Wednesday, August 27, 2014

Germany's Energiewende

It means, "energy revolution," which really means government mandated move to renewable energy. The Wall Street Journal has a pretty good summary of the results so far:

Average electricity prices for companies have jumped 60% over the past five years because of costs passed along as part of government subsidies of renewable energy producers. Prices are now more than double those in the U.S....
...nearly 75% of Germany's small- and medium-size industrial businesses say rising energy costs are a major risk, according to a recent survey by PricewaterhouseCoopers and the Federation of German Industry.
A similar percentage of the U.S. companies operating in Germany said the Energiewende had made the country a less attractive place for business, according to a separate poll by the U.S. Chamber of Commerce. And for the first time since 2008, German companies cited rising overall costs at home as a motivation to invest abroad in a recent survey by the German Chambers of Commerce and Industry. 
I've been reading "The Economic Consequences of the Peace," by John Maynard Keynes. In it he discusses the punitive terms of the Paris Peace Treaty that ended WWI and the raping of Germany's industrial base by the victors. This passage struck me:

In a régime of Free Trade and free economic intercourse it would be of little consequence that iron lay on one side of a political frontier, and labor, coal, and blast furnaces on the other. But as it is, men have devised ways to impoverish themselves and one another; and prefer collective animosities to individual happiness.
 "Men have devised ways to impoverish themselves and one another." Substitute "delusions" for "animosities" and the last sentence applies to Germany's Energiewende.

Here in Connecticut (and elsewhere I suppose), our local politicians brag about the renewable energy standards they have imposed on the electric utility industry. Whenever I hear renewable energy standards I think increased costs.

When businesses and consumers face increased costs they act. Again from the Journal article:

BASF, which consumes as much electricity every year at its main German plant as the entire country of Denmark, said in May it would substantially reduce its investments in Germany as a result of the country's energy policy. It said its plan for the next five years is to cut investment in Germany to one-fourth the €20 billion global total investment, from one-third currently, and that it would invest in Asia and the U.S. instead. BASF has more than 50,000 employees in Germany, about half the company's total workforce.
 Germany's loss is our gain. But I doubt BASF will look at Connecticut. Electricity prices here are the highest in the continental US.

Tuesday, August 12, 2014

The Beer Bottle Dictator?

Eli,

I suppose there could be a danger to the public from beer bottle labels but I doubt it. Lucky for us, we have a beer bottle dictator to save us.

From The Daily Beast:
“He’s the king of beer. His will is law,” said one lawyer who works with him regularly. The lawyer asked to remain anonymous, for fear of crossing the beer specialist. “There’s one dude in the government who gets to control a multibillion-dollar industry with almost no supervision.”
John Cochrane at The Grumpy Economist has a point to make about regulations as well:

The Wall Street Journal has had two recent articles on the FDA, "Why your phone isn't as smart as it could be" by Scott Gottlieb and Coleen Klasmeier on how FDA regulation is stopping health apps on your iphone, and Alex Tabarrok's review of "Innovation breakdown," the sad story of MelaFind, a device that takes pictures of your skin and a computer then flags potential cancers. The FAA's ban on commercial use of drones is another good current example....
The cost of regulations is the new businesses that don't get started -- or that fail as MelaFind nearly did, because the Raj would not grant a license -- the innovative products they would bring us, the employees they would hire, and so on. 
Bill

Wednesday, August 6, 2014

“Marshall has made his decision; now let him enforce it”

That was the (most likely apocryphal) response President Andrew Jackson had to a decision by the Supreme Court led by John Marshall. The decision ruled states have no authority on Indian lands. Since the State of Georgia wanted the Cherokee lands it was upset. As was Jackson. So they ignored the law.

Walter McDougall, in "Throes of Democracy," argues Americans believe in the law as long as it is convenient
They hustled in the sense of scoffing at or finding a way around any law or authority that stood in the way of their pursuits of happiness.
Prohibition, and the widespread flouting of that law, and today's breaching of the laws on marijuana use suggest to me there is a rather complex relationship we have with THE LAW.

