Archive for the ‘statism’ Category

Bob Murphy spins shallow "Blockbuster study" by coal lobby on cap and trade bill

October 2nd, 2009 No comments

The coal- and utility-funded “free-market think tank” Institute of Energy Research has a just released another study that tells us the obvious about the regressive consequences of the Waxman-Markey cap-and-trade bill and the benefits likely to flow to its corporate supporters, while masking its own agenda. As an added benefit, the press release includes some one-sided and unsupportable over-statements by Bob Murphy.

A few points:

IER:  “cap-and-trade would precipitate a financial windfall for well-connected
special interests and politically-favored companies.”

me:  No dispute here. It`s perfectly fair to point out who will benefit from the cap-and-trade bills.  But let`s not ignore that coal investors have long benefitted from being able to shift pollution costs to people downstream, under the perverse “rights to pollute” enabled under the Clean Air Act, and under state and federal mining licenses that allow mining firms to force out local residents.

IER:  “The study … details how shareholders,
not ratepayers, will be the primary beneficiaries of cap-and-trade’s

me:  Sure, just like how it was shareholders in coal producers and utilities who are the primary beneficiaries of the externalities permitted by the status quo.

Bob Murphy[The] analysis … illustrates just how flawed and skewed this
legislation is toward rent-seeking special interests.

me:  Sure, but the interest of the coal lobby is that the legislation doesn`t benefit them enough. Do coal investors care MORE about what`s good for the average Joe than do other “rent-seeking special interests”?

Bob Murphy:  “secondly, and more important, [the analysis] shows that cap-and-trade, as
outlined in Waxman-Markey, is nothing more than a transfer of wealth
from the poorest to the richest among us.

me:  Oh really?  Does the analysis really conclude that Waxman-Markey does “nothing more” than transfer wealth? You mean Waxman-Markey wouldn`t actually raise prices of carbon-based energy or affect consumption and investment decisions by industry, businesses and consumers?

Bob Murphy:  “These new findings should send a clear message to the American people cap-and-trade helps the powerful and hurts the rest of us.

me: The message is fine and important. But are coal firms and investors “the rest of us”, not powerful and only concerned about the average Joe, or are they trying to protect their own privileged position? Further, are there any alternatives to cap-and-trade that coal investors support, such as carbon taxes, or even undoing their favored treatment under federal clean air laws and mining laws?

Bob Murphy:  And as Congress’ corporate allies receive the bulk of the benefits
Waxman-Markey has to offer, our environment, along with our struggling
economy, will suffer for years to come. Congress needs to get out of
the business of picking winners and losers and allow the market to
determine which energy and electricity sources should power our

me: Ahh yes, forgive me; I forgot that coal firms were a part of the enviro lobby!  But aside from that, I agree strongly that Waxman-Markey is poor policy.  Do coal investors agree with Exxon that rebated carbon taxes would keep Congress “out of the business of picking winners and losers and allow the market to determine which energy and electricity sources should power our economy”?

Thanks, IER for showing us how “political capitalism” works!


* “Political capitalism” is Rob Bradley`s term for “rent-seeking”

Note to William Anderson: Limited liability is a key to understanding the Great American Ponzi scheme

January 5th, 2009 No comments

William Anderson (an adjunct scholar of the Mises Institute and economics prof. at Frostburg State University) has a thoughtful New Year’s Day post, pointing out how Paul Krugman fails to understand the causes of ouir economic stagnation and financial meltdown.

I posted the following comment, in which I argue that the state grant of limited laibility (which I have discussed in several recent posts) is a key to understanding the Great American Ponzi scheme:

Bill, I agree with the thrust of your criticisms of Krugman, but have a few small quibbles.

First, while you rightly condemn “most economic regulation … of the command-and-control variety”, you blame all of this on “the whims of bureaucrats and environmentalists” and completely fail to note that state and federal environmental regulation (i) initially responded to real environmental problems and (ii) also represents the successful efforts by established firms to raise barriers to entry and to cartelize their industries.  See Roger Meiners & Bruce Yandle, Common Law and the Conceit of Modern Environmental Policy, 7 Geo. Mason L. Rev. 923, 926-46 (1999), and Walter Block, Environmentalism and Economic Freedom: the Case for Private Property Rights..

