Coyote Blog

It is something you see all the time -- large companies asking to be regulated, at first glance against self-interest.  Those most interested in expansion of the government and the regulatory state will shout, "See!  Even large evil companies know they need to be subject to government oversight."

But in fact what is usually going on is that the large company knows that regulation will actually cement its position in the industry, making it harder for rivals and new entrants to compete.   Toy-maker Mattel turned a lead scandal of their own making into a coup by creating a regulatory framework that pounded its competitors.  Walmart and Costco often support minimum wage in retail legislation because they know that with their higher sales per employee, they can survive higher minimum wages than their smaller ma and pa competitors.

Mark Zuckerberg, who I am increasingly convinced is the most dangerous man in America, and his testimony to Congress begging for regulation, should be seen in this context.

So in Facebook’s case, they will advocate some institutionalized changes in the way social media should work. Every change will involve compliance costs. Facebook will make sure that it can comply...and that its competitors cannot without great expense. That will give them a distinct advantage in the marketplace, make it more difficult for startups to compete, and guarantee this platform a leading place by law.

This is why Mark readily agreed to be regulated. Regulations always work to the advantage of the largest market players....

Nor should this come as some sort of shock. This is the way government regulations have always worked, from the meatpackers in the early 20th century (who crafted and enforced meatpacking legislation), to all labor legislation (it’s labor-union lawyers who exercise the dominant influence) to Bitcoin regulations (the major exchanges are always involved) to digital technology today (no way are Google and Facebook going to be excluded from writing the regulations that govern their industries).

There is a civics-text myth that imagines government workers and politicians as all-knowing, crafting rules that benefit everyone as opposed to particular players. It imagines that major market players are suffering as government forces new rules that require their operations put greed on hold and serve the public. The on-the-ground reality is otherwise. There is not a single regulation on the books that does not have an author who is unattached in some way to the regulated industry in question.

Milton Friedman called this regulatory capture. The problem is the influence of industry is there from the beginning. It’s absolutely not the case that capitalists are champions of capitalist competition, as the career and policies of Donald Trump should make clear. Lots of people are good at using markets to make money; only very special people become defenders of open competitive processes.

Right now, Facebook faces massive competition from other platforms in social media, copycats, and alternative uses of people’s time. In some ways, it’s the best possible moment to call on government to institutionalize Facebook as a form of public utility. That might actually be the end game that Zuckerberg has in mind. Then the politicians can update their timeline status: today we passed regulations that brought this wayward company to heel.

Zuckerberg said from the very beginning that he was dismissive of individual privacy and he has created the Facebook honeytrap to kill it.  He now is setting his sights on free speech, begging the government to tear up the First Amendment.  He is a one-man individual rights wrecking crew.

Update:  I am actually going to include this from the Reason article about Mattel, because the situation is so similar -- a failing at a large company is used to create a regulatory framework that greatly aids the large company against rivals

Remember the sloppily written "for the children" toy testing law that went into effect last year? The Consumer Product Safety Improvement Act (CPSIA) requires third-party testing of nearly every object intended for a child's use, and was passed in response to several toy recalls in 2007 for lead and other chemicals. Six of those recalls were on toys made by Mattel, or its subsidiary Fisher Price.

Small toymakers were blindsided by the expensive requirement, which made no exception for small domestic companies working with materials that posed no threat. Makers of books, jewelry, and clothes for kids were also caught in the net. Enforcement of the law was delayed by a year—that grace period ended last week—and many particular exceptions have been carved out, but despite an outcry, there has been no wholesale re-evaluation of the law. Once might think that large toy manufacturers would have made common cause with the little guys begging for mercy. After all, Mattel also stood to gain if the law was repealed, right?

Turns out, when Mattel got lemons, it decided to make lead-tainted lemonade (leadonade?). As luck would have it, Mattel already operates several of its own toy testing labs, including those in Mexico, China, Malaysia, Indonesia and California.

So while most small toymakers had no idea this law was coming down the pike until it was too late, Mattel spent $1 million lobbying for a little provision to be included in the CPSIA permitting companies to test their own toys in "firewalled" labs that have won Consumer Product Safety Commission approval.

The million bucks was well spent, as Mattel gained approval late last week to test its own toys in the sites listed above—just as the window for delayed enforcement closed.

Instead of winding up hurting, Mattel now has a cost advantage on mandatory testing, and a handy new government-sponsored barrier to entry for its competitors.

I thought this study was very interesting, as highlighted by Alex Tabarrok.  I usually try not to publish highlights from research papers without actually reading them (the divergence between press releases on papers and the papers themselves is shocking and constitutes what may be one of the worst current academic practices).  But in this case I have learned to trust Mr. Tabarrok's judgement:

The best paper I have read in a long time is Hopenhayn, Neira and Singhania’s From Population Growth to Firm Demographics: Implications for Concentration, Entrepreneurship and the Labor Share. HNS do a great job at combining empirics and theory to explain an important fact about the world in an innovative and surprising way. The question the paper addresses is, Why is dynamism declining? As you may recall, my paper with Nathan Goldschlag, Is regulation to blame for the decline in American entrepreneurship?, somewhat surprisingly answered that the decline in dynamism was too widespread across too many industries to be explained by regulation. HNS point to a factor which is widespread across the entire economy, declining labor force growth.

Figure Two of the paper (at right) looks complicated but it tells a consistent and significant story. The top row of the figure shows three measures of declining dynamism: the rise in concentration which is measured as the share of employment accounted for by large (250+) firms, the increase in average firm size, and the declining exit rate. The bottom row of the figure shows the same measures but this time conditional on firm age. What we see in the bottom figure is two things. First, most of the lines jump around a bit but are generally flat or not increasing. In other words, once we control for firm age we do not see, for example, increasing concentration. Peering closer at the bottom row the second thing it shows is that older firms account for a larger share of employment, are bigger and have lower exit rates. Putting these two facts together suggests that we might be able to explain all the trends in the top row by one fact, aging firms.

So what explains aging firms? Changes in labor force growth have a big influence on the age distribution of firms. Assume, for example, that labor force growth increases. An increase in labor force growth means we need more firms. Current firms cannot absorb all new workers because of diminishing returns to scale. Thus, new workers lead to new firms. New firms are small and young. In contrast, declining labor force growth means fewer new firms. Thus, the average firm is bigger and older.

I confess that historically, I have always had a bit of disdain for folks who say they are single issue voters.  "Really?" I would ask, "You are going to ignore everything else going on and only vote based on X?"  I thought it was a narrow-minded and shallow way to vote.

My apologies.  I may have become a single issue voter myself.  Here is why:

Two years ago, when the Republicans manage to elect Trump, I was sure I was going to vote straight-ticket Democrat in reaction.  I find Trump's entire style distasteful in the extreme.  And while I think there has been some good news on the regulatory front in various Departments under him, on his signature issues of immigration and trade I am 100% opposed to his goals and his approach.  And while I have always believed Trump is probably a social liberal himself, he has a lot of advisors and cabinet members who are pretty hard-core opposed to a variety of freedoms, from gay marriage to marijuana use.

But that was two years ago, before the Democrats decided that their future was in a hard left turn into Marxism.   I am not sure how a serious person can really entertain socialism  given its pathetic history, but it seems to be a product of several cardinal sins of the modern generation (e.g. ignorance of history, evaluating policy based on its intentions rather than its logical consequences, and categorizing all perceived problems as resulting from white male European hetereosexual priviledge).  At first I thought perhaps people were just using "democratic socialism" as a synonym for more redistributive taxes and greater welfare spending within an otherwise capitalist society.  But over time I see proposals like one in Congress with fully 100+ Democratic sponsors calling for banning health care companies of all sorts from making a profit.  This is straight-on socialism and ignorant in the extreme of any consequences beyond good intentions.  By the way, I actually don't think we will end up with socialism under the Democrats but a form of European-style corporatism.  This will mean that large companies like Google and Amazon with political influence will be ok, maybe even better.  But small companies like mine with no hope of political access will get hammered.

So here is my voting problem.  Republicans suck on many issues -- gay rights, drug law liberalization, immigration, trade -- that I am extremely passionate about (I briefly ran an Arizona initiative to legalize gay marriage) but that don't directly affect me.  Yes, they affect many of my friends -- I have friends with potential immigration issues, I have friends with businesses getting hammered by tariffs, I have friends who are gay and married, I have friends that smoke rope and would rather not go to jail for it -- but not me directly.  On the other hand, Democrats suck on most business regulatory issues, trying in the near term to turn the US into California and in the long-term into Venezuela.  These are issues that DO affect me directly and greatly as a business owner.   Already I have had to red line states such as California, Oregon, Illinois, New York, and Rhode Island where I formerly did business but backed out because the business climate was impossible.  If this spreads to more states, I will be wiped out.

All of this is being made worse as both parties have started to get worse in the areas where they were traditionally more sensible.  Republicans have abandoned whatever free market credentials they had by pursuing trade protectionism and increased restrictions on companies trying to hire foreign workers.  Democrats are in the process of turning against free speech and have started sticking their nose in the bedroom (for example, by shifting the discussion of sex work to "trafficking," Republicans have successfully gotten Democrats to turn against a number of sorts of sexual freedom).

For years I have voted against my personal interests in elections, because my interests did not seem as weighty as other issues in play.  Folks are being denied basic civil rights, so am I really going to vote for the folks enabling that just to avoid (admittedly costly and loony) California meal break laws to be applied in Arizona? Now, though, I am starting to rethink this position.  In part because threats to businesses like me are more existential, and part because I am exhausted spending time defending other people's rights who in turn actively work to take away mine.  For certain offices like sheriff, that don't affect my business, I will still be voting as I always have -- which person is least likely to harass the sh*t out of certain marginalized groups.  But for others, and particularly the national offices, I am thinking about voting a straight "it's all about me" ticket (I am reminded, ironically, of the old "Me, Al Franken" SNL news bit he used to do.)

