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Does responding to climate change risks REQUIRE government?

September 30th, 2009 No comments

A reader of Bob Murphy`s recent post on climate science – “TokyoTom Moving the Goalposts?” – queried my views on whether perceptions of climate change problems themselves justified a need to establish government.  I copy below my response (with a few typo and editorial changes):

“Do you believe that averting climate catastrophe is, by itself, justification for establishing a government?”

No,
Taylor, I don`t see that a looming climate catastrophe (or other
apparent catastrophe) by itself would justify the formation of a state.
Absent governments, other voluntary responses would no doubt arise, and
more quickly than when hampered by governments and rent-seeking.

“I
am curious if you seek to use the government to solve this problem
because it already exists and thus you see it as expedient and
practical to do so”

My view is quite a bit more subtle.
First, the fact of the matter is that we HAVE a government; even if we
didn`t, we`d have to deal with the governments of other peoples on an
issue such as this. Theoretically, in negotiations with others around
the world regarding the atmosphere and climate, we might very well end
up creating forms of government. Be that as it may, we cannot ignore
that states exist; the question is in part whether we can put them to
any good use, and in part how do we avoid making them worse.

Then
again, our government has already helped screw up the issue in any number
of ways. In my view, the focus should be as much on UNDOING what has
been counterproductive and what libertarians have never supported.
Those who don`t want to see MORE government should not be closing their
minds to the fact of the status quo, and ought to see in concerns about
climate change and resources issues (irrespective if the concerns are justified or not) an OPPORTUNITY to undo existing
and damaging state actions.

See my point?

But in all this, libertarians rarely strive to be positive change agents, but instead have been almost
wholly co-opted by rent-seekers who benefit from rights to pollute for
free and barriers to entry under the status quo.

[A few lists of my many posts related to this subject can be found here, here and here.]

Categories: Bob Murphy, Coal, rent-seeking, state Tags:

The extra richness of Robert Bradley/MasterResource: diehard libertarian making a living at pure rent-seeking ("political capitalism")

September 11th, 2009 No comments

Lord knows I`ve got better things to do, but I can`t resist.

Rob Bradley has written extensively on energy regulation from a libertarian viewpoint and spent a number of years as an adviser to Ken Lay inside Enron – apparently seeing up-close (while conscientiously fighting a losing battle to steer Enron away from) the now well-known efforts of Enron to use the power of government to create profitable markets for it. Bradley`s energy commentary came to my attention a few years ago (on the Mises pages), and I have been observing him fairly closely over the past year, particularly after the launch of MasterResource, his “free-market energy blog”.

Unfortunately, even while Bradley has been making some very thoughtful comments on energy policy, he is now rather nakedly involved in precisely the game of
rent-seeking (Rob`s preferred term is “political capitalism”) that he
so loudly decries in practically every blog post or other piece of
“free-market” commentary that he spins out.

Bradley`s activities now include:

  • his commentary and support for Institute for Energy Resources
    a “free market” “think tank” that he founded and remains CEO of but which is
    now staffed by former Republican K Street apparatchiks Essentially the same staff as AEA, noted next), and which has moved from
    Houston to DC, the better to engage in influence peddling, but whose
    cover was blown wide open last year when ExxonMobil (a firm that Bradley has made clear, in post after post, that he adores), announced that it would no longer fund
    IER
    and others whose activities were tied too closely to anti-climate change
    science and policies that Exxon has decided are counterproductive);
  • support for the public lobbying arm of IER, the American Energy Alliance, staffed by former Republican K Street apparatchiks, which
    has been coordinating “grassroots” events to put political pressure on
    Congresscritters from coal-producing and -consuming states; and
  • his relentless blogging on climate police at MasterResource
    his chief soapbox – with co-bloggers who are generally well-regarded
    but nevertheless professionals at the climate policy influence game (such as Chip Knappenberger, who works at a self-proclaimed “advocacy science consulting firm”).

This is clearly a rent-seeker`s game, and Rob is in the thick of it, producing a steady stream of one-sided political, economic and scientific argument after another.

Bradley valiantly pretends simply to be an opponent of some possibly counterproductive government policies (of which there are plenty, to be sure) that various nefarious and/or corrupt interest groups are advancing, but in reality serves as a paid spokesman for that group of interests that have benefitted most from the status quo, and have the most to lose from any form of carbon pricing –  including “King Coal“, as Bradley so aptly names them. Coal merits unfailingly positive references – it`s clean, it`s cheap, it`s the FUTURE – but never any observations of the pollution resulting from coal (significant annual deaths, breaches of fly ash dams, court cases regarding cross-border pollution) or of the negative role of government ownership of coal reserves or of misguided federal regulations (Clean Air Act grandfathering of the oldest, dirtiest plants, and right to pollute; and the federal supplanting of private tort protections regarding air pollution and mountaintop removal practices).

It looks like a pretty good brew that Bradley serves up – he serves his clients well – but it`s always been a bit too strong for me. As a result, Rob has booted me from his bar, and I`ve been left to occasionally grumble outside. I haven`t particularly lost interest so much as run out of time and an ability to keep up, particularly as the flow of rhetoric and partial “analysis” has increased (in step with the legislative agenda).

But in a couple of recent posts by Bradley, the brew of self-righteous, self-serving and self-deceptive rhetoric has proved too rich for me to ignore.

