On the Blog
The media is looking for scientists in all the wrong places.
Celebrities are, frequently, looked to as a source of wisdom, their only qualification for advice being the ability to obtain continued employment in the entertainment industry. Women shell out hundreds, if not thousands, for cosmetics and clothing worn by the likes of Gwyneth Paltrow; product placement in movies and on television is a multi-million dollar industry.
But while celebrities might be well-placed to instruct on how to dress with an inflated budget and how to stay young forever with the help of expensive creams and plastic surgery, their expertise on matters of biology and climatology might be less reliable. So how do celebrities like Leonardo DiCaprio and James Cameron gain credibility as influential environmentalists while collecting frequent flier miles and stocking garages with unnecessary vehicles?
As the Media Research Center pointed out this week, mainstream media outlets often give celebrities the benefit of the doubt, accepting their claims as fact even when the claims are outrageous, ignoring their carbon-emitting lifestyles, and elevating them to an almost-infallible status typically reserved for religious figures (though, to be fair, the left has also taken to elevating religious figures to the status of superheroes when they “get it right” on climate change).
The media should take the MRC’s suggestions: Treat celebrities pontificating on science the way you’d treat a scientist pontificating on hair products, and instead, give the time you’d spend excoriating their greatness to investigating their outrageous ideas.
In today’s edition of The Heartland Daily Podcast, Managing Editor of School Reform News Heather Kays speaks with Moriah Costa. Costa is an education reporter for Watchdog.org. Costa and Kays talk about student privacy and a recently introduced bill titled “the Student Digital Privacy and Parental Rights Act of 2015.”
The bill, introduced on April 29 by Rep. Luke Messer (R-IN) and Jared Polis (D-CO), aims to address student data and parental rights concerns. Kays and Costa also talk about the Children’s Online Privacy Protection Rule (COPPA) and the revamping of the Family Educational Rights and Privacy Act (FERPA).
A leading psychiatry journal reports in its most recent issue that underground drug users are experimenting with novel, psychoactive substances, sold exclusively online, before they are deemed “controlled substances” by the feds and other regulatory authorities.
These so-called “e-psychonauts” evade legal sanction for experimenting with psychoactive substances, including synthetic cannabinoids, cathinone derivatives, psychedelic disassociatives, novel stimulants, synthetic opioids, and herbs and plants, according to the journal, World Psychiatry.
In an article entitled, Novel psychoactive substances of interest for psychiatry, the authors, Fabrizio Schifano, et al, indicate that users are “typically attracted by these substances due to their intense psychoactive effects and likely lack of detection in routine drug screenings.”
The drugs work on a range of the brain’s neurotransmitter pathways, whose imbalance has been associated by medicine with psychopathological conditions, according to the report.
“In parallel with a stabilization (decrease) of the use of internationally controlled drugs, the market for novel psychoactive substances is on the rise year-on-year,” the authors note. “The diffusion of these substances has been identified in 94 countries with some 5% of 19-24 year-old Europeans having already experimented with them. The Web plays a major role in shaping this unregulated market.”
Novel psychoactive substances are psychotropic drugs which are not controlled by the U.S. Food and Drug Administration (FDA), and other regulatory authorities overseas who are parties to the U.N. narcotic and psychotropic drug conventions, or treaties, from 1961 and 1971.
The term “psychonaut” was coined during the 1970s, and is defined as one who experiments with drugs to explore altered states of consciousness. The “e,” for electronic, was added by the authors of the World Psychiatry article to the word “psychonaut” to identify the electronic, Internet-based nature of the trend. The drugs used by these consumers are considered “legal highs,” until regulators ban them, and government regulators are struggling to keep up with the new designer drugs, which users find online by typing “substance keywords” on Google and searching through posts and threads. As soon as regulators designate a drug as illegal, underground chemists alter its molecular design, market the new product, with a slightly different name, online, and evade legal sanctions.
While the nation eagerly awaits the Supreme Court’s ruling in King v. Burwell, a case brought by an unknown Pennsylvania tax collector has quietly made its way to the U.S. Court of Appeals for the District of Columbia and has the potential to end President Barack Obama’s most important piece of legislation, the Affordable Care Act.
Like countless others, Jeffrey Cutler, currently the tax collector of East Lampeter Township, Pennsylvania, received a notice from his health insurance company in October 2013 that indicated his plan did not qualify for renewal under the rules established by the Affordable Care Act (ACA), also known as Obamacare. Cutler, who had been enrolled in the same plan since 2007, was satisfied with his coverage and did not want to switch to what he considered to be an inferior plan offered through the government-run health insurance exchange.
Facing significant political pressure from Republicans and Americans who had lost their insurance plans, Obama announced a “transition policy” in November 2013 that promised to allow individuals to temporarily keep their health insurance plans even if they otherwise would not qualify for renewal under the ACA. However, the transition plan was not applied universally; state governments had the authority to decide whether or not to allow their own citizens to keep their plans.
Rules established by Pennsylvania state officials made it possible for Cutler to keep his plan, but only if his insurance company agreed. His insurance company did not, and Cutler lost his insurance on January 1, 2014. He has been without health insurance since.
Representing himself, Cutler filed suit on December 31, 2013, alleging Obamacare violates his constitutional rights on two counts. First, Cutler says the Obama administration’s transition policy, also known as the “administrative fix,” violates the Fifth Amendment’s guarantee to equal protection under the law. Because every state was given the authority by the federal government to apply the administrative fix differently, Obamacare did not exist equally in every state. If Cutler had been a citizen of Arkansas, a state that required insurance companies to continue covering what the ACA determined to be non-compliant plans, he would have been able to keep his health insurance.
Cutler’s second argument is Obamacare violates the Establishment Clause of the First Amendment. According to Cutler, who is Jewish—a religion that is not exempt from Obamacare mandates—federal agencies under Obamacare unfairly give certain religious groups the freedom to avoid having compliant health insurance plans without paying a penalty. By making this exception, Obamacare clearly favors some religious groups over others.
The federal government filed a motion for dismissal in U.S. District Court claiming Cutler lacked proper standing. Judge Colleen Kollar-Kotelly granted the dismissal, and Cutler appealed the decision to the U.S. Court of Appeals, which has agreed to hear the case. Oral arguments were presented on May 12.
Cutler is now represented by constitutional lawyers David Yerushalmi and Robert Muise of the American Freedom Law Center, and he’s confident his case will eventually take down Obamacare.
“My case is a full blown frontal attack on the constitutionality of the law,” said Cutler. “Many of the cases are about minute parts of the law. King v. Burwell is about five words. Hobby Lobby’s suit was largely about contraception. My case strikes at the heart of Obamacare and the administrative fix that was unconstitutionally applied after ACA’s passage.”
West Virginia Attorney General Patrick Morrisey filed suit on behalf of his state in July 2014 alleging similar claims.
“My letter to the attorney general of [West Virginia] seems to have resulted in them also challenging the law on the same point,” said Cutler.
“I think Jeffrey Cutler is correct—his First Amendment rights, and probably those of many other people, may have been violated under the ACA,” said Kenneth Artz, a research fellow specializing in health care at The Heartland Institute. “This is not unexpected considering Obama’s massive health care reform bill is the most complex piece of legislation in the history of the world.”
Regardless of what the D.C. Court of Appeals decides, Cutler says he expects his case to eventually be heard by the Supreme Court.
No matter what becomes of Cutler’s case, his arguments raise important questions about the federal government’s authority to create laws and regulations that are applied unequally. While it’s true the signers of the Constitution and the Bill of Rights did not intend for religion to be shoved out of the public sphere, they absolutely were concerned about the federal government favoring one religious group over another, and they also feared certain states, especially the more wealthy and powerful states, being treated differently than others.
It’s within this context that the Constitution was agreed upon, and Cutler’s case directly addresses these same concerns. If federal authorities can pick particular groups based on religion or geography to exempt from federal law, then our national laws are, by definition, not truly national and not equally applied.
The only question now is: Will the courts agree, or will they allow the power of the executive branch to continue to expand beyond what anyone in 1789, when the Constitution was implemented, believed was possible under the law?