By the way, you might ask, "Coyote, you are a libertarian, why not just vote for the Libertarian candidate."  Good question.  Well, it turns out that the Arizona state legislature changed the rules for third parties explicitly to get the libertarian party off the ballot and prevent libertarians from "taking" votes from Republicans.  Seriously, they were not even subtle about it.  Instead of having to get a certain percentage of libertarians to sign a petition to get on the ballot, libertarian candidates now have to get a certain percentage of all independents to sign a petitions to get on the ballot.  This is an very high bar and one that most libertarians could not clear this year (cynically, somehow the rules allowed green candidates to get on easier as Republicans want them on the ballot to "steal" votes from Democrats.)  This is the #1 reason I may not vote tomorrow at all -- I cannot vote for our Marxist Democratic candidate for Senator, but I refuse to be forced to vote for the Republican.  Ugh.

I was in a course this weekend on the rise and fall of the Roman Republic.  One term that was new to me was Polybius's theory of government called Anacyclosis (Polybius was a contemporary of the Roman Republic and actually lived during the time when the seeds of the Republic's downfall were being planted).  Others before and after Polybius had similar ideas but apparently Polybius gets a lot of the credit.  There are two interesting ideas in this theory that I think will have a lot of resonance to folks today.  First, he believed that governments followed a cycle from one-man rule to aristocracy to democracy and back.  Second, and perhaps more interesting, he believed that each of these three forms of government had a good and bad form, and that the good form was inherently unstable and always degenerated into the bad form.

Here is how Wikipedia summarizes the cycle:

Polybius' sequence of anacyclosis proceeds in the following order: 1. monarchy, 2. kingship, 3. tyranny, 4. aristocracy, 5. oligarchy, 6. democracy, and 7. ochlocracy.

According to Polybius' elaboration of the theory, the state begins in a form of primitive monarchy. The state will emerge from monarchy under the leadership of an influential and wise king; this represents the emergence of "kingship". Political power will pass by hereditary succession to the children of the king, who will abuse their authority for their own gain; this represents the degeneration of kingship into "tyranny".

Some of the more influential and powerful men of the state will grow weary of the abuses of tyrants, and will overthrow them; this represents the ascendancy of "aristocracy" (as well as the end of the "rule by the one" and the beginning of the "rule by the few").

Just as the descendants of kings, however, political influence will pass to the descendants of the aristocrats, and these descendants will begin to abuse their power and influence, as the tyrants before them; this represents the decline of aristocracy and the beginning of "oligarchy". As Polybius explains, the people will by this stage in the political evolution of the state decide to take political matters into their own hands.

This point of the cycle sees the emergence of "democracy", as well as the beginning of "rule by the many". In the same way that the descendants of kings and aristocrats abused their political status, so too will the descendants of democrats. Accordingly, democracy degenerates into "ochlocracy", literally, "mob-rule". In an ochlocracy, according to Polybius, the people of the state will become corrupted, and will develop a sense of entitlement and will be conditioned to accept the pandering of demagogues.

Eventually, the state will be engulfed in chaos, and the competing claims of demagogues will culminate in a single (sometimes virtuous) demagogue claiming absolute power, bringing the state full-circle back to monarchy.

He believed that the Roman Republic worked because it was a merger of all three forms of government.  If this seems like a goofy theory, like the balancing of humors for health; or if it seems wrong because we are all taught today that democracy is superior to the other two forms, consider this:  In the US, think of the Presidency as kingship, the Senate (as originally configured in the Constitution) as aristocracy, and the House of Representatives as democracy.  Our Constitution is arguably based in part on Polybius's theory.

A key thrust of Nancy MacLean's book on the great Koch / Buchanan / libertarian conspiracy to destroy democracy is that public choice theory is all about protecting and cementing elite privilege under the law.  This is actually exactly opposite of how I have always viewed public choice theory -- public choice theory tends to show how well-intentioned "public service" programs tend to get co-opted by a few powerful people for their own benefit.  See "ethanol mandates" or "steel tariffs" or "beautician licensing" or any number of other programs.  But I am not conversant enough to really make this case well.  Fortunately, Steven Horwitz (pdf) has done it in his powerful critique of MacLean's book.

The intellectual error that is most frustrating, however, is her understanding of the relationship between public choice theory and questions of power and privilege. As Munger (2018) points out in his review, MacLean is an unreconstructed majoritarian. She genuinely believes, at least in this book, that the majority should always be able to enact its preferences and that constitutional constraints on majority rule are ways of protecting the power and privilege of wealthy white males. That’s the source of Democracy in Chains as her title and her argument that public choice theory is a tool of the powerful elite. As Munger also observes, normally such a view would be seen as a strawman as no serious political scientist believes it, not to mention that no democracy in the world lacks constitutional constraints on majorities. In addition, one must presume that a progressive like MacLean thinks Loving v. Virginia, Roe v. Wade, and  Obergefell v. Hodges, not to mention Brown, were all decided correctly, even though all of them put local democracies in chains, and in some cases, thwarted the expressed preferences of a majority of Americans.

For public choice theory, constitutions protect the citizens from two forms of tyranny: tyrannies of the majority when they wish to violate rights and tyrannies of coalitions of minorities who wish to use the state to redirect resources to themselves by taking advantage of the logic of concentrated benefits and diffuse costs. Buchanan’s political vision is, in Peter Boettke’s words, a world without discrimination and domination. Constitutional constraints, for Buchanan, are a central way of ensuring that democracy actually protects rights by preventing the powerful from exploiting the powerless and that political decisions involve the consent of all. Constitutional constraints make democracy work for all citizens – they do not put it in chains.

When MacLean argues that public choice is a tool to protect privilege, she gets it exactly backward. Public choice shows us how those with the power to influence the political process can use that power to create and protect privilege for themselves at the expense of the rest of the citizenry. Public choice’s analysis of rent-seeking and politics as exchange enables us to strip off the mask of bogus “public interest” explanations and see a great deal of political activity as socially destructive exploitation of the least well-off. To borrow a bit from the left’s rhetoric: public choice is better seen as a tool of resistance to oligarchy than a defense thereof. It helps us understand why corporate welfare remains so common even as so many see it as a problem. Public choice also helps to understand the growth of the military-industrial complex and challenges public interest explanations of that growth. One can tell similar stories about immigration policy and a number of other issues of that concern modern progressives. Public choice theory sees the battles over Uber and Lyft as the powerful government-licensed taxi companies fighting to protect their monopoly privileges and profits against upstart entrepreneurs better meeting the wants of the public. This provides an excellent illustration of how public choice theory can explain political outcomes, and why the theory is useful in understanding how the powerful can victimize the less powerful. Public choice theory, properly understood, is a tool of critical thinking that enables us to deconstruct political rhetoric to see the underlying forces at work that are allowing those with wealth and access to power to use politics to acquire and protect their privileges and profits

As Arnold Kling might say, and Horowitz himself posits in different words, libertarians spend so much time obsessing over the freedom-coercion political axis that they miss out on ways to engage those on the Oppressor-Oppressed axis.  Public choice theory has a lot to offer Progressives, as it explains a lot about how well-meaning legislation with progressive intent is often co-opted by powerful groups to enrich themselves.  Sure a lot of public choice theory is used by libertarians to say, essentially, burn the whole government to the ground; but there is a lot from my experience in public choice literature that should speak to good government progressives, academic work using public choice to think about better designing programs to more closely achieve their objectives.

I have disputed the meme in the post's title on many occasions.  For example:

• No person running any government agency has access to the same information that millions of individuals might have in making decisions for themselves
• No person running any government agency can create an optimal solution, because millions of citizens all have different values and make different tradeoffs, so an optimum for one is not going to be an optimum for many others
• No person running any government agency has the right incentives to make good decisions.  They will always optimize for increasing the size and scope of their organization and signaling virtue over actually being virtuous.

But researchers have found yet another reason:  power causes brain damage

A spate of recent articles corroborate what I already suspected, that holding elected office is the neurological equivalent of getting kicked in the head by a donkey.

"Subjects under the influence of power," Dacher Keltner, a professor atUniversity of California, Berkeleyfound, "acted as if they had suffered a traumatic brain injury—becoming more impulsive, less risk-aware, and, crucially, less adept at seeing things from other people's point of view."

In other words, power turns people into sociopaths.

This isn't a huge surprise to the vast majority of us who rant about power on election day and every day afterward. Republicans and Democrats want power and scramble for it, like a football. Classical liberals see power more like Frodo's ring—a corrupting influence better chucked into a volcano. In light of recent studies we ought to consider it a bit more like a concussion.

Keltner, brought into the public spotlight through a recent piece in The Atlantic, likens the accruing of power to actual brain trauma: "My own research has found that people with power tend to behave like patients who have damaged their brain's orbitofrontal lobes (the region of the frontal lobes right behind the eye sockets), a condition that seems to cause overly impulsive and insensitive behavior. Thus the experience of power might be thought of as having someone open up your skull and take out that part of your brain so critical to empathy and socially-appropriate behavior."

Bret Stephens has initiated a huge storm on the Left as journalists and other Leftwing luminaries have fallen over themselves to make sure everyone understands how evil and absolutely unacceptable Stephens' article is.  A good example is probably "This New York Times Article on Climate Change Is So F***ing Bad".  I don't know where and how these things are announced, but apparently virtue-signaling on the Left offcially requires that everyone denounce the article as the most evil thing ever written (actually reading it is apparently optional).

But you will almost never see much of Stephens article quoted.  Here is the entirety of the article that discusses climate.  This is all there is (there are other discussions that are meant to be a parable somewhat relevant to the climate debate, but below is the entirety of what Stephens writes directly about climate:

Let’s turn to climate change.