1. The first is a naked appeal to influence the policy leanings of the natural gas industry, in Bradley`s September 8 post, the title of which lays bare Bradley`s clients: “Why Natural Gas Should Not Play the Cap-and-Trade Game (the real enemy is mandated renewables/conservation, not coal)” (geez, has he beat my record for long titles?). Why is this rich? First, because coal is the heaviest producer of GHGs per BTU, so coal is obviously most threatened by climate bills (that`s why Bradley and a legion of others can make a living at this, after all). Next, some of the reasons he trots out, such as his reference to “grassroot” citizens in Houston that Bradley and the American Petroleum Institute organized, and the more straightforward argument that, to be blunt, “Big Coal is too powerful for a Kill Coal bill on the Senate side“.  But despite all of coal`s bluster, Bradley knows that it is THEY that are on the table, not natural gas, and so he argues that it`s really natural gas “as the swing fuel in electricity generation” that loses mostly from a climate bill. Which is why Bradley closes with an appeal to natural gas to help not coal, but “capitalism in its desperate hour”.

2. The second post is a re-post of interesting earlier commentary by Bradley concerning Enron. This is rich because Bradley continually tries to draw important lessons about what went wrong at Enron (while thumping his chest about his own efforts to correct “philosophical errors” at the firm), while blindly ignoring his own present involvement in the self-same “political capitalism” that he decries. Bradley just conveniently overlooks that “political  capitalism” lies not solely in seeking CURRENT political favor, but also in PAST efforts to secure such favor, and in ongoing efforts to preserve it. One wonders whether for Bradley, reciting the lessons he learned from Enron might be serving as a salve for a guilty conscience for actually forgetting the inconvenient part of such lessons (and deeper Austrian lessons about problem solving and the frustration of preferences when government is acting heavy-handedly).

Okay, I`m all out of rants for now.

 

Categories: Bradley, Coal, Enron, rent-seeking Tags:

[Updated] Bob Murphy: Rob Bradley's "IER Calls for End to All Energy Subsidies" – Not

July 6th, 2009 No comments

[Update at bottom.]

Bob Murphy, Austrian economist and part-time consultant for Rob Bradley`s Institute for Energy Research, asserted in a recent blog post that “IER [has] Call[ed]  For End to All Energy Subsidies”.  I took a closer look at the recent commentary at IER that Bob pointed to as support for his position, and came away unimpressed.

I posted the following comments to Bob in response a week ago; since I have heard nothing further from Bob, I think it`s worth copying them here (with editorial comments in brackets):

Bob, I`m sorry, but where does IER (or MasterResource) actually CALL “for an end to all energy subsidies”? They certainly don`t do so expressly in this op-ed. I`d be thrilled if you could point the way to other places where Bradley`s various enterprises specifically call for an end to subsidies and other regulatory favors for coal.

By bashing WaPo`s inconsistent concerns about “clean coal” subsidies [in an interesting editorial about rent-seeking by coal firms that ignores other rent-seekers] – and bashing clean energy interests while refusing to criticize rent-seeking by coal – it seems fairly apparent that IER remains a friend of big coal, and of the big thumb that government has long placed on the scales in its favor.

“That would at least make them intellectually consistent. But it appears there is no room for logic and consistency when you have an agenda to advance.” [from Rob Bradley`s commentary]

Such apt words!

Categories: Bob Murphy, Coal, IER, Rob Bradley Tags:

Overlooked by those warmed by climate rhetoric ("alarmist" or "denialist") – the fact that our most important commons have NO property rights rules

March 12th, 2009 1 comment

Roger Pielke, Jr., a political scientist who rather persistently blames politically naive climate scientists for the very natural fact that there is a politicized debate over climate policy,  posted last week at his Prometheus website a guest commentary by Michael Zimmerman, Professor and Director, Center for the Humanities and Arts at the University of Colorado.  Zimmerman’s post, “Coal Trains, Death Camps, and Recent Anti-Modernism,” which only recently came to my attention, apparently addressed politically-oriented remarks and actions by climate scientist Jim Hansen.  “Apparently”, I say, because the essay itself has been taken down by the author in light of factual errors and other criticism made of it, both at Prometheus and around the blogosphere (which sometimes does not lap so strongly at my distant shores).

But having finally been drawn toward Roger’s site by the fuss and taking a look through comments, I felt compelled to make a few comments, despite my inability to read the actual post.  I felt particularly struck by the commonness of a refrain we are hearing from various pundits who prefer to question the good will or sanity of environmentalists over the harder work of engaging in a good faith examination and discussion of the underlying institutional problem of ALL “environmental” disputes:  namely, a lack of property rights and/or a means to enforce them. 

We can see this not only in George Will‘s recent piece about sea ice, but also in the ongoing series of posts by the supposedly “free market” libertarian Rob Bradley and his co-bloggers at MasterResource.

With that as background, here is what I posted at Roger’s (emphasis added):

I’m sorry I missed the fun; did anyone happen to archive Mr. Zimmerman’s work, apparently so flawed that it required a withdrawal rather than an update or two?

Roger, I note the criticisms of you and Mr. Zimmerman at Things Break, and have to say I agree with them: http://thingsbreak.wordpress.com/2009/03/03/honest-broker-at-prometheus-attacks-hansen-over-claim-he-never-makes/. Perhaps Mr. Zimmerman has never carefully read the man whom he attacks in his piece, but you have, and it’s crystal clear that Hansen has ALWAYS been talking about coal’s relationship to species extinctions, not coal’s impact on humans. I’m surprised that you would post such an obvious misreading of Hansen.

I think I can agree with tomfid and Len Ornstein without the benefit of reading Zimmerman’s piece. It’s clear that we have no ability to instantly replace coal, but it’s also clear that even without the climate change issue, coal is not even now bearing its environmental costs – witness the roughly $1 billion TVA flyash spill, the 25,000 or so annual deaths that the American Lung Assn attributes to coal, etc – w/o even getting to China and India. Investors make profits, while losses are shifted to others. There’s hardly anything conservative or socially beneficial in that business model.

