March 18, 2017

Don’t just “fix” CAFE … eliminate it

Filed under: Business, Environment, Government, Technology, USA — Tags: , , — Nicholas @ 03:00

Virginia Postrel on the best idea for fixing the Corporate Average Fuel Economy regulations:

Although Congress originally established the Corporate Average Fuel Economy, or CAFE, standards to conserve gasoline in 1975, the Obama administration justified its sharp hike as a way to curb greenhouse gases under the Clean Air Act. A reversal will almost certainly trigger legal challenges.

Fighting over the right level for fuel-economy mandates obscures the fundamental problem, however. The CAFE standards are lousy environmental policy. Instead of targeting the real issue — burning less gasoline — the mandates meddle in corporate strategy, impose enormous hidden costs, and encourage drivers to hang on to their old gas guzzlers. Republicans should scrap the standards altogether while they control the White House and Congress. The CAFE rules are a terrible way to achieve either fuel savings or lower carbon emissions.

For starters, measuring miles per gallon is a misleading way to think about fuel efficiency. What we need is the reverse: gallons per mile. That more clearly shows how much fuel a given improvement might save. Going from 3.3 gallons per 100 miles (better known as 30 mpg) to 2 gallons per 100 miles (50 mpg) presents a much tougher design challenge than getting from 6.7 gallons per 100 miles (15 mpg) to 4 gallons per 100 miles (25 mpg). Yet the more modest improvement saves more than twice as much gasoline. And that’s without considering the relative popularity of gas guzzlers or how better gas mileage can encourage people to drive more.

And, of course, CAFE standards affect only new vehicles, a tiny percentage of the total. Higher mandates don’t get old ones off the road and, in fact, they may very likely keep gas guzzlers driving longer. Research by economists Mark Jacobsen of the University of California-San Diego and Arthur van Benthem at the Wharton School finds that among vehicles more than nine years old, the least fuel-efficient ones stay on the road the longest. By raising the prices of new vehicles, tighter fuel regulations encourage drivers to buy used ones or simply keep what they already have.

March 14, 2017

DIY Biohacking Can Change The World, If the Government Allows It

Filed under: Bureaucracy, Science, Technology, USA — Tags: , , , — Nicholas @ 04:00

Published on 13 Mar 2017

Biohackers, much like their computer hacker forebears, prefer asking for forgiveness rather than permission.

March 6, 2017

QotD: Organic food “standards”

Filed under: Environment, Government, Health, Quotations, Science, USA — Tags: , , , , — Nicholas @ 01:00

In December 1997 when USDA proposed standards for organic agricultural production, the original version was rejected by the organic enthusiasts, largely because it would have permitted the use of organisms modified with modern genetic engineering techniques (“GMOs”) – which would have been quite sensible in the view of the scientific community. In the end, modern genetic engineering, which employs highly precise and predictable techniques, was prohibited, while genetic modification with older, far less precise, less predictable and less effective techniques were waived through.

The resulting organic “standards,” which are based on a kind of “nature good, technology evil” ethic, arbitrarily define which pesticides are acceptable, but allow “deviations” if based on “need.” Synthetic chemical pesticides are generally prohibited, although there is a lengthy list of exceptions listed in the Organic Foods Production Act – while most “natural” ones are permitted. Thus, advocates of organic agriculture might be described as “pragmatic fanatics.” (Along those lines, the application as fertilizer of pathogen-laden animal manures, as compost, to the foods we eat is not only allowed, but in organic dogma, is virtually sacred.)

What, then, is the purpose of organic standards? “Let me be clear about one thing,” Secretary of Agriculture Dan Glickman said when organic certification was being considered, “the organic label is a marketing tool. It is not a statement about food safety. Nor is ‘organic’ a value judgment about nutrition or quality.”

Organic standards are wholly arbitrary, owing more to the dogma of an atavistic religious cult than to science or common sense. And whatever their merit, as a December 2014 report in the Wall Street Journal described, the standards are not being enforced very effectively: An investigation by the newspaper of USDA inspection records since 2005 found that 38 of the 81 certifying agents – entities accredited by USDA to inspect and certify organic farms and suppliers — “failed on at least one occasion to uphold basic Agriculture Department standards.” More specifically, “40% of these 81 certifiers have been flagged by the USDA for conducting incomplete inspections; 16% of certifiers failed to cite organic farms’ potential use of banned pesticides and antibiotics; and 5% failed to prevent potential commingling of organic and nonorganic products.”


