Posts from — July 2011
[Editor note: The growing importance of offshore mineral development (including oil and gas) makes property rights and the rule of law important for 21st century development.
In this post, Mr. Borders introduces us to this new frontier of human ingenuity. Cities of the sea will be way stations for a variety of commercial activities, including ultra-deep mineral development in future decades and centuries. ]
“History teaches us that we see incredible gains for civilization whenever a new frontier is developed. Seasteads represent a freedom frontier unique in the world: offering a chance to provide social, economic and political freedom to its citizens. Humanity will benefit from more places open to liberty, opportunity, free markets and innovation in everything.”
- Jim Von Ehr, founder and CEO, Zyvex Labs
When I tell people I’ve been working part-time as a scholar with the Seasteading Institute (see description below), I usually encounter polite skepticism. Fair enough. New things are often greeted with skepticism. But I’d like to offer some reasons to be lessskeptical of seasteading. In particular, this movement/enterprise could go toward solving some of the most pressing resource and environmental problems of our time.
Imagine a city on the sea. This city could very well be a cluster of floating platforms like the platform pictured below. Given the modularity and mobility of these future platforms, each will likely position itself as a beneficial unit within a commercial ecosystem.
Like benevolentfungi, seasteads are likely to accrete where their presence is most highly valued. These clusters might crop up near resource-rich areas. Or they might emerge near urban centers. Wherever they arise, seastead clusters will likely be the next frontier of human expansion. At the Seasteading Institute, we are most excited about the new legal rulesets that will emerge as people live, love, barter and cooperate.
Common(s) Problems? [Read more →]
July 29, 2011 1 Comment
At a time when the federal government is debating whether to raise the debt ceiling, the U.S. Department of Energy’s Loan Programs Office (LPO) is offering guaranteed financing to First Solar Inc. for three solar panel projects in California for $4.5 billion. Not million but billion.
Carefully analyzed, these projects do little to fund efficient energy production or create permanent jobs. Such largesse is one of many rich targets for immediate deficit reduction in any budget deal.
LPO specifically targets projects that promote clean energy and includes “job creation; reducing dependency on foreign oil; improving our environmental legacy; and enhancing American competitiveness in the global economy of the 21st century.”
Specifically, these loan guarantees promote projects that include biomass, hydrogen, wind and hydropower, advanced fossil energy coal, carbon sequestration practices and technologies, electricity delivery and energy reliability, alternative fuel vehicles, industry energy efficiency projects, pollution control equipment, nuclear, and solar power.
Moreover, support by the LPO is for borrowers in case they default on their financial obligations while the project is constructed. Clearly, this is all about government picking energy winners at the expense of market preferences and forces. [Read more →]
July 28, 2011 5 Comments
MasterResource is home to a growing number of grassroot environmentalists who are challenging the Washington, D.C. establishment to reconsider industrial wind turbines. Jen Gilbert’s Dear Sierra Club (Canada): I Resign Over Your Anti-Environmental Wind Support and Jon Boone’s three-part The Sierra Club: How Support for Industrial Wind Technology Subverts Its History, Betrays Its Mission, and Erodes Commitment to the Scientific Method of what Robert Bradley has summarized in his post, Windpower: Environmentalists vs. Environmentalists (NIMBYism, precautionary principle vs. industrial wind).
My piece for National Review (reprinted below) looks at the bigger picture of how reasoned criticism and intellectual diversity have struggled to penetrate the environmental mainstream. The result of such intolerance has been Faustian bargains such as the Sierra Club going all-in for wind power (see their response to Robert Bryce’s recent op-edin the New York Times). After all, it was the Los Angeles director of the Sierra Club that coined the moniker, Cuisinarts of the Air.
