May 2012

Subsidies don’t work

by Iain Murray on December 22, 2006

in Economy, Environment, Nanny State, Politics as Usual

A good story in the New York Times about how subsidies to domestic oil and gas producers are a waste of taxpayer dollars:

Analysts said the meager impact of royalty incentives was not surprising: for oil and gas companies deciding whether to drill in deep water, the potential money involved in royalty incentives is small compared with the money at stake in changes of market prices.

Eliminating royalties on oil or gas will save a company 12 to 16 percent on some of its production. But those savings are minuscule compared with the nearly fourfold increase in oil prices from $15 a barrel in 1999 to more than $70 this summer.

CEI has long opposed federal subsidies to oil and gas companies. As it’s Christmas, we’ll use Dave Barry to illustrate why:

You will also be thrilled, as a taxpayer, to learn that the Farm Security Act provides new subsidies for producers of lentils and chickpeas. And not a moment too soon. This nation has become far too dependent on imported lentils and chickpeas. Try to picture the horror of living in a world in which foreigners, in foreign countries, suddenly cut off our lentil and chickpea supply. Imagine how you would feel if you had to look your small child in the eye and say, “I’m sorry, little Billy or Suzy as the case may be, but there will be no lentils or chickpeas tonight, and all because we taxpayers were too shortsighted to fork over millions of dollars in support for domestic lentil and chickpea producers, who thus were forced to compete in the market like everybody else, and . . . HEY, COME BACK HERE!”

Subsidies reward those who are powerful enough to extort, erm, extract them from government. in some cases, such as fishing subsidies, they are seriously damaging. We’re better off without them.

Hat-tips: Env-econ and Greg Mankiw, two sources always worth reading even if we don’t always agree with them…

Farming is big business – with big government handouts

by Fran Smith on December 22, 2006

in Odds & Ends

The Washington Post continued its hard-hitting series attacking farm subsidies today. The article notes that some important counter-forces to the big-bucks farm lobbies are emerging to offer the moral high ground arguments.

Yesterday’s article pointed out how the biggest share of farm support goes to large-scale farmers, not the small family farm:

Large family farms, defined as those with revenue of more than $250,000, account for nearly 60 percent of all agricultural production but just 7 percent of all farms. They receive more than 54 percent of government subsidies. And their share of federal payments is growing — more than doubling over the past decade for the biggest farms.

Farewell to Frank

by Iain Murray on December 22, 2006

in Economy

Frank Johnson, the Thatcherite journalist and wit, died recently at the tragically early age of 63. It has been a bad year for Thatcherites – we lost Ralph Harris and Milton Friedman as well this year – but John O’Sullivan reminds us of the zeal with which Thatcherites opposed the nanny state in the 1970s in his excellent obituary for Frank in ConservativeHome. A sample:

No one present when the TUC’s Len Murray attended one of Bill Deedes’s Telegraph drink parties could have doubted that Frank had digested the full Thatcherite creed. Murray was arguing that the workers in a failing company deserved financial compensation because they had “invested their lives” in it.“I would be a little wary of that argument, Lord Murray,” I said politely, “because if that were so…”

”When the company went bankrupt, the workers would all drop dead,” interjected Frank.

Murray had been one of the most powerful men in Britain when he headed the TUC (Trades Union Congress). Interestingly, I do not know who the current General Secretary of the TUC is. We have men like Frank Johnson to thank for that.

TSA — Unsafe at Any Altitude

by John Berlau on December 21, 2006

in Odds & Ends, Precaution & Risk

If you’re flying this holiday season, once you’re on board the plane — after getting through with the stripping of belt and shoes, the unfolding of laptops, the confiscation of liquids, and possible patdowns — you may want to whip out a book the Transportation Security Administration doesn’t want you to read.

The new book that lays bare the TSA’s sorry record at flight security is called Unsafe at Any Altitude. Don’t let the sensational title fool you. Being the author of Eco-Freaks: Environmentalism Is Hazardous to Your Health — another great stocking stuffer — I know the virtue of strong titles to grab attention.

Written by husband and wife Joseph and Susan Trento — respectively, a former CNN reporter and a former Congressional staffer — and published by the prestigious independent Steerforth Press, Unsafe at Any Altitude is the exact opposite of a Naderite expose and a call for more government regulation. This book exposes government bungling at its worst, while showing that the private security firms performed better in almost every respect when it came to ensuring flight safety. As such, makes one of the most compelling cases for privatization in air travel in years.

The Trentos obtained non-public documents they say show the TSA passes random safety tests — detecting weapons in bags — only 50 percent of the time. By contrast, the pre-911 private security firms would regularly pass 80 to 95 percent of the time. The Trentos also defend the much-maligned Argenbright Security, who they show was actually a pioneering firm in baggage screening that Europeans countries learned from. And they show how John McCain was largely to blame for pushing the GOP to go along with the Democrat-pushed plan to create an Army of unionized TSA workers.

