Iain Murray

Beer for my Horses

by Iain Murray on September 15, 2009

The global-warming industry would probably still be solely owned by assoted cranks and romantics (and the odd vice president) if it weren’t for a bunch of CEOs taking a leaf from Enron’s playbook and attempting to monetize the issue. Playing the bootleggers in a classic bootleggers and baptists alliance, these businessmen have realized that they can get the government to increase their profits by means of “cap and trade” and similar regulatory interventions, at the expense of other businesses and the paying public. Ordinarily, such shenanigans would have the corporate watchdog groups in arms, but by getting the “baptists” of the green movement on their side, they have shielded themselves from public disgust.

This has to stop, and the good folks at Junkscience.com are at the forefront of calling foul. They are releasing a series of “Wanted” posters for six corporate fat cats who want to grow fatter by means of the Waxman-Markey Bill. Junkscience describes the six and their crimes as:

* Exelon CEO John Roe, the “carbon bandit,” who stands to make billions of dollars at taxpayer expense from Waxman-Markey’s free carbon allowances;

* General Electric CEO Jeff Immelt, the “carbon schemer,” who would rather profit from lobbying for Waxman-Markey than innovating products that consumers actually want;

* Duke Energy CEO Jim Rogers, the “carbon betrayer,” who is lobbying for higher energy prices and against his own customers and shareholders;

* Dow Chemical CEO Andrew Liveris, the “carbon extortionist,” who threatens to send American jobs overseas unless Congress pays him off with free carbon allowances;

* Caterpillar CEO James Owens, who can only be considered as “carbon clueless” since he is lobbying against the coal industry, one of his biggest customers; and

* John Deer & Co. Chairman Robert Lane, the “carbon crapshooter,” who seems to be betting that he can wreck the economy and profit simultaneously.

Form that posse and go get ‘em, guys.

There’s a new cost:benefit study from New York University Law School’s Institute for Public Integrity that, its authors claim, shows that, “From almost any perspective and under almost any assumption, H.R. 2454 [Waxman-Markey] is a good investment for the United States to make in our own economic future and in the future of the planet.”  A good investment for the US? Really?

The authors recognize that the benefits they find are global, while the costs are located in the US.  So let’s see what benefits accrue to US citizens and at what cost. (I am working with the authors’ figures here, which derive from the EPA, and are significantly different from the figures provided by such groups as the Heritage Foundation or the American Council for Capital Formation, which find much, much higher costs.)

Highest possible benefit = $5.2 trillion / 6 billion people = benefits of $866 per person

Cost to US citizen = $660 billion / 300 million people = cost of $2200 per citizen

That means a best possible benefit to cost ratio for a US citizen of 0.4:1.

The report talks about thinking of the Waxman-Markey costs as a “highly effective, highly leveraged form of foreign aid.”  One has to doubt that, given that the benefits that accrue to the developing world do so mostly in the far future, while the developing world is in desperate need of greater wealth – and better access to energy – today.  Even if it were true, however, one wonders whether the American public will accept a de facto tax increase of around $1300 per person, or $400 billion total, to pay for such climate aid.

Yet that’s assuming that the “high end” benefits scenario is what occurs.  The global low end benefits are actually far outweighed by the American costs, leading to a benefit:cost ratio to America of something in the order of 0.05:1 (or a cost:benefit ratio of 20:1).

And, of course, there’s no guarantee that a reduction in American emissions will amount to a reduction in global emissions.  We have seen the response to European cap-and-trade schemes being the relocation of facilities to other jurisdictions.  If so, the effective foreign aid program of Waxman-Markey might actually be a loss of American jobs to be replaced by developing world jobs, with no emissions reduction at all.  That would be very generous of us, but not quite what the authors of this study have in mind.

To summarize, the authors of the study have conclusively demonstrated that the Waxman-Markey bill is actually a very bad deal for the United States, and their attempts to claim otherwise are just spin.

