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Congressional Testimony of Bernard Weinstein to Subcommittee on Energy and Power

August 02, 2014, 9:48 AM

[The following is the testimony of Prof. Herbert "Bud" Weinstein to the House Committee on Energy and Commerce, Subcommittee on Energy and Power. This hearing, held on July 24, was on the subject of "Laboratories of Democracy: The Economic Impacts of State Energy Policies."]

Mr. Chairman and Members of the Committee, my name is Bernard Weinstein and I am the Associate Director of the Maguire Energy Institute at Southern Methodist University (SMU) and  an adjunct professor of business economics at SMU’s Cox School of Business.  Thank you for this opportunity to speak to you today.

I want to address two topics today: first, the ongoing “War on Coal” and its implications for electric power costs and grid reliability; and second, the contrasting economic performance of those states that have embraced energy development with those that haven’t.

The War on Coal

President Barack Obama, in pursuit of his “Climate Action Plan,” has been using his executive power in an effort to limit carbon dioxide (CO2) emissions from both new and existing power plants, further increase fuel economy standards for motor vehicles, and provide additional incentives for the development of renewable energy sources.  Among these initiatives, the potentially most damaging to the economy are those related to power generation.

Electricity drives our economy, and nearly 40 percent of the electrons on the grid still come from coal-fired power plants, which will be most affected by mandates to reduce CO2 emissions and other greenhouse gases (GHG).  Coal’s contribution to the electricity mix has been slowly declining in recent years, mainly because of a sluggish economy and comparatively cheap natural gas prices.

According to projections by the Energy Information Administration, by 2016 we’ll see a capacity decline of 42 gigawatts, or 14 percent, in the nation’s coal-fired generating capacity since 2012.  Without question, the Environmental Protection Agency’s (EPA) proposed GHG standards for new and existing coal-fired power plants will accelerate plant closures.  Indeed, these standards are so restrictive they will likely block the construction of new coal-fired power plants in Texas and elsewhere unless they utilize novel and expensive technology to capture carbon.  The newest and most advanced coal-fired generators in Texas, and the rest of the nation for that matter, can’t meet the proposed emissions limit of 1,100 pounds of CO2 per megawatt hour for new power plants.

The consequences, in terms of higher energy costs and compromised grid reliability, could be serious.  The new standards could also derail America’s nascent industrial revival while eroding the competitiveness of U.S. manufacturers.  Hundreds of thousands of jobs are at risk—not a happy prospect in an economy that’s barely growing five years after the Great Recession with 9.5 million workers currently unemployed and millions more underemployed or discouraged from even looking for work.

Policy-makers and regulators must keep in mind that a one percent increase in economic output necessitates a 0.3 percent increase in energy use.  By extension, any combination of policies that serves to increase the price of electricity or reduce the reliability of energy sources will have a negative impact on economic growth.  Higher power costs can be especially detrimental to manufacturing industries, who consume proportionately more electricity than other sectors of the economy.  Five million manufacturing jobs were lost during the Great Recession, and relatively few have come back during the recovery.  But manufacturing still matters because of its strong linkages with other sectors of the economy.  About one in eight private sector jobs relies on America’s manufacturing base.

We can ill-afford to risk undermining the availability of power in the U.S., placing electricity reliability in jeopardy and risking catastrophic economic impacts.  Coal-fired plants cannot be replaced overnight by natural gas plants, and they certainly cannot quickly be replaced by alternative energy facilities. The time it takes to install pipeline and other infrastructure necessary even to begin the conversion of an old plant or construction of a new one is considerable.  Accordingly, if EPA regulations accelerate the closure of coal-fired power plants, that, in turn, will increase the probability of an insufficient supply of electricity at times when demand peaks, such as during hot weather, or when there are unexpected problems with electricity generation or transmission.

EPA should not be developing long-term energy policy through environmental regulation.  The improper regulation of GHG’s could drastically reduce the diversity of this country’s energy sources, particularly by minimizing coal-fired power generation, and hold the nation hostage to volatile natural gas prices and intermittent renewables like wind and solar for the next fifty years.

For example, proponents of the EPA’s proposed GHG rules contend they will incentivize renewable energy in states where such resources are a possibility.  But we know from recent experience that the fastest growing form of renewable power is so-called rooftop solar, a form of distributed generation.  The business model for this expansion is likely to be third-party leases for periods of 20 years or more, where available subsidies are transferred to third parties and where the leases are eventually securitized and sold as financial instruments on Wall Street.

There are a number of issues that must be resolved before federal rules encourage the transfer of affordable, reliable fossil-fuel base load electric power for leased rooftop solar.  Since rooftop solar depends on the use of the electric grid for backup and for sales of excess power, net metering policy must take into account a fair allocation of the costs necessary to maintain grid integrity.  Without doing so, relatively wealthy solar households or Wall Street investors will essentially be subsidized by lower income base load customers.  Further, replacing reliable power sources with intermittent ones can have profound negative impacts for overall system reliability.

These risks must be taken seriously.  As the Institute of Electrical and Electronics Engineers (IEEE) has stated, “a reliable supply of electricity is more than just a convenience, it is a necessity; the global economy and world’s very way of life depends on it.”[1]  IEEE further observes that “Even minor occurrences in the electric power grid can sometimes lead to catastrophic ‘cascading’ blackouts.  The loss of a single generator can result in an imbalance between load and generation, altering many flows in the electricity network.”  The direct costs to high-technology manufacturing in just the San Francisco Bay Area during the California blackouts alone ran as high as one million dollars a minute due to lost production.  The relatively brief Northeast blackout of 2003 cost business about $13 billion in lost productivity.[2]

The administration and Congress must also acknowledge that America, by itself, can do little to reduce global greenhouse gas emissions.  In fact, GHG emissions in the United States today are at a 20-year low, even though the economy is more than 50 percent larger.  The only effective way to significantly reduce global GHG emissions is through a coordinated strategy involving all of the planet’s major economies.  Otherwise, any marginal reductions in America as a result of shuttering coal plants will be more than offset by rising emissions in China, India, Brazil, and other fast-growing economies around the world.

Energy development and economic growth: a contrast among the states

 As is generally well known, America is in the midst of an oil and gas boom unlike anything we’ve seen since the 1920s, thanks largely to the technologies of horizontal drilling and hydraulic fracturing in the various shale plays around the country.  Domestic oil production has jumped 40 percent since 2010 and is now above its peak in the mid-1980s.  By 2016 at the latest, the U.S. will have reclaimed its crown as the world’s number one oil producing country.  Natural gas output has also climbed dramatically, up 33 percent since 2010, pushing us ahead of Russia to become the planet’s number one gas producer.

Five years ago, the oil and gas industry accounted for only 3 percent of America’s economic output.  Today, it’s more than 10 percent.  Employment in the oil and gas industry is up nearly 30 percent since 2008 while total U.S. employment has just returned to its pre-recession level. Because of higher domestic production, oil imports have dropped from 50 percent of consumption to 30 percent in just five years, helping to lower our trade deficit and improve America’s global competitiveness.

Contrary to the commonly-held belief that only a few states are in the energy business, the Energy Information Administration reports that 24 states are currently producing commercial quantities of coal, 31 are producing crude oil, and 33 are producing natural gas.  What’s more, current and prospective shale plays are found in most part of the U.S.

But the shale revolution has not been embraced by all of the states who are situated above the shale formations.  In those states that have chosen to pursue energy development, output and jobs have grown faster than in most other states while their unemployment rates are well below the U.S. average of 6.1 percent.  For example, Texas, which has aggressively developed its shale fields, has witnessed a 100 percent increase in oil production since 2010 and currently records an unemployment rate of 5.1 percent.  By contrast, New York State, whose southern tier sits atop one of the “sweet spots” of the Marcellus Shale, has imposed a ban on hydraulic fracturing with the result that oil and gas production has plummeted in recent years while the state’s unemployment rate is currently at 6.7 percent, with some upstate counties as high as 7.5 percent.

  1. Texas v. California: Two large energy states pursuing different paths

Last year, Texas led the nation in job creation for the fourth straight year, adding 323,000 workers to payrolls.  Through June of this year, another 225,000 jobs have been created and the state currently boasts the lowest unemployment rate (5.1%) of any large state.  More incredibly, Texas has accounted for almost 35 percent of the nation’s job growth since 2000.

Without question, the tremendous growth in oil and gas production resulting from the “shale revolution” has accounted for much of Texas’ superior economic performance. The state now accounts for more than 25 percent of America’s oil and gas and would rank as the 14th-largest producer in the world if we were a separate nation.

Texas’ economic fortunes can also be attributed to a positive business climate and sensible, cost-effective regulation of energy and other sectors of the state’s economy.  Contrary to assertions by some environmental activists, Texas is not a toxic wasteland.  We care greatly about the quality of our air, water and land.  But we make sure our regulatory environment is predictable and effective so that the costs of compliance aren’t burdensome to the point of discouraging new investment.

California’s economy has recovered somewhat from the Great Recession, though total payroll employment growth since 2008 has been a mere 322,100—about the same as Texas’ gains last year.  Had the state been more supportive of energy development, especially in the huge Monterey Shale, California would likely have posted much faster job gains and its unemployment rate wouldn’t be 7.4 percent, the highest among the 10 largest states with the exception of Michigan.

According to some estimates, the Monterey Shale, which runs from Los Angeles to San Francisco, contains approximately two-thirds of America’s total shale oil reserves, or 15 billion barrels.  Unfortunately, hydraulic fracturing has been roundly opposed by the state’s influential environmental community as well as many state and local government officials.  Consequently, oil production has been falling rapidly in California for more than a decade while output in Texas has skyrocketed.

If California were to adopt more accommodating energy policies and regulations, the state could realize huge economic benefits.  According to a recent study conducted by the University of Southern California and the Communications Institute, a Los Angeles think tank, development of the Monterey Shale would generate 500,000 direct and indirect jobs within three years and 2.8 million direct and indirect jobs within a decade.

  1.  David v. Goliath: North Dakota slays New York

Two years ago, North Dakota passed Alaska to become America’s number two oil producing state.  In just a few years, production has jumped from 10,000 barrels per day to more than one million barrels per day.

North Dakota is unique in that very few states sit atop formations like the Bakken Shale.  But in addition to its resource base, the state’s business-friendly policies have helped grow its energy sector.  Unlike New York, which prohibits the use of hydraulic fracturing, North Dakota offers an accommodating and supportive business and regulatory climate that encourages new investment in oil and gas production.  Since 2008, North Dakota has created jobs at a faster clip than any other state and currently records the nation’s lowest unemployment rate, 2.9 percent.

Could New York replicate the experience of North Dakota?  As mentioned earlier, the southern tier of New York is one of the “sweet spots” of the Marcellus Shale, the largest gas field in the continental United States.  But because of the fracking ban, thousands of potential jobs and millions of new tax revenues are being forfeited.  For example, the New York State Department of Environmental Conservation estimates that at least 25,000 new jobs would be created quickly if the state lifted the ban, and that figure doesn’t include the indirect and induced employment that would follow.  Another study, prepare d by Michael Orlando of the University of Colorado, estimates that drilling and producing activities could support 39,000 new jobs in New York State within three years and 69,000 jobs within ten years.  And the Manhattan Institute recently projected that with shale development, total employment in upstate New York by 2020 would be 54,000 higher than without shale development.

  1. Economic performance of other energy states

Other states that have encouraged their energy sectors have outperformed the U.S. averages for job creation and economic growth in recent years.  But it’s important to note that the economic benefits from energy development are benefiting the entire nation, not just those states producing oil and gas.  The shale boom has helped to revive America’s industrial base, boost our exports, and reduce our reliance on imported oil while creating hundreds of thousands of high-wage jobs.  At the same time, cheap and abundant natural gas is reducing electricity and heating costs for millions of American households and businesses.

Categories: On the Blog

Climate Alarmists Never Quit!

August 02, 2014, 9:10 AM

In the same way Americans are discovering that the Cold War that was waged from the end of World War Two until the collapse of the Soviet Union in 1991 is not over, Americans continue to be subjected to the endless, massive, global campaign to foist the hoax of global warming–now called climate change—on everyone.

