Coyote Blog

Megan McArdle makes a great point that should be absolutely uncontroversial:

government is much better as a price taker than a price maker.
Government procurement is all kinds of tedious and cluttered with red
tape, but in the end there's no gigantic problem with the government
pencil supply. Defense procurement, on the other hand, is pretty well
agreed to be godawful-expensive for what we get, the only excuse being
that we can't think of another way to buy fighter planes.

That means that government procurement alongside a free market looks a lot
different from government procurement when the government is the only
buyer. Yes, the health care market is extremely screwed up, but the
prices in it do tell you something about demand for various services,
and provide some signals about cost/benefit. You may think that viagra
is a prime example of wasted pharmaceutical R&D spending (though if
you do, I am willing to bet that you are either under forty, or
female), but the fact that a lot of people are willing to pay a fair
amount of coin for it tells you that they probably feel it is improving
their lives in some significant way. Governments can estimate
cost-benefit when the benefit is limited to crude mortality
improvements, but they are pretty much at sea when it comes to
quality-of-life. America's price signals are wildly distorted by its
insurance markets--but they're almost certainly better than no signal
at all.

Europe's governments operate their health care systems in the
context of an existing US market that provides information about demand
for new treatments (and of course I would argue, also the new
treatments). They don't use that price information to set what they pay
for drugs, but it does filter through to their markets--for example,
more widespread use of Herceptin for breast cancer in the US is putting
pressure on the British government to provide it. I think an American
shift to single-payer would be more problematic than the European
example for a variety of reasons related to our government structure.
But one important reason is that if we did, we'd have no where left to
get prices from.

A bunch of media outlets credulously ran a Greenpeace press release as a news story last year, hammering on Exxon for donating a cumulative $2 million dollars to "skeptical" climate researchers.  Never mind that no one could explain what was so ominous about an American company exercising its free speech rights.  I and other pointed out that this $2 million was a trivial amount of spending compared to the billions that had been routed to global warming activists. 

This week, we get a great example.  While over a period of a decade, the great Satan ExxonMobil spent $2 million on climate issues, it turns out one city government, in San Francisco, spends this much each year on global warming activism:

In his quest to make San Francisco the greenest city in the nation,
Mayor Gavin Newsom recently created a $160,000-a-year job for a senior
aide and gave him the ambitious-sounding title of director of climate
protection initiatives.
...
But officials in the Newsom administration say that even 25 people working on climate issues is not enough and that having a director in the mayor's inner circle is necessary to coordinate all the city's climate initiatives."

If
there are 25 people working on climate protection issues for the city,
that's a good start," Newsom spokesman Nathan Ballard said. "Ten years
ago [when the "globe" was still "warming"], there probably weren't any.
It's smart policy to have one point person at the highest level of city
government to coordinate all 25 of them."

The city has a climate
action plan, issued by Newsom after he took office in 2004, that aims
to cut the city's greenhouse emissions by 2012 to 20 percent below
1990's level.

In addition to the director of climate protection
initiatives in Newsom's office, San Francisco has an Energy and Climate
Program team of eight people in the Department of the Environment, who
combined earn more than $800,000 a year in salary and benefits,
including a "climate action coordinator." At least 12 San Francisco
Public Utilities Commission staff members work on climate issues
related to water and energy, including a $146,000-a-year "projects
manager for the climate action plan."

Also in the name of
climate control, the Municipal Transportation Agency has a "manager of
emissions reductions and sustainability programs" who works on making
Muni's bus fleet greener, and the San Francisco International Airport
has a "manager of environmental services" who oversees such projects as
the installation of energy-efficient lighting and solar panels.

The
list doesn't include the scores of staff members who work on broader
environmental policies, like the recently hired $130,700-a-year
"greening director" in Newsom's office, or Jared Blumenfeld, who earns
$207,500 a year in salary and benefits as the head of the city's
Environment Department, which has a staff of 65 and annual budget of
about $14 million.

It borders on journalistic malpractice that nearly every article on skeptics delve into their funding sources but no reporter ever seems to have ever asked climate alarmists about their funding sources nor delved into these funding issues.

Get ready, because global warming will soon be an excuse for government micro-management of any number of everyday behaviors.  We have already seen California's attempt to have the government take control of your home thermostat.  In England, the target is patio heaters:

Britain's growing café culture and taste for alfresco drinking and
dining may be under threat from MEPs who want to ban the patio heater.

A
vote in Brussels today is expected to call on the European Commission
to abolish the heaters to help to tackle climate change. Such a move
could cost the pub and catering trade dear.

