Paul C. "Chip" Knappenberger
Every time there is some sort of weather disaster somewhere, someone blames it on human-caused global warming. Maybe not directly, but the implication is clear. “While we can’t link individual events to global warming, the increase of this type of event is consistent with our expectations, blah, blah…”
Most recently this came in testimony from White House Science Adviser John Holdren before the Committee on Science, Space, and Technology of the U.S. House of Representatives:
In general, one cannot say with confidence that an individual extreme weather event (or weather-related event)—for example, a heat wave, drought, flood, powerful storm, or large wildfire—was caused by global climate change. Such events usually result from the convergence of multiple factors, and these kinds of events occurred with some frequency before the onset of the discernible, largely human-caused changes in global climate in the late 20th and early 21st centuries. But there is much evidence demonstrating that extreme weather events of many kinds are beginning to be influenced—in magnitude or frequency—by changes in climate.
Holdren then goes to list a bunch of types of extreme weather whose characteristics have changed (remarkably, all becoming worse), adding that:
There are good scientific explanations, moreover, supported by measurements, of the mechanisms by which the overall changes in climate resulting from the human-caused build-up of heat-trapping substances are leading to the observed changes in weather-related extremes.
Holdren’s implication is pretty clear—human-caused global warming is leading to changes in extreme weather. And just for good measure, he added this zinger:
[I]t is reasonable to say that most weather in most places is being influenced in modest to significant ways by the changes in climate that have occurred as a result of human activities.
If this were the case, then there is a lot of good news to be found here, for by and large the weather is pretty good, with rare examples to the contrary.
Take, for instance, what has been all abuzz this week in Washington, D.C.: how great the weather has been. The Washington Post’s Capital Weather Gang, which keeps close tabs on the pulse of D.C. weather, has commented repeatedly on how remarkable and enjoyable it has been. According to Holdren’s logic, we have global warming to thank, and yet I have not seen one news story that links the pleasant weather to human-caused climate change.
Across the country in Tucson, Ariz. (where I reside), the news this week has been dominated by the threat of the passage of the remnants of Hurricane Odile, which were forecast to move into the region from out of the Gulf of California. The predictions were for record-breaking rainfall amounts with the potential for widespread damage from flooding. The outlook stirred up memories of the passage of Tropical Storm Octave in 1983, which resulted in over $500 million (in 1983 dollars) of damage to the region. Thankfully, this did not come to pass. Instead, the heavy rains associated with Odile passed well east of the city, over much more sparsely populated country. Since apparently all weather is influenced by anthropogenic global warming, we have it to thank for averting what could have been a very costly and hugely disruptive situation affecting upwards of a million people.
And speaking of hurricanes, the first major hurricane (category 3 or greater) in almost two years formed in the Atlantic Ocean. But, in encountering conditions arguably consistent with human-caused climate change, Hurricane Edouard quickly weakened and remained far out in the open Atlantic, steering well clear of the U.S. mainland. Major disaster averted. It has now been nearly nine years since the last major hurricane made landfall in the United States, the longest such occurrence going back at least to the year 1900. Thanks, global warming!
I could go on, because there are a lot more cases of non-extreme weather than there are of extreme weather, and as many or more cases to be made for weather catastrophes averted by conditions “consistent with global warming” than caused by it.
So if you want to play the all-weather-is-influenced-by-global-warming game, you are going to lose.
Best bet would be to stick with the science, which for most types of extreme weather events and for most places indicates that a definitive link between event characteristics and human-caused climate change has not been established. Either talk about that situation or leave the attribution issue alone.
According to Kate Toran, the San Francisco transport authority’s Taxis and Accessible Services interim director, companies such as Uber and Lyft, which provide ridesharing services, “have dramatically changed the for-hire transportation industry in San Francisco.”
A few days ago, the San Francisco Examiner reported on a presentation Toran gave to the San Francisco Municipal Transportation Agency (SFMTA) board of directors. The presentation included the slide below:
Uber and Lyft are both headquartered in San Francisco and are classified as Transportation Network Companies (TNCs), a designation created by California’s Public Utilities Commission last year.
Uber CEO Travis Kalanick has not hidden his feelings regarding the taxi industry. Earlier this year he said that Uber was in a political campaign against “an ass*** named Taxi.”
Of course, the slide does not show the whole picture. Correlation is not causation, and without data on ridesharing companies’ rides in San Francisco over the same time period, it is impossible to conclude for sure that the ridesharing services provided by companies such as Uber and Lyft are significantly contributing to the taxi decline in San Francisco.
It is notable that the SFMTA has decided to waive some fees—including the driver application fee—for taxis in 2014-2015 in an attempt to attract new drivers and keep current drivers from quitting. Among the many advantages of companies such as Lyft is the low cost of entry for drivers.
According to the San Francisco Examiner, the SFMTA is also contemplating reducing the medallion fee:
Other possible regulatory actions the transit agency has contemplated to make cab driving more financially attractive to drivers include reducing fees for medallions, which allow holders to operate taxis. Other ideas include reducing the fee to transfer medallions by 20 percent, eliminating the $500 ramp taxi medallion use fee, lowering the medallion renewal for transferrable medallion holders and allowing taxi wrap advertising.
During her presentation, Toran also highlighted the need for the SFMTA to review regulation. From the San Francisco Examiner:
“It’s time for [the] MTA as a regulator to really review the regulations and make sure our regulations have been thoroughly reviewed and that they still make sense,” Toran said. “Our bottom line is public safety, but to the extent that the regulations can be more flexible and more responsive and we have a process to update.”
The presentation mentions taxi apps Curb and Flywheel. It remains to be seen if an increasing number of San Francisco taxis using these apps will halt the dramatic decline in taxi trips, but it is encouraging to see that Toran supports competing with ridesharing apps and reviewing San Francisco’s taxi regulations.