The campaign’s purpose to convince everyone that it is humans, not the sun, oceans, and other natural phenomenon, and that requires abandoning fossil fuels in favor of “renewable” wind and solar energy.

“It is not surprising that climate alarmists, who desire above all else blind allegiance to their cause, would demand all school teachers toe the ‘official party line’ and quash any dissent on the subject of man-made global warming in their classroom,” says Craig Rucker, the Executive Director of co-founder of the Committee for a Constructive Tomorrow (CFACT). “What is absurd is that any teacher or free-thinking person for that matter would listen to them.”

These days when I am challenged regarding my views about global warming, climate change or energy I send the individual towww.climatedepot.com  and www.energydepot.us, two constantly updated websites filled with links to information on these topics. Both are maintained by CFACT.

It’s not just our classrooms where Green indoctrination goes on. It is also our news media that continue to distort every weather event to advance the hoax. Guiding and feeding them is a massive complex of organizations led by the United Nations—the International Panel on Climate Change—that maintains the hoax to frighten people worldwide in order to achieve “one world order.”

On September 23, heads of state, including President Obama, will gather in New York City for what the Sierra Club calls “a historic summit on climate change. With our future on the line, we will take a weekend and use it to bend the course of history” to save the world from “the ravages of climate change.” This is absurd. Suggesting that humans can alter the climate in any way defies centuries of proof they do not.

One of the leading Leftist organizations, the Center for American Progress, focused on the July 14 Major Economics Forum in Paris, offered four items for its agenda. Claiming that “the Arctic is warming two times faster than any other region on earth”, they wanted policy changes based on this falsehood. They blamed climate change for “global poverty” and wanted further reductions in so-called greenhouse gas emissions from energy use. The enemy, as far as they were concerned was energy use.

Mary Hutzler, a senior research fellow of the Institute for Energy Research, testified before a July 22nd meeting of the Senate Foreign Affairs Subcommittee on International Development and Foreign Assistance, that due to Europe’s green energy (wind and solar) policies, industrial electricity prices are two-to-five times higher than in the U.S. and that, by 2020, 1.4 million European households will be added to those experiencing energy poverty.

There are lessons to be learned, for example, from Spain’s investment in wind energy that caused the loss of four jobs for the electricity it produced and 13 jobs for every megawatt of solar energy. In Germany, the cost of electricity is three times higher than average U.S. residential prices. Little wonder that European nations are now slashing wind and solar programs.

Billions Wasted to Combat Global Warming

In the U.S., the Obama administration used its “stimulus” to fund Solyndra—$500 million dollars—and fifty other Green energy projects that have failed or are on their way to failure. Undeterred with this appalling record, on July 3 the Energy Department announced $4 billion for “projects that fight global warming.”

But there is no global warming. The Earth has been in a cooling cycle for seventeen years and it shows no indication of ending anytime soon. This is the same administration that has waged a war on coal, forcing the closure of many plants that produced electricity efficiently and affordably, and had throughout the last century.

The National Oceanic and Atmospheric Administration’s 2014 weather highlights showed that, from January to June, the temperature in the U.S. has risen by a miniscule 0.1 degrees Fahrenheit compared with the average temperature for the 20th century. NOAA also noted that recorded temperatures for the first half of 2014 are the coldest since 1993 when the cooling cycle began. The exception to this has been California.

Brainwashed for decades about global warming, 20% of likely voters, according to a July Rasmussen poll, still believe that global warming is not over, colder weather or not, 17% were not sure, but fully 63% disagreed!

The results of a Pew Research Center poll in June revealed that 35% of Americans say there is not enough solid evidence to suggest mankind is warming the Earth while another 18% says the world has warmed due to “natural patterns”, not human activity. Pew found that liberals remain convinced that humans are to blame, but the bottom line is that 53% disputed the President’s claims.

That means that a growing number of Americans are now skeptics.

In the months to come we will see marches and meetings intended to further the global warming lies. The good news is that fewer Americans are being influenced by such efforts.

 

[Originally published at Warning Signs]

Categories: On the Blog

A Case for a Politically Oblivious Citizen

August 01, 2014, 12:16 PM

Recently while discussing the political knowledge, or lack thereof, of the average U.S. citizen, a thought occurred to me. Ideally, this is how it should be. Government in America was designed to be small, very limited and irrelevant to the day-to-day life of the average American.

Government work is supposed to be boring. With the Constitution severely limiting the responsibilities of the government, the role of the public sector was intended to be constricted and narrow. When the branches of the federal government were being formed, our founders envisioned citizen statesman that would serve in government for a short amount of time before returning to their farms or trades. What was not expected was the rise of the career politician. Government work has since become an industry.

The growth in all facets of the government has created a leviathan out of the public sector. Politicians seek constant reelection, move from office to office and stay in politics as lobbyists. These politicians become policy experts which is now required do to the complex matters now under the umbrella of government responsibility.

The issues debated in government today are so convoluted and intricate; the layman cannot possibly stay properly informed. For example, The Patient Protection and Affordable Care Act was nearly 1,000 pages long. This bill was also filled with jargon, specific terminology and references to other statutes. How could the average person develop an opinion on this legislation without relying on third or fourth party sources? No wonder Rep. Nancy Pelosi (D-CA) said, “we have to pass the bill so that you can find out what is in it.” The length of the ACA bill was not unique. Plenty of bills reach the 1,000 page mark. Many other bills including yearly budgets, the stimulus bill and others extend well beyond 1,000 pages.

For the person who follows politics closely, reads the legislation and stays informed on all the important topics, only one thing can be going through his/her head, ‘Why am I not getting paid for this?’ It is simply impossibly for the average person to stay up to date and comprehend all of the issues and proposed legislation up for debate.

In the ideal scenario, government would be small and not of concern for the average person. The state would have little impact on the constituents’ everyday life. This would free up the citizen’s time to focus on their trade or whatever they deem necessary or important. There would be no reason why someone should not develop a niche expertise in whatever they find interesting while staying only moderately informed on the actions of the government. As of now however, we are far from this ideal. We have to stay informed on these issues that affect the entire nation and strive to reduce the size of the government to something more manageable.

Categories: On the Blog

Industry Doesn’t Undermine Tourism

August 01, 2014, 9:43 AM

In rural areas, there is often a heated debate over economic development that essentially boils down to a choice between industrial jobs and tourism jobs. Both come with advantages and disadvantages, but to pit these two sectors against each other in an either-or discussion is a false dichotomy. My hometown provides a good example of how industry and tourism can coexist.

I grew up on a dairy farm in Waupaca, Wisconsin. For those industry buffs out there, Waupaca is home to the Waupaca Foundry, the largest producer of gray, ductile, austempered ductile, and compacted granite iron in the world, melting more than 9,500 tons a day. For those of you planning your next vacation, Waupaca has the Chain O’Lakes, a beautiful series of interconnected lakes that is one of the state’s top tourism destinations.

The debate over industry versus tourism is heated in Waupaca, an economic profile of which can be described as the three Fs: farming, foundry, and FIBs (an unflattering term for tourists from Illinois). It’s a debate common to small towns, with the alternatives seen as being a focus on increasing tourism or promoting development of industrial, blue-collar jobs. The truth is, our town needs both.

I lived a stone’s throw from the Waupaca Foundry (don’t ask me how I know that), which employs more people than any other employer in Waupaca County. Some days the air smelled bad, so bad I didn’t want to be outside, especially when there was a wagon full of hay that needed to be put up in the barn. Fewer people had more exposure to the unappealing externalities of the foundry than my family and I.

Although things did not always smell like roses at my house, Waupaca is a small town surrounded by smaller towns, and the wages paid by Waupaca Foundry are a big reason we have a little movie theater, two grocery stores, and three car dealerships, which the surrounding towns don’t have. The foundry also helped some of my friends pay for college.

Starting wages at the foundry are around $12 an hour, but with piece work and incentives, people can start at $15 to $18 an hour. Jobs paying more than $37,000 a year are hard to come by in our part of the state, but that is what workers at the foundry make with only a high school diploma.

On the other side of town we have the Chain O’Lakes. Many of my friends worked there, too. These first jobs provided valuable real-world experience, and my friends who served as hostesses, servers, dish washers, and cooks at local restaurants learned interpersonal skills, the art of conversation with strangers, how to be amazing short-order cooks, and other useful skills.

Tourism provides a boost for the small businesses on Main Street that see their margins dwindle in the winter as their main customers stay home for the cold months. But tourism jobs are usually minimum-wage jobs, and they leave with the tourists after Labor Day.

Thus both these sources of income are important to the local economy, and they can coexist peacefully. In too many cases, environmental activists who advocate for a tourism-based economy frame this discussion as an economic Sophie’s Choice, when they should instead look for environmentally responsible ways to promote both manufacturing and tourism.

Unfortunately, the false dichotomy that pits industry against tourism is not confined to the little town where I grew up; it rages in areas all over the country. This debate is especially destructive now, as more than 800,000 people dropped out of the labor force in April alone, partly because so many of them became frustrated and stopped looking for work entirely. Voters and lawmakers in small towns should be looking for all ways to create more good-paying, family-supporting jobs—as should those in bigger cities. If anyone asks you whether you are for industry or tourism, remember: The correct response is “both.”

Isaac Orr (iorr@heartland.org) is a research fellow for energy and environmental policy at The Heartland Institute.

Categories: On the Blog

Che Guevara Shirts: Proof of the Triumph of Capitalism

August 01, 2014, 9:00 AM

Want to know why capitalism will always triumph over collectivism? It responds to people’s desires, even those who would consider themselves enemies of capitalism.  A case-in-point is the ubiquitous Che Guevara t-shirt.

Anyone who has spent any time walking down a city street will have come across at least one young person wearing Che’s famous likeness. Some leftists have argued that the sheer pervasiveness and popularity of the image is proof of the enduring principles of which Che has sometimes been seen as a symbol. Yet that is not the case.

The Che Guevara t-shirts actually represent the ultimate power of capitalism, the power to transform the most potent symbols in opposition to it into commodities that can be bought and sold in the marketplace. The market does not care about what the symbol “represents.” All that matters is that the symbol can be bought and sold. That is the ultimate neutering of socialism and radical leftism, when the young people who Che might in another time have tried to galvanize to violent rebellion tacitly accept the capitalist system. When Che and his ilk became fashion symbols rather than political symbols, they were finally defeated. That is the real beauty of the free market: its ability to transform an enemy into harmless kitsch.

Supporters of liberty and the free market might understandably be irritated by the nation’s youth running around with the image of a monomaniacal war criminal blazoned on their chests, but they should bite back their bile. Indeed, they should rejoice. As Che has become a popular image, the image has lost all the symbolic power it once might have claimed.

A couple of generations ago, radical socialism was a common part of the zeitgeist of the American youth, with college campuses forming the primary advocates and apologists for the totalitarian regimes of Cuba and the Soviet Union. Today, a lot of leftishness is still there, but it has been beaten down to a softer kind of socialism or social-democratic philosophy. People on the political right often rail against the liberal bastions of academia, and they are not completely wrong to do so. To be sure, the political products of the academic world, such President Obama and Senator Elizabeth Warren, serve as cautionary tales to voters thinking about giving real power to cloistered professors. But they are nowhere near as threatening as the sorts of firebrand spokespeople produced by the hallowed halls of academia only a few decades ago.

Socialism in America, and around the world, has had to respond and adapt to the overwhelming power of the free market. In the marketplace of ideas, socialism is outdated and doomed to go out of business. In response, socialist thinking has shifted, softened, and come to accept at least parts of the capitalist system as essential to maintenance of prosperity. We should call that a tentative victory for liberty, if not a total one.

The youth of today are not as susceptible to the radicalization of the 1960s and 1970s because capitalism is the only serious game in town. The aspects of it that still adhere are just empty or deflated symbols, like t-shirts featuring half-forgotten political dissidents. Young people represent a fertile marketplace for sellers of the ideas of liberty, perhaps more so than any time in the past 40 years. Before the forces of socialism mutate into yet another dangerous ideological strain, proponents of freedom and liberty ought to claim the territory.

