Warren is local to me (he lives about three miles away actually), and runs both the excellent libertarian small business and economics blog CoyoteBlog, and the absolutely essential climate blog Climate Skeptic.
Category Archives: Energy Policy
As a libertarian, I spend a lot of time railing against idiotic government giveaways. The TARP, the
Porkulus Stimulus, and Cash For Clunkers all took copious levels of heat. I derided them for various reasons:
TARP: Notwithstanding the wide-ranging areas this money was targeted to (i.e. auto bailouts) and the fact that when it was determined it would lose less than planned the difference would be spent elsewhere, this was nothing more than a bald-faced attempt to shore up balance sheets to forestall economic reality. I said at the time that much of this activity was designed to slow down the contraction and hope that the economy could grow out of the doldrums in the meantime, but that it risks causing rampant inflation when money velocity actually picks up. Worst, it had the potential for the government to buy the worst garbage paper the banks had on offer, essentially being an economic sinkhole of major proportions. Luckily it has not been as bad as anticipated, largely because government meddling in the internal affairs of banks has caused them to try like hell to pay it back quickly and get themselves out from under its terms.
Stimulus: The stimulus was billed as a way to jumpstart shovel-ready infrastructure projects, but it was quickly apparent that the only thing shoveled was a load of BS. Stimulus was little more than a giveaway to state and local governments to continue spending beyond the ability of their states to support and reward them for overspending the proceeds of economic expansion as if the bubble would never pop. While employment has plummeted in the private sector, government is growing — never a good sign to a libertarian. Here in high-tax California, we need to slash our state public sector, not bail it out.
Cash for clunkers: Billed as a stimulus and environmental program, cash for clunkers was pure destruction of economic value. Cars with an average market value of roughly $1500 — productive, useful assets — were rendered completely inoperable. In a perverse unintended consequence, it dried up the supply of older used cars (and thus increased the price of said cars), hurting some of the poor who might not be able to afford better vehicles. Paying people to dig and then fill up holes would have been economically stupid, but cash for clunkers is the equivalent of asking them to put uranium in those holes so that hole could never be safely dug again. Pure economic insanity.
But Cash for Caulkers is somewhat different. For those unfamiliar with the proposed program, it gives tax subsidies to people who work to make their homes more energy-efficient. The draft would provide a 50% rebate on materials and labor up to $12K per household. As a libertarian, I don’t much believe that the government should have the responsibility to fix economic burst bubbles. But this particular policy has several features that make it much more effective and efficient economic stimulus than much of what the federal government has done.
- This policy primarily targets those in the building/construction trade, arguably the hardest hit of the economic downturn. Since the housing bubble was partially created by bad government policy, it is at least preferable to help these folks find a more orderly transition than the welfare line.
- Home weatherization and energy efficiency is often a large initial expense with a long time horizon to pay back. Due to increased social and geographic mobility, it is often ignored by homeowners who don’t know if they’ll be in their homes long enough to make the efficiency gains worth it. Thus, improvements in home energy efficiency are underproduced by the market.
- Because this will reduce energy consumption in some homes, it may have the positive externality of reducing demand on energy for all users (thus hopefully lowering price). Again, this positive externality suggests that energy efficiency improvements are underproduced by the market.
- Finally, unlike Cash-for-clunkers, which destroyed and replaced useful economic assets, Cash for Caulkers actually improves existing economic assets. There is a lasting economic benefit to reduced energy usage for the present and future owners of these homes.
Of course, I cannot claim that I’m in favor of this program. The positive aspects I list above are ascribed to my ideal cash-for-caulkers policy, which I am certain will not closely resemble what comes out of the sausage-factory on Capitol Hill. Waste, fraud, and abuse are certain to be rampant. In a cost-benefit analysis of the size of the program, one can’t assume Congress will determine either cost or benefit rationally. It is picking economic winners and losers, which is partly responsible for getting us into the Great Recession in the first place. And finally, while it might have been an interesting idea BEFORE the TARP, stimulus, and cash for clunkers, I think we’ve already gone so far into deficit spending that it’s a good idea to stop while we’re only a few trillion behind. It appears that the country has hired Barack Obama to dig a deficit hole and [hopefully] fill it back up, but he simply refuses to stop digging.