Last October, the Pew Research Center published a survey on the politics of climate change. Among its findings: Just 36 percent of Americans care “a great deal” about the subject. Despite 30 years of efforts by scientists, politicians and activists to raise the alarm, nearly two-thirds of Americans are either indifferent to or only somewhat bothered by the prospect of planetary calamity.

Why? The science is settled. The threat is clear. Isn’t this one instance, at least, where 100 percent of the truth resides on one side of the argument?

Well, not entirely. As Andrew Revkin wrote last year about his storied career as an environmental reporter at The Times, “I saw a widening gap between what scientists had been learning about global warming and what advocates were claiming as they pushed ever harder to pass climate legislation.” The science was generally scrupulous. The boosters who claimed its authority weren’t.

Anyone who has read the 2014 report of the Intergovernmental Panel on Climate Change knows that, while the modest (0.85 degrees Celsius, or about 1.5 degrees Fahrenheit) warming of the Northern Hemisphere since 1880 is indisputable, as is the human influence on that warming, much else that passes as accepted fact is really a matter of probabilities. That’s especially true of the sophisticated but fallible models and simulations by which scientists attempt to peer into the climate future. To say this isn’t to deny science. It’s to acknowledge it honestly.

By now I can almost hear the heads exploding. They shouldn’t, because there’s another lesson here — this one for anyone who wants to advance the cause of good climate policy. As Revkin wisely noted, hyperbole about climate “not only didn’t fit the science at the time but could even be counterproductive if the hope was to engage a distracted public.”

Let me put it another way. Claiming total certainty about the science traduces the spirit of science and creates openings for doubt whenever a climate claim proves wrong. Demanding abrupt and expensive changes in public policy raises fair questions about ideological intentions. Censoriously asserting one’s moral superiority and treating skeptics as imbeciles and deplorables wins few converts.

None of this is to deny climate change or the possible severity of its consequences. But ordinary citizens also have a right to be skeptical of an overweening scientism. They know — as all environmentalists should — that history is littered with the human wreckage of scientific errors married to political power.

Ten years ago I would have thought this so milquetoast as to be uncontroversial to anyone -- almost unpublishable as an editorial due its shear lack of controversy.  He acknowledges warming, acknowledges some is man-made, states that some activists have gone beyond the science in their claims, and that climate action folks tend to be hostile to anything but ardent agreement (an attitude not really consistent with "science").  In response, ironically, virtually the entire Left has responded to this mildest of mild criticisms by treating Stephens as the next incarnation of Joseph Goebbels.  Apparently he was spot-on about the lack of tolerance for any debate or disagreement.

This reminds me when my speech on global warming was banned from a conference by representatives of the City of Los Angeles.  I remember writing to them:

Apparently, several folks on this board were calling me a climate denier and a flat Earther.  Now, it seems kind of amazing that a presentation that calls for a carbon tax and acknowledges 1-1.5 degrees C of man-made warming per century could be called an extremist denier presentation.  But here is the key to understand -- my bet is that not one of you in opposition has ever bothered to see it.  This despite the fact that I sent your organization both a copy of the CMC video linked above as well as this very short 4-page summary from Forbes.  But everyone involved seems more willing to spend hours and hours arguing that I am a child of Satan than they were willing to spend 5-minutes acquainting themselves with what I actually say.  (By the way, at this point you probably should not look at this material, as all it will do is embarrass you because I am positive that it is nothing like what you expected)

In fact, I would be willing to bet that the folks who were most vociferous in their opposition to this talk have never actually read anything from a lukewarmer or a skeptic.  It is a hallmark of modern public discourse that people frequently don't know the other side's argument from the other side itself, but rather from its own side.   This is roughly equivalent to knowing about Hillary Clinton's policy positions solely from listening to Rush Limbaugh.  It is a terrible way to be an informed adult participating in public discourse, but unfortunately it seems to be a practice that is increasingly common, and in fact encouraged by most universities, which have become echo chambers of conventional thought rather than real institutions of learning.

And here is the video of the speech in question:

I really wasn't going to do much with this Skeptical Science post by Rob Honeycutt called "Correcting Warren Meyer on Forbes," but several readers have asked me about it and it's Friday and I am sort of bored in the office so here goes.  I may skip parts of his critique.  That does not necessarily mean I agree with it, but several sections of this article are just so trivial (let's defend Al Gore!) that it is hard to work up any energy about it.  As reference, my original article published back in 2012 is here.

Dammit Meyer, You Changed The Words to the Doxology!

The author begins his critique this way:

Mr. Meyer opens with a misleading attempt to frame the issue as a debate on "catastrophic man-man global warming theory." This approach conflates two very distinct elements of the science on anthropogenic climate change. Nowhere in the published scientific literature can you find the phrase he uses. When I did a search on this term in Google Scholar, what did I find? Mr. Meyer's Forbes article. Also searching "catastrophic man-made climate change" I get a smattering of non-research related materials coming from people who rejecting human influence on climate. Meyer has formed a completely irrelevant and fabricated framing of the issue for the basis of his discussion.

In Mr. Meyer's article he claims this is the "core theory" and states that he will use the IPCC as the primary source for this, even though there is no place where the IPCC frames climate change in this manner.

Hey, thanks for making my point!  I always start climate discussions by saying that supporters of climate action are frequently sloppy with the way they frame the debate.   They use phrases like "climate denier" for folks like me which make no sense, since I don't deny there is a climate.  Clearly "climate denier" is a shortcut term for my denying some other more complex proposition, but what proposition exactly?  Merely saying "global warming" as a proposition is sloppy because it could include both natural and manmade effects.  Climate change is even sloppier (I would argue purposely so) because it obscures the fact that deleterious effects from anthropogenic CO2 must be via the intermediate stage of warming (i.e. there is no theory that CO2 causes hurricanes directly).

With this in mind, I begin nearly every discussion of climate change by doing what many proponents of climate action fail to do  -- I am very precise about the proposition I am going to discuss.  It's not just global warming, it's man-made global warming.  And since the climate alarmists are urging immediate action, it is not just man-made global warming but it is catastrophic man-made global warming, ie man-made global warming with negative effects so severe it requires urgent and extensive actions to circumvent.  I think that is a very fair reading of what folks like James Hansen have in mind (if he does not think it will be catastrophic, why is he getting arrested in front of power plants?)  The fact that Google searches do not yield these precise terms but rather yield millions of hits for meaningless phrases like "climate denier" just go to support one of the themes of my original piece, that the climate debate is made much muddier by the sloppy framing of the issues in the media.

However, while Mr. Honeycutt criticizes my framing as non-canon, he offers no specific critiques of how the phrase "catastrophic man-made global warming" might be wrong and offers no alternative framing.  I really do try to pass Bryan Caplan's ideological Turing test on this stuff, so I am interested -- if advocates for climate action do not think "Catastrophic Man-Made Global Warming" is a fair statement of their theory, what would they use instead?

So Is Feedback a Critical Assumption or Not?

I really don't want to repeat my article, but it is useful to understand my thesis:  Catastrophic Man-Made Global Warming Theory is actually a two-part theory, with two chained steps.  In the first, CO2 (and methane and other stuff) act as greenhouse gasses and incrementally warm the planet (about 1-1.2C per doubling of CO2 levels).  In the second step, via a second theory unrelated to greenhouse gas theory, the initial warming from greenhouse gasses is multiplied several times by positive feedbacks that dominate the Earth's climate system, up to the IPCC's estimate of 3-5 C per doubling.  Most of the projected warming in forecasts, such as those from the IPCC, are actually from this second step.  My position is that I largely agree with the first step, which is well understood, but believe there is little real understanding of the second, that feedbacks could be net positive or negative, and that scientists either over-estimate their certainty on feedbacks or, more commonly, bury the feedback assumptions and don't even talk about them in public.

As an aside, I have presented this in front of many climate scientists and no one has really disputed that my summary of the logic is correct (they have of course disputed my skepticism with the feedback number).  In fact Wikipedia, no climate denier, has this in their article about climate sensitivity:

CO₂ climate sensitivity has a component directly due to radiative forcing by CO₂, and a further contribution arising from climate feedbacks, both positive and negative. "Without any feedbacks, a doubling of CO₂ (which amounts to a forcing of 3.7 W/m²) would result in 1 °C global warming, which is easy to calculate and is undisputed. The remaining uncertainty is due entirely to feedbacks in the system, namely, the water vapor feedback, the ice-albedo feedback, the cloud feedback, and the lapse rate feedback";^[12] addition of these feedbacks leads to a value of the sensitivity to CO₂ doubling of approximately 3 °C ± 1.5 °C, which corresponds to a value of λ of 0.8 K/(W/m²).

In a critique, I would expect someone to say, "your description of the theories is wrong because of X" or "I agree with your basic description of the theories but think there are good reasons why we expect feedbacks to be strongly positive".  But this is what we get instead from Mr. Honeycutt

New errors pop up when trying to describe this "theory" where he attempts to describe water vapor feedbacks. He states that the IPCC "assumed" a strong positive feedbackfrom water vapor. The IPCC doesn't assume anything. The IPCC is a collection of leading experts in their fields who ware painstakingly cataloguing the scientific research. Meyer also makes an error suggesting the IPCC "just add" 2-4°C onto the 1°C for CO2 warming. Such figures, again, are completely manufactured by Meyer. They don't jibe with climate sensitivity figures and he provides no reference to what he means with figures like these.

The IPCC actually produces graphs such as the following to quantify forcings on the climate system, which also very clearly indicate levels of scientific understanding and uncertainty ranges.

