Every Gentleman Best Heed the Power of Hysterics To Censor

19 Saturday Feb 2022

Posted by Nuetzel in Censorship, Gender Differences, Uncategorized

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Abortion, Antifa, BLM, Bullying, Center for the Study of Partisanship and Ideology, Civil Rights Law, Critical Race Theory, Dark Triad, Defense Priorities, Disparate impact, Equal Pay, Eric Landers, Family Leave Mandates, Feminization, First Amendment, Gender Conventions, Gender Studies, Georgetown Law School, Grievance Studies, Harrassment, Hate Speech, Human Resources, Ilya Shapiro, Joe Biden, Minimum Wage, Noah Carl, Racial Quotas, racism, Richard Hanania, Sexism, Virtuous Victimhood, Yale Halloween

Here are the gender conventions we’ve adopted in Western society on the rules of debate:

“We accept gender double standards, and tolerate more aggression towards men than we do towards women. We also tolerate more hyper-emotionalism from women than men.”

So says Richard Hanania in an essay called “Women’s Tears Win In the Marketplace of Ideas“. Hanania is the president of the Center for the Study of Partisanship and Ideology, and a research fellow at Defense Priorities. He offers some cogent examples of this disparate treatment, such as the Yale Halloween costume imbroglio and the “cancelling” of Ilya Shapiro at Georgetown Law School. To those we can add Eric Landers’ forced withdrawal as Joe Biden’s chief science advisor, and there are countless others. About this, Hanania says:

“What makes these cases difficult is that male versus male argumentation just has completely different rules, norms, and expectations than male versus female. … A man can’t just yell in another man’s face for 5 or 10 minutes about how he’s hurting his feelings. If a man does behave this way, bystanders are more likely to feel disgusted than join in or play the role of white knight. The man at the receiving end of the abuse is at some point going to have to escalate towards violence, or back down and say something about how this is beneath him. Depending on the situation, observers may assume violence is a distinct possibility, and get between the two sides.

None of these options are available when getting yelled at by a woman. You certainly can’t make an implicit threat of violence. Raising your voice will turn everyone against you, and even walking away can look heartless.”

I’ve witnessed a few pathetic crying jags in the workplace myself, as well as some volleys of verbal belligerence from females on social media that were pointedly anti-social. In my experience, most women can dish out barbs good-naturedly in jest and conduct themselves with dignity in debate. On the other hand, there are too many men who become hostile in debate, which most observers will find much less sympathetic if the counter-party is a woman. And there are a few men, here and there, who have trouble holding back tears in a fraught exchange, but we all know it’s not a good look.

To state the obvious, tears are a natural reaction to grief or real hurt. Anger is well-justified in response to criminal or personal wrongs. Nevertheless, it’s necessary to distinguish between these kinds of reactions and the ignoble tears or venom sometimes brought to controversial debates by neurotic partisans. As Hanania says of our disparate gender conventions, considerable censorship is instigated by an intransigent minority of women who manage to “… indulge their passions in ways that men cannot … .” Most men, anyway… and if they do, they’ve usually lost and know it.

These passionate displays are often tied to claims of individual or group victimhood. The objector could be anyone who feels an under-appreciated beef, but acting-out in order to signal “virtuous victimhood” in this way might indicate a deeper instability.

Again, as Hanania says, females have a definite advantage in the deployment of tears, confrontational rhetoric, and screams. Coincidentally, in a post to which Hanania links, Noah Carl marshals data on the extremely skewed representation of degrees awarded to women in Grievance Studies (e.g. Gender Studies and Critical Race Theory).

Too often, claims of victimhood are invoked in attempts to rebut any number of principled policy positions. For example, your views might be construed as offensive, racist, or sexist if you oppose such things as an increase in the minimum wage, racial quotas, disparate impact actions, equal pay rules, family leave mandates, and abortion. Expressing a strong and reasoned defense of many positions can foment imagined micro-aggressions or even harassment.

The real danger here is that honest debate is suppressed, and with it, very often, the truth. I acknowledge that people must be free to express or defend their views passionately, and with tears, screams, or otherwise, which the First Amendment guarantees. Our gender conventions in this matter should be revisited, however, if men and women are truly to be on equal footing.