In today’s edition of The Heartland Daily Podcast, we listen in to America’s Voice for Energy with host Marita Noon. In this segment, Noon is joined by Heartland Policy Advisor Marc Morano and Research Fellow H. Sterling Burnett. They discuss, among other environment related topics, The Heartland Institute’s recent trip to the Vatican climate conference.
In the first half of the podcast, Morano describes the events surrounding the conference in Rome. He talks about conference and Heartland’s rebuttal. In the second half, H. Sterling Burnett joins Noon to discuss the implications of the Pope’s impeding encyclical.
Providence Alaska Medical Center (PAMC) this week submitted its amended Certificate of Need (CON) application following an injunction secured by its rival, Alaska Regional Hospital, in state court.
A Certificate of Need – like the one at issue in Alaska — is an increasingly controversial regulatory requirement in 36 U.S. states. The rules prevent hospitals from expanding their facilities, or opening new ones, without the permission of state regulators, and rival healthcare corporations.
“These laws, which require government permission before a facility can expand, offer a new service, or purchase certain pieces of equipment, were enacted in the belief that restricting entry would lower health care costs and increase availability of these services to the poor,” notes the Mercatus Center, a free-market think tank at the George Mason University, in its new website, dedicated to CON reform.
In its amended application, the medical center seeks to reemphasize a local market need for 14 additional Emergency Department (ED) treatment rooms, for example. Currently, the center is the largest hospital facility in Alaska, but still needs to grow to accommodate market conditions there.
According to recent research, these CON regulations do little to increase access to health care for the poor, but they do limit the availability of such health care services. The first state to implement a CON law was New York in 1964.
States with these onerous laws report fewer beds for patients, fewer magnetic resonance imaging (MRI) tests offered to patients, and a lower-than-would-be-expected number of computed tomography (CT) scans provided for patients. Reforming the laws – removing the CON requirement – will increase access to medical care.
“These regulations were initially enacted under the theory that unregulated market competition would drive medical providers to overinvest in facilities and equipment, raising the cost of medical care,” the Mercatus Center web site states.
FOR FURTHER REFERENCE:
Without investment, everything economic collapses. Stasis is death. We must constantly create and innovate to move forward our massive $14-trillion-per-year economy. That takes lots and lots and LOTS of speculative capital.
Without certain certainties, investment collapses. If investors don’t have any reasonable idea what’s going to happen in a market – they won’t invest in that market.
That is not to say guarantees. Investing is – in the best of circumstances – extraordinarily risky. Investors know this. They are risk takers by nature – thank God. Without them, their copious coin – and their intestinal fortitude – everything economic collapses.
What we absolutely do not need is government artificially creating all manner of additional uncertainties. Sadly, that is inherently what government does.
Regulation-compliance-costs waste investment capital. Unilateral regulation – when the Executive Branch bypasses the Legislative Branch and its process and rewrites and superimposes laws all by its onesies – creates tremendous uncertainty. And with it tremendous loss of investment.
Because if the economic landscape can be fundamentally altered on a whim – by the wave of a hand and the stroke of a pen – those looking to invest will instead head for the hills.
The examples are legion – and often legendary.
Federal regulation and intervention cost American consumers and businesses an estimated $1.88 trillion in 2014 in lost economic productivity and higher prices.
And on, and on, and…
Sometimes this is the expressed intent of those in governmental power. Remember these promises from now-President Barack Obama?
That’s certainly investment-friendly.
Often the intent is just as malicious – but obfuscated. Remember this promise from now-President Obama?
After our premiums necessarily skyrocketed, we learned from ObamaCare architect and accidental video star Jonathan Gruber that they all along knew it would increase premiums by 19-30 percent. In many instances, it’s been much higher than even that. And there are more, even larger increases on the way.
There are many, many, MANY ways this money could be better spent.
Often uncertainty and its resulting loss of investment is – if we’re giving the benefit of the doubt – an accidental government by-product. They mean well, but their government actions end up squelching speculative coin.
For instance – behold the woefully misnamed Innovation Act. Which harms what it claims to want to help. Yet another government “Oops.”
For investors in technology start-ups, things are about to get much more complex and dangerous….
(T)his bill actually will kill investment and innovation….
The American patent, so indispensable to technology start-ups, is about to be rendered useless when faced with an infringer of disproportionate size….
President Obama, known to be tight with Google, has said he will sign it. Google and other mega-corporations will be pleased.
Big Government and Big Business love it. The Little Guys – not so much.
(T)he Innovation Act threatens American inventors, particularly individual inventors and those working at small businesses and startups….
What do all of these inventors need to create and innovate? Investment. Which the government is poised to fundamentally undermine.
When the ability for investors to get a return on said investment is legislated away – they’ll head for the hills. And take their copious coin – and our hopes for future creation, innovation and economic expansion – with them.
Of that we can all be most certain.
Both of the nation’s retail hardware behemoths, Home Depot and Lowe’s, recently sold out to activists in ways that are the corporate equivalent of a dog’s putting his tail between his legs and slinking away from a bully. Home Depot announced that by the end of this year it will stop selling vinyl flooring that contains a class of chemicals called phthalates. It described the move as an effort to “continually challenge our suppliers to develop new, innovative options for our customers.” Baloney. What the company did was abandon both science and its customers under pressure from the activist group Safer Chemicals, Healthy Families, which sponsors the “Mind the Store” campaign that has been strong-arming retailers to remove safe, useful, and affordable products from shelves.
Determined not to lag in the Stupid-Strategy Sweepstakes, Lowe’s announced not only that it will follow Home Depot’s lead on phthalates, but also that it will phase out the sale of products that contain neonicotinoid pesticides — which are widely used on turf and ornamental products as well as on corn and soybean seeds — supposedly because of their adverse effects on pollinators. “Lowe’s will include greater organic and non-neonic product selections, work with growers to eliminate the use of neonic pesticides on bee-attractive plants it sells and educate customers and employees through in-store and online resources,” the company said.
The people who need education are the ones at Lowe’s who decided to phase out “neonics” to protect bees. Contrary to oft-repeated claims, honeybee populations are not declining. According to U.N. Food and Agriculture Organization statistics, the world’s honeybee population rose to 80 million colonies in 2011 from 50 million in 1960. In the U.S. and Europe, honeybee populations have been stable (or even rising slightly over the past couple of years) during the two decades since neonics were introduced, according to U.N. and USDA data. Statistics Canada reports an increase to 672,000 honeybee colonies in Canada, up from 501,000, over the same two decades.
When retailers such as Home Depot and Lowe’s capitulate to pressure groups rather than stand up for science, they actually harm consumers. Products won’t become any safer, while the replacements will often be of inferior quality, more expensive, or, most likely, both. The European experience with neonics illustrates the flaw in Lowe’s reasoning: The EU’s politically motivated ban on neonics, which began in 2013, has forced farmers to resort to older, more toxic, less effective pesticides — primarily pyrethroids, which had been largely phased out. Moreover, European farmers are now seeing a resurgence of insect predation, and insect infestations may lead to a 15 percent drop in this year’s European harvest of canola, the continent’s primary source of the vegetable oil used in food and as biodiesel.
Home Depot and Lowe’s aren’t responding to “consumer demand” or being environmentally responsible; they are simply seeking the path of least resistance, knowing consumers are unlikely to protest much when their floors become marginally more expensive or somewhat less durable, or when they need to shift to alternative pest-control products. They just want to get the pesky activists off their backs.
Market forces actually work; if the replacement products that activists want us to use were better, cheaper, or safer, we’d use them without a pressure campaign directed at retailers. And if the original products were actually harming consumers, zealous regulators (and the plaintiffs’ bar) would have acted. When activists can’t get their way via science, regulation, or litigation, they resort to propagandistic tactics like this one.
History tells us that the approach works — for the activists. These campaigns for what have been dubbed “regrettable substitutions” — substitutions that have undesirable outcomes — have become standard operating procedure. Activists thump their chests, get their way, and go on to raise more money to fund the next campaign. Companies give in to avoid negative press, and cast their cowardice as corporate social responsibility.
