Category: US business

Several years ago, the word “green” became a noun, and not something you ate with other vegetables and your favorite dressing.

Adding the adjective “green” to anything — “green” energy, “green” cleaning products, etc. — automatically makes it more expensive. This isn’t a problem for the “rich,” but it is a problem for everyone else, particularly the poor, who obviously have less money to spend.

The National Center for Policy Analysis chronicles how much “green” costs the poor in one specific area, energy:

The United Nations and other global warming activists frequently say that global warming hurts the poor the most. But the policies that these groups want to put into place to combat climate change are incredibly costly and they hurt the poor most of all, says Bjorn Lømborg, director of the Copenhagen Consensus Centre.

• Since 2005, British households have reduced electricity consumption by 10 percent.
• This is a stat frequently cheered by environmentalists, but they tend to leave out the fact that the reduction came alongside a 50 percent increase in electricity prices (necessary to pay for Britain’s increased share of renewables from 1.8 percent to 4.6 percent).

This directly impacts the poor, for whom electricity costs are a large portion of their budgets. Higher energy prices means that the poor must reduce their electricity consumption in order to pay for it. Energy consumption among the rich, on the other hand, has remained steady.

In the last five years, it has become 63 percent more expensive to heat a home in the United Kingdom. At the same time, real wages have declined.

• More and more households (17 percent) are being forced to spend more than 10 percent of their income simply on energy, earning the designation “energy poor.” Elderly households are especially affected by this — 25 percent of all households whose inhabitants are over the age of 60 fall into this category.
• The situation in Germany is even worse. German households have seen an 80 percent increase in electricity prices since 2000, and nearly 7 million households are considered “energy poor.”

In the developing world, millions are dying from indoor air pollution, because they must burn twigs and dung to heat their homes. These poverty-stricken nations need access to cheap electricity, yet the developed world wants these nations to use solar panels.

• According to the Centre for Global Development, a $10 billion renewable energy investment would lift 20 million Africans out of poverty.
• But a $10 billion investment in gas electrification? That would lift 90 million out of poverty.

People and nations become prosperous with access to affordable and dependable energy. Those advocating policies to combat global warming claim that doing so will help the world’s poor. They do not recognize the fact that cutting carbon emissions is the least efficient means to this end. What the poor need is affordable and plentiful energy.

Lømborg adds specific examples:

Stories of fuel poverty frequently appear in the press. A 75-year-old widow, Rita Young, has been quoted saying: ‘I’ve worked all my life. It doesn’t feel fair. People my age don’t want to put hats and scarves on in their homes, but there’s nothing we can do about it. I sit in a blanket, put on a hat and sometimes go to bed at 7.30 in the evening.’ She joins almost a million other pensioners who are forced to stay in bed longer to keep warm because of rising fuel bills.

But things could be worse. In Germany green subsidies will cost €23.6 billion this year. Real household electricity prices have increased by 80 per cent since 2000, contributing to almost seven million households now living in energy poverty. Wealthy homeowners in Bavaria might feel good about installing inefficient solar panels on their roofs, but their lavish subsidies are essentially financed by poor tenants in the Ruhr paying higher electricity costs. …

The rich world generates just 0.8 per cent of its energy from solar and wind, far from meeting even minimal demand. In fact, Germany will build ten new coal-fired power plants over the next two years to keep its own lights on.

Africa is the renewable utopia, getting 50 per cent of its energy from renewables — though nobody wants to emulate it. In 1971, China derived 40 per cent of its energy from renewables. Since then, it has powered its incredible growth almost exclusively on heavily polluting coal, lifting a historic 680 million people out of poverty. Today, China gets a trifling 0.23 per cent of its energy from unreliable wind and solar.