Categories: On the Blog

Shivering in the Dark

August 01, 2014, 8:00 AM

Yesterday, the temperature here at Rosevale in Queensland rose 25 ℃ in just 8 hours – from zero at 6 am to 25 ℃ at 2 pm. It rose at the rate of 3 ℃ per hour, and every degree of warmth felt better.

And then, despite there being 400 ppm of the dreaded “global warming gas” in the atmosphere, the temperature plunged 25 ℃ to zero by the next dawn.

Yet learned people are being paid by governments to scare us into suicidal energy policies they say will save us the horror of possible man-made global warming of maybe 1-2 ℃ per century.

Do these people ever go outside? Do they ever feel the powerful life-giving warmth of the sun? Do they notice that all life celebrates spring? Have they read some climate history – of the abundance during warm eras and the bleak starvation of the ice ages? Do they know there has been no global warming for 17 years? Are they aware that the sun has gone ominously quiet and we may face global cooling, just at the time their disastrous energy policies leave us shivering in the dark?

It’s time for some common sense on energy and climate.

[Originally published in the American Thinker]

Categories: On the Blog

BBC ‘Digging Its Own Grave’ By Banning Global Warming Skeptics

August 01, 2014, 12:51 AM

Actual science: Banned by the BBC.

The other day, a nonprofit called The Institute of Art and Ideas interviewed Benny Peiser, a prominent British global warming skeptic. IAI, according to its website, “is committed to fostering a progressive and vibrant intellectual culture in the UK.”

Judging by its fair and thorough interview of Dr. Peiser, they are genuinely interested in fostering better understanding of important public policy issues — in this case, climate change. I recommend you keep an eye on IAI.

IAI focused its interview on Peiser’s view of the BBC’s recent decision to no longer allow climate “skeptics” be a part of their news and commentary. Peiser, who spoke at the first two of The Heartland Institute’s nine International Conferences on Climate Change, did not think much of that decision.

In short, Peiser said the truth: The BBC’s new policy is anti-science, misunderstands what’s important about the climate debate, and is doing a disservice to its audience — which will be ignorant of vital facts about climate change and what we can (or should) do about it.

IAI should be applauded for reaching out to Peiser, and let’s hope enough Brits get wind of this interview to reverse the BBC’s flat-earth policy on the climate. Some excerpts from the interview, a printed Q&A, are below. A quick overvirew of what Peiser addresses:

  • His concern about the global warming discussion mindlessly cleaving on a left/right divide.
  • How “green energy” mainly helps countries like China, that produces solar panels in some of the dirtiest coal-fired plants in the world.
  • How without the government-pushed and unneccesary alarm about a climate crisis, “we would not have wind and solar energy; we would not have the need for renewable energy.”
  • How “there is a difference between evidence and people saying, ‘if we don’t act now then in 50 or a 100 years time we will face mega catastrophe.’ That’s not evidence, it is speculation.”
  • How “if you want to decide what to do about climate change then the climate scientists are really the least likely to understand what policies or alternatives there are.”
  • How the BBC is “digging its own grave by annoying half of the population who are known to be sceptical about the alarmist claims which are not substantiated, which are not founded on any evidence. They are only based on on some kinds of computer modelling, which is not scientific evidence.”

Read the whole IAI interview with Benny Peiser, but below are some key Q&A excerpts:

Q: Do you think there is such a thing as a unanimous scientific consensus about climate change today?

A: I think this is irrelevant. I mean, there is a general agreement on CO2 and greenhouse gas: that we are pumping CO2 into the atmosphere and that this will have a warming effect. This is agreed by everyone so that is not the real issue. Even the sceptics agree to that. So, this is a red herring, because no one denies the basic physics, no one denies the basic facts.

And that was not part of the discussion at the BBC anyhow. It was about the flooding this winter and whether it was caused by climate change, as well as what to do about climate change. And, of course, there is no consensus about these issues. So, the BBC is using a red herring to deny critics of climate policies and climate alarmism a forum.

Q: So do you think that, when it comes to the media, it is a one-sided kind of alarmist perception of risk that comes into question?

A: Of course, because they are well-known for pointing out everything that is alarming and being silent on reports that show it is not as alarming. So you have a bias in favour of alarm, and a kind of ignoring any evidence that suggests that it might not be that alarming.

It’s about people who think we are facing doomsday, and people who are thinking that the issue of climate change is exaggerated. And if you deny anyone sceptical of the apocalyptic doomsday prophecies, then you get in a position where the BBC is so biased that MPs are beginning to consider cutting the license fee, or abolishing the license fee altogether, because people are beginning to be upset by the BBC’s bias.

This is a self-defeating policy; the BBC is digging its own grave by annoying half of the population who are known to be sceptical about the alarmist claims which are not substantiated, which are not founded on any evidence. They are only based on on some kinds of computer modelling, which is not scientific evidence.

Q: In the press, the argument has been put forward quite regularly that sceptics or critics are already over-represented in media coverage, which is said to be misleading the public. Is that a fact? Or do you think the BBC should give more air time to climate change critics/ sceptics?

A: Well they haven’t in the past. Take Lord Lawson. That was the first time ever that he’s been interviewed on climate change. And if you think about the hundreds of reports over the years by the BBC, climate sceptics are a very and increasingly rare species.

Climate sceptics are definitely not under-represented, but simply absent when it comes to the number of media outlets. However, because there is that bias in the BBC and other news organisations, they are finding their own outlets. The climate-sceptical bloggers are increasingly popular and have huge readerships, and a number of newspapers can see that there is a real market for more balanced views.

Take for instance the Times, the Daily Telegraph and the Daily Mail. These newspapers have realized that the BBC and others are ignoring alternative views and so they are providing the half of the population who are sceptics an opportunity to have more balanced reporting. They can see the big opportunity that the BBC is ruling out.

As I said, from surveys, more than half of the British public is sceptical, so if the BBC alienates more than half of the population then they only have themselves to blame if the British public don’t anymore want to pay for the BBC.

Q: Do you think there might also be a confusion created by separating people in two strict camps: either you are a sceptic or you are a firm believer in climate change? Perhaps there could be a more constructive critic of authoritative knowledge or prevailing rhetoric?

A: When the BBC interviewed the sceptical scientists like Professor [Bob] Carter they also got complaints from those who said it was wrong, so it’s not about knowledge or because you are not a climate scientist. They don’t even interview scientists who are sceptical, and on the very rare occasion – once every two years – that they perhaps have an interview with a sceptical scientist, they also get complaints. So this is not about people not being knowledgeable, it’s that people don’t want to listen to any critics. That is as simple as that, they do not want to, or do not like the idea of a debate on this issue. …

Q: So it is rhetoric of risk?

A: At the end of the day there is a big industry behind this campaign, let’s not forget. There’s a huge green energy industry which relies on billions of subsidies on government policy. All the people who own wind farms and solar panels and bio-fuel lands all rely on government support. Without the alarm there would not be that much money going into their pockets. So there are big industrial claims behind this campaign who make hundreds of millions of pounds on the back of this alarm.

Q: How could the discussion about climate change be improved in the media more generally? How could we make the discussion more constructive?

A: Well, it is difficult. By and large you improve it by making it as factual, as objective, and as balanced as possible. Also, moving away from the basic scientific issues to focus on the real, big divides and problems which have to do with what we are going to do about climate change. That is where the big question mark remains. And, as you may have noticed, it is much more difficult and more complex than the simplistic way the BBC portrays the controversy.

Do visit the IAI site and read the whole thing.

For an exhaustive argument supporting what Peiser was talking about, visit the archive site of Heartland’s nine International Conferences on Climate Change. At the home page of the conferences archive site, you will see more than 100 presentations at our confernce July 7-9, 2014 in Las Vegas. In the menu bar, you can access hundreds more presentations from previous conferences, what we call the ICCC.

You can also check out the latest peer-reviewed science disputing a global warming catastrophe at the Climate Change Reconsidered site. It contains years of academic work and nearly 10,000 pages of science in several volumes from the Nongovernmental International Panel on Climate Change (NIPCC) — the fact-checkers of the United Nations’ IPCC.

The Heartland Institute is internationally known for its excellent, science-based work countering the idea that human activity is causing a climate crisis. Learn more about that work by subscribing to Heartland’s newslettersClimate Change Weekly, NIPCC Update, and Environment & Climate News. Heartland also covers a lot of other ground, so sign up for those newsletters at this page, as well.

Immediately below is a video that gives an overview of what was discussed at Heartland’s Ninth International Conference on Climate Change. Below that are Benny Peiser’s presentations at Heartland’s ICCC1 and ICCC2.

Categories: On the Blog

Fishy Polls on Common Core

July 31, 2014, 2:21 PM

Never let it be said that Common Core (CC) entirely lacks educational value.

By exercising even a little of the critical thinking the pushers of these national standards claim to want mandated in all classrooms, consumers can learn a big, valuable lesson about polling that seeks to shape public opinion rather than honestly gauge it.

The one constant in the spate of polls being taken as CC heats up as a political issue is that a sizable portion of the population still knows little or nothing about how these curricular guidelines were developed or what they do. To some prominent pollsters, the knowledge gap is an opening to feed respondents an entirely positive portrayal and then ask them leading questions likely to elicit pro-CC responses.

A recent example was a Wall Street Journal/NBC News poll done June 11–15, purporting to find support exceeds opposition to Common Core by almost a 2–1 margin. But first, the pollsters found almost half their participants said they had seen, read, or heard zilch about the national standards. So then WSJ/NBC “educated” them with the following description:

“The Common Core standards are a new set of education standards for English and math that have been set to internationally competitive levels and would be used in every state for students in grades K through 12.”

That is a grossly misleading description. It utterly ignores serious scholarly findings about weaknesses of the math and English standards and their lack of comparability to the best in the world. Furthermore, it fails to acknowledge heavy Obama administration pressure to get states signed up, or the growing number of states now bailing on CC testing and CC itself.

In a June 18 Cato at Liberty blogpost, Cato Institute education analyst Neil McCluskey likened the WSJ/NBC approach to failing to tell people that pufferfish are poisonous, then telling them “pufferfish are delicious and nutritious,” then finally asking, “would you like to eat some pufferfish?”

The first week of May, a survey by Republican pollster John McLaughlin used similar pufferfishy questioning to convert an almost equal split of opinion on CC (35 percent approval, 33 percent disapproval, 32 percent don’t know) to a whopping two-thirds level of support, by feeding respondents what it called a “simple, neutral” description. Again, it was anything but objective. It was CC puffery.

The political takeaway from McLaughlin was that Republicans should beware of opposing Common Core, because national standards will have a big upside with swing voters in the general election. Scribes from the Thomas B. Fordham Institute, a nominally conservative think tank, then sought to drive home that point with commentary warning Republican candidates that criticizing Common Core is a losing issue.

It would have been reasonable for media reporting on all this to have noted the McLaughlin Poll was commissioned by the Collaborative for Student Success, recipient of heavy funding from the Bill & Melinda Gates Foundation, which has spent hundreds of millions of dollars both creating Common Core and now purchasing support for it. And Fordham also does PR for the Gates people.

Someone might ask Oklahoma state school superintendent Janet Barresi how much being a red-hot supporter of Common Core in a deep-red state helped her. Despite reportedly putting more than $1 million of her own money into her campaign, she lost in a landslide to CC opponent Joy Hofmeister in the June 24 GOP primary. In fact, Barresi finished third with just 21 percent support.

Here and there, some polls are beginning to reflect the growing anger of citizens over undemocratically imposed nationalized standards they like less the more they find out about them. A little-noted University of Connecticut poll conducted the last week of April found just that: Opposition was highest among people who said they were most highly informed about CC.

Now, one of the polling heavyweights, Rasmussen Reports, has done a straightforward survey (June 21–22), using no leading or trick questions, and finds support for Common Core plummeting among parents with school-age children. Only 34 percent of those parents favor schools nationwide having to meet the so-called Common Core State Standards, a drop of 18 percentage points since a Rasmussen survey last November.