Scholarship and reasoned dissent are essential for public trust. The faster this is recognized by mainstream environmental groups, the better the result for both the environment and economy.
by Steve Hayward
When Gregg Easterbrook’s voluminous book A Moment on the Earth: The Coming Age of Environmental Optimism was published in 1995, it received the predictable reaction from the environmental community: outrage. Despite– or probably because of– Easterbrook’s bona fides as a mainstream-liberal writer for The New Republic, The Atlantic, The New Yorker, and Newsweek, the environmental lobby swung into full distort-and-denounce mode. The Environmental Defense Fund, for example, alleged the existence of factual errors that “substantially undermine his thesis that many environmental problems have been overstated.” [Ed.: See EDF's Part I and Part II rebuttals] [Read more →]
July 27, 2011 6 Comments
Wind Turbines and Whooping Cranes: Going Soft on Soft Energy (politically correct environmental damage)
The Federal agency charged with protecting endangered species under the Endangered Species Act is evaluating a plan to allow a 200-mile wide corridor for wind energy development from Canada to the Gulf of Mexico. The draft land-based guidelines–made ostensibly to avoid, minimize, and compensate for effects to fish, wildlife, and their habitats” — represent one more example of overt and destructive favoritism for an industry that already benefits from fat tax subsidies and mandated market purchases.
U.S. Fish and Wildlife Service Plan
The plan by U.S. Fish and Wildlife Service (FWS) would allow for killing endangered whooping cranes. The government’s environmental review will consider a permit, sought by 19 energy developers, which would allow constructing turbines (over 300 feet tall) and associated transmission lines on non-federal lands in nine states from Montana to the Texas coast, encroaching on the migratory route of the cranes.
The permit from the FWS would allow the projects to “take” an unspecified number of endangered species. Under the Endangered Species Act, “take” is just the euphemism for killing or injuring an endangered species. The government can issue permits to kill or injure listed species with no penalties or risks of lawsuits to developers if they agree to craft conservation plans.
The Administration’s latest wind energy proposal raises concerns because the developments would imperil the habitat of the whooping cranes, including the Central Flyway (shown in purple), a migratory path that cuts through North America, not surprisingly where wind developers want to build, because of prevailing winds. [Read more →]
July 26, 2011 21 Comments
The first six months of 2011 are now in the books. Heat waves are currently in the headlines, but how does the national average temperature compare to other years and ‘normal’? And what does the first half of the year portend for the year as a whole?
The indication is that 2011 will mark the continued return of U.S. national temperatures to conditions much closer to the 20th century mean, down from the unusually elevated temperatures that characterized the 1998–2010 period.
If this proves to be the case, it strongly suggests that the unusually warm decade from 1998–2007, was just that–unusual–and does not best represent the expected trend or the climate state of the U.S. for the next several decades to come.
The U.S. National Climatic Data Center has compiled a data set representing the annual average temperature for the contiguous United States which dates back to 1895.
Figure 1 shows that history, from the beginning through 1997. Over that time, there was really not much worth writing home about—there were signs of inter-decadal variability, but nothing that seemed to scream “dangerous anthropogenic global warming!” The overall upward trend was being driven more by cool conditions in the early decades of the record, rather than warm conditions at the end of the record. [Read more →]
July 25, 2011 10 Comments
The Crisis of Interventionism (Mises’s 1949 wisdom speaks to the limits of government- forced energy transformation today)
Ludwig von Mises’s Human Action: A Treatise on Economics might stand as the single greatest social science book of the 20th century. Written in 1949, with slight revisions in 1961 and 1966, Human Action has been described as economics as it might have been and should be. No economists jokes here! This book is all about using sound assumptions and logically deriving the qualitative truths, the science, of economics.
I spent the summer of my sophomore year in college (1975) teaching tennis and studying Human Action. It was slow reading, and I worked up my own index to help me. I underlined profusely and wrote margin notes.
It was exhilarating. I had just changed my major from business to economics and wanted a solid foundation, a worldview, to understand the business and economic world. This book gave me that–and more.
Part Six of the 900-page treatise is called The Hampered Market Economy. Mises explains government intervention in detail, from taxation to production controls to consumption rules. He also examines the redistributive state and business-government corporativism. Money and credit manipulation by decree is also covered.
This part ends with a section, The Crisis of Intervention. MasterResource this week has explored the current crisis of Big U.S. Government in light of the Misesian concept of the exhaustion of the reserve fund.
The Obama Administration today is at the crossroads of fundamentally less or more government. More federal spending, even greater budget deficits, federalizing and socializing economic sectors, forcefully transforming factors of production (think energy) will no doubt bring on a feared death spiral.