He follows with a IPCC chart that showing forcing number estimates for different atmospheric components and the range of IPCC climate sensitivity forecasts, then says

By comparison, the IPCC and research scientists take the uncertainties involved with climateforcings and feedbacks very seriously. They clearly quantify and document them. The net result of the research suggests that our climate's sensitivity to forcing centers around 3°C for doubling CO2 concentrations. The low end probability is ~1.5°C, and the IPCC clearly state that anything lower than this is highly improbable.

My first thought is a snarky one, that it is interesting to see someone from a site with the word "skeptical" in the title go in for such a full-bore appeal to authority.  But to the substance, I am certainly familiar with all the IPCC forcing charts, and what is more, that these charts include a self-assessment by the IPCC about how confident they are in their estimates.  Since that self-assessment never is supported by any methodology or analysis in the reports, or any neutral third-party review, I take it with a grain of salt.

But to the rest, if one wants to discuss climate change with a lay audience, it is not wildly useful to start spewing out forcing numbers that have little meaning to the reader, and which the reader has no ability to connect to what they really care about, ie how much temperatures may rise.

More tellingly, though, after I spend most of my article discussing how the media frequently merges the effects of greenhouse gasses acting alone with the effects of feedbacks in the system that multiply or reduce these direct effects, Mr. Honeycutt does just that, offering forcing numbers that, if I read them correctly, include both direct effects and feedback multipliers.

The reason why it is useful to separate the direct warming effect from CO2 from the follow-on effects of feedback multipliers is the level of certainty we have in assessing their values.  We can figure out pretty precisely the absorption and reradiation characteristics of CO2 in a laboratory.  We can't do anything similar with feedbacks -- they must be inferred using various (all to-date imperfect) approaches to isolating feedback effects from everything else in the climate.  An example from another field might be useful.  Let's say we want to know the economic effect of hosting the Superbowl in Phoenix.  It is pretty easy to measure the direct effects, like the money spent on tickets for the event.  But when we look at the total system, things get really hard.  Sure we had people come in spending money on the Superbowl, but maybe we had fewer tourists doing other things, or maybe increased spending at the Superbowl was offset by less spending at movies or amusement parks.  We might compare that day's revenues to other years, but other years might have had different weather, different population, and a million other small differences that affect the outcome.  Sorting through all these literally millions of changing variables to get the net effect of hosting the Superbowl is hard (and in fact for the last Superbowl hosted in Arizona, academic groups have come up with a huge array of numbers that range all the way from highly positive to negative for the net economic effect).  The one difference between this example and what scientists have to do to isolate effects of individual inputs to the climate system is that the climate problem is much harder.

In responding to Mr. Honeycutt, I cannot honestly tell if Mr. Honeycutt is refuting this formulation of the problem (ie incremental warming from greenhouse gas effects of CO2 is increased to much higher, catastrophic levels by a second theory that the earth is dominated by strong positive feedbacks) or merely disputing my assertion that the second half of this proposition is not well-proven.

Missing the Point on Past Temperatures

Mr. Honeycutt has a number of problems with my discussion of past temperatures.  First, he doesn't like my saying that warming from pre-industrial times was 0.7C.  Mea culpa, it was probably 0.8C when I wrote the article.  He also does not like the satellite temperature measurement, because it measures temperatures in the lower troposphere (a couple miles up in the atmosphere) rather than at the surface.  He is absolutely correct, but you know what?  I am skeptical of both land and space data sets.  They both have their flaws.  Land surface temperatures, especially near the poles and in places like Africa, are widely spaced requiring a lot of interpolation.  They are also subject to a number of biases, such as from changing land use and urbanization.  Satellite data tends to cover larger swaths of the Earth, but have to be corrected for orbital decay and other satellite aging factors.  And as the author mentioned, they measure temperatures in the lower troposphere rather than the surface.  However, since the IPCC says that the most warming from greenhouse gasses should be in the lower troposphere, even greater than the warming on the surface, satellites strike me as a useful tool to look for a global warming signal.   That is why I always use both.  (As an aside, Mr. Honeycutt departs from his appeals to IPCC authority by advocating two land surface data sets NOT chosen by the IPCC as their lead data set -- I use the Hadley CRUT4 because this is what the IPCC uses as their gold standard).

But all this misses the point of why I introduced past temperatures in the first place.  My thesis was that past warming was not consistent with high CO2 temperature sensitivity numbers.  I used charts in the article but I can repeat the logic simply here.  Sensitivity numbers in the IPCC are the warming expected per doubling of CO2 levels.  Since pre-industrial times we have increased global CO2 concentrations from about 270ppm  (or 0.0270%) to about 405 ppm.  This increase of 135pp from 270ppm is conveniently (for the math) about 50% of a doubling.  Because the ratio between concentration and temperature is logarithmic, at 50% of a doubling we should see 57% of the doubling effect.  So for an IPCC sensitivity of 3C per doubling, since pre-industrial times we should have seen a warming of .57 x 3 =  1.7C.  We are nowhere close to this, even if every tenth of degree of warming over the last 100 years was man-made (a proposition with which I would disagree).  At the high end of the IPCC range, around 5C, we would have had to see 2.85C of warming to date.  At the low end of 1.5C, which the author calls unlikely, we would have seen about 0.86C of historical warming.  If one argues that manmade warming is only about half the past warming, then the sensitivity would have to be less than 1C  (by the way, this disconnect only gets larger if one considers greenhouse gasses other than CO2).

There are plenty of potential arguments one could counter with.  One could argue that time delays are really long or that man-made aerosols are masking past warming -- and we could have a nice back and forth on the topic.  Instead we just get printouts from models.  Seriously, is that how skeptical folks approach science, accepting black box model output that embodies hundreds or even thousands of potential GIGO assumptions and inputs?  I would love someone to show me in a sort of waterfall chart how one gets from 1.7C of expected warming from 270-405ppm to Hadley CRUT4 actual warming around 0.8C.  Doesn't anyone feel the need to reconcile their forecasts to actual observations?

There are really good reasons to distrust models.  If Donald Trump wanted to invest $100 million in building new military bases, and said that he had a computer model from experts with graphs that show the plan will grow GNP by a trillion dollars, would you automatically accept the model?  If GNP only grew by $200 million instead of by a trillion, would you want a reconciliation and explanation?

There are also good reasons to distrust climate models and forecasts.  James Hansen's models he used in his famous testimony in front of Congress in 1988 over-predicted warming rates by quite a bit (full explanation here).  Since people argue endlessly over this chart about how to center and zero the graphs, it is much easier just to look at implied warming rates:

Even the IPCC finds itself questioning its past warming forecasts:

These forecast failures are not meant as proof the theory is wrong, merely that there is good reason to be skeptical of computer model output as somehow the last word in a debate.

Actually, Missing the Whole Point of the Article

I had naively thought that the title of the article "Understanding the Global Warming Debate" (rather than, say, "Climate Alarmists Are Big Fat Liars") might be a clue I was trying outline the terms of the debate and the skeptic position in it rather than put a detailed dagger through the heart of, say, climate models.

I wrote this article based on my extreme frustration in the climate debate.  I have no problem with folks disagreeing with me  - in enjoy it.  But I was frustrated that the skeptic argument was being mis-portrayed and folks were arguing about the wrong things.  Specifically, I was frustrated with both of these two arguments that were frequently thrown in my face:

• "Climate deniers are anti-science morons and liars because they deny the obvious truth of warming from greenhouse gasses like CO2"

In fact, if you read the article, most of the prominent climate skeptics (plus me, as a non-prominent one) totally accept greenhouse gas theory and that CO2, acting alone, would warm the Earth by 1-1.2C.  What we are skeptical of is the very net high positive feedbacks (and believe me, for those of you not familiar with dynamic systems analysis, these numbers are very large for stable natural systems) assumed to multiply this initial warming many-fold.  Of all the folks I have talked to in the past, perhaps less than 1% were familiar with the fact that warming forecasts were a chain of not one but two theories, both greenhouse gas theory and the theory that the Earth's atmosphere is dominated by strong net positive feedbacks.  Even if the audience does not choose to agree with my skepticism over feedback levels, isn't this education of the public about the basic theory useful?  The author accuses me of purposeful obfuscation, but for those of us who are skeptical, it is odd that alarmists seem to resist discussing the second part of the theory.  Could it be that the evidence for strong positive feedbacks dominating the Earth's long-term-stable greenhouse gas theory is not as strong as that for greenhouse gas theory?  Evidence for high atmospheric positive feedbacks simply HAS to be weaker than that for greenhouse gas theory, not only because they have been studied less time but more importantly because it is orders of magnitude harder to parse out values of feedbacks in a complex system than it is to measure the absorption and emission spectrum of a gas in a laboratory.

• "Climate deniers are anti-science morons and liars because there is a 97% consensus behind global warming theory.

Well, studies have shown a 97% agreement on .. something.  This comes back to the first part of this post.  If one is sloppy about the proposition being tested, then it is easier to get widespread agreement.  The original study that arrived at the 97% number asked two questions -- "do you think the world has warmed in the last century" and "do you think a significant part of this warming has been due to man".  97% of scientists said yes.  But I, called a climate denier, would have said yes to both as well.  Alarmists attempt to shut off debate with skeptics by siting 97% agreement with propositions that have little or nothing to do with skeptics' arguments.  Try asking a large group of scientists if they think that the world will warm 3C per doubling of CO2 levels, the proposition with which I disagree, and I guarantee you are not going to get anywhere near 97%.  This is simply a bait and switch.

I will conclude with his conclusion:

Meyer ends with an unjustifiable conclusion, stating:

So this is the real problem at the heart of the climate debate — the two sides are debating different propositions!  In our chart, proponents of global warming action are vigorously defending the propositions on the left side, propositions with which serious skeptics generally already agree.   When skeptics raise issues about climate models, natural sources of warming, and climate feedbacks, advocates of global warming action run back to the left side of the chart and respond that the world is warming and greenhouse gastheory is correct.    At best, this is a function of the laziness and scientific illiteracy of the media that allows folks to talk past one another;  at worst, it is a purposeful bait-and-switch to avoid debate on the tough issues.