The bottom line is that buying “certified organic” products doesn’t guarantee that they will be free of genetically engineered ingredients. Even so, buying organic should please those consumers who think that paying a big premium for something means that it’s sure to be better. We hope that at least they get the benefit of the “placebo effect.”

Henry I. Miller and Drew L. Kershen, “Fanaticism, Pragmatism and Organic Agriculture”, Forbes, 2015-07-08.

February 5, 2017

QotD: Gaming the LEED certification for fun and profit

Some of my favorites include environmental building requirements tied to government contract approval. The LEED certification is such a joke. There are a ton of “real” categories, like motion detecting lights, solar / thermal filtering windows, CO2 neutral engineering. But if you can’t get enough of that, you can also squeeze in with points for “environmental education”. For instance, a display in the lobby discussing the three solar panels on the roof, or with a pretty diagram of the building’s heat pump system. You can end up getting a platinum LEED certification and still have the highest energy consumption density in the city of Chicago, as it turns out.

The proprietor of the Finem Respice blog, quoted by Warren Meyer, “Diesel Emissions Cheating, Regulation, and the Crony State”, Coyote Blog, 2017-01-14.

January 26, 2017

QotD: Why government intervention usually fails

Filed under: Bureaucracy, Government, Quotations, USA — Tags: , , , , , — Nicholas @ 01:00

We saw in an earlier story that the government is trying to tighten regulations on private company cyber security practices at the same time its own network security practices have been shown to be a joke. In finance, it can never balance a budget and uses accounting techniques that would get most companies thrown in jail. It almost never fully funds its pensions. Anything it does is generally done more expensively than would be the same task undertaken privately. Its various sites are among the worst superfund environmental messes. Almost all the current threats to water quality in rivers and oceans comes from municipal sewage plants. The government’s Philadelphia naval yard single-handedly accounts for a huge number of the worst asbestos exposure cases to date.

By what alchemy does such a failing organization suddenly become such a good regulator?

Warren Meyer, “Question: Name An Activity The Government is Better At Than the Private Actors It Purports to Regulate”, Coyote Blog, 2015-06-12.

January 24, 2017

QotD: Token ownership to game government mandates

Filed under: Bureaucracy, Business, Quotations, USA — Tags: , , , — Nicholas @ 01:00

I was researching energy shorts and had a ton of discussions with former regulatory types in the U.S. I was stunned to discover that there was widespread acknowledgement on the regulatory side that many regulations were impossible to comply with and so “compliance trump cards” were built into the system.

For instance, in Illinois you get favorable treatment as a potential government contractor if you “comply” with all sorts of insane progressive policy strictures. “Woman or minority owned business” or “small business owner”, as an example. Even a small advantage in the contracting process for (for example) the State of Illinois puts you over the edge. Competitors without (for instance) the Woman or Minority Owned Business certification would have to underbid a certified applicant by 10-15% (it’s all a complex points system) to just break even. It got so bad so quickly that the regs were revised to permit a de minimis ownership (1%). Of course, several regulatory lawyers quickly made a business out of offering minority or women equity “owners” who would take 1% for a fee (just absorb how backwards it is to be paying a fee to have a 1% equity partner) with very restrictive shareholder agreements. Then it became obvious that you’d get points for the “women” and “minority” categories BOTH if you had a black woman as a proxy 1% “owner.” There was one woman who was a 1% owner of 320 firms.

The proprietor of the Finem Respice blog, quoted by Warren Meyer, “Diesel Emissions Cheating, Regulation, and the Crony State”, Coyote Blog, 2017-01-14.