It’s also very clear that, far from wanting to return to a golden age, environmentalists (largely a well-to-do/wealthy slice of America) have quite legitimate concerns about the future, and about our uncontrolled, widespread and large-scale experiments with our planet. Find me someone ranting about “Malthusians” or somesuch, and I’ll show you someone who doesn’t understand – or refuses to acknowledge – the difference between wealth-creating markets based on private property / contracts protected by law, and the tragedy of the commons situations that result when there are NO property rights (atmosphere, oceans) or when the pressures of markets swamp indigenous hunter-gather community rules.

Just look at how the oceans are being trashed and strip-mined of fish, for an alternate example. It is a first order priority of mankind to grapple with the problem of managing our commons, before we irreversibly impoverish them. For the atmosphere, the handwriting has long been on the wall, though those who profit by externalizing risks have done a pretty good job of scribbling all over it.

Of course, while on the one hand the “skeptics” manage to so completely ignore their supposedly much greater understanding of markets, on the other hand, we hear very little talk about markets from most of the enviro pundits.   Even if scientists have a right to be worried, that doesn’t really tell us what we should do. 

So what’s the deal?  Here’s a perfect opportunity for skeptics to educate the supposedly market ignorant, but they refuse, preferring to focus instead on why concerned scientists must be wrong, how concerns about climate have become a matter of an irrational “religious” faith, or that those raising their concerns are “misanthropes” or worse.

Both sides, it seems, prefer to fight – and to see themselves as right and the “others” as evil – rather than to reason. 

While we should not regret that we cannot really constrain human nature very well, at least Austrians (a breed of libertarian-linked economists, for any visitors not already familiar with these pages or the great LvMI organization that hosts them) ought to be paying attention to the inadequate institutional framework that is not only poisoning the political atmosphere, but posing risks to important globally and regionally shared open-access commons like the atmosphere and oceans (which are probably are in much more immediate and grave threat than the climate).  And they also ought to recognize that there are important economic interests that profit from the current institutional framework and have quite deliberately encouraged the current culture war.

(One such economically interested party, Exxon, has recently stopped funding one culture war outfit, Rob Bradley‘s climate “skeptic” shop – “MasterResource” – which remains dedicated to trumpeting relentlessly pro-coal talking points – e.g., civilization will collapse if we try to substitute nuclear, gas or other technologies for coal, or try to make coal investors pay for the climate and other environmental risks that they shift to society as a whole!)

 

Rot at the core: federally-owned TVA’s massive coal flyash spill – the TVA "protects" affected residents by hassling/arresting the volunteers who help them

March 10th, 2009 No comments

A few items of interest have come to my attention regarding the TVA’s massive spill last December 22 of wet coal fly-ash into a lovely river area near Kingston, TN (about 35 miles west of Knoxville, at the junction of the Emory and Clinch Rivers).  The collapse of a retaining wall released over five million cubic feet (more than a billion gallons) of wet coal ash
flooded nearly 400 acres of land adjacent to the power plant and into the nearby
Clinch and Emory rivers, filling large areas of the rivers, damaging homes and property, rupturing
a major gas line and damaging a
railway line.

– according to a report in the Tennessean, the TVA was long aware of the possibility of a release from the Kingston site, but elected not to proceed with any costly fix – the most expensive fix apparently in the ballpark of $25 million – because it didn’t want to set a precedent for spending similar sums at its other wet ash storage sites.  Penny wise, pound foolish – how often that happens when decision-makers don’t face personal responsibility for the downsides (yes, my “limited liaibility breeds moral hazards” meme)!

– in response to the accident, the EPA announced on Monday that it will: request electric utilities
nationwide to provide coal ash impoundment information (the EPA estimates there may be as many as 300 coal ash impoundments across the US
); conduct on-site assessments to determine structural
integrity and vulnerabilities; order cleanup and repairs where needed; and develop new regulations for future safety.  Said administrator Lisa Jackson: “Environmental disasters like the one last December in Kingston should never happen anywhere in this country.”  Not only are such regulations too little too late and probably unneccesarily costly, but one wonders why in this case she fails to note that as the TVA is wholly-owned by the US government, in this case the government did this to us itself.  The industry must be really grateful to TVA for leading the way to more regulations!

– The TVA is spending $1 million a day on the cleanup, and estimates final recovery may cost $525 million to $825 million.  This is just the cost for recovering the spilled ash, which could take two years or more, and does not cover long-term mediation costs, or litigation expenses, fines or any settlements
from the accident or the extra cost of upgrading coal ash ponds at
other TVA plants
, or costs being borne by local, state or other federal agencies.  So we could be easily talking physical damage of a billion dollars or more, and decades before local homeowners can start enjoying the rivers again.

– The TVA announced in February that TVA it lost $305 million in the fiscal quarter
ending Dec. 31 2008 due to the $525 million charge
the utility took for the
estimated cost of the ash spill.

– In response, TVA president and CEO Tom Kilgore, who earned $2.2 million in FY2008, saw his base and incentive compensation for FY 2009 cut by about half.  Said Kilgore, who had outraged ratepayers in October (on the heels of rate increases) by taking large compensation increase for FY2009 (in a package worth up to $3.275 million), “I’m at the point in
my career where it’s not all about money.”
 

– The fly ash poses health risks, both as the small particle dust can affect the lungs and since the ash contains elevated levels of heavy metals that were left behind from the combusted coal.  A Tennessee Department of Health survey indicates that a third of the people living near the toxic coal ash spill are experiencing respiratory problems, and about half
have increased stress and anxiety.  

According to TVA President Tom Kilgore, TVA and the state Department of Environment and Conservation have tested the water and believe there’s “no reason to believe that the water is not safe,” but “water quality tests conducted by environmental activists showed arsenic
levels as high as 48 times the primary drinking water standard in river
water nearest the spill
. Coal industry watchdog United Mountain Defense
and Washington, D.C.-based Environmental Integrity Project said January
levels of arsenic, lead, selenium, cadmium, beryllium, antimony and
copper violated water quality standards and exceeded primary drinking
water standards.”

