An update to Friday’s post:
Bloomberg (and the The New York Times) reported this weekend on China’s response to U.S. accusations over Chinese green energy subsidies. Zhang Guobao, a top energy official in China, directed a number of blunt comments towards the Obama administration:
Should the Americans pursue the subsidy issue with the World Trade Organization, Mr. Zhang said, “the only ones who will be humiliated are themselves.”
“What America is blaming us for is exactly what they do themselves,” Mr. Zhang said. “Chinese subsidies to new energy companies are much smaller than those of the U.S. government. If the U.S. government can subsidize companies, then why can’t we?”
Mr. Zhang accused American trade officials of repeatedly delaying talks over the same issues that the White House now wanted to investigate and suggested the administration was playing election season politics.
Mr. Zhang called the Steelworkers’ complaint unfounded, saying the Obama administration had proposed subsidies totaling $60 billion for clean energy industries, adding that the American government had placed domestic-content provisions — so-called Buy American clauses — on certain clean energy products.
“I have been thinking: What do the Americans want?” said Mr. Zhang, the vice chairman of the government’s National Development and Reform Commission. “Do they want fair trade? Or an earnest dialogue? Or transparent information? I don’t think they want any of this. I think more likely, the Americans just want votes.”
He makes a number of very obvious points: this case is likely without merit as the U.S. heavily subsidizes our domestic green energy industry, and that the Obama administration is misdirecting U.S. anger over the economy towards China.
The New York Times also published this weekend a China bashing op-ed by Senator Sherrod Brown (D-Ohio). Senator Brown, no stranger to criticizing U.S. trade policy, has written a book — Myths of Free Trade — covering it. Departing from the almost universal consensus of economists across the political spectrum, Brown argues that no one outside of rich investors benefit from what he calls “unregulated trade” and that free trade has led to global economic stagnation. Despite what the Times might tell you, denying reality is a time-honored tradition shared by politicians across the political spectrum.
[youtube:http://www.youtube.com/watch?v=bmzVgg0tpmo 285 234]
Doug Koplow of Earth Track, assisted by researchers with Friends of the Earth, has produced a new study, A Boon to Bad Biofuels, on the taxpayer cost of federal biofuel tax credits and mandates. The numbers are staggering.
In 2008, federal support for ethanol and biodiesel totalled more than $9.5 billion. The subsidy system has two main components:
- The Renewable Fuels Standard (RFS), which mandates increased blending of biofuels into the national motor fuel supply, ramping up from 9 billion gallons in 2008 to 36 billion in 2022.
- Tax credits including the Volumetric Ethanol Excise Tax Credit (VEETC), which pays out $0.45 for each gallon of corn ethanol; a parallel program for biodiesel worth $1.00 per gallon; and a production tax credit that pays $1.01 for each gallon of cellulosic ethanol produced.
“In their current form, these tax credits scale linearly with production, without limit,” notes Koplow. This means that the $9.5 billion in subsidies in 2008 increases six-fold to $60 billion in 2022, “due both to more production and to a shift to more heavily subsidized cellulosic fuels.” The cumulative cost from 2008 to 2022: $420 billion, nearly 40% of which will go to the corn industry.
But wait, there may be more. As a candidate, Obama proposed to up the RFS to 60 billion gallons by 2030. If this proposal is adopted, “subsidies would top $120 billion per year by the end of the period, for a cumulative subsidy during the 2008-2030 period of more than $1 trillion.”
Kudos to Koplow and his colleagues at Friends of the Earth for this important contribution.
My good friend and Bureaucrash ally Xaq Fixx recently altered me to an interesting story on the intersection of politics, technology and free speech. It seems that the state government of California, through the California Employment Training Panel, is paying contractors who train in-state workers in new skills – an effort to boost the Golden State’s notoriously sagging economy. Nothing too unusual there.
Enter SF Weekly’s Matt Smith, who noticed that the list of recipients of this state-subsidized training were employees of Cybernet Entertainment LLC. Cybernet in turn is the proprietor of a number of websites which feature videos catering to adult and, ah, highly specialized interests. Kinky but legal, in other words. Smith submitted a public records request regarding the company’s participation to the state, and received a reply to the effect that “the government had been unaware that Cybernet was in the business of narrowcasting videos depicting sexualized torture.”
Thus informed, however, officials at the Employment Training Panel promptly canceled Cybernet’s participation in the program, citing a policy of not working with the adult entertainment industry. The company’s COO Daniel Riedel, has vowed to fight the state to keep the subsidy. Interestingly, scribe Smith goes on to cite the possibility that denying participation in the program based on the content produced by Cybernet may violate the First Amendment:
Does the state’s refusal to train porn-makers violate constitutional free-speech guarantees? I’m not joking. Some serious and credible people says it’s worth considering whether it’s legal to deny training to porn workers merely because they film naked, shackled women with live electrodes clipped to their genitals.
Smith then goes on to cite experts from the California First Amendment Coalition and the UC Hastings College of the Law to the effect that there might, in fact, be a case here for Cybernet. And, of course, they have their natural allies within their own industry – porn titan Vivid Entertainment Group is also opposed to the decision.
So what do we think, OpenMarket readers? Assuming that there’s going to be an employment training subsidy program in place at all, should the people running it have discretion to deny participation to legal businesses because they don’t like the product being pedaled? Should vegan grant administrators, for example, be able to veto applications from meat processing plants, or Catholic administrators applications from health clinics that provide abortions? Tell us what you think in the comments section.
[youtube:http://www.youtube.com/watch?v=iARSO30KAks 285 234]
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