Yet most Westerners still want to focus on putting up more inefficient solar panels in the developing world. But this infatuation inflicts a real cost. A recent analysis from the Centre for Global Development shows that $10 billion invested in such renewables would help lift 20 million people in Africa out of poverty. It sounds impressive, until you learn that if this sum was spent on gas electrification it would lift 90 million people out of poverty. So in choosing to spend that $10 billion on renewables, we deliberately end up choosing to leave more than 70 million people in darkness and poverty. …

Dr Rowan Williams, the former Archbishop of Canterbury, wrote in the Sunday Telegraph last weekend about how the industrialised economies’ greenhouse emissions have wrecked the world. He urges us to cut fossil fuel-based pollution, to help the world’s poor. Sadly, it does not seem to occur to the well-meaning Dr Williams to ask whether we best help the poor by cutting carbon emissions — or by focusing on the provision of affordable food, medicine or energy. It seems not to occur to him that there is a trade-off.

The Evil Koch Brothers — you know, employers of 2,400 Wisconsinites — have a role within the Republican Party that you might not expect, according to, of all people, a Mother Jones magazine writer:

Recently, no less a Republican Party icon than Karl Rove canonized Charles and David Koch: “Bless them for all they do,” he wrote in Time magazine.

Rove’s blessing is the clearest sign yet that the brothers have been granted admission to the inner sanctum of Republican power. Yet for many years the Kochs were enemies of the GOP, whose political primacy they challenged through the libertarianmovement. Writing in 1978 in a magazine he owned called Libertarian Review, Charles Kochcalled the GOP “the party of ‘business’ in the wors[t] sense” and blasted Republicans for advancing a doomed strategy that “has failed so miserably.”

It seems hard to fathom now, but the Republican establishment once viewed the Kochs as a threat. In the late 1970s, National Review — now a reliable defender of the brothers — devoted a series of articles to eviscerating the libertarian movement and its angel investor, Charles Koch, whom the magazine described as “a man whose wealth and devotion to privacy are straight out of the Howard Hughes legend.”

Now the Koch brothers, thanks to their sprawling political and fundraising network, are the toast of the GOP, while Democrats have taken up the cause of demonizing them, even placing them at the center of their midterm election strategy. Senate Majority Leader Harry Reid (D-Nev.)recently suggested that Senate Republicans should “wear Koch insignias to denote their sponsorship.” The Democratic Senatorial Campaign Committee, meanwhile, has rolled out a Web siteproclaiming that the “GOP is addicted to Koch.”

But their fiercest critics on the left may be surprised to learn that the Kochs actually share a host of views with them, particularly on social issues (though emphatically not on economic ones). And now that the brothers wield significant influence within the Republican Party, they have an opportunity to push it closer to the center on issues that have caused members of many key voting blocs — women, Latinos, youth — to shun the GOP.

For a party undergoing an identity crisis, a Koch-style makeover may not be such a bad thing.

The brothers have achieved political notoriety for bankrolling the tea party movement, leading the charge against Obama­care, stoking skepticism about climate change and carpet-bombing the airwaves with ads targeting vulnerable Democratic lawmakers via their advocacy group Americans for Prosperity. But lesser known are the issues on which they are at odds with the conservative mainstream.

The Kochs generally disapprove of foreign military interventions and were no fans of the Iraq war.As a young man, Charles strongly opposed the Vietnam War, even though this position was highly unpopular in his home town of Wichita, headquarters of military contractors such as Beech and Cessna that supplied the war effort. His activism so angered the leadership of the conservative John Birch Society, which his father had played a role in founding and where Charles was a member, that he was forced to part ways with the group in the late 1960s after placing an antiwar ad in the local newspaper.

David has criticized U.S. drug policy and victimless-crime laws. “I have friends who smoke pot. I know many homosexuals. It’s ridiculous to treat them as criminals,” he said in 1980. He supports same-sex marriage and abortion rights — positions that risk his standing in the GOP. Charles seemingly shares these views. “What a spectacle it is for the same people who preach freedom in voluntary economic activities to call for the full force of the law against voluntary sexual or other personal activities!” he wrote in his 1978 jeremiad. “What else can the public conclude but that the free-market rhetoric is a sham — that business only cares about freedom for itself, and doesn’t give a damn about freedom for the individual?” …

The Kochs ultimately abandoned the Libertarian Party, though not its core beliefs, once the futility of challenging the two-party system became clear. Thus began their three-decade climb from libertarian gadflies to Republican power brokers. The question now is what they will do with their newly acquired clout within the GOP.