Citizens should closely scrutinize all public-opinion surveys for embedded bias. A critical assessment of the accumulating data indicates a growing proportion of parents who have brought themselves up to speed independently on Common Core—as opposed to being pollster-led—oppose this top-down imposition of shoddy, one-size-fits-all standards and subjective testing on their children.

Robert Holland (rholland@heartland.org) is a senior fellow for education policy with The Heartland Institute.

Categories: On the Blog

The FCC Shouldn’t Go Down the Primrose (Preemption) Path

July 31, 2014, 11:54 AM

The Federal Communications Commission (FCC) already has suffered two judicial rebukes in its efforts to impose net neutrality mandates on Internet service providers, most recently this past January in the D.C. Circuit’s Verizon v. FCC decision. Nonetheless, the agency now is in the midst of yet another rule-making proposing to adopt new net neutrality regulations.

But here I want to address a separate, but nevertheless related, FCC initiative that is likely to lead to yet another judicial reversal. In response to the Verizon defeat, FCC Chairman Tom Wheeler has said that he wants to encourage municipalities to operate their own broadband networks in competition with private-sector broadband providers.

Invoking a “pro-competition” mantra, Wheeler intimates government-run communications networks are no different than those run by private providers. So, he wants the FCC to consider preempting state laws banning or restricting the provision of communications services by municipalities. Harkening to Wheeler’s siren song, on July 24 two cities — Chattanooga, Tenn., and Wilson, N.C. — filed petitions asking the commission to preempt restrictions in their states. Acting with unusual dispatch, on July 28 the commission issued a notice seeking public comment on the petitions.

Wheeler’s idea that the FCC should preempt the 20 state laws restricting municipal telecom networks is flawed from both a policy and legal perspective.

As for policy, there are good reasons why so many states have banned or restricted municipal networks. In general, cities that have ventured into the communications business have compiled a pretty dismal record of failure. In recent years, some of the most publicized failures include the government-run networks in Burlington, Vt.; Provo, Utah; Lafayette, La.; Mooresville and Davidson, N.C.; and Utah’s inaptly named UTOPIA network consisting of 10 towns.

These networks and others have fallen short of meeting their initial rosy financial projections, leaving the municipalities’ taxpayers and bondholders on the hook to make up the financial shortfall. At the same time, the private-sector providers, such as cable operators and telephone companies, find it difficult to compete against government entities that enjoy taxpayer-funded financial advantages, along with other competitive edges such as preferential permitting and rights-of-way privileges.

So, there is certainly a valid policy justification for the state laws restricting municipal networks.

Moreover, any attempt by the FCC to preempt the state bans is likely to fail as a matter of law. In Nixon v. Missouri Municipal League (2004), the Supreme Court agreed with the FCC’s then-position that the Communications Act provision granting the agency authority to preempt state laws that “have the effect of prohibiting the ability of any entity to provide” communications services did not extend to government networks. In doing so, the court reiterated its longstanding principle that there must be a clear statement from Congress before the federal government acts in a way that constrains state authority.

Wheeler suggests that the Commission may preempt the state bans under now-famous Section 706 of the Communications Act that the D.C. Circuit interpreted as authorizing agency actions that promote broadband deployment. Whatever the extent of the FCC’s authority under Section 706, it almost certainly doesn’t extend to allowing the agency to interfere with a state’s relationships with its municipalities. There is no clear statement in Section 706 that Congress intended to grant the FCC such preemptive authority.

In any proper conception of our federalist system, it is not enough for Wheeler simply to suggest that the wishes of municipalities should prevail over the state sovereigns under which they are created. After all, in our constitutional regime, we do not recognize, as a matter of legal status, “citizens” of Provo or Lafayette, but we do recognize citizens of Utah and Louisiana. And the Constitution confers upon these citizens of states the authority to exert their will through their elected representatives to adopt laws that restrict municipal activities. This is what the Supreme Court meant when it rejected preemption in its Missouri Municipal League decision, declaring that “preemption would come only by interposing federal authority between a State and its municipal subdivisions, which our precedents teach, ‘are created as convenient agencies for exercising such of the governmental powers of the State as may be entrusted to them in its absolute discretion.’”

Rather than pursuing actions likely to result in further court defeats, the FCC could make better use of its time — while promoting more competition — by focusing on eliminating existing regulatory burdens that impede private-sector investment in new broadband networks.

[Originally published at The Hill]

Categories: On the Blog

On Energy Prices, The Working Class Blames Washington

July 31, 2014, 11:48 AM

This Molly Ball piece on the metric which best determines the outcome of elections makes for a fascinating read: essentially, it demonstrates that when Republicans don’t lose the working class by a wide margin, they do well, and when they lose it by 20 points, they don’t. Throw out all the other measures of race and religion – and Republicans even spot the Democrats the ten points! – and the share of the working class vote determines the outcome:

Republicans consistently win voters making $50,000 or more, approximately the U.S. median income. The margin doesn’t vary too much: In 2012, Mitt Romney got 53 percent of this group’s vote; in 2010, Republican House candidates got 55 percent. And Democrats consistently win voters making less than the median—but the margin varies widely. In fact, whether Democrats win these voters by a 10-point or a 20-point margin tells you who won every national election for the past decade.

In 2004, Democrats won the working-class vote by 11 points; George W. Bush was reelected. In 2006, Democrats won the working-class vote by 22 points and took the House and Senate. In 2008, Democrats won by 22 points again, and President Obama was elected. In 2010, the margin narrowed to 11 points, and Republicans took the House back. In 2012, Obama was reelected—on the strength of another 22-point margin among voters making under $50,000.

One of the central arguments that I and those who share my view that the future of the right ought to be more populist, as both a matter of policy and politics, is that Washington has largely ignored the increased burdens faced by the middle and working class in a time of wage stagnation. The interests of big business and large established players, sometimes working in tandem with government policy and other times simply bent to the will of regulators, have burdened families with higher costs than they ought to be paying for goods and services. It’s a simple thesis: health care, higher education, energy, and groceries cost more than they should; government policy is a not insignificant factor, but Washington largely doesn’t care; therefore, limited government advocates should seize the opportunity to take on the government policies that factor into this and make the case to eliminate or reform them.

You can see a good example of that in this Gallup poll from last year, which illustrates how gas, food, and healthcare costs are as bad or worse than tax issues in the minds of most Americans:

Of course, global supply and demand issues affect energy prices – but what do people think of government policy on the subject? Not much. Check out this Morning Consult poll, released last week, which reflects a marked skepticism of government policy helping people on the subject of energy affordability. And the working class has strong opinions: people with incomes under 50k gave the government the worst grade in keeping energy costs affordable (and by a much wider margin than those making $100k+).

Unfortunately for Republicans, the working class doesn’t trust them on energy issues. Voters may blame Washington as a whole, but for those earning under 50k, they see the left’s message as more appealing.

This shouldn’t be the case, and the fact that it is just illustrates the need for Republicans to stop thinking about board room table issues and start talking about kitchen table issues. The energy portion of a “gas and groceries” agenda is full of politically vulnerable targets. Republicans ought to favor ending the massive subsidies for big conglomerates that drive up gas prices; streamline or eliminate burdensome regulations on energy, such as oil/gas export licensing; eliminate prohibitions on the ability of companies to drill and explore for fuel and other regulations which needlessly drive up prices, inhibit competition, and destabilize the market; eliminating all taxpayer-funded energy subsidies and letting the best product win; and, of course, eliminating subsidies and tax incentives for energy companies to turn food into gas, such as the Renewable Fuel Standard.

Most conservatives already oppose the RFS, the Jones Act, duties on oil pipe imports, pipeline delays, export restrictions, and drilling bans both offshore and on public land. They need to do more to reframe this issue into one with a more explicit appeal to working class concerns. Gas prices rose 3.3 percent in June, and the index for energy is up 3.2 percent over the course of the year.The political advantage here should be obvious: by attacking an issue the working class cares about and where it believes government policy is failing, this presents a golden opportunity to break the left’s coalition in half – between the Tom Steyers of the world who don’t want energy to be cheap and don’t care about the pricing ramifications of their policies, and for the working class that does.

Subscribe to Ben’s newsletter, The Transom.

 

[Originally published at The Federalist]

Categories: On the Blog

A Foreign Policy Doctrine for the 21st Century

July 31, 2014, 9:00 AM

The United States is a political anomaly. Throughout time there has never been a nation so politically, culturally, and militarily dominant. Rome, even at its height, had rivals. So too did the British Empire, which at its apex made pretense to the rule of the waves, in spite of near constant challenges to its power from forces seeking to upset or supplant it. The international stability and peace created by these great empires, the Pax Romana and Pax Britannica, the Roman Peace and the British Peace, served in their times to guarantee security and relative prosperity within their spheres of influence. Yet they could never do so unchallenged.

First, Without Equals

After the fall of the Soviet Union, the United States stood alone. It was the one true super power, the like of which the world had never seen, nor may ever see again. With the ability to project irresistible power to all corners of the Earth, the United States worked to construct a global order in its own image.

Many of its efforts have borne remarkable fruit. The preponderance and entrenchment of international laws and institutions have been the direct result of American effort. Along with its many allies, the United States has promoted an international system that is ever more intertwined and interdependent.

The United States has also used its influence to export liberal-democracy and its attendant principles around the world. Through organizations like the International Monetary Fund and World Trade Organization, nations have been brought closer together, both in terms of economic ties and ideological harmonization.

The United States has also risen in the past two decades to the role of de facto guarantor of international security. With a military and defense budget greater than the rest of world’s combined, American military might is unparalleled in history.

With Great Power…

This great might has, however, not simply produced stability and prosperity. Indeed, the United States has on many occasions abused its privileged position in international affairs. It has pursued unilateralist policies over the strident objections of the international community, such as in its prosecution of the Second Iraq War in which it blatantly ignored the UN, and many of its allies and trading partners.

In the War on Terror, also, the United States has adopted a policy of ignoring the principles of sovereignty, even that of its allies, through the use of unmanned drones and other weapons in the endless hunt for al Qaeda and its offshoots. America’s efforts in this regard are often counterproductive, as they serve often only to radicalize populations against not only America, but also the liberal-democratic principles it represents and wishes to spread.

Perhaps worst of all, the US has actively sought to subvert the institutions it helped build when political expediency has demanded it. By ignoring WTO policies and trade agreements, as well as a variety of other international laws, the United States has succeeded in weakening the institutions it has been instrumental in building, by creating a feeling in the international community that international law only applies to those countries not strong enough to flout it.

On balance, however, I would argue that the United States has done more good than harm. In truth it has succeeded in fostering an era of unheard of peace and cooperation between nations great and small, respect for international institutions that have now taken on a life and robustness all their own, and has served to prevent major conflicts both between and within states.

However, these positive efforts will not be sufficient in future, and those negative actions will only become more damaging as we progress into the 21st century.

The Rise of the East

We live in a time of change, change far more rapid than anyone expected. Accelerated by the financial crisis and the deep recession in the West, power, economic, political, and ideological, is flowing inexorably eastward. The rise of China is the biggest headline grabber, but many other countries, such as Vietnam are no less startling in their explosive growth and expansion.

Many of the swiftly rising states, most notably China, are quite new to the international institutional and legal system, and have proven to be rather cagey about accepting its precepts wholesale. This reluctance to sign up to international laws and norms signals grave difficulties for the future of international relations. One need only look to the resurgence of Russia to understand the dangers of an international system no longer moored by American leadership. Political and military shenanigans like those of Vladimir Putin may one day soon not be an aberration, but the norm.

It may be easy to assume that the natural state of relations between governments and nations is one of stability and peace, since that has been the reality, generally, for the past several decades. Yet this peaceful status quo is in many ways the result of dominant American leadership in the international arena. It was, after all, out of a relatively chaotic, often war-torn world that America built the current system.

So long as the United States and its allies are able to defend this order it has created, it will survive.