January 23, 2017

Five easy fixes to improve US federal health policies

Filed under: Bureaucracy, Government, Health, USA — Tags: , , — Nicholas @ 03:00

Scott Alexander finds, to his surprise, that two of the candidates for the post of FDA commissioner in the Trump administration are following his blog or social media profile. To mark that, he offers five easy-to-implement policy fixes that would make a difference:

1. Medical reciprocity with Europe and other First World countries […] Right now, Europe has a licensing agency about as strict as the FDA approving medications invented in Europe. Any pharma company that wants their medication approved in both the US and Europe has to spend a billion or so dollars getting it approved by the FDA, and then another billion or so dollars getting it approved by the Europeans. A lot of pharma companies don’t want to bother, with the end result that Europe has many good medications that America doesn’t, and vice versa. Just in my own field, amisulpride, one of the antipsychotics with the best safety/efficacy balance, has been used successfully in Europe for twenty years and is totally unavailable here despite a real need for better antipsychotic drugs. If the FDA agreed to approve any medication already approved by Europe (or to give it a very expedited review process), we could get an immediate windfall of dozens of drugs with unimpeachable records for almost no cost. Instead, in the real world, we’re cracking down on imported Canadian pharmaceuticals because the Canadians don’t have exactly our same FDA which means that for all we know they might be adding thalidomide to every pill or something. This is exactly the sort of silly anti-competitive cronyist practice that a principled intelligent libertarian could do away with.

2. Burdensome approval process for generic medications […] How come Martin Shkreli can hike the dose of an off-patent toxoplasma drug 5000%, and everyone just has to take it lying down even though the drug itself is so easy to produce that high school chemistry classes make it just to show they can? The reason is that every new company that makes a drug, even a widely-used generic drug that’s already been proven safe, has to go through a separate approval process that costs millions of dollars and takes two to three years – and which other companies in the market constantly try to sabotage through legal action. Shkreli can get away with his price hike because he knows that by the time the FDA gives anyone permission to compete with him, he’ll have made his fortune and moved on to his next nefarious scheme. If the FDA allowed reputable pharmaceutical companies in good standing to produce whatever generic drugs they wanted, the same as every other company is allowed to make whatever products they want, scandals like Daraprim and EpiPens would be a thing of the past, and the price of many medications could decrease by an order of magnitude. […]

3. Stop having that thing allowing companies to “steal” popular and effective drugs that have been in the public domain for years, claim them as their private property, shut down all competitors, and jack up the price 10x just by bringing them up to date with modern FDA bureaucracy.

4. Stop having that thing where drug companies can legally bribe other companies not to compete with them. I like this one because it sounds anti-libertarian (we’re imposing a new regulation on what companies can do!) but I think it’s exactly the sort of thing that the crony capitalists would never touch but which principled intelligent libertarians like O’Neill and Srinivasan might be open to, in order to bring more actors into the marketplace.

5. Stop thwarting consumer diagnostic products and genetic tests […] Srinivasan comes from the genetic testing world himself, so he’s likely to be extra sympathetic to this.

January 16, 2017

QotD: The process of de facto legalization of marijuana in Vancouver

Filed under: Cancon, Economics, Law, Quotations — Tags: , , , , — Nicholas @ 01:00

Despite the fact that I don’t smoke pot — because if I do I will be asleep in approximately three minutes — I have long advocated complete legalization. Largely for libertarian reasons but also because the criminal law is essentially unenforceable. But the medical marijuana regulatory scheme interests me as a grand example of government getting something entirely wrong.

The original medical marijuana regulations allowed people to buy from a single supplier or grow their own or designate a grower. While the system was far from perfect, and found to be unconstitutional, it had the advantage of regulating with a very light hand. But, oh Heavens, there was “leakage”. Medical pot was not always only used by medical users. Yikes.

So Health Canada came up with a regulatory scheme which was going to licence grower/distributors and put the users and their growers out of business. Enter Big Green and a bunch of promoters who sold shares in publicly listed companies based on the new regulations. The promoters made a lot of money using a simple story: there were 45,000 medical pot users in Canada (projected to grow to 450,000 users in a decade) who each used about 3 grams a day and who would have no choice but to pay between $8 and $15 a gram for their “medicine”. You do the math.

To my not very great surprise, people used to paying $0 to $5.00 a gram did not rush to sign up. And, very quickly, at least in Vancouver, pot shops – for registered users only of course – began to spring up. Becoming a registered user was not tough. As the 5th Estate guy discovered, telling a naturopath a charming story about stress and sleep disturbance over Skype gets you your registration. At which point you are free to buy. (I note the 5th Estate did not ask the pot shop owners where they were getting their pot – which is a rather good question because it is certainly not from the licenced growers as they are not allowed to sell except by mail order.)