Germanic Hoards

by Iain Murray on August 26, 2009

The old central powers (Germany, Austria, Hungary) seem to have come together again in opposition to plans to phase out incandescent light bulbs in favor of the more expensive twirly kind:

Germans, Austrians and Hungarians are hoarding energy-hungry light bulbs, which have fallen out of favour in other European countries, ahead of a European Union ban that takes effect next month.

The scramble for conventional bulbs illuminates the challenges of persuading consumers to embrace environmentally friendly shopping habits – particularly in the midst of an economic crisis. Sales of incandescent light bulbs have risen 34 per cent year-on-year in Germany in the first six months of 2009, data from GfK, the German consumer research group, shows.

In most other European countries, sales of old-style light bulbs have fallen at double-digit rates this year. In the UK, sales dropped 22 per cent, amid a voluntary agreement between retailers and energy companies to phase out light bulbs nine months ahead of the EU ban.

Germany, home of the Green Party founded by Petra Kelly and Joseph Beuys amongst others, seems to be doing so for reasons of comforting domesticity:

The shopping behaviour appears to contradict the stereotypes of Germans and Austrians as environmentally conscious. But Hans-Georg Häusel, a psychologist who uses brain science to explain consumer behaviour, said they were reluctant to change. “There is a fear that they could destroy the snug atmosphere of their homes,” he said.

CFLs will surely get more affordable and provide better quality light.  In the meantime, however, it seems that the Germans, Austrians and Hungarians have decided that, even if a German’s home is not his castle, it deserves to be as well lit as possible.

Image: Professor Joseph Beuys in the 1960s.  He was still wearing that hat when the author heard him speak in the 1980s.

Even though 4 Democratic Senators are so nervous about the electricity tax called cap-and-trade they are urging their leadership to drop it from the global warming bill, no-one should count on that happening yet. More Senators need to wake up to the significant problems cap-and-trade has, and there is no better example of those than the European version of the scheme. With that in mind, my colleague Roger Abbott and I have written a piece for the American Spectator today that outlines just two of the problems the Europeans have encountered. We conclude:

To sum up, the failure of the European ETS should give pause to Senators considering a similar system for the U.S. Cap-and-trade will not result in emissions cuts. It will, however, greatly enhance the power of the government to regulate the economy. And it will lead to higher energy costs, as the costs of trading permits add to utilities’ cost of doing business.

Given these facts, why the strong push for cap-and-trade? The sad fact is that both President Obama and the Democratic Congress are misleading the public. Alternative measures such as a carbon tax have not been considered precisely because their costs are transparent and obvious to the public. By contrast, cap-and-trade allows the President and Congress to claim credit for “taking action” on global warming without acknowledging the real costs that entails — costs which the public, when informed of the facts, is rightly unwilling to accept.

Feel free to send a copy of our piece to your Senator!

Smart Is As Smart Does

by Iain Murray on August 12, 2009

This picture accompanying this post is doing the rounds on the internet.  The commentary normally reads:

Below is a photo of a wreck in Jefferson Parish, LA (near New Orleans ) between two
trucks and a Smart Car.
Think Il (sic) pass on the Smart Car.

As with any email circular, especially ones with egregious spelling errors, you should always take it with a pinch of salt.  The goldmine that is snopes.com says the following:

According to a reader who relayed information to us from the Jefferson Parish Sherriff’s Office, the accident pictured above involved a Ford Escape not (as is commonly reported) a Smart Car.  The impact did not occure dead center as apparently shown in the photograph; it was offset to the right, and thus the driver’s side was not nearly as heavily damaged.  the driver of the Ford survived the crash and has since been released from the hospital.

So does this mean that a Smart car is safe and you should be happy if your son or daughter wanted to drive one?  Up to a point:

Ouch.

More proof that government does things better! In traditional “astroturfing,” a company would pay a PR firm to set up a fake grassroots organization aimed at promoting or fending off legislation that would affect the company.  Her Majesty’s Government in the UK, however, has decided to take this a step further and fund groups that lobby it, thereby creating a groundswell of public opinion in favor of its legislation.  According to a new report by the Taxpayers Alliance, it is doing this, on the issue of global warming alone, to the tune of $12 million a year*.