State senator Tim Burchett (a Republican) characterized TVA officials as “arrogant clowns” on March 10 as he presented legislation on coal ash storage to a Senate committee.  “I want to assure my colleagues that any offense (to TVA) is intentional,” he said. “I have little faith in what TVA is telling us.”

More on water testing results and on health, safety and environment impacts is here.

– the TVA is naturally trying to buy out residents, both to cut future losses and to limit coverage of the affected area. Apparently these buyouts require the sellers to waive all future health claims against the TVA.

– On top of such purchases, though, TVA – through its own police department – is trying to make it difficult for residents to remain and to prevent full disclosure of health risks, by restricting access to public roads and to the homes of residents, requiring any who receive medical checkups from TVA doctors to waive health claims and by hassling volunteers who, at the invitation of residents, do ash, water and air testing, deliver bottled water, and assist some residents with the transportation needs.   In two recent incidents, the TVA police have gone onto private property to detain volunteers and force the removal of private air quality monitoring devices, and arrested, shackled and jailed on March 6 a driver who had used a public road – now restricted by the TVA – to drop off a two grandmothers (one elderly and vision-impaired) at their homes after a town meeting – and who had written permission from residents to visit at any time.

According to one group, volunteers “have relatives in the Swan Pond Community and have an
open invitation to visit residents or their property near the disaster
site at any time day or night.”   The volunteer who was arrested reports the following, entirely believable – conversation with a TVA officer when he was being booked:

So as I was escorted to the Roane County Jail for processing I was informed by the TVA officer that he was “protecting the residents” of the Swan Pond Community from “people like me.”  When I questioned him further about this he stated that he meant onlookers and sight seers and people taking video while disrupting vehicle traffic and impeding the cleanup of the disaster site.
 
Well if TVA has any video proof of me personally disrupting vehicle traffic or impeding the cleanup of the disaster site I would like to see it, please post it to YouTube; show the world exactly what I am doing, PLEASE.    When I stated,” why would the residents need to be protected from someone who is delivering water, taking people to the grocery store, hospital, doctor, not trespassing, monitoring air/ water/ coal ash, helping facilitate trainings and organize with the local community, and sit at the Harriman American Legion building for more than 20 hours helping with heavy metal exposure testing,” he could not answer.

So far, one lawsuit against the TVA has been filed in federal court in Knoxville on
behalf of 109 citizens.  The TVA harassment policy may be aimed in part at preventing residents from gathering independent evidence to support their claims.

The TVA is governed by a nine-member board of directors, all current members of which were appointed by nominated by former President Bush (on
the approval of senators from the region) and confirmed by the Senate. 
Over the objections of the current chairman and two others
(Republicans),former national GOP committee chairman and former TVA board member was reappointed in February as chairman.  Since the TVA board has two vacancies, will
have two members terms expire in May and another in 2010, President Obama will have the opportunity to take control of the board.

– Photographic and video images of the impact of the ash spill are here:

– by renowned photographer Carlan Tapp

– by local residents (first three minutes are home footage before the accident)

– More information by the enviro group doing testing and resident support work

– the TVA’s home page, etc.

 

Where is anyone calling for the privatization of the TVA?

Categories: Coal, damage, limited liability, moral hazard, TVA Tags:

MasterResource/Tom Tanton: another muddle-headed "free-marketer" who thinks it’s fine that coal gets to shift pollution costs to others

March 6th, 2009 6 comments

Sadly, so-called “free-marketers” are often so busy smacking down bad arguments from greens that they fail to note, much less acknowledge, that they’re fairly frequently making bad arguments themselves or ignoring gaping inconsistencies in their own positions.  Of course it IS awfully easy to get caught up in partisan conflict, which provides a nice rush of self-righteousness, but it probably also helps if you’re being paid to post by fossil fuel interests, like the folks over at the supposedly “free-market” MasterResource energy blog, of Rob Bradley‘s Institute for Energy Research.  In any case, it’s disappointing, not solely because it comes from “free-marketers”, but because it offers no hope of engaging productively with those with whom they disagree.  In other words, more of Culture Wars “R” Us.

I’ve already commented quite a number of times here about Rob Bradley and his co-bloggers at MasterResource, but I continue to be astonished by the inability of the bloggers (and some commenters) to notice when they are being inconsistent or are taking anti-market/anti-lbertarian positions.  A recent post by Rob Bradley on the limitations of wind power, with follow-on comments by others, is a case in point.  In his post, Rob trots out some very old literature to make some perfectly fine – if rather obvious and well-known – points about the limitations of wind power; I observed that of course one can make similar observations about the short-comings of other energy sources, such as the social costs of coal. 

While Rob fails to respond, a visitor and one of his guest bloggers, Tom Stanton, senior energy fellow at the Pacific Research Institute (which bills itself as a “champion [of] freedom,
opportunity, and personal responsibility for all individuals by
advancing free-market policy solutions”) ride to his rescue, with strawmen and astonishingly non-libertarian (indeed, utilitarian) commentary.  Why can’t the right do better than this?

For the interested, I excerpt the relevant comments below (emphasis added):

1
TokyoTom { 03.04.09 at 12:09 pm }

Rob, thanks for this; you are right of course about the drawbacks to wind.

Now can I interest you in some very, very old tracts on how dirty
coal is, both in mining and combustion, or newer ones about deaths,
health costs, damages to property that are still ongoing and
uncompensated?
BTW, while you are obviously an advocate for coal, are you also an
advocate that coal producers and consumers bear their own costs? Or is
shifting those costs to others a right that they have homesteaded?

