What many movement conservatives can’t or won’t understand is that for some of us, the “family” should not be the base unit of society, because it can just as easily be a locus of evil as for good.
To many people, the “world” is a haven from a heartless family.
I am forever bowled over by my Jewish friends’ affection (or at least, infinite tolerance) for their families. When one of them suggested that I set up some kind of enterprise with “a trusted family member,” I reminded him that, being a gentile, I have no trusted family members.
The idea of wanted to increase one’s ties to one’s relatives rather than snip them as quickly and permanently as possible is utterly foreign to me.
Radical leftists are half-right in wanting to reduce each individual’s forced reliance upon their families for lifelong security and prosperity. They went wrong when they held up the State as a replacement. You can always, if you absolutely have to, kill your family. But the State is, at the end of the day, immortal and a million times more powerful.
December 21, 2014
December 19, 2014
Michael Brendan Dougherty on the real rape culture in the United States:
… we don’t have to descend to the netherworld of Greek life to find evidence of an insidious rape culture. There are indeed state-supported institutions where gang rape is used as ritual initiation. There are institutional authorities that meet this culture with indifference or outright support. And we file the poor souls of this system under the heading: deserving victims. We joke in ways that suggest that if these rape victims did not want it, they should never have put on a prison uniform.
In this manner, rape is treated as a feature of our justice system when it happens to prisoners, rather than what it is: another grave crime.
Statistics on rape are notoriously unreliable. In or out of prison, victims often fear reporting on their assailants. And so the above statistics are likely to underestimate the problem. But we do know that once you include the prison population, men are raped more often in the United States than women.
In prison, men may become the victim of repeated gang rapes. Prisoners can be locked into cells with the men who prey on them. Some live under the constant threat of sexual assault for decades. Their efforts to report their rape are ignored or even punished, both by prison personnel and an inmate culture that destroys “snitches.” The threat of rape is so pervasive it causes some inmates to “consent” to sex with certain prisoners or officers as a way of avoiding rape by others.
Acceptance of prison rape is a stinking corruption. No conception of justice can include plunging criminals into an anarchic world of sexual terror. And obviously it thwarts any possibility of a rehabilitative justice that aims to restore criminals to lawful society. Inmates are not improved or better integrated into society through physical and psychological torture.
December 18, 2014
At Samizdata, Johnathan Pearce suspects that the folks at NATO headquarters are not getting as much sleep these days as they used to:
… it appears that the image of Putin as this ruthless, chess-playing genius wrongfooting silly old Cameron, Merkel, and the chap with the funny moonface from France is not quite standing up to scrutiny. Here’s a report by Bloomberg:
“The foundations on which Vladimir Putin built his 15 years in charge of Russia are giving way. The meltdown of the ruble, which has plunged 18 percent against the dollar in the last two days alone, is endangering the mantra of stability around which Putin has based his rule. While his approval rating is near an all-time high on the back of his stance over Ukraine, the currency crisis risks eroding it and undermining his authority, Moscow-based analysts said.
In a surprise move today, the Russian central bank raised interest rates by the most in 16 years, taking its benchmark to 17 percent. That failed to halt the rout in the ruble, which has plummeted to about 70 rubles a dollar from 34 as oil prices dived by almost half to below $60 a barrel. Russia relies on the energy industry for as much as a quarter of economic output, Moody’s Investors Service said in a Dec. 9 report.
Now might also be a good time to remind ourselves of the “curse of natural resources”.
It would be worth wondering what are the odds that Putin can last a lot longer in power. That said, a sobering thought is that when regimes are in deep trouble, they can do desperate, crazy things, as Argentina did in 1982 by invading the Falklands. If I were a planner for NATO right now, I’d be having a nervous Christmas and New Year ahead of me.
December 17, 2014
Published on 6 Dec 2014
This talk was given at a local TEDx event, produced independently of the TED Conferences. The Internet is on Fire
Mikko is a world class cyber criminality expert who has led his team through some of the largest computer virus outbreaks in history. He spoke twice at TEDxBrussels in 2011 and in 2013. Every time his talks move the world and surpass the 1 million viewers. We’ve had a huge amount of requests for Mikko to come back this year. And guess what? He will!