So if I’m not in favor of the program, why am I writing this post? Frankly, it’s because I saw the level of derision that the policy got on several fronts (including from Jon Stewart). Done properly (which I don’t expect Congress to be capable of delivering), it would have been a timely program that helps those who are most affected by the housing crash while improving existing assets that might not be otherwise improved. Done properly, it could actually be seen as an investment in our future — and by that I mean an actual investment, not simply “spending”, which is politicospeak for that word.
It might sound silly, but home weatherization actually has potential at being smart policy. After a year of horrible, bad, not-very-good-at-all government spending and giveaway programs, to see one that actually has promise shouldn’t cause scorn and derision as its primary reactions.
Anyone who is really paying attention to the global warming debate will notice that reducing carbon emissions and wealth distribution go hand-in-hand.
Or do they?
Dick Morris and Eileen McGann wrote a very interesting article which makes very much the opposite point.
The goals of the climate change crowd are not reduction in global warming but the enactment of a world-wide system of regulation which puts business under government control and transfers wealth from rich nations to poor ones under the guise of fighting climate change. Should the emissions come down on their own, as they are doing, the excuse for draconian legislation goes, well, up in smoke.
The facts are startling. In 1990, the year chosen as the global benchmark for carbon emissions, the United States emitted 5,007 millions of metric tons of carbon (mmts). Kyoto specified that emissions must be reduced to a level 6% lower than in 1990. For the U.S., that means 4,700 million metric tons.
American carbon emissions rose year after year until they peaked in 2007 at 5,967 mmts. But, in 2008, they dropped to 5,801 and, in 2009, the best estimate is for a reduction to 5,476. So, in two years, U.S. carbon emissions will have gone down by more than 500 mmts – a cut of over 8%.
President Obama has pledged to bring the U.S. carbon emissions down by 17%. He’s halfway there.
All this without government regulation, taxation, or phony “carbon credits”.
In all honesty, I really don’t know what to make of the science behind the man made global warming debate* but I have been a skeptic since the issue has been part of the public debate (and long before the whole ClimateGate scandal broke). I don’t doubt the phenomenon of global warming at all; the earth has warmed and cooled many times over billions of years without the intervention of man. Why wouldn’t the earth warm up again regardless of man’s intervention?
My skepticism aside, the fact that carbon emissions are being reduced on the part of private actors without government force isn’t all that surprising. Over the last several years, global warming “awareness” has been broadcast on an almost daily basis and the market has responded.
As a general rule, I believe that reducing waste and increasing efficiency is not only good for the environment but also cost effective. Being environmentally conscious should not mean sacrificing quality or increasing costs.
A good Capitalist wants to have the car with the best mpg rating without sacrificing safety. It’s not because the Capitalist is necessarily concerned about man made global warming nor that s/he wants to “stick it to the BIG oil companies” but simply s/he wants more bang for his/her buck (greedy Capitalist!).
On a personal level, I use the reusable shopping bags not because I am overly concerned about too many plastic bags filling up the public landfill but simply because the reusable bags are stronger. I am quite willing to pay the $2 it costs to buy the stronger, reusable bag because it means fewer trips between my vehicle and my home without fear of the bag tearing in the process.
Many of these “green” innovations have benefits beyond combating pollution.
But even if everything Morris and McGann writes is true and even if the Kyoto targets are met (or even exceeded), this will not be enough for the global warming extremists**. If carbon emissions are reduced by 17%, they will move the goal posts and demand 20 and 25% reductions. When these goals are not met, the extremists will demand more government regulation despite what the free market has achieved on its own.
Over at the Master Resource Blog, law professor Gail Heriot points out the similarities between global warming, fear-monger Al Gore and Xhosa Prophetess Nongqawuse:
Nongqawuse was a teenager and a member of the Xhosa tribe in South Africa. One day in April or May of 1856, she went down to the river to fetch water. When she returned, she said that she had encountered the spirits of three of her ancestors who told her that her people must destroy their crops and kill their cattle. In return, the sun would rise red on February 18, 1857, and the Xhosa ancestors would sweep the British settlers from the land and bring them fresh, healthier cattle. (Some of the Xhosa cattle had been suffering from a lung ailment, which may or may not have been brought by the British settlers’ cattle.)