But more Americans than ever have woken up to this fact. The path of significant and continuing government cutbacks–bringing balanced budgets in the short-to-medium-term and tax cuts in the longer term–is part of this libertarian renaissance.
by Ludwig von Mises [Read more →]
July 22, 2011 5 Comments
“The interventionist in advocating additional public expenditure is not aware of the fact that the funds available are limited. He does not realize that increasing expenditure in one department enjoins restricting it in other departments. In his opinion there is plenty of money available. The income and wealth of the rich can be freely tapped…. It never occurs to him [think Obama] that grave arguments could be advanced in favor of restricting public spending and lowering the burden of taxation. The champions of cuts in the budget are in his eyes merely the defenders of the manifestly unfair class interests of the rich.”
- Ludwig von Mises, Human Action: A Treatise on Economics (1949), 1966, pp. 856–57.
“This is where we stand in our current debt ceiling debate. Government is too big, too bloated. Washington faces a spending problem, not a revenue problem. But too many within the economy depend on the government transfers to live and to work. Yet the economy is not growing at a rate that can afford the illusion. Where are we to go from here?”
- Peter Boettke, “Why The Great Stagnation Thesis is the Most Subversive Libertarian Argument of Our Age,” July 15, 2011.
Energy subsidies are now on the table in the debt-ceiling debate now raging before Congress. But a macro approach needs to be taken to encompass subsidies in the electric generation market (wind and solar in particular), not only in the transportation fuels (oil and ethanol).
Congressional lawmakers interested in budget reduction have set their sights on eliminating ethanol subsidies and oil and gas tax breaks. But renewable energy subsidies–the holly grail of Big Environmentalism and the Obama Administration–are also under pressure.
Earlier this year, the Department of Energy’s Section 1705 loan guarantee was cut. The popular Section 1603 cash grant program created under ARRA is expected to expire later this year. And some industry insiders indicate the federal production tax credit, in effect since passage of the Energy Act of 1992, will be allowed to sunset at the end of 2012.
Indeed, the moment has come to consider eliminating all of the energy subsidies–simultaneously–to let the natural economics of a freer market prevail.
Consumer-driven energy decisions will create winners and losers, for sure. That is the creative destruction of the marketplace. The public is far better served when industries compete for market share and profits rather than fight for political favoritism and handouts.
Windpower: A Trail of Broken Promises
The U.S. wind market, which has relied on public funding since its inception in the 1970s, has a long trail of false expectations and broken promises.
July 21, 2011 18 Comments
The Shale Gas Hit Piece: The New York Times (minus public editor Brisbane) Doubles Down on a Bad Bet
When New York Magazine reported earlier this month that the national editor of the New York Times had sent an internal memo laying out a “surprisingly detailed” defense of reporter Ian Urbina’s latest front-page attack on natural gas, the hope was that the memo would spur an equally detailed response by Arthur Brisbane, the Times’ public editor.
That hope was realized when Mr. Brisbane’s 1,100-word piece was postedon the paper’s website over the weekend, a column in which Brisbane takes square aim at the Times for going “out on a limb” and “lack[ing] an in-depth dissenting view in the text” (see the Appendix below for more of his piece).
The Brisbane piece is remarkable for a number of reasons and on a number of levels, continuing the healthy scrutiny that spontaneously emerged from various respected experts over the past three weeks.
Just yesterday, in fact, the head of the U.S. Energy Information Administration (EIA) told the U.S. Senate that “the data clearly show that shale gas is rapidly becoming a significant source of natural gas supply” – a direct hit to the Times. According to POLITICO, he went on to tell the lawmakers that emails from EIA cited by the Times as part of its reporting “came from an entry-level staffer who had been hired as an intern in 2009.”
Digging In and Doubling Down
Notably, as the criticisms of the Times have continued to pile up — most recently from paper itself — the response on the part of the reporter who authored the piece (and the editors who allowed it to run on the paper’s front-page) has been to dig-in and double-down. In an interview on public radio last month, Urbina sought to defend his story by characterizing it simply as a way to advance a “full and candid discussion of all the factors that play into the long-term viability of [natural gas].”
Urbina’s editors took a different tack, basing their defense on the notion that, since it took him six months to do it, and since it includes lots of emails from “industry insiders,” it must be good. Of course, activity isn’t the same thing as achievement. Just like volume isn’t the same thing as veracity.