Mark A. Calabria
Yesterday Bloomberg reported that Federal Housing Administration (FHA) purchase loan guarantees “plunged” compared to a year ago. Part of that plunge, of course, was an expected decline in refinance activity. Currently, FHA endorsement activity is almost 80 percent purchase, whereas a year it ago it was just over half for purchase. Looking at trends in purchase endorsements, the decline looks a lot more moderate.
Even so, there has been a modest decline. Many in the banking industry, as expressed to Bloomberg, believe this is because FHA and the U.S. Deparment of Justice have been too tough on lenders, making them take back soured loans and assessing damages. JP Morgan CEO Jamie Dimon recently asked, because of the legal risk, “should we [JP Morgan] be in the FHA business at all?”
Personally, this sounds like little more than jawboning. As illustrated by FHA’s recent credit reports, lenders are still dumping an awful lot of junk onto FHA. The average credit score is around a 680 FICO, meaning about half of FHA’s recent business is subprime. Beyond that, even subprime borrowers typically face downpayments of only around 5%, and then there’s the high debt levels witnessed. Lenders should be held responsible for making loans of such poor credit quality.
If DOJ fines on poorly performing FHA loans are chasing banks away from FHA, then I say “great.” That’s one of the reasons I helped get FHA new powers against fraud back in 2008 (see Section 2129 of HERA). As Congress is unlikely to ever scale bank the various mortgage subsidies, perhaps our only hope is that DOJ makes those subsidies so unattractive that lenders won’t use them. But then I could also see DOJ sue lenders, under fair-lending, for not using FHA.
Ukrainian President Petro Poroshenko spoke before the U.S. Congress yesterday morning, and afterward met with President Obama at the White House. The visit was overshadowed by other major events of the week—Congress’s vote to authorize arms and training for Syrian rebels, and the Scottish independence referendum—but it was noteworthy that the visit didn’t elicit any U.S. offers of military support for Ukraine.
Poroshenko’s speech to Congress focused heavily on Ukraine’s role as a “strong American partner” and fellow democracy, and argued for greater U.S. involvement in the crisis. He even went so far as to argue that “this is America’s war too,” though he certainly offered no justification for why Ukraine is of key strategic interest for the United States. Between rousing rhetoric, references to John F. Kennedy, and anecdotes about brave Ukrainian warriors, he did ask the United States for three pieces of aid:
First, he asked for weaponry. Poroshenko thanked the United States for the humanitarian aid it has provided to Ukraine, but argued that “we can’t win a war with blankets.” The White House has promised a new $53 million aid package, comprising nonlethal military aid (i.e., blankets and food supplies). In contrast, the Ukrainians are particularly interested in heavy and antitank weapons.
Second, Poroshenko asked Congress for a massive injection of financial aid to support investment, fight corruption, and reform the Ukrainian state.
Finally, and most worrisome, he asked the United States (and NATO) to grant Ukraine a “special, non-allied partner status” for security and defense. It’s unclear exactly what this would entail, but it sounds suspiciously like a plea for NATO protection of Ukraine without full NATO membership.
There is limited interest in Congress to give Poroshenko some of what he is seeking. Sens. Bob Corker (R-TN) and Robert Menendez (D-NJ) have co-sponsored the Ukraine Freedom Support Act of 2014, which would seek to arm Ukrainian troops. But though the bill unanimously passed the Senate Foreign Relations Committee, it is unclear what will become of it as the Senate begins its recess, or whether it would command broader support from Congress.
Arming Ukraine’s government is foolhardy at best. Even if Ukraine were central to U.S. interests, the United States cannot possibly provide enough military aid to allow Ukraine to prevail against the Russian military. Such aid has the potential to escalate the situation and undermine a diplomatic settlement. Giving Ukraine a “special defense status” is an even worse idea, especially if it were to commit NATO to the military defense of Ukraine.
Luckily, the Obama administration seems determined to give Poroshenko a public relations boost—rolling out the red carpet for his visit—and nothing more. President Obama’s remarks praised Poroshenko’s leadership, but promised only to continue to help Ukraine reach a diplomatic settlement with Russia. With the U.S. military already gearing up for action on two different continents, it isn’t surprising that American leaders would choose to avoid escalating another regional conflict. Let’s hope this restraint continues once the other crises are past.
As an eighth-generation Scottish-American, I’m disappointed that my ancestral homeland has chosen not to be A Nation Once Again. But at the Daily Caller I do note one remarkable and positive aspect of the referendum:
The leaders of the United Kingdom allowed this referendum to take place, allowed the Scots to peacefully decide their own fate. Just think how remarkable that is. We Americans weren’t allowed to peacefully leave the United Kingdom….
A few secession efforts in the United States also demonstrate the remarkable nature of the Scottish independence referendum. The San Fernando Valley region wanted to secede from the city of Los Angeles in the 1970s, and eventually a vote on secession was held in 2002. But the entire city of Los Angeles got to vote on whether the Valley could leave, and the effort was defeated. Today there are counties in both California and Colorado that have discussed secession, but in both cases the state law says that the legislature would have to approve. Few central governments look kindly on the loss of any portion of their taxpayers.
And that’s why I offer a tip o’ the hat today to the Parliament and the governments of the United Kingdom. They allowed the people of Scotland to decide their own fate. They did not insist that any secession had to get the approval of the government from which the dissident region wanted to secede. They did campaign hard to persuade Scottish voters to stick with the UK. But they let the Scots decide. May the road rise up to meet them, and may the sun shine warm upon their faces. And may other central governments learn from their example.
