ right to not know how their money is being spent and state law should be changed to eliminate gaping loopholes in KORA.” … I’m really curious to learn more about this finding: “KPI’s review of state travel records also found many examples of the vendor being listed as the agency or university itself rather than the actual vendor that provided the service.” … KPI’s press release is at State Agencies Claim Confidentiality on Travel Spending.

    Kansas wind energy jobs. Again we find that the promise of green energy projects being an economic development driver is overplayed. In “Goal of many more ‘green’ jobs is elusive” (February 14, 2011 Kansas City Star) we find the same skepticism that most now see justified regarding ethanol is applicable to wind power: “‘We need to temper our expectations on wind energy,’ said David Swenson, an Iowa State University economist known for deflating the ethanol industry’s job claims. Now, he says, the same ‘environment of hype’ is developing around wind power.” It’s been good for China, though: “… more than 80 percent of $1 billion in federal stimulus grants for wind projects went to foreign countries. One of the projects, a $1.5 billion wind farm in Texas, expected to collect $450 million in stimulus money — but use wind turbines made in China.” The counting of a job as “green” is highly suspect, as the article notes: “Kansas officials have trumpeted that the state already has 20,000 green jobs — and hopes for 10,000 more, many from manufacturing and assembly work for generating wind power. But so far, most of the jobs in that count by the state Department of Labor have been around for years, including carpenters installing energy-efficient windows and plumbers putting in toilets that don’t use much water. Even maids, if they use green products, are classified as green-collar workers.” … Wichita Mayor Carl Brewer promotes manufacturing of wind power machinery as good for Wichita’s economic development, and Kansas Governor Sam Brownback supports renewable energy standards for Kansas.

    The role of profits and losses. From Robert P. Murphy, Lessons for the Young Economist: Many naïve observers of the market economy dismiss concern with the “bottom line” as a purely arbitrary social convention. To these critics, it seems senseless that a factory producing, say, medicine or shoes for toddlers stops at the point when the owner decides that profit has been maximized. It would certainly be physically possible to produce more bottles of aspirin or more shoes in size 3T, yet the boss doesn’t allow it, because to do so would “lose money.” On the other hand, many apparently superfluous gadgets and unnecessary luxury items are produced every day in a market economy, because they are profitable. Observers who are outraged by this system may adopt the slogan: “Production for people, not profit!” … Such critics do not appreciate the indispensable service that the profit and-loss test provides to members of a market economy. Whatever the social system in place, the regrettable fact is that the material world is one of scarcity — there are not enough resources to produce all the goods and services that people desire. Because of scarcity, every economic decision involves tradeoffs. When scarce resources are devoted to producing more bottles of aspirin, for example, there are necessarily fewer resources available to produce everything else. It’s not enough to ask, “Would the world be a better place if there were more medicine?” The relevant question is, “Would the world be a better place if there were more medicine and less of the other goods and services that would have to be sacrificed to produce more medicine?” … Loosely speaking, the profit and loss system communicates the desires of consumers to the resource owners and entrepreneurs when they are deciding how many resources to send into each potential line of production. … In a market based on the institution of private property, profits occur when an entrepreneur takes resources of a certain market value and transforms them into finished goods (or services) of a higher market value. This is the important sense in which profitable entrepreneurs are providing a definite service to others in the economy.

  • Kansas and Wichita quick takes: Friday March 11, 2011

    Owens said to be blocking judicial selection reform. From National Review Online All Eyes on Kansas: “Unfortunately, I am reliably informed that the liberal Republican chair of the state senate Judiciary Committee, Tim Owens, is obstructing the reform legislation, refusing to even hold a hearing. I hadn’t heard of Owens until now, and I doubt very many people have, but apparently this is not the first time he has used his power to thwart the goals of his colleagues. … If Owens wants to make policy for the entire state of Kansas, he should run for statewide office. Until then, he should at least hold a hearing and allow a vote on this judicial-selection-reform bill that has the support of the state’s governor and house of representatives.” … It’s not surprising that Tim Owens, an attorney and Republican from Overland Park, would be obstructing reform measures that would take power away from the state’s bar in place it in the hands of the people. The characterization by NRO of Owens as liberal is accurate, as on last year’s Kansas Economic Freedom Index, Owens scored just 20 percent.