Whether baring fangs or shedding tears, there are self-appointed arbiters of acceptable speech represented in almost all of our public and private institutions, ready to shut down debate on account of their feelings. They have more than a few sympathetic allies, male and female, at higher levels of their organizations. In the past, Hanania has discussed the over-representation of females in Human Resource departments. In these contexts, adjudication of disputes often relies on vague notions of what constitutes “hate speech” or “harassment” under Civil Rights Law. If you manage to provoke the tears of a colleague or underling, you’re probably behind the eight ball!

Hanania considers some alternative ground rules or “options” for debate:

Expect everyone who participates in the marketplace of ideas to abide by male standards, meaning you accept some level of abrasiveness and hurt feelings as the price of entry.
Expect everyone to abide by female standards, meaning we care less about truth and prioritize the emotional and mental well-being of participants in debates.”

Either of these options is better than the double standard we have now, and Hanania point to a number of egregious manifestations of our double standard. As he notes, #2 might be what’s meant by the “feminization of intellectual life”, but it fosters the arbitrary prohibition against discussion of any number of ideas that belong on the policy menu.

Option #1 would undoubtedly be condemned as “traditional male dominance” of public debate, but it would bar no one from participation, and obstacles perceived by females, or any sensitive soul, can be viewed as a matter of socialization. Both tearful and ferocious argumentation should be marginalized regardless of the antagonist’s gender.

Imperfect as they are, we have laws and/or social strictures against harassment, bullying, and other aggressive behavior thought to be largely associated with malcontented males. But as Hanania says:

“We haven’t even begun to think carefully about equivalent pathologies stemming from traits of the other sex.”

This problem obviously pales in comparison to the fascist tactics typical of the far Left. That includes the violent behavior of Antifa and BLM, unethical attempts blame conservatives for various, often fabricated deeds, and to threaten and punish them economically, even to the point of state-sponsored thievery and threats of harm to family members. Despite the more benign nature of the disparities discussed here, restoring gender equality to the terms of civil debate, without tears and hysterics, would be a great step forward.

Fiscal Inflation Is Simple With This One Weird Trick

03 Thursday Feb 2022

Posted by Nuetzel in Fiscal policy, Inflation

≈ 2 Comments

Tags

Alexandria Ocasio-Cortez, Bernie Sanders, Build Back Better, Child Tax Credit, Congressional Budget Office, Deficits, Federal Reserve, Fiscal policy, Fiscal Theory of the Price Level, Helicopter Drop, Inflation tax, infrastructure, Joe Biden, John Cochrane, Median CPI, Modern Monetary Theory, Monetary policy, Pandemic Relief, Seigniorage, Stimulus Payments, Student Loans, Surpluses, Trimmed CPI, Universal Basic Income

I’ll get to the weird trick right off the bat. Then you can read on if you want. The trick really is perverse if you believe in principles of sound credit and financial stability. To levy a fiscal inflation tax, all the government need do is spend like a drunken sailor and undermine its own credibility as a trustworthy borrower. One way to do that: adopt the policy prescriptions of Modern Monetary Theory (MMT).

A Theory of Deadbeat Government

That’s right! Run budget deficits and convince investors the debt you float will never be repaid with future real surpluses. That doesn’t mean the government would literally default (though that is never outside the realm of possibility). However, given such a loss of faith, something else must give, because the real value government debt outstanding will exceed the real value of expected future surpluses from which to pay that debt. The debt might be in the form of interest-bearing government bonds or printed money: it’s all government debt. Ultimately, under these circumstances, there will be a revised expectation that the value of that debt (bonds and dollars) will be eroded by an inflation tax.

This is a sketch of “The Fiscal Theory of the Price Level” (FTPL). The link goes to a draft of a paper by John Cochrane, which he intends as an introduction and summary of the theory. He has been discussing and refining this theory for many years. In fairness to him, it’s a draft. There are a few passages that could be written more clearly, but on the whole, FTPL is a useful way of thinking about fiscal issues that may give rise to inflation.

Fiscal Helicopters

Cochrane discusses the old allegory about how an economy responds to dollar bills dropped from a helicopter — free money floating into everyone’s yard! The result is the classic “too much money chasing too few goods” problem, so dollar prices of goods must rise. We tend to think of the helicopter drop as a monetary policy experiment, but as Cochrane asserts, it is fiscal policy.