That workman from Craigslist who dropped by to install a set of office cabinets for you “off the books” is now more likely to be headed to jail, no matter how happy you are with the quality of his work, thanks to the California legislature:
Gov. Jerry Brown has signed S.B. 315, described by its sponsor, Sen. Ted Lieu (D-Beverly Hills), as a measure “to help curb California’s underground economy.” The measure would step up penalties and enforcement against persons who advertise for, or perform, repair and construction work with a value of $500 or more, counting parts and material as well as labor. … First offenses are subject to six months in jail and a $5,000 fine, and subsequent offenses are treated yet more harshly.
There’s more. The bill, according to its legislative summary, “would additionally require that the enforcement division, when participating in the activities of the Joint Enforcement Strike Force on the Underground Economy, be granted free access to all places of labor,” at least in business locations. (Yes, “all”; you only thought your property was private.)
A special touch: the customer who ordered the work will now be legally classed as a “victim of crime” entitled to restitution and other benefits, even if the work was done exactly as ordered, and even if (the law is explicit) the customer was fully aware the job was unlicensed.
How could the California legislature have unanimously (as it did) passed a measure curtailing property rights by giving more state inspectors access to places of labor against owners’ will? Simple: it was framed as a pro-business measure. Among its backers were the sponsoring Contractors State License Board and such groups as the Air Conditioning and Refrigeration Contractors Association, the electrical contractors, the landscape contractors, the plumbing and heating contractors, and so forth.
The costs of occupational licensure are many. Not least is that it gives established businesses a stake in making government more powerful and invasive.
P.S.: Possibly unrelated, or possibly not: California issued massive fines that closed down a small winery whose owners were allowing volunteers to do some work, in violation of state law; a state spokesman said permitting volunteer labor “isn’t fair” to competing wineries with all-professional staff.
Caleb O. Brown
Thousands of Venezuelans regularly protest Nicolás Maduro’s government. Juan Carlos Hidalgo, a Policy Analyst on Latin America at the Center for Global Liberty and Prosperity at the Cato Institute, recalls witnessing the struggle for freedom in Caracas.
“Why Liberty” is a short series of personal stories emphasizing the value of liberty. Feel free to make your own video telling your story using #WhyLiberty. And, of course, subscribe to us on YouTube.
Tom Giovanetti of the Institute for Policy Innovation, who spoke at a Cato event we held earlier this year, has a new essay arguing that intellectual property protection should be included in trade agreements. He makes several points, but I’m going to focus on just one. He states:
[N]umerous studies have found a correlation between higher levels of IP protection and stronger economic growth.
- According to a 2008 OECD [Organization for Economic Cooperation and Development] study, stronger patent rights in developing countries are a significant determinant of levels of foreign direct investment, and also facilitate higher levels of technology transfer.
- A 2012 OECD study found that a 1 percent change in the strength of a country’s IP framework is associated with a 2.8 percent increase in foreign direct investment inflows and a 0.7 percent increase in domestic R&D [research and development].
- And a 2013 study found that R&D spending has grown relative to GDP in developing countries after they adopted the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS). The study also found that medicines for developing countries had received additional funding, and that the TRIPS agreement had directly contributed to the emergence of native film industries in African countries.
Here’s the problem: If you treat intellectual property as a single concept, and you can either have more or less protection of it, it would be reasonable to conclude that some countries have too little protection and probably need more. But intellectual property covers a lot of ground. To name a few areas, you have copyrights, trademarks, and patents. You also have the European favorite, “geographical indications.”
If the argument is that having intellectual property protection is better than not having intellectual property protection, in terms of economic growth, that seems like an easy one. It’s hard to imagine a modern economy working very well without effective trademark enforcement, for example.
But beyond that, things get complicated. How much protection is too much? The United States is pushing copyright terms that last for the life of the author plus 70 years as part of its trade negotiations. I’ve argued that’s way too long. What is the right amount exactly? Well, no one seems to be sure, as far as I can tell, but there are plenty of people who say life plus 70 years is excessive.
So, it’s not enough just to say, “we need stronger IP protection in trade agreements.” If you want to convince anybody, you need to get into the specifics of each kind of protection, and why the stronger level you propose is justified. Otherwise I’m just going to assume you want stronger IP protection of any and all kinds and would go along with the European Union demand that Feta cheese can only be made in Greece.
Mark A. Calabria
Four times a year members of the Federal Reserve Board are scheduled to meet with members of the banking industry, as represented by the Fed’s Federal Advisory Council. This, of course, does not include all the many other occasions that the Fed meets with bankers. These meetings allow the banking industry to express its views to the Fed on a wide range of issues. Summarized records of those meetings are released to the public. In the most recent meeting, bankers raised, among other topics, the issue of Bitcoin.
While the bankers did not yet view Bitcoin as a viable competitor to their role in the payments system, the bankers did express that Bitcoin “regulation is advisable.” Those soft-hearted bankers expressed a concern that without adquate consumer protections, users of Bitcoin would be vulnerable to fraud and theft. Bankers also suggested, presumably out of a concern for national security, that Bitcoin be subject to the same anti-money-laundering procedures, including Know-Your-Consumer, that banks are subjected to. Bankers explicitly suggested that Bitcoin be subjected to the suspicious activities reports (SARs) that banks must currently file. Personally, this all sounds like an attempt at “raising rivals’ costs” to me.
Interestingly banks also suggested that in “an economy hypothetically dominated by Bitcoin, its finite number (21 million) would prevent the application of traditional monetary policy tools to provide support…” In other words banks are concerned that a Bitcoin world would be one where bank bailouts and assistance were more difficult to achieve. I guess one man’s bug is another man’s feature.
NYU’s Paul Light provides thoughts on government failure in the Wall Street Journal today.
Congress returned to its investigation of the General Motors faulty ignition switch Tuesday with a blistering Senate hearing on the National Highway Traffic Safety Administration’s failure to act. As the House Energy and Commerce Committee concluded on the same day, the agency had more than enough information in 2007 to prevent further tragedy, but gave GM a pass.