As Matt Sinclair says:

With the government funding political campaigns as well, the voice of the public is diluted still further. Popular pressure is crowded out by well-funded professional campaigns, but those campaigns don’t even represent an actual economic interest. Instead, those campaigns represent the views of politicians and officials and allow them to push their ideological preoccupations to prominence in the public discourse. Green campaigns like the Sustainable Development Commission and the New Economics Foundation loom large in the public debate and make it easier for politicians to justify – to themselves, the media and the public – ever more draconian attempts to force cuts in emissions.

It is important that Americans understand how disconnected policy in Britain is from the preferences and priorities of the public. British politicians like to strut around on the world stage boasting about the radical action that the country is taking, for example, how we lead the world in setting carbon reduction targets. They hope that the U.S. won’t want to let the side down and can be pressured into embracing similar policies to ours. The European example might not quite have the same appeal if Americans understood that Britain is putting in place green policies not because of popular pressure but in order to satisfy a government-funded lobby. Ordinary people pay the price in the form of higher electricity bills, prices at the pump and fares for their airline tickets.

Political contempt for taxpayers and the electorate is running at record levels on both sides of the Atlantic, it seems.

*Note that this figure is above what the “well-funded” anti-alarmism groups probably spend in total  on the issue even in the US, and probably globally.

The Right to a Green Job?

by Iain Murray on August 4, 2009

Demand for wind turbine blades in Europe has slipped, apparently, so a British company that makes them, Vestas, has plans to let go 625 workers (or, in the formulaic language of British news reports, “axe 625 jobs“).  So some of those being “axed” have decided to barricade themselves into the factory, in the unorthodox but apparent hope that this will stimulate demand.

What is perhaps most interesting about this story is not so much what it reveals about the impermanence of green jobs as the British labor unions’ attitude to them:

“The court has made its decision, but we will continue with our campaign and the right to work on green energy jobs.”

So it seems that on the British left there is now a substantive right to a green job. What a happy world this will be, when everyone is paid for saving the planet.  Presumably this right will be secured by a tax on the productive workers, but one has to wonder, just who will they be in this world?

A good, short, succinct summary of why Rep Lamar Smith (R.-KY) voted against Cap-and-Tax.

Hat-tip: The Chilling Effect

You need to a flashplayer enabled browser to view this YouTube video

Very interesting, but of course unscientific*, poll of hybrid vehicle owners over at HybridCarBlog.  It turns out that very few hybrid owners bought their hybrid because of global warming fears:

So far, there have been more than 28,000 responses to the poll and the results are a little surprising. 37 percent of respondents picked foreign oil dependency, 29 percent cool technology, 27 percent car pool lane access, but only 7 percent picked global warming.

Certainly, everyone I know in Northern Virginia who bought a hybrid did so because of the (no longer available) HOV lane access, but I am a little surprised and gratified to see that over 50 percent of hybrid purchasers made their decision based on personal rather than political considerations.

More importantly, however, as the post author notes, this suggests that car companies are missing a huge marketing bonanza by concentrating so heavily on save-the-planet considerations in their advertising campaigns.  If we really want to see hybrid technology develop and become more affordable, the auto makers need to wise up to this.  Of course, with the major American automakers (apart from Ford) now substantially owned by politicians and their allies, the chances of this happening are slight.

*So take it with a grain of salt

Forza Italia!

by Iain Murray on July 10, 2009

Italy’s Senate has overturned a 1987 ban on nuclear power, passed in panic after Chernobyl.  This is good news for Italians, as they face some of the highest electricity rates in Europe.  Of course, this being Europe, the plants will probably be built with significant government subsidy, so there won’t be much we can learn from it about the viability of nuclear power built without government assistance.  Nevertheless, if European countries are going to meet the ambitious emissions targets they have adopted, nuclear power is going to have to play a large part in doing so.