The positions he's put forth in this article are the epitome of lazy analysis and scientific illiteracy. He's bizarrely framed his entire discussion attempting to attack the positions of the IPCC, a body composed of the world's leading researchers, as being scientifically illiterate. One has to ask, from where does his own "literacy" if not from leading climateresearchers? It's certainly not based in the available published research which the IPCC reports are based on.

In this, perhaps he's inadvertently answering his own questions in a manner that he would prefer to reject. What are "skeptics" denying? Answer: The scientific research.

Well, first, I would advise him to work on his reading comprehension scores.  I called the media scientifically illiterate, not the IPCC and researchers.  The basic framework of greenhouse gas incremental warming multiplied many times by assumed positive net feedbacks is in the scientific literature and the IPCC -- my frustration is that the feedback theory seldom enters the public debate and media articles, despite the fact that the feedback theory is the source of the majority of projected warming and is the heart of many climate skeptic's criticisms of the theory.

And with that, the "skeptical science" article ends with an appeal to authority.

Postscript:  Thinking about it more, at some level I find this article weirdly totalitarian, particularly the last paragraph where I am described as doing nothing but polluting the climate discussion.  Here he writes:

Forbes is a very high profile publication and thus someone there, at Forbes, decided that it was fine and well to give this person an internet soapbox to promote a position rejecting the climate science which he has absolutely no expertise. He is not genuinely adding to the discussion on climate change but is being placed into a position as someone to listen to. Meyer is polluting the discussion with misinformation and poor analysis which has no bearing on the actual issue of climate change. And thanks to Google, these types of discussions, lacking in any substance, are given equal weight to actual science due to the traffic they generate.

This seems an oddly extreme response to someone who:

• agrees in the linked article that the world has warmed over the last century
• agrees in the linked article that a good chunk of that warming is due to manmade CO2
• agrees in the linked article that CO2 acting as a greenhouse gas will increase temperatures, acting alone, by about 1-1.2C per doubling
• argues for a form of carbon tax (in a different article)
• but disagrees on the magnitude of added warming from net feedback effects.

It seems that we have moved beyond "you are either with us or against us" and entered the realm of "you are either entirely with us on every single detail or you are against us".

Postscript #2:  Something else has been bothering me about this critique and I think I can finally put it into words  -- the critique is sort of science without thought, a regurgitation of the canon whenever I diverge from orthodoxy without actually considering the arguments presented.

Look, there are tens of thousands of people talking past each other on climate issues.  One of the things I try to do, if nothing else to bring something new to the discussion, is try to reframe the discussion in more useful and accesible terms, often with different sorts of graphs.  Sometimes these are useful reframings, and sometimes not, but I do know that in general I am a heck of a lot better at creating charts to communicate with a lay audience than is the IPCC or most of the prominent folks on either side of the climate debate.  This is why getting feedback (as in this critique) that I use different words to summarize the issue or that I do not use the standard charts everyone else xeroxes out of the IPCC reports (as did Mr. Honeycutt) is not very helpful.

Yesterday at an event called One Day University, I saw a talk by William Burke-White of Penn and formerly of the Obama state department (I think he was one of many consultants, but I can never figure out seniority from people's biographies - his is here).

Mr. Burke-White was discussing the liberal world order created by the US after WWII and recent decline / threats to this world order and American power.  He discussed five trends or forces driving changes, and you probably can predicts many of them.  He discussed the rise of new world powers (e.g. China), the rise of powerful NGO's (e.g. ISIS) and the expansion of the Internet (which can destabilize traditional powers).  All fine, I have no particular comment on that stuff.  He also discussed climate change, with a picture of Manhattan underwater, and though I am tempted, I won't even respond to that.

What caught my attention was his fifth point -- about income inequality.  He showed a slide with the meme that 8 people (Warren Buffet et al) had more wealth than something like half the world's population put together.   His conclusion was that the liberal world order had failed because so much wealth had been concentrated in a few hands.

Well, if American power and influence is declining in the world and Mr. Burke-White is an example of the thinking of the Obama administration over the last 8 years, I now have a better understanding of why.   Sure there are really rich people.   There were probably 8 really rich guys in 1400 (though they would have all been Kings and Emperors rather than private business people).  The really different, world-changing event over the last 50 years has been the emergence from poverty of over a billion people, as facilitated by market capitalism.  Never before in all of the history of the planet have so many people been pulled out of poverty in such a short time.  Never before has such a large percentage of the globe moved beyond pure subsistence farming.  If the leaders of this country find it impossible to communicate this simple good news, then of course the post-WWII liberal world order is going to struggle.

Look, I understand that baby boomers (a group of which I am barely a member) have a hard time figuring out how to cope with this country's many past missteps.  Yes, we have been ham-handed (and that is generous) in exercising our power and we have often failed to live up to our stated values.  But helping to unleash a wave of market capitalism on the world is among our true successes.   And this is the US's one true source of power, this wave of prosperity we have helped to birth.  Other supposed sources of our power -- a big military and atomic bombs -- are horrifying.  Market capitalism is our one source of strength that is genuinely positive.  If we are staffing the state department with people who don't get this, then no wonder we are losing influence in the world.

Yesterday, I suggested we needed a new, real consumer advocacy organization to replace the economically ignorant Nader-led PIRG organizations.  The reason is that it is time that consumers banded together and resisted Trump's protectionism, since such protection generally protects a few politically favored unions and corporations while raising prices and reducing choice for all consumers.

A couple of hours after I posted that, the absolutely indispensable Mark Perry brings us a great post on academic research about how protectionist actions nearly always cost consumers more than they help producers.

The empirical evidence above helps us to understand a very important economic lesson about international trade, call it “protectionist math” — and that mathematical reality is that the costs of protectionism imposed on American consumers in the form of higher prices and a reduction in trade will always be greater than the benefits generated for the protected industries and the workers in those industries. And here’s another part of that “protectionist math” that helps us answer the question: Sure, we can save US jobs with protectionist trade policies, but how much does it cost consumers for every job saved with protectionist trade policy, and is that cost worth it? Economic analysis and the empirical evidence presented above suggest that it’s very, very expensive to save US jobs with protectionism — more than half-a-million dollars on average per year per job in 2016 dollars (see chart above). If Trump enacts protectionist policies that save $50,000 per year US factory jobs but at a cost to consumer of $500,000 annually for each job saved, that’s a surefire formula to “Make America Expensive and Poor Again,” not “great again.”

I won't reprint his chart, but he has detailed results form a number of academic studies in different industries that back this statement up.

My point about needing a new consumer advocacy group was a little tongue in cheek, but here is Perry quoting from a study at the Federal Reserve Bank of St Louis a number of years ago (back during the last wave of protectionism, which was based on Japan rather than China bashing).

The primary reason for these costly protectionist policies relies on a public choice argument. The desire to influence trade policy arises from the fact that trade policy changes benefit some groups, while harming others. Consumers are harmed by protectionist legislation; however, ignorance, small individual costs, and the high costs of organizing consumers prevent the consumers from being an effective force. On the other hand, workers and other resource owners in an industry are more likely to be effective politically because of their relative ease of organizing and their individually large and easy-to-identify benefits. Politicians interested in re-election will most likely respond to the demands for protectionist legislation of such an interest group.

Scott Alexander has a great article on the problems with Trump's approach to economics.  I want to begin, though, with an analogy he uses at the end because it is the best single framework I have seen about understanding Trump's appeal:

Suppose you’re a hypercompetent billionaire in a decaying city, and you want to do something about the crime problem. What’s your best option? Maybe you could to donate money to law-enforcement, or after-school programs for at-risk teens, or urban renewal. Or you could urge your company full of engineering geniuses to invent new police tactics and better security systems. Or you could use your influence as a beloved celebrity to petition the government to pass laws which improve efficiency of the justice system.

Bruce Wayne decided to dress up in a bat costume and personally punch criminals. And we love him for it.

I worry that Trump’s plan for his administration is to dress up in a President costume and personally punch people we don’t like, while leaving policy to rot. And I worry it’s going to work.

Basically, Trump is acting like a small state governor, focusing his economic efforts on getting the Apple factory to come to town

So based on these two strategies, we are in for four years of sham Trump victories which look really convincing on a first glance. Every couple of weeks, until it gets boring, another company is going to say Trump convinced them to keep jobs in the United States. The total number of jobs saved this way will never be more than a tiny fraction of the jobs that could be saved by (eg) good economic policy, but nobody knows anything about economic policy and Trump will make sure everybody hears about Ford keeping jobs in the US. Every one of these victories will actively make the world worse, in the sense that these big companies will get taxpayer subsidies or favors they can call in later to distort government priorities, but nobody’s going to notice these either.

It seems appropriate to end this with a bit of Bastiat:

In the economic sphere an act, a habit, an institution, a law produces not only one effect, but a series of effects. Of these effects, the first alone is immediate; it appears simultaneously with its cause; it is seen. The other effects emerge only subsequently; they are not seen; we are fortunate if we foresee them.

There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen.

Yet this difference is tremendous; for it almost always happens that when the immediate consequence is favorable, the later consequences are disastrous, and vice versa. Whence it follows that the bad economist pursues a small present good that will be followed by a great evil to come, while the good economist pursues a great good to come, at the risk of a small present evil.

This may be the last message you expected from me, but Obama should pardon Hillary.  If Obama does not, Trump should.