Lest anyone think that the neglect was an aberration in an otherwise invulnerable government, the cascade of highly visible failures has been accelerating since the mid-1980s. According to my list of management failures that made the national news over the past quarter-century, the federal government produced an average of 1.5 failures per year from 1986 to 1993, two per year from 1993 to 2001, and three per year from 2001 to today.
Light’s views build on his recent study on the subject, which I discussed in this blog. Light says some nice things about the bureaucracy, which I have not quoted here. But he has documented a long list of failures:
With more aggressive oversight and stronger policy, for example, the Occupational Health and Safety Administration could have prevented the fertilizer plant explosion in West, Texas, last year that killed 13 people. With more effective monitoring of at least two of its watchlists, the intelligence community could have warned the Boston police that there was a potential terrorist duo in the city before the Boston Marathon bombing. With a bit of late-night reading of its own internal reports, the Department of Veterans Affairs could have discovered the VA’s wait-list scandal well before it hit the news. And so it goes, from the flu-vaccine shortages, to the Columbia shuttle disaster, the financial meltdown, the Gulf of Mexico oil spill and the healthcare.gov disaster.
I think a key reason why the federal government is failing more than ever is because it is larger than ever. Light suggests other reasons for the government’s poor performance. Either way, this is an important discussion to have, and I am glad Light is out front documenting the failures and asking some fundamental questions.
Two years after whistleblowers submitted tips to the Commerce Department Inspector General’s office, the United States Patent and Trademark Office (USPTO) is acknowledging extensive timekeeping fraud among its employees. Many employees have reported working more hours and achieving higher levels of production than they actually did in order to secure overtime pay and bonuses.
The Washington Post has the details:
For example, patent examiners are allowed to submit incomplete reviews in order to meet productivity deadlines that ensure their work will be rewarded with bonuses. But the work is not always completed, the officials told congressional investigators.
They also said they believe they have adequate tools to allow managers to make sure the examiners they supervise are working, primarily through e-mail and phone calls. The 32-page review had concluded that many managers feel they have little authority to oversee their employees’ work; examiners have a full day to respond to calls and are not required to log into the agency’s internal Web site, so their bosses do not know if they are at their desks at a given time…
More than 70 percent of the 80 managers interviewed told the internal review team that a “significant” number of examiners did not work for long periods, then rushed to get their reviews done at the end of each quarter. The supervisors were concerned that the practice negatively affected the quality of the work.
After the tips were received, USPTO assigned an internal team to investigate. The team produced a 32 page report detailing the abuse. However, the agency scrubbed the report before submitting it to the inspector general. According to the Washington Post, “top patent officials removed the most damaging revelations from the report, providing the agency’s inspector general with an account half the length and with many potentially embarrassing findings removed.”
The agency now claims that the issue is under control. Workers are required to log into the agency’s remote server while teleworking. Unlike many federal agencies, the USPTO is specifically authorized by the U.S. Constitution, but it still has a duty to spend money wisely.
The Cato Institute’s Center for the Study of Science today kicks off its rapid response center that will identify and correct inappropriate and generally bizarre claims on behalf of climate alarm. I wish them luck in this worthy enterprise, but more will surely be needed to deal with this issue.
To be sure, there is an important role for such a center. It is not to convince the ‘believers.’ Nor do I think that there is any longer a significant body of sincere and intelligent individuals who are simply trying to assess the evidence. As far as I can tell, the issue has largely polarized that relatively small portion of the population that has chosen to care about the issue. The remainder quite reasonably have chosen to remain outside the polarization. Thus the purpose of a rapid response Center will be to reassure those who realize that this is a fishy issue, that there remain scientists who are still concerned with the integrity of science. There is also a crucial role in informing those who wish to avoid the conflict as to what is at stake. While these are important functions, there are other issues that I feel a think tank ought to consider. Moreover, there is a danger that rapid response to trivial claims lends unwarranted seriousness to these claims.
Climate alarm belongs to a class of issues characterized by a claim for which there is no evidence, that nonetheless appeals strongly to one or more interests or prejudices. Once the issue is adopted, evidence becomes irrelevant. Instead, the believer sees what he believes. Anything can serve as a supporting omen. Three very different previous examples come to mind (though there are many more examples that could be cited): Malthus’ theory of overpopulation, social Darwinism and the Dreyfus Affair. Although each of these issues engendered opposition, only the Dreyfus Affair led to widespread societal polarization. More commonly, only the ‘believers’ are sufficiently driven to form a movement. We will briefly review these examples (though each has been subject to book length analyses), but the issue of climate alarm is somewhat special in that it appeals to a sizeable number of interests, and has strong claims on the scientific community. It also has the potential to cause exceptional harm to an unprecedented number of people. This has led to persistent opposition amidst widespread lack of interest. However, all these issues are characterized by profound immorality pretending to virtue.
Malthus’ peculiar theory wherein the claimed linear growth of food loses out to the exponential growth of population has maintained continuous popularity in the faculty lounge for about two centuries. It is, therefore, worth noting that Malthus had no evidence that food supply would increase only linearly. Nor did he have evidence for exponential population growth. Malthus initially went so far as to estimate an e-folding time for population of 25 years, based on the population of North America, and ignoring the role of immigration. Although Malthus, himself, eventually acknowledged these problems, the enthusiasm for his anti-human conclusions remains strong. Neither the green revolution nor the diminution of famine amidst increasing population dissuades them. The fact that Chad is poor and the Netherlands is rich never strikes the believer as odd. Apparently, the growth of cities, the movement of workers from the farm to the city, and, for much of the developed world, immigration, all served to convince people of means that there were too many other people around, and Malthusian theory formed a framework for something they were (and are) eager to believe.