Pubs spent about £85
million on patio heaters after the smoking ban was introduced last
year. Besides forcing smokers into the cold there is concern that a ban
on patio heaters could bring a significant cash loss to pubs, cafés and
restaurants.

By the way, something not mentioned in the article, perhaps because it takes a knowledge of actual science and stuff, is that these heaters tend to burn LPG and propane, which due to their molecular structure produce far less CO2 per BTU than other fossil fuels.

One is left to wonder what pareto-style ranking of CO2 reduction opportunities put patio heaters at the top of the list.  In fact, there is no possible rational analysis that would make this a legislative priority.  It is a great illustration of two points about such technocratic endeavors:

1. Government cannot correct supposed market irrationalities because governments always act more irrational than private players in the market, no matter who is in charge.
2. Most legislation supposedly to fight global warming is using global warming as a fig leaf to hide the actual reason for the legislation.  My guess in this case is that the sponsors of this legislation have some other reason for wanting the ban, but dress it up as global warming.  This mirrors the larger issues, there socialists, unrepentant Ehrlich admirers,  and anti-globalization loonies have repackaged themselves as fighting global warming and then, surprise, proposed the same government actions they were pushing for pre-global-warming-hysteria.

A lot of conservatives have an incredible loathing for unions.  Which is one of the reasons why I differ from them as a libertarian.  In a free society, any group of people, including workers at a company, should be able to associate to achieve certain goals, including to increase their bargaining power in wage negotiations.  As I said here:

If a group of even two people want to get together at GM and call
themselves a "union" and approach management to negotiate, they should
be able to have at it.  In a free society, this is how things should work -- any
number of employees should be able to organize themselves.  If they get
enough people, then they will have enough clout, perhaps, to be
listened to by management.

Here is where the problem comes in, though.  Over history, governments have intervened to increase the power of unions vs. the companies they work for.  Some of the early legislation was fine from an individual rights perspective - e.g. "companies can't hire thugs to beat the crap out of workers to get them to come back to work."  However, over time, the government has passed laws to increase the bargaining power of unions artificially and to increase their power in general (e.g. to violate workers association rights by forcing them to join a pre-existing union or to at least pay union dues as a pre-condition to work in certain companies or industries).  In some states we have come nearly full cirle, to the point that it is almost impossible to prevent unions from using violence in strikes, for example against people crossing picket lines.

So when I see studies like this one, I don't see it as an indictment of unions per se, since unions exist in "right to work" states, but rather an indictment of government intervention trying to ham-handedly balance bargaining.  Here is the interesting chart, from a study by Arthur Laffer:

Michigan in particular has made itself downright hostile to employers.  Given that the official government position is that "we aim to tilt the bargaining power against you in your negotiations with your largest suppliers," it is a wonder any business locates there.

And by the title of this post, I don't mean because they are not throwing enough money and mandates at it.  Here is what I wrote about the alternative energy mandates in the most recent energy bill:

They want 15% of power generation from renewables by 2020.  I am not
sure if this includes hydro.  If it does, then a bunch of Pacific
Northwest utilities already have this in the bag.  But even if
"renewable" includes hydro, hydro power will do nothing to meet this
goal by 2020.  I am not sure, given environmental concerns, if any
major new hydro project will ever be permitted in the US again, and
certainly not in a 10 year time frame.  In fact, speaking of
permitting, there is absolutely no way utilities could finance, permit,
and construct 15% of the US electricity capacity by 2020 even if they
started today.  No.  Way.   By the way, as a sense of scale, after 35
years of subsidies and mandates, renewables (other than hydro) make up
... about .27% of US generation.

Here is an example of what I mean about the permitting process:  10-years a counting between proposal for a wind farm and having a chance to build it.  And I assure you that there is not way this thing will clear remaining regulatory hurdles to be in place even by 2011.

Today, I had to buy gas in Oregon.   Usually, I try to gas up just before I enter Oregon, in protest of their anachronistic laws making self-service gasoline illegal.  Unfortunately, I had not choice but to stop in a station in Portland.  Because of this government mandate, I had to sit in my car for 5 minutes waiting futilely for service.  Getting none, I finally got out and gassed up myself.  The state-mandated car-fueling employee, who couldn't manage to get to me to fill up my car, was at my car in 5 seconds once he saw that I was impinging on his territory by gassing up my own vehicle.  I told him full service was not service at all if I had to wait five minutes, and he could have me arrested if he wanted.  For the rest of the time I gassed my car, I was subjected to an ignorant left-coast lecture on how the mandate created jobs.  All this lecture took place, of course, while other customers waited for service.  I wonder what it would feel like to know with absolute certainty that your job was completely useless and existed only because of a trick of legislation.  People who owe their jobs to the government are always a lot more vigilent about protecting their turf than they are about providing service.