Prepare for what is becoming his ‘yearly’ talk about PRISM and other modern surveillance issues.
December 14, 2014
In this week’s Goldberg File, Jonah Goldberg talks about the show Jonathan Gruber put on in front of some Washington political types:
I learned from Twitter this morning that Gustave Flaubert, born this day in 1821, said, “The art of writing is the art of discovering what you believe.” So, as Jay-Z says every morning he enters a music studio and as Joe Biden says every time President Obama gives him a fresh 64-pack of crayons, “Let’s make some art, bitches.”
Let’s start with Jonathan Gruber. I have to say I was disappointed by the hearings. Oh, sure, it was good theater-as-human sacrifice of the sort Washington does so well (though I am glad they stopped short of rectal rehydration).
But this was one of those moments where they really could have put the system on trial. Gruber’s consistent answer was that he’s a shabby, shallow, little man who belittles others, including the American people, to make himself look good. “I tried to make myself seem smarter by demeaning others.”
In almost every exchange, Gruber fell back on language you’d expect from a stockbroker tied up in an S&M dungeon. I did it because I am a flea! A worm! I am no master of the universe, I am nothing! Punnnniissshhh meee!
All that was missing were some riding-crop and melted-candle-wax welts, and maybe a shorn scrotum. But, hey man, it’s a defense.
But it’s not a good one. You can blame your arrogance for calling the American voters stupid, but you can’t blame your arrogance for claiming that the bill was designed to hide taxes and deceive the public. If I stab someone 34 times, the jury might want to hear about my arrogance, but whether I’m arrogant or humble, it doesn’t change what I did — and apologizing for it doesn’t clarify where the body is buried.
Gruber’s strategy of emotional self-abasement was very clever because it distracted from the central arguments of fact.
As for Gruber, he said this week that he wasn’t an architect of Obamacare. And yet, for several years he let the New York Times, The New Republic, PBS, and countless other media outlets describe him as exactly that. That label was of great financial value to him. But it was probably of greater social, psychological, and professional value. And that is probably why he seems to have not once taken the time to ask them to stop calling him that. Gruber is of a class of people who take great satisfaction from the belief that they are not only smarter and better than normal Americans, but that their superiority entitles them to manipulate the public and system in whatever way they think necessary.
There’s another reason Gruber never corrected anybody when they described him as an architect of Obamacare: Because it’s true!
Which leads to another important point: Gruber’s a huge, monumental, Brobdingnagian liar.
To believe his testimony before Congress is to believe that on one occasion after another, he baldly lied over and over again to his peers, colleagues, students, and friends. Darrell Issa sort of gets at this here at the end of Gowdy’s interrogation when he asks Gruber, “Did anybody come up to you and tell you that what you were saying was inappropriate?”
That’s an interesting question and tells you a lot about the sovereign contempt the expert class has for the American people. But a better question would be, “Why didn’t anybody correct you on your factual claims? Or simply say ‘What you’re saying isn’t true’?” Gruber was on panels with other health-care experts. The audiences were full of people who were deeply informed about Obamacare and all its details. And yet no one said, “Hey, that’s not the way it happened.” Why? Because Gruber was telling the truth when he said they had to deceive the American people. And before you ask me what proof I have, I would like to direct you to the fact that Barack Obama deceived the American people over and over and over again when he said things like “You can keep your doctor” and “You can keep your insurance” etc. (and not one liberal journalist cheerleader for Obamacare ever felt compelled to push back on this obvious lie). Are we really so stunned that the same president might be willing to play accounting games with the CBO?
Sure maybe Gruber exaggerated his role or involvement. Maybe he embellished this or that. But you can’t exaggerate a lie; you can only exaggerate the truth. For years he told the truth to anyone who would listen, and now that it’s politically problematic he says it was all a lie.
So we’re forced to choose: Was he lying when talking to countless audiences full of peers, colleagues, and experts, or was he lying in front of Congress in order to save his team any further embarrassment and preserve a law he’s sincerely proud of (because he was an architect of it)? Personally, I think you’d have to be too stupid to beat Joe Biden at tic-tac-toe to think the “real” Gruber testified before Congress this week. But whichever side you come down on this question, one thing has been established: He’s a huge liar.