The Trentos also show how there was more accountability. Not just from regulatory agencies, but also the airlines. The airlines would push to fire a service that didn’t have a satisfactory screeing record. The TSA, by contrast, answers to virtually no one.

The airport system wasn’t perfect. Largely, because, unlike countries from Great Britain to Mexico, the U.S. had barely any airports that had been privatized or corporatized. But the Trentos show that we can learn from the semi-private system of the recent past to make for a safer system of air travel in the future.

The Trentos also have a web site. Have a nice flight!

Making Job Losses Bad Politics

by Ivan Osorio on December 21, 2006

in Economy, Odds & Ends

Yesterday, President Bush announced that he may go along with Congressional Democrats’ proposal for an increase in the federal minimum wage, in exchange for some tax and regulatory. Today, I note in The American Spectator that this may not be a politically wise move.

Lost in translation? Mais non!

by Fran Smith on December 21, 2006

in Environment, Odds & Ends, Sanctimony

Today the French newspaper L’Express attacked CEI and other skeptics of catastrophic global warming as “les négationnistes” or “deniers” — following the low ground captured by Senators Snowe and Rockefeller (see earlier posts on this).

It’s interesting too that the article needed some serious fact-checking — not only about the science of global warming, but about CEI. L’Express said that CEI is “une organisation de lobbying créée par ExxonMobil.” (Translation: “a lobbying organization created by ExxonMobil”)

Mais non! CEI was créée, founded, established — whatever he did — by Fred L. Smith, Jr. in 1984 — with no money or involvement by ExxonMobil (having a working spouse was helpful). For its first year, CEI operated from our apartment, with one underpaid employee knocking on the door each morning. (C’est une histoire triste, n’est-ce pas?)

What’s also shocking about this article is its — shall I say — l’arrogance francais. Check out this quote from the article: “Aujourd’hui, le doute n’est plus permis.” No translation needed.

Carbon Trading Enriches the Few (for no global benefit)

by Iain Murray on December 21, 2006

in Environment

Wonder where all the money the developed world is investing in the developing world to reduce greenhouse gas emissions is going? To the privileged few, of course:

Among their targets is a large rusting chemical factory here in southeastern China. Its emissions of just one waste gas contribute as much to global warming each year as the emissions from a million American cars, each driven 12,000 miles.

Cleaning up this factory will require an incinerator that costs $5 million — far less than the cost of cleaning up so many cars, or other sources of pollution in Europe and Japan.

Yet the foreign companies will pay roughly $500 million for the incinerator — 100 times what it cost. The high price is set in a European-based market in carbon dioxide emissions. Because the waste gas has a far more powerful effect on global warming than carbon dioxide emissions, the foreign businesses must pay a premium far beyond the cost of the actual cleanup.

The huge profits from that will be divided by the chemical factory’s owners, a Chinese government energy fund, and the consultants and bankers who put together the deal from a mansion in the wealthy Mayfair district of London.

So why aren’t the carbon traders investing in less ethically-challenged projects?

As word of deals like this has spread, everyone involved in the nascent business is searching for other such potential jackpots in developing countries.

As for more modest deals, like small wind farms, “if you don’t have a humongous margin, it’s not worth it,” said Pedro Moura Costa, chief operating officer of EcoSecurities, an emissions-trading company in Oxford, England.

I’m wondering whether the term “carbon pirates” might not be useful here.

Yet more Stern criticism

by Iain Murray on December 21, 2006

in Economy, Environment, Politics as Usual

David Maddison of the University of Birmingham in the UK adds his voice (PDF link) to the criticisms of the Stern Review, concluding:

There is much in the Stern report with which one can wholeheartedly agree. Climate
change is a problem. Climate policy can be informed by cost benefit analysis. The
treatment of uncertainty is of paramount importance and economic instruments have a
role to play in cutting carbon emissions. Permitting tropical deforestation is madness.
Some of the background material commissioned by Stern is top quality.

But the review also contains errors, questionable judgement and inconsistencies. Stern
moreover misses the opportunity to say some things which needed to be said. There is
often insufficient information to discover what Stern and his team have done and how
they arrive at key results. It would currently be impossible for another researcher to
replicate Stern’s findings for lack of information. Some of the evidence upon which
the review is based is dated whilst more recent evidence has been overlooked. The
Stern review should have been subject to far more extensive peer review prior to its
release, particularly in the light of its political impact.

Because of the shortcomings highlighted here and elsewhere it is unclear whether the
Stern report provides an economic rationale for the measures it recommends.

The Stern Review has been roundly castigated by economists who know about the subject. Yet politicians and advocates continue to trumpet it because it is politically convenient. Just who is distorting research findings here?