Brisbane Weighs In [Read more →]
July 20, 2011 8 Comments
Editor Note: Dr. Ebeling’s two-part post (Part I yesterday) provides the necessary background to understand how debt reduction is driving energy policy. Regarding the budget fight, E&E News (see Appendix) reported yesterday: “As the proverbial eleventh hour looms for the nation’s maxed-out debt limit, this week brings energy-policy battles of all sizes — from how to divide offshore-drilling revenue to the lessons gleaned from recent oil spills — that will play out amid the larger fiscal showdown.”
“Austria was successful in pushing through policies that are popular all over the world. Austria has the most impressive records in five lines: she increased public expenditures, she increased wages, she increased social benefits, she increased bank credits [monetary expansion], she increased consumption. After all these achievements she was on the verge of ruin.”
- Fritz Machlup, “The Consumption of Capital in Austria,” Review of Economic Statistics (January 15, 1935), pp. 13-19 at 19.
U.S. spending and the accumulated deft load is more than the economy can bear. What is collected in both personal and corporate taxes is not enough to cover all that the government spends because government’s promises to an ever-expanding spider’s web of special interest groups vastly exceeds what the country can afford to pay out of currently earned income. If the government attempted to raise that additional 40 cents out of every dollar it presently spends through borrowing by raising taxes, it would bring the economy to a screeching halt.
It would soon be discovered that “soaking the rich” even more would barely provide a handful of drops to cover the spending in excess of taxes collected. It would have to be admitted that the only source of additional government revenue to fill the deficit gap would be significantly higher taxes on the broad middle class of income earners, as well as adding to the tax rolls many of those currently paying no taxes.
Income earners would save even less than now; incentives and resource ability for private sector investment in new or existing businesses in the U.S. would be crushed – along with any market- based job creation. The capital for research and technological development would dry up even more in America, and capital that could get away would flee to more business-friendly countries.
Nor can the borrowing binge continue for very much longer. Net interest payments on U.S. government debt presently equals about 1.3 percent of GDP. Under current borrowing projections, with no change in planned government spending, by 2020 interest payments on the government debt would nearly double to 3.2 percent of GDP. Between 2011 and 2020, this would mean that the United States government would have to pay a total of $4.8 trillion in interest payments.
July 19, 2011 1 Comment
[Editor Note: Obama's transformationist energy policy, enabled by taxpayer largesse, is being whipsawed by the federal deficit crisis. And the energy/environmental statists are running scared. "[Obama] has bought into and reinforced the GOP narrative that debt and spending concerns reign supreme,’ lamented Joe Romm at Climate Progress, “which will undermine short-term and long-term efforts to create jobs or promote clean energy or reduce oil dependence or cut carbon pollution.”
Today and tomorrow, economist Richard Ebeling outlines the macro crisis. On Wednesday, Lisa Linowes of Wind Action makes a case for ending all energy subsidies as a contribution toward fiscal reform.]
The economic crisis through which the United States and much of the rest of the world are now passing is not another supposed instance of the “failure” of unrestrained capitalism. It is the failure of the government’s own policies. In other words, it is a crisis of the Interventionist State.
The recession has been the inevitable outcome of the prior artificial investment boom and housing bubble, which were caused by the misguided and highly expansionary monetary policy of the Federal Reserve between 2003 and 2008. The money supply was increased by nearly 50 percent during this five-year period, and key interest rates, when adjusted for inflation, were at or below zero. Investment and housing decisions were radically out of balance with available real savings to sustain such long-term financial commitments. Consumers and homeowners were induced by low interest rates and easy mortgage policies to get in way over their heads.
The duration and slowness of the recovery, and especially the sluggish delay in anything approaching “full employment,” is also the consequence of the government’s policies. The Federal Reserve went on another massive monetary expansionist binge that has increased the money supply in the form of additional bank reserves by well over $2 trillion in just a less than three years. Interest rates have, again, been kept at or even below zero when adjusted for inflation, with the affect of continued highly distorted investment and housing sectors.
Fiscal Folly, Burdensome Government [Read more →]
July 18, 2011 2 Comments