We have experienced something very much like the classic helicopter drop in the past two years. The federal government has effectively given money away in a variety of pandemic relief efforts. Our central bank, the Federal Reserve, has monetized much of the debt the Treasury issued as it “loaded the helicopter”.

In effect, this wasn’t an act of monetary policy at all, because the Fed does not have the authority to simply issue new government debt. The Fed can buy other assets (like government bonds) by issuing dollars (as bank reserves). That’s how it engineers increases in the money supply. It can also “lend” to the U.S. Treasury, crediting the Treasury’s checking account. Presto! Stimulus payments are in the mail!

This is classic monetary seigniorage, or in more familiar language, an inflation tax. Here is Cochrane description of the recent helicopter drop:

“The Fed and Treasury together sent people about $6 trillion, financed by new Treasury debt and new reserves. This cumulative expansion was about 30% of GDP ($21,481) or 38% of outstanding debt ($16,924). If people do not expect that any of that new debt will be repaid, it suggests a 38% price-level rise. If people expect Treasury debt to be repaid by surpluses but not reserves, then we still expect $2,506 / $16,924 = 15% cumulative inflation.”

FTPL, May I Introduce You To MMT

Another trend in thought seems to have dovetailed with the helicopter drop , and it may have influenced investor sentiment regarding the government’s ever-weakening commitment to future surpluses: that would be the growing interest in MMT. This “theory” says, sure, go ahead! Print the money government “must” spend. The state simply fesses-up, right off the bat, that it has no intention of running future surpluses.

To be clear, and perhaps more fair, economists who subscribe to MMT believe that deficits financed with money printing are acceptable when inflation and interest rates are very low. However, expecting stability under those circumstances requires a certain level of investor confidence in the government fisc. Read this for Cochrane’s view of MMT.

Statists like Bernie Sanders, Alexandria Ocasio-Cortez, and seemingly Joe Biden are delighted to adopt a more general application of MMT as intellectual cover for their grandiose plans to remake the economy, fix the climate, and expand the welfare state. But generalizing MMT is a dangerous flirtation with inflation denialism and invites economic disaster.

If This Goes On…

Amid this lunacy we have Joe Biden and his party hoping to find avenues for “Build Back Better”. Fortunately, it’s looking dead at this point. The bill considered in the fall would have amounted to an additional $2 trillion of “infrastructure” spending, mostly not for physical infrastructure. Moreover, according to the Congressional Budget Office, that bill’s cost would have far exceeded $2 trillion by the time all was said and done. There are ongoing hopes for separate passage of free community college, an extended child tax credit for all families, a higher cap for state and local income tax deductions, and a host of other social and climate initiatives. The latter, relegated to a separate bill, is said to carry a price tag of over $550 billion. In addition, the Left would still love to see complete forgiveness of all student debt and institute some form of universal basic income. Hey, just print the money, right? Warm up the chopper! But rest easy, cause all this appears less likely by the day.

Are there possible non-inflationary outcomes from ongoing helicopter drops that are contingent on behavior? What if people save the fresh cash because it’s viewed as a one-time windfall (i.e., not a permanent increase in income)? If you sit on such a windfall it will erode as prices rise, and the change in expectations about government finance won’t be too comforting on that score.

There are many aspects of FTPL worth pondering, such as whether bond investors would be very troubled by yawning deficits with MMT noisemakers in Congress IF the Fed refused to go along with it. That is, no money printing or debt monetization. The burgeoning supply of debt would weigh heavily on the market, forcing rates up. Government keeps spending and interest costs balloon. It is here where Cochrane and critics of FTPL have a sharp disagreement. Does this engender inflation in the absence of debt monetization? Cochrane says yes if investors have faith in the unfaithfulness of fiscal policymakers. Excessive debt is then every bit as inflationary as printing money.

Real Shocks and FTPL

It’s natural to think supply disruptions are primarily responsible for the recent acceleration of inflation, rather than the helicopter drop. There’s no question about those price pressures in certain markets, much of it inflected by wayward policymakers, and some of those markets involve key inputs like energy and labor. Even the median component of the CPI has escalated sharply, though it has lagged broader measures a bit.

Broad price pressures cannot be sustained indefinitely without accommodating changes in the supply of money, which is the so-called “numeraire” in which all goods are priced. What does this have to do with FTPL or the government’s long-term budget constraint? The helicopter drop certainly led to additional money growth and spending, but again, FTPL would say that inflation follows from the expectation that government will not produce future surpluses needed for long-term budget balance. The creation of either new money or government debt, loaded the chopper as it were, is sufficient to accommodate broad price pressures over some duration.