The tension between science and alarmism

by Iain Murray on December 21, 2006

in Economy, Precaution & Risk, Sanctimony

Early last month, at about the time of the publication of the Stern Review with its inclusion of “catastrophe” in its analysis of the risks of global warming, Mike Hulme, Director of the Tyndall Centre for Climate Change Research, warned that things were getting out of hand:

I have found myself increasingly chastised by climate change campaigners when my public statements and lectures on climate change have not satisfied their thirst for environmental drama and exaggerated rhetoric.

It seems that it is we, the professional climate scientists, who are now the (catastrophe) sceptics. How the wheel turns.

He concluded:

I believe climate change is real, must be faced and action taken. But the discourse of catastrophe is in danger of tipping society onto a negative, depressive and reactionary trajectory.

Now Kevin Vranes of the Prometheus blog reports from the American Geophysical Union conference that there is a growing tension between climate scientists and those who use climate science to spread alarmism:

What I see is something that I am having a hard time labeling, but that I might call either a “hangover” or a “sophomore slump” or “buyers remorse.” None fit perfectly, but perhaps the combination does. I speak for (my interpretation) of the collective: {We tried for years — decades — to get them to listen to us about climate change. To do that we had to ramp up our rhetoric. We had to figure out ways to tone down our natural skepticism (we are scientists, after all) in order to put on a united face. We knew it would mean pushing the science harder than it should be. We knew it would mean allowing the boundary-pushers on the “it’s happening” side free reign while stifling the boundary-pushers on the other side. But knowing the science, we knew the stakes to humanity were high and that the opposition to the truth would be fierce, so we knew we had to dig in. But now they are listening. Now they do believe us. Now they say they’re ready to take action. And now we’re wondering if we didn’t create a monster. We’re wondering if they realize how uncertain our projections of future climate are. We wonder if we’ve oversold the science. We’re wondering what happened to our community, that individuals caveat even the most minor questionings of barely-proven climate change evidence, lest they be tagged as “skeptics.” We’re wondering if we’ve let our alarm at the problem trickle to the public sphere, missing all the caveats in translation that we have internalized. And we’re wondering if we’ve let some of our scientists take the science too far, promise too much knowledge, and promote more certainty in ourselves than is warranted.}

He refers to a colleague who allowed his science to be directed by fear:

I came to this place in a few ways. One was a colleague describing a caveat he put into his poster abstract out of fear — yes, fear! (He strongly called into question widely-quoted data supporting a decline in snowpack and advance in spring peak runoff in the northern Rockies.) Another was multiple colleagues giving me independent but similar blistering accounts of the GCMs they work on (upcoming post on this).

He promises more such examples and makes a point that we at CEI have made for years:

In upcoming posts I will give concrete examples of events and discussions from which I draw these conclusions. For now I leave the concerned climsci community with the thoughts of one former Congressional science fellow who is now back in research science (with some additions of my own): dealing with uncertainty is exactly what Congresspeople do, and they do it a lot better than we do. For scientists, uncertainty is an abstract concept, something that feeds into an academic study, a place where the stakes are low and time-scale is long-term. For politicians and unelected decision-makers, uncertainty is life-or-death, yet decisions must still be made. Politicians constantly make decisions amid levels of uncertainty that would stifle the publication of any academic climate change paper. We need to realize that, give the politicians their due, and get the hell out of their way. Give them the science and the uncertainties and let them make the decisions. Overplaying our hand is a dangerous gambit, and may spell big trouble for us in the future.

Quite right. The problem of global warming is not a scientific one. Science can only inform policy choices that have to take economic, political and moral considerations into play as well. Politicians, not scientists, are the professionals at doing that. As soon as we allow the economic, political and moral considerations to be dictated by the science, or, even worse, by a politicized version of the science, then we have abandoned democracy for a form of techno-ochlocracy – rule by those who shout the loudest about the science. I hope Kevin is right and that more scientist will step up and condemn those like Al Gore who distort the science for their own ends while condemning reasonable skepticism as a distortion instead.
There is a great deal at stake here for society and science in general way beyond the question of greenhouse gas restrictions, and that’s why CEI will not be cowed by threats of Nuremberg Trials for “climate deniers.”

Who gets the farm pork?

by Fran Smith on December 20, 2006

in Politics as Usual

According to news reports, the U.S. Department of Agriculture will release on Wednesday a database showing just which farmers get part of the $56 billion in subsidies listed. Although this information has been available, the data have been difficult to locate and it has been almost impossible to find the names of individuals who received subsidy payments.

The USDA said the database is too huge for its website, so it is distributing the data to some news organizations and to the Environmental Working Group, which said it will post the info online.

The EWG site shows that in 2005, the top 10 percent of recipients were paid 66 percent of all USDA subsidies, and the top 1 percent of those receiving payments got 20 percent of the total.

As debate on the 2007 Farm Bill heats up in the next Congress, having readily available data on just which farmers receive which subsidies could make clear that the majority of the farm pork goes to relatively few porkers.

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