Posts from — July 2012
[Ed. note: Milton Friedman's views will be further explored in Part II on energy and Part III on political capitalism.]
“Our central theme in public advocacy has been the promotion of human freedom … [It] underlies our opposition to rent control and general wage and price controls, our support for educational choice, privatizing radio and television channels, an all-volunteer army, limitation of government spending, legalization of drugs, privatizing social security, free trade, and the deregulation of industry and private life to the fullest extent possible.”
- Milton and Rose Friedman, Two Lucky People (1998), p. 588.
Today some 150 events are taking place in the U.S. and internationally to commemorate the 100th anniversary of the birth of Milton Friedman (1912–2006). I will be hosting a Houston event this evening with presentations by myself and University of Houston economist Thomas Mayor on Friedman’s many contributions that, in sum, opened the door for libertarian thought in academia and within the wider public.
The Wikipedia entry for Friedman begins as follows:
Milton Friedman (July 31, 1912 – November 16, 2006) was an American economist, statistician, and author who taught at the University of Chicago for more than three decades. He was a recipient of the Nobel Memorial Prize in Economic Sciences, and is known for his research on consumption analysis, monetary history and theory, and the complexity of stabilization policy.
As a leader of the Chicago school of economics, he influenced the research agenda of the economics profession. A survey of economists ranked Friedman as the second most popular economist of the twentieth century behind John Maynard Keynes, and The Economist described him as “the most influential economist of the second half of the 20th century…possibly of all of it.”
Many other biographies can be accessed on Friedman; this post will continue with some Friedman quotations of import on various topics except for those to come in Part II (energy) and Part III (political and special-interest capitalism). [Read more →]
July 31, 2012 7 Comments
“The American Bird Conservancy (ABC) and other experts estimate that well over 500,000 birds and countless bats are being killed annually by turbines. The subsidized slaughter “could easily be over 500” golden eagles a year in western states, Save the Eagles International biologist Jim Wiegand told me. Bald eagles are also being butchered. The body count for the two species could soon reach 1,000 a year.”
Extending the industrial wind production tax credit (PTC), in addition to its other problems, threatens eagles and other majestic birds in consequential ways. Do the Washington, DC environmentalists know this? Do they care?
Back in 1995, Paul Gipe’s book, Wind Power Comes of Age (New York: John Wiley & Sons) forthrightly dealt with the fierce, internal debate within the Sierra Club and other groups about the ‘avian mortality problem.” Christopher Flavin of the Worldwatch Institute even said in a foreword to Gipe’s book (pp. xiv–xv):
To its credit, Wind Energy Comes of Age tackles even the most nettlesome issues plaguing the wind industry, including the problem of bird kills, often referred to euphemistically as ‘avian mortality.’ Although the magnitude of the problem is not yet fully clear, Paul raises important warning flags about the dangers of not taking it and other environmental issues seriously. Unless the industry heeds Paul’s warnings, it will lose the environmental high-ground that helped get it where it is today. . . . Even those who feel stung by his criticisms would do well to remember the fate of the nuclear power industry, and others that chose to ignore early problems.
Well, 17 years later, we can say this major environmental problem is clear, and Big Environmentalism is giving Big Wind a pass, an undeserved pass. [Read more →]
July 30, 2012 7 Comments
On November 5, I will be debating Bill McKibben, considered “world’s leading environmentalist” by some, on the proposition: “Fossil fuels are a risk to the planet.” I will be arguing that fossil fuels dramatically improve the planet for human beings.
This debate came about at the suggestion of MasterResource’s own Rob Bradley, who pointed me to McKibben’s article, “Global Warming’s Terrifying New Math” , which received many rave reviews and not nearly enough criticism. My Center for Industrial Progress colleague (physicist) Eric Dennis and I decided to respond to the article with a video that addresses what we think is the root of the problem–not any given fact but bad thinking methodology. The problem that makes McKibben’s piece possible is that Americans have never been taught to distinguish science from pseudoscience–how to think critically about scientific claims.
At the end of the debate, I challenged McKibben to a debate, offering him $10,000 and an audience at Duke University. To his credit, after some haggling over the topic, he accepted. It should be a great illustration of how the philosophy of environmentalism stacks up against the philosophy of industrial progress. Stay tuned for more.
July 30, 2012 14 Comments
“In the current energy debate, the diligent amateurs are often the real pros, and too many ‘pros’ are amateurish.”
MasterResource continues apace as a movement-wide voice of free market energy scholarship. Nearly 150 different authors have been featured at our site since its inception in late 2008. Total views have surpassed 1.3 million, with many visits by those searching on a topic relevant to past posts.
MasterResource is rated a top 30 (of 10,000) “green blog,” and a “Top 100″ Science blog, according to Technorati.