Andrew { 03.04.09 at 6:45 pm }

Tom,
the question isn’t “is coal bad?” its “is it better than (essentially)
nothing?” It is. Coal, I submit, has save far more lives than it has
cost, and has improved quality of life more than damaged it.

TokyoTom { 03.05.09 at 3:58 am }

Andrew,
the question is NOT whether “coal is it better than (essentially)
nothing?”, just as it is not whether wind or any other energy source is
perfect or preferable.

The question is whether those who engage in economic activities are
bearing the costs or risks of those activities, or whether those
activities appear relatively preferable to the people involved because
they are able to shift damages, costs, risks and/or responsibilities
for consequences to others.

True libertarians insist that individuals (and firms) bear full
responsibility for harms caused to others; some in fact insist that
those who are harmed without their consent have the right to use courts
to enjoin the damaging activity. Maybe this all seems a little quaint
to you?

My point is simply that Rob is ignoring, rather obviously and perhaps deliberately, the human costs of the use of coal.

Tom Tanton { 03.05.09 at 9:15 am }

The
“human cost of coal” has been extensively studied as have most other
energy (nay, all economic) technologies. That study are most often
referred to as “externalities”–Guess what? The economic ‘costs’ of coal
are mostly, if not completely, offset by the economic benefits.
The
negative externalities are NOT enough to offset the higher cost
premiums of technologies like wind that never quite mature (most likely
because of the heavy per unit subsidy they’ve become dependent on after
35+ years.)
Now let’s see about human costs–in countries with coal (or nuclear or
any meaningful) baseload power isn’t the average life span about twice
that of folks living in countries with no or primitive energy? Aren’t
THOSE folks also less educated, and less free? Do they even have 15
minutes a day of “leisure time”?Aren’t those folks also burdened with
spending every daylight hour finding a piece of wood (or dung) to cook
their measly daily bread and using unsanitary water to boot?
I don’t believe Rob is ignoring the costs of coal. I believe Sir you’re
ignoring the economic and human benefits of coal and modern energy
.

TokyoTom { 03.05.09 at 12:08 pm } [links added]

Tom,
it seems that you understand little, if anything, about free markets or
libertarian principles. Murray Rothbard`s paper on air pollution makes
it clear that it was utilitarian arguments like yours – “the damage my
pollution does to you is fine because people want to but my products” –
that industry used in the 1800s to subvert the common law and run
roughshod over property rights, leading to the “pollution is free”
philosophy and ruinous competition where the non-polluter went
bankrupt. The upshot was the horrible pollution in the 50s, 60s and 70s
that led to tremendous citizens` movements to use government to bring
pollution under control – with laws signed by Republican presidents.

No externalities? Where were you? What motivated the Clean Air Act, Clean Water Act, SuperFund?

As for coal vs. wind, please spare me the strawman. I`m not at all
suggesting that wind OUGHT to be subsidized. I`m just asking for a
little intellectual honesty that will recognize that coal use IS
subsidized, by being allowed to shift real and significant costs to
others, and that we`d all be better off if those socialized costs were
internalized.

Perhaps someday it will occur to those who (correctly) want to bash
greens for their stupid proposals that they might be more successful if
they were a little more consistent themselves and started exploring
common ground. Where`s the post praising the federal court decision
forcing TVA to do a better job at cleaning flue gases than required by
the CAA in order to limit harm caused in NC, for example? Where`s the
post calling for the privatization of the bumbling, polluting TVA,
which keeps generating costs for taxpayers and ratepayers?

But that`s not what this blog is all about, is it? You guys are more
into making enemies and fighting over government than in truly shifting
risks and regulation back to markets and the courts.

As for countries abroad, this is of course unrelated to a discussion
local/regional costs and energy alternatives in the US. But since you
bring it up, don`t forget that the real reason why these other nations
aren`t developed yet is that they`re still kleptocracies that don`t
sufficiently protect private property rights and returns on
investments.  Why are you cheering on poor governance, instead of
suggesting that they could become wealthier sooner by accelerating
their move up the Kuznets curve
(which is an artifact not only of
preferences, but of insufficient information and laws that protect the
elites over private property of the masses)?

Steven Milloy – yet another thoughtful green-hater – on RFK, Jr. and "coal criminal" Don Blankenship

March 3rd, 2009 No comments

Anti-enviro Steven Milloy,adjunct scholar at CEI, author and co-founder of a gadfly free-enterprise fund, has a post up on his Green Hell Blog about some interesting recent remarks by Robert F. Kennedy, Jr.   Apparently RFK Jr., at the “Capitol Climate Action” rally held on March 2, said that 

“Massey Energy CEO Don Blankenship “should be in jail… for all of eternity,”  and that coal companies Massey Energy, Peabody Energy and Arch Coal are “criminal enterprises.”

It seems clear from the context that RFK Jr. is referring to these firm’s destructive “mountaintop removal” mining practices and the legal and political strong-arming (all the way up to bribing W.Va. supreme court justices) in which the leaders of these politically powerful firm engage, which I have commented on several times.

I’m a bit disappointed that Milloy does not favor his readers with an explanation for why RFK Jr. is wrong, and Milloy closes with these puzzling remarks:

“But if Kennedy wants to oppose coal while honoring his father, perhaps
he ought to adopt RFK’s pro-nuclear stance. According to a March 21,
1967 New York Times article, RFK proposed that the New York
State Power Authority be permitted to develop nuclear power pants and
that private investment in nuclear power be encouraged.”

Milloy’s apparently favorable reference to nuclear power and his faiure to address the real social costs of coal stirred me to make a few comments, which I copy below:

Steve, just a few quick questions:

– are you seriously pushing nuclear power, or just cynically
flogging Kennedy for a technology that energy experts like Cato’s Jerry
Taylor have concluded just aren’t economical without life-support from
government?

http://mises.org/Community/blogs/tokyotom/archive/2009/02/24/cato-s-jerry-taylor-quot-nuclear-power-is-solar-power-for-conservatives-quot-and-nuclear-needs-quot-a-policy-of-tough-love-quot.aspx.

