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Some Pointers for Whitehouse

Retired economics professor Dennis Sheehan had some excellent advice for Democrat U.S. Senator from Rhode Island Sheldon Whitehouse in a recent Newport Daily News:

In that spirit, let me offer Sen. Whitehouse some new ideas. First, stop calling people names. Reading the senator’s speeches, it is all too easy to find people referred to as “thugs,” “liars,” “flunkies,” and “stooges.” He has said “The fossil fuel industry, on the other hand, is neither honest nor decent.” Accusations like this make for good political theater – which might be the senator’s real purpose – but they don’t make for good discussions.

Second, end the hyperbole. As an example, in the Roll Call article, Sen. Whitehouse claims that “he sees weekly full-page ads in his local paper for services to protect homes from rising seas.” If the senator’s local paper is The Daily News, I have to say that I have never seen weekly full-page ads for such services. The National Oceanic and Atmospheric Administration prediction for Newport of a rise of 0.9 feet over 100 years might explain the lack of ads.

Third, rethink the “fossil fuel industry controls everyone” idea. …

One suspects Professor Sheehan is correct that political theater is more the Senator’s objective than actual action, which explains why he would persist with his hundreds of “Wake Up” speeches despite finding that they have little practical effect.

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Farmland Subsidies and a Bad Trade in the Economic Ecology

In late summer 2016, I looked into the state government’s program, then under development, to purchase farmland and distribute it to small-time farmers (see here and here).  Well, Jennifer McDermott reports for the Associated Press that the program is now getting underway, emphasizing that the “entrepreneurial” farmers can buy the property for about one-fifth of what the state pays.

The National Farmers Union knows of no other state that buys farmland to sell to farmers at less than market price. Other states give tax credits and loans to beginning farmers.

Though some critics say this is not the role of state government, Rhode Island sees it as a way to keep young entrepreneurs from moving to other states, where land may be cheaper. It also could attract other farmers to the state, though retaining farmers who already are here is the main goal and the selection process favors Rhode Island farmers.

These points don’t make sense.  If other states don’t offer these benefits, farmers won’t find much-cheaper land for quite some distance, creating a pretty high barrier in order to up and leave.

More importantly, allocating resources to this activity — not only in the purchase price, but in the effect of preventing more-efficient usage of the land — implicitly makes somebody else’s activity more difficult.  On the hill down which excrement rolls, that “somebody” is more likely to be some other variation of entrepreneur trying to scrape resources together.

To keep the boutique farmer, in other words the state government may ultimately (although invisibly) be dismissing the office-based innovator with some hot technology of the future.  Given the geography and soil of the area, such a trade means playing to the Ocean State’s weaknesses, not its strengths.

And farmers aside, which Rhode Islanders does this policy benefit?  I’d suggest that the answer is relatively wealthy people who like the aesthetics of having nearby farms and purchasing local produce.  Those are aesthetics that I share, but our community (and economy) would be much better served by having it expressed in actual prices for produce.  Subsidizing local farms to keep the prices down creates higher prices for something we can’t see.

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After the Green Charmer Moves On

Remember when Rhode Island helped get Deepwater Wind off the ground by forcing Rhode Island energy users to pay an artificially high price for its product, in the name of making the Ocean State “the Saudi Arabia of wind”?  We were supposedly taking the lead in an industry of the future and securing the “well-paying jobs” that Rhode Islanders deserved.

Well, at least we can say we kicked off a job bump in the larger region:

Deepwater Wind will assemble the wind turbine foundations for its Revolution Wind in Massachusetts, and it has identified three South Coast cities – New Bedford, Fall River and Somerset – as possible locations for this major fabrication activity, the company is announcing today. …

These commitments are in addition to Deepwater Wind’s previously announced plans to use the New BEdford Marine Commerce Terminal for significant construction and staging operations, and to pay $500,000 per year to the New Bedford Port Authority to use the facility.”

Businesses will go where it is in their immediate interest to go.  That’s just what the incentives dictate.  Rhode Island continues to attempt to use crony capitalism in order to avoid making the changes necessary to be a place that businesses find attractive without special incentives.  That will ultimately fail, because it drives away all businesses that do not receive the special deals, and it keeps those that do only as long as the subsidies keep coming… and aren’t exceeded by somebody else’s deal.