Social Darwinism and its corollary, eugenics, represents another case of a theory without support that was widely accepted with, at times, horrid consequences. Darwin’s “The Origin of the Species” had immense influence. It presented a theory whereby natural selection and what were essentially mutations could account for biological evolution. While it offered valuable insights into the development of finch beaks, it was hardly meant to describe societal evolution. Nevertheless, the notion of ‘survival of the fittest’ applied to society had obvious appeal to those who perceived themselves to be the fittest and who naturally regarded the application as scientifically justified. It was a small step to eugenics which was the counterpart of modern day environmentalism during the first third of the twentieth century, and was supported by all the ‘best’ people (including George Bernard Shaw, Margaret Sanger, Alexander Graham Bell, and Theodore Roosevelt) despite the fact that there actually was a mathematical theorem (the Hardy-Weinberg Theorem) that showed that the impact of eugenics on the gene pool would be negligible. Needless to add, mathematics is of no importance to the ‘best’ people. Malthusian population fears continue to the present, but eugenics was rendered unfashionable by the obvious implications presented by the Nazis.
While science is a common vehicle for such misuse, the Dreyfus Affair shows that other vehicles exist. In 1894, Captain Alfred Dreyfus was accused of passing secret French military information to the Germans. There was, in fact, no evidence to support this accusation. Nevertheless, there was again a strong desire on the part of many people in France to believe the accusation. To be sure, there was the endemic anti-Semitism in France. However, there was also the humiliation of France’s loss in the Franco-Prussian War, and the desire to blame such loss not on the army, but on the perfidy of a group that some considered to be ‘outside’. (The Nazis’ ‘stab in the back’ theory for the German loss in WW1 represents a similar instinct). Dreyfus was tried (several times) and sentenced to Devil’s Island. Prominent Frenchmen (Emile Zola in particular) , incensed by the obvious injustice campaigned for Dreyfus, and the issue literally split France in half (partly because the conflict between Catholics and Secularists also entered the Affair). Dreyfus was eventually exonerated after the identification of the actual spy became undeniable.
The current issue of global warming/climate change is extreme in terms of the number of special interests that opportunistically have strong interests in believing in the claims of catastrophe despite the lack of evidence. In no particular order, there are the leftist economists for whom global warming represents a market failure, there are the UN apparatchiks for whom global warming is the route to global governance, there are third world dictators who see guilt over global warming as providing a convenient claim on aid (ie, the transfer of wealth from the poor in rich countries to the wealthy in poor countries), there are the environmental activists who love any issue that has the capacity to frighten the gullible into making hefty contributions to their numerous NGOs, there are the crony capitalists who see the opportunity to cash in on the immense sums being made available for ‘sustainable’ energy, there are the government regulators for whom the control of a natural product of breathing is a dream come true, there are newly minted billionaires who find the issue of ‘saving the planet’ appropriately suitable to their grandiose pretensions, etc., etc. Strange as it may seem, even the fossil fuel industry is generally willing to go along. After all, they realize better than most, that there is no current replacement for fossil fuels. The closest possibilities, nuclear and hydro, are despised by the environmentalists. As long as fossil fuel companies have a level playing field, and can pass expenses to the consumers, they are satisfied. Given the nature of corporate overhead, the latter can even form a profit center. The situation within science itself is equally grim. Huge sums of government and private funding have become available to what was initially a small backwater field. Science becomes easy when emphasis is on malleable models supported by hugely uncertain data that can be readily found ‘consistent’ with the models supplemented by fervidly imagined catastrophic ‘implications.’ Indeed, uncertainty is often exaggerated for just this purpose. Opposition within the scientific community is immediately met with ad hominem attacks, loss of funding, and difficulty in publishing.
Of course, science is not the only victim of this situation. Affordable energy has been the primary vehicle for the greatest advance in human welfare in human history. This issue promises to deny this to the over 1 billion humans who still lack electricity. For billions more energy will be much less affordable leading to increased poverty. Poverty, itself, is a major factor in reduced life expectancy. It requires a peculiarly ugly obtuseness to ignore the fundamental immorality of this issue.
Although all these issues have strong political consequences, it is by no means clear that their origin is, itself, political. I would suggest that a more likely situation is that politics is always opportunistically seeking some cause that fits its needs. However, once an illusional issue becomes a passionate belief, it becomes impervious to argument. Given how dangerous some illusional positions are, it is an important problem to know how to avoid them. This is a problem that is truly worthy of Cato’s attention. Rapid response can only do so much; belief seems to inevitably trump objective reality when one is free to choose ones narrative.
Caleb O. BrownFreedom of Speech - Why Liberty?
Having the ability to freely exchange ideas creates better governance and stronger communities. Catherine Sevenko describes her time working overseas in Budapest and Moscow and understanding the importance of our First Amendment rights.
Catherine Sevcenko works for the Foundation for Individual Rights in Education.
President Barack Obama is fighting the Islamic State with a coalition without members. What are allies for?
Washington collects allies like most people collect Facebook friends. It doesn’t matter if the new “friends” enhance America’s security. Washington wants more allies.
Yet America’s allies do little for the U.S. Their view is that Washington’s job is to defend them. Their job is to be defended by Washington.
For decades Washington faced down a nuclear-armed power—the Soviet Union and then Russia—to protect the Europeans. The Europeans did essentially nothing for the U.S.
After 9/11 several European states contributed to America’s efforts in Afghanistan and Iraq. Neither invading the latter nor attempting to build a democratic central government in the former made policy sense, but some Europeans sacrificed on behalf of a professed U.S. interest.
However, Washington quickly repaid the favor, underwriting Britain’s and France’s foolish war in Libya. Now the Europeans want Washington to save Ukraine and “reassure” countries to the east. Yet the EU has a larger GDP and population than America.