Thank God the government and not the private sector is in charge of road design and construction.  Because those private sector guys just aren't accountable and might have screwed up.

This Tuesday, Arizona's death penalty goes into effect for businesses that knowingly hire workers who have not been licensed to work by the US Government.  Employers must use the e-Verify system the Federal government has in place to confirm which human beings are allowed by the federal government to work in this country and which people businesses are not allowed to employ.  Businesses that don't face loss of their business license (in itself a bit of government permission to perform consensual commerce I should not have to obtain).

There are any number of ironies in this law:

• The Arizona government has resisted applying the same tight standards to receipt of government benefits, meaning the state is more comfortable with immigrants seeking government handouts than gainful employment.
• The state of Arizona resists asking for any sort of ID from voters.  This means that the official position of the state of Arizona is that it is less concerned about illegal immigrants voting and receiving benefits than it is about making sure these immigrants don't support themselves by working.  This is exactly the opposite of what a sane proposal would look like. (and here)
• In the past, we have used Arizona drivers licenses to verify citizenship.  By implementing this law, the Arizona Government has said that an Arizona driver's license is not sufficient proof of citizenship.  Unable to maintain the integrity of their own system (e.g. the drivers license system) the state has effectively thrown up its hands and dumped the problem on employers
• The e-verify system, which the law requires businesses use, currently disappears in 11 months.
• The law requires that the e-Verify system be used for both current and new employees.  It is, however, illegal under federal law to use the e-Verify system on current employees.
• In fact, the e-Verify system may only be used within 3 days of hire -- use it earlier or later, and one is violating the law.  In a particular bit of comedy, it is illegal to use the e-Verify system to vet people in the hiring process.  The government wants you to entirely complete the expensive hiring process before you find out the person is illegal to hire.
• There are apparently no new penalties for hiring illegal immigrants at your house (since there is no business license to lose).  State legislators did not want to personally lose access to low-cost house cleaning and landscaping help.  We're legislators for God sakes -- we aren't supposed to pay the cost of our dumb laws!

I have criticized the AZ Republic a lot, but they have pretty comprehensive coverage on this new law here and here.

Update:  Typical of the government, the e-Verify registration site is down right now.

Update #2:  It appears Arizona is taking a page from California's book.  California often passes regulations that it hopes businesses will follow nationally rather than go through the expense of creating different products or product packaging for California vs. the other states.  Arizona may be doing something of the same thing, since the terms of use for e-Verify require that if a business uses e-Verify, it must use if for all employees.  Therefore, a business that has any employees in Arizona is technically required to use this system for all employees nationwide.

Update #3:  By the way, I guess I have never made my interest in this issue clear.  We do not hire any illegal immigrants.  Since most of our positions require employees to live on site in their own RV, it is seldom an issue since the average illegal immigrant does not own an RV.  We have always done all of our I-9 homework, even though the government stopped auditing I-9's about 8 years ago.  We have in fact been asked about five times by foreigners to hire them under the table without having the licenses and papers they need from the US government -- all of them have been Canadian.

TJIC has a great roundup of 20th century lending regulation:

Once upon a time, when we had a free market, bankers made loans to poor people.

Then, FDR came into office, and he and the Democratic Congress
passed laws to pressure banks to stop making loans to poor people.

Then, in the 1980s, Democrats heckled banks for not making
sufficient loans to poor people, and pass laws to force them to change
their ways.

Then, in the 21st century, Democrats heckled banks for making
too many loans to poor people, and passed laws to force them to change
their ways.

In about the hundredth post in this series, yet another example of government health care costs being used to micro-regulate even the smallest personal lifestyle decisions:

The city that banned plastic grocery bags and styrofoam take-out
containers has found a new cause: your favorite soft drink. San
Francisco may impose a new fee on those big retail stores that sell
them. The purpose is to curb the obesity problem among kids and adults.
Such fee or tax would be the first in the nation.

 

San Francisco says the obesity problem is costing the city too
much money in health care costs. Studies have linked obesity to
diabetes and heart disease.

"One third of all of our new
on-set diabetics are type 2 because of obesity and this is in children
now," says Robert Lustig, M.D., Endocrinologist, UCSF.

It is perhaps appropriate, given the polls in Iowa, that Mike Huckabee precipitated one of the earliest posts in this series:

Mike Huckabee, the Governor of Arkansas, now
requires annual fat reports. These are sent to the parents of every
single child aged between 5 and 17; a response, he says, to "an
absolutely epidemic issue that we could not ignore" in the 1,139
schools for which he is responsible.