It’s not as if consumers benefit when big retailers, under pressure, remove popular products. Consumers who, for whatever reason, want phthalate-free floors or BPA-free bottles already have choices. There are no shortages of so-called “green” products available — for a price. But a small group of vocal activists shouldn’t dictate the availability of safe products the rest of us want — simply because stores such as Home Depot and Lowe’s want to avoid confrontation with groups that are in the business of confrontation.
This is part of a pattern. The “Safer Chemicals, Healthy Families” bullies have a track record of spreading misleading information about the safety profile of chemicals in products that benefit consumers. Their baseless fear-mongering plays to the psychological phenomenon of “loss aversion,” in which people perceive the pain of loss more than they do the pleasure of gain. Their junk science has targeted a wide range of chemicals, including those found in cleaning supplies, furniture, children’s toys, food packaging, water bottles, and even commonly used food ingredients.
If the Home Depots and Lowe’s of the world continue to cave to these campaigns, consumers will be the losers. Activists will consign us to a life of more expensive products that aren’t safer or better. And inevitably, other activists will attack the replacement chemicals — the regrettable substitutions — for their risks, real or imaginary. There will be plenty of regrets for everyone, except the activists.
[Originally published at Pundicity]
In today’s edition of The Heartland Daily Podcast, Managing Editor of Environment & Climate News H. Sterling Burnett speaks with Senior Fellow James M. Taylor. Taylor and Burnett discuss the EPA’s proposed updated ozone regulations.
Taylor notes that current rules already protect public health and the new rules will neither save lives nor prevent illness. Along with the lack of positive effects, the new rules will be the costliest regulations in EPA history. The proposed regulations would impose more than $1,000 per year for each individual household in direct and indirect energy costs. The ozone rule is a prime example of the EPA’s use of selective scientific data to expand its mission and grow its budget.
In response to significantly lower oil and natural gas prices, America’s energy sector is retrenching rapidly. The drilling rig count has dropped by more than 50 percent over the past year, while companies large and small have announced sizeable layoffs and cuts in their capital budgets for 2015 and 2016. Nonetheless, several states, including Pennsylvania and Ohio, are considering imposing or hiking production taxes—called severance taxes—on oil and gas operators. These increases will be in neither the public’s nor the industry’s best interests.
Governors and state legislators should keep in mind that in today’s competitive environment, producers in their states are simply “price takers.” What this means is that any factor increasing the marginal cost of production, such as new or higher severance taxes, will put that state’s operators at a competitive disadvantage. The result will be lower production today and diminished investment in the future.
What’s more, as the experience of Texas and other energy producing states has demonstrated over the years, severance taxes are not dependable revenue sources because they rise and fall with changes in output and price. With prices for oil and natural gas expected to remain low for an extended period, their contribution to total state revenues is likely to be quite small and not enough to offset any sizeable cuts in other taxes. In addition, it’s never good public policy to increase the tax burden one specific industry as opposed to imposing or hiking taxes generally across all industries.
It’s not as though oil and gas producers aren’t already paying more than their fair share of taxes and fees to state and local governments. Aside from severance taxes, all producers pay state sales taxes on equipment purchases as well as some servicing activities. Most producers are also subject to state income or gross receipts taxes, and some states impose impact fees on each well drilled. At the local level, oil and gas companies pay property taxes on their operating equipment and reserves.
In addition to the taxes paid directly by oil and gas operators, working interest owners must report payments received for state income tax purposes. Landowners with royalty interests in oil and gas wells must pay severance taxes on their individual shares of production even as their net income falls in today’s price climate, further reducing revenues to the state.
The oil and gas renaissance has been a boon for states with shale plays, bringing with it heightened levels of economic development, jobs and tax revenue. For the shale boom to continue in the face of lower prices, tax and regulatory policies must remain accommodative. If a state imposes new or higher severance tax rates in today’s low price environment, the result will be fewer jobs in an already distressed industry and diminished prospects for future investment when prices rebound.
We need not ascribe malicious motives to Big Government advocates – we need only look at their results.
With this track record of uber-failure – which has put us on the fast track to oblivion – why would we want even more government? When everything Big Government advocates say they need – results in less of what they say they want?
(Federal Communications Commission) FCC Chairman Tom Wheeler defended newly imposed net neutrality rules as well as the agency’s plans to block the Comcast-Time Warner Cable merger, saying that moves have been necessary to protect competition.
These are two HUGE government impositions on the private sector. Made by Big Government advocates – in the name of protecting competition.
Yet again, the exact opposite is going to happen.
(A) number of small Internet Service Providers (ISP)…are going on record, saying the FCC’s Open Internet Order will have a negative impact on their business and stifle future investment….
(S)ix ISPs—which have customer bases ranging from 475 to 8,000—…have declared under penalty of perjury that the FCC’s Order is leading them to cut back on investing in their networks. Those companies include wireless service providers, small cable operators and electric cooperatives.
Of course they will have to cut back on investments. Reality mandates they must.
More Government costs everyone in the private sector more money. The smaller the private sector participant – the less able they are to absorb the costs.
If they’re lucky – investment is all that goes away. As government continues to grow – more and more of these small providers will go under. How’s that for more competition?
(W)hen informed that her plan to nationalize health insurance might lead to massive bankruptcies, Hillary respond(ed):
“I can’t worry about every small, undercapitalized business in America.”
Big Government advocates are usually much less straightforward. As does Chairman Wheeler, they in Alice-in-Wonderland down-is-up fashion claim more government means more room for small players to operate.
Far and away the biggest impediments to private Internet providers being Internet providers – are local governments.
Local governments and their public utilities charge (Internet Service Providers) ISPs far more (for building rights) than these things actually cost. For example, rights of way and pole attachments fees can double the cost of network construction….
These (government) incumbents – the real monopolists – also have the final say on whether an ISP can build a network. They determine what hoops an ISP must jump through to get approval.
This reduces the number of potential competitors who can profitably deploy service.… The lack of competition makes it easier for local governments and utilities to charge more for rights of way and pole attachments.
It’s a vicious circle…(A) system of forced kickbacks….(also) includ(ing) ISPs…building out service where it isn’t demanded, donating equipment, and delivering free broadband to government buildings.
Not exactly conducive to competition – as smaller companies don’t have the coin to pay the government-kickback freight.
And this ain’t competition-conducive, either:
The U.S. Federal Communications Commission has voted to overturn large parts of two state laws that limit local governments from funding and building broadband networks.
Government is the referee – and playing for the opposing team….
Think about these local governments – which hold the intrinsic fate of every private Internet provider in their greedy, giant hands – also competing with them as Internet providers.
Think the government shakedowns are bad now? Think its hard to get the government to grant you permission to do business now? Wait until the government is trying to sell what you’re trying to sell.
And government can ultimately do this:
The Postal Service (USPS) has a legal government monopoly on delivering first-class mail…. (Prospective competitors) are required by law to charge a high minimum price and cannot undercut USPS rates.
Government is taxing private providers – and using that money to fund competitors to these private providers.
Imagine if McDonald’s could tax Burger King – and use that money to fund McDonald’s.
The answer to government-caused problems – isn’t more government. Hair of the dog won’t work for public policy – because it never, ever has.
You want more competition? Get the layers of government impeding it out of the way.
Old fallacies never seem to die, they just fad away to reemerge once again later on. One such fallacy is that if there is significant unemployment and slow economic growth it must be due to not enough consumers’ spending in the economy, what Keynesian economists call a “failure of aggregate demand.”
This fallacy has been voiced, once more, in a recent interview with Joseph Stiglitz, professor of economics at Columbia University and the 2001 recipient of the Nobel Prize in Economics.
In an interview that appears in the British “Globe and Mail” on May 8, 2015, Stiglitz blames the sluggish economic growth in the U.S. and around the world, with accompanying unemployment, on weak market demand due to income inequality.
“You are not going to have robust growth without adequate demand,” says Stiglitz. “The people at the top who have seen big income gains are saving large portions of their income, on average 35 percent. Those at the very top are not spending their money. People at the bottom, on the other hand, have no choice. To just get by, they have to spend all their income.”
