Archives: 01/2017

You Ought to Have a Look: How to Properly Worry about Climate Change, aka, Lukewarming

You Ought to Have a Look is a regular feature from the Center for the Study of Science.  While this section will feature all of the areas of interest that we are emphasizing, the prominence of the climate issue is driving a tremendous amount of web traffic.  Here we post a few of the best in recent days, along with our color commentary.

In our last episode of You Ought to Have a Look (which was prominently quoted in an editorial in Nature magazine this week), we looked at reasons why folks who are wishing climate change mitigation should be the driving force behind most federal regulations should be very worried about what the incoming Trump Administration has in store. Most of his announced agency heads, etc., don’t share their vision (unlike those currently running the Obama Administration).

This week we start off with a guide to how folks should worry about climate change in general. Is it really true that, according to President Obama, “No challenge—no challenge—poses a greater threat to future generations than climate change”? The short answer is no. The long answer is provided by Manhattan Institute’s Oren Cass is his recent piece for National Affairs called “How to Worry about Climate Change”.

Oren describes how climate change is different from typical political policy questions:

Climate change is a different kind of problem from health-care reform, gender equality, or almost any traditional subject of political attention and action. Its relevant effects are still decades or centuries away. Scenarios with the most extreme effects, rather than the most likely ones, provide the sense of urgency and the rationale for policy responses. Those extreme outcomes are often distant ripples from the initial effect of a warmer climate, transmitted outward through multiple steps of causation and combined with other factors to produce or amplify the damage. By the time actual impacts arrive, the time for action may have long passed. But if climate change is not a typical policy problem, how should policymakers approach it?

…Yes, climate change is a problem. But what kind of problem?

He then sets out to answer that question:

Climate change—forecasted, irreversible, and pervasive—might therefore be called a “worrying problem.” Here, “worrying” does not mean “concerning” (though it is that as well), but rather something tailor-made for worry. Its effects exist primarily in the imagination and have poorly defined bounds that encourage speculation; a point of no return looms. Yet the contours of those bounds and that point may become clear only after it is too late to correct course.

Other worrying problems exist. They tend to emerge where clear long-term trends in technological or social change produce concerning side effects.

Oren provides other examples of “worrying problems” such as a global pandemic caused by international travel and urbanization, overuse of antibiotics, nuclear weapons, interconnectivity of financial systems, democratization of communications technologies, computer viruses, superhuman computer intelligence, weaponized nanotechnology, and many more, including social ones, as well as the sustainability of the Western welfare state itself. As Oren says there is “much to worry about,” but reminding everyone that “we should heed the well-known warning: ‘What worries you masters you.’”

The Results Are In: The IMF’s Venezuela Inflation Guesstimate Was Way Off

In October, the International Monetary Fund (IMF) committed a blunder when it issued a forecast for Venezuela’s end-of-year annual inflation rate. An inflation forecast in a country that is toying with hyperinflation is a mug’s game.

The IMF’s October 2016 World Economic Outlook (WEO) forecast for Venezuela’s 2016 year-end annual inflation rate was 720 percent. The IMF’s figure gave the appearance that it was based on a finger-in-the-wind estimate. Indeed, the last serious connection between Venezuela and the IMF was back in September of 2004, when an Article IV Executive Board Consultation occurred.

However, the IMF published a forecast anyway. What became a magic number of 720 percent was repeated over and over in the financial press. Sometimes the press reported it as a forecast, which it was, but more often than not, it was reported it as if it were a measured rate, which it was not.

The only accurate measured rate of the general level of inflation in Venezuela is produced by the Johns Hopkins-Cato Institute Troubled Currencies Project (TCP), which I direct. This project measures inflation as it occurs. It does not produce inflation forecasts. The TCP’s measured inflation rates are based on the long-established principle of Purchasing Power Parity. Using this method, changes in black market (read: free market) exchange rates are translated into overall inflation rates. Based on my calculations, the 30-day moving average for Venezuela’s annual year-over-year inflation in December 2016 was 290 percent. This rate is less than half of the IMF’s forecast.

Is U.S. Primacy a Burden or a Benefit?

Thanassis Cambanis argues in Politico that, contrary to what we may think, America’s role as global policeman, defender of more than 50 different countries, buyer of more than a third of worldwide military spending, etc. is not a costly burden compared to the benefits it yields. All this talk about how allies free ride off our security commitments and how the promiscuous use of U.S. military power imposes significant economic and geopolitical costs on the homeland are off base, according to Cambanis. Being the policeman of the world makes us richer, he says.