But improving Rhode Island’s business environment inherently requires reform of and risk to the insider system that has corrupted the state, so it’s not a realistic option.

(Via Ted Nesi.)

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Some Practical Calculations Applied to Climate Alarmism

Here’s an interesting alternative view to the usual alarmism about the climate. Manhattan Institute Senior Scholar Oren Cass looks at a few studies with implausible conclusions. One predicts Iceland and Mongolia as future economic powerhouses.  Here’s another interesting finding from a government agency:

One Environmental Protection Agency study estimates the potential increase in extreme-temperature deaths by looking at city-specific effects. It assumes that a day counting as unusually hot for some city in 2000 will cause a similar mortality increase in that city in 2100, even if climate change makes it no longer unusual.

The result is a projection that a hot day will kill massive numbers in Northern cities by 2100—though such temperatures are already routine at lower latitudes with no such ill effects. Pittsburgh’s extreme-temperature mortality rate is supposed to be 75 times as high in 2100 as that of Phoenix in 2000, though Pittsburgh will not be as hot then as Phoenix was a century earlier.

But if Pittsburgh’s climate steadily warms over the coming century, it will not react to a 100-degree day in 2100 the same way it did in 2000. Even if it didn’t warm, we should assume that economic and technological advancement will make the city and its residents more resilient to heat than they are today.

The absence of this sort of discussion is what makes many of us skeptical of alarmism.  There are many steps between “the planet is warming” and “you have to restrain your economy and give up your freedom,” but we’re typically told that there’s no time for all that stuff.

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The Backwards-Thinking Environmentalist

Is it just me, or does this sound like the sort of thing that Hollywood would put in the mouth of an unsophisticated rube standing in the way of progress?

“Our climate crisis is at such an advanced point that we can’t be developing new fossil fuel resources, especially in one of the wealthiest countries in the world that has the largest historical responsibility for causing climate change,” said nationally-known climate activist Tim DeChristopher, of Pawtucket. “All of our oil and gas needs to be kept in the ground and here in Rhode Island we’re going to make sure that happens.”

The logical fallacies and just plain thinking are bad enough.  The stage of climate change is an independent variable from developing new fossil fuels.  Indeed, at a certain point, it might be too late to stop calamity, meaning that the only way forward is rapid technological advancement powered by cheap fuel.

Similarly, the wealth of a nation has little bearing on its right to harvest fuel.  Indeed, environmentalists should account for the probability that the United States will extract fuel in a relatively environmentally friendly way, and with its produce driving down the price of fossil fuels worldwide, there is less incentive for the world’s truly bad actors to join the market.

But punctuating all DeChristopher’s bad thinking is this Luddite notion that the fuel must stay in the ground.  Does the superstitious bubba believe that Gaia will lash out in anger, like the goddess of nature in Disney’s Moana?

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Borrowing Money to Make Housing More Expensive

One can have real debates about the wisdom of driving up housing prices.  If you’re trying to get started in the state, high housing prices are a huge burden.  On the other hand, if you own property in Rhode Island, making property more scarce should drive up its value… at least until the inability of people to move around easily strangles the economy even more and reduces the reasons for living here in the first place.

That said, it’s worth pointing out that this sort of thing certainly plays a role:

The Rhode Island Department of Environmental Management announced Friday that 17 projects will receive matching grants to protect 889 acres of open space and farmland. The funding stems from the Green Economy Bond program, which was voters passed in 2016.

The initiative aims to invest $35 million to preserve open space, improve recreational facilities and clean up land and waterways.

So, taxpayers committed to spending money (with interest) on initiatives that will reduce the amount of buildable land, leaving hundreds of acres that do little for anybody who doesn’t have a lot of free time.  Sure, it sounds like a nice thing to do, but it would be less of a concern if we could be confident that people understood the economics involved.  The value of land is mainly helpful when one makes the decision to sell (and buy in a less-inflated market elsewhere); in the meantime, it primarily means higher property tax bills and pressure for more debt and state-level taxes to subsidize housing for those who can’t afford it.