As anyone who has lived in Vancouver knows, the Vancouver Police Department has better things to do than bust dispensaries. Plus, given the injunction halting enforcement of the Health Canada regs, it is not obvious what they would bust the dispensaries for that would have a chance of getting past the Crown. But even if they did bust the dispensary and even if the Crown brought charges, it is pretty difficult to see how a judge could find a person guilty who was selling to a registered user.

The problem is that the boffins at Health Canada have not quite figured out that their regulations are assuming a world which does not exist. First, they assume that people want to smoke “legal pot”. That might be true if police forces were in the habit of kicking down doors to arrest people smoking pot at home but, I fear, that hasn’t happened in years. (It may occasionally occur as a means of harassment but the probable cause issue is usually sufficient to kick the charges.)

Jay Currie, “Gone to Pot”, Jay Currie, 2015-06-15.

January 13, 2017

QotD: Markets and politics

Filed under: Economics, Politics, Quotations, USA — Tags: , , — Nicholas @ 01:00

Markets adapt to political changes, and the hierarchy of values that distinguishes between an hour’s worth of warehouse management, an hour’s worth of composing poetry, an hour’s worth of brain surgery, and an hour’s worth of singing pop songs is not going to change because a politician says so, or because a group of politicians says so, or because 50 percent + 1 of the voters say so, or for any other reason. To think otherwise is the equivalent of flat-earth cosmology. In the long term, people’s needs and desires are what they are; in the short term, you can cause a great deal of chaos in the economy and you can give employers additional reasons to automate rote work. But you cannot make a fry-guy’s labor as valuable as a patent lawyer’s by simply passing a law.

This is not a matter of opinion — that is how the world actually works. One of the many corrosive effects of having a political apparatus and a political class dominated by lawyers is that the lawyerly conflation of opinion with reality becomes a ruling principle. Lawyers and high-school debaters (the groups are not alien to one another) operate in a world in which opinion is reality: If you convince the jury or the debate judges that your argument is superior, or if you can get them to believe that your position is the correct one, then you win, and the question of who wins is the most important one if you are, e.g., on trial for murder. But if you shot that guy you shot that guy, regardless of what the jury says — facts are facts. Galileo et al. were right (or closer to right) about the organization of the solar system than were Fra Hieronimus de Casalimaiori and the Aristotelians, and the fact that Galileo lost at trial didn’t change that.

Kevin D. Williamson, “Bernie Sanders’s Dark Age Economics”, National Review, 2015-05-27.

December 30, 2016

Thanks to stealth regulations, your shower sucks

Filed under: Bureaucracy, Environment, Government, USA — Tags: , — Nicholas @ 04:00

Jeffrey Tucker on why it’s not just your imagination — showers really were better in the old days:

Even I, who have been writing about terrible American showers for 10 years, was shocked with delight at the shower in Brazil. Now, here we have a socialist country and an entire population that grouses about how hard it is to get ahead. And yet, step into the shower and you have a glorious capitalist experience. Hot water, really hot, pours down on you like a mighty and unending waterfall, sort of like it used to sea to shining sea.

At least the socialists in Brazil knew better than to destroy such an essential of civilized life.

But here we’ve forgotten. We have long lived with regulated showers, plugged up with a stopper imposed by government controls imposed in 1992. There was no public announcement. It just happened gradually. After a few years, you couldn’t buy a decent shower head. They called it a flow restrictor and said it would increase efficiency. By efficiency, the government means “doesn’t work as well as it used to.”

We’ve been acculturated to lame showers, but that’s just the start of it. Anything in your home that involves water has been made pathetic, thanks to government controls.

You can see the evidence of the bureaucrat in your shower if you pull off the showerhead and look inside. It has all this complicated stuff inside, whereas it should just be an open hole, you know, so the water could get through. The flow stopper is mandated by the federal government.

To be sure, the regulations apply only on a per-showerhead basis, so if you are rich, you can install a super fancy stall with spray coming at you from all directions. Yes, the market invented this brilliant but expensive workaround. As for the rest of the population, we have to live with a pathetic trickle.

It’s a pretty astonishing fact, if you think about it. The government ruined our showers by truncating our personal rights to have a great shower even when we are willing to pay for one. Sure, you can hack your showerhead but each year this gets more difficult to do. Today it requires drills and hammers, whereas it used to just require a screwdriver.