Conclusion

Whether or not FTPL is a fully accurate description of fiscal and monetary phenomena, few would argue that a truly deadbeat government is a prescription for hyperinflation. That’s an extreme, but the motivation for FTPL is the potential abandonment of good and honest governing principles. Pledging an inflation tax is not exactly what anyone means by the full faith and credit of the U.S. government.

The Great Unmasking: Take Back Your Stolen Face!

28 Friday Jan 2022

Posted by Nuetzel in Masks, Pandemic

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Aerosols, Anthony Fauci, City Journal, Cloth Masks, Cochrane Library, Dr. Robert Lending, Filtration Efficiency, Influenza, Jeffrey H. Anderson, Joe Biden, KN95, Mask Efficacy, Mask Fit, Mask Leaks, Mask Mandates, N95, Omicron Variant, OSHA, P95, Physics of Fluids, R95, Randomized Control Trial, RCT, Surgical Masks, Teachers Unions, Viral Transmission

Right at the start of the pandemic, Dr. Anthony Fauci insisted that masks were unnecessary, which was in line with the preponderance of earlier evidence. Later, he sowed confusion — and distrust — by claiming he said that to discourage a run on masks, thus preserving supplies for the medical community. That mix-up put a stain on his credibility among those who were paying attention, and the reversal was simply bad policy given what is well established by the evidence on mask efficacy.

No Mas, No Mask!

Despite my own doubts about the efficacy of masks, I went along with masking for a while. It gave me a chuckle to see people wearing them outside, especially runners, or solo drivers. We knew by then that contracting Covid outside was highly unlikely. I was also amused by the idiotic protocols in place at many restaurants, where it was just fine to remove them once you walked a few feet to sit at your table, as if aerosols indoors were bound within narrow bands of altitude. Finally, I had reservations about the health consequences of frequent masking, which have certainly been borne out. Restricting air flow is generally not good for human health! Neither is trapping bits of sputum and hot, exhaled moisture rich in microbes right up against one’s muzzle. Still, I thought it polite to wear a mask in places of business, and I did so for a number of months.

In time it became apparent that the cloth and paper masks we were all wearing were a waste of effort. Covid is spread via fine aerosols and generally not droplets. That’s important because the masks in common use cannot block a sufficient level of Covid particles from escaping nor from penetrating through gaps and through the fiber itself. Neither can N95s if not fitted properly, as so many are not. And none of these masks can protect your eyeballs! When tens of thousands of tiny beads of aerosol are released with each cough or exhalation, a mask that stops 70% of them will not accomplish much.

The evidence began to accumulate that mask mandates were completely ineffective at “stopping the spread” of Covid. I then became an ardent anti-masker. I generally don’t wear them anywhere except medical buildings, and then only because I refuse to defer normal medical care, the consequences of which have been tragic during the pandemic. I have told clerks “I don’t need a mask”, which is true, and they have backed off. I have turned on my heal at stores that refuse to give on the issue, but like masks themselves, the signs on the doors are usually more for show than anything else. So I walk right past them.

Now, the Biden Administration has decided to provide to the public 400 million N95 masks — on the taxpayer! It’s a waste of time and money. But the timing is incredible, just as the Omicron wave crashes on it’s own. It will be one more worthless act of theatre. But don’t doubt for a moment that Joe Biden, when no one remembers the timing, will claim that this action helped defeat Omicron.

Mask Varieties

What is the real efficacy of masks in stopping the spread of Covid aerosol emissions? Cloth masks, including bandanas and scarves, are still the most popular masks. Based on casual observation, I suspect most of those masks aren’t washed as frequently as they should be. People hang them from their rear view mirrors for God knows how long. Beyond that, cloth masks tend to fit loosely and protect from aerosols about as well as the disposable medical or surgical masks that are now so common. Which is to say they don’t provide much protection at all.

But can that be? Don’t surgeons think they help? Well yes, because operating rooms can be very splattery places. Besides, it’s rude to sneeze into your patient’s chest cavity. Protection against fine aerosols? Not so much. “Oh, but should I double mask?”, you might ask? Gross! Just Shut*Up!

