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Category — Book Reviews

‘Theft of the Subsoil’ (Guillermo Yeatts on Latin/South America mineral-rights reform)

“[There is] a general economic maxim: public [government] resources are really private, owned and exploited by a political elite, while private resources are really public, owned and managed by a multitude. Government-owned resources do not ‘belong to all of the people’ and allow ‘self determination;’ they belong to none or a very few.”

- R. Bradley, Foreword to G. Yeatts, Subsurface Wealth: The Struggle for Privatization in Argentina (Foundation for Economic Education, 1997), pp. xv–xvi.

The recent reform of Mexico’s Constitution to allow private investment (up to $20 billion in production-sharing agreements) still leaves state-owned PEMEX with a legal monopoly for oil and gas development inside the country. But it is a start at reform that may turn into a deregulatory, privatization dynamic.

More, indeed, awaits to open the energy sector internal and external competition and to foreign investment in any amounts:

1) Competition to PEMEX in all oil and gas areas should be legalized;

2) PEMEX shares be allocated to the country’s private citizens;

3) Subsoil mineral rights should be assigned–with deed of title–to the (private) surface owners of land. Surface land not privately owned can be privatized with mineral rights attached.

Thus, Mexico’s recent reform can be seen as the first of four steps to fundamental reform so that mineral wealth can benefit the masses, not just a political elite. [Read more →]

February 6, 2014   No Comments

Wartime Energy Planning: Not Good for Veterans (or civilians either)

[Editor Note: This discussion is taken from chapter 5 of the author’s Oil, Gas, and Government: The U.S. Experience (Cato Institute: 1996).]

“Allocation regulation, in turn, sought to cure the problems created by price regulation. Government intervention during wartime encounters many examples of regulation begetting other regulation, a major theme of peacetime intervention as well.”

Government direction of economic activities, rare in U.S. history, has typically accompanied wartime situations. In particular, government petroleum planning has occurred during World War I, World War II, and the Korean Conflict. Standby oil and gas planning also followed the Korean Conflict.

General Theory

Economic understanding reaches the conclusion that consumers are best served when entrepreneurs are not subsidized or penalized by government involvement.  Conceived abstractly, consumers could be a private individual or even a government agency. Furthermore, the conditions surrounding production and consumption are not defined; it could have been during wartime, the aftermath of a calamity, or a period of relative tranquility.

The question is: can the market be relied upon in wartime as in peacetime? [Read more →]

November 11, 2013   4 Comments

California Biologist’s New Book Shakes Climate Science Cartel

“Despite media horror stories, many species have benefitted from recent climate change. Those species that are struggling have invariably been affected by issues other than climate change and require very different remedies. Controlling our carbon footprints will never address the most pressing issues of habitat loss and watershed degradation.”

- Book Description, Amazon

Book Review: Landscape and Cycles: An Environmentalist’s Journey to Climate Skepticism by Jim Steele, 2013.

In 1615 astronomer Galileo Gallei wrote a famous letter called the Letter to the Grand Duchess Christina in the Duchy of Tuscany, Italy, giving his heliocentric position that the sun – not the earth — was the center of the earth’s solar system. By 1632, Galileo had expanded his letter into his scientific manifesto titled Dialogue on the Two Chief World Systems, for which he ended up being brought to trial by a faction of Dominican priests before Catholic Pope Urban as a religious heretic.

Jim Steele, a biologist at San Francisco State University in California, has perhaps written no less than the modern day equivalent to Galileo’s letter and his Dialogues in his book Landscapes and Cycles: An Environmentalist’s Journey to Climate Skepticism.”

A New, Credible Voice

Just as Galileo’s book was monumental because he was a pious Roman Catholic who once considered the priesthood, Steele’s book is important because of who he is.

Steele enlisted in the military at age 17 and was honorably discharged. He was a computer programmer for a major Sacramento newspaper for 10 years.  Steele’s environmental pedigrees are too long to list.

Steele dropped out of the mechanical engineering program at the University of Massachusetts in 1968 out of concern that his career would involve Vietnam War time industrial production.  He embraced several social justice issues and toured many national parks around the U.S.  Later, he completed a master’s degree in biology from San Francisco State University, where he went on to direct their field biology program. [Read more →]

November 5, 2013   8 Comments

Reclaiming the Moral High Ground (Epstein’s new energy primer)

“Although trained as a philosopher, [Alex] Epstein is perhaps best described as a happy intellectual warrior whose main goal is to rewrite the dominant romantic/authoritarian narrative that nowadays underlie energy and sustainability debates.”

