Archives: 03/2013

Burning Books, Burning Witches, Burning Corn

Global Science Report is a weekly feature from the Center for the Study of Science, where we highlight one or two important new items in the scientific literature or the popular media. For broader and more technical perspectives, consult our monthly “Current Wisdom.”

 

History is littered with ideology gone awry.

The most recent example? Burning corn as a substitute for fossil fuels in an effort to mitigate anthropogenic climate change (which supposedly has a negative impact on the production of crops such as corn).

This is about as logical as publicity-stunt burnings of Harry Potter books because of objections to the contents within, which only results in more people buying and reading the books to find out what got the book-burners so inflamed in the first place.

With Harry Potter it was the fantasy world of witchcraft and wizardry. With corn ethanol it is the fantasy world of agriculturally damaging climate change.

A few years ago, a paper was published in the prominent scientific journal Science by Stanford’s David Lobell and colleagues that reported that human-caused global warming over the past 30 years resulted in a slowdown in global crop production. Modeling the climate response of the world’s four largest commodity crops—corn, rice, wheat, and soybeans—Lobell’s team calculated that as a result of rising temperatures and precipitation changes, global crop production was about 3 percent less than it otherwise would have been.

But consider this: The United States produces about 36 percent of the world’s corn. And about 40 percent of U.S. corn is used to produce ethanol for use as a gasoline substitute in an attempt to lower net carbon dioxide emissions from driving and reduce climate change. Globally, corn makes up 30 percent of total worldwide production of the four crops studied by Lobell’s group.

Multiply all these percentages out, and you get that the United States is burning a bit more than 4 percent of global crop production in an attempt to mitigate a climate-driven loss of 3 percent of the global crop production.

Keynesianism and Labor Markets: United States vs. Canada

Some more from the new Canadian budget: It has some interesting charts (page 38) comparing U.S. and Canadian labor markets (or “labour” markets as the Canadians would say).

The charts, replicated below, show that by every dimension (total employment, unemployment rates, and participation rates) the Canadian economy has done far better than the U.S. economy in recent years.

New Estimates for Effective Corporate Tax Rates

The new Canadian budget includes estimates of marginal effective corporate tax rates for major countries (page 149). These rates measure the tax load on new investments, such as a manufacturing company buying new machines and expanding a plant.

A chart in the report, which I’ve replicated below, shows that the Canadians have chopped their rate to less than half of the U.S. rate, 17 percent vs. 34.8 percent. The U.S. rate is also far higher than the average OECD rate of 20.2 percent.

The economic effect of this is straightforward: our higher rate means less capital investment, which in turn means fewer jobs, reduced productivity, and lower wage and income levels.

Come on America, we can do better than that. It’s time for federal policymakers to stop stalling and simply slice the U.S. federal statutory rate from 35 percent to 20 percent or less. All this gibber-gabber about corporate loopholes and base-broadening is a waste of time. Just cut the rate, please. The Canadians have shown that the government probably won’t even lose any revenue.

See here for more on effective corporate tax rates.

Corporate Taxes: Low Rates, High Revenues in Canada

Canada’s federal government introduced a budget yesterday that includes new estimates of corporate tax revenues. I’ve discussed how Canada has cut its statutory corporate tax rate to a fraction of the U.S. rate, yet Canada raises more revenue. The new budget shows that the Canadian federal 15 percent tax raised 1.9 percent of GDP in revenue in 2012, while the U.S. federal tax at 35 percent raised just 1.6 percent, per CBO.

U.S. revenues are below normal levels right now, so let’s look further out at the steady-state projections for the two countries. Canada’s budget projection to 2018 shows that corporate tax revenues under the 15 percent rate are expected to stabilize at 1.9 percent of GDP. U.S. projections by the CBO show that corporate tax revenues will rise to 2.6 percent and then fall back to 2.0 percent in the longer-term. So the Canadian corporate tax will raise 95 percent as much as the U.S. tax even though the Canadian rate is just 43 percent of the American rate. The upshot is that worries about proposed U.S. corporate tax cuts reducing revenues are misplaced. If the U.S. federal government chopped its 35 percent rate, the tax base would expand automatically over time and the government would probably lose little if any revenue.