    Cabela’s bank. Lincoln (Nebraska) Journal Star: “World’s Foremost Bank, the Lincoln-based credit card operation run by outdoors retailer Cabela’s, has settled allegations of unfair and deceptive practices for more than $10 million, the Federal Deposit Insurance Corp. announced Tuesday.” Cabela’s was recently awarded a large and generous hunk of corporate welfare from the City of Wichita, on the threat that the merchant would not open a store in Wichita unless such welfare was forthcoming. Cabela’s: an honorable company? You decide. Also you decide whether Wichita’s “due diligence” investigation of the backgrounds of its partners should have been aware of this.

    Scott Walker. Wisconsin Governor Scott Walker writing in the Wall Street Journal: “In 2010, Megan Sampson was named an Outstanding First Year Teacher in Wisconsin. A week later, she got a layoff notice from the Milwaukee Public Schools. Why would one of the best new teachers in the state be one of the first let go? Because her collective-bargaining contract requires staffing decisions to be made based on seniority.” Walker goes on to explain some of the fiscal aspects of his efforts, but there are other very important goals to achieve, he writes: “Beyond balancing budgets, our reforms give schools — as well as state and local governments — the tools to reward productive workers and improve their operations. Most crucially, our reforms confront the barriers of collective bargaining that currently block innovation and reform.” The situation where an outstanding teacher would be laid off instead of a less-effective teacher would happen in Wichita, too, as the Wichita teachers union contract requires the same policy as does Wisconsin’s. Situations like this, not to mention the financial factors, as why public worker unions are harming America.

    Outsourcing opposed by Kansas state workers. Kansas Organization of State Workers opposes a bill creating the Kansas Advisory Council on Privatization and Public-Private
    Partnerships Act. The purpose of the bill (HB 2194) is to seek ways to improve the operations of state agencies, as described in the supplemental note of the bill: “1) focus on the core mission and provide goods and services efficiently and effectively; 2) develop a process to analyze opportunities to improve efficiency, cost-effectiveness and provide quality services, operations, functions, and activities; and 3) evaluate for feasibility, cost-effectiveness, and efficiency opportunities that could be outsourced.” … This is the type of efficiency-seeking efforts that many private-sector firms undergo regularly. But not so much for government. In fact, state employees are actively opposing this bill. Here’s what the state worker advocacy group KOSE says: “Our services are under threat from a privatization proposal and it’s up to us to stop this devastating bill in Senate Committee. HB 2194, misleadingly called the council on efficient government act, establishes a partisan commission of big-business interests to privatize state services putting a wolf in charge of the hen house. To be clear, this bill allows for future privatization of nearly all services provided by state workers.” It’s not clear who KOSE means when writing “our services.” Not to mention the fact that right now the wolf (government worker unions) are in charge of the hen house (the politicians whose support they buy with union dues). … When the City of Wichita outsourced some maintenance of parks, they estimated it would save a certain amount. After starting the project, the city saved even more than first thought. … The state has a responsibility to its citizens to operate as efficiently as possible. If it is possible to have work done less expensively through outsourcing, the state should do so. The state’s first responsibility is to the taxpayers, not a state worker jobs program.

    Tilting at wind turbines. “Switching from conventional sources of electricity like coal and natural gas to renewables like wind and solar, our elected leaders tell us, will reduce pollution, advance renewable technology and spark a green jobs revolution. Is renewable energy really a green pathway to a brighter economic future? Or is it nothing more than a heavily subsidized impossible dream?” Reason TV takes a look at wind energy in the video Tilting at Wind Turbines: Should the Government Subsidize Renewable Energy? Locally, Wichita Mayor Carl Brewer promotes manufacturing of wind power machinery as good for Wichita’s economic development, and Kansas Governor Sam Brownback supports renewable energy standards for Kansas.