Second, while you are correct that Krugman fails to understand the role of the state in creating the distortions that underlie our current problems, it seems to me that you have neglected one of the key state interventions that has fuelled the rent-seeking and risk socialization that we see today – the grants of legal personhood (with unlimited purposes and life and Constitutional rights) to corporations and blanket limited liability to shareholders.

Limited liability has enabled corporate managers to act without close shareholder oversight and management; this I believe has played a key role in the vast misalignment of incentives that Michael Lewis and David Einhorn describe at the NYT, and in the risk mismanagement that Joe Nocera of the NYT describes at length in the NYT Magazine.  Those taking large bonuses (whether in the financial industry or large corporations) were essentially playing with OPM – Other People’s Money – and capturing the upside of short-term gains while leaving shareholders and taxpayers holding the bag for loses.

I hope that you and others here will look more deeply at the role of the state in the problem of misaligned incentives that continue to corrupt American capitalism.

Bush’s Advent message on Appalachian coal: "Every valley shall be raised up, every mountain and hill made low"

December 8th, 2008 No comments

Just in time for last Sunday’s readings at Advent liturgies of Isaiah 40:4, on December 2 the White House and EPA approved the final issuance by the Department of the Interior of industry-backed changes in the 25-year-old stream “buffer zone” rule.  The revised rule, which the NYT describes as one of “the most contentious of all the regulations emerging from the White House in President Bush’s last weeks in office”, will make it much easier for coal companies to fill in streams and valleys with the rock and dirt produced by mountaintop removal mining operations.  As I described in an earlier post, these mining practices create direct physical effects on nearby communities, and produce extensive and long-lasting alterations to streamflows and aquatic life, leaching of heavy metals into streams and wells and leave behind dangerous leach ponds.  

It is clear from a review of the proceedings that the decisions of the DOI and EPA were based on the premise that mountaintop removal mining would proceed, with stream buffers not being required if the alternative to stream and valley fill were not economically practicable.  Largely because of the damage such mountaintop removal and fill operations have been proven to do to the interests of local and state residents in stream and groundwater quality and flows, the changes were strongly opposed by the public and by the governors of Kentucky and Tennessee.

Nobody seems to have swallowed the rather Orwellian announcement by the DOI’s Office of Surface Mining Reclamation and Enforcement that the new rule will “tighten” restrictions on excess spoil, coal mine waste, and mining activities in or near streams – least of all the coal firms, who praised the new rule!

One wonders if in all the litigation over federal rules, residents who bear the impacts of mountaintop mining have considered bringing direct claims against the mining firms for damage under the common law – as opposed to struggling over the substance of federal and state regulations and whether regulators and prosecutors will try to enforce them.

While I noted this issue last week, I was gently reminded of President Bush’s Christmas gift to the coal companies by the perversely coincidental appropriateness of a church reading on Sunday (the second Sunday of Advent) of Isaiah 40:4:

Every valley shall be raised up,
every mountain and hill made low;
the rough ground shall become level,
the rugged places a plain.

Bush and the coal companies are doing God’s work!

Almost levelled, West Virginia: Crooked justice allows mountain-top removal practices to freely injure homes and health

March 3rd, 2008 3 comments

… with the federal government, state and union all firmly
in the pocket of coal firms.

This seems to be a classic case, on a huge scale, of the difficulties individual property owners and communities face when confronting clearly wrongful acts by large
corporations with deep pockets
– and how easily our
governments and courts are suborned from their duties to enforce property rights or other
laws protecting lives, health and property.

The influence and corruption goes all the way up, as this discussion of recusals and non-recusals by W. Va. Supreme Court  justices illustrates:

[Note: desnarked in light of fair comment.]



Here is a partial list  – just scratching the surface – of resources on this topic: – this site has great Google Earth links