I
just cannot craft any reasonable theory of government where this is the
state's job.   The "obesity" crisis in this country just amazes me.
"Experts" every few years broaden the definition of who is overweight
or obese, and suddenly (surprise!) there are more people defined as
overweight.  Even presuming it is the state's job to optimize our body
weights, is it really the right approach to tell everyone they are too
fat?  Having known several people who were anorexic, including at least
one young woman who died of its complications, is it really a net
benefit to get young people more obsessed with looks and body style?
And what about the kids that are genetically programmed to be
overweight?  Does this mean that years of taunting and bullying by
their peers is not enough, that the state's governor wants to pile on
now?

It is interesting to note that governor Huckabee apparently started
this initiative after his own personal battle with weight loss:

[Huckabee] lost 110lb after being warned that his
weight, more than 280lb after a life of southern fried food, was a
death sentence. A chair even collapsed under him as he was about to
preside over a meeting of state officials in Little Rock.

We
all have friends who have lost weight or gotten into homeopathy or
became a vegan and simply cannot stop trying to convert their friends
now that they see the light.  Now we have the spectacle of elected
officials doing the same thing, but on a broader scale and with the
force of law, rather than  just mere irritation, on their side.  One
can only imagine what report cards kids would be carrying home if
Huckabee had instead had a successful experience with penis
enlargement.  What's next, negative reports for kids with bad acne?
For women whose breasts are too small?  For kids who are unattractive?

Update: I see Q&O posts on the same issue

New today from the new Australian government, who to date have placed themselves solidly in the catastrophic camp:

PRIME Minister Kevin Rudd last night did an about-face on deep cuts to
greenhouse gas emissions, days after Australia's delegation backed the
plan at the climate talks in Bali.

A government representative at the talks this week said Australia backed a 25-40 per cent cut on 1990 emission levels by 2020.

But after warnings it would lead to huge rises in electricity prices, Mr Rudd said the Government would not support the target.

The
repudiation of the delegate's position represents the first stumble by
the new Government's in its approach to climate change.

From the NY Times via Maggies Farm:

The rescue of the
Florida Everglades, the largest and most expensive environmental
restoration project on the planet, is faltering.

Seven years into
what was supposed to be a four-decade, $8 billion effort to reverse
generations of destruction, federal financing has slowed to a trickle.
Projects are already years behind schedule. Thousands of acres of
wetlands and wildlife habitat continue to disappear, paved by
developers or blasted by rock miners to feed the hungry construction
industry.

The idea that the federal government could summon the
will and money to restore the subtle, sodden grandeur of the so-called
River of Grass is disappearing, too.

If, forty years ago, individuals who cared about the Everglades had banded together with private money, they could have bought up and preserved huge tracts of land around the current National Park.  Instead, as so many activists do today, rather than trying to rally private action they lobbied the government to do something about it.  Once the ball was thrown into the Feds' court, all incentive for private action disappeared, and as is so often the case, the Feds bungled their way $8 billion to little effect.

I am a little late on this, but Ilya Somin has a nice post on Joel Waldfogel's book on capitalism and serving niche markets. 

University of Pennsylvania business Professor Joel Waldfogel argues that markets give us too few choices because
they often fail to provide products that satisfy minority preferences.
This is the opposite of Barry Schwartz's argument that markets are bad
because they give people too many choices, which I criticized here.
In one sense, Waldfogel's point is irrefutable: due to high startup
costs or fixed costs and just to the general scarcity of resources in
the world, there are some minority preferences that the market won't
satisfy. The market is undoubtedly inferior to a hypothetical world in
which all preferences, no matter how unusual, could be satisfied at
zero cost. Not even the most hard-core of libertarian thinkers denies
this. That, however, says little about the question of whether
government could satisfy such minority preferences better, or whether
it is even a good thing to provide products whose costs are greater
than their benefits.

He makes a number of good points, including the one that first comes to my mind -- that in most cases, it is the government that tends to limit choice.

the relative lack of diversity of programming on radio stations - one
of Waldfogel's principle examples of the inability of the market to
satisfy minority interests - is actually a failure of government
regulation. As Jesse Walker documents in this book,
the FCC has for decades colluded with big broadcasters in suppressing
alternative and "microradio" broadcasters, thereby greatly reducing the
number of stations and making it very difficult to run a station that
caters primarily to the interests of a small minority. Even a
completely free broadcasting market would not satisfy all potential
listeners. But it would have a great deal more diversity than is
currently permitted by the FCC.