  • Kansas and Wichita quick takes: Thursday March 10, 2011

    Kansas labor report. For January 2011, the Kansas Department of Labor reports: “According to January 2011 estimates, Kansas businesses lost 6,100 jobs over-the-year, a 0.5 percent decrease. … The January 2011 unemployment rate in Kansas was 7.4 percent, up from 6.4 in December 2010 but down from 7.9 percent in January 2010.” Said Labor Secretary Karin Brownlee: “The Great Recession continues to take a tremendous toll on the Kansas economy. The Governor’s focus on creating jobs could not be more timely. The work by the Brownback administration to make Kansas the best place to do business is the focus needed to grow our economy. Improving the tax and regulatory climate will help take some of the sting out of this recession and get Kansans back to work.” … Interestingly, at a time when it is said government is slashing budgets, government employment at all levels in Kansas grow by about 300 jobs from January 2010 to January 2011. In Topeka, about 600 government jobs were gained over that time period, in Wichita 300 jobs, and in Kansas City, 400 jobs.

    Whose money is it? Wisconsin protester: “Why do you have a right to your money?” See video.

    Kansas 2011 budget. Kansas Reporter writes: “Kansas House and Senate negotiators reached a tentative school financing deal Wednesday that may unjam state budget talks that have been stalled for weeks. … In the agreement that began emerging Wednesday, the House negotiators broadly agreed to restore some of the originally proposed special education funding cuts, while Senate negotiators broadly agreed to cut general fund spending for workers’ longevity pay, capital improvement projects and some child care development and insurance plans. Between $12 million and $14 million for those programs would come from special funds outside the state’s basic general fund or would be self funded with internal budget reductions.”

    Green jobs. John Stossel in Washington Examiner: “Anyone who understands basic economics already knows that President Obama’s $2.3 billion green-jobs initiative was snake oil. Now, thanks to Kenneth P. Green, we have statistics as well as theory to prove it. In a new article, ‘The Myth of Green Energy Jobs: The European Experience,’ the environmental scientist and a resident scholar at the American Enterprise Institute writes, ‘Green programs in Spain destroyed 2.2 jobs for every green job created, while the capital needed for one green job in Italy could create almost five jobs in the general economy.’” The article Stossel refers to may be read by clicking on The Myth of Green Energy Jobs: The European Experience. Despite this evidence, Wichita Mayor Carl Brewer promotes manufacturing of wind power machinery as good for Wichita’s economic development, and Kansas Governor Sam Brownback supports renewable energy standards for Kansas.

    America, welfare nation. Investor’s Business Daily: “More than one-third of all wages and salaries in this country are actually government handouts. We should be alarmed that we’ve become a nation of dependents. Using data mined from the Bureau of Economic Analysis, TrimTabs Investment Research has found that 35% of wages and salaries this year will be in the form of a government payment. That’s up sharply from 2000, when it was 21%, which is more than double the rate — 10% — of 1960.” … We should note that 1960 was before the start of the Great Society programs of Lyndon Johnson and of the War on Poverty. 2000 was the year of the election of George W. Bush.

    Politics vs. free markets. Rothbard on the difference between the political means and the economic means: “A second basic reason for the oligarchic rule of the State is its parasitic nature — the fact that it lives coercively off the production of the citizenry. To be successful to its practitioners, the fruits of parasitic exploitation must be confined to a relative minority, otherwise a meaningless plunder of all by all would result in no gains for anyone. Nowhere has the coercive and parasitic nature of the State been more clearly limned than by the great late nineteenth-century German sociologist, Franz Oppenheimer. Oppenheimer pointed out that there are two and only two mutually exclusive means for man to obtain wealth. One, the method of production and voluntary exchange, the method of the free market, Oppenheimer termed the ‘economic means’; the other, the method of robbery by the use of violence, he called the ‘political means.’ The political means is clearly parasitic, for it requires previous production for the exploiters to confiscate, and it subtracts from instead of adding to the total production in society. Oppenheimer then proceeded to define the State as the ‘organization of the political means’ — the systematization of the predatory process over a given territorial area.”