Astonishingly, the Xhosa chieftain, Sarhili, agreed to do exactly as this young girl urged. Over the next year, a frenzy occurred in which it is estimated that between 300,000 and 400,000 cattle were killed and crops destroyed. Historians sometimes call it the “Great Cattle Killing.”
But on February 18, 1857, the sun rose as usual. It was not red. And the Xhosa ancestors did not show. But the Xhosa people had destroyed their livelihood. In the resulting famine, the population of the area dropped from 105,000 to less than 27,000. Cannibalism was reported. Following Nongqawuse’s advice was a calamity of staggering proportions for the Xhosa people.
Like Nongqawuse, Gore tells us that the sun will soon rise red over the land. Well, maybe. But already the models that he relies on have been proven wrong. The intense period of warming that these models predicted over the past ten years never came to pass. Yet we are repeatedly told that it’s still coming and that it’s just a little late. Apparently, we should pay no attention to the fact that the polar ice is expanding again. Instead, we must put the brakes on our use of energy–the very thing that makes the modern world possible–to avoid antagonizing the spirits of our ancestors, I mean to avoid climate disaster.
The most infuriating aspect of the fear-mongers’ movement is that their solution to climate change is for humanity to adopt an economic system that has brought misery and death nearly every time it has been tried. From the tropics to the poles, free markets have brought prosperity, comfort and longevity to the masses. No matter how well intentioned they are, the fear-mongers threaten to wreck the engine that allows the Earth to support a human population in the billions.
The Earth’s climate is in a state of flux. The notion that humanity should doom itself to privation and famines in a futile attempt to maintain climactic parameters within a set of narrow bands is the height of folly. If we kill our cattle, we too will starve.
Homeowners’ Associations are one of life’s little sour tastes of government. Petty meddling nannies who tell you that you can’t do X, or that you must do Y, in order to keep the neighborhood “uniform” or somesuch. Sadly, it’s also a microcosm for most peoples’ reactions to government. When it’s a neighbor doing something they don’t like, they scour the by-laws for a way to run off to the HOA board of directors to get a nice little note sent to the neighbor. But when it’s their own behavior scrutinized, they think the HOA board of directors is an intolerable PITA.
So you can imagine I’m not a big fan of HOA’s, and there’s a little bit of schadenfreude in watching them get their hands slapped… But I still can’t support this (via Ezra Klein — hence calling this “good” — on Waxman-Markey):
Lots of small tweaks were added in the past day or two. And some of them were good! Rep. Dennis Cardoza, for instance, added a smart amendment to discourage neighborhood associations from prohibiting solar panels of aesthetic grounds.
So, they can tell you not to paint your door green, but they can’t stop you from filling your roof with a solar array the size of a tennis court.
I have a coworker facing this issue right now. He lives in Newport Beach, CA, and his HOA has some waterfront homes. One of his neighbors with oceanfront (cliff, not sand) is planning to put solar panels down the face of the cliff to electrically heat his pool. This, of course, is California. There are environmental laws, and the HOA doesn’t want to see this happen either. But being California, they ALREADY have laws that stop the HOA or anyone else (including the Greens) from interfering, because solar energy takes precedence. Now it sounds like this will extend nationwide.
This is one of those issues that gets thorny for libertarians. It comes down to property rights, but the question of what legitimate hindrances can be placed on the owners by HOA’s. After all, an HOA is a contract that a buyer of a house willingly enters into. But it doesn’t seem to me like an issue in which Congress has any right to intervene.
As a renter who is waiting for the complete collapse of the market before I buy a home, I know that I may be faced with a tough decision regarding my purchase based upon whether or not I’ll choose a neighborhood with an HOA, and whether the existence of an HOA is enough to dissuade me from the house we otherwise find desirable. But I know what I don’t want, and that is for Congress to be the one telling my HOA what it can or cannot do.