Stiglitz goes on to say, “The contention that people at the top are the job creators and, if you tax them at higher rates, they won’t create jobs is nonsense. The fact is there is talented entrepreneurs at all levels of the U.S. economy. Whenever there is demand, jobs get created and entrepreneurship flourishes. Our big corporations are sitting on upwards of $2-trillion. The reason they are not investing it is there’s no demand for their goods.”
Stiglitz argues that what is needed is to “get the economy growing by more equitably sharing income gains and investing in our future.”
Taxing or Deficit Spending Do Not Create Jobs
First, if the government attempts to “stimulate” the economy through more of its own spending, the question has to be asked: From where will come the financial means for the government to increase its expenditures?
If the government taxes the citizenry to finance its increased spending, then every dollar more that the government spends by necessity reduces taxpayers’ spending by an equivalent amount. The net change in overall or total spending in the economy would be zero.
If the government runs a budget deficit, it must borrow the dollars it wishes to spend above what it takes in, in taxes. Every dollar borrowed by the government in the loan and financial markets is one dollar less of people’s savings available for someone in the private sector to borrow for some investment or consumer purchase. Again, the net change in overall or total spending in the economy would be zero.
If it is argued that the government need not siphon away a dollar from a private-sector borrower because it can offer a higher rate of interest to attract more savings, the net result will still tend to be the same. Why?
If income earners decide to save more due to an attractively higher rate of interest the government offers to pay for some of those borrowed dollars, it means that that saver is spending fewer dollars, himself, on consumption or some other spending.
In addition, pushing up market interest rates to attract savers to lend to the government also raises the cost of borrowing for private businesses. The higher the rates of interest the more likely that some businessmen “at the margin” will find that the cost of borrowing is now greater than the anticipated rate of profit from investing a borrowed sum.
Economists call this the “crowding-out effect.” Part of the cost of funding the government’s budget deficit comes from a reduction in private sector borrowing and spending due to the higher interest costs. Thus, again, the net effect on total spending in the economy tends towards zero.
Good Ideas Need Savings and Investment
Joseph Stiglitz is certainly correct that there are potentially talented entrepreneurs in all walks of life and levels of income in the United States and around the world. But having a good idea and even willingness to take a chance and start or expand an enterprise is not enough.
In most instances, you need capital to begin and operate a business over a period of time before you have anything ready to sell. You need sufficient funds to cover some of the losses that often will occur before you find a niche and attract enough consumer interest and demand to defray the costs of doing business.
In other words, there first has to be the savings that facilitates the time-consuming production that will eventually generate the product or services that can earn consumer dollars at some point in the future.
The Simple Logic of Saving, Investing and Capital Formation
Let take a simple example first. Imagine Robinson Crusoe alone on his island. If he is to escape from extremely primitive conditions of existence of mere “survival” by picking berries and attempting to catch fish in a stream with his bare hands, Crusoe must invest in the manufacture of “capital,” – tools – to assist in improving and increasing the productivity derivable from his human labor.
But to do so Crusoe must “save,” that is, he must out of his daily efforts to have enough for survival set aside a sufficient amount of berries and fish as a “store” of goods to live off to free up his time and resources that would otherwise go into immediate production for his present consumption.
He uses that freed up time and resources to, perhaps, make a bow and arrows, or a canoe and fishing net, so that after the requisite “period of investment” during which he has lived off his “savings,” he will have the capital goods – the tools of production – that will then assist him increasing the quantities, varieties and qualities of the consumption goods that previously were beyond his bare labor’s potential to obtain.
In this way, he has employed himself in making capital goods with his store of saved consumption goods to live off so his own labor can be diverted from more immediate berry picking and fishing with his bare hands.
Production Time Results in More Desired Goods
The manufacture of those capital goods and their use over a period of time once in existence must logically and temporally precede the greater availability of consumer goods that that capital’s existence now makes possible. In other words, besides the time taken to making the canoe and net, he must now paddle out into the waters off his island to first catch that larger harvest of fish that his capital goods enables him to have before he can have that increased and more varied fish supply to eat as part of his dinner.
At the same time, using his bow and arrows for hunting and utilizing his net for fishing will result in “wear and tear.” That is, capital – tools and equipment – get used up in their use, and Crusoe will have to devote part of his labors and time to maintenance and repair if his ability to hunt and fish is not to be diminished.
Furthermore, if he is to increase his supply of desired consumer goods even more from their existing availabilities and amounts he must again divert an increased amount of his labor time and resource use to “investing” in more and/or better capital goods above that required to maintain his existing capital.
Thus, the more he invests in making the capital equipment that increases his capacity to produce greater quantities, varieties and qualities of the finished goods he would like to use and consume, the more resources, time, and labor effort he has to equivalently devote to maintaining his enlarged stock of capital to sustain whatever the standard of living he has been able to establish for himself through savings and investment.
In the Market, Prices Guide Production for Consumption and Investment
Of course, in “modern society” the process is more complex than presented when using Robinson Crusoe as a first approximation. In our world, today, this all works in a competitive market system of independent private entrepreneurs who employ and directing the men and material they hire, rent or buy in the arena of exchange.
In this market setting entrepreneurial decision-makers are guided by the system of market prices that reflect the types and amounts of goods that consumers desire, and on the basis of which entrepreneurs hope to make their profits. Changes in consumer demands are expressed in changes in the relative prices for the various goods offered on the market, and these prices then direct entrepreneurs to shift the types and amounts of goods they decide to produce.
This also applies to changes people make concerning consumption and savings, that is, their demand for consumer goods in the present versus consumer goods in the future for which they put their savings aside.
In a properly functioning free market, competitive economy, a decision to consume less and save more may reduce the current demand for some consumer goods. But the greater savings reemerges as spending on investment activities and other types of borrowing when the increased savings results in lower rates of interest to attract willing borrowers in the financial markets where that greater savings has been deposited.
But why would investors borrow this greater savings, even at lower rates of interest, if the current demand for goods on the market has not increased or maybe even gone down?
Saving “Today” Means a Desire to Demand More “Tomorrow”
This was explained by the famous Austrian economist, Eugen von Böhm-Bawerk (1851-1914) near the beginning the twentieth century.
“The man who saves curtails his demand for present goods but by no means his desire for pleasure-affording goods generally . . .
“The person who saves is not willing to hand over his savings without return, but requires that they be given back at some future time, usually indeed with interest, either to himself or his heirs.
“Through savings not a single particle of the demand for goods is extinguished outright . . . the demand for goods, the wish for means of enjoyment is, under whatever circumstances men are found, insatiable. A person may have enough or even too much of a particular kind of goods at a particular time, but not of goods in general nor for all time. The doctrine applies particularly to savings.
“For the principle motive of those who save is precisely to provide for their own futures or for the futures of their heirs. This means nothing else than that they wish to secure and make certain their command over the means to the satisfaction of their future needs, that is, over consumption goods in a future time. In other words, those who save curtail their demand for consumption goods in the present merely to increase proportionally their demand for consumption goods in the future.”
But even if there is a potential future demand for consumer goods, how shall entrepreneurs know what type of capital investments to undertake and what types of greater quantities of goods to offer in preparation for that higher future demand?
Böhm-Bawerk ‘s reply was to point out that production is always forward-looking, a process of applying productive means today with a plan to have finished consumer goods for sale tomorrow. The very purpose of entrepreneurial competitiveness is to constantly test the market, so as to better anticipate and correct for existing and changing patterns of consumer demand.
Competition is the market method through which supplies are brought into balance with consumer demands. And if errors are made, the resulting losses or less than the anticipated profits act as the stimuli for appropriate adjustments in production and reallocations of labor and resources among alternative lines of production.
When left to itself, Böhm-Bawerk argued, the market successfully assures that demands are tending to equal supply, and that the time horizons of investments match the available savings needed to maintain the society’s existing and expanding structure of capital in the long run.
Wages are Paid Out of Savings, Not Current Consumer Demand
Böhm-Bawerk explained that all production takes time, and invariably through a series of steps or “stages of production” that finally leads to a finished consumer good available for sale and use. He emphasized that the very nature of the time structure of production means that the goods available for consumption today are goods the production of which extends backwards in time over many production periods of the past, over months or years.
And the production processes being begun “today” and which will continue over the time periods of many “tomorrows” will only be completed and ready in the form of finished consumer goods at some point in the future.