Face shields are “transparently” useless, offering no barrier against floating aerosols whatsoever except a fleeting moment’s protection against those blown directly into the wearer’s face. Then there are respirator masks: N95 and KN95, which are essentially the same thing. The difference is that KN95s must meet Chinese performance standards rather than U.S. standards. Both must filter and capture 95% of airborne particles as small as 0.3 microns. Covid particles are smaller than that, but the aerosol “beadlets” in which they are swathed may be larger, so the respirators would appear to be a big step up from cloth or surgical masks. R95 and P95 masks are made for protection against oil-based particles. They seem to be better overall due to thicker material and tighter fit with an overhead strap and extra padding.

Measuring Mask Efficacy

A thorough assessment of these mask types is documented in a 2021 paper published in The Physics of Fluids. Here are the baseline filtration efficiencies measured by the authors with an ideal mask fit relative to exhalation of 1 micron aerosols:

Cloth_______40%
Surgical____47%
KN95_______95%
R95_________96%

These are simply the filtration efficiencies of the respective barrier materials used in each type of mask, as measured by the researcher’s tests. Obviously, cloth and surgical masks don’t do too well. Unfortunately, even the N95 and KN95 masks never fit perfectly:

“It is important to note that, while masks … decrease the forward momentum of the respiratory jet, a significant fraction of aerosol escapes the masks, particularly at the bridge of the nose.”

Next, the authors assess the “apparent” filtration efficiencies of masks measured by relative aerosol concentrations in an enclosed space, measured two meters away from the source, after an extended period. This is a tough test for a mask, but it amounts to what people hope masks can accomplish: trapping aerosols containing bits of crap on material surrounding the nose and mouth, and for many hours. Here are the results:

Cloth___________9.8%
Surgical_______12.4%
KN95__________46.3%
R95____________60.2%
KN95-Gap______3.4%
KN95-Valve____20.3%

Cloth and surgical masks don’t do much to reduce the aerosol concentrations. Both the KN95 and R95 masks capture a meaningful share of the aerosols, but the R95 is a bit more effective. Remember, however, that the uncaptured share is a stand-in for the many thousands of virus particles that would remain suspended within the indoor space, so the filtration efficiency of the R95, while far superior to cloth or surgical masks, would do little to mitigate the spread of the virus. The KN95-Gap case is a test of a more “loosely fitted” mask with 3 mm gaps, which the authors say is realistic. Under those circumstances, the KN95 is about as good as nothing. Finally, the authors tested a well-fitted KN95 equipped with a one-way discharge valve. While its efficiency was better than cloth or surgical masks, it still performed poorly. The authors also found that various degrees of air filtration were far more effective in reducing aerosol concentrations than masks.

On the subject of mask fit, I quote Dr. Robert Lending, who has regularly chronicled pandemic developments for patients in his practice since the start of the pandemic:

“N95 type masks cannot be worn by men with beards. They must be so tightly fitted that they leave deep creases in your face. Prior to Covid-19, when hospital employees had to wear them for TB exposure prevention, they were told not to wear them for more than 3 hours at a time. They had to be fit-tested and gas leak-tested. … The N95 knockoffs such as the KN95s are not as good. N95 with valves do not protect others from you. There are now many counterfeit N95s for sale. … Obviously, N95s were never meant to be worn for 8-12 hours; and certainly not by youth and school children. If you are wearing an N95 and you can smell anything, such as aroma in a restaurant when you walk in, perfume, cologne, coffee, citrus, foul odors, etc.; then your fit is not correct and that N95 is worthless.”

Other Evidence

Another kind of evidence on mask efficacy is offered by randomized control trials (RCTs) in mitigating transmission of the influenza virus across a variety of settings, including hospital wards, schools, and neighborhoods of varying characteristics. A meta-analysis of 44 such RCTs published in the Cochran Library in late 2020 found that surgical masks make little or no difference to the spread of the virus. In a small set of RCTs from health care settings, the authors found that N95 and P95 masks perform about as well as surgical masks in limiting transmission.

An excellent review of research on mask efficacy appeared in City Journal last August. The author, Jeffrey H. Anderson, was fairly awestruck at the uniformity of RCT evidence that masks are ineffective. One well-publicized RCT purporting to show the opposite relied on effects that were negligible. Meanwhile, other research has shown that state-level mask mandates are ineffective at reducing the spread of the virus. Finally, here is a nice “cheat sheet” containing links to a number of mask studies.