I called for the end of broadcast licensing here.  By the way, the author also ignores Sirius and XM, which have some incredibly niche offerings, and which happen to be in the least regulated part of broadcasting.  Why Sirius would have more niche choices than Clear Channel is explained here.

I could add many other examples onto this.  The FCC's regulation of the cell phone market creates the stupid environment we have today, arguing about locked iPhones.  In a previous post, I demonstrated how new government "a la carte pricing' regulation will lead to more homogenization and less focus on niche viewing audiences in the cable TV industry:

I can add a million examples.  Hair braiders are stepped on by the government in collusion with licensed beauticians.  Taxi companies get the government to quash low-cost or innovative shuttle transportation.  Discount casket companies are banned by government in collusion with undertakers.  Take dentistry.  Why do I need to go to an expensive dentist when 99% of my dental needs could be served by a hygienist alone?  Because the government colludes with dentists to make it so.  And don't even get me started on medicine.  My guess is a huge percentage of the conditions people come into emergency rooms with are treatable by someone without a 4 year medical degree and 6 years of internship.  Does one really need a full medical education to stitch up a kids cut knee?  Well, yes, you do today, because doctors collude with the government to make it so.  Why can't people specialize, with less than 10 years of education, on just, say, setting bones and closing cuts?  Why can't someone specialize in simple wills or divorces without a full law degree?

Every business where the government has licensing is an industry where the government is limiting consumer choice.  It is limiting the number of competitors, and it is specifying a narrow subset of ways in which a company can compete, eliminating service or product innovation.  In Colorado, my employees needs a license to take our customers fishing on a lake.  In Phoenix, you need a license to paint street numbers on a curb.  In Scottsdale you need a license to work out of your own home, a license to valet park cars, and a license to give massages.  And, of course, there are our tremendously dated liquor licensing laws.

Per Milton Friedman:

The justification offered is always the same: to protect the consumer. However, the reason
is demonstrated by observing who lobbies at the state legislature for
the imposition or strengthening of licensure. The lobbyists are
invariably representatives of the occupation in question rather than of
the customers. True enough, plumbers presumably know better than anyone
else what their customers need to be protected against. However, it is
hard to regard altruistic concern for their customers as the primary
motive behind their determined efforts to get legal power to decide who
may be a plumber.

Update:  Just for fun, I sat here and came up with 10 business ideas that would provide better service for customers, would reduce costs in notoriously high cost industries (e.g. medicine, dentistry, law) and which would make me a pile of money. which are all illegal due to licensing requirements that are set in collusion with current industry incumbents.

I really wanted to fisk in depth this post at Government Is Good.  While there are loads of factual inaccuracies and logical fallacies, the most common is the assumption that if the government does something today, that activity would not have been performed by anyone without government.  For example, if the government did not educate our kids, we'd all be happy to let them lay around all day and play Nintendo.

The article reminds me of nothing so much as the old "better living through chemicals" commercials which were so ably parodied with the Kentucky Fried Movie skit about zinc oxide.

Unfortunately, I don't have the time. Fortunately, TJIC has already done a great job. Here is one example from a long post:

7:01 a.m. Government also helps you own your house in more than the
legal sense. On a more practical level, the federal government actually
gives you money every year to help pay for your house. It's called a
mortgage interest tax deduction

So I earn $100, and the government would normally steal $30 of
that, but because I fill out certain forms, the government only steals
$20 of it"¦and the $10 that the government would have stolen, but chose
not to, is a "gift" ?

Rad Geek has three awful stories of petty little thugs hired by government schools to harass and intimidate students.  At least one of these stories has racial overtones, but it would be a mistake to ascribe these actions merely to prejudice.  This is what inevitably happens when government employees are given carte blanch to exercise cohesive power.

In the first story, a 13-year-old girl was asked to strip naked because school security thugs has "reliable" information that she had an ibuprofen tablet - basically a freaking aspirin.

In the second story, security officers quiz high school girls about whether they are having their period to see if it is OK that they are carrying a small purse.

In story number three, a fifteen-year-old girl was tackled by security officers, forced down on a table, and had her wrist broken in an arm lock.  Later she was arrested and charged with assault.  All because she failed to fully clean up a piece of cake she dropped on the floor. 

In the same incident, two onlookers were attacked, tackled, handcuffed, and arrested for photographing and video-taping the incident.  This is what you get for trying to record video of government employees at work:

Twenty years ago, when I would have called myself a conservative instead of a libertarian as I do today, I probably would have said, "Oh, there are probably two sides of the story.  He probably provoked them."  I am embarrassed to admit it, but that might have been my reaction.  But watch the video that is linked from Rad Geeks post.  What could he have possibly done to warrant this?  You can see in the video he was just circling the security guards filming them until one pointed at him, the other came at him, and then this.  This boy was led from the school in handcuffs and spent the night in jail.  Sick.