The finished consumer goods bought today do not represent a “demand for labor” today. The entrepreneurs demanded that labor in the various stages of production at different times in the past while the consumer goods being purchased today were in the process of being produced.
And the labor being demanded “today” in the various stages of production, each stage of which represents a future product at a different degree of completion and that will be, respectively, ready for sale as a consumer good at different time periods of the future, is a demand by entrepreneurs looking to future sales, not current period consumer demand for “commodities.”
But this “demand for labor” by entrepreneurs through these future-oriented stages of production is entirely dependent upon the extend to which incomes and revenues earned in the present and future periods (and the resources they represent) are partly saved and not consumed.
It is this savings of resources not being utilized for more immediate consumption purposes, that “frees” part of the productive capacity of the society to be diverted to the making and maintaining of capital and providing the means to pay wages to workers who will be hired and employed in the respective processes of production for long periods of time before those specific goods in the manufacture of which they are participating will be offered for sale and generating a revenue in the future.
Thus, it is savings that represents the greater part of the “demand for labor” in the production processes of the market and not the current period’s demand for consumer goods.
Don’t Tax Away the Wealth that Provides the Savings for Production
Keynesian economists like Joseph Stiglitz miss all of this in their simplified and, in fact, simplistic view of the world that all that is needed is more government spending and greater “aggregate demand” to create more employment today.
When the “rich” are saving rather than consuming they are, in fact, supplying part of the financial wherewithal (and the real resources their savings represents) to maintain and expand the capital supply and to provide the means to pay workers and other resource suppliers incomes over the periods of production that everyday culminates in the availability of the goods and services (and the standard of living) we take for granted.
Under Stiglitz’s own argument, low or lower-income individuals in society use more of their incomes for consumption and less for savings. By using various government fiscal and other policies to transfer wealth and income from those in society who are greater savers to those who are greater consumers, the net effect over time can be to reduce capital formation and productive investment looking to the future.
It is savings that supports investment, enables capital formation, and creates and sustains jobs. Faster growth and more jobs depend upon savings and market-oriented investment, not the level or amount of current consumption spending.
Taxes and Regulations Reduce the Ability and Incentives to Invest
But what about Stiglitz’s statement that American “big corporations are sitting on upwards of $2-trillion.” What he failed to mention is that over half of that money is parked overseas where American firms have earned those sums from foreign investments and sales of goods. Why haven’t those dollars come home?
The Financial Times reported on May 10, 2015, “The growing cash piles underline the reluctance of boardrooms to repatriate money held abroad even as they tap debt markets to fund record spending on dividends, buybacks and acquisitions.”
U.S. businesses are double taxed if they bring those dollars back to the U.S.. The foreign government in whose country they earned those profits has already taxed them on their net revenues. If they bring any or all of those dollars back to the United States, Uncle Sam will tax them again on their foreign gains, a practice that few other government follow around the world.
But what about the profits made a home? Why aren’t more of those profits plowed back into productive activities and forward-looking investments? Partly this is due to what economic historian, Robert Higgs, has called “regime uncertainty,” that is, the uncertainties concerning the future direction of government policies that makes investment decisions more risky than it otherwise has to be.
This includes the uncertainty surrounding what to expect in terms of government regulations, controls, commands and restrictions in an environment in which the U.S. Federal code of regulations on business activity numbers over 175,000 pages. The enforcement of these regulations is widely open to the discretion and decisions of thousands of government bureaucrats, with often total unpredictability of where and when the regulators will appear and what they will demand or accuse an enterprise of having violated.
Matching the hindrances of the interventionist state is the manipulations of money and interest rates by central banks everywhere, which distorts markets, misdirects capital and labor use resulting in unsustainable booms and inescapable downturns that bring about wrongly invested capital and misallocated labor. This “wrong twists” to the market takes time to overcome and correct.
It is government impediments to open, competitive markets – whether in America or in other parts of the world – that are the causes to behind slow growth and sluggish job creation, not “the rich” and their savings.
While Apple Inc. continues its laughable claim that its data centers are run “100-percent” on renewable energy – highlighted by a solar farm built adjacent to its server facility in Maiden, N.C. – public records show the company has received permits to install 44 pollutant-spewing diesel generators for back-up power.
Meanwhile two weeks ago the Cupertino, Calif.-based computing giant boasted far and wide that it was joining with the Conservation Fund to “protect” a “working forest” in Brunswick Co., N.C., which is on the state’s southeastern coast. So Apple asserts that it reduces pollution produced by fossil fuels, while conserving timber for future generations. Wouldn’t that be wonderful if it was true? Instead it’s more of what the environmental left likes to call “greenwashing.”
The diesel generators for the western North Carolina data center are the normal redundancy you’d expect a power-dependent corporation to install to insure continual service (such as cloud computing and iTunes) for customers. But even though the back-ups will run for only a few hours a year (unless there’s a catastrophe), the fact that they’re fossil-fueled highlights how next-to-useless the “green” alternatives are. After all, have you heard of solar- or wind-powered backup generators?
And as NLPC has reported in the past, the idea that its server farm is completely powered by its solar panels (and another adjacent fuel cell facility) is a mirage. Apple built the project in the Tar Heel State because of access to Duke Energy’s inexpensive electricity resources that are mostly fueled by nuclear, natural gas and coal. Power generated by the 100-acre solar expanse – dubbed an “iSore” by the U.K. Daily Mail – is absorbed by Duke onto its grid at great expense, while Apple accesses nonstop, round-the-clock electricity at super discount rates. Net result: The rest of Duke’s customers pay more for having to accept additional solar into the mix, thanks to Apple.
As for preserving woodlands, let’s look at the server farm in western NC before giving attention to the Brunswick Forest initiative. When the data center and solar facility was under construction in late 2011, Apple commissioned the massive clear-cutting of forest for them. But did the company chop down the timber “responsibly,” as would be defined by most liberal environmentalists?
The answer is no. As NLPC reported at the time, instead Apple burned the 170 acres of woodlands, releasing pollutants (CO2!) and particulates into the atmosphere, and destroying habitats.
“The told us they would have a fire, and only do it when the wind’s blowing away,” said Zelda Vosburgh, a resident of Maiden, to the Hickory Daily Record. “They do it 24 hours a day. The house inside smells like smoke. I don’t know if it’s hurting us, breathing it 24 hours a day. Between the smell and the smoke, it’s bad.
“It’s pushed everything out of the woods into the area here. I had a snake on my steps,” she said. “I’ve seen rabbits and squirrels everywhere.”
Only after the complaints and bad press did Apple alter its plans and switch to grinding the trees into mulch instead – which is not much of a “responsible” improvement, especially when environmentalists expect you to at least replant more trees.
Now after that slash-and-burn experience, Apple wants you to believe it is adding to its sustainability credentials with the “investment” in the southeastern North Carolina forest, with an environmental group providing legitimacy.
“Apple is clearly leading by example—one that we hope others will follow,” said Larry Selzer, president and CEO of The Conservation Fund. “The initiative announced today is precedent-setting.”
According to a report by Raleigh TV station WRAL, Apple said the forest will be “harvested sustainably,” with the Conservation Fund selling the land to commercial owners who will be bound contractually to “preserve the forest and follow environmentally sound principles for cutting and replanting trees.”
The initiative is apparently driven by Apple’s guilt over its heavy usage of paper and cardboard; thus the desire to invest in “sustainable” wood. But there was a qualifier – Apple “won’t necessarily” buy paper made from the SE NC trees, but it would produce the equivalent of a significant portion of the wood fiber in Apple’s paper and packaging that it does use.
So the concept is like carbon offsets – just like the guilt-ridden who fly on emissions-spewing jets that buy “indulgences” to alleviate their consciences, so also do users of paper made from “bad” forestry practices forgive themselves by buying up “responsible” woodlands!
It kind of makes you feel bad for that poor forest that Apple hacked and mutilated to death for that western NC data center and its (phony) power supply. It was replaced by a bunch of toxic solar panels – with no indulgences – and in reality is run by power generated by coal, natural gas and nuclear, backed up by diesel.