  • Kansas and Wichita quick takes: Thursday December 30, 2010

    Kansas Meadowlark blog recast. Earl Glynn of Overland Park has reformed his Kansas Meadowlark site from a blog to a news site along the lines of the Drudge Report. Glynn’s full-time job is working for Kansas Watchdog.

    Longwell site noted. A website supporting the candidacy of Wichita Vice Mayor Jeff Longwell for re-election to his current position has been spotted. Title: Vote for Jeff Longwell.

    Kansas legislative issues to watch. Fort Hays State University political science professor Chapman Rackaway lists the things to watch for in the upcoming session of the Kansas Legislature, which opens on January 10. Here’s his list: The budget, K-12 education funding, economic growth, higher education, entitlements, a balancing act between the “interests of the center-right and polar-alliance wings of the party,” and redistricting. The full article is in the Wichita Eagle at Seven legislative issues to watch in 2011.

    Local governments are a model. H. Edward Flentje, public affairs professor at Wichita State University, explains the difference between the finances of local governments — cities and counties — as compared to states and the federal government: “So, why aren’t our cities and counties wallowing in red ink? For the most part, they do the basics right. They keep revenues and spending in balance. When times are tough, they tighten the belt. In good times, they pay off debt or pay for projects that might otherwise require debt. They maintain reasonable fund balances that buffer economic downturns and avoid unnecessary tax increases or draconian cuts in services. They use debt sparingly but never for ongoing obligations.” He also mentions the role of professional managers in local government, something that Kansas has a long tradition of using. Flentje plays a role in educating and training these managers, and served a stint as interim city manager for Wichita a few years ago. The full article is at State of the State KS at Insight Kansas Editorial: Local Clues for Stemming the Flow of Red Ink.

    Truce in culture wars? Michael Barone in the Washington Examiner: “The fact is that there is an ongoing truce on the social issues, because for most Americans they have been overshadowed by concerns raised by the weak economy and the Obama Democrats’ vast increase in the size and scope of government.” Somehow I don’t think this message has made it to Kansas. As reported by Fred Mann in today’s Wichita Eagle: “Before Kansas lawmakers consider such a bill, Kinzer said, they will take up a host of previous abortion measures that were vetoed by former Govs. Kathleen Sebelius and Mark Parkinson, and that are more likely to be approved by incoming Gov. Sam Brownback.” Lance Kinzer is a member of the Kansas House of Representatives from Olathe and a member of Governor-Elect Sam Brownback’s transition team. Barone, in the article mentioned above, writes “Abortion remains controversial. But we are not going to see abortion criminalized, not in a country where the Supreme Court has been ruling for 37 years that it’s a right. At the same time, we are seeing abortion disfavored and restricted by state laws that are widely popular and have at least in some cases been upheld by the courts.” In Kansas, though, anti-abortion forces are preparing a number of laws that concern, according to Mann, “tightened reporting requirements for late-term abortions, remedies against doctors who violate the laws, and provisions allowing a woman, her husband or parents to sue a doctor if they thought a late-term abortion was performed illegally.” The biggest danger is the culture war in Kansas will take our focus off the state’s economy and the need to get it on track. Chapman Rackaway, in his piece mentioned above, wrote: “If Brownback can successfully balance pragmatism and the interests of the center-right and polar-alliance wings of the party, he can be a rousing success as governor. If open warfare breaks out between wings of the party, all could be lost.”