Preserving the Pax Americana

Yet, while the United States remains the preeminent world power, with the world’s biggest economy, and by far its most powerful military, this reality is changing. Soon enough the United States will be supplanted by China as the largest economy in the world. After that, America’s military and technological advantages will face greater and greater challenges, if not eventual erosion.

For an international political order to outlive its creator is unheard of in history. Throughout history, as dominant powers decline, the systems they create decline with them. As the political scientist Robert Kagan puts it, “The present order will last only as long as those who favor it and benefit from it retain the will and capacity to defend it.” Such was the case with both the Roman and British empires. As Rome declined in power, the stability it had created within its borders and on its periphery was washed away by the barbarian tide. So too did the end of British naval supremacy precipitate the conflicts that would plunge the whole world into war. The Pax Romana and Pax Britannica died with their creators.

Yet this need not necessarily be the case for the American Peace. It is still possible for the United States to build a lasting world order that will outlive its own era of supremacy, though its window of opportunity is certainly closing fast. The question is not whether the US has the power to affect this solidification of the present order. The question facing America, rather, is whether it has the will to change course from exceptionalism and flouting of the international system it built for its own short-term strategic aims.

America faces a major decision point. If the global system the United States has created and defended is to survive the end of American preeminence, the United States must take full advantage of the time it has left in the saddle of world affairs.

There are a number of things it can do:

First, it can use its power to help struggling and nascent democracies, rather than wasting resources and political will in seeking to impose democratic systems where they are not yet wanted and would not be accepted. American adventurism and instigation of regime-change is a costly and counterproductive exercise, as the lessons of Iraq and Afghanistan have taught us, in terms of money, goodwill, and most importantly lives. Better to foster organic change where possible and to help in sustaining the many states still fighting to retain and entrench their democracies and the rule of law than to pursue the quixotic unilateralism of the present.

Second, America’s leaders must abandon the mindset of absolute exceptionalism that has caused the US to not only charge into conflicts unbidden, but also to regularly ignore basic international statutes and treaties when it finds it convenient to do so. In order to entrench the institutions into which it has poured so much blood and treasure, the United States must accept that those institutions must bind it too if they are to have any credibility in the long term.

Third, the United States must seek to engage the rising powers on terms that will allow for their acceptance of, and integration into the international system. China in particular must be coaxed into buying into the system. By continuing and expanding economic cooperation, while at the same time utilizing America’s significant influence in Asia and the Pacific to cajole China into participation in, rather than antagonism toward, its neighbors and the global community. All of this will take considerable effort from America’s leaders, who must learn better to use their waning influence carefully and effectively. An important part of that would be to secure free trade as an international norm so far as is possible and to allow the free market, rather than military muscle or government coercion, lead global affairs.

Ultimately it is not a matter of whether the United States will lose its position of near invulnerability, but of when. And as that when seems sooner than anyone expected, the timetable for action must be accelerated. The window of opportunity is at best a few decades wide, and we must hope America does not squander its unique opportunity to leave its permanent imprint upon the global order. Because, it is not only a matter of America making for itself a comfortable set-up for retirement from preeminence, but rather it is also a matter of guaranteeing peace, security, and liberty for all nations.

It is in the manifest interest of the international community that the remarkable peace and stability that exists today be maintained into the future. The world has, through history, been an extremely dangerous place, fraught with violence and conflict. Certainly, the institutional and ideological model underpinning the current system is not perfect, and has been faced with many strong and legitimate criticisms, but the system has been truly unique in its ability to maintain lasting peace, and to foster trade and cooperation between and across states on a global scale.

The American Peace can be different and longer lasting than its predecessors, but only if it is a peace that is built by, not dominated by, America.

Categories: On the Blog

Environmentalists Use Environmental Justice to Kill Millions Per Year

July 31, 2014, 8:36 AM

Environmentalists are enlisting minority groups such as African-Americans and Latinos to help them stop use of fossil fuels in the name of ENVIRONMENTAL JUSTICE.   They claim minorities suffer more from health effects due to fossil fuel use because they live closer to power plants.  Thus we need to replace fossil fuel power plants with renewable energy sources of solar and wind.  No thought is given to higher priced electricity that results from these energy sources and how this impacts minority communities.

Based on faulty science, the environmental movement has called for banning use of the following products:

1.  DDT is banned for alleged weakening of bird eggshells.

2.  Genetic modified foods, such as corn and rice, must be banned for alleged health effects.

3.  Nuclear power should be banned because it is unsafe and spreads nuclear weapons proliferation.

4.  Greenpeace wants to ban chlorine.

5.  Fossil fuel use should be banned because of health effects and catastrophic global warming caused by carbon dioxide from combustion.

The banning of DDT in Africa has allowed the spread of malaria throughout Africa with hundreds of millions sickened and annual deaths estimated at over 600,000.  There is no evidence genetic modified foods produce adverse health effects and there loss has led to food shortages and adverse health effects in Asia and Africa.  Nuclear power is demonstrated as one of the safest methods of electric power generation and its use extends the life of fossil fuels.  Chlorine is used to treat drinking water and a ban would put the earth in peril;  millions would die annually. The world’s vast supply of coal, oil, and natural gas allow cheap electricity for the whole planet with its life-saving benefits.

Problems with Africa

A June 29, 2014, article in Forbes Electrify African and Save Hundreds of Millions of Lives” by Jude Clemente quantifies the tragedies of life living in Sub-Sahara Africa because of electricity shortages.  One factor for shortages is the environmental movement’s demands electricity generation fossil-fuel free.  The article is so compelling it is given in entirety at the end of this note.  Particular interest is the table Africa’s Forgotten Calamity:  Electricity Deprivationshows speech’s by politicians who preach problems of global warming when talking about Africa and neglect to mention electricity shortages.  These comments are made in the name of environmental justice.

Urbanizing the World

In a later Forbes July 22, 2014 article, “Urbanization:  Reducing Poverty and Helping the Environment“, Jude Clemente showed how urbanization reduced poverty and helped improve the environment.  The planet went from 29 % living in cities in 1950, to 39 % in 1980, to 53% now, and to an estimated 70 % of a 9.6 billion population by 2050.  Urbanization makes it easier to supply energy to the population, reduces pollution because it is easier to control, and leaves more land as free space.  He wrote, “In particular, coal-based China and India are in the midst of the largest urbanizations in world history, and it will continue for decades.”

There is a direct correlation between poverty level and annual electricity use in kilowatt-hours (kw-hr) per year per capita.  These extremes range from 13,500 kw-hr per capita in the United States to 75 kw-hr per capita in Ethiopia where 75% of the population lacks power.   Fossil fuels are concentrated energy forms and require less land areas than renewable sources such a solar, wind, biomass, and biofuels.  Thus fossil fuels are necessary to uplift the world from poverty.  The environmental movement’s attempts to ban fossil fuels are a killing form of environmental justice.

EPA Jumps Into the Fight

A July 24 EPA News Release:

EPA Issues Policy Supporting Tribal and Indigenous Communities

WASHINGTON – Today, Environmental Protection Agency (EPA) Administrator Gina McCarthy signed theEPA Policy on Environmental Justice for Working with Federally Recognized Tribes and Indigenous Peoples, reinforcing the agency’s commitment to work with tribes on a government-to-government basis when issues of environmental justice arise.

“All tribal and indigenous communities deserve environmental and public health protection. Through this agreement, we are reinforcing our commitment to tribal communities, especially in addressing issues of Environmental Justice,” said Administrator McCarthy.  “We know that tribes are uniquely impacted by a changing climate, which highlights the importance of this agreement and other agency actions, including funding research through the STAR Tribal health grants.”

More information on:

EPA Policy on Environmental Justice for Working with Federally Recognized Tribes and Indigenous Peoples
Details of Program– EPA’s Plan EJ 2014

Whether EPA’s plans for environmental justice for Tribal and Indigenous Communities improves or makes lives more miserable requires more study.

It is quite apparent fossil fuels are necessary to combat poverty in the world and their use will not be banned on a global basis.    Attempts to ban fossil fuel use in the United States are futile and not worth wasting time for discussion.  Some Christian organizations have jumped onto the ban of fossil fuels in the name of environmental justice.  It is hard to reconcile this type of reasoning when a basic principle of Christianity is to help the less fortunate.

Categories: On the Blog

The Carbon Tax Scam

July 31, 2014, 8:00 AM

In a recent appearance before a congressional committee, EPA Administrator Gina McCarthy told them that the agency’s proposed sweeping carbon-regulation plan was “really an investment opportunity. This is not about pollution control.”

If the plan isn’t about pollution, the primary reason for the EPA’s existence, why bother with yet more regulation of something that is not a pollutant—carbon dioxide—despite the Supreme Court’s idiotic decision that it is. Yes, even the Court gets things wrong.

Carbon dioxide (CO2) is vital to all life on Earth, but most particularly to every piece of vegetation that grows on it. Top climatologists tell me that it plays a very small role, if any, in the Earth’s climate or weather. Why would anyone expect a gas that represents 400 parts per million of all atmospheric gases, barely 0.04% of all atmospheric gases to have the capacity to affect something as huge and dynamic as the weather or climate?

When something as absurd as the notion the U.S. must drastically reduce its CO2 emissions is told often enough by a wide range of people that include teachers, the media, scientists, politicians, and the President, people can be forgiven for believing this makes sense.

What Gina McCarthy was demonstrating is her belief that not only the members of Congress are idiots, but all the rest of us are as well.

Faking Climate Data

“The science is clear. The risks are clear. We must act…” Sorry, Gina, a recent issue of Natural News, citing the Real Science website, reported “(in) what might be the largest scientific fraud ever uncovered, NASA and the NOAA have been caught red-handed altering historical temperature data to produce a ‘climate change narrative’ that defies reality.”  As reported in The Telegraph, a London daily, “NOAA’s U.S. Historical Climatology Network has been ‘adjusting’ its record by replacing real temperatures with data ‘fabricated’ by computer models.”

The EPA has been on the front lines of destroying coal-fired plants that produce the bulk of the nation’s electricity, claiming, like the Sierra Club and Friends of the Earth that coal is “dirty” and must be eliminated from any use.

On July 29, CNSnews reported that “For the first time ever, the average price for a kilowatthour of electricity in the United States has broken through the 14-cent mark, climbing to a record 14.3 cents in June, according to data released last week by the Bureau of Labor Statistics.”

A Carbon Tax

What the Greens want most of all is a carbon tax; that is to say, a tax on CO2 emissions. It is one of the most baseless, destructive taxes that could be imposed on Americans and we should take a lesson from the recent experience that Australians had when, after being told by a former prime minister, Julia Gillard, that she would not impose the tax, she did. They get rid of her andthen got rid of the tax!

As Daniel Simmons, the vice president of policy at the American Energy Alliance, wrote in Roll Call “Australia is now the first country to eliminate its carbon tax. In doing so, it struck a blow in favor of sound public policy.”  Initiated in 2012, the tax had imposed a $21.50 charge (in U.S. dollars), increasing annually, on each ton of carbon dioxide emitted by the country’s power plants.” At the time President Obama called it “good for the world”, but Australians quickly found it was not good for them or their economy.

Favored by several Democratic Senators that include New Hampshire’s Jeanne Shaheen, Alaska’s Mark Begich, and North Carolina’s Kay Hagan, the Heritage Foundation, based on data provided by the Energy Information Administration, took a look at the impact that a proposed U.S. carbon tax would have and calculated that it “would cut a family of four’s income by nearly $2,000 a year while increasing its electricity bills by more than $500 per year. It would increase gas prices by 50 cents per gallon. It could eliminate more than a million jobs in the first few years.”

Simmons noted that “It only took (Australians) two years of higher prices, fewer jobs, and no environmental benefits before they abandoned their carbon tax.”

We don’t need, as Gina McCarthy told the congressional committee, “investments in renewables and clean energy” because billions were wasted by Obama’s “stimulus” and by the grants and other credits extended to wind and solar energy in America. They are the most expensive, least productive, and most unpredictable forms of energy imaginable, given that neither the wind nor the sun is available full-time in the way fossil fuel generated energy is. Both require backup from coal, natural gas, and nuclear energy plants.