To people who lived through them, the “good old days” were more akin to Hobbesian trying times where life was much more solitary, poorer, nastier, brutish and shorter than in our “Age of Energy.”

In a world where no good deed goes unpunished, however, hydrocarbons and the people who locate, refine and deliver them in usable forms are loudly condemned as toxic threats by activists who would rather have energy-starved masses consume little, distant, costly, intermittent, unreliable, and low-density alternative energy cupcakes.

Even more disheartening is how many energy executives have been shamed into paying lip-service (and a fair amount of “sustainability” and “green partnership” consulting fees) to their most virulent detractors.

Enter Alex Epstein, the young dynamo behind the Center for Industrial Progress (CIP)  and regular contributor to this blog. (Disclaimer: Alex is a virtual friend, meaning we have only met through Skype.)

Although trained as a philosopher, Epstein is perhaps best described as a happy intellectual warrior whose main goal is to rewrite the dominant romantic/authoritarian narrative that nowadays underlie energy and sustainability debates. He recently summarized his main insights and achievements in a short free e-book “Fossil Fuels Improve the Planet.” [Read more →]

July 8, 2013   6 Comments

‘Adventures in Energy Economics’ (Murphy online course begins Tuesday)

Tuesday July 2 begins my new Mises Academy online class, “Adventures in Energy Economics.” This five-week $59 course will cover the economic treatment of depletable natural resources, pollution, and climate change, as well as the current public policy debate.

The course naturally will focus on an entrepreneurial, property-rights, Austrian perspective, but the standard mainstream views will be accurately presented. All reading materials will be provided and are included in the course fee.

After the five-week course, the student will have a solid command of some of the major issues in energy economics and will be able to handle typical objections to laissez-faire capitalism coming from an environmentalist perspective.

Scope

The weekly lectures will run from July 2 through July 30. The first week will address the question, “Will we run out of energy?” We will cover the standard mainstream treatment (based on the classic article by Harold Hotelling) and then see the weakness in this perspective, because it fails to account for the role of entrepreneurship.

To see the “optimistic” Austrian take, we will cover selections from Julian Simon and Robert Bradley, arguably the world’s leading Austrian expert on energy economics, who chose Murray Rothbard to oversee his dissertationon the U.S. experience with oil and gas regulation. [Read more →]

June 28, 2013   2 Comments

‘The Greening of Planet Earth’ (the 1992 video, updated in 1998, needs another update)

“[M]any industry groups have maintained that putting carbon dioxide in the air would produce a general ‘greening’ of the planet. In fact, that’s the thesis of a famous 1992 video, “The Greening of Planet Earth,” which riled the environmental community more than just about anything else [because] … big-name scientists were willing to appear and argue that carbon dioxide will enhance global plant growth.”

- Patrick Michaels, Global Warming Produced a Greener, More Fruitful Planet, September 13, 2001.

Today, President Obama sounds the climate alarm and calls for more regulation of carbon dioxide (CO2). Throwing bad regulation after bad in the name of climate change is all about costs without commensurate benefits. Simple math shows that unilateral action by California or the U.S. or North American will not have a discernible influence on climate decades out.

With the “pause” of global warming, it is time to consider the non-temperature effects of higher, growing atmospheric concentrations of CO2. [Read more →]

June 25, 2013   7 Comments

“Silent Spring at 50: The False Crises of Rachel Carson” (Reassessing environmentalism’s fateful turn from science to advocacy)

“Carson made little effort to provide a balanced perspective and consistently ignored key evidence that would have contradicted her work. Thus, while the book provided a range of notable ideas, a number of Carson’s major arguments rested on what can only be described as deliberate ignorance.”

- Roger Meiners, et. al (cover insert)

Widely credited with launching the modern environmental movement when published 50 years ago, Rachel Carson’s Silent Spring has had a profound impact on our society. While Carson was not the first to write about the dangers of pesticides or to sound environmental alarms, her writing style and ability to reach out to a broad audience allowed her to capture and retain the attention of the public.

Yet this iconic book, hardly scrutinized over the decades, substituted sensationalism for fact and apocalyptic pronouncements for genuine knowledge.