Hat tip Catallarchy.

For a while, I have been trying to highlight that the real problem with health care is that consumers who receive the service do not have any incentive to shop for the best price or to make trade offs on marginal procedures based on price.  The only people who have any incentive to shop are 1) people without insurance and 2) people with high deductibles (like me).  Politicians are trying to eliminate the former group, even if they don't want insurance, and programs like Romney's in Massachusetts actually ban high deductible insurance.

Now, Obama is worried about anti-trust:

The consequences of lax enforcement for consumers are clear. Take
health care, for example. There have been over 400 health care mergers
in the last 10 years. The American Medical Association reports that 95%
of insurance markets in the United States are now highly concentrated
and the number of insurers has fallen by just under 20% since 2000.
These changes were supposed to make the industry more efficient, but
instead premiums have skyrocketed, increasing over 87 percent over the
past six years. As president, I will direct my administration to
reinvigorate antitrust enforcement. It will step up review of merger
activity and take effective action to stop or restructure those mergers
that are likely to harm consumer welfare, while quickly clearing those
that do not.

How can these mergers harm consumers when consumers don't shop for the service and don't care about price in the first place?  Candidates like Obama and Clinton are threatening to create single payer systems that use monopsony power combined presumably with the coercive power of government to hammer suppliers.  Is it any wonder that they are joining together to try to gain some sort of bargaining position for themselves?  In the context of what Obama wants to do with health care buying, this can be thought of more as unionizing than merging.

By the way, does anyone else note the irony of Obama, who wants to create a single supplier for health care (the US Government) lamenting concentration in the health care field?

...you equate the government choosing not to provide a service with that service being banned.  Michael Cannon quotes our Speaker of the House:

House Speaker Nancy Pelosi's understanding of government's role in a
liberal democracy (and of the veto power) may be worse than I thought. A reporter sends a transcript of a press conference that Pelosi held yesterday, where she made the following remarks:

Oh, [President Bush] used the veto pen to veto the stem
cell research bill.  That was a major disappointment. . . . I remember
that veto very well because he was saying, "I forbid science to proceed
to improve the health of the American people."

Regarding Bush's threatened veto of the Democrats' expansion of the State Children's Health Insurance Program:

The President is saying, "I forbid 10 million children
in America to have health care." You know from your Latin that is what
"veto" means.

Pelosi should know that there is a difference between the government not funding something and forbidding it.

At a recent meeting of the National Associate of State Treasurers
(Yawn), John Podesta, after stating hilariously that what the world
really needed was continued leadership by state treasurers on the
global warming issue, argued: 

"Climate change is a threat to the long-term value of the economy and
failure to calculate its impacts or manage or reduce its harm mean that
our assets are being over valued, and the risks we face are being under
reported."

I have a lot of interest in global warming, which is why I created a second blog Climate Skeptic to deal with these issues.  There is a lot about anthropogenic warming we do not understand.  But what is nearly a total 100% lock is that, at least for the United States, the cost to our economy of regulations to limit CO2 will be far higher than the likely net-negative effects of warming (Al Gore's 20 foot sea level rises and other anti-rational claims notwithstanding).  At its heart, isn't the risk really of damage from government regulation, rather than the climate?

Via Michael Giberson of Knowledge Problem, the NY Attorney General is concerned that certain companies are not disclosing global warming-related risks, but he is at least more honest about what those risks are:

Last Friday, New York Attorney General Andrew Cuomo sent subpoenas
to five power generating companies seeking to find out if the companies
had properly disclosed financial risks associated with proposed new
coal-fired power plants.

All five of the letters accompanying the subpoenas are available from the NYAG's website.  Here is the opening paragraph of the letter to Dominion Resources, Inc.:

We are aware that Dominion Resources, Inc., ("Dominion")
has plans to build a coal-fired electric generating unit that would
generate 585 megawatts of electricity without current plans to capture
and sequester the resulting carbon dioxide (CO2) emissions. The
increase in CO2 emissions from the operating of this unit, in
combination with Dominion's other coal-fired plants, will subject
Dominion to increased financial, regulatory, and litigation risks. We
are concerned that Dominion has not adequately disclosed these risks to
its shareholders, including the New York State Common Retirement Fund,
which is a significant holder of Dominion stock. Pursuant to the
Attorney General's investigatory authority under New York General
Business Law § 352, and New York Executive Law § 63(12), accompanying
this letter is a subpoena seeking information regarding Dominion's
analysis of its climate risks and its disclosures of such risks to
investors.