November 30, 2014
Tim Worstall explains that the fuss and bother in European newspapers about the “market failure” in the chocolate supply is actually a governmental failure (a market sufficiently bothered by legislation and regulation):
The last few days have seen us regaled with a series of stories about how the world is going to run out of chocolate. That would be, I think we can all agree, almost as bad as running out of bacon. So it’s worth thinking through the reasons as to why we might be running out. After all, cocoa, from which chocolate is made, is a plant, it’s obviously renewable in that it grows each season. So how can we be running out of something we farm? The answer is, in part at least, that there’s some bad public policy at the root of this. As there usually is when something that shouldn’t happen does.
Here’s the basic story in a nutshell:
A recent chocolate shortage has seen cocoa farmers unable to keep up with the public’s insatiable appetite for the treat–and the world’s largest chocolate producers, drought, Ebola and a fungal disease may all be to blame.
Much of the world’s chocolate comes from West Africa so the disruption by the Ebola outbreak is one obvious part of it. But the shortage is not something immediate, it’s something that has been coming for some years. Ebola is right now, not a medium term influence. Drought similarly, that’s a short term thing, and this is a medium term problem. It’s also true that as the world gets richer more people can afford and thus desire that delicious chocolate.
Ahhh…the government is paying the farmers £1 a kg or so and the market is indicating that supply and demand will balance at £1.88 a kg. So, what we’ve actually got here is some price fixing. And the price to the producers is fixed well below the market clearing price (although the government most certainly gets that market price). So, we’ve a wedge in between the prices that consumers are willing to pay for a certain volume and the price that the farmers get for production. So, therefore, instead of it being the price that balances supply and demand we end up with an imbalance of the supply and demand as a result of the price fixing.
This is how it always goes, of course, whenever anyone tries to fix a price. If that price is fixed above the market clearing one then producers make more than anyone wants to consume (think the EU and agriculture, leading to butter mountains and wine lakes). If the price is fixed below the market clearing one then producers don’t make as much as people want to consume. This is why it’s near impossible to get an apartment anywhere where there is rent control. And if prices are fixed at the market clearing price then why bother in the first place? Quite apart from the fact that we’ve got to use the market itself to calculate the market clearing price.
November 26, 2014
No shit, this really exists:
Ethically, it’s been a rough couple of years for the military.
In July 2013, an Air Force major general went on an epic five-day bender while on a diplomatic mission in Russia. That November, Navy officials launched an investigation into misconduct involving top officers and a Malaysian contractor named Fat Leonard.
Individually, the cases are all bad news. The good news is that authorities often catch and punish government cheats, thieves and frauds. Penalties for ripping off the American taxpayer range from huge fines to hard time in prison.
And when the trial ends and punishment begins, many military ethics cases wind up in the Pentagon’s Encyclopedia of Ethical Failure.
That’s right, the military maintains a database of the federal government’s worst ethics violators. Unlike many government documents, the encyclopedia is clear, easy to read … and actually quite funny. Many of the stories are as amusing as they are aggravating.
It might be the most light-hearted official report anyone’s ever written about criminals.
H/T to John Turner for the link.
November 24, 2014
At Techdirt, Karl Bode points out the existing problem with lack of competition in the US broadband industry is largely due to various levels of government meddling with the market:
While Title II is the best net neutrality option available in the face of a lumbering broadband duopoly, it still doesn’t fix the fact that the vast majority of customers only have the choice of one or two broadband options. It’s this lack of competition that not only results in net neutrality violations (as customers can’t vote down stupid ISP behavior with their wallet), but the higher prices and abysmal customer service so many of us have come to know and love. Stripping away protectionist state laws can help a little, as can the slow rise of services like Google Fiber. But even these efforts can only go so far in blowing up a broadband duopoly, pampered through regulatory capture and built up over a generation of campaign contributions.
One solution is the return to the country’s barely-tried implementation of unbundling and network open access, or requiring that the nation’s subsidy-slathered monopolists open their networks to allow other competitors to come in and compete. There are many variations of this concept, and it’s something Google Fiber promised in its markets before backing away from it (much like their vocal support of net neutrality). Obviously being forced to compete is an immensely unpopular concept for the nation’s incumbent ISPs. Given that those companies dictate and often literally write the nation’s telecom laws, these requirements were eliminated in a number of policies moves starting in 2001 and culminating in the FCC’s Triennial Review Remand Order of 2004 (pdf).