Since the United States is so extravagantly rich in relative international terms but also historically speaking, identifying even major costs can be difficult. But Cambanis misses the mark with some selective accounting. He makes his case with three main points. First:

[M]ost of America’s defense spending functions as a massive, job creating subsidy for the U.S. defense industry. According to a Deloitte study, the aerospace and defense sector directly employed 1.2 million workers in 2014, and another 3.2 million indirectly. Obama’s 2017 budget calls for $619 billion in defense spending, which is a direct giveback to the American economy…

Of course, a “giveback” to the American economy implies the real truth: that in order to create jobs by massively subsidizing the military industrial complex, the government has to first extract resources from the more productive sectors of the private economy. If the U.S. pared back its global role and initiated serious restraint-oriented cuts to the defense budget, it could produce something on the order of $150 billion in annual savings. That could serve as quite a stimulus if left in taxpayers’ pockets.

DACA Definitely Did Not Cause the Child Migrant Crisis

Senators Dick Durbin and Lindsey Graham have introduced a bill to extend the Deferred Action for Childhood Arrivals (DACA) program, which since 2012 has provided work permits and lawful presence to 800,000 young immigrants brought illegally to the United States as children. One difficulty for the bill is that the GOP House passed a bill to end DACA in 2014, arguing that DACA caused a surge of young children to come to the border starting in 2012 and reaching its peak in 2014.

At the time, my colleague Alex Nowrasteh published an article arguing against this thesis. First, he noted that DACA specifically prohibited recent arrivals from applying for the benefits. DACA applicants had to be under the age of 31, have arrived in the United States before they were the age of 16, and have continuously resided in the United States since June 15, 2007. Second, Nowrasteh explained that the surge began well before DACA was unexpectedly announced on June 15, 2012. He wrote:

From October 2011 through March 2012, there was a 93 percent increase in UAC arrivals over the same period in Fiscal Year 2011.  Texas Governor Rick Perry warned President Obama about the rapid increase in UAC at the border in early May 2012 – more than a full month before DACA was announced.  In early June 2012, Mexico was detaining twice as many Central American children as in 2011.  The surge in unaccompanied children (UAC) began before DACA was announced.

As the bill was being debated on the House floor, Rep. Zoe Lofgren, the ranking member of the House Subcommittee on Immigration and Border Security, proceeded to introduce Nowrasteh’s article into the record as evidence against the underlying reason for the bill. Unfortunately, Border Patrol had not yet released their monthly UAC arrival figures for 2012, so Nowrasteh’s report had to rely on comments from border agents and local officials about the increases in arrivals rather than the raw Border Patrol data. The anti-DACA bill passed on a party-line vote.

Removing Barriers to Infrastructure Investment

As Obama administration officials head for the door at the Department of the Treasury, they have released a new study on infrastructure. The study—completed by outside consultants—profiles 40 large transportation and water projects that the authors believe would generate economic growth.

For each project, the study gives the estimated benefits, costs, and benefit-cost ratio. Many of the 40 projects appear to be worthwhile, such as an $8 billion Hampton Roads highway project with a benefit-cost ratio of 4.0. The report is silent on who should fund each project, but such high returns suggest that the states have a strong incentive to invest by themselves without aid from Washington.

What the states need from Washington is not money but to get out of the way. The Treasury report suggests that some “major challenges to completion” of projects are imposed by governments.

One challenge is “significantly increased capital costs:”

Capital costs of transportation and water infrastructure have increased much faster than the general rate of inflation over the past 20 years … Increased capital costs are also a product of enhanced design standards and regulatory requirements related to performance, safety, environmental protection, reliability, and resiliency.

Another challenge is “extended program and project review and permitting processes:”

Successful completion of the review and permitting processes required by the National Environmental Policy Act of 1969 (NEPA), which requires federal agencies to assess the environmental effects of their proposed actions, is an important part of project development. NEPA helps promote efforts to prevent or eliminate damage to the environment, but has also extended the schedule and generally increased the cost of implementing major infrastructure projects. This is a long-standing challenge that has spanned the last 20 to 30 years. Studies conducted for the Federal Highway Administration (FHWA) concluded that the average time to complete a NEPA study increased from 2.2 years in the 1970s, to 4.4 years in the 1980s, to 5.1 years in the 1995 to 2001 period, to 6.6 years in 2011.