The brothers have focused their advocacy largely on economic issues, such as blocking passage of 2009’s climate bill and pushing for steep decreases in state and federal spending, but there have been subtle signs that they are trying to influence other political battles. Charles dipped a toe into last year’s immigration reform debate when his instituteco-sponsored a forum on the subject with BuzzFeed. His organization has lately waded into criminal justice reform, highlighting troubling racial disparities in the system andconvening an event that featured a chapter president of the NAACP — an organization that in the past has condemned the political activities of the Koch brothers.

That’s a start, but there are other ways the Kochs could nudge the Republican Party to a more moderate place. The brothers have traditionally avoided bankrolling advocacy on controversial social issues, but they would certainly throw a curveball to their opponents on the left (not to mention their supporters on the right) by actively backing the causes of marriage equality or reproductive rights. They could take a page from hedge-fund manager Paul Singer, a member of their donor network, who has emerged as a top backer of same-sex marriage.

As a conservatarian and not a Republican, I’m all for a more libertarian GOP. It is hypocritical to espouse economic liberty but not personal liberty, just as it is hypocritical for Democrats to espouse personal liberty (abortion rights, legalized marijuana, same-sex marriage) and not economic liberty (lower taxes and smaller government).

The Capital Times’ Jack Craver pauses from his usual demonization of conservatives to report that a number of Wisconsin conservatives are starting to figure out that opposition to same-sex marriage is a losing issue for them:

Aside from a vocal minority of religious hardliners, few are repeating the arguments that defined the push to ban same-sex nuptials eight years ago, when Republicans claimed that gay marriage would endanger the institution of traditional marriage and erode society’s moral fabric.

“Conservatives, it’s time to let gay marriage go,” declared an article promoted by RightWisconsin, a leading conservative website run by Milwaukee talk radio host Charlie Sykes. The author of the article, who writes under the pseudonym Conservative Consigliore, wrote that the fight against gay marriage was “a loser politically, an embarrassment socially, and a raving hypocrisy morally.”

Some Democrats running this fall are claiming that they are the real champions of the middle class.

They therefore have a few things to explain to voters about their president.

One is why raising their energy costs is good for them. From Newsmax:

The Obama administration’s ongoing assault on fossil fuels is hurting the poor, says Stephen Moore, chief economist for the Heritage Foundation and a board member of the Wall Street Journal.

“The left has this assault against . . . drilling and nuclear power and natural gas and all of the ways that we get cheap and abundant electricity,” Moore told “The Steve Malzberg Show” on Newsmax TV.

“Their agenda is to make electricity power much more expensive by making us buy it from things like windmills and solar power, which is extraordinarily expensive.

“[This] is going to hurt the poor way more than it’s going to hurt rich people because the poor are the ones who are going to be priced out of the electricity market,” he said Tuesday.

Moore said low-income families have been devastated by the government’s regulation of coal operations.

“You can go to whole towns in states like Kentucky and West Virginia, in Ohio and Pennsylvania and . . . even Virginia that have been essentially wiped out because of this, you know, wacko assault against fossil fuels,” he said.

“The people who are hurt are people who make $20,000, $30,000, $40,000 a year. These aren’t rich people, and there are whole towns, literally whole towns [that] have been decimated by this radical environmental agenda.” 

Here’s how it works: Energy is a big component of the cost of everything you buy, both in creating it and in transporting it. If things become more expensive, people buy fewer of them. If  people buy fewer things, unemployment increases. It’s unclear to me how increasing unemployment helps the middle and lower-than-middle class.

Tied to that is Obama’s obsession with global warming — I mean, climate change — I mean destroying capitalism. Herman Cain:

I’ve said it many times but it bears repeating as often as is necessary: Global warmists are really government expansionsts, and global warming is merely their chosen rationale of the moment for the things they really want to do. Try to make any distinction between the left’s preferred “response to climate change” and the left’s agenda in general: Higher taxes, more government control of industry, more enforcement power for federal bureaucrats.

You can’t. There is no distinction to be made. This is what they want regardless of circumstances. If global warming wasn’t the rationale for it, a shortage of Popsicle sticks would be.