This was amazingly presented at the time as a way to improve competition and spur investment, but primarily resulted in a bloodbath as dozens of consumer-friendly, smaller independent ISPs and CLECs were killed off, perpetuating and further cementing the noncompetitive duopoly we have today.
Despite the fact this model clearly works, it’s never considered in policy discussions as a serious possibility. Why? Quite simply because the incumbent providers don’t want it. Through the use of their various PR folk, astroturfers, think tankers, fauxcademics and assorted hired mouthpieces, they’ve successfully managed to utterly vilify the concept, painting it as the very worst sort of government meddling in (not actually) free markets. Instead, we’ve chosen to head down the path of letting the nation’s duopolists dictate telecom policy, and the end result should at this point be painfully obvious to everyone. Well, except the industry lobbyists who still somehow insist we’re all living in a competitive broadband Utopia.
November 19, 2014
Net Neutrality is back in the news thanks to President Obama making a PR push to the regulators who may (or may not) be crafting regulations to bring the internet under government supervision:
Because this issue is still in the FCC’s hands, no one can know for sure what rules the agency will adopt. One important question, though, is: will neutrality apply to wireless services or only to cable-based ISPs, such as Comcast, Time Warner, and AT&T? In addition, will failure to preserve the status quo slow down the speed at which Internet connections and broadband capacity expand (because ISPs won’t be able to shift more of the expansion costs onto the “hogs”)? And what exactly is wrong with ISPs wanting to charge content providers higher prices for more bandwidth and faster, more reliable downloads?
More certain, however, is that regulations requiring “net neutrality” will end up benefiting the large, established ISPs. Incumbent firms have gained from “common carrier” regulation throughout U.S. history. As a matter of fact, the FCC predictably will be captured (if it has not already been) by the very companies President Obama wants to regulate “in the public interest.”
The president’s call to action sounds eerily similar to demands for federal railroad regulation that ultimately led to the creation of the Interstate Commerce Commission in 1887. Until it was put out of business in the early 1980s by President Jimmy Carter, the ICC allowed the railroads and, later, motor carriers and pipelines to charge prices exceeding competitive levels, thereby trying its best to protect the carriers’ profits at consumers’ expense.
William Shugart follows up on his original post:
The source of today’s online bottleneck can be traced back to local and regional government authorities, who quickly recognized the benefits (to them personally) of creating and granting exclusive franchises to one ISP that would, for the term of the contract, be a monopolist. (Government officials can extract more rents if they negotiate with only a handful of contestants.) Given that only one ISP would “win” the right to provide online content to local customers, the local monopolists also recognized a benefit of exclusive franchises: They would have the freedom to discriminate against some content suppliers by adding extra fees for privileged access.
So, a simple solution to the absence of net neutrality is readily available: Foster competition between ISPs.
Some people might raise the objection that, in this realm, robust competition for consumer dollars is unlikely because the suppliers of connections to the Internet are “natural monopolists”. In fact, ISPs are not “natural monopolists” as some commentators would have us believe. They are local government-granted monopolies. (Even Frederic Scherer, the author of the influential textbook Industrial Market Structure and Economic Performance, wrote that such claims of “natural monopoly” are “trumped up.”) Competition between ISPs nowadays is a contest for the favors of mayors and city councils who ultimately will determine who will win the exclusive franchise; it is not competition for the business of paying customers.
November 16, 2014
It was such a quiet coup that even the media failed to see it! Mark Taliano screams to us Canuckian sheeple that it’s time to wake up!
The biggest threat to Canada’s national security is internal. It is the offshoot of an extraordinarily successful quiet coup that imposed itself on the country with the federal election of the Conservative Party of Canada (CPC) in 2006, and solidified its impacts with the election of a Conservative majority in 2011.
Author, poet, academic, and former Canadian diplomat Prof. Peter Dale Scott recently disclosed a WikiLeaks cable indicating that the International Republican Institute (IRI), an off-shoot of the CIA, and a subsidiary of the National Endowment for Democracy (NED), helped install Stephen Harper as Canada’s Prime Minister. This was the coup.