Children

Children in many parts of the country are forced to wear masks at school. It’s well-established, however, despite wailing from teachers’ unions, that Covid poses extremely low risks to children. And there is no shortage of evidence that constant masking has extremely negative effects on children. The stupidity has reached grotesque proportions. Now, some school districts are proposing that children wear N95 masks! This is unnecessary and cruel, and it is ineffective precisely because children will be even less likely to use them properly than adults, who are generally not very good at it. From the last link:

“If N95s filter so well, why are respirators an ineffective intervention? Because masking is a behavioral intervention as much as a physical one. For respirators to work, they must be well fitting, must be tested by OSHA, and must be used for only short time windows as their effectiveness diminishes as they get wet from breathing.

“Fit requirements and comfort issues are untenable in children who have small faces and are required to wear masks for six or more hours each day. For these reasons, NIOSH specifically states that children should not use respirators, and there are no respirators that are approved for children. These views are shared by the California Department of public health. Concerns about impaired breathing and improper use outweigh potential benefits. There are no studies on the effectiveness of respirators on children because they are not approved for pediatric use.”

Rip It Off

At this point in the Omicron wave, which appears to have crested, we’re basically dealing with a virus that is less lethal than the flu and, for most people, comparable to the common cold. It’s a good time for the timid to shed their masks, which don’t help contain the spread of the virus to begin with. And masks do more harm than has generally been acknowledged, especially to children. So stop the bullshit. Take off your mask, and leave it off!

Voting Rights Doublespeak

18 Tuesday Jan 2022

Posted by Nuetzel in Voter Fraud, Voting Rights

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Absentee Voting, Antifa, Armed Resistance, Ballot Harvesting, Ballot Security, BLM, Capitol Riot, Domestic Terror, Donald Trump, Early Voting, FBI, filibuster, Freedom To Vote Act, George Wallace, Glenn Reynolds, Insurrection, Joe Biden, Joseph M. Hanneman, LARP, Legal Insurrection, Mail-In Voting, Marco Rubio, NASA, Oathkeepers, Patrick Eddington, PATRIOT Act, Proud Boys, Ray Epps, Robert Byrd, Russian Collusion, Sedition, Transfer of Power, Voter ID, Voter Suppression, Voting Rights Act

The so-called insurrection that took place on January 6, 2021 (J6) has obsessed Democrats seeking to ram through a “voting rights” bill that they hope will advantage them in future elections. Oh, and to legitimize proposed new powers for agencies in the fight against “domestic terror”, and to somehow disqualify Donald Trump from holding the presidency again. We can thank a couple of moderate Democrats for shutting down the election bill, at least for the time being, by refusing to eliminate the filibuster.

The Real Threat to Voting Rights

If your real aim is to undermine ballot security and make it easier to cheat, you’d have to work hard to beat the election bill pushed by the Biden Administration: the Freedom To Vote Act (FVA). In their fashion, however, the Left prefers to stake-out phony rhetorical high-ground, replete with spurious charges against the opposition alleging racism and subversive, anti-democratic intent. Joe Biden demonstrated this vividly during his ill-advised speech in Georgia last week.

Here is a fairly thorough summary of the FVA, including an earlier version passed by the House last March. The overarching thrust of the bill is to substitute federal for state authority over the election process. States would not be permitted to demand that voters produce photo IDs. The bill would also require automatic voter registration at the department of motor vehicles and other government agencies, on-line registration, same-day registration, more days of early voting, excuse-free, notary-free, and witness-free absentee ballots, and extended counting of late-arriving ballots.

Democrats in the House of Representatives have now used a NASA funding bill as a shell for all these federally-prescribed protocols. Reportedly, this bill would legalize ballot harvesting nationwide, but that does not appear to be the case. Nevertheless, it includes all of the other provisions cited above, and many others.

While Congress certainly has the power to regulate elections, states were given the primary authority for conducting elections under the Constitution:

“The Times, Places and Manner of holding Elections for Senators and Representatives, shall be prescribed in each State by the Legislature thereof; but the Congress may at any time by Law make or alter such Regulations, except as to the Places of chusing Senators.”