And Secretary of State John Kerry clumsily revealed that in a commencement speech at Boston College:

“The solution is actually staring us in the face. It is energy policy. Make the right energy policy choices and America can lead a $6 trillion market with four billion users today and growing to nine billion users in the next 50 years,” Mr. Kerry said in his commencement address, referring to climate change. Then came the odd poser.

“If we make the necessary efforts to address this challenge—and supposing I’m wrong or scientists are wrong, 97% of them all wrong—supposing they are, what’s the worst that can happen?” Mr. Kerry said. “We put millions of people to work transitioning our energy, creating new and renewable and alternative; we make life healthier because we have less particulates in the air and cleaner air and more health; we give ourselves greater security through greater energy independence—that’s the downside.”

Well. Not that I would expect a left-wing ideologue like John Kerry to understand this, but that’s actually quite some downside. You manipulate the movement of capital from reliable energy sources to those that are immature and unproven. You increase people’s energy bills. You soak up taxpayer money subsidizing industries that are not viable enough to operate on their own, likely getting the same results we’ve seen so far with green energy subsidies (Solyndra, Fisker, ethanol, etc.). You impose crushing new costs on manufacturers. You turn bureaucrats loose to enforce all this, knowing full well that the culture of the federal government is to use such power to endlessly harass chosen targets.

And oh by the way, you put yourself at a competitive disadvantage globally because – regardless of what any treaty might say – other nations have shown they will only hue to this insanity until it starts costing them their economic viability.

Who do manufacturers employ? Not rich people. Kerry, to no one’s surprise, overstates the employment potential of so-called green energy (birds killed by wind turbines are unavailable for comment) and ignores the unemployment that will result.

Readers are sadly familiar with the endless series of fiscal cliffs in the federal government, deadlines after which, you know, the world ends.

Randal O’Toole of the Cato Institute explains the next one, coming up to you like a dead end:

Pundits are fretting over the looming insolvency of the Highway Trust Fund, which some call the “transportation cliff.” The fund, which distributes federal gas taxes to the states, is expected to run out of money in August, while Congressional authority to even collect gas taxes will expire in September.

The real battle is not over the cliff but how Congress spends the renewed gas tax. Here are five facts to help people understand this debate.

1. The transportation cliff resulted from overspending.

For four decades after creating the Highway Trust Fund in 1956, Congress ensured transportation spending did not exceed revenues.

In 1998, however, Congress consciously decided to spend beyond its means. Since revenues declined in 2007, Congress has had to transfer $55 billion in general funds to the Highway Trust Fund. This is not a subsidy to highways; it is a subsidy to Congress’ lack of frugality.

2. User fees are better than taxes.

Despite alarms about crumbling infrastructure, much of our transportation infrastructure is in good shape, including state highways, airports and railroads. Local roads and transit systems, on the other hand, are in relatively poor shape. The difference is that user fees pay for most of the former while taxes pay for most of the latter.

For example, the state highway “roughness index” and the number of structurally deficient bridges have both steadily declined for more than two decades. Meanwhile, America’s rail transit systems have a $60 billion maintenance backlog and transit agencies aren’t even spending enough to keep them in their current poor state of repair.

Legislators value ribbon-cutting ceremonies over routine maintenance, so when taxes fund infrastructure, governments build more than they can maintain. If fees can’t support the construction and maintenance of a piece of infrastructure, then it shouldn’t be built.

3. Raising gas taxes is not the solution.

It is tempting to think Congress could solve the problems by simply raising gas taxes. But gas taxes, like a user fee, are far from perfect.

They fail to give users information about the true cost of roads or contractors information about the real demand for travel. They cover most costs of state highways but only about a quarter of the costs of local roads. They do nothing to mitigate rush-hour congestion.

Moreover, since the real problem is not a shortage of revenues but excessive spending, raising gas taxes would only give Congress more money to spend on pork-barrel projects while failing to prevent another transportation cliff. Mileage-based user fees that guarantee people’s privacy would solve all of these problems, and hastening the transition to such fees would be better than raising taxes.

4. Competitive grants equal pork.

The Obama administration wants to put more transportation dollars into competitive grants, arguing that such grants can be spent where they are really needed.

In fact, competitive grants are really political grants. Just before the 2010 election, for example, the administration gave a high-speed rail grant to California on the condition that the funds be spent in the district of a Democratic congressman who was facing a tough re-election campaign.

Competitive grants have funded some of the most wasteful transportation projects ever. These include transit projects in Dallas, Nashville, Portland and elsewhere that attract so few riders it would have been less expensive to give every daily round-trip rider a new Toyota Prius every two years for 30 years.

5. The feds aren’t really needed.

The federal government is just a middleman between the oil companies, which pay the gas tax, and the states, which spend the money. A transition to mileage-based user fees eliminates the need for that middleman. Since Congress seems incapable of responsibly spending within its means, we are better off shifting transportation funding to state and local governments and to commuters.

The continuing trend of government by crisis is certainly the result of making bad past decisions (see O’Toole’s number 1), though expecting Congress to suddenly make good decisions (see number 4) seems naive at best.

(This is about federal, not state, gas taxes, though there are similar themes given that state government has managed to plan to spend more than state government projects to take in through current gas tax rates.)

Transportation (to be precise, “post roads”) are one of the spelled-out duties of the federal government in the U.S. Constitution. (As opposed to nearly everything else the federal government does.) There are certain forms of transportation that cross state lines (for instance, Interstate highways, interstate rail lines, airplanes and barges), though fewer than are justified to receive federal funding (for instance, mass transit).

The gas tax does reflect, though imperfectly, distance traveled, since if you drive more, you need more fuel. One problem is that as vehicle miles per gallon improve, people buy less fuel, and thus the feds (and states) get less gas tax revenue. O’Toole is correct, however, that the transportation cliff is not the result of too-low taxes, but of too-high spending, particularly on things that benefit small numbers of Americans.

One flaw in O’Toole’s piece is that he doesn’t acknowledge that, as with any business tax, the oil companies aren’t paying gas taxes; their customers — that is, drivers — are. Any increase in fuel taxes will be paid for by either drivers, directly at the pump, or consumers,  indirectly through higher costs for products and services since transportation is a cost of every product or service. (As we found out during the gas price spike in 2008 that preceded the Great Recession.) One group that would suffer would be people who have to travel long distances to work, in many cases because they choose to live where the quality of life is superior to where they work. (For instance, anyone who works in Milwaukee but doesn’t want to subject their children to the disaster area that is Milwaukee Public Schools.)

The other flaw is the idea that gas taxes can be replaced by “mileage-based user fees that guarantee people’s privacy.” As we know, the Obama administration has a rotten record on privacy issues. If you don’t trust the feds (and you shouldn’t) on such things as your health care (ObamaCare), your contributions to politicians to go (that would be the Internal Revenue Service harassing conservative groups), or which businesses the feds consider legitimate (Operation Choke Point), why should you trust the feds in funding transportation by “mileage-based user fees that guarantee people’s privacy”?

That question is posed in this Reason item:

Despite being in good financial standing, adult film performers and others in the porn industry have had bank accounts abruptly terminated—and the U.S. Department of Justice (DOJ) may have had something to do with it.

Under “Operation Choke Point,” the DOJ and its allies are going after legal but subjectively undesirable business ventures by pressuring banks to terminate their bank accounts or refuse their business. The very premise is clearly chilling—the DOJ is coercing private businesses in an attempt to centrally engineer the American marketplace based on it’s own politically biased moral judgements. Targeted business categories so far have included payday lenders, ammunition sales, dating services, purveyors of drug paraphernalia, and online gambling sites. …

For years, various government initiatives have been aimed at reaching the “unbanked” and “underbanked.” Federal officials claim to want to help these individuals avoid high fees and other downsides of nontraditional financial services, but it’s hard not to suspect these efforts have at least as much to do with wanting a record of everyone’s financial goings-on. If the unbanked were such a real concern, why would federal agencies be simultaneously encouraging banks to drop more customers? …

In a March 2013 hearing before a Senate Banking subcommittee, Sen. David Vitter (R-La.) pointed out the obvious: that DOJ has “no statutory authority” to be doing this. But why bother with statutory authority when you can just secretly strong-arm highly regulated businesses into doing what you want?