    Wind power: the transmission subsidy. From The Wall Street Journal column The Midwest Wind Surtax: The latest scheme to socialize the costs of renewable energy: “You’d think poor Michigan has enough economic troubles without the Federal Energy Regulatory Commission placing a $300 million to $500 million annual surtax on the state’s electric utility bills. But on December 16 FERC Chairman Jon Wellinghoff announced new rules that would essentially socialize the cost of transmission lines across 13 states in the Midwest. … This is another discriminatory subsidy for wind energy that will raise electricity prices on everyone, notably on those who don’t rely on wind for electric power. … Let’s be very clear on what’s happening here: Mr. Wellinghoff and FERC are trying to establish by regulatory fiat a national energy policy that Congress has refused to endorse. Last summer Congress rejected the Obama Administration’s renewable energy standard law because it would have inflated power costs.” In Kansas, outgoing Governor Mark Parkinson is proud of his accomplishments in forcing more wind power mandates on Kansans.

  • Wind power again reaps subsidy

    The editorial page of the Wall Street Journal is at the forefront of letting Americans know just how bad an investment our country is making in wind power, as well as other forms of renewable energy. A recent Review and Outlook piece titled The Wind Subsidy Bubble: Green pork should be a GOP budget target holds these facts:

    • The recent tax bill has a $3 billion grant for wind projects.
    • The 2009 stimulus bill had $30 billion for wind.
    • Wind power installations are way down from recent years.
    • The 2008 stimulus bill forces taxpayers to pay 30% of a renewable energy project’s costs. Wind energy also get a tax credit for each unit of power produced.
    • “Subsidies for renewable energy cost taxpayers about $475,000 for every job generated.”
    • “The wind industry claims to employ 85,000 Americans. That’s almost certainly an exaggeration, but if it is true it compares with roughly 140,000 miners and others directly employed by the coal industry. Wind accounts for a little more than 1% of electricity generation and coal almost 50%. So it takes at least 25 times more workers to produce a kilowatt of electricity from wind as from coal.”

    This information is timely as Kansas Governor Mark Parkinson recently released a list of his “achievements,” three of which involve increasing wind power in Kansas.

    Incoming Kansas governor Sam Brownback is in favor of wind energy too, and he also supports federal subsidies and mandates for ethanol production and use. In endorsing Brownback the Kansas Association of Ethanol Producers said “… no other public official has done more to promote the merits of ethanol than Sam Brownback. Whereas ethanol is the future of America’s fuel supply, Sam Brownback is the future of Kansas.”

    The Wall Street Journal has also long been opposed to this intervention in the market for ethanol, recently quoting a report by a group of U.S. Senators: “Historically our government has helped a product compete in one of three ways: subsidize it, protect it from competition, or require its use. We understand that ethanol may be the only product receiving all three forms of support from the U.S. government at this time.”

  • Kansas Governor Parkinson says “thank you”

    This week outgoing Kansas Governor Mark Parkinson released a “thank you” to Kansans that has been commented on — favorably — in many Kansas newspapers and media outlets. The entire piece may be read at the governor’s site at Thanks So Much.

    The governor’s list of “achievements” — his language, not mine — is a reminder that under Parkinson and his predecessor Kathleen Sebelius Kansans have lost economic and personal freedom. It’s nothing that we should thank Parkinson for, and nothing he should be proud of.

    Under achievement number one (“Steering the state budget through a very challenging time”) Parkinson wrote “Suffice it to say that I cut state spending more than any governor in Kansas history.” He doesn’t mention that he was forced to make these cuts, as Kansas can’t run deficits like the federal government.

    Achievements two, three, and four have to do with his promotion of wind power in Kansas. It’s almost impossible to overstate how unwise these policies are. See Wind power: a wise investment for Wichita and Kansas? for a recent discussion of why wind power is a bad investment. Relying on the manufacturing of wind power equipment as an economic development strategy is an even worse idea. The governor praises legislation that requires utilities to increase their usage of renewable power such as wind. But I’d ask the governor this: If electricity from wind is so desirable, why do utilities have to be forced — and heavily subsidized — to produce it?