With 435 categories in our extensive index, MasterResource is a research tool, not only a timely contribution to energy scholarship and current political debates. We are Google friendly with many energy terms (try one with ‘masterresource’).
I have lauded our ‘talented amateurs’ in previous activity reports. This is really an understatement given the large population of ‘smartest guy in the room’ alarmists and interventionists. Let history note that in the current energy debate, the diligent amateurs are often the real pros, and too many ‘pros’ are amateurish.
New Principals: Lisa Linowes and Travis Fisher
Principals at MasterResource are those of us who regularly post at this site. One relatively recent addition has been Alex Epstein, the head of Center for Industrial Progress, and a trained philosopher, who has graced our pages with his unique perspective in the last year.
MasterResource is pleased to announce two new principals, windpower expert Lisa Linowes and energy economist Travis Fisher. [Read more →]
July 27, 2012 No Comments
“We need to defeat climate deniers like Ann Marie Buerkle and Dan Benishek to restore the place of science on Capitol Hill.”
- Gene Karpinski, president, League of Conservation Voters, quoted in Jennifer Yachnin, “Enviros Target Climate Deniers in Latest Ad Campaign” (sub. req.) Greenwire, July 24, 2012.
All but the most impartial and inflammatory participants in the climate-change debate disdain the term “denier” to characterize so-called climate-change skeptics. Climatologist Judith Curry, chair of the School of Earth and Atmospheric Sciences at the Georgia Institute of Technology, for example, has complained:
Somebody needs to research the sociology and psychology of people that insist that anyone that does not accept [anthropogenic global warming] as a rationale for massive CO2 mitigation efforts is a “denier.” The complexity of skepticism (ranging from multiple aspects of the science, to the impacts that can be attributable to AGW and whether or not they are “dangerous” to the policies proposed for CO2 mitigation) seems to be completely missed by all of the “scholars” writing articles about ‘deniers’.
Yet the League of Conservation Voters (LCV) this week launched a $1.5 million ad campaign against five House lawmakers who are skeptical of climate alarmism (as are most Americans), and who as lawmakers know that “fighting” climate change is all pain and no gain. ( Think higher energy prices and more bureaucrats.) The key term of the campaign? Deniers. [Read more →]
July 26, 2012 5 Comments
Consider the preconceptions that surface in your mind when you read the name “Enron”. Chances are that they are negative, and not particularly nuanced — fraudulent business activity, tarnishing the idea of free markets by trying to manipulate them using the political process, and so on.
If that’s true for you, then you are probably in a pretty similar mental space to mine when I started reading Rob Bradley’s Edison to Enron: Energy Markets and Political Strategies. Rob’s detailed and thoroughly researched book is a well-told analysis of the valuable and interesting regulatory and business history that formed the backdrop of Enron’s spectacular failure.
Samuel Insull, Father of Modern Electricity
The name of the book is somewhat misleading, because the first third of the book focuses not on Thomas Edison but on Samuel Insull. Insull, the oldest son of a working class family in Victorian England, emigrated to the U.S. (at age 21) after several years of a successful financial career in London.
Insull brought, and sharpened, his business acumen to complement Edison’s inventive creativity. Together they built the company that was renamed General Electric in 1892. But it was Insull’s business genius after he left the manufacturing side of the business to enter the distribution side (integrated from power generation to delivery), which accelerated the electrification of the country.
Rob tells Insull’s story extremely well, and provides extensive links to supporting material that illustrates how important Insull’s contributions were to Edison’s success individually and as a business/set of businesses.
With his analysis Rob also argues that Insull’s business skill generated substantial social value (i.e., consumer surplus as well as profit). That point is incontrovertible, but the story is not told often enough or well enough, and Rob has done so here.
I appreciated this part of the book in particular because although I am familiar with Insull’s biography, I did not realized that his business model advocacy had shaped our modern electricity industry so dramatically; for example, Insull consistently pursued acquisitions and consolidation that led to reduced costs through economies of scale, but always advocated for pairing those moves with reductions in retail prices to consumers. The companies he headed that followed this strategy profited while charging lower prices, in the absence of formal economic regulation.
Insull was, though, always an advocate for regulation, largely because he worried that rising debt service costs would make it difficult to pursue this model. [Read more →]
July 25, 2012 2 Comments
“I want to build something that is environmentally forward-thinking. I’m not building a satellite dish so I can watch the Knicks game.”
- Alec Baldwin, quoted in “Actor Tilts at Windmill,” Wall Street Journal, July 16, 2012.
“‘We’re behind big wind,’ [Mike] Bergey [of Bergey Windpower] said, with small-turbine technology having advanced just a couple of iterations from its early days, while the more mature big-wind technology has pushed forward eight or nine times. A little more help on the R&D front — some of that government solar money, say — would be appreciated, he said.”