In addition to all the other White House efforts to saddle Americans with higher costs, it has now launched a major effort to push its “climate change” agenda with a carbon tax high on its list. A July 29 article in The Hill reported that “Obama is poised to sidestep Congress with a new set of executive actions on climate change.”

If we don’t jump-start our economy by tapping into the jobs and revenue our vast energy reserves represent, secure our southern border, and elect a Congress that will rein in the President, the U.S. risks becoming a lawless banana republic. Carbon taxes are one more nail in the national coffin.

 

[Originally published at Warning Signs]

Categories: On the Blog

Americans Have Nowhere to Hide from the Tax Man

July 30, 2014, 10:43 AM

America is supposed to be the land of the free, yet it has one of the most vicious tax regimes in the rich world. Once blessed with comparatively low tax rates and levels of regulation, businesses and entrepreneurs flocked to the United States from the sclerotic systems of Europe (and elsewhere). Now American businesses are fleeing America’s shores and foreign-born entrepreneurs are less inclined to come at all.

What happened? Basically, America has stood still while other countries have been improving their business and market climates. Today America’s corporate tax rate of 35% is far above the OECD average. Personal income tax rates are still a bit lower in America than in Europe, but the federal government has worked hard to erode that advantage by other means.

One major government imposition on American citizens is its tax on foreign income. The United States is one of the only civilized countries to actually force its citizens to pay taxes on income gained abroad. That means Americans working in foreign countries, and thus not taking or using any American social services, still have to pay income tax to Uncle Sam. So Americans trying to work abroad are confronted with a huge disadvantage: After paying the income tax to the country in which they actually live, the American government gets a cut.

There is little possible justification for such an imposition. Evidently Americans are so indebted for the gift of citizenship that they have to pay a fee to keep it. That is directly contrary to the idea of the social contract as it is generally understood. Most countries tax their citizens (and non-citizens for that matter) for the economic activity conducted within their borders. That is where they have preeminence as the sole governmental bodies as sovereign states. Yet the United States believes it can claim that foreign income for itself, simply because the generator of the income holds an American passport.

Apparently American citizens are so free that they have the privilege to pay for Uncle Sam’s spending even if they have no inclination to live in the United States. So long as they hold that passport they will be milked for all they are worth. That attitude creates a real incentive for Americans moving abroad to not come home. It antagonizes foreign countries that see America extending its grubby begging cup all over the world without regard for sovereign borders.

America should join the rest of the world and end its backward taxation policy. Individuals working and living in America ought to pay the taxes the government levies on them. It makes no sense at all for them to pay for a country they do not live in.

Categories: On the Blog

Choice as a Cure for Common Core

July 30, 2014, 9:56 AM

Suppose instead of making common cause with corporate titans and Washington technocrats to impose Common Core standards uniformly on education, philanthropist Bill Gates instead used his vast wealth to create his own brand of schools to compete in a vibrant educational marketplace.

Billions of dollars of Gates’ money sunk into such failed, inside-the-monopoly ventures as “small schools,” and, more recently, nationalized standards and tests could have gone instead toward creating the Gates Alternative. Although it’s true even the richest donor could not outspend the $600 billion public-school monopoly, Gates’ foundation (with net assets of $40.2 billion) could start with model schools and expand with demand.

In fact, given Gates’ high regard for the Khan Academy’s incredible rise as a free online resource begun on YouTube, the Gates Alternative could shun bricks-and-mortar schooling entirely and gain market share in cyberspace.

What might the Gates’ way be?

Given the Microsoft co-founder and Harvard dropout’s oft-expressed disdain for the liberal arts and his preference for utilitarian schooling, his independent schools could feature Common Core-style cutbacks in classic literature, increased reading of technical material, encouragement of grade-schoolers to solve math problems in creative ways as Seattle grade-schooler Bill Gates surely did, all-online testing with individualized problem-solving elements, and collection of student data to enable tracking each student from cradle to career.

This option might well appeal to many families looking to position their kids for success in a high-tech world. Gates’ seed money to start such schools and the potential availability of vouchers or tax credits to help parents pay tuition for these and other private options could be a winning combination.

After all, it was through entrepreneurial spirit that Bill Gates began to achieve his enormous success as early as the seventh grade. Although detractors might say he dabbled in monopolistic territory with Microsoft, his inventiveness cannot be denied.

Judging from the Common Core wars, on the other hand, it is clear millions of Americans have a different idea than Bill Gates about the best education for their children. They want their kids to learn the standard algorithms of math, cursive writing instead of solely computer keyboarding, an appreciation of poetry and stories that excite the imagination—not just whatever leads them to become good global worker bees.

Moreover, even if they like elements of Gatesian training, they don’t appreciate elitists forcing one approach uniformly on all, stripping parents and communities of control, as Gates and his buddies in boardrooms and government bureaucracies have sought to do.

Common Core promoters incessantly proclaim their scheme is not a curriculum but rather just a standard outline of what kids should learn about math and English nationwide. Local schools still determine the curriculum and teachers are free to use their own methods, they claim. But in 2009, Gates himself told a conference of state lawmakers, “when the [federally financed] tests are aligned to the common standards, the curriculum will line up as well.”

In fact, Common Core will be far more than just a curriculum if fully implemented: It is a workforce-development system, something that was touted as far back as the Progressive Era a century ago. It came close to taking hold in the 1990s with the School-to-Work (STW) system advanced by Bill and Hillary Clinton, but a grassroots uprising moved it to the back burner.

The elitists who regrouped after STW’s fall and devised Common Core behind closed doors with the help of Bill Gates’ millions ought to stand down and let the market—the people—decide. The use of force is beginning to fail once again: Last week, Oklahoma’s legislature became the fourth to vote to pull put, and others are leaning toward repeal. Meanwhile, the two federally financed national testing consortia—the Partnership for Assessment of Readiness for College and Careers (PARCC) and Smarter Balanced—are shedding participant states like autumn leaves.

Bill Gates, the technological genius, ought to take his Common Core design to the marketplace, and be humble enough to realize there are many Americans who still love the liberal arts and who revered innovator Steve Jobs of Apple. Indeed, there should be many sets of standards and tests from which people can choose, just as they do at a technology fair.

Many grassroots Americans remain intent on keeping this the land of the free, not of the manipulated and managed masses.

[Originally published at Human Events]

Categories: On the Blog

Ethanol Mandates Go from Bad to Worse

July 30, 2014, 9:36 AM

President Obama, and his administration, has enacted so many foolish and cost-increasing energy policies, it is easy to think that they are his purview alone. But in 2007, Republicans were just as guilty. Seeds were planted and a garden of bad legislation took root in a totally different energy environment. At the time, the growth seemed like something worthy of cultivation. However, what sprouted up more closely resembles a weed that needs to be yanked out.

Last week, I wrote about Australia’s carbon tax that was pulled on July 17. Its seeds were also planted in 2007, though not germinated until 2011. Prime Minister Abbott promised to eradicate the unpopular plant—and after nearly a year of struggle, he did.

2007 was also the year of the Renewable Portfolio Standard (RPS). Around that time, more than half the states put in a mandate requiring increasing amounts of wind and solar power be incorporated into the energy mix the local utilities provided for their customers. It was expected that the RPS would become a much-admired garden with wind turbines blowing in the breeze and solar panels turning toward the sun like sunflowers.

Instead, the RPS has been an expensive folly. Angering the ratepayers, electricity prices have gone up. Groups, like the American Bird Conservancy, have filed suit against the U.S. Fish and Wildlife Service because it allows bald and golden eagles to be chopped up by wind turbines without punishment to the operators. Industrial solar installations are in trouble due to the massive land use and literally frying birds that fly through the reflected sunlight. The mandates have created false markets and bred crony corruption that has the beneficiaries squawking when legislatures threaten to pull plans that have grown like kudzu. Yet, many states have now introduced legislation to trim, or uproot, the plans that sounded so good back in 2007. Though none has actually been yanked out, Ohio just put a pause on its RPS.

The RPS was state legislation; the RFS, federal.

Enacted, in 2005 and strengthened in 2007, the Renewable Fuel Standard (RFS)—also known as the ethanol mandate—had true bipartisan support (something that is difficult to imagine in today’s political climate). Both Republicans and Democrats lauded the RFS as America’s solution to U.S. dependence on foreign oil. In signing the Energy Independence and Security Act that contained the RFS, President George W. Bush promised it would end our addiction to oil by growing our gas. Although it was passed by Congress with the best of intentions, it, too, has become a costly, wasteful, and politically-charged fiasco that has created an artificial market for corn-based ethanol and driven up both fuel and food prices while threatening to damage millions of families’ most prized and essential possessions: their cars and trucks.

Times have changed. People are no longer lining up to view the garden of renewables as they do to stroll through the spectacular floral displays at Las Vegas’ Bellagio—where teams of specialized staff maintain the stylized gardens. At the Bellagio, you can gaze gratis. America’s renewable garden is costly at a time when our citizens are forced to cut back on everything else.

Compared to 2007, several things are different today. The big one is the economy. We, as a country, were still living large in 2007. We were also still dependent on oil from overseas and our purchases were funding terrorism. Plus, it was, then, generally believed by many that our globe was warming—and it was our fault because of burning fossil fuels. When presented with the idea of growing our gasoline, even though it might cost more, it seemed worth it—after all, what was a few cents a gallon to thumb our nose at the Middle East and save the planet?

But this is a different day. A few cents a gallon matters now. Thanks to the combined technologies of horizontal drilling and hydraulic fracturing, America is rich with oil-and-gas resources—and we could be truly energy secure if there were greater access to federal lands. Since 2007, the U.S. has trimmed our CO2 emissions—while they’ve grown globally. The predicted warming (and accompanying catastrophes) hasn’t happened. Instead, it appears that the increased CO2 has generated record harvests—despite predictions to the contrary.

But the seeds planted in 2007 have grown false markets that need the mandates—both for electricity generation and transportation fuels—to stake them up, as they can’t survive on their own. Talk of yanking the mandates is likened to cutting down the once-a-year blossom of the Queen of the Night. “How could you?” “You’ll kill jobs!” Elected officials, such as Congressman Steve King (R-IA), who are normally fiscally conservative, vote to continue the boondoggles that benefit his state.

When the Energy Independence and Security Act was passed in 2007, it was assumed that gasoline demand would continue to rise indefinitely so larger volumes of ethanol could be blended into gasoline every year to create E10, a motor fuel comprised of 90 percent gasoline and 10 percent ethanol. Rather than requiring a percentage of ethanol, the law mandated a growing number of gallons of ethanol be used.

Instead, due to increased vehicle efficiencies and a bad economy, gasoline demand peaked in 2007 and began to decline, reducing the amount of gasoline consumed in the U.S. Still, the law requires refiners to blend ever-increasing volumes of ethanol into gasoline every year until 36 billion gallons of ethanol is blended into the nation’s fuel supplies by 2022.

It is the mandate that allowed the ethanol tax credit (a.k.a. subsidy) to expire at beginning of 2012. The growing mandates gave the corn farmers plenty of incentive.

In the modern era, with ethanol no longer needed due to America’s increasing oil production and the mandates’ unreasonable requirements, an unusual collection of opponents has risen up against ethanol: environmentalists and big oilauto manufacturers and anti-hunger groups.

Much to everyone’s surprise, last November the EPA came out with a proposal to use its authority to make a practical decision to keep the mandate from increasing that resulted in a cut in the amount of biofuels that refiners would need to mix into their fuels—a decision that was required to be made by the end of November 2013. To date, in the seventh month of 2014, the EPA still has not released the 2014 mandates. Refiners are still waiting.

On Thursday, July 24, White House Advisor John Podesta met with select Democrat Senators including Heidi Heitkamp (D-ND) and Al Franken (D-MN) to discuss the EPA’s November 2013 proposal to lower ethanol targets—which, according to reports, Franken called: “unacceptable.” The Hill quotes Franken as saying: “White House adviser John Podesta has indicated the administration plans to raise the amount of ethanol and other biofuels that must be blended into the nation’s fuel supply.” And, in another report, The Hill says: “That may mean Podesta’s signal—that the levels of ethanol, biodiesel and other biofuels will be increased in the EPA’s final rule—is as good as gold.” A decision from the EPA is expected to “be imminent.”