The Voting Rights Act of 1965 helped secure minority voting rights that plainly exist under the Constitution, and it prescribed federal review of certain changes in state voting procedures (some aspects of which were struck down by the Supreme Court). However, never before has such sweeping federal authority been proposed as to the range of mechanics involved in casting and counting ballots. Ballot security would be compromised by several provisions of the legislation.

While voter registration should be relatively painless, it should not be so painless that non-citizens find it easy to register. That is likely to be the case under automatic voter registration. Surely many non-citizens have much to recommend them, but they have not yet demonstrated their commitment to the nation through earned citizenship. The right to vote is a benefit of citizenship; it serves as an inducement to learn about our system of government through the naturalization process. These individuals might not be interested in going to the trouble, however, or they might be loyal to a foreign power. Do we really want such individuals to have a vote? And to the extent that their interest is focused on public benefits, they surely do not have an equal claim to natural-born but similarly-situated Americans.

Voter ID is a safeguard against voter fraud, and a huge majority of Americans support it, including majorities of minorities. The very idea that a photo ID requirement would “suppress” the legitimate votes of minorities is based on the presumption that those voters might have difficulty obtaining identification such as a drivers license or other government ID. Oh really? We can safely file that contention under “the bigotry of low expectations”.

Extensive use of absentee ballots was intended to facilitate voting during pandemic restrictions that were expected to reduce the safety and efficiency of polling places. However, most developed countries ban “mail-in voting”, regarding it as a prescription for voter fraud. That threat seems all too real given the lax standards proposed in the FVA.

The Threat to Political Opposition

The House investigative committee looking into the January 6th melee may recommend new intelligence powers for the federal government. Those powers aren’t needed to investigate the Capitol riot: the FBI has been in possession of teams of video evidence, and it has broad powers under the PATRIOT Act and other measures. Here’s Patrick Eddington from the link above:

“… the FBI already has unbelievably sweeping authority to surveil individual Americans or domestic groups without ever having to go before a judge to get a warrant.

Under an investigative category known as an assessment, FBI agents can search commercial and government databases (including databases containing classified information), run confidential informants, and conduct physical surveillance, all without a court order.”

The simple truth is that certain congressional Democrats and the Biden Administration are attempting to use the Capitol riot as an excuse to turn federal law enforcement against their political enemies. The claim by Biden, the guy who bragged of being mentored by Klansman Robert Byrd, and the same man who praised George Wallace on several occasions, is that his opponents are “domestic terrorists” and/or “white supremacists”. We’ve seen quite enough of this chicanery already. Having suffered through a lengthy “Russian collision” charade, a willingness to completely ignore massive riots and property destruction by BLM and Antifa activists in 2020, and an orchestrated attempt to treat concerned parents of schoolchildren as “domestic terrorists”, we’re expected to believe that these stooges need more power?

The J6 Fiasco

And that brings us back to the Capitol riot. It was, as Glenn Reynolds has said, a clownshow and a mess. But speaking of insurrection, let’s hope the FBI is keeping its eye on violent leftists as well, who perpetrated some unquestionably treasonous escapades in the not very distant past. From Legal Insurrection:

“…leftist rioters … attempted to stop the peaceful transition of power during President Trump’s inauguration. … did anti-Trump leftists riot, attack and injure police, set cars and buildings on fire… …

… the multi-day May, 2020 assault on the White House that left at least 60 Secret Service agents wounded and forced President Trump to be whisked away to a bunker for his personal safety.”

Even more dangerous leftist attacks on the Capitol building have been perpetrated, such as bombings by the Weather Underground in 1971 and the Armed Resistance in 1983.

Many people were hurt in the J6 riot through no real fault of their own, including Ashli Babbitt, who was shot and killed by a Capitol police officer shortly after she attempted to stop attackers from smashing windows. Nevertheless, those who breached the Capitol building were mostly a bunch of hapless goofballs encouraged to run amuck by certain instigators. Among those were the Oathkeepers, a gang who marched around in stack formation wearing gear that looked vaguely militaristic. They brought no weapons to the Capitol (though they had some stashed in the VA suburbs). Apparently, one of them did assist a crowd in barging through a door to the Capitol. Their activities on J6 have been described by one pundit as LARP — live action role playing. Nevertheless, there was much talk among them of interfering with the transfer of power to “the usurper”, as they called Joe Biden. And now, eleven of them have been charged with insurrection and sedition. Members of the Proud Boys were also at the Capitol, some of whom fought with police.