One thing we can say for Rhode Island government:  It’s great at creating tax traps that drag the economy down in ways that aren’t easily traceable back to them, while they buy votes from special interests.

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Progressives and NIMBYs Raising Energy Rates

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Utilities Reducing Rates Around the Country Due to Tax Cut

Paul Bedard reports in the Washington Examiner that National Grid won’t be alone if it reduces rates to reflect its lower tax burden, owing to the GOP-Trump tax cut that has just gone into effect:

On the heels of companies dishing bonuses of up to $3,000 to over one million workers due to the anticipated benefit of President Trump’s tax reform victory, several major utilities have announced plans to cut rates in a consumer payback related to the lower taxes.

Energy suppliers like Washington’s Pepco, Baltimore Gas and Light, Pacific Power, Rocky Mountain Power and Commonwealth Edison said they plan to give hundreds of thousands of customers a rate cut due to the tax reform.

Again, lowering the cost of doing business lowers the prices that companies have to charge to cover operating expenses and achieve whatever profits they need, which contrary to popular progressive delusion, they can’t just arbitrarily collect.

On the same topic, I asked Lt. Governor Dan McKee’s office whether his call for lower utility rates means he supports the tax reduction.  Here’s the response:

Lt. Governor McKee has publicly voiced his concern with the tax bill. One of his major issues with the bill is that it gave the overwhelming amount of tax relief to a very small and select percentage of the population and particularly large corporations. Lt. Governor McKee will use the new law in any way possible to help Rhode Islanders. In that vein, he will continue to pursue the rollback of previously approved and pending National Grid rate increases and encourage others to do the same.

Political rhetoric notwithstanding, one suspects that the former mayor of Cumberland understands that tax cuts in a system in which a relatively small percentage of the population pays the majority of taxes will lead to disproportionate reductions for those who pay the most.  One also hopes that the lieutenant governor is cognizant of the fact that his latest initiative plans to take advantage of the relief given to a “large corporation.”

We can only shake our heads, though, that a politician who actually seeks to draw advantage from the effects of legislation from the opposite party seems so moderate.

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McKee Proves the Point on Corporate Tax Reform

Readers may have caught wind of the push — led by Democrat Lieutenant Governor Dan McKee — to pressure or force National Grid to lower its requested energy rates in response to presumably significant savings due to the tax reform passed by the Republican Congress and President Trump.  On WPRI, Ted Nesi reports that at least one Massachusetts energy provider is lowering rates “to pass along some of its millions of dollars in tax savings to customers”:

“Our neighbors in Massachusetts will be getting a break on their monthly electricity bills,” McKee said in a statement. “It’s time for Rhode Island to ask National Grid to use its corporate savings to lower rates in our state and provide much needed relief for local families and small businesses.”

Wherever one may fall on the spectrum of possibilities for pressuring or forcing companies to use their resources in certain ways, whether utilities or otherwise, doesn’t this episode pretty much reinforce the premise of corporate tax cuts?  When government imposes costs on businesses, they are ultimately passed along to consumers and the economy overall.

And by the way, when we periodically hear politicians attacking companies — as McKee has attacked National Grid in the past — shouldn’t they simultaneously seek to mitigate the various ways in which they, the politicians, push the companies to higher prices?  That would include not only taxes, but also regulations and other government programs, such as those proliferating in the name of environmentalism.  Or is government the only area in which there are no trade-offs?

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Bag Ban Mania Has Come to Tiverton

The activists are going town by town pushing fruitless plastic bag bans, and in Tiverton the debate raises more disturbing beliefs:

Hilton apparently believes that government’s providing educational services creates an excellent opportunity to manipulate children into conflict with their parents to advance a cause whenever a handful of elected officials agree with activists that the cause is righteous. While one would have to research how much class time must be devoted to an issue in order to turn children into a government youth corps, Tiverton parents might rightly wonder whether the school district’s academic results illustrate available slack in the school day. Just 28% of Tiverton high school students are proficient in math and fewer than half in reading. Perhaps indoctrination can wait until those results improve.

On the other hand, perhaps the school department could seize on the issue to provide practical lessons in math, science, and critical thinking.

The town administrator is warning of big spending increases next year, and this is what elected officials are spending their time on?