– do you disagree that coal is dirty, and imposes serious impacts on
health and property rights, both when mined and burned? The American
Lung Assn said in 2004 that power plant pollution causes 24,000
premature deaths each year (at least 50% more than annual homicides),
as well as over 550,000 asthma attacks and 38,000 heart attacks
annually.

– States like North Carolina are still suing – and winning – in
federal court to force power producers (like the big, government-owned,
polluting dinosaur TVA bureacracy) to be cleaner:
http://edition.cnn.com/2009/US/01/14/tva.ruling/index.html

Do you love the TVA, and hate North Carolina?

Inquiring minds want your help in figuring out whom to hate, and why.

[Update] Cato’s Jerry Taylor: Nuclear power is "solar power for conservatives" and needs "a policy of tough love"

February 24th, 2009 No comments

After decades of loathing nuclear power as the ugly, monstrous child of a big government Dr. Frankenstein, climate-change-fearing enviros like George Monbiot are finally coming around to the relative benefits of nuclear power.  This is a welcome change – as it is clear that coal has generated and continues to generate much greater environmental impacts (not only in extraction, but in acid rain, particulates, heavy metals, released radiation and fly waste) – but that doesn’t mean that libertarians or conservatives ought to support throwing any more taxpayer dollars at nuclear power.

Rather, as Jerry Taylor (a senior fellow at the Cato Institute and well-regarded energy/environment expert) argues (as noted in the excerpts below), we should push nuclear power off the federal dole, deregulate power markets, and – IF we decide that climate change risks merits a constraint on greenhouse gas emissions  – we should do that through pricing mechanisms rather than by having the federal government further involved in the business of trying to guess what technological approaches will be successful via massive subsidies for nuclear or other “clean” technologies.

I pretty much agree with Taylor in principle (including on tackling power market regulatory issues), but believe that he both (1) dodges the massive pollution costs imposed by and rent-seeking conducted by coal firms and coal-fired utilities and (2) understates the economic case for carbon pricing, as I have noted elsewhere.

For those interested, I’ve collected below a few pieces of analysis and debate from Jerry Taylor on nuclear power:

– at Cato.org on June 21, 2003:

The federal government has always maintained a unique public-private partnership with the nuclear industry, wherein the costs of nuclear power are shared by the public but the profits are enjoyed privately. In an attempt to resuscitate this dying industry, the current Senate energy bill proposes unprecedented federal support for nuclear power. …

But nuclear power was ultimately rejected by investors because it simply does not make economic sense. In truth, nuclear power has never made economic sense and exists purely as a creature of government.

In fact, a recent report by Scully Capital Services, an investment banking and financial services firm, commissioned by the Department of Energy (DOE), highlighted three federal subsidies and regulations — termed “show stoppers” — without which the industry would grind to a halt. These “show stoppers” include the Price Anderson Act, which limits the liability of the nuclear industry in case of a serious nuclear accident — leaving taxpayers on the hook for potentially hundreds of billions in compensation costs; federal disposal of nuclear waste in a permanent repository, which will save the industry billions at taxpayer expense; and licensing regulations, wherein the report recommends that the Nuclear Regulatory Commission further grease the skids of its quasi-judicial licensing process to preclude successful interventions from opponents.

But even these long-standing subsidies are not enough to convince investors, who for decades have treated nuclear power as the pariah of the energy industry. Nuclear generated electricity remains about twice as expensive as coal- or gas-fired electricity. Although the marginal costs of nuclear are lower, the capital costs are much higher. In light of this resounding cold shoulder from Wall Street, the federal government is opening the treasury wider than ever before.

– at NRO on Jan. 26, 2006:

Nuclear power is solar power for conservatives — an energy source with every merit in the world save for the most important — economic merit. Investors — not environmentalists — are the parties that have turned against nuclear and there’s no reason for government to second guess the businessmen …

– at a Rountable on Nuclear Power and Energy Independence at Reason Foundation on October 21, 2008: [worth reviewing in whole]

Nuclear energy is to the Right what solar energy is to the Left: Religious devotion in practice, a wonderful technology in theory, but an economic white elephant in fact

But nuclear power plant construction costs are so high that it would take a very, very long time for nuclear facilities to pay for themselves if they only operated during high demand periods. Hence, nuclear power plants are only profitable in base-load markets. Gas-fired power plants, on the other hand, can be profitable in either market because not only are their upfront costs low but it is much easier to turn them off or on unlike nuclear.

Nuclear’s high up-front costs don’t just mean delayed profits, it also makes nuclear a more risky investment, especially since 20 states have scrapped policies that used to allow investors to charge rates that would guarantee their money back. This means that investors in new nuclear power plants are making a multi-billion dollar bet on disciplined construction schedules, accurate cost estimates, and the future economic health of the region. Bet wrong on any of the above and the company may well go bankrupt. Bet wrong on a gas-fired power plant, on the other hand, and corporate life will go on because there is less to lose given that the construction costs associated with gas-fired power plants are a small fraction of those associated with nuclear plants. …

Investors are also wary of nuclear plants because of the construction delays and cost over-runs that have historically plagued the industry. …  Nor have these construction delays had anything to do with regulatory obstruction or organized public opposition.

If nuclear power plants are so uneconomical, how then to explain the blizzard of permit applications for the construction and operation of new nuclear power plants that the Nuclear Regulatory Commission has received? Easy: These applications cost little and oblige utilities to do nothing. Industry analysts maintain that federal approvals will not translate into actual plants without a federal promise to private equity markets that, in case of default by power plants, the taxpayer will make good on the full sum of all bad nuclear loans.