But what really happened to make things go off the rails on January 6th? This article by Joseph M. Hanneman offers an excellent discussion of the events of that afternoon, and the subsequent investigation. He notes the mysterious absence of a number of individuals involved in the breach of the Capitol and grounds from the FBI’s “Seeking Information” list of over 1,500 photos. That includes one Ray Epps, whose incitement was otherwise fairly well-documented. Some suspect certain parties with no interest in seeing Donald Trump remain in office actually encouraged the rioters, up to and including the FBI. Would that surprise anyone after the Whitmer kidnapping operation or the Russian collusion hoax?

The vast majority of the crowd on J6 came to the Capitol grounds to conduct a peaceful protest in the vain hope for congressional action to put a hold on the counting of electors pending state election audits, investigations, and court challenges. Many of those arrested were denied due process, and were held for months with no charges filed.

As for the “threat to the nation” posed by the crowd on J6, I found this Marco Rubio quote to be apropos:

“I don’t care how many candlelight vigils and musical performances you have from the cast of Hamilton, you’re not going to convince most normal and sane people that our government last year was almost overthrown by a guy wearing a Viking hat and speedos.”

Conclusion

Democrats still hope to vote to eliminate the Senate filibuster and then pass the FVA. That is a pipe dream at this point, but they would come to regret eliminating the filibuster in due course. They have used it themselves to defeat legislation hundreds of times in the recent past. The filibuster has its shortcomings, particularly its inability to restrain executive power. Nevertheless, it has never been more critical as protection against a tyrannical (and slim) majority in Congress.

The Freedom To Vote Act is doomed to failure. Still, no one should forget the mendacious rhetoric employed by Joe Biden and the leftist Democrat leadership in Congress on the issue of election integrity. Nor should anyone forget their dishonorable, anti-democratic intent to devalue legitimate voting rights.

Price Controls: Political Gut Reaction, Gut Punch To Public

06 Thursday Jan 2022

Posted by Nuetzel in Price Controls, Shortage

≈ 1 Comment

Tags

Artificial Tradeoffs, Big Meat, Big Oil, Black Markets, central planning, Excess Demand, Federal Reserve, Inflation, Isabella Weber, Joe Biden, Money Supply, Paul Krugman, Price Controls, Relative Prices, Scientism, Shortage, Unintended Consequences

In a gross failure of education or perhaps memory, politicians, policymakers, and certain academics seem blithely ignorant of things we’ve learned repeatedly. And of all the dumb ideas floated regarding our current bout with inflation, the notion of invoking price controls is near the top. But watch out, because the Biden Administration has already shifted from “inflation is transitory” to “it only hurts the rich” to “it’s fine because people just want to buy things”, and now “greedy businessmen are the culprits”. The latter falsehood is indeed the rationale for price controls put forward by a very confused economist at the University of Massachusetts-Amherst named Isabella Weber. (See this for an excerpt and a few immediate reactions.) She makes me grieve for my profession… even the frequently ditzy Paul Krugman called her out, though he softened his words after realizing he might have offended some of his partisan allies. Of course, the idea of price controls is just bad enough to gain favor with the lefty goofballs pulling Biden’s strings.

To understand the inflation process, it’s helpful to distinguish between two different dynamics:

1. When prices change we usually look for explanations in supply and demand conditions. We have supply constraints across a range of markets at the moment. There’s also a great deal to say about the ways in which government policy is hampering supplies of labor and energy, which are key inputs for just about everything. It’s fair to note here that, rather than price controls, we just might do better to ask government to get out of the way! In addition, however, consumer demand rebounded as the pandemic waned and waxed, and the federal government has been spending hand over fist, with generous distributions of cash with no strings attached. Thus, supply shortfalls and strong demand have combined to create price pressures across many markets.

2. Economy-wide, all dollar prices cannot rise continuously without an excess supply of a monetary asset. The Federal Reserve has discussed tapering its bond purchases in 2022 and its intention to raise overnight interest rates starting in the spring. It’s about time! The U.S. money supply ballooned during 2020 and its growth remains at a gallop. This has enabled the inflation we are experiencing today, and only recently have the markets begun to react as if the Fed means business.

Weber, our would-be price controller, exhibits a marked ignorance with respect to both aspects of price pressure: how markets work in the first instance, and how monetary profligacy lies at the