Despite the protests of countless experts claiming Wikipedia is often not a reliable source of information, it remains perhaps the most influential and one of the most-visited websites on the planet. But exactly who is really behind the world’s largest source of information? And does their agenda, if one exists, ever shine through their supposedly “unbiased” wiki pages?
After hearing of and experiencing incidents in which undeniable facts were removed from the site because editors at Wikipedia claimed the researchers who uncovered them were “not reliable”—which is, of course, irrelevant if the facts are demonstrably true—I began to research the prominent website’s leadership. That endeavor revealed that despite the site’s claims of being a neutral source of information, many of those leading Wikipedia have intimate ties to far-left organizations or openly support liberal policies and candidates.
Sue Gardner is just one example. She is the former executive director of the Wikimedia Foundation and served in that role from December 2007 to May 2014. Her influence on Wikipedia is substantial and unquestioned. She was even named one of the 100 most powerful women in the world by Forbes in 2012.
In addition to serving on Wikimedia’s Board of Trustees, Gardner has held a leadership position with the “nonpartisan” Sunlight Foundation (SF). SF has been funded by numerous left-wing organizations, such as the George Soros-funded Open Society Foundation and the Knight Foundation. SF even received $1 million in 2010 from the left-leaning Rockefeller Family Fund.
Also connected to SF is Wikipedia founder and Wikimedia Board of Trustees member Jimmy Wales, who serves on the SF Advisory Board. Wales is not only connected to leftist groups through his role at the Sunlight Foundation, he also has close personal ties to multiple left-wing bigshots. Wales even attended one of George Soros’ birthday parties, according to The New York Times.
Other Wikimedia Board of Trustees members have less extravagant ties to leftist causes but still openly admit they support such causes and politicians. Guy Kawasaki, Wikipedia’s “internet evangelist,” announced his support of Barack Obama on Election Day in 2012.
In one of her blog posts, Wikipedia board member Phoebe Ayers lamented that she had “white privilege” and reminisced about rifle-carrying “rednecks,” to whom she referred as “drunken yokel[s],” whose proximity she had to endure while growing up in the South. In another post, she applauded Sen. Barbara Boxer (D-CA) for her “stands on the environment … and women’s issues” and worried someday the “unthinkable” might happen in California: A Republican could get elected.
Having a particular set of personal beliefs doesn’t necessarily mean there will be content bias, but the evidence suggests Wikipedia has been affected by its leftist leaders and many biased editors.
In 2012, for example, Northwestern University’s Shane Greenstein and the University of Southern California’s Feng Zhu analyzed more than 70,000 Wikipedia articles published over 10 years related to U.S. politics to determine whether any bias existed in the material. Greenstein and Feng found there was a distinct bias favoring Democrats and their positions. The authors also discovered articles produced in the early 2000s were “very slanted” and less so after 2005. As time has gone on and more unbiased users have become involved in Wikipedia’s editing process, articles have become more balanced, Greenstein and Zhu say.
Things may be improving, but Wikipedia’s bias remains obvious. Not only are factual, credible sources being removed in an effort to censor information that reflects badly on political projects such as global warming alarmism, net neutrality, and Obamacare, but the editors have also allowed dishonest, biased sources to mislead people on numerous wiki pages. For instance, climate alarmist William Connolley repeatedly removed factual material from Wikipedia pages in 2010 and earlier because it didn’t support his belief in man-caused catastrophic global warming, even while he was being investigated for poor practices.
It’s true Wikipedia is an enormous project and its leadership cannot be held responsible for every foolish decision, but from the top down, the evidence shows Wikipedia is decidedly not a neutral source operated by unbiased editors, and all of its readers should keep that in mind whenever visiting the site.
The prospect of paying penalties to the IRS is driving many Americans reluctantly, for the first time, to sign-up for the health insurance offered by their employers, new research by a leading healthcare consultancy shows.
Previously, these individuals had gone without health insurance, or not utilized the health care benefits offered at their workplace. The new enrollments — including the adult children of older employees — are increasing costs for employers around the country, cutting into profitability and dampening job creation.
Many companies are now making substantial changes to their health benefit offerings, as these new mandates of Obamacare are implemented, Paul Goldbeck, senior consultant at Towers Watson, the consultancy, told attendees of the 44th Annual Retirement & Benefits Management Seminar at the Darla Moore School of Business at the University of South Carolina.
Moreover, the controversial Obamacare law has added administrative complexity with new eligibility and reporting requirements as well as rules to set “out-of-pocket maximums” for pharmacy and medical plans.
“All of this leads employers to consider whether they want to take a different approach to health benefits,” Goldbeck said.
Many employers have increased employee cost-sharing, or are transitioning to private exchanges. Goldbeck said that changes will increase even more dramatically as the 2018 “excise tax on high-cost health plans” comes on stream.
Towers Watson estimates that nearly “48% of large companies,” will face the excise tax in 2018. To avoid the tax, the employers may seek cheaper plans for health coverage, creating even more unwanted change for employees.
In today’s edition of The Heartland Daily Podcast, Managing Editor of Budget & Tax News Jesse Hathaway speaks with Veronique De Rugy. De Rugy is a Senior Fellow at the Mercatus Center. De Rugy is on the podcast to explain how Congress is attempting to increase spending and bypass sequestration spending caps in the coming 2016 budget.
De Rugy says Congress is using “gimmicks” to avoid counting defense spending as part of the budget, and is now loading discretionary spending hikes into “buckets” intended to enable emergency spending during the early phases of wars.
Former White House advisor Karl Rove is telling top Republicans that now is the time to revise their five-year-old strategy of opposing Obamacare, and come up with a legislative alternative that can be considered by the Congress.
Rove wrote recently in The Wall Street Journal that if the Supreme Court rules that the Obamacare subsidies are unconstitutional, as expected, millions of Americans will this summer be without health insurance. That could be a potent political issue that conservatives need to be ready to handle.
“President Barack Obama will then accuse conservative justices of overreaching and demand that the GOP Congress immediately extend subsidies to every state. His message will be politically potent, as it will turn the words of Republicans in 2013 back on them: ‘If you like your plan,’ Republicans said, ‘you should be able to keep your plan.’ Hillary Clinton will join in depicting Republicans as heartless brutes who would let people die for lack of health insurance rather than fix Mr. Obama’s law,” writes Rove, a former senior aide to President Bush, in the WSJ. “The answers must come from congressional Republicans. The effort could be stopped by a few legislators making the perfect the enemy of the good. Nor can Republicans rely on leadership from their presidential hopefuls, who are more focused on their quests than on advancing policy solutions.”
Republicans have voted to repeal Obamacare a significant number of times in the House of Representatives. But liberal online news organizations like The Huffington Post increasingly have claimed the GOP has “no alternative” of its own for health insurance reform.
President Obama, Al Gore and other alarmists continue to prophesy manmade global warming crises, brought on by our “unsustainable” reliance on fossil fuels. Modelers like Mike Mann and Gavin Schmidt conjure up illusory crisis “scenarios” based on the assumption that carbon dioxide emissions now drive climate change. A trillion-dollar Climate Crisis industry self-servingly echoes their claims.
But what if these merchants of fear are wrong? What if the sun refuses to cooperate with the alarmists?
“The sun is almost completely blank,” meteorologist Paul Dorian notes. Virtually no sunspots darken the blinding yellow orb. “The main driver of all weather and climate … has gone quiet again during what is likely to be the weakest sunspot cycle in more than a century. Not since February 1906 has there been a solar cycle with fewer sunspots.”
“Going back to 1755, there have been only a few solar cycles that have had a lower number of sunspots during their maximum phase,” Dorian continues. This continued downward trend in solar sunspot cycles began over 20 years ago, when Earth stopped warming. If it continues for a couple more cycles, Earth could be entering another “grand minimum,” an extended period of low solar activity.
That would mean less incoming solar radiation, which could have a marked cooling effect – as happened during previous decades-long episodes of low solar activity. The “Maunder Minimum” lasted 70 years (1645-1715), the “Dalton Minimum” 40 years (1790-1830); they brought even colder global temperatures to the “Little Ice Age.”