Nuclear supporters often counter that construction costs would be a lot lower if regulators didn’t impose insanely demanding safety standards, byzantine and time-consuming permitting processes, or endless public hearings, any one of which could result in the plant being stopped in its tracks. Investors would also be more likely to invest, we’re told, if there were a high-level waste repository in place or more political support for nuclear power.

I would love to tell that story. I do, after all, work at the Cato Institute, and blaming government for economic problems is what keeps me in business. But what stops me is the fact that those complaints are not echoed by the nuclear power industry itself.

On the contrary, the industry in the early 1990s asked for – and got – exactly the sort of safety regulations, permit review process, and public comment regime now in place. Both public and political support for nuclear power is running so high than even a majority of Democrats in Congress are happy to not just tolerate nuclear power, but lavish even more subsidies upon it. And while Yucca Mountain may not be open now or ever, everyone seems reasonably content with the current on-site waste storage regime.

Indeed, if government were the reason why investors were saying “no” to their loan applications, I would expect that industry officials would be the first to say so. But they do not.

There’s another good reason why the industry is not protesting government intervention these days — the industry would not exist without it. Take away the 1.8¢ per kWh production tax credit available to the first 6,000 megawatts of new nuclear generation built prior to 2021, for instance, and Metcalf calculates that the levelized cost of new nuclear power plants jumps by 30 percent. Replace accelerated depreciation tax rules with regular depreciation rules and costs jump another 9 percent. Even zero taxation on nuclear power would increase costs by 6 percent because right now nuclear power enjoys a negative effective tax rate. Indeed, this jump by itself would make nuclear much more expensive than conventional coal, “clean” coal, and natural gas. Finally, repealing the $18 billion in federal loan guarantees recently promised the industry and eliminating regulations that relieve nuclear plant owners of the responsibility to pay third-parties to accept the risks associated with waste disposal would dampen market interest in nuclear power even further.

But the final nail in the coffin for the industry would be if the federal cap on the liability that nuclear power plant owners face in case of accidents (the Price-Anderson Act) were to be lifted.

Given all of this, how do France, India, China and Russia build cost-effective nuclear power plants? They don’t. Government officials in those countries, not private investors, decide what is built. …

Conservatives project nuclear power as the solution to greenhouse gas emissions. But they should resist that argument. If we slapped a carbon tax on the economy to “internalize” the costs associated with greenhouse gas emissions – the ideal way to address emissions if we find such policies necessary – then the “right” carbon tax would likely be about $2 per ton of emissions according to a survey of the academic literature by climate economist Richard Tol [As noted in the update further below, Taylor has subsequently moved from this low figure after reviewing Tol’s more recent work]. That’s not enough to make nuclear energy competitive against coal or natural gas according to calculations performed by the Electric Power Research Institute. In any case, if nuclear offers a cost-effective way to reduce greenhouse gas emissions, it should have to prove it by competing against alternatives in some future carbon-constrained market.  …

Those who favor nuclear power should adopt a policy of tough love. Getting this industry off the government dole would finally force it to innovate or die – at least in the United States. Welfare, after all, breeds sloth in both individual and corporate recipients. The Left’s distrust of nuclear power is not a sufficient rationale for the Right’s embrace of the same.

follow-up discussion on Reason Foundation’s “Out of Control” blog, involving Jerry Taylor and co-essayists William Tucker and Shikha Dalmia (also moderator) and various blog commenters. 

    One interesting point made in the follow-up discussion was that while our regulatory scheme is much tougher on nuclear power over risks that so far have been speculative, Taylor ignores the much heavier health damages (on the order of 25,000 deaths per year) generated by coal.  Taylor’s response:  perhaps so, but coal’s extra environmental cost should be directly addressed by being tougher on coal, not by subsidizing nuclear power.

 

[Update:  On the carbon pricing issue, subsequent to the October 2008 Rountable referred to above, I pointed out to Jerry that his reference to Tol was dated (based on a 2005 study rather than on Tol’s more recent 2008 study.  Jerry reviewed and summarized Tol’s most recent study at Cato in December 2008;  in this, (1) Taylor notes Tol’s conclusions that (a) the social cost of carbon emissions
is positive, that (b) there is so much uncertainty regarding costs that “a
considerable risk premium is warranted,”
and that, (c) consequently,
“greenhouse gas emission reduction today is justified,” and (2) Taylor concludes that “Given our skepticism about the underlying logic of discount rates of 1%
or less, any number between $3 per ton and $24 per ton seems
defensible.” 
However, Taylor remains conerned that “the political and economic transaction costs associated with imposing a carbon tax … likely exceed the benefits,” and argues that “there may be less expensive ways of reducing harm.”]

Update from Rob Bradley: My BOOKS prove that I'm a free-marketer! (That's why I'm free to boost fossil fuels and bash enviros on my blogs!)

February 7th, 2009 No comments

I noted in a previous post that Rob Bradley, CEO of the Institute for Energy Research and lead blogger at MasterResource, has cheered on big coal and bashed what he calls “Malthusian anti-energy crusaders”,  but ignoring while he does so the questions of (1) whether there are any legitimate disputes as to the environmental impacts of coal production and consumption and (2) the role of government in contributing to or perpetuating these disputes.

In response, Rob says that his bona fides are not to be questioned.  I quote below the relevant portions of the comment thread (emphasis added):

TokyoTom { 02.05.09 at 2:50 am }

Rob, are the John Badens, Terry Andersons, Bruce Yandles, Elinor Ostroms and others who want to find ways to manage our commons better – by improving ownership, incentives and pricing signals – also part of a “Malthusian crusade”?

I just wanna make sure I know who to hate.