A little later, the letter gets more specific: "For example, any one
of the several new or likely regulatory initiatives for CO2 emissions
from power plants "“ including state carbon controls, EPA's regulations
under the Clean Air Act, or the enactment of federal global warming
legislation "“ would add a significant cost to carbon-intensive coal
generation, such as the new coal plant planned by Dominion." In
addition to Dominion, the NYAG's office sent subpoenas to AES, Dynegy,
Peabody, and Xcel. Here is the story from the New York Times.

The letter doesn't say so explicitly, but I'm sure the message was
clear, that in addition to new or likely legislative actions and
substantive regulatory initiatives, the companies also faced the risks
and costs associated with being harassed by swarms of officers from the
NYAG's office.

You can see what is going on here -- following in the rich tradition established by the egregious Eliot Spitzer, the NY AG is again overreaching his office's authority and attempting to set regulatory policy rather than enforce it.  But at least he is honest in portraying the main risk to be a government regulatory backlash on these companies.

Thinking about this, couldn't every company put this in their boilerplate?  I mean, for most of us, the number one risk we face all the time is that the government will either do something to us specifically or the economy in general to hurt results.  Let's just have everyone add the line "the government poses a huge risk to our business plan" and be done with it.

Henry Payne has an interesting tidbit:  The government is now concerning itself with what cars its employees purchase.

Your tax dollars at work. The U.S. Department of Health and Human Services last week sent an email urging its 67,000 employees not to buy SUVs, lecturing that fuel efficiency should be their "top priority" when buying a car.

 

"Every
new sport utility vehicle on the road produces 60 percent more climate
threatening CO2 emissions than a smaller vehicle," said Energy News,
a quarterly newsletter from a department that has nothing to do with
energy, but everything to do with energy morality apparently.

 

"The
toll that vehicles take on the environment includes air pollution, oil
spills, pollution of our water supplies, and damage to natural
habitats," continues the HHS sermon. "In order to really cut CO2
emissions, higher fuel efficiency in all vehicles will be essential."

American auto makers were not amused by the recommendation to buy Toyotas or Hondas. 

This surprises me not at all.  A few weeks ago, I had an EPA audit of a marina and store I operate in Colorado (the report in all its glory is here).  In that audit, the Environmental Protection Agency recommended that we begin selling fair trade coffee in our store.  What that has to do with emissions into the lake, I have no idea.  They also recommended that I put an environmental message on our shopping bags, replacing the current boating safety message.  The audit did say that they could not require these two things.  Well, give them some time, they will probably make it a requirement soon.

The government is worried that you will do harm to yourself if you self-medicate pain pills.  So what is their response?  They will throw you in jail for 25 years.  Yeah, much better to have someone rot in jail for a quarter of a century than make a bad decision that only affects himself.

One of the arguments for banning adult legal access to drugs like marijuana (and even allergy medications) is that it helps to prevent abuse of these drugs by underage kids.  This would be nice to test in a true control group setting, but we really don't have the opportunity under current laws to do so.  But we can work by proxy.  We can compare drugs that are illicit for everyone, like marijuana, to drugs that are legal for adults but not for minors, like tobacco. 

If drug warriors are correct, teenage tobacco use should be much higher than use of other illicit drugs.  This is particularly true because the proxy is an imperfect one, since the tobacco is a far less intimidating drug to try than, say, heroin.  However, it turns out not to be the case.  The new figures our out from our friendly US Government drug warriors, and it turns out that tobacco use is barely higher among teens than illicit drug use.

For example, the study shows that past month tobacco use among kids 12-17 was 12.9% in 2006, while past month illicit drug use in the same group was 9.8% (tables G.16 and G.7).  That's lower, but certainly not decisively so.  Both of these use numbers have fallen since 2002 at about the same rate.

Even more interesting are the figures for the number of kids 12-17 who had initiated use of certain substances in the past year (table G.26).  In that year, 2.45 million had initiated cigarette use, but 2.79 million had initiated illicit drug use.  Further, when asked if certain substances carried "great risk" in trying to purchase them, 68.7% of underage cigarette smokers said yes (table G.25).   This response was 10 or more points higher than that of teenage occasional users marijuana, cocaine, or even heroin.  In short, teenagers are saying it is more difficult and/or riskier to support cigarette use than it is to support a weekly marijuana, cocaine, or heroin habit -- exactly the opposite of the drug warriors' argument for prohibition  (but consistent with the libertarian argument that bringing these drug sales above ground will make underage purchase more visible and easier to combat).