Solar activity is in free fall, Reading University (UK) space physicist Mike Lockwood confirms, perhaps “faster than at any time in the last 9,300 years.” He raised the likelihood of another grand minimum to 25% (from 10% three years previously). However, he claims a new little ice age is unlikely.
“Human-induced global warming is already a more important force in global temperatures than even major solar cycles,” Professor Lockwood insists. That warmist mantra may keep him from getting excoriated for even mentioning solar influences. But it ignores Earth’s long history of climate change.
And what if Lockwood is wrong about human influences and the extent of a coming cold era? Habibullo Abdussamatov, director of Russia’s space research laboratory and its global warming research team, is convinced another little ice age is on its way. (See pages 18-21 of this report.) That would be LIA #19.
A couple degrees warmer, with more carbon dioxide in the air, would be good for humanity and planet. Crops, forests and grasslands would grow faster and better, longer growing seasons over larger areas of land would support more habitats, wildlife, agriculture and people – especially if everyone has access to ample, reliable, affordable energy, especially electricity, and modern farming technologies. Most people, including the elderly, can easily handle such warmth, especially if they have air conditioning.
But a couple degrees colder would bring serious adverse consequences for habitats, wildlife, agriculture and humanity. Though geologists say we are overdue for one, this does not mean another Pleistocene ice age – with glaciers obliterating forests and cities under mile-thick walls of ice across North America, Europe, Asia and beyond. Maybe Lockwood is right, and it won’t be a full-blown Little Ice Age déjà vu.
However, Antarctic sea ice just set a new April record. Ice conditions are back to normal in the Arctic. Winters have become longer, colder and snowier. With less meltwater, sea levels are barely rising.
Moreover, a 2-degree drop in average global temperatures would shrink growing seasons, cropland and wildlife habitats. Agriculture would be curtailed across Canada, northern Europe and Russia, putting greater pressure on remaining land to feed hungry families without turning more habitats into cropland. Governments might even have to stop mandating corn for ethanol and devote the land to food crops.
Our ability to feed Earth’s growing population would be seriously impaired, especially since the same factions that wail about fossil fuels, fracking and “dangerous manmade climate change” also despise the chemical fertilizers, insecticides, biotechnology and mechanized farming that would enable us to get far more food per acre under colder conditions, even if crops are starved for plant-fertilizing CO2.
Generally colder conditions can also bring more unpredictable storms and cold snaps during shortened growing seasons. That happened frequently during the last Little Ice Age (1350-1850), resulting in frequent crop failures and bouts of hunger, malnutrition, starvation and disease in much of Europe.
Worst of all, cold kills. Modern homes and buildings with affordable heat make it easy to survive even brutal winters in comfort. However, carbon taxes, restrictions on coal and natural gas, renewable energy mandates and other ill-conceived programs have sent electricity and home heating prices soaring.
When energy is rationed, expensive and unpredictable, businesses lay people off or close their doors. Forced to go on welfare, people’s health and well-being suffer. The elderly are especially susceptible. In Britain, many pensioners now ride buses or sit in libraries all day to stay warm, while others burn used books in stoves (they are cheaper than coal or wood). Thousands die of hypothermia, because they can no longer afford proper heat.
In Germany, Greece and other countries, rising energy costs have caused a surge in illegal tree cutting, as desperate families try to stay warm. Hungry, unemployed families are also poaching wildlife. Meanwhile, forests of wind turbines generate minimal expensive electricity but do slaughter millions of birds and bats every year, leaving crops to be eaten by hordes of insects, across Europe and the United States.
These realities portend what will likely happen on a far larger scale, if we do enter another prolonged cold era under anti-fossil fuel rules imposed in response to global warming hysteria. The specter of widespread turmoil, rising death tolls and climate refugees by the millions could become reality.
And still alarmists say, even if temperatures aren’t rising, we should force developed nations to curtail their energy use and living standards – and modernize developing countries in a “sustainable” manner. We should use the “climate crisis” to “move the world in a greener, more equitable direction.”
As though wind, solar and biofuel energy and widespread organic farming are sustainable, under any objective standard. As though government elites have a right to tell poor countries what level of development, what energy technologies, what farming methods they will be “permitted” to have – and what level of poverty, disease, malnutrition and early death they must continue to suffer.
Ending this insanity must begin with the climate scientists and modelers. They are taking our tax dollars and promoting constant scare stories. They owe it to us to be objective, transparent and willing to discuss and debate these issues with those who question human influences on climate change. They owe it to us to get the predictions right, so that we can be properly prepared, especially if the iceman cometh again.
That means basing their models on all the forces that determine global temperature and climate fluctuations: the sun, cosmic rays, deep ocean currents, volcanoes and other natural forces, as well as the 0.04% of Earth’s atmosphere that is carbon dioxide. It means comparing predictions with actual (non-averaged, non-manipulated) real-world observations and data. If the improved models still do not predict accurately, it means revising hypotheses and methodologies yet again, until they square with reality.
Meanwhile, our politicians owe it to us to start basing energy and environmental policies on reality: on how Earth’s climate and weather actually behave – and on how their policies, laws and regulations affect job creation and preservation, economic growth and opportunities, and human health and welfare, especially for poor and minority families, and even more so for the poorest people on our planet.
Congratulations on your decision to run for President of the United States. I was at home writing at the time of your announcement. As a professional speaker and someone who has spent more than thirty years training speakers, I felt your presentation was stellar—especially considering that you delivered it without a note. I even posted the following on my Facebook page: “I have work to do but am captivated listening to Ben Carson”—which garnered many “likes” and favorable comments.
I say that to emphasize that I like you. I am glad that you’ve joined the voices that will be utilizing the platforms afforded to them as candidates to educate the public as they expound on important issues facing America today. In fact, the libertarian leaning Reason Magazineapplauded you for this exact reason: “To my happy surprise, he spent a good chunk of his announcement speech hinting at a Ross Perot-style crusade against the massive national debt and its drag on the economic growth.” Matt Welch, Reason’s editor in chief continues: “I would be happy if he made such talk the centerpiece of his campaign, particularly at a time when the new GOP congressional majority is already going wobbly on spending. If the guy’s gonna be sucking up oxygen in the race, he might as well be focusing monomaniacally on the giant sucking sound of debt service.”
I know you are not a politician and agree that is an asset for your candidacy. You speak, refreshingly, off the cuff and from the heart, rather than from a poll-tested script. As such, you’ll likely say a thing or two—especially in the early days of your campaign—for you which you’ll later have to apologize (at worst) or dial back on (at best).
I hope such is the case with your energy-themed comments during your first speech in Iowa since your declaration as a candidate, where you quoted President Obama’s deceptive “$4 billion a year in oil subsidies” line. It is disappointing to hear you parroting the president, but especially since it is essentially wrong.
When you use the term “subsidy,” the public automatically thinks a handout of government cash. President Obama chose to use it specifically to give his audience in New Hampshire a negative attitude toward “the oil industry.” Yet, as Forbes columnist Larry Bell found in his analysis of Obama’s attack on “fossil fuel subsidies,” the so-called subsidies are far from cash handouts and some of it doesn’t even go to the industry. I’ll explain.
Bell points out a broad definition for “subsidy” as used by Oil Change International: “any government action that lowers the cost of fossil fuel energy production, raises the price received by energy producers, or lowers the price paid by consumers.” Though different from public perception, this allows tax deductions—akin to those used by most industries—to be relabeled.
Three such tax deductions presently allowed by the IRS are: (The Heritage Foundation offers an excellent primer.)
- Oil depletion allowance: Applied to small, independent producers (large integrated corporations haven’t been eligible for this since the mid-1970s), this deduction allows producers to pass depletion deductions (similar to benefits available to all mineral extraction, timber, etc.) on to individual investors.
- Expensing drilling costs: Producers can write off expenses in the year occurred rather than capitalizing them and taking the deductions over several years.
- Credit for taxes to foreign nations: Provides an offset for international companies that paid foreign taxes so that the companies are not taxed twice on the same income.