I think of all this when reading about President Obama's "lawlessness." Is he breaking the law when he unilaterally changes portions of Obamacare? Probably. But even the die-hard supporters of that law, if there are any left, admit the law was at best poorly drafted, while the more realistic recognize the law was also poorly constructed, while opponents contend the law was always doomed to fail. But what should we do? Let people suffer so we can comply with the law?

The situation on the border strikes me as another case where adherence to the law may do more harm than good.When George Will was asked about the children entering the US illegally he responded:
“I think we ought to say to these children, ‘Welcome to America. You’re going to go to school and get a job and become Americans.' We have 3,141 counties in this country. That’d be 20 per county. The idea that we can’t assimilate these 8-year-old criminals with their teddy bears is preposterous,”
 I agree with that, but is that legal? I doubt it. If the law is an ass, should we really obey it?

Tuesday, August 5, 2014

Medicare for All!

In response to some criticism I made on the VA single-payer model, I was asked what was wrong with Medicare for all. This is what's wrong:


The data is from an Urban Institute study, "Social Security and Medicare Taxes and Benefits Over a Lifetime," by C. Eugene Steuerle and Stephanie Rennane. The study is from 2011, but I doubt the numbers have changed much.

The authors contend a single man that turns 65 in 2030 will pay $87,000 in lifetime Medicare taxes and receive $251,000 in lifetime Medicare benefits.  It's why old people love Medicare. 

So sure, Medicare is great as long as someone else pays for it. But if there is Medicare for ALL, who is the sucker left to pay? 



North Dakota

The unemployment rate in North Dakota is less than 3%. Here is why:

 

Source: eia.gov

The success of hydraulic fracturing throughout the US (except NY state) is truly remarkable.

What happens when the unemployment rate is less than 3%? This is from Mark Perry's Carpe Diem blog.

A fairly quick, and entertaining, read about fracking, which includes the history of Harold Hamm's Continential Resources and fracking in North Dakota, is Gregory Zuckerman's "The Frackers."

It is really unfortunate that professional distorters, like Joe Romm at climateprogress.org are willfully ignorant or deliberately deceitful about the envirnomental safety of fracking as well as the environmental and economic benefits it creates.

 

Tuesday, July 15, 2014

Boeing and the Ex-Im Bank

Joe Nocera has another post in support of the Ex-Im Bank. It's titled "Helping Big Companies Compete," which I found amusing enough. He comes out boldly in support of subsidizing Boeing, and laments the damage that will be done if the Ex-Im Bank isn't re-authorized. 

A Boeing source told me that it is hearing from customers and potential customers about the fate of the Ex-Im Bank. “It’s a big deal,” my source said, especially in places like Africa, where conventional financing for aircraft is hard to come by.
According the Ex-Im Bank's 2013 annual report Boeing's customers received $8 billion in loan guarantees. That compares to about $109 billion in commercial aircraft orders Boeing received in 2013. It's also slightly less than the $10 billion share buy back Boeing announced on December 16, 2013. Boeing has $10 billion to prop up its stock but can't afford that as a reserve to provide low-cost loans to its customers? Please.

Poor Boeing. What would they do without the Ex-Im Bank? Where would Transportation Partners, owned by Lion Air, Indonesia's largest private airline get a $1.1 billion loan guarantee? Where would China Air get a $558 million guarantee. And the African customers Nocera is worried about? The largest loan guarantee to an African customer (excluding the Middle East) was to Ethiopian Airlines for $125 million. The only other African customers were Royal Air Maroc in Morocco and Comair in South Africa. These three loans totaled $254 million, or 3.19% of the total loan guarantees for Boeing customers. That $254 million is 0.23% of the $109 billion in commercial aircraft orders for Boeing in 2013.

Nocera finds it "mind boggling that anyone in Washington would want to pursue a path that is so clearly destructive to the economy."I don't think the numbers support his conclusion.

It is mind boggling to me as well. But I take the opposite side.


Wednesday, July 9, 2014

Why HUD?

I saw this, "The Senate on Wednesday voted to confirm San Antonio Mayor Julián Castro to be secretary of Housing and Urban Development. The vote was 71-26," and the first thing I thought was, "We have a Department of Housing and Urban Development? Why?"

But I could, and do ask the same questions of the Departments of Agriculture, Energy, Education and the VHA.