While the details are American, the Canadian market generally operates in lockstep with theirs, so when Tucker talks about the regulated reduction in both water heater maximum temperature and available water pressure, it’s probably the same here in Canada (and possibly worse, given our longer history of regulatory interference).

December 14, 2016

Econ Duel: Why Is the Rent So Damn High?

Filed under: Economics, Government, USA — Tags: , , — Nicholas @ 02:00

Published on 13 Dec 2016

This week: Matt Yglesias and Tyler Cowen in a brand new Econ Duel.

Next week: Another Econ Duel! Scott Sumner and Larry White will take on monetary policy.

You’ve no doubt heard it before: the rent is too damn high!

In major cities across the United States, rent prices have been skyrocketing for some time. As a percentage of median income, rent is much higher for those that choose city life over suburbia.

But why are rental prices in these cities so expensive, and what can we do about it?

It’s a classic case of supply and demand: lots of people want to move to big cities because of the opportunities they afford. Naturally, they demand housing. But the supply is often short due to many factors, from geography to regulations. What does economics tell us happens when there’s a lot of demand, but not so much supply? Prices rise. As a consequence, many people are priced out of pursuing the lucrative opportunities available in major cities.

Coastal cities, like San Francisco and New York, have obvious geographical restrictions on building “out.” One way to deal with this problem is to build upwards with more skyscraper housing. This often isn’t feasible due to regulations on building heights, density, parking requirements, etc. But these regulations could be lessened or removed, allowing big cities to become denser and lowering rent prices. Lifelong city-dweller Matt Yglesias discusses this approach in this Duel.

On the other side, Tyler Cowen, who has always lived in the suburbs, argues that allowing cities to become denser may only provide a short-term solution. As more people move in, the cities become more productive with higher incomes for their inhabitants. And the rents rise again.

Of course, we’ve merely skimmed over the arguments here, and you’ll have to watch the Econ Duel to get the full picture! Check it out and let us know in the comments who you think makes a better case.

QotD: Fill-in-the-blank OECD fun

Filed under: Bureaucracy, Economics, Humour — Tags: , , , — Nicholas @ 01:00

When writing about the Organization for Economic Cooperation and Development, an international bureaucracy based in Paris, my life would be simpler if I created some sort of automatic fill-in-the-blanks system.

Something like this.

    The OECD, subsidized by $____ million from American taxpayers, has just produced a new _________ that advocates more power for governments over the _________ sector of the economy.

But this may not be sufficiently descriptive.

So maybe I should create a multiple choice exercise. Sort of like when students take tests and get asked to circle the most appropriate answer.

    The bureaucrats at the Paris-based OECD, working in cooperation with union bosses/class-warfare advocates/other tax-free international bureaucrats/politicians, have released a new report/study/paper urging more power/control/authority for governments in order to increase regulation/taxes/spending/redistribution/intervention.

You may think I’m trying to be funny, but this is totally serious.

How else would you describe a bureaucracy that consorts and cooperates with leftist groups like Occupy Wall Street and the AFL-CIO and routinely published propaganda in favor of Obama’s agenda on issues such as global warming, government-run healthcare, so-called stimulus, and class-warfare taxation.

And never forget that American taxpayers finance the biggest chunk of this bureaucracy’s budget.

Adding insult to injury, the bureaucrats at the OECD get tax-free salaries, which makes their relentless support for higher taxes on the rest of us even more obnoxious.

Dan Mitchell, “More Statist Propaganda from the Taxpayer-Funded OECD”, International Liberty, 2015-04-12.

December 2, 2016

QotD: Socialism

Filed under: Government, Politics, Quotations — Tags: , , , — Nicholas @ 01:00

Socialism, like the ancient ideas from which it springs, confuses the distinction between government and society. As a result of this, every time we object to a thing being done by government, the socialists conclude that we object to its being done at all. We disapprove of state education. Then the socialists say that we are opposed to any education. We object to a state religion. Then the socialists say that we want no religion at all. We object to a state-enforced equality. Then they say that we are against equality. And so on, and so on. It is as if the socialists were to accuse us of not wanting persons to eat because we do not want the state to raise grain.