Look, I am a FOIA absolutist.  Long before it came out that Clinton may have had top secret emails on her home server, I wanted to see her punished for her flouting of public accountability laws.  Her whole home-brewed email system was a transparent attempt to evade FOIA, and consistent with her history of attempting to duck transparency (going all the way back to her abortive health care initiative she ran as First Lady).  In addition, I have had it up to here with bogus non-profits that pretend to do charity work, but are in fact merely lifestyle and influence maintenance devices for their principals.  I would love to see the Clinton Foundation investigated (though market forces may take care of that institution on their own, as it is unlikely donors will be sending much money their way now that the Clintons have no prospect of returning to power).

But the optics, and precedents involved, with a winning candidate's administration criminally prosecuting the election's loser are just terrible.  Even if entirely justified, the prosecution smacks of banana republic politics.  And even if it were justified, half the country would not see it that way and next time, when the parties are reversed, as sure as the sun rises in the East there will be folks looking to duplicate the prosecution in the other direction.

The rule of law is seldom helped by ignoring wrong-doing, but in this case I will make an exception.

Postscript:  By the way, what could be a better political FU than having Trump pardon her?   An attempted prosecution could last for years and could lead nowhere.  But nothing leaves the impression of "your guilty" like a preemptive pardon (see Richard Nixon).  From a political point of view Obama should pardon her just to prevent Trump from doing so and getting credit for being a healer.

1.  There is absolutely no guarantee that spending more money increases service quality, especially when (as is the case with public schools) there is no competition to discipline spending and ensure that it is funneled to those aspects of the service that are actually important to customers
2. Over the last 20-30 years, administrative staffing in public schools has grown from a small percentage of the total to about half the headcount in many public school districts, and thus likely more than half the salary budget (since administrators frequently make more than teachers)
3. Much of the increased funding is going to retired teachers who aren't actually teaching anyone

Per-student spending on K-12 education has risen steadily over the last two decades, but student test scores, and teacher salaries, are stagnant. Why hasn’t this massive increase in investment produced better teachers and better opportunity for students? The short-answer, according to a new Manhattan Institute report by Josh McGee: State and local governments have catastrophically mismanaged their teacher pension systems. The cash infusion to K-12 has been used largely to pay for irresponsible pension promises politicians made to teachers’ unions and justified to the public with shoddy accounting. . . .

In other words, to cover benefits for retirees, states need to dig into education funds that might otherwise be used to attract and retain good teachers or buy better textbooks and build new facilities. So long as state governments are unwilling to reform the blue model pension-for-life civil service system, and so long as teachers unions continue to wield outsized influence in so many state legislatures, this pattern seems likely to continue indefinitely.

Campaigns to increase spending on schools are always popular, and understandably so: Education ought to be a great equalizing force in our society and, in theory, an efficient way to invest in the future. The problem is that in many states, new “K-12 spending” isn’t really an investment so much as a transfer payment to retired employees of the public schools who have been promised untenable lifetime pension benefits.

James Bessen has a terrific article in the Harvard Business Review on the estimated contribution to corporate profits of rent-seeking, or the acquisition of special favors, subsidies, and protections from the government that shelter a company from the normal competition of a free market.  Bessen argues that such rent-seeking is major explanatory factor for recent rises in corporate profits.

This topic will be a familiar one to Coyoteblog readers.   Show me a regulation and I will show you the large corporation that is able to use it to throttle competition.  I remember when everyone claimed the retail minimum wage was going to hurt Wal-Mart, but in fact Wal-Mart actually supported it because it was paying a higher wage than its smaller upstart competitors and thus the minimum wage would tend to hurt Wal-Mart's competition worse than it would be hurt.  Taxi service is one of the most regulated businesses in the country (at least in relation to the complexity of the business) and we are seeing just how much these regulations have supported taxi profits as we watch the taxi companies use the regulations to try to hammer Uber and Lyft.

According to Bessen, the effect is both large and on the rise:

I find that investments in conventional capital assets like machinery and spending on R&D together account for a substantial part of the rise in valuations and profits, especially during the 1990s. However, since 2000, political activity and regulation account for a surprisingly large share of the increase....

The pattern around the 1992 Cable Act is representative: I find that firms experiencing major regulatory change see their valuations rise 12% compared to closely matched control groups. Smaller regulatory changes are also associated with a subsequent rise in firm market values and profits.

This research supports the view that political rent seeking is responsible for a significant portion of the rise in profits. Firms influence the legislative and regulatory process and they engage in a wide range of activity to profit from regulatory changes, with significant success. Without further research, we cannot say for sure whether this activity is making the economy less dynamic and more unequal, but the magnitude of this effect certainly heightens those concerns.

Two characteristics make these changes particularly worrisome. First, the link between regulation and profits is highly concentrated in a small number of politically influential industries. Among non-financial corporations, most of the effect is accounted for by just five industries: pharmaceuticals/chemicals, petroleum refining, transportation equipment/defense, utilities, and communications. These industries comprise, in effect, a “rent seeking sector.” Concentration of political influence among a narrow group of firms means that those firms may skew policy for the entire economy. For example, the pharmaceutical industry has actively stymied efforts to address problems of patent trolls that affect many other industries.

I would add two other industries to this list -- medicine and legal.  The reason it likely does not show up in his study is that the returns in these businesses show up to individuals or small private firms.  But heavy regulation, and in particular a licensing process wherein one must get permission from the incumbents in order to compete with them, has always kept prices and returns in these businesses artificially high.

Note by the way that the breakpoint year of 2000 makes this a bipartisan issue, occurring in equal measure in Republican and Democratic Congresses and Presidencies.

And I don't think I need to remind folks, but both of our Presidential candidates are absolutely steeped in and committed to this cronyist, corporatist system

This sounds so much like the latter stages of Atlas Shrugged, when one by one Colorado businesses shut down, worsening shortages across he country.  The government tries to come in and restart each factory, but there is no confidence that the government can actually do the job and within months the whole thing has imploded forever.

Over the weekend, Kimberly-Clark said that the South American nation’s deteriorating economic situation had made “it impossible to continue our business at this time."  The company had made a number of hard-to-find staples in Venezuela such as diapers and face tissues.

As Bloomberg adds, the decision will likely to add to shortages that have gripped Venezuela for the past few years after the ruling socialists capped the price on many consumer basics below production costs." As we have documented repeatedly, desperate shoppers now routinely spend long hours in front of stores to purchase essential products ranging from toilet paper to rice. At the same time, companies face hefty losses on price-controlled goods, while the products are often flipped on the black market for many times their sticker price.

So in retaliation, Venezuela's government announced it had seized the factory.  Labor Minister Owaldo Vera said Monday that the socialist government took the action at the request of the 971 workers at the factory that the company decided to shutter. The seizure follows a similar takeover from 2014 when Clorox announced it was closing its doors.

"Kimberly-Clark will continue producing for all of the Venezuelans," Vera said in a televised statement from the factory surrounded by workers chanting pro-government slogans. That statement was not exactly true: former workers of the company would continue producing under the observation of government management. We doubt this "forced restructring" will survive more than a few months.

I have written this before, but I interpret Atlas Shrugged a bit differently than most.  There is much criticism of the one-dimensional characters and limited character development in the book.  But I have always thought this beside the point.  The main character in Atlas Shrugged is the world itself, and the main story arc is the decline and fall of the world under the increasing influence of socialism.  All the human characters are just props to this main drama.

In this interpretation, the climax of the book is when the hobo Jeff Allen tells the story of 20th Century Motors to Dagny on the train.  This story shows the final death throws of a group of people attempting to pursue socialism in its purest form.  It's a statement of the end towards which everything else is quickly heading.  After this point in the book, we immediately are in Galt's Gulch and end up with Rand's Utopian vision, which from a literary standpoint is awkward and boring.  That's because utopian novels are always dull as dirt.  Rand's triumph in that book was that she was absolutely prescient about how socialism plays out, which we are seeing today in Venezuela.

A few random notes on computer games for those who share that interest:

1. For those Diablo fans who loved Diablo II but were disappointed that Diablo III was not exactly the sequel they'd hoped for, I have a suggestion:  Path of Exile from Grinding Gear Games.  It is set up as an mmrpg (so you have to be online to play) but it plays just fine single player and all the map areas are dedicated instances such that you aren't fighting other players for kills and loot drops.  The skill tree is famously enormous.  A certain group of you will buy the game 2 minutes after clicking on the next link (I did).   Here is the whole tree, it is absurd (the highlighted areas are the selections for one of my characters).  The customization ability is simply staggering.   Choosing a class like fighter or mage (they have different names in this game, but essentially these base classes) just changes your starting point on this map.  But this is not the end of the customization.  There is also an elaborate skill gem system where your attack and defense skills are based on your gem choices, both the main gems and support gems one adds to it.  Seriously, the actual combat is not much more elaborate than the debuff then hack and slash and loot drop of other Diablo style games, but this game has more ability to fine tune and experiment with character design than any I have ever played.
2. My absolute favorite, by far, board game has finally come out as a PC game -- Twilight Struggle.  It is on Steam and I can't yet fully recommend it because I have not played through all the way online.  I am told the AI needs to be tougher but it should be fine for noobs.  There is also online person to person play.  I love the gameplay and it has also been a platform for my son and I to have a lot of discussions about recent history.  If you are a total noob, here are a few lessons for the Soviet player (which I have the most experience playing)
   • The Soviets have to rush.  The game has three periods, and you have big advantages in period 1 and disadvantages in period 3.  You HAVE to build up a lead early or you are toast later on.  I have seen a 15 point lead evaporate in the last third of the game.  The best outcome is to win the game outright by the smear rule (20 point lead) by turn 7.
   • Your first move is to coup Iran.  Asia is yours in the early game if you succeed.  The only alternative is to first turn coup in Italy, but that is a riskier strategy and can only be justified if your first turn hand is really tuned to that approach.
   • Coup every turn ASAP.  Coups are your most powerful weapon (other than events) and couping first thing every turn denies that ability to the US
   • The space race is for dumping your worst cards, not an end in and of itself (always exceptions, of course).  Twilight Struggle's best dynamic is how you end up with your opponents cards in your hand that you end up having to play for them-- the space race is one way to dump the worst of these cards (e.g. grain sales to the Soviets).  Since the cards you can play become more restricted as you advance in the space race track, there are even some advantages to failing your rolls early on.
   • If you play the China card, it needs to be for a BIG goal - like improving your scoring of Asia right before you play the Asia scoring card.  In many cases, it is better to not play the China card at all than to have it pass to the Allies.
   • Cards that allow you to play influence on any country should be used to get access to places where you have no adjoining influence -- don't use it to add to existing influence or enter countries to which you already are adjacent.   This is the only way in initially to places like South America and much of Africa..  Decolonization is your friend.
   • Learn to love this site.  Not only does it give you a LOT of strategy, but it also answers complex card interaction questions for every card.