Point 12 of the cable explains that “In addition to the campaign schools, IRI will be bringing in consultants who specialize in party renovation to discuss case studies of political parties in Germany, Spain, and Canada which successfully carried out the process”
My GOD! Canadian political parties bringing in American advisors? This must be resisted! We won’t stand for filthy imperialistic Yankee scum polluting our pristine and uncorrupted political sphere!! Oh, wait … Justin has American advisors too? Oh. Move along: nothing to see here. Move along.
Dr. Anthony James Hall, Professor of Globalization Studies at the University of Lethbridge, in Alberta, explains the genesis of the Harper Conservative assault on the “Red Tory” traditions of Canada’s indigenous conservative party in Flanagan’s Last Stand?:
The assault by the Harper-Flanagan juggernaut on the generally friendly orientation of Canadian conservatism towards the state, towards Indigenous peoples, and towards the institutions of Crown sovereignty helped clear aside obstacles to the importation from United States of the Republican Party’s jihad on managed capitalism. Flanagan and Harper took charge of the Canadian version of the Reagan Revolution aimed at transforming the social welfare state into the stock market state.
I’d love to say this was just a parody, but I think at least some people on the left really do believe all of this.
They really do things differently in Germany, as Megan McArdle reports:
The German Catholic Church is contemplating denying communion to Catholics who have … wait for it … declined to register as Catholics with the government. The reason? Those Catholics don’t want to pay their “church tax.” That’s right: Germany taxes registered religious believers of major denominations, distributing that money to the country’s churches, temples and the like. And it recently changed the rules for calculating the tax to include capital gains, prompting an exodus of presumably well-heeled Catholics from the official rolls. So the German church is threatening to cut them off. Lots of tax rules seem to be written on a pay-to-play basis, but I’ve never before heard of one that was “pay to pray.” I don’t recall Christ saying anything about an admission fee to hear him preach.
To American ears, this is positively shocking. The American Catholic Church certainly doesn’t want you to take communion if you haven’t been baptized by the church or confessed any mortal sins. But no one checks to see whether you made a deposit in the offering plate. What’s going on here?
What’s going on is a phenomenon that conservative-leaning analysts call “crowding out”: when government provision of a service destroys the voluntary institutions that used to do so. This phenomenon often gets exaggerated, but there’s no doubt that it’s real enough — and in the actions of Germany’s Catholic bishops, I think we are seeing an extreme example of where it can lead.
Without the need to support itself with voluntary offerings, the Catholic Church in Germany has become dependent on government support. And government support has some big drawbacks compared to voluntary contributions. To be sure, government money is nice and steady, but it’s also fixed at the amount of the tax.
November 14, 2014
The House of Lords is the upper chamber of Britain’s parliament. Canada’s (mostly useless) Senate is our equivalent legislative body, in that the members are not there through any kind of popular vote, and the general public view them — if they have any opinion about them at all — as an odd historical holdover that doesn’t really matter in today’s world. Recently, the Wall Street Journal talked about the House of Lords, and Tim Worstall wants to correct their misunderstandings about that august body:
The change to appointing Life Peers rather than hereditaries really came back in 1958, when it first became possible to appoint someone only for life, rather than appointing someone and finding out that their sons (only first son to first son of course, not all sons) to the nth generation also got membership of the House when the time came. Since then there have been very few hereditary peerages granted and those that have been have been special cases. Ex-Prime Ministers, if they desire, become Earls, ex-Speakers of the Commons Viscounts and after that, well, just some very few special people (such a William Whitelaw who became a Viscount, and everyone was assured that he only had daughters so it would not be inherited).
That is, Blair didn’t so much change the usual method of appointment, for that carried on in much the same way it had for the previous few decades. What he did do was remove the extant hereditaries (except for 92 of them, which is a whole other story). He also created a number of peerages in order to try and balance the party memberships in the Lords. But not excessively so perhaps. There’s a nice listing here of the numbers created under each PM and how many per year. Blair’s numbers are well above the historical average, yes, but rather below Cameron’s numbers per year (Cameron, of course, is trying to reverse the balance in favour of Labour that Blair engineered).