All of this amid new reports that ethanol has little if any effect on reducing greenhouse gas emissions blamed for climate change. A Congressional Budget Office report, released on June 26, states: “available evidence suggests that replacing gasoline with corn ethanol has only limited potential for reducing emissions (and some studies indicate that it could increase emissions).”

It may have been Bush who planted the ethanol mandate, but it is the Obama administration that is fertilizing it and keeping it alive, when it should be yanked out by its roots.

[Originally published at The Strident Conservative]

Categories: On the Blog

Tax Inversion Freedom vs. Fiscal Berlin Wall

July 29, 2014, 3:45 PM

The Obama Administration has proposed its latest form of collectivist control over the American people. In a letter to Congress U.S. Treasury Secretary, Jack Lew, has called for punishment and prohibition of any company that tries to move its headquarters overseas to avoid higher taxes in the United States. Plus, Mr. Lew has the audacity to call his proposed territorial imprisonment of American business, “economic patriotism.”

National Imprisonment Equals “Economic Patriotism”

He said, “What we need is a nation with a new sense of economic patriotism, where we all rise or fall together.” In other words, if the government ruins or weakens your business or financial well being through its misguided and disastrous economic policies, no one is to be allowed to escape the consequences.

The implication, it should be understood, is that you are the ward and property of the state. The government determines and fully controls your present and your future. Any attempt to emigrate your enterprise to a fiscally freer and less burdensome country or political jurisdiction will be prevented through the full police power of the American government.

What has caused a panic among many in Washington is that some high profile corporations have gained media attention with their plans to shift their corporate headquarters to countries with lower business taxes than those in the United States.

How dare portions of the American public who are the shareholders in these companies try to deny the political authorities some of the tax revenue they lust after!

You see the United States has one of the highest corporate tax rates in the world. Also the U.S. government imposes double taxes on American companies that do business in other parts of the world. If a U.S. headquartered enterprise earns profits in another country, they pay taxes in the country in which those profits have been earned.

But unlike most other nations, if that American enterprise repatriates back to the U.S. any or all of the net profits after paying those foreign taxes, Uncle Sam taxes them again. In other words, Washington doesn’t care where that American company has earned those profits or how much a foreign government has already taxed it; Uncle Sam demands his own “cut.”

Tax Differentials and Personal Choice

Let me give an example from my own experience as an income earner deciding where to work.  A good number of years ago, I was teaching at a university in Texas. I was offered a highly attractive academic position at a free market-oriented college in Michigan.

I explained to the academic dean at this college in Michigan that his salary offer was one I had to refuse.  Texas, I pointed out, had (and has) no state income tax, while Michigan does. If I were to accept the offer I would be financially worse off in comparison to the take-home pay that I was earning in Texas. I made a counter-offer of what salary I would have to receive if accepting the position was to be financially rewarding enough.

My employment experience is far from unique. Indeed, it goes on all the time for tens of thousands of people in the United States every year. Pleasant working conditions, an interesting and challenging job description, better opportunities for promotion and advancement, and desirable geographical location in which to live are all among the factors that most people weigh when deciding whether or not to leave a job and accept alternative employment.

But salary matters, too, and for most of us it is given a significant weight in this decision-making process. All things considered, each of us would rather earn more, on net, than less. Our take-home income is the means by which we have access to all the purchasable goods and services we like to buy in the market. And the greater our take-home pay the larger the number of things we can acquire that money can buy.

It is not surprising, therefore, that besides the nonmonetary factors that influence employment decisions, people usually investigate, to one degree or another, how local and state taxes will affect their net-income position when deciding whether to move from one place to another.

Unless the monetary reward after taxes is sufficiently attractive (or unless the nonmonetary factors are so overwhelming), many of us are unlikely to make a move from one town to another or one state to another when we are comparing job opportunities.

Business Decisions and the Tax Structure

The same incentives and relative earning opportunities guide business enterprises in selecting locations for their headquarters and their production, service, and distribution facilities among the various states.  Because of tax advantages hundreds of thousands of companies are incorporated in the tiny state of Delaware, including a majority of the companies listed among the Fortune 500.

Tax differentials can also influence decisions about the country in which a business has its headquarters and facilities. Globally, the average corporate tax rate in 2013 was about 24 percent. In the European Union it was an average of 23 percent. In Latin America it was around 27 percent. In Africa, it was about 28 percent. But in the United States, it was between 35 and 40 percent.

In addition, the U.S. government taxes overseas business earnings in a way that most these other countries do not. For instance, suppose you own and operate your business in one of the leading member countries of the European Union, but also have a subsidiary in the United States. You will owe taxes to your home government only on the profits you’ve earned from sales in your own country. The U.S. government will have already taxed any profits your company earned from American operations; you can then, in general, repatriate those after-tax profits back to your own country without any further tax liability.

However, if you are an American company with a subsidiary in any other country, the United States will double-tax you on your foreign earnings. Not only will you have paid corporate taxes in the foreign country in which you’ve earned those profits, but in most cases the U.S. government will also tax those profits if you repatriate them back to the U.S. The fiscal arm of the U.S. Treasury extends around the globe, claiming a right to a portion of anything you’ve earned anywhere in the world.

This is why American multinational companies have parked nearly $2 trillion of accumulated profits in foreign countries, rather than beinging it home to the United States to be taxed at a corporate rate of at least 35 percent. This represents a huge amount of money that could have been distributed as dividends among tens of millions of Americans who own shares in these American enterprises, and who are therefore denied the financial benefits those dividends could have provided.

Tax Inversion as Escape from Fiscal Plunder

To minimize their tax liability within the United States and to try to reduce tax disadvantages, a growing number of American corporations have been moving their headquarters “offshore,” a procedure known as “corporate inversion.”

A company opens a subsidiary in another country, or merges with another company in another country. It then transfers its international headquarters to the country in which the subsidiary or the merged company is located.

Often virtually nothing else changes as a result of this inversion. Manufacturing, jobs, sales, and marketing may remain exactly as they were before. It is basically a paperwork process to shift the company’s ownership and headquarters outside the United States to avoid such fiscal disadvantages as double taxing of earnings.

Recently there has been a lot of publicity due to the fact that the Pfizer Corporation attempted to buy a British pharmaceutical company to move its headquarters to the United Kingdom.  And it has been reported that Walgreens Pharmacy has been weighing the possibility of buying a British drugstore chain that has its headquarters in Switzerland.

Critics of the type of legal restrictions that Secretary Lew wishes to see implemented against corporate inversions have pointed out that such decisions and actions are perfectly legal and no different than a company’s decision to move, say from Iowa to Kansas where corporate taxes are noticeably lower.

Rather than attempt to legally imprison American companies within the territorial jurisdiction of the United States government, a far better solution would be to lower (or even abolish!) corporate taxes and eliminate the double tax on earnings by American companies from their foreign business activities.

The Tax State vs. Economic Freedom

The real heart of the problem, however, is a lot deeper and more fundamental than these insightful observations and policy suggestions about tax disadvantages. The Austrian economist, Joseph A. Schumpeter, suggested in an essay entitled “The Crisis of the Tax State” (1919) that a nation’s fiscal system can serve as a useful basis for a history of that country’s rise and fall, since the tax system and its structure reflect the political and ideological ideas of that society through time.

Many of the classical liberals of the nineteenth century believed that what a man had earned through his own peaceful production and market exchange was his “natural right” to keep. Many of the classical economists of that time, from a more utilitarian perspective, reinforced this view by emphasizing that taxing income and capital weakened incentives for work, saving and investment, thus reducing the growth of capital and therefore retarding increases in the standard of living for all in society.

Many of them argued that both justice and compassion, especially a concern for the condition of the poor, required that those who had produced and earned should be allowed to keep the fruits of their own labor, with expenses of a strictly limited government funded though a variety of low indirect taxes.

The ideal of a low tax system to fund minimal government with the fewest infringements on market incentives was the fiscal regime of an earlier historical era devoted to the principles of individual rights and freedom, and a respect for private property.

The Rise of the Social Engineering Fiscal State

The rise of socialist, interventionist, and welfare-statist ideas in the late nineteenth and twentieth centuries created a totally different fiscal regime. Government was to use its taxing power as an avenging sword to abolish the exploitation of the poor by the rich. It was to rectify and reduce inequalities in income that were considered to be socially unjust.

Government was to use its taxing authority to influence and indirectly determine the amounts, types, and locations of investment and job creation in various parts of the country. It was to use its fiscal tools to make agricultural countries more industrialized and make industrial countries more agrarian. It was to use customs duties to control the flow of imports and investments into the country, and subsidize or restrict the export of certain goods, resources, or services out of the country.

Taxes were made into an instrument of social engineering and a device for special-interest power politics.

In such an era and regime of fiscal collectivism, nothing is more detested by the political authorities than any attempt by the tax-paying public to escape from the clutches of the tax collector and the government’s thirst for the private wealth created and earned by the members of society through their peaceful and voluntary market transactions.

The Tax Vampires and Fiscal Berlin Wall

Even a legal avoidance of taxes such as the corporate inversion process threatens to reduce the fiscal blood supply of the political vampires who live off the productive efforts of others.

How can those in political authority redistribute income; how can foster various schemes for environmental development; how can they manipulate and control the direction of investment, manufacturing, and employment within their country – what in the 1950s and 1960s the French called “indicative planning” through the tax structure; how can they have the financial resources to bestow privileges on some and impose financial hardships on others in pursuit of re-election through the pandering to special groups? How can they do any of these things, as well as many others, if the tax base is reduced by corporations moving out of the government’s immediate jurisdiction and therefore out of the direct control of the taxing power of the state?

This new political campaign against corporate inversion, therefore, is really an assault on a remaining freedom through which private citizens attempt to retain more of the wealth and income they have produced and earned in the market. It is a campaign to keep the American people captive behind a fiscal Berlin Wall over which there is to be no escape.

[Originally published at EpicTimes]

Categories: On the Blog

Energy and Earthquakes in Ohio

July 29, 2014, 3:15 PM

Ohio sits above the Utica and Marcellus shales, two geologic formations that have rich energy potential waiting to be unlocked by the process of hydraulic fracturing, commonly referred to as “fracking.” Increased energy production has the potential to be a powerful economic engine for unemployed Ohioans, but the debate over hydraulic fracturing has served to highlight the natural and political fault lines running through the state.

These fault lines have become most apparent near Youngstown, Ohio, an area that has felt two different sets of minor, fracking-related earthquakes, one in 2011 and one in the spring of 2014. The 2011 earthquakes are thought to be caused by disposing of wastewater from the hydraulic fracturing process in deep underground injection wells (the same kind used for carbon capture and sequestration), and the 2014 quakes are thought to have been caused by the hydraulic fracturing process itself.

Despite these quakes, the residents of Youngstown have rejected bans on hydraulic fracturing three times within the last year, by double-digit or near-double-digit margins on each vote, dealing radical environmental groups a hat-trick of defeat in their quest to ban the practice. Youngstown residents have embraced hydraulic fracturing largely because the quakes were mild, Ohio regulators acted quickly and efficiently to take steps limiting future risks, and hydraulic fracturing has sparked an economic recovery in Rust Belt communities throughout the state.

When most people think of earthquakes, they think of Hollywood-style earthquakes twisting bridges and splitting roads in two, but these are not the kind of tremors Youngstown experienced. The largest earthquakes felt in Youngstown in 2011 measured at 2.7 and 4.0 in intensity, and they resulted in zero injuries and no cases of verified damage. The largest of the 2014 quakes was a magnitude 3.0, which the US Geological Survey categorizes as a minor quake that produces vibrations similar to the passing of a truck.