As for that big fly ash breach/spill in Tennessee, I’m glad that you didn’t point out how this was a result of government ownership of TVA, with the added benefit that costs will be borne not only by direct and indirect victims, but by taxpayers as well. No sense in pointing out how government is so often in the way, particularly if it detracts from our “we hate enviros!” message. Last thing we ever want to do is to reach a shared understanding with enviros of the institutional underpinnings of problems, since that means our funders might lose some of their fairly purchased, government-given special privileges.

rbradley { 02.05.09 at 9:46 pm }

TT:

I have several thousand pages in the public domain on free market theory and history applied to energy, including criticisms of political capitalism.

The ball is in your court to buy and read any of my six energy books–and to visit my website http://www.politicalcapitalism.org. Particularly focus on Enron on this website.

Capitalism at Work (2009) is the latest book that I invite you to read and review.

TokyoTom { 02.05.09 at 10:21 pm }

Rob, does this mean that you are a “free-marketer” in principle, but can’t be bothered to show it in your public policy discussions?

rbradley { 02.06.09 at 9:28 am }

TT:

It means that you have to do your homework. I take on opposing views as a matter of course in my books and essays–I hope you understand that I do not have time to regurgitate my arguments in a personal debate with you.

But if you are really a “libertarian,” you need to get more critical toward climate alarmism and the history of Malthusianism–and more realistic towards government failure versus market failure.

I am signing off with you but look foward to your review of Capitalism at Work–a multi-disciplinary treatise on heroic capitalism that as a libertarian you should study.

TokyoTom { 02.07.09 at 4:44 am }

Rob, Roy Cordato (linked at my name) said this:

“The starting point for all Austrian welfare economics is the goal seeking individual and the ability of actors to formulate and execute plans within the context of their goals. … [S]ocial welfare or efficiency problems arise because of interpersonal conflict. [C] that similarly cannot be resolved by the market process, gives rise to catallactic inefficiency by preventing useful information from being captured by prices.”

“Environmental problems are brought to light as striking at the heart of the efficiency problem as typically seen by Austrians, that is, they generate human conflict and disrupt inter- and intra-personal plan formulation and execution.”

“The focus of the Austrian approach to environmental economics is conflict resolution. The purpose of focusing on issues related to property rights is to describe the source of the conflict and to identify possible ways of resolving it.”

“If a pollution problem exists then its solution must be found in either a clearer definition of property rights to the relevant resources or in the stricter enforcement of rights that already exist. This has been the approach taken to environmental problems by nearly all Austrians who have addressed these kinds of issues (see Mises 1998; Rothbard 1982; Lewin 1982; Cordato 1997). This shifts the perspective on pollution from one of “market failure” where the free market is seen as failing to generate an efficient outcome, to legal failure where the market process is prevented from proceeding efficiently because the necessary institutional framework, clearly defined and enforced property rights, is not in place.”

Do you agree?

My focus in reviewing your comments and those of other posters is whether you are contributing in good faith to conflict RESOLUTION – conflict over readily understandable preferences – or to “winning” the struggle over government for the benefit of your clients.

I think that`s perfectly fair.

So far, I don`t see much of an effort at good faith engagement [with the enviros].

Here`s to hoping that you demonstrate here that you are a free-marketer, and not a rent-seeker.

Rob Bradley cheers on coal, but are all those who want to better manage commons and environmental impacts "Malthusian" idiots, or only in the case of coal?

February 5th, 2009 No comments

Rob Bradley has a new post up at MasterResource, cheering on big (and now “clean”) coal, which has apparently received assurances from the Obama administration – after being bad-mouthed by NASA scientist Jim Hansen, Steven Chu and Obama himself – that, despite pressures from the “Malthusian anti-energy crusade” regarding climate change impacts, the recent massive TVA fly-ash spill and opposition to destructive mountaintop removal practices in Appalachia, coal will remain profitable during Obama’s term and central to US energy supplies.  Hooray!

But I wasn’t quite clear on all of Rob’s message, so I asked him a few questions in the comment thread:

Rob, are the John Badens, Terry Andersons, Bruce Yandles, Elinor Ostroms and others who want to find ways to manage our commons better – by improving ownership, incentives and pricing signals – also part of a[n evil] “Malthusian crusade”?

I just wanna make sure I know who to hate.

As for that big fly-ash breach/spill in Tennessee, I’m glad that you didn’t point out how this was a result of government ownership of TVA, with the added benefit that costs will be borne not only by direct and indirect victims, but by taxpayers as well. No sense in pointing out how government is so often in the way, particularly if it detracts from our “we hate enviros!” message. Last thing we ever want to do is to reach a shared understanding with enviros of the institutional underpinnings of problems, since that means our funders might lose some of their fairly purchased, government-given special privileges.

While it’s clear that “free-market” Rob cares little about whether the coal industry continues commercial activities that shift the environmental costs and risks (including potential costs arising from GHG emissions) to others, I forgot to ask Rob whether, as a hearty cheerleader for those poor coal underdogs, he also supports their position that the government should subsidize their change in business model by (a) having Uncle Sam pay the bulk of capital costs for IGCC (integrated gas combined cycle plant) [something like $1 billion for the first one with CCS], (b) giving them a further break (reduced royalties) on the sweet deals they already have for stripping coal from public lands and (c) – now that the federal government is getting into the busy of running the financial sector – making sure that power producers that want to use coal have easy access to credit, by twisting the arms of those uppity Wall Street financiers who with their fancy new “Carbon Principles” and “Enhanced Due Diligence” seem a bit too reluctant to extend credit for coal-fired power plants.

Here’s hoping Rob weighs in further.  I want to make sure I’m not messing up when I try to distinguish the “white hats” from the “black hats”.   From what I can tell so far, seeking to manipulate government policy for your own benefit is evil – as long as you’re not a coal firm, and we call the evil ones “Malthusians”.  Right?