With the U.S. now calling for assistance against ISIL, the continent has turned more frigid. No one seems interested in joining Washington’s air war, even Great Britain.
Washington’s Asian friends are even less helpful. For decades Japan wouldn’t help U.S. forces, even if they were defending Japan. That is finally changing, but there still is no good reason Washington to stare down the People’s Republic of China to secure Tokyo’s disputed claim to the Senkaku Islands.
Similar is the case of South Korea. The U.S. defended the Republic of Korea during the Korean War and since then has maintained a military garrison, even as the South swept past North Korea economically. Seoul contributed detachments to America’s Afghanistan and Iraq operations, a nice gesture, but little return for decades of protection from unpredictable Pyongyang.
What about allies in the Middle East? Turkey is a member of NATO, but apparently said no to participation in the new grand coalition and even to American use of Incirlik Air Base. This country allowed Islamic State fighters free access to Syria and has far more at stake in ISIL’s defeat than does America.
The Saudis have underwritten radical insurgents in Syria. Yet there are few nations more at risk from the Islamic State. So far the Arab monarchies have committed little to the battle against ISIL.
The U.S. gets little from its many alliances. Washington is expected to confront Russia, China, Iran, North Korea, the Islamic State, Syria, and everyone else to defend a host of Asian, European, and Middle Eastern nations.
Few, if any, are vital to U.S. security. Equally important, most of these nations are capable of defending themselves.
Instead of adding allies, Washington should drop them. Instead of taking on permanent defense obligations to other states, the U.S. should cooperate with other nations on issues of mutual interest.
Instead of promiscuously intervening overseas, American officials should treat war as a last resort. Equally important, the U.S. should stop doing for other states what they can do for themselves.
ISIL is evil, but until now, at least, has not been interested in the U.S. The Islamic State wants to become a traditional government, ruling over a specific territory and population. But so far the countries targeted by the group have fallen short as American allies. As I argue in Forbes online, “They are more likely to act for themselves, but only if they must, that is, they cannot rely on Washington to take on their problems as its own.”
The administration’s non-war war against the Islamic State would be bad in any circumstance. But relying on empty alliances for international assistance exacerbates the potential for failure. A coalition of the threatened should degrade and destroy ISIL.
Cato senior fellow Johan Norberg writes in The Spectator that David Cameron ought to ponder the electoral loss of his friend and fellow “modernizing conservative” Fredrik Reinfeldt in the Swedish election:
It was not that Swedish voters were not impressed with the economy. According to a recent European Commission survey, 97 per cent of Swedes were satisfied with their living standards, a number that would please Kim Jong-un. In the big exit poll, voters said that the Moderates handled the nation’s finances better than any other party. But this success, it seems, was self-defeating. The old law, ‘He who has slaked his thirst turns his back on the well’, seems to have applied. The Swedish Conservatives kindly tidied up the fiscal mess — but why keep the cleaners on after the job is done?
Any country that struggles with financial collapse (and lacklustre recovery) would love to recruit an Anders Borg. But Swedes think they are now out of the woods. They want to talk about other things: the climate, immigration, girl power (the feminist party’s share of the vote rose seven-fold) and the quality of public services.
Reinfelt’s big mistake was to look as if he had finished the job. His coalition seemed out of ideas, with no vision for the future. They had, of course, accomplished most of what they set out to achieve in the first, radical four years — and had also lost their majority in parliament. But the general impression was that they had run out of puff….
Once, it was Reinfeldt who won elections by capturing the imagination and daring to be different. Now, he has played it safe — and lost. Last time, Reinfeldt gave Cameron a masterclass in how to win an election. Now he has given a masterclass in how to lose one.
There’s more, on Sweden’s economic recovery, its remaining problems, the pathetically weak victory of the Social Democrats, and the rise of the populist Sweden Democrats.
Steve H. Hanke
Bitcoin, the new digital currency, remains a mystery to many. There is no better way to lift the fog surrounding bitcoin than to let the data speak. And data speaks loudest through charts. Yes, topological analysis is often the best route to comprehension.
I have constructed – with my assistant, Mazin Al-Rayes – a series of charts that contain illuminating data about bitcoins and brief directions for use following each chart.
How to interpret: Currently there are 13.235 million bitcoins in circulation. The issuance of new bitcoins will halt when the total number of bitcoins “mined” (read: in circulation) reaches 21 million.
How to interpret: This chart shows the total revenue in USD of bitcoin miners (See: the formula at the bottom of the chart for the calculation). A bitcoin miner can be anyone with a computer and a connection to the internet. Miners lend their computers’ processing power to the bitcoin network and are compensated with new bitcoins. Many miners use hardware designed specifically for mining, others simply use their home computers - pooling their processing power via the internet and sharing the rewards.
How to interpret: This chart shows the estimated number of giga-hashes per second that the bitcoin network is performing. It’s clear that the processing power of the bitcoin network increased over time. The hash rate increased for a myriad of reasons: an increased number of miners, collaboration of miners in pools and hardware capacity.
How to interpret: New bitcoins are created at a predictable rate. This rate is a function of both the difficulty level of a bitcoin miner’s mathematical operation and the processing power of a miner’s hardware.
How to interpret: This chart shows the bitcoin market capitalization. This is calculated by multiplying the total number of bitcoins by the market price of a bitcoin in USD.
How to interpret: This chart shows the trade volume in USD from the largest bitcoin exchanges.
How to Interpret: This chart shows the price and volatility of the bitcoin. Volatility is calculated by annualizing the standard deviation of the daily returns of the past 14 days. If the price behavior over the past 14 days remains the same for one year, the volatility charted above can be interpreted as the expected price change range (+ or -) at the end of the year.