Other FHWA data show that the number of environmental laws and executive orders creating barriers to transportation projects increased from 26 in 1970 to about 70 today, as shown in the chart below sourced from a trade association.

The upshot? The incoming Trump administration can spur infrastructure investment by working with Congress to repeal rules that unnecessarily delay projects and increase costs. Other steps include cutting the corporate tax rate to increase private investment and ending the bias against the private provision of facilities such as airports.

For more on infrastructure, see here, here, and here.

 

E-Verify Gaining Ground in Texas

Texas State Senator Charles Schwertner (R-Georgetown) recently filed SB 23, a bill that would put into statute Governor Rick Perry’s executive order mandating E-Verify for all state contractors and force all state contracts to include a paragraph specifying that they must participate in the program. There’s a good faith exemption, in case the contractor receives inaccurate information from the E-Verify system (false confirmations that later come to light). SB 23 adds an enforcement mechanism that Governor Perry’s executive order lacked. Under the proposed law, a contractor’s failure to use E-Verify would bar them from receiving state contracts for five years and make the state comptroller responsible for enforcement. The legislature already mandated E-Verify for state agencies and universities.  

SB 23 won’t much affect Texas because it probably won’t be enforced. Nebraska mandates E-Verify for all public contractors, but a 2011 Nebraska report found that only 23 percent of registered state contractors were even enrolled in the system. If Texas is as uninterested in enforcing E-Verify as Nebraska, then the results will be similar.    

The real damage from SB 23 is that it brings Texas one step close to universally mandated E-Verify and all of its systematic problems. E-Verify is a government run system that is free for the user if you exclude the taxes, time, and money spent on maintaining it, using it, and resolving any identification problems that arise. E-Verify also doesn’t work well, as accuracy rates are poor, there are many ways for illegal workers to obtain SSNs from deceased Americans to fool the system, and many employers in states where the system is mandated don’t bother to use it at all. Furthermore, E-Verify doesn’t dim the job magnetE-Verify is an expensive system that doesn’t work.

SB 23 is a stepping stone toward universal mandated E-Verify in Texas and all of the problems it creates. For that reason alone, SB 23 is a rotten deal for Texans. 

Special thanks to Scott Platton for his help in researching this blog post.

Nat Hentoff, RIP

Cato Senior Fellow Nat Hentoff passed away on Saturday evening at age 91.  He was a leading authority on the Bill of Rights and most especially the First Amendment.  He authored 37 books and countless newspaper and magazine articles.  He is perhaps most well-known for his opinion articles in the Village Voice, where he wrote for 51 years, from 1957 until 2008.  He joined the Cato staff in 2009 and never stopped researching and writing.  A few years ago, he told me that he was following Duke Ellington’s guide with respect to his own work in defense of the American Constitution:

Rule 1: Don’t Quit

Rule 2: Reread Rule #1

Nat actually knew Duke and many other luminaries, from Malcolm X to Supreme Court Justice William Brennan.  He was a jazz expert, writing on music for the Wall Street Journal.  He often said that “jazz and the Constitution were his main reasons for being.”  He said his passion for jazz and liberty overlapped because they were both about respecting everyone’s individuality.  

Nat was bemused by both his fan mail and hate mail as the years passed.  He didn’t play the political game—he would condemn Democrats and Republicans alike if they attacked constitutional principles. And he was always enthusiastic when he found a member of Congress coming to the defense of the Constitution, such as Senator Russ Feingold’s (D-WI) lone vote (in the Senate) against the Patriot Act in 2001, or, more recently, Senator Rand Paul’s (R-KY) efforts to scale back the surveillance state.  Go here to view an interview with his thoughts on other current events.

Nat said one of the best things about losing his job at the Village Voice in 2008 was that it afforded him the opportunity to (sort of) read his own obituaries.  “Dig this one!,” he would tell me over the phone with a chuckle. 

Interestingly, when asked about his proudest achievement, he would say it was not anything he wrote.  He got an opportunity to work as a producer for a television special about jazz music in 1957.  He jumped at the chance to bring beautiful jazz music into the living rooms of folks who had never really been exposed to it before.  Here is Billy Holiday’s Fine and Mellow from that special.  According to Nat’s relatives, he passed away while listening to his favorite jazz tunes.

We’re sad you’re gone, but we celebrate your good life.  Rest in peace.