In other words it wasn’t so much “replacement” as the exclusion of the hereditaries leading to a much smaller House.
He also addresses the voiced concern that so many peers have (shock, horror!) business ties that might influence their voting:
Yes, many do indeed have contacts with firms in the economy. Quite possibly too many with not the right kind of firm. But then look back up to that first quote from the article. The Life Peers are drawn from, among other places, the captains of industry (and yes, senior trade union leaders get an equal look in, as do left leaning academics, Lord Glasman comes to mind there, as does my old professor, Lord Layard). If you appoint people from industry to the second house of the legislature then you’re going to have people with links to, and quite possibly paycheques from, industry in that second house of the legislature. George Simpson become Lord Simpson (one of them, there are several I think with that name, the distinction becoming “Simpson of Where”) while he was still ruining GEC. So, obviously, there was the Chairman of a defence related company sitting in the House of Lords. But he was appointed because he was head of GEC.
Similarly, one of the particular peers I did some work for had been instrumental in the creation and running of a very successful financial services firm. It was in part what he was made a Lord for. And while I’ve no idea what his financial relationship with his old firm is or was it wouldn’t surprise me if he was still drawing a paycheque or a pension from it.
November 13, 2014
After World War II, many left-wing European governments wanted to do something about unemployment. As I discuss extensively in my book, unemployment is about the worst thing that can happen to you in a modern democracy, short of death or dismemberment. So they passed laws making it very, very difficult to fire workers. In Italy, for example, a judge could reverse a layoff decision, not because you’d fired the worker unjustly, but because the judge didn’t think you needed to cut staff. Hurrah! Finally, workers were protected from the dark specter of unemployment!
Well, not quite. Workers were thrilled; employers were terrified. Now hiring a worker meant you were stuck with them unless they committed some absolutely flagrant offense — like, say, emptying the till and running out the door.
That’s a hell of a commitment to make to someone you barely know. So employers didn’t want to hire scary strangers; they wanted to hire close friends and family. Or, better yet, no one at all. Youth unemployment in many of these nations was staggering. The insiders had a great deal, but people without jobs found themselves consigned to a series of temporary, not-very-well-paid contracts. Or the dole.
The lesson is that when you make it harder to exit, you also make people reluctant to enter.
Megan McArdle, “Can Limiting Divorce Make Marriage Stronger?”, Bloomberg View, 2014-04-16
November 12, 2014
In The Federalist, Daniel Payne explains what the food nannies really mean by the term “national food policy”:
In the past I have used the term “food system” as shorthand for the industrial paradigm of food production, but for Bittman et al. to talk about the “food system” in such a way exposes it for the ridiculous concept it really is. There is no “food system,” not in the sense of a truly unified body of fully interdependent constituent parts: the “food system” is actually composed of millions of individuals acting privately and voluntarily, in different cities, counties, and states, as part of different companies and corporations and individual businesses, in elective concert with each other and with the rest of the world. To speak if it as a single “system” is deeply misguided, at least insofar as it is not a single entity but an endlessly complex patchwork of fully autonomous beings.
Thus when the authors write about “align[ing] agricultural policies,” they are not speaking in some ill-defined abstract about government policy; they are talking about forcing actual farmers to grow and do things the authors want. When they write of the Environmental Protection Agency and the U.S. Department of Agriculture monitoring “food production,” they are actually advocating that these federal agencies go after and punish people who are not farming in the way the authors want them to farm — and all this without Congress having passed a single law.
The authors are advocating, in other words, for a kind of executive dictatorship over the nation’s farmers, farms, and food supply. While it is unsurprising that they would use this dictatorship to attack the people who grow the food, it is also undeniable that this “national food policy” would target consumers as well. Such a “food system” cannot exist, after all, without people who are willing to purchase and consume its products.
The authors are not merely fed up with their big agribusiness boogeymen; they are also fed up with you for buying agribusiness products, and they want to use the government to make you stop. That you have broken no laws now, and will have broken no laws even after this “policy” goes into effect, is immaterial. They wish for the government to boss you around simply because your shopping purchases displease them. That they are too cowardly to come right out and say so is very telling of who they are—as men, and as advocates of the “public health.” Shame on them for being too spineless to tell the truth of their motives.