How to Interpret: Each day the volatility of bitcoins (as calculated in Chart 7) is plotted against the return on bitcoins that day. In the chart, the number of days above the 0% line is greater than the number of days below the 0% line, because the price of bitcoins has been trending upward since 1 January 2013.
How to interpret: A simple moving average (SMA) is the average of the price over the past X days. When a short-term moving average crosses over and exceeds a long-term moving average, price momentum in the market is accelerating. When a short-term moving average falls below a long-term moving average, price momentum in the market is decelerating.
How to interpret: We have chosen to measure long-term trends with 50- and 100-day simple moving averages, and short-term trends with 10- and 20-day simple moving averages. When the 50-day simple moving average is greater than the 100-day moving average, the long-term position is indicated in red. When the 10-day simple moving average is greater than the 20-day simple moving average, the short-term position is indicated in green.
Peter Van Doren
This week the New York Times featured an article lauding Germany’s embrace of renewable energy in recent years. This came just under a year after it published a separate article questioning the costs of subsidized wind power. The article last year noted that “Industrial users still pay substantially more for electricity here than do their counterparts in Britain or France, and almost three times as much as those in the United States, according to a study by the German industrial giant Siemens. The Cologne Institute for Economic Research said there had been a marked decline in the willingness of industrial companies to invest in Germany since 2000.”
In the first, Jonathan Lesser examines the costs of the Cape Cod wind farms in Massachusetts. Cape Wind prices will be around 21 cents per kWh when it starts production and 35 cents at the end of the contract in 2027. In contrast the market supply is currently around 11 cents per kWh and projected to be 15 cents from 2020 through 2027.
In the second article, Lesser uses data on actual wind generation to demonstrate the perverse economic consequences of the inverse relationship between the availability of wind power (at night in the winter) and the demand for electricity (during the day in the summer).
From January 2009 to August 2012 in three of the areas of the country that account for more than half of the installed wind generation capacity in the U.S.: Pennsylvania-New Jersey-Maryland, the upper Midwest, and Texas, the median wind unit operated only between 26 and 31 percent of the hours in a year and only between 2 and 16 percent of the peak hours in the 10 highest demand days of the year.
Even though renewable power is least available when electricity is in greatest demand, renewable energy subsidies create taxpayer-subsidized competition for existing power generators during other lower-demand times. This reduces the returns of existing generators. The lower returns cause conventional supply to decline and eventually consumer prices increase particularly at peak times because so little wind generation is produced during peak hours.
As my colleague Doug Bandow noted on Cato@Liberty a few days ago, Scottish independence is for the voters of Scotland to decide. And so it should be. But, as I write over at Foreign Policy, U.S. policymakers need to be aware that Scottish independence would carry some key costs for the United States:
- The loss of nuclear submarine basing privileges is the most concrete cost of Scottish independence, with Scotland’s nationalist party pledging a ‘nuclear-free’ Scotland if a Yes vote occurs. U.S. nuclear submarines, though based in King’s Bay, Georgia, use the United Kingdom’s HMNB Clyde Naval Base at Faslane, Scotland for maintenance and deployment needs. The site is located conveniently close to key North Sea patrol waters, and has acted as a visiting port for U.S. submarines since the Cold War. The loss of the base will force the UK to relocate its four Trident submarines, and the paucity of available sites in Europe may eventually lead to UK submarines being based alongside their American counterparts in Georgia.
- The UK and United States also have strong, historical links in intelligence sharing and military cooperation, formalized in the 1946 UKUSA agreement. Intelligence sharing and operational burdens are widely shared; officers on both sides of the Atlantic even refer to each other as ‘cousins.’ But independence could undermine the value of this alliance for the United States, at least in the short term. In the case of a Yes vote, the remainder of the United Kingdom (RUK) will need to rebuild its military and intelligence capabilities, extricating itself from Scotland, and negotiating which military assets will go to which country. During this period, the United States will lose the benefit of British intelligence and military support.
- The breakdown of the UK will also result in the loss of a valuable U.S. supporter on the world stage. The UK is often the only nation which commits substantial levels of troops or financing to joint military or humanitarian operations. While ‘partner states’ like France committed only 88 troops to the War in Afghanistan, the UK contributed 10-15% of total troops to the conflict. In Iraq, the UK was responsible for almost half of the non-U.S. troops involved. The UK also carries its own weight in NATO, contributing between 2.5-3% of GDP in military spending each year, a level few European states achieve. The loss of Scotland will carve up the UK, removing at least 8% of its population and tax base, making it less able to commit to any U.S. initiatives.
The timing could not be worse: achieving consensus on Syria, Ukraine or a host of other issues will be harder in the turmoil of a Yes vote for independence. Whether the United States should be involved in these conflicts is debatable at best, but they will be costly, especially if Britain can’t contribute. An independent Scotland, even without the incipient startup costs of independence, is not going to fill that gap. U.S. policymakers shouldn’t be telling Scotland what to do. But they should be worried. If a Yes vote occurs, the costs will certainly impact the United States
U.S. Customs and Border Protection is the second largest agency within the Department of Homeland Security (DHS). The agency cost taxpayers $13 billion in fiscal year 2014, and its budget is growing quickly. Spending has increased 85 percent in the last ten years, after accounting for inflation.
This chart shows CBP spending since 1970, including its recent meteoric rise.
Regrettably for taxpayers, all of that money is not being spent wisely. The Washington Post recently highlighted one example of egregious CBP spending:
U.S. Customs and Border Protection “vastly overpaid” for an employee housing project near one of its checkpoints in rural Arizona, spending nearly eight times the average price of homes in the area to build each of the units, according to a federal audit.
The 21 agency homes in Ajo, Ariz, cost about $680,000 each, whereas the average price for a home in the city is $86,500, the Homeland Security Office of Inspector General said in a report on Thursday.