Frédéric Bastiat, The Law, 1850.

November 28, 2016

Legalized political corruption

Filed under: Government, Politics, USA — Tags: , , , , , — Nicholas @ 03:00

Walter Williams on the real danger the hyper-rich pose to the body politic:

Microsoft co-founder Bill Gates, having a net worth of $81.8 billion, and Amazon.com CEO Jeff Bezos, having a net worth of $70.4 billion, are the nation’s two richest men. They are at the top of the Forbes 400 list of America’s superrich individuals, people who have net worths of billions of dollars. Many see the rich as a danger. New York Times columnist Bob Herbert wrote, “It doesn’t really matter what ordinary people want. The wealthy call the tune, and the politicians dance.” His colleague Paul Krugman wrote, “On paper, we’re a one-person-one-vote nation; in reality, we’re more than a bit of an oligarchy, in which a handful of wealthy people dominate.” It’s sentiments like these that have led me to wish there were a humane way to get rid of the rich. For without having the rich around to be whipping boys and distract our attention, we might be able to concentrate on what’s best for the 99.9 percent of the rest of us.

Let’s look at the power of the rich. With all the money that Gates, Bezos and other superrich people have, what can they force you or me to do? Can they condemn our houses to create space so that another individual can build an auto dealership or a casino parking lot? Can they force us to pay money into the government-run — and doomed — Obamacare program? Can they force us to bus our children to schools out of our neighborhood in the name of diversity? Can they force us to buy our sugar from a high-cost domestic producer rather than from a low-cost Caribbean producer? The answer to all of these questions is a big fat no.

You say, “Williams, I don’t understand.” Let me be more explicit. Bill Gates cannot order you to enroll your child in another school in order to promote racial diversity. He has no power to condemn your house to make way for a casino parking lot. Unless our elected public officials grant them the power to rip us off, rich people have little power to force us to do anything. A lowly municipal clerk earning $50,000 a year has far more life-and-death power over us. It is that type of person to whom we must turn for permission to build a house, ply a trade, open a restaurant and do myriad other activities. It’s government people, not rich people, who have the power to coerce us and rip us off. They have the power to make our lives miserable if we disobey. This coercive power goes a long way toward explaining legalized political corruption.

November 24, 2016

QotD: Black hats and white hats

Filed under: Economics, Government, Politics, Quotations, USA — Tags: , , , , — Nicholas @ 01:00

When considering the major failures of recent American governance – the 2008-09 financial crisis, the catastrophe that is U.S. policy in the Mideast – the one thing that any honest-minded person must conclude is: Nobody meant for things to turn out this way. It is impossible to make precise predictions about the effects of government policy; that is the nature of systems characterized by high levels of complexity. It’s one thing to predict that it’ll be colder during the winter, but another thing to predict down to the millimeter how much snow will fall on a particular acre in rural Maine on the third Wednesday in February, which is really what we expect from our public policy.

Classic cowboy movies, in contrast, are not complex at all: The good guys wear white hats, the bad guys wear black hats, all hats remain firmly affixed to all heads at all times, and that’s that. You can pretty much always predict how an old Western is going to turn out.

But that isn’t how the real world works.

On Tuesday, I had a conversation about Elizabeth Warren and Wall Street, pointing out that the popular version of that story – Senator Warren vs. Wall Street – is so oversimplified as to be not merely useless but misleading. The reality is that there are people working on Wall Street who dislike Senator Warren – investors and bankers, mainly – and people who adore her – notably Wall Street lawyers, who are reliable donors to her campaign and to those of other Democrats. My naïve interlocutor said: “Hopefully, it’s the lawyers that fight against Wall Street,” as though there were such a thing, as though there weren’t nice progressive lawyers in Manhattan who jokingly refer to their yachts as the SS Dodd-Frank.

Spend any time writing about this sort of thing and you’ll hear angry and panicked denunciations of derivatives-trading from people who pretty clearly do not know what a derivative is, just as you’ll hear paeans to Glass-Steagall sung by people who don’t understand the difference between a commercial bank and an investment bank, who don’t know how Goldman-Sachs makes its money or what it is that Standard & Poor’s does.

But they’re quite sure they know who is wearing the black hats.

Kevin Williamson, “Black Hats and White Hats”, National Review, 2015-04-15.

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