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The Other Side on Cleaning the Bay

I forget the specific issue, but some years ago, out of frustration at the one-sided nature of his reporting, I contacted the Providence Journal environment reporter to say I’d be happy to voice the other side if he ever felt inclined to include it.  I think it was Alex Kuffner, but it might have been his predecessor.  Whoever it was, the reply was that he didn’t believe there really was another side.

That exchange came to mind when I read Kuffner’s article about fishermen who aren’t happy that we’ve cleaned Narragansett Bay so thoroughly:

Lanny Dellinger, board member of the Rhode Island Lobstermen’s Association, put the blame on a tightening of restrictions on wastewater treatment plants after the historic Greenwich Bay.

We think of waste as waste, of course, but there’s a reason we put manure in soil to fertilize it.  We do live in an ecosystem, in which creatures tend to have complementary roles.

The article does a good job highlighting the reality that, over time, different forms of life thrive and fade out.  Some human modification or natural event changes the immediate environment, and the balance of life changes.  People have to adapt, both in their diets and their industries.

Sometimes we adopt a hubris that hides that fact:

There are larger questions in play, said Janet Coit, director of the Rhode Island Department of Environmental Management.

“Given the complexity of everything that’s going on, what are we trying to get to?” she asked.

What’s the right level of nutrients in Narragansett Bay?

“Right” by whose lights?  In some ways, environmentalists are just reactionaries.  The thing that they value in the status quo (or the past) must be preserved or even enhanced without regard to some unseen cost.

There shouldn’t be something that we’re “trying to get to” as a permanent condition.  We should set some controls for outright pollution guidelines for resolving differences and then let life happen.

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National Grid as Learning Opportunity for the Governor

One begins to get the sense that National Grid energy prices are becoming a bit of a representation of Rhode Island’s business climate generally, which makes this sort of rhetoric from the Raimondo administration a bit hard to take, from Alex Kuffner’s article on rate increase requests for the Providence Journal:

Rhode Island families and small business owners — especially manufacturing businesses — are already challenged by high energy costs,” Gov. Gina Raimondo said in a statement. “The Public Utilities Commission needs to open up National Grid’s books and stand up for Rhode Island ratepayers.”

Macky McCleary, administrator of the state Division of Public Utilities and Carriers — sister agency to the PUC — said Rhode Islanders deserve better value in their utility services.

“What we received today appears to be a proposal that continues business as usual and presumes the willingness of Rhode Islanders to bear an ever‐increasing burden of higher costs,” he said.

Read through the article and what you’ll find is a list of complaints that touch on government mandates on energy and on business in general:

  • Labor costs, including health care
  • New hires to connect green energy sources to the grid
  • Wealth redistribution through a low-income discount
  • Electric vehicle charging stations

How can the governor play defender of the people when it comes to these expenses and then allow things like mandatory paid sick time, new health care mandates, and expanded green energy programs?  Whether these costs filter through the energy company or not, they ultimately all come from the same household incomes.

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The Fruitlessness of Plastic Bag Bans

As we hear rumors that the municipal fad of plastic bag bans may move up to the state level, Glenn Reynolds points toDaily Mail article reporting that up to 95% of all plastic waste in the world’s oceans comes from eight rivers in Asia and two in Africa:

Up to 95 per cent of plastic polluting the world’s oceans pours in from just ten rivers, according to new research.

The top 10 rivers – eight of which are in Asia – accounted for so much plastic because of the mismanagement of waste.

About five trillion pounds is floating in the sea, and targeting the major sources – such as the Yangtze and the Ganges – could almost halve it, scientists claim.

When your neighbors attempt to impose these sorts of environmentalist restrictions on you, what they’re really doing is imposing useless drags on our lives and economy in order to feel good about themselves.  Naturally, the most vulnerable in our community will ultimately feel the effects most acutely, but that’s of little concern when you’re saving the world from a phantom non-Asian bag menace.

That statement may seem a little harsh, but in all the articles I’ve read about these bans, I don’t think I’ve ever seen mention of the actual source of plastic in the oceans or a discussion of the economics.  I have, however, seen stories about people getting sick from reusable grocery bags.

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