Auditors determined that CBP overpaid for the land, added “nonessential items” and ignored recommendations for the types of houses that should be built. A CBP study had called for one-bedroom homes, but the agency instead built two- and three-bedroom units with amenities such as quartz counter tops, three-car garages and stand-alone freezers.
The report concluded that the homes exceeded employee needs, noting that 80 percent of the agency’s field officers own permanent residences in other locations.
“CBP did not effectively plan and manage employee housing in Ajo, Arizona, and made decisions that resulted in additional costs to the federal government,” the report said.
All told, the auditors identified $4.6 million in expenses that “could have been put to better use.” They noted that CBP increased the cost of the project seven times without explaining how the extra funds would be spent.
Ajo, Arizona represents just one of six areas where CBP is building new homes for its agents. The Inspector General’s report calls on CBP to postpone further construction until it gets this wasteful spending under control.
This is one more example to add to the ever-growing list of wasteful federal spending.
Marian L. Tupy
Much has been said about the impact of Scottish independence on British politics. With the predominantly socialist parliamentarians from Scotland gone, the Conservative Party would likely come to dominate British politics for the foreseeable future. The much needed economic reforms and, perhaps, withdrawal from the European Union would become very likely.
What about the impact of independence on Scotland? The breakup of the Czech and Slovak Federal Republic some 21 years ago provides an interesting example.
The 1992 elections produced dramatically different results in the two parts of the former Czechoslovak federation. In the Czech Republic, the election was won by the Civic Democratic Party (ODS) led by Vaclav Klaus. Klaus was a highly regarded former federal Finance Minister, who later became Prime Minister and President of the independent Czech Republic. The ODS was dominated by economic reformers whose main goal was a speedy transition of the Czech Republic from a centrally planned economy to capitalism.
In Slovakia, the election was won by the left-leaning Movement for Democratic Slovakia (HZDS) led by Vladimir Meciar. Meciar, a former communist with who instinctively opposed dramatic economic reforms favored by Klaus, won by promising the increasingly nationalistic Slovaks some type of a confederal arrangement with the Czechs, but not outright independence. Since the HZDS, with support of smaller Slovak National Party, had enough votes to block all legislation in the Federal Parliament, the future of the federation would depend on an agreement between the ODS and the HZDS.
While demanding an increased autonomy for Slovakia, the Slovak leadership did not bother to find out how far the Czechs were prepared to go. The Slovak leadership seemed to believe that the Czechs, who were more emotionally attached to the continuation of the Czechoslovak federation than the Slovaks, would simply accede to whatever demands the Slovaks chose to make. That turned out to be a colossal miscalculation.
The Czechs were determined not to have their economic reforms hindered by the more socialist Slovaks. If the federal government in Prague were to be rendered ineffective by the Slovak veto and thus prevented from reforming the socialist economies of both parts of the federation, then the two nations would have to go their separate ways. As such, the Czechs flatly rejected a confederal arrangement that would provide for a common currency, but autonomy of economic decision-making in the two parts of the federation. As the Czechs saw it, Slovak statism would destabilize the Czechoslovak crown, and thus harm the Czech economic prospects.
The Czechs called the Slovak bluff and the two republics went their separate ways.
It turned out that many of the concerns that the anti-independence Slovaks had were well founded. Slovakia was not ready for independence. Virtually all the ministries of government were in Prague and the Slovaks working there did not return to Slovakia. While the Czechs simply “repainted” the signs on government buildings from “Czechoslovak” to “Czech,” the Slovaks would have to do everything from the scratch.
The Czechoslovak federation was dissolved on January 31, 1993. In the Czech Republic, Klaus introduced his far-reaching economic reforms. The Czech Republic pulled ahead and became one of the early post-communist success stories. Even better, the Czechs no longer had to feel that they were subsidizing their “younger sibling.”
Slovakia, in contrast, suffered years of economic and political decline. Meciar’s style of government became increasingly authoritarian, leading the U.S. Secretary of State Madeleine Albright refer to Slovakia as the “black hole in the heart of Europe.” The Slovak economy remained unreformed. While some of the more lucrative enterprises were sold off to Meciar’s friends (who, in turn, financed his political campaigns), most of the obsolete state-owned firms kept on losing money. By 1998, when Meciar left office, Slovakia was near bankruptcy.
Following the change of government, Slovakia returned to a full-fledged democracy and embraced far-reaching economic reforms. The Slovaks partially privatized their pension system, introduced a flat income tax and reduced regulation. In recognition of those improvements, the World Bank’s “Doing Business in 2005” report declared Slovakia the world’s leading reformer and ranked it among the top 20 countries with the best business conditions. By 2006, the Slovak economy was growing at 10 percent per annum and Slovakia was the world’s largest exporter of cars per capita.
Independence forced Slovaks to realize that they had no one to blame for their misfortunes but themselves. Likewise, the success of the “Tatra Tiger,” as Slovakia came to be known in the mid-2000s, imbued the Slovaks with optimism and confidence. As for the relationship between the Czechs and Slovaks: it has never been better.
Since Scottish devolution in 1997, the socialists in the Scottish National and Labor parties have been busily over-regulating those parts of the Scottish economy that were unfortunate enough to fall under their control. According to the 2010 United Kingdom Competitiveness Index, the region with “the largest fall in relative competitiveness” between 1997 and 2010 was Scotland.
Scotland’s greater statism and, ironically for the birth place of Adam Smith, suspicion of capitalism, is a potent obstacle to reform in England and Wales. It is also a serious danger to economic prosperity north of the border. Sooner or later, Scotland will need to introduce reforms that it would never accept from a Westminster government. The end of the Union maybe a high price to pay for the end of socialism on the British isles, but the rewards from a more robust, long-term economic growth are not negligible either.