    Achievement seven highlights “Economic development wins,” mentioning Black and Veatch, Cerner, Bombardier LearJet, and Hawker Beechcraft in particular. Each of these “wins” required large subsidy from the state. Worse, these taxpayer giveaways cement our practice of bureaucratic management of economic development instead of creating a vibrant Kansas business climate where innovation and entrepreneurship thrive. This state policy filters down to counties and cities, to the point where the first consideration for businesses and entrepreneurs is not is this something that will create value for customers and profit for me and my investors but rather what type of government help can I get?

    Achievement eight is the statewide smoking ban. Parkinson’s championing of it means that he doesn’t believe that adult Kansans can decide for themselves whether they want to be around smokey places, and that he has little respect for private property rights.

    Achievement nine is the new transportation plan. The governor claims it will create or keep 175,000 jobs. Most of these must be highway construction jobs, as it is that industry that heavily supported the plan. As usual, the governor and other advocates of government spending fail to see the jobs that are lost due to the government spending and the taxes necessary to pay for it. Veronique de Rugy explains: “Taxes simply transfer resources from consumers to government, displacing private spending and investment. Families whose taxes have increased will have less money to spend on themselves. They are poorer and will consume less. They also save less money, which in turn reduces the resources available for lending.” In addition, Kansas roads rate very well, even number one among the states in one highly-publicized study. Why the need to so much new investment?

    Finally, achievement number ten is “Keeping Kansas a great place to do business.” If this is true, I wonder why do we have to spend so much on subsidies to keep Kansas companies from expanding elsewhere or packing up and leaving entirely, as with Hawker Beechcraft?

  • Wind power: a wise investment for Wichita and Kansas?

    Writing in The Wall Street Journal, Robert Bryce explains the terrible economics now facing the wind power energy, with emphasis on T. Boone Pickens, who has made a big splash with his plans to invest in wind power. A few takeaways:

    • Pickens’ $2 billion investment in buying wind turbines has left him with “a slew of turbines he can’t use.”
    • U.S. government subsidies amount to $6.44 per million BTUs generated by wind, but natural gas costs just $4 now. These low prices may be around for years, with gas market futures contracts below $6 through 2017.
    • Even with the subsidy, gas can’t compete with wind. Wind power installations are down 72 percent in 2010 as compared to 2009. That trend is expected to continue.
    • “Texas Comptroller Susan Combs reported that property tax breaks for wind projects in the Lone Star State cost nearly $1.6 million per job.”
    • Because Canada has renewable energy mandates, Pickens hopes to sell his turbines there.

    With the economics of wind power looking so grim and with $2 billion of turbines sitting around looking for a buyer, we have to question the wisdom of Wichita Mayor Carl Brewer recruiting wind power companies to come to Wichita.

    Incoming Kansas governor Sam Brownback is a supporter of renewable energy standards. These standards require utility companies to produce a certain level of power from renewable sources, which in Kansas is primarily wind. When Kansas electric generator Westar announced plans to increase its wind energy portfolio, Brownback said “Kansas wind is an important resource for our state that will provide clean energy for our residents and businesses and contribute to our economic growth. I applaud Westar Energy’s leadership in wind energy.”

    A Wind Power Boonedoggle

    T. Boone Pickens badly misjudged the supply and price of natural gas.
    By Robert Bryce

    After 30 months, countless TV appearances, and $80 million spent on an extravagant PR campaign, T. Boone Pickens has finally admitted the obvious: The wind energy business isn’t a very good one.

    The Dallas-based entrepreneur, who has relentlessly promoted his “Pickens Plan” since July 4, 2008, announced earlier this month that he’s abandoning the wind business to focus on natural gas.

    Continue reading at The Wall Street Journal (subscription required) or at Bryce’s site (free)