Our just released 11-author study, Silent Spring at 50: The False Crises of Rachel Carson, reexamines Carson’s historical context and science, as well as the policy consequences of Silent Spring‘s core ideas. We assembled scholars from different disciplines and asked them to evaluate Carson’s work given the state of knowledge at the time she was writing. What information was available that she ignored? Where did she deviate from accepted science of the day?

Our findings are unsettling. Carson made little effort to provide a balanced perspective and consistently ignored key evidence that would have contradicted her work. Thus, while the book provided a range of notable ideas, a number of Carson’s major arguments rested on what can only be described as deliberate ignorance.

Despite her reputation as a careful science- and fact-based writer, Carson produced a best-seller full of significant errors and sins of omission. Three areas are particularly noteworthy:

· Carson vilified the use of DDT and other pest controls in agriculture but ignored their role in saving millions of lives worldwide from malaria, typhus, dysentery, among other diseases. Millions of deaths, and much greater human suffering, ultimately resulted from pesticide bans as part of disease-eradication campaigns. Carson knew of the beneficial effects of DDT, but never discussed it; her story was all negative. [Read more →]

September 21, 2012   14 Comments

“Not Cheap, Not ‘Green’” at the California Energy Commission

“In my period at Cato (1990–present), “Renewable Energy: Not Cheap, Not ‘Green’,” is probably our most important Policy Analysis in the energy/environment area. Bradley’s thorough review and analysis (60 pages, 325 footnotes) was a real pushback against the viability of ‘green’ energy in theory and practice.”

- Jerry Taylor, Senior Fellow and Director, Natural Resource Studies, Cato Institute.

On the fifteenth anniversary of “Renewable Energy: Not Cheap, Not ‘Green’” (yesterday), I recall, with no little pride, a lot of hard work that went into supplying the author with information about California’s wind and solar experience.

At the time I was working in the belly of the beast, the California Energy Commission (CEC) in Sacramento. The Commission was a major proponent of all things renewable, almost to the point of fanaticism. Well, actually far beyond that point (and that persists to this day), and therein lies a story about how I met a particular Texan and became the silent author of a major public policy study that still reads well today.

Three Amigos

Back in the 1980s and 1990s, I was fortunate to work alongside Richard Bilas, Vice Chair of the Commission, who was our ‘F. A. Hayek’ (think 1944 and Road to Serfdom). Dick Bilas was schooled in Austrian School and Public Choice economics and a real rarity–a free-market California energy regulator (and not wannabe energy planner).

And the third person in our group was Manual Alvarez, principal advisor to Commissioner Bilas, who actually cared about energy consumers. The three of us were rather wide-eyed at what can only be described as postmodern energy policy, a sort of ‘anything goes and is good if you really want it.’ [Read more →]

August 28, 2012   4 Comments

“Renewable Energy: Not Cheap, Not ‘Green’” Turns 15

[Ed. note: On August 27, 1997, the Cato Institute published Policy Analysis #280, which criticized the government push to subsidize politically correct renewable energy, particularly solar and windpower. Today and tomorrow, different authors revisit what was the free-market-movement's first full-scale rebuttal, on economic and environmental grounds, to so-called "green" energy policy .]

“The policy implication of [a thorough examination of renewable technologies] is, stop throwing good money after bad. All renewable energy subsidies from all levels of government should cease.”

Such is the conclusion voiced today by a rising chorus of energy experts, economists, even politicians, after many years of failed renewables projects and more expensive utility bills in the growing shadow of a $16 trillion national debt ($140,000 per taxpayer). But, remarkably, fifteen years have passed since Rob Bradley crafted this statement for the Cato Institute as the bottom line of his comprehensive six-part policy alarum, Renewable Energy: Not Cheap, Not ‘Green’

An Opening Shot

Few knew about or shared Bradley’s concerns at the time. Even more remarkably, his analysis was at odds with the policy direction of his employer, Enron, as Ken Lay’s political capitalism began promoting renewable investment as sustainable tax shelters.

By taking his concerns public, even as a scholar, Bradley risked much as Enron’s director of public policy analysis. Sparks flew as executives within Enron Wind Corporation digested Bradley’s external work (see these internal memos).

Bradley’s one-person stand also challenged the (Enron-directed) energy policies of Texas governor George W. Bush (and what would be the policies of his successor, Rick Perry). For Bradley, there was indeed a problem in Houston…. [Read more →]

August 27, 2012   6 Comments

Edison to Enron (Bradley): Some Thoughts

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