Certainly the government's current permission-based approach to business regulation combined with an overt hostility of government (or at least those parties that influence it) to radically new business models (see: Uber) is a big part of the great stagnation story.

But insanity like this is also a big part:

Vague but expensive-if-not-correct rules on employee seating just got vaguer and harder to figure out

Weighing in on two California laws that require employers to provide suitable seating to workers when “the nature of the work” permits it, the California Supreme Court said the phrase refers to an employee's tasks performed at a given location for which the right to a suitable seat is asserted.

In response to questions certified by the U.S. Court of Appeals for the Ninth Circuit, the state high court said April 4 that the phrase “nature of the work” doesn't require a holistic evaluation of the full range of an employee's tasks completed during a shift.

An employer's business judgment and the layout of the workplace are relevant in determining whether sitting is permitted, but courts should apply an objective analysis based on the totality of the circumstances, the California Supreme Court said.

It held that “if an employer argues there is no suitable seat available, the burden is on the employer to prove unavailability.”

As a business owner in California, I am going to have to do a ton of research to figure out just how we can comply with all this, and even then I will likely be wrong because whether one is in compliance or not is never actually clear until it is tested in court.  I had to do the same thing with California meal break law (multiple times), California heat stress law, new California harassment rules, California sick leave rules, the California minimum wage, Obamacare rules, Obamacare reporting, the new upcoming DOL rules on salaried employees, etc.

Five or ten years ago, I spent most of my free time thinking about improving and growing the business.  Now, all my mental bandwidth is consumed by regulatory compliance.  I have not added a new business operation for years, but instead have spent most of my time exiting businesses in California.  Perhaps more important is what I am doing with my managers.  My managers are not Harvard MBAs, they are front-line blue collar folks who have been promoted to manager because they have proven themselves adept at our service process.  There are only a finite number of things I can teach them and new initiatives I can give them in a year.  And instead of using this limited bandwidth to teach some of the vital productivity enhancement tools we should be adopting, I spend all my training time on compliance management issues.

A few days ago, there was an article in our daily fishwrap that said something I found hard to believe.  It said that the state had initiated a crackdown on unlicensed shipments of wine from out of state at the behest of a letter from the Goldwater Institute.  It even had a picture (at least in the online edition) of Clint Bolick, Goldwater's chief of litigation.

Essentially, most states do not allow or severely restrict direct purchase by consumers of liquor products from out of state.  As usual for such protectionist stupidity, it is claimed to be for the children, but in fact mainly is meant to protect a small, very powerful group of liquor distributors who make a fortune from their state-granted monopoly on liquor wholesaling.  Basically, by some outdated post-prohibition laws, every drop of alcohol in the state must pass through the hands of a couple of companies, who of course extract their toll like Baron's of old with castles on the Rhine.

I simply found it unfathomable that Clint Bolick, a founder of the Institute for Justice (IC) for god sakes, would be pestering the state to more vigorously enforce stupid, outdated, and protectionist licensing laws.  And it turns out I was right.  

Clint Bolick, the Goldwater Institute’s director of litigation, said he sent the state a letter in November 2012 asking it to get rid of a rule that required customers to show up at certain wineries annually in order to get direct shipments to their homes.

Bolick’s letter, which he provided to The Republic and azcentral, said that rule made no sense and would stop Arizonans from joining wine clubs, where wineries send a designated amount of wine to customers each year, sometimes including wines not available to the general public.

“A requirement of annual presence also does not serve any obvious public purpose, given that the purchaser has established age and identity at the time of the order,” he wrote.

Bolick said he met with the director of the department at the time, Alan Everett, who told him the department would start a regulatory review.

So it turns out that Goldwater was trying to ease regulation and make it easier for consumers to have some choice and access to more suppliers.  All good.

But it turns out "regulatory review" means something different to a state regulator.  I suppose it was too much to think that they might have a review to see if their regulations went too far.  In fact, the "regulatory review" seems to have focused on how they could tighten regulations even further.  The result was not the one Goldwater hoped for ... instead of making things easier on consumers, the state went all-in trying to make things even worse for consumers.

Hill said Bolick's 2012 letter made the department question whether the wineries sending club shipments into Arizona were all licensed.

“It was the basis for us starting to ask questions about who is shipping liquor into the state of Arizona that does not hold an Arizona liquor license,” Hill said....

So far, the department has investigated 223 violations at a total of 199 wineries, according to records obtained through the Liquor Department’s website.

Additionally, somewhere between 250 and 300 wineries were found to have not filed their production reports. Once the department receives those, it could cause some or all of those to be found in violation. Some of those wineries, in order to comply with state liquor laws and have their cases closed, might also agree to not ship wine to Arizona.

Customers frustrated that they cannot get their wine shipped anymore are funding a renewed effort to change the state’s shipping laws. Two California-based groups, The Wine Institute and Free The Grapes, said they are work

It is clear that Goldwater, representing consumers, has very little influence on the state agency.  So who does?  Well, you have probably guessed:

Hill said last Thursday the crackdown came at the request of a member of the Arizona wine industry, saying it was an example of government and industry working together.

Ugh, what a happy thought -- government and industry working together to protect incumbents from competition and restrict consumer choice.

From the Daily Beast

For some wealthy donors, it doesn’t matter who takes the White House in 2016—as long as the president’s name is Clinton or Bush.

More than 60 ultra-rich Americans have contributed to both Jeb Bush’s and Hillary Clinton’s federal campaigns, according to an analysis of Federal Election Commission data by Vocativ and The Daily Beast. Seventeen of those contributors have gone one step further and opened their wallets to fund both Bush’s and Clinton’s 2016 ambitions.

After all, why support just Hillary Clinton or just Jeb Bush when you can hedge your bets and donate to both? This seems to be the thinking of a group of powerful men and women—racetrack owners, bankers, media barons, chicken magnates, hedge funders (and their spouses). Some of them have net worths that can eclipse the GDPs of small countries.

Ideology, policy prescriptions, legislative plans -- nothing matters except influence.  This will always happen as long as we give politicians so much power.  Its why the Coke and Pepsi party look so similar today.   At least a few people are noticing:

Is there a single person alive who believes that corporations, trade associations, NGOs, unions, and the like pay the Clintons enormous sums for speeches because they believe their members actually want to hear the Clintons say the same tedious talking points they have been spewing for years? If that were the only value received no profit-minded enterprise would pay the Clintons these vast fees because they would earn, well, a shitty rate of return.

No, the Clintons are not paid to speak. Businesses and other interest groups pay them for the favor of access at a crucial moment or a thumb on the scale in the future, perhaps when it is time to renew the Ex-Im Bank or at a thousand other occasions when a nod might divert millions of dollars from average people in to the pockets of the crony capitalists. The speaking is just a ragged fig leaf, mostly to allow their allies in the media to say they “earned” the money for “speaking,” which is, after all, hard work.

We have such people as the Clintons (and the tens of thousands of smaller bore looters who have turned the counties around Washington, D.C. in to the richest in the country) because they and their ilk in both parties have transformed the federal government of the United States in to a vast favors factory, an invidious place that not only picks winners and losers and decides the economic fates of millions of people, but which has persuaded itself that this is all quite noble. Instead, the opposite is true: This entire class of people, of which the Clintons are a most ugly apotheosis, are destroying the country while claiming it is all in the “public service.” It is disgusting. We need to say that, at least, out loud. . . .

Tear down the aristocracy of pull. This may be our last chance.

Jay P. Greene's suggestions for potential petty little dictators in government:

• Think about how others have plans for their own lives just as you have a plan for yours.  Just because you don’t understand their plan doesn’t mean that theirs is not legitimate or that you should impose your vision on them.
• Recognize that just as others are subject to limited information and systematic deviations from rationality, so are you.  You shouldn’t imagine that you are the rational, well-informed one whose plan can fix the defects from which others suffer.
• Remember that you and your friends are not the government.  Once the government takes responsibility for an issue, no one can completely control what the government will do and those with the strongest vested interests (and often not the best intentions) are likely to have more influence than you.
• Be humble about the limits of your knowledge and expertise.  You may have gone to an elite school and have always been told how smart you are, but that doesn’t mean that you understand everything.  Understanding comes from real experience and/or rigorous examination of an issue.  Reading a bunch of articles or having spent a few years as the deputy assistant director of whatever does not count as experience or rigorous examination.

This is just a sample.  There is more at the link

Last week I wrote:

One can build a very good predictive model of government agency behavior if one assumes the main purpose of the agency is to maximize its budget and staff count.  Yes, many in the organization are there because they support the agency's public mission (e.g. protecting the environment at the EPA), but I can tell you from long experience that preservation of their staff and budget will almost always come ahead of their public mission if push comes to shove.

Despite being a Jerry Pournelle fan, I had never heard his Iron Law of Bureaucracy, but it certainly fits my observations

Iron Law of Bureaucracy

In any bureaucracy, the people devoted to the benefit of the bureaucracy itself always get in control and those dedicated to the goals the bureaucracy is supposed to accomplish have less and less influence, and sometimes are eliminated entirely.