While oil-and-gas producers are allowed typical cost-of-doing-business tax deductions, they are singled out to receive fewer tax breaks than other industries. For example, Bell highlights Section 199 of the “American Job Creation Act of 2004”—which was intended “to provide a competitive advantage to domestic companies engaged in product manufacturing, sales, leasing or licensing, and production-related software activities.” Most businesses engaged in “qualified production activities” receive a 9 percent deduction from net income. Yet oil and gas can claim only 6 percent.
Using the broad definition of “subsidies,” there are some large dollar figures that warrant review. A summary of the data from a 2010 OECD-IEA report titled: “Fossil Fuel Subsidies and Other Support,” concludes a total of $4.5 billion for oil-related subsidies in the U.S. in 2010—which may be where the $4 billion talking point comes from. But that, too, is deceptive.
The single largest expenditure is just over $1 billion for the Strategic Petroleum Reserve, which is designed to protect the U.S. from oil shortages. The second largest category is just under $1 billion in tax exemptions for farm fuel. The justification for that tax exemption is that fuel taxes pay for roads, and the farm equipment that benefits from the tax exemption is technically not supposed to be using the roads. The third largest category? $570 million for the Low-Income Home Energy Assistance Program. (This program is classified as a petroleum subsidy because it artificially reduces the price of fuel, which helps oil companies sell more of it). Those three programs account for $2.5 billion a year in “oil subsidies.”
As you can see, understanding the whole fossil-fuel subsidy argument is complicated, but it is clearly not the cash give-away the anti-petroleum crowd wants people to believe. And I haven’t addressed all the tax and royalty revenue that comes in from the oil-and-gas industry.
I know you were in Iowa and you must have felt that you needed to offer some nod to corn-based ethanol, but your suggestion that oil subsidies should, instead, be used to build ethanol-fueling stations, indicates that you are ill-informed on renewable energy as well.
We could take apart your comment about ethanol being 50-80 cents a gallon less than gasoline and being better for the environment—there is plenty to work with there. But for brevity, I am going to stick with the subsidy theme and expand it to include renewables.
Because energy subsidies are complicated, I think the easiest way to look at them is using an energy-received-for-dollar-spent model—which is a good indicator of how federal dollars are being used and the value the nation is getting from them.
The Energy Information Administration (EIA), at the request of Congress, recently updated a study it did in 2010 that evaluated the amount of subsidies the federal government provides energy producers for fiscal year 2013. In short, it found, as reported by the Institute for Energy Research (IER): “The largest increases in federal energy subsidies were in electricity-related renewable energy, which increased 54 percent over the 3-year period, from $8.6 billion to $13.2 billion. Total fossil fuel subsidies declined by 15 percent, from $4.0 billion to $3.4 billion.”
IER took the numbers from the EIA study and calculated the federal subsidies and support per unit of electricity produced. It concluded: “On a per dollar basis, government policies have led to solar generation being subsidized by over 345 times more than coal and oil and natural gas electricity production, and wind is being subsidized over 52 times more than the more conventional fossil fuels on a unit of production basis.”
The Independent Petroleum Association of America did a similar analysis based on the EIA’s 2008 numbers. At the time, it found: “On this basis, the highest figure by far is for ethanol and biofuels, at $5.72 per million BTU for 2007, with oil and gas coming in at just 3 cents per million BTU.”
Dr. Carson, while supporting renewable energy, like ethanol, may seem vogue, because you are running for the highest office in the land, I encourage you—and all presidential candidates—to learn from the recent elections in the UK.
Consider this: Climate Change Secretary Ed Davey became the first cabinet minister to lose a seat in almost twenty years. Davey, according to the UK’s Mirror, “claimed credit for leading the bid to secure a ‘massive increase’ in renewable electricity in the UK and …he led negotiations for the UK on the world stage at UN climate talks in Qatar, Poland and Peru.” By comparison, Prime Minister David Cameron, who while campaigning in Montgomeryshire, promised if he was re-elected: “We’ll scrap funds for wind farms.” Regarding the unpopular project, Cameron said: “I will seek a further careful consideration of this wind farms/power lines project. It’s financial and environmental madness. It should be abandoned.” Though not predicted, Cameron won “the sweetest victory,” while “Labour was virtually wiped out in Scotland and the Liberal Democrat vote collapsed,” reported The Daily Telegraph.
Dr. Carson, I know you are smart, very smart, but you know medicine. You need very smart people to advise you on energy policy now, before you address the topic any further. I have a cadre of energy experts that I could make available to you—and any candidate who wants smart energy policy.
Call me, maybe?
The pope’s climate conclave has come and gone, and with it went any hope this papacy would embrace a rational assessment of the evidence concerning claims humans are causing catastrophic climate change to inform his message to the world.
Had the pope bothered to consult scientists and economists outside his select circle of climate alarmists tied to the politically-founded and directed U.N. Intergovernmental Panel on Climate Change, he would have found almost every conclusion reached concerning the alleged coming climate catastrophe, the merits of fossil fuels, and the ability of low-density renewable energy technologies to raise the poor from poverty was dead wrong.
The Papal declaration on the moral dimensions of climate change stated, “Human-induced climate change is a scientific reality, and its decisive mitigation is a moral and religious imperative for humanity.”
This statement was based almost entirely on model simulations of climate, not actual evidence. These models have repeatedly failed the test of reality at even the most basic levels. The models project ever-rising temperature, which they say are caused by increasing carbon-dioxide emissions. Despite an ongoing rise in carbon-dioxide levels, temperatures plateaued more than 18 years ago and haven’t risen since. Every year, the gap between climate model predictions and the actual temperatures measured grows. The observed facts do not validate the models, and when models and observations conflict, one should trust the observation, not the models.
Also relying on model predictions, the Pontifical academy’s final declaration touts increasingly frequent droughts, extreme storms, and rising sea levels as imminent climate threats due to fossil fuel use. The facts say otherwise. Sea levels are rising, but the average rate of rise is no greater now than it has been for the past 500 years and is in fact lower than the average rate of rise for the past 14,000 years. Though droughts continue to occur, measurements show their frequency, severity, and duration are no greater now than they were long before carbon-dioxide emissions began to rise.
The claim about extreme storms is a real puzzler, since the world is currently experiencing a hurricane drought.This isn’t theory or models, but fact. The five-year sum of the number of global tropical cyclones tracked between 1970 and 2015 is the lowest it has ever been in the 45-year record. The number of intense hurricanes is also setting record lows. As of April 22, it had been 3,467 days, or more than nine years, since a category 3 storm (Wilma on October 24th, 2005) made landfall in the United States. This is the longest period between major hurricane landfalls in the United States since 1900.
Finally, the papal declaration provides no evidence whatsoever for its claim the technology exists to decarbonize rapidly.
Google is a technological leader, and no company has done more to develop and deploy innovative clean energy technologies to quickly replace fossil fuels, yet even Google recently admitted defeat.
Starting in 2007, Google committed significant resources to tackle the world’s climate and energy problems. Its boldest effort, RE<C, aimed to develop renewable energy sources that would generate electricity more cheaply than coal-fired power plants. By 2011, the company shut down the initiative, having determined existing renewable technologies, even accounting for steady improvements in efficiency and declining costs, would be unable to replace fossil fuel-based energy for the vast majority of electric power generation. Google concluded what is needed is an entirely new suite of as-yet-unimagined energy technologies.
That is nothing like the message the pope’s U.N. technology advisors, woolly-headed academics all, delivered.
In the end, use of fossil fuels did not take a safe climate and make it hazardous for human health and ecological fecundity. On the contrary, the use of oil, coal, and natural gas has positively transformed the world, allowing billions to live freer, healthier, more prosperous and longer lives than the vast majority of the most powerful people in human history.
Although the kings of old controlled armies and sometimes untold riches, I have a car, microwave, indoor plumbing, and safe drinking water, and I can eat almost any fruit or vegetable without regard to season and can travel across the world in mere hours. All the wealth and power ancient emperors had couldn’t buy any one of these things, and they were all made possible through the use of fossil fuels.
Today’s poor deserve the chance to live as I do, not as their ancestors have done for millennia, toiling in poverty, constantly threatened with disease and malnourishment. Only fossil fuels can deliver them from this fate. The pope should show his real concern for the world’s poor by rejecting false claims of imminent climate disaster and the draconian restrictions they are being used to justify.