Tim Worstall isn’t impressed with a recent report that claims traditional energy companies (oil, gas, and coal) get government subsidies that amount to $88 billion per year, just from the G20 countries:
The report itself is here. Have a look at it yourselves, by all means, but here’s the three things they’ve added up to get to that $88 billion figure:
A fossil fuel subsidy is any government action that lowers the cost of production, lowers the cost of consumption, or raises the price received by producers of fossil fuels. Types of fossil fuel subsidies include financial contributions or other support from the government, such as grants and direct payments, tax concessions, non-market investments made as a result of government ownership of fossil fuel companies, in-kind support (including specific infrastructure), credit support (loans and loan guarantees), insurance and indemnification, market price support, procurement, and responsibility for decommissioning (Koplow and Charles, 2010; Steenblik, 2008). This report divides ‘exploration subsidies’ into three categories:
• ‘national subsidies’, such as tax breaks to companies and direct spending by government agencies
• ‘investment by SOEs and
• ‘public financing’ including support from domestic, bilateral and multilateral international (e.g. loans, equity, and guarantees)
To take that second one first, SOEs are state owned enterprises. So when Rosneft spends money on drilling a new well, given that Rosneft is largely state owned (and most certainly closely state connected) then this is a government subsidy to fossil fuel exploration. No, this isn’t normally what we mean by a subsidy and shouldn’t be counted as one. Just that one classification error accounts for up to half of their $88 billion. Just to repeat the error: claiming that investment by a state owned company on purely commercial terms is a subsidy simply isn’t true. If Statoil drills a new well, upon which it makes the usual profits and finances it in the normal manner, this is not a state subsidy. Yet this report is trying to claim that it is.
The public financing part is a bit of a stretch to be honest. The claim is that if the World Bank lends money to open a coal mine in some poor country then that’s a subsidy from the rich countries (who subsidise the World Bank) to fossil fuels. You could, I suppose, make that case but it is very much a stretch. And if you were to make that case then the subsidy would be only the difference between commercial lending terms on that mine and the concessionary terms that the World Bank is offering. Which isn’t what they measure at all.
But the real problem is with their insistence that any tax break is a subsidy. In their estimates of tax breaks they include things that any normal company gets it’s just that given the differences in the extractive industries we tend to give them different names. Every company is, for example, able to write off the cost of R&D against future income. Drilling or surveying is a form of R&D but we just have a slightly different set of names for how fossil fuel companies can write off those costs. To include all of those “tax breaks” as subsidies when they’re on offer, in slightly different forms and slightly different names, to all producers of anything is not quite being accurate.
Update: In a post today, he revisits the subsidies argument.
Here’s one report on what the IEA is saying:
Fossil fuels are reaping $550 billion a year in subsidies and holding back investment in cleaner forms of energy, the International Energy Agency said.
Oil, coal and gas received more than four times the $120 billion paid out in incentives for renewables including wind, solar and biofuels, the Paris-based institution said today in its annual World Energy Outlook.
Yes, all of that is entirely true. And it’s also true, as the IEA has said in the past, that we really would like to stop those subsidies to fossil fuels. On three grounds, the first that they’re very inefficient, the second that they don’t actually reach the poor they’re aimed at and the third that removing them would take us a long way to meeting our climate change targets.
However, nothing is ever that simple: and the big point to note here is that it really isn’t us in the rich countries that are subsidising fossil fuels.
There’s our two numbers, the renewables subsidy and the fossil fuel one. And yes it’s entirely true that we’d like to reduce that second, the fossil fuel one. Either so we can increase the renewables one because we have more money or so we can decrease it as we now longer have two policies working in opposition to each other.
However, here’s the thing for public policy. It’s us in the rich countries, largely so at least, who are subsidising the renewables. Great, that’s under our control. But it’s almost entirely not us in the rich countries subsidising the fossil fuels. That means, absent the reintroduction of colonialism, that those subsidies are not something under our control.
We should also note that these are “real subsidies”. These aren’t games being played with statistics as yesterday’s attempt to persuade us that we do subsidise by $88 billion. We’re not including tax breaks, not totting up R&D allowances or anything. This really is $550 billion in cash being spent by governments to subsidise fossil fuels.