It turns out that small government libertarians like myself and large-government progressives actually have something in common -- we both fear accumulations of unaccountable power.  We just find such power in different places.  Progressives fear the accumulation of power in large corporations and moneyed individuals.  Libertarians fear government power.

I won't try to take Caplan's ideological Turing test today, but will just speak from my own perspective.  I wonder how Progressives can ignore that government has guns and prisons while corporations just have the ability to sell you something or hire you (though perhaps not on the terms you prefer).  When pressed to explain why the Left is more comfortable with government power, their explanations (to my taste) depend too much on assumptions that competent versions of "their guy" pull the levers of power, and that power itself and the vagaries of government incentives will not corrupt this guy.

On the other hand, progressives ask me all the time, "how can you trust corporations so much" and then list off a justifiably long list of examples of them acting poorly.  This, I think, is where the real difference comes in, and where the confusion often comes int he public discourse.  I will answer that I don't trust anyone, government or corporations.  What I trust are the incentives and the accountability enforced in a market where a) consumers can take their money elsewhere if they get bad products or services; b) employees can take their labor elsewhere if they are treated poorly; and c) entrepreneurs can make a fortune identifying shortcomings in incumbent businesses and offering consumers and/or employees a better deal.

Unfortunately, when a person or organization finds itself very successful in this game, there is a natural tendency to want to protect their winning position.  But nothing in the market can stop a challenge from a better product or service, so successful entities tend to turn to the government (which has a monopoly on guns and prisons and asset seizures and the like) for protection against upstart challengers.  If successful, these restrictions tend to hobble growth and innovation -- imagine if IBM had successfully used government influence to halt the PC revolution or if AT&T had blocked the growth of cell phones.

This dynamic is at the heart of Brink Lindsey's new white paper at Cato (pdf).   As has been his wont in several past works, Lindsey is looking for proposals that bridge the gap between Left and Right.  So, rather than stake out the 98th salvo in an area where there seems to be a hopeless ideological divide (e.g. minimum wage or low-skill immigration), he focuses on four areas one could imagine building a broad coalition.  Lindsey focuses on attempts by successful incumbents to use government to cement their position and calls them "regressive regulation" because they tend to benefit the already-successful at the expense of everyone else.

In the following sections, I examine four major examples of regressive regulation: (a) excessive monopoly privileges granted under copyright and patent law; (b) protection of incumbent service providers under occupational licensing; (c) restrictions on high-skilled immigration; and (d) artificial scarcity created by land-use regulation. In all four examples, current government policy works to create explicit barriers to entry. In the first two cases, the restriction is on entry into a product market: businesses are not allowed to sell products that are deemed to infringe on a copyright or patent, and individuals are not allowed to sell their services without a license. In the other two cases, actual physical entry into a geographic area is being limited: on the one hand, immigration into the country; on the other, the development and purchase or rental of real estate.

One can immediately see how this might appeal across ideologies.  Libertarians and market Conservatives will like the reduction in regulation and government scope.  Progressives should like the elimination of government actions that primarily help the wealthy and powerful.**

I said "cross ideologies" above rather than bi-partisan because things get messy when actual politics intrude.  All of these protected constituencies wield a lot of political influence across both parties -- that is why the regressive regulation exists in the first place.  And they all have finally honed stories about how these restrictions that prevent new competition and business models are really there to protect the little people (just watch the battles between Uber and the taxi cartels and you will see what I mean).

Never-the-less, this strikes me as a pretty good list.  For whatever barriers there may be, it is a hell of a lot easier to picture a bipartisan agreement on any of these issues than on, say, low-skill immigration.  I haven't finished reading to the end -- I have to get on now with my day job -- so I have yet to see if there are any concrete proposals that look promising.

**The ideological problem here, of course, is that libertarians think that these restrictions are the primary way in which the wealthy unfairly benefit while most Progressives would (I suppose) see it as a side issue given that they believe that even the free-est of market capitalism is inherently unfair.

Deborah Vollmer appears to be a nightmare neighbor in this story from the Washington Post (via Maggie's Farm).  She is absolutely hell-bent on preventing her neighbor from doing anything to their house that she would not do to it.  If her neighbor's aesthetics don't match hers, she takes them to court.

“Some people may question my motives,” Vollmer said. “But what’s happening in this town, these developers, tearing down old homes. I’m standing up for my rights. . . . And then this whole thing just kind of evolved” from that...

What could possibly be driving this woman? Friend and Chevy Chase resident John Fitzgerald said that her stubborn streak has roots deep in her past. Vollmer forged her career defending the rights of those without means. And that, he said, inculcated in her a desire to protect principles until the bitter end.

What right or principle is she fighting for?  The right to micro-manage her neighbor's property.  Read the article, this woman seems to be a total nightmare, all because she wants everyone else's house to look exactly like hers.

She should move to California.  She would fit right in.  She would be a perfect candidate to sit on the California Coastal Commission, for example.

We have a sort-of similar fight brewing here in Phoenix where a few local residents were trying to prevent another resident from tearing down and rebuilding his tired old house, which happened to have been designed by Frank Lloyd Wright's studios.  I appreciate Mr. Wright's work, but also know he designed some unlivable crap.  He was an artist, experimenting, and sometimes the experiments were not great.  He was also a businessman, always short of money, and sometimes his projects did not get his full artistic attention.  In my view, this was such a house.

I have the same answer for Ms. Vollmer that I do for those Wright house enthusiasts -- if you want to control a piece of property, buy it.  If you don't have the money, encourage other people to chip in.  But if you can't get enough people who similarly value your vision for the property to fund its acquisition, don't take the shortcut of using your influence with the government to impose the cost on taxpayers, or worse, on the individual property holder.

Bloomberg (via Zero Hedge) had this chart on Disney theme park entrance prices:

A few random thoughts:

• This highlights how hard it is to do inflation statistics correctly.  For example, the ticket being sold in 1971 is completely different from the one being sold in 2015.  The 2015 ticket gets one access without additional charge to all the attractions.  The 1971 ticket required purchase of additional ride tickets (the famous, among Disney fans, A-E tickets).  So this is not an apples to apples comparison.  Further, Disney has huge discounts for multi-day tickets.  The first day may cost $105, but adding a fourth day to a three day ticket costs just a trivial few bucks.  Local residents who come often for a single day get special rates as well.  So the inflation rate here grossly overestimates that actual increase in per person, per trip total spending for access to park attractions
• This is a great case in pricing strategy.  Around 1980, the Bass family bought into a large ownership percentage of Disney.  The story I am about to tell is often credited to their influence, but I am not positive.  Never-the-less, someone had a big "aha!" moment at Disney.  They realized that families were taking trips just to visit DisneyWorld.  These trips cost hundreds, even thousands of dollars.  The families were thus paying hundreds of dollars per person to enjoy Disney, of which Disney was reaping... $9.50 a day.  They had a stupendously valuable product (as far as consumers were concerned) but everyone else in the supply chain was grabbing most of the value they created.  So Disney raised prices, on the theory that if a family were paying over a thousand dollars to get and stay there, they would not object to paying an extra $50 at the gate.  And they were right.

I have mentioned a number of times my chicken or the egg arguments with Progressives on the solution to cronyism.  Is the problem that government power exists to influence markets, and as long as it exists people will bid to control it?  Or is it possible to wield massive make-or-break government power over industry rationally, and only the rank immorality and corrupt speech of corporations stands in the way.  The former argues for a reduction in government power, the latter for more regulation of corporations and their ability to participate in the political process.

I believe this is an example in favor of the "power is inherently corrupting" argument.  No corporation lobbied for NOx rules on diesel engines.  They all fought it tooth and nail.  But once these regulations existed, engine makers are all trying to use the laws to gut their competition:

In 1991, the EPA ignored complaints from several makers of non-road engines that rivals were cheating, in order to save fuel, on emissions rules for oxides of nitrous (NOx). Then environmental groups took up the same complaint, whereupon the agency demanded face-saving consent decrees with numerous engine makers, including two Volvo affiliates.

In essence, the engine makers apologized by agreeing in 1999 to accelerate by a single year compliance with a new emissions standard scheduled to take effect in 2006.

Meanwhile, with another NOx standard looming in 2010, Navistar sued the EPA claiming rival engine-makers were seeking to meet the rule with a defective technology. In turn, Navistar’s competitors sued claiming the EPA was unfairly favoring a defective technology pursued by Navistar (these are only the barest highlights of what became a truck-makers’ legal holy war).

While all this was going on, a Navistar joint-venture partner, Caterpillar, complained that 7,262 Volvo stationary engines made in Sweden before 2006 had violated the 1999 consent decree. Now let’s credit Caterpillar with a certain paperwork ingenuity: The Volvo engines were not imported to the U.S. and were made by a Volvo affiliate that wasn’t a party to the consent decree. EPA itself happily certified the engines under its then-current NOx standard, only changing its mind four years later, prodded by a competitor with a clear interest in damaging Volvo’s business.

To complete the parody, a federal district court would later agree that the 1999 consent terms “do not clearly apply” to the engines in question, but upheld an EPA penalty anyway because Volvo otherwise might enjoy a “competitive advantage” against engines to which the consent decree applied.

As a side note, this is from the "oops, nevermind" Emily Litella School of Regulation:

Let it be said that the EPA’s NOx regulation must have done some good for the American people, though how much good is hard to know. The EPA relies on dubious extrapolations to estimate the benefits to public health. What’s more, the agency appears to have stopped publishing estimates of NOx pollution after 2005. Maybe that’s because the EPA’s focus has shifted to climate change, and its NOx regulations actually increase greenhouse emissions by increasing fuel burn.