- Peter Danko, “Alec Baldwin Turbine Puts Small Wind In Spotlight,” Ecotech Institute, July 20, 2012.
Alec Baldwin, the Hollywood movie star, has worked to preserve the charm and character of the Town of East Hampton on Long Island (Suffolk County, New York). But his plan to build a 120-foot-tall wind turbine on his Amagansett property is misguided and temps other people to make the same mistake.
If TV antennas on house roofs look bad, these small wind turbines will look much worse–and make noise.
Mr. Baldwin said he is trying to “escape” high electric rates and draw attention to renewable energy with his Bergey Windpower Excel 10kW turbine.
However, as most other, well-meaning “visionaries,” he is doing the Long Island economy a disservice by touting small wind turbines, which is an inefficient choice within an inefficient technology to begin with. It is unfortunate also because of other well-meaning people with much less money to waste could follow his flawed example. [Read more →]
July 24, 2012 18 Comments
“EPA’s politically appointed leadership believes that the perversion of science is a ‘minor evil’ committed to achieve the ‘greater good’ of ridding the nation of coal-fired power generation. Science may be the first casualty in the EPA’s war on coal, but all of us are its victims.”
- Robert Peltier, “MACT Attack,” POWER, July 2012, p. 6.
Robert Peltier is no ordinary participant in today’s important energy debates. He is editor-in-chief of POWER magazine, which covers all technologies relating to electricity. He is a professional engineer with a Ph.D. in mechanical engineering. Peltier in a previous life was a tenured professor. He has worked in manufacturing and for a public utility. And before that, he was a commissioned officer in the U.S. Navy.
It is his job to study the technological possibilities with an eye to competitive viability in electric generation. When examining regulation—past, present, or proposed—he considers the peer-reviewed literature as well as personal opinions to get to the essence of things.
Utility Mercury and Air Toxics Standards
Enter the recent Utility Mercury and Air Toxics Standards (Utility MACT) rule issued by the U.S. Environmental Protection Agency (EPA), the subject of Peltier’s ‘Speaking of Power’ editorial in the July 2012 issue of POWER. It is worth reading in whole. [Read more →]
July 23, 2012 6 Comments
“Intermittent generation may be consistent with a liberalized market, as long as generators are required to bear all the direct and indirect costs of their production. Otherwise, competition is doomed to become an irrelevant feature of a system that becomes more and more politically driven.”
Can an intermittent source be integrated into a liberalized electricity market?
Yes, it is technically feasible, but no otherwise. If subsidies enter into play, intermittent generation might undermine the very design of the market. This is what happened in Italy with the boom of solar power, which last year alone skyrocketed from 3.47 GW to 12.75 GW, with the annual cost of subsidies increasing from 800 million euro in 2010 to 3.9 billion euro in 2011 (about $975 million to $4.75 billion at today’s exchange rate).
These very generous incentives (which have been cut back in the last year for complex legal reasons) led to an over-investment in solar power in the country.
“Perfect Storm” for Malinvestment
Italy’s perfect storm of so little electricity at so much cost had three causes: [Read more →]
July 20, 2012 5 Comments
“Even in flush economic times, carbon taxes would be bad policy. When economies are already laboring under too much spending and are at diminishing-return levels of taxation, implementing a carbon tax would be a mistake.”
- Kenneth Green, Dissecting the Carbon Tax, The American, July 13, 2012.
Open-mindedness is a mark of scholarship. And some great lights of classical-liberal social thought in the 20th century changed their minds for theoretical/empirical reasons from a utilitarian perspective.
F. A. Hayek began as a democratic socialist. Milton Friedman started as a FDR New Dealer and Keynesian.  Friedman later in life even moved away from his (naive) view of a fixed-monetary rule where, as he once put it, a computer program could manage the money supply.  Turns out that ‘money supply’ is not a fixed, known quantity; turns out that money is a government monopoly subject to politics.
In resource thought, Julian Simon began as a Malthusian. But the data told a different story. The number of human beings and progress measures were positively, not negatively, correlated. The Malthusians, and now neo-Malthusians, were wrong, so Simon changed his mind.
‘Revenue Neutral’ … Really?
In 1977, James Buchanan and Richard Wagner published a classic book in what became known as ‘Public Choice’ economics, Democracy in Deficit: The Political Legacy of Lord Keynes (1977). Taxation in the name of Keynesian economics, whereby it was believed that public dollars could do what private dollars (caught in a ‘liquidity trap’) could not do, was the rationale and political rage of the day. Yet, such macroeconomic policy was not implemented by angels but man, namely political men and women.
July 19, 2012 9 Comments