HT: Hit and Run for the link

OK, I have resisted commenting on Larry Craig.  My reactions are:

1. We are so off topic here it is unbelievable.  For Congress, exercising arbitrary powers over individuals in violation of the intent, if not the letter, of the Constitution:  OK.  Playing footsie in the bathroom: Not OK
2. Are we really going to have a Congressman resign for tapping his foot in a public bathroom while a man who had $100,000 in cash bribe money found in his freezer still sits in office?
3. Why is it that Democrats, against their political beliefs, feel the need to criticize Republicans for being gay while Republicans feel the need to criticize Democrats for having large homes and SUVs?
4. Do we really pay police officers to sit on the toilet for hours and try to catch men who are soliciting consensual sex?  And if so, do they also pay female officers to patrol for the same thing among women?  This is a real threat to us?

David Bernstein has more.  Via TJIC.

Update:  A reader pointed out to me I had a fairly relevant passage in my novel BMOC, when the Senator is confronted with his $50,000 earmark nominally for a "women's consulting company" turned out to be directed at a house of prostitution [edited to remove the more raunchy terminology]:

Taking a deep
breath, [the Senator's aid] said, "Senator, there is a reason that this one is not going
away. I will spell it out: S-E-X. The press doesn't give a shit about a few billion dollars of waste. No one tunes in to the evening news if the
teaser is "˜Government pays too much for a bridge, news at eleven.' The Today Show doesn't interview the
contractors benefiting from a useless bridge."

"However, everybody and his dog will tune in if
the teaser is "˜Your tax dollars are funding call girls, film at eleven'. Jesus, do you really think the CBS Evening
News is going to turn down a chance to put hookers on the evening news? Not just tonight but day after day? Just watch "“ Dan Rather will be interviewing
hookers and Chris Mathews will be interviewing hookers and for God's sakes
Barbara Walters will probably have a weepy interview with a hooker."

"And you know
what?" Givens continued, his voice rising. "The whole act makes me sick. All
these media types are going to be piously turning up their nose at you and
those women, while at the same time making more money for themselves off those
prostitutes than those women ever made for themselves on their back. It's rank
hypocrisy but it's the facts of life in Washington,
and I shouldn't have to be explaining this to you."

"You guys in the
Senate can get away with a lot, as long as long as a) you don't get caught or
b) the scandal is so boring or complex that it won't sell newspapers. Hell, I saw a poll the other day that a
substantial percentage of Americans to this day don't understand or even
believe what Richard Nixon did wrong. But if you polled those same people, every freaking one of them would
say that they knew and believed that Bill Clinton [fooled around with] an intern. What's the difference? Sex. Bill Clinton was impeached and lost his law license, not because he did
or did not commit fraud with Whitewater Development Corp., but because he lied
about [sex with] a young girl."

Via Cato and IBD:

Sen. Hillary Clinton says she wants to establish a national academy
that will train public servants. Why do re-education camps come to
mind? "¦ Somehow we doubt there will be many lectures in making
government smaller, deregulating business, cutting taxes or increasing
individual freedom. Is there a chance that this "new generation"
attending the academy will hear a single voice that isn't hailing the
glories of the nanny state? Will students being groomed for public
service ever hear the names Hayek, von Mises or Friedman during their
studies? "¦ Government at all levels is already overflowing with
bureaucrats who suck up taxpayers' money and produce little, if
anything, of economic value. More often, the bureaucracy actually gets
in the way of economic progress.

This way, government employees can know absolutely nothing about the real world or productive enterprise, and never have to be burdened with listening to anyone in school who doesn't think government is the be-all end-all, kind of like, uh, Hillary Clinton.

I have written before that the government story of the next decade will be the financial meltdown that will ensue as state and local governments are forced to face up to the enormous unfunded pension and medical liabilities they have assumed for their state employees.  Largely, these liabilities are currently well-hidden and off the books, a trick even Jeff Skilling was unable to pull off at Enron. 

My previous prediction that the liabilities probably total over a trillion dollars now seems way low.  Just one state, Illinois, may have over $100 billion in such off-the-books liabilities, and this does not even include liabilities of local authorities like the city of Chicago:

The study puts the state's pension debt at $10 billion, its unfunded
pension costs at $46 billion, its unfunded employee health care costs
at $48 billion, and its unpaid Medicaid bills at $2 billion. The total
costs that will be pushed onto tomorrow's taxpayers without reforms is
an enormous $106 billion, or $8,800 per every person in the state of
Illinois.

At the exact same time that the President and the Congress have the lowest approval ratings of all time, consumer confidence just hit a 6-year high.  While we all understand the power of the government to screw up the economy, has there ever been quite so eloquent an expression of just how irrelevant the government is to economic expansion?