The following charts compare U.S. and Canadian rates and revenues:

If the Canadians Can Handle Free Trade in Hockey Equipment…

…then can’t everyone else adopt a little free trade of their own? This is from the NY Times:

Take a walk down an aisle at Pro Hockey Life, an emporium of the Canadian national sport here on the capital’s southern fringe, and a customer comes away with a decidedly non-Canadian feel. Almost every pad, mask, stick and skate is made elsewhere — mostly in Asia, often by foreign-owned manufacturers. Just about the only thing Canadian about buying hockey equipment in Canada has for years been the tariff on imported goods. Now, even that quirk of Canadian hockey history is going away. On Thursday, the finance minister, Jim Flaherty, announced that the Conservative government would end import tariffs on all sports equipment, except bicycles, on April 1. The tariffs were as high as 18 percent.
It may be just a small step (glide?), but it’s good news for free trade nonetheless. So what prompted the change?
The government’s decision to eliminate tariffs that were protecting a largely nonexistent industry seems to have more to do with online shopping and the rise of the Canadian dollar to parity with its American counterpart. For example, many of the skates at Pro Hockey Life priced from $500 to $700, a surprisingly large category, are available from American online retailers at prices that are at least $100 lower because of low tariffs in the United States.
I was a big fan of online shopping anyway. If it can help get rid of tariffs, even better!

When A Public School Becomes the Bully

We expect our schools to keep our children safe from bullies. But what should parents do when their assigned government school becomes the bully?

That’s what happened to the parents of Eileen Parkman, a Hawaiian second-grader who courageously stood up to several fifth-grade boys who were kicking and stomping a defenseless autistic child as he was curled up in the fetal position. The bullies then set their sights on Eileen, whom they threw to the ground and stepped on. The Maui Autism Center gave her an award for her bravery, but the boys continued to hit and kick her and throw balls at her face on several subsequent occasions. School officials at Kamali’i Elementary in Maui were apparently unable to stop the bullying, so Eileen’s parents decided to pull her out of the dangerous environment.

That’s when the school officials became bullies themselves:

It took Sean Parkman a while to remove Eileen from enrollment at Kamali’i. After the first incident, he was told the situation would be remedied, he said. But when Eileen endured more retaliation, Parkman said he received no help from school officials. He and his mother offered to help serve as school field monitors, but they were turned away, he said. Parkman said school officials told him that if he pulled Eileen from the school, then officials would report him to Child Protective Services because he could be violating school attendance policies. So, he held off. But after taking Eileen to doctors several times after getting beaten, doctors warned Parkman that Eileen was not safe. He then removed her from the school.

School Board Votes to Shutter Three of California’s Top Schools

On Wednesday, the Oakland school board voted 4–3 to close three of California’s highest performing schools: the American Indian Model (AIM) charter schools. When Ben Chavis took over the American Indian Public Charter School just over a decade ago, it was the worst peformer in Oakland—an utter shambles. Today, it and the two sister schools Chavis created are among the highest-performing in the entire state. I know—I did the math. In a 2011 study comparing the performance of all of California’s charter school networks, I found that AIM was #1 by a wide margin. For contrast, I included in the study two of the state’s most elite, academically selective high schools: Lowell in San Francisco and Gretchen Whitney outside of Los Angeles. After controlling for student characteristics and peer effects, the AIM network beat them both—not just on the official state tests, but on the Advanced Placement tests administered by the College Board as well. More remarkable, AIM accomplished all that while spending less per pupil than the Oakland Unified School District, whose performance is abysmal by comparison. And that’s the great irony of the school board’s vote to close the AIM schools: the board accuses Ben Chavis, who is now retired, of fiscal irregularities or mismanagement during his tenure. Think about that: The board’s own schools are expensive failures. The AIM network is an incredibly cost-effective success. Yet somehow Chavis is the one accused of mishandling a budget? The core of the allegations seems to be that Chavis, who has a real-estate business, leased space to his schools and made money from that transaction, while vaulting AIM schools to stratospheric success. So, naturally, we should punish his schools. $#%#?!?