Not only were the quakes minor, but state regulators wasted no time in identifying the problems, shutting down activity directly contributing to the risk, and crafting new rules that have been applauded by the industry and environmental groups, such as the Environmental Defense Fund. Among the new rules are requirements that companies install sensitive seismic monitors before drilling horizontally into rock formations within three miles of a known fault area or an area where seismic activity greater than 2.0 has occurred, and drilling must be suspended pending investigation when monitors detect seismic activity above magnitude 1.

These safeguards and the sterling track record of Ohio regulators in dealing with oil-and gas-related earthquakes have given residents confidence that proper precautions will be taken to make sure hydraulic fracturing is done in an environmentally responsible way, while providing a huge economic stimulus in an area that has been trending downward for decades.

In some ways, the Youngstown area is an unfortunate poster child for the term Rust Belt. The region lost more than 16,000 manufacturing jobs during the Great Recession, and the unemployment rate peaked at 12.9 percent in March of 2009. Now, hydraulic fracturing is starting to shake off some of that rust, as evidenced by the construction of a $1 billion steel plant by Vallourec, a French manufacturer of steel pipes for the oil and gas industry, which employs 350 people.

Additionally, a local pipefitters union, which reported 40 percent unemployment at the height of the recession only 41⁄2 years ago, reached full employment last year, and as the business manager of Local 396 states, “None of this would have been possible without the oil and gas industry.” This dramatic drop in unemployment led Local 396 to rally against the fracking ban in Youngstown, creating a rift between blue-collar workers and greens, two demographics that have traditionally supported Democratic candidates.

As more states seek to increase their economic opportunities by expanding their oil and natural gas industries, Ohio’s restrictions on wastewater injection wells and required mapping of geologic fault lines will likely serve as a blueprint for regulators in other states. But even if other states have fewer worries about natural geologic faults, the political ones will be sure to shake things up.

Isaac Orr (iorr@heartland.org) is a research fellow for energy and environmental policy at The Heartland Institute.

Categories: On the Blog

Who’s Really Waging the ‘War on Science’?

July 29, 2014, 10:32 AM

Left-leaning environmentalists, media and academics have long railed against the alleged conservative “war on science.” They augment this vitriol with substantial money, books, documentaries and conference sessions devoted to “protecting” global warming alarmists from supposed “harassment” by climate chaos skeptics, whom they accuse of wanting to conduct “fishing expeditions” of alarmist emails and “rifle” their file cabinets in search of juicy material (which might expose collusion or manipulated science).

A primary target of this “unjustified harassment” has been Penn State University professor Dr. Michael Mann, creator of the infamous “hockey stick” temperature graph that purported to show a sudden spike in average planetary temperatures in recent decades, following centuries of supposedly stable climate. But at a recent AGU meeting a number of other “persecuted” scientists were trotted out to tell their story of how they have been “attacked” or had their research, policy demands or integrity questioned.

To fight back against this “harassment,” the American Geophysical Union actually created a “Climate Science Legal Defense Fund,” to pay mounting legal bills that these scientists have incurred. The AGU does not want any “prying eyes” to gain access to their emails or other information.  These scientists and the AGU see themselves as “Freedom Fighters” in this “war on science.” It’s a bizarre war.

While proclaiming victimhood, they detest and vilify any experts who express doubts that we face an imminent climate Armageddon. They refuse to debate any such skeptics, or permit “nonbelievers” to participate in conferences where endless panels insist that every imaginable and imagined ecological problem is due to fossil fuels. They use hysteria and hyperbole to advance claims that slashing fossil fuel use and carbon dioxide emissions will enable us to control Earth’s climate – and that references to computer model predictions and “extreme weather events” justify skyrocketing energy costs, millions of lost jobs, and severe damage to people’s livelihoods, living standards, health and welfare.

Reality is vastly different from what these alarmist, environmentalist, academic, media and political elites attempt to convey.

In 2009, before Mann’s problems began, Greenpeace started attacking scientists it calls “climate deniers,” focusing its venom on seven scientists at four institutions, including the University of Virginia and University of Delaware. This anti-humanity group claimed its effort would “bring greater transparency to the climate science discussion” through “educational and other charitable public interest activities.” (If you believe that, send your bank account number to those Nigerians with millions in unclaimed cash.)

UVA administrators quickly agreed to turn over all archived records belonging to Dr. Patrick Michaels, a prominent climate chaos skeptic who had recently retired from the university. They did not seem to mind that no press coverage ensued, and certainly none that was critical of these Spanish Inquisition tactics.

However, when the American Tradition Institute later filed a similar FOIA request for Dr. Mann’s records, UVA marshaled the troops and launched a media circus, saying conservatives were harassing a leading climate scientist. The AGU, American Meteorological Society and American Association of University Professors (the nation’s college faculty union) rushed forward to lend their support. All the while, in a remarkable display of hypocrisy and double standards, UVA and these organizations continued to insist it was proper and ethical to turn all of Dr. Michaels’ material over to Greenpeace.

Meanwhile, although it had started out similarly, the scenario played out quite differently at the University of Delaware. Greenpeace targeted Dr. David Legates, demanding access to records related to his role as the Delaware State Climatologist. The University not only agreed to this. It went further, and demanded that Legates produce all his records – regardless of whether they pertained to his role as State Climatologist, his position on the university faculty, or his outside speaking and writing activities, even though he had received no state money for any of this work. Everything was fair game.

But when the Competitive Enterprise Institute filed a FOIA request for documents belonging to several U of Delaware faculty members who had contributed to the IPCC, the university told CEI the state’s FOIA Law did not apply. (The hypocrisy and double standards disease is contagious.) Although one faculty contributor clearly had received state money for his climate change work, University Vice-President and General Counsel Lawrence White claimed none of the individuals had received state funds.

When Legates approached White to inquire about the disparate treatment, White said Legates did not understand the law. State law did not require that White produce anything, White insisted, but also did not preclude him from doing so. Under threat of termination for failure to respond to the demands of a senior university official, Legates was required to allow White to inspect his emails and hardcopy files.

Legates subsequently sought outside legal advice. At this, his academic dean told him he had now gone too far. “This puts you at odds with the University,” she told him, “and the College will no longer support anything you do.” This remarkable threat was promptly implemented. Legates was terminated as the State Climatologist, removed from a state weather network he had been instrumental in organizing and operating, and banished from serving on any faculty committees.

Legates appealed to the AAUP – the same union that had staunchly supported Mann at UVA.  Although the local AAUP president had written extensively on the need to protect academic freedom, she told Legates that FOIA issues and actions taken by the University of Delaware’s vice-president and dean “would not fall within the scope of the AAUP.”

What about the precedent of the AAUP and other professional organizations supporting Dr. Mann so quickly and vigorously? Where was the legal defense fund to pay Legates’ legal bills? Fuggedaboutit.

In the end, it was shown that nothing White examined in Legates’ files originated from state funds. The State Climate Office had received no money while Legates was there, and the university funded none of Legates’ climate change research though state funds. This is important because, unlike in Virginia, Delaware’s FOIA law says that regarding university faculty, only state-funded work is subject to FOIA.

That means White used his position to bully and attack Legates for his scientific views – pure and simple.  Moreover, a 1991 federal arbitration case had ruled that the University of Delaware had violated another faculty member’s academic freedom when it examined the content of her research. But now, more than twenty years later, U Del was at it again.

Obviously, academic freedom means nothing when one’s views differ from the liberal faculty majority – or when they contrast with views and “science” that garners the university millions of dollars a year from government, foundation, corporate and other sources, to advance the alarmist climate change agenda. All these institutions are intolerant of research by scientists like Legates, because they fear losing grant money if they permit contrarian views, discussions, debates or anything that questions the climate chaos “consensus.”  At this point, academic freedom and free speech obviously apply only to advance selected political agendas, and campus “diversity” exists in everything but opinions.

Climate alarmists have been implicated in the ClimateGate scandal, for conspiring to prevent their adversaries from receiving grants, publishing scientific papers, and advancing their careers. Yet they are staunchly supported by their universities, professional organizations, union – and groups like Greenpeace.

Meanwhile, climate disaster skeptics are vilified and harassed by these same groups, who pretend they are fighting to “let scientists conduct research without the threat of politically motivated attacks.” Far worse, we taxpayers are paying the tab for the junk science – and then getting stuck with regulations, soaring energy bills, lost jobs and reduced living standards … based on that bogus science.

Right now, the climate alarmists appear to be winning their war on honest science. But storm clouds are gathering, and a powerful counteroffensive is heading their way.

Paul Driessen is senior policy analyst for the Committee For A Constructive Tomorrow (www.CFACT.org) and author of Eco-Imperialism: Green power – Black death.

 

Categories: On the Blog

Harry Reid Remains Obstinately, Perversely Insistent on Taxing the Internet

July 29, 2014, 9:17 AM

As we asked last week – who says bipartisanship is dead?

The allegedly “do-nothing” Republican-led House of Representatives has actually done a lot of good stuff – a lot of it bipartisan in nature.

“We’ve put together a helpful list of bipartisan bills (Senate Majority Leader Harry Reid) can start with that have passed the House with over 250 votes and are stuck sitting idly in the Senate. The do-nothing Senate really must do-better,” (Congressman Eric) Cantor spokeswoman Megan Whittemore said.

Therein lies the problem.  Senator Reid remains an obstinate obstruction to advancing good legislation.  He only moves bills that lessen our freedom – and lighten our wallets.

On November 1 – and remember, Election Day is November 4 – a since-1998 federal moratorium on Internet-only taxes ends.  Meaning you and I will pay the government even more coin to surf the World Wide Web.

When you next fume at your Internet or cell phone bill – check the litany of taxes tacked on.  (And forget not the built-in government costs you pay but never see.)  That way you’ll know at whom to actually be angry.

Governments already bite huge chunks out of our hide.  But they view our money likeJello – there’s always room in their stomachs and wallets for more.

But the House just passed – by mega-bipartisan voice vote acclimation – the Permanent Internet Tax Freedom Act (PITFA).

(T)he law has attracted large bipartisan majorities every time it’s been up for a vote in either house. That’s because the law has allowed the Internet to grow into an engine of interstate and international commerce.

Except Senator Reid won’t allow the bill up for a vote in his Senate.  Unless he can tether it to a whole new Internet tax scheme – the woefully misnamed, incredibly destructive Marketplace Fairness Act (MFA).

A new Senate bill may force lawmakers this week to make a tough choice on internet taxes: they must agree to expand the reach of sales taxes on out-of-state retailers, or else see the end of a law that forbids states and cities from imposing a tax on internet access.

…(T)he dilemma stems from Senate Majority Leader Harry Reid’s handling of a bill called the Internet Tax Freedom Act. That bill, which passed the House by a large margin, would permanently entrench a temporary moratorium on ISP taxes. The measure is politically popular because it means consumers won’t see “service fees,” akin to those that appear on cell phone statements, on their broadband bills.

Instead of putting the same bill to the Senate, however, Reid has decided to attach it to a proposed law called the Marketplace Fairness Act. That bill, which first passed the Senate last year, would require online retailers to collect tax on sales they make to out-of-state consumers.

Get that?  Under the MFA, uber-tax-happy states like California would no longer be confined to taxing into oblivion just Californians.  They’d have access to the wallets of every business – every person – in all fifty states.

Turning Huge Government states into additional Huge Government federals.  And tempting Less-Huge-Government states to grow – with the siren song of new coin taken from people in forty-nine states that can’t vote against them.  That’ll help the economy and spur growth.

These people need to be told: Stop looking for new ways to take our money – instead, stop spending quite so much.

The underlying assumption when government looks for new money – is that every current penny is being spent wisely and well.  And there’s your Joke of the Day.

Senator Reid is constantly decrying the lack of bipartisanship in Washington.  He could get a whole lot more of it if he stopped serially, unilaterally blocking things that garner it – like PITFA.

Or tacking to it things like the MFA – which both sides oppose.

Hold on a sec.  Senator Reid’s actually getting more of the bipartisanship he says he wants – against him and his Huge Tax, Huge Government policies.

That’s one mean to an end, I guess.

[Originally published at Human Events]

 

Categories: On the Blog