Archives: 08/2015

CO2-induced Greening of the Earth: Benefiting the Biosphere While Lifting the Poor out of Poverty

In the “Agriculture” chapter of Cato’s 2012 Addendum to the federal government’s “Second National Assessment” of the effects of climate change on the United States, I wrote the following:

At a fundamental level, carbon dioxide is the basis of nearly all life on Earth, as it is the primary raw material or “food” that is utilized by plants to produce the organic matter out of which they construct their tissues…

Typically, a doubling of the air’s CO2 content above present-day concentrations raises the productivity of most herbaceous plants by about one-third; this positive response occurs in plants that utilize all three of the major biochemical pathways of photosynthesis.

There is no doubt elevated concentrations of atmospheric CO2 lead to enhanced plant photosynthesis and growth. This well-known fact has been confirmed over and over again in literally thousands of laboratory and field studies conducted by scientists over the past several decades. In recent years, however, the growth-enhancing benefits of atmospheric CO2 have been increasingly studied and observed in the real world of nature using Earth-orbiting satellites. Such instruments have the capability to remotely sense plant growth and vigor at altitudes miles above the Earth’s surface; and they have generated a spatial and temporal record of vegetative change that now spans more than three decades. And what has that record revealed?

RICO Suits Hit Colorado Pot Dealers (and Landlords and Bankers)

I’ve been warning for years of the dangers of the federal Racketeering Influenced and Corrupt Organizations law and how it gives prosecutors and enterprising private lawyers leverage to target above-board businesses in search of punishment or profit. Since the law’s passage in 1970, RICO has seldom been used against violent organized crime. Instead, it has been aimed at a wide array of white-collar defendants, as William Anderson noted in Regulation six years ago, and especially at unpopular industries like gun and cigarette makers, as Cato’s Bob Levy noted in 2000. The latest fillip is Sen. Sheldon Whitehouse’s proposal to aim racketeering charges against groups that promote wrongful thinking on climate change. The civil side of the statute (“civil RICO”), which can be used in private litigation, is especially susceptible to tactical use by private lawyers who know that the vagueness of the law, the high cost of response, the triple-damages provisions, and the racketeering stigma especially are useful in forcing adversaries to the bargaining table. The more those adversaries value respectability, the more powerful the leverage. 

Now comes word that a Washington, D.C.-based tough-on-crime group calling itself the Safe Streets Alliance has filed suit seeking, in its words, “to hold those involved with Colorado’s recreational marijuana industry liable under federal racketeering statute and to have Colorado marijuana business licenses held invalid.” Its press release is at least honest enough to acknowledge that the targets include “the citizens of Colorado” for what it believes was their faulty decision to enact Amendment 64 in 2012. In one case SSA, representing a local Holiday Inn franchisee that didn’t care to have a medical marijuana shop near its business, succeeded in forcing owner Jerry Olson (no relation) out of business. A key tactic in the suit – one quite familiar to those of us who follow hardball civil litigation in general – was to name as racketeering co-defendants a variety of risk-averse, often respectable businesses that had in some way done business with the main target. Thus AP reports

…just last week, a bonding company in Des Moines, Iowa, paid $50,000 to get out of the lawsuit.

“We are out of the business of bonding marijuana businesses in Colorado and elsewhere until this is settled politically,” said Therese Wielage, spokeswoman for Merchants Bonding Company Mutual.

Thus does the litigation accomplish its goal whether or not it ultimately prevails before a judge:

“This lawsuit is meant more to have a chilling effect on others than it is to benefit the plaintiffs,” said Adam Wolf, Olson’s lawyer.

SSA lawyer Brian Barnes of Cooper & Kirk doesn’t seem to contradict that: 

“We’re putting a bounty on the heads of anyone doing business with the marijuana industry,” Barnes said.

I’m occasionally asked why I bother to worry about the legal woes of unpopular industries whose goods I don’t even care to consume. A different way to look at the question is that almost anyone’s line of business – whether it be soft drinks or accounting or putting up visitors in one’s home or charitable non-profit work or electioneering or employing entry-level workers at minimum wage – is one public-vilification campaign, or one round of lawsuits, away from becoming an unpopular industry. 

Why China Is in Trouble

The course of an economy is determined by the course of that economy’s money supply (broadly determined). The relationship between money growth and nominal GDP growth is presented in the accompanying chart. It is persuasive. Indeed, money, not fiscal policy, dominates.

As I listen to all the ad hoc conjectures about the state of China’s economy and its near-term prospects, I am astounded to never hear anything said about the most important determinant of nominal economic growth: the money supply. The second chart tells the tale. The picture is not a pretty one. China’s money supply growth rate has been slowing down since early 2012. It now is growing at an annual rate of about 10%, which is well below the trend rate of money growth: 17.06%. China is in trouble. Slower money supply growth means that slower nominal GDP growth is already baked in the cake.

Should Prostitution Be Legalized?

Does three make a trend? I can’t recall hearing much discussion of legalizing prostitution in the recent past, and suddenly this week I’ve seen three significant reports in the media. Are they straws in the wind? Could the legalization of prostitution be the next social reform to come to the fore?

First, last Thursday the Telegraph reported on a new study from the venerable free-market think tank in London, the Institute for Economic Affairs:

The sex trade should be fully decriminalised because feminism has left modern men starved of sex, one of Baroness Thatcher’s favourirte think-tanks claims.

A controversial new paper published by the Institute of Economic Affairs (IEA) calls for Britain’s prostitution laws to be scrapped, insisting it is “inevitable” that men will resort to paying for sex as women become more empowered through participation in the workplace.

As IEA notes, the paper got plenty of publicity in the British media.

Then on Tuesday Amnesty International voted, as the New York Times put it, “to support a policy that calls for decriminalization of the sex trade, including prostitution, payment for sex and brothel ownership.” The full policy, which still requires final approval from the board, can be found here. The new policy

is based on the human rights principle that consensual sexual conduct between adults—which excludes acts that involve coercion, deception, threats, or violence—is entitled to protection from state interference (bearing in mind that legitimate restrictions may be imposed on sex work, as noted below).

And then today I see this in the Washington Post:

The School Choice Myth That Just Won’t Die

The myth that there’s no evidence that school choice works has more lives than Dracula. Worse, it’s often repeated by people who should know better, like the education wonks at Third Way or the ranking Democrat on the U.S. Senate education committee. In a particularly egregious recent example, a professor of educational leadership and the dean of the University of Wisconsin-Madison School of Education wrote an op-ed repeating the “no evidence” canard, among others:

The committee also expands the statewide voucher program. There is no evidence privatization [sic] results in better outcomes for kids. The result will be to pay the tuition for students who currently attend private school and who will continue to attend private school—their tuition will become the taxpayers’ bill rather than a private one. Additionally, the funds for the expansion would siphon an estimated $48 million away from public schools, decreasing the amount of money available for each and every school district in the state.

It is astounding that a professor and a dean at a school of education in Wisconsin would be unfamiliar with the research on the Milwaukee voucher program, never mind the numerous gold standard studies on school choice programs elsewhere. Fortunately, Professor James Shuls of the University of Missouri-St. Louis and Martin Lueken of the Wisconsin Institute for Law & Liberty set the record straight:

Sugar and the TPP

How much Australian sugar should be allowed to enter the U.S. market?  That’s a key question the U.S. government must answer prior to concluding the Trans-Pacific Partnership (TPP) negotiations.  The United States is the largest sugar market in the TPP, consuming about 11 million metric tons (MMT) per year.  It also is the largest producer (7-8 MMT) and importer (3 MMT) in the group.  Australia generally is believed to be the most cost-competitive sugar producer among the12 TPP nations.  It also is the largest exporter, annually shipping 3-4 MMT to other countries. 

To complicate matters further, sugar liberalization was explicitly excluded from the 2004 Australia-United States Free Trade Agreement (AUSFTA) due to U.S. political sensitivities.  Australian sugar producers understandably want to redress that omission.  Failure to obtain commercially meaningful access to the U.S. sugar market could lead to rejection of the pact by the Australian parliament.

The U.S. sugar program includes a price-support level for raw cane sugar of 22.25 cents per pound ($490/MT), with refined sugar supported at 26 cents.  Those levels effectively have been raised more than 10 percent to around 24.7 cents ($545/MT) and 30-32 cents, respectively, under the trade-restricting terms of the recent settlement agreement in the antidumping/countervailing-duty (AD/CVD) dispute involving imports from Mexico. (For more on U.S.-Mexico sugar issues, see here and here.)  Mexico is the largest supplier of U.S. sugar imports, generally providing between 1.0-1.5 MMT per year.  Suffice it to say that the agreement between the U.S. and Mexican governments will limit the amount of sugar Mexican producers can export to the United States, and also force that sugar to be sold at higher prices. 

With global raw sugar prices currently at relatively low levels of around 12 cents, Australian cane growers find the possibility of selling more sugar to the United States at high prices to be quite intriguing.  However, those sales currently are limited to the amount allocated to Australia under the U.S. tariff-rate quota (TRQ) regime – a modest quantity of only 87,000 MT.  Australia is asking that the TRQ be boosted by 750,000 MT, an increase of more than nine times.  The United States apparently has offered an additional 65,000 MT (official figure not disclosed), which would not even double Australia’s current access. 

Video: An Introduction to HumanProgress.org

If you’re familiar with Cato’s project HumanProgress.org, then you probably know that according to the available data, people today are wealthier, healthier, better educated, and less exposed to violence than in the past. HumanProgress.org provides you with the tools to explore how the state of humanity has changed over time. But even if you have visited the website before, you may not be aware of every feature it offers. Did you know that HumanProgress.org allows you to compare datasets of human wellbeing against one another, allowing you to see if the datasets correlate? Or that you can download a customized chart or map with the click of a mouse? Our new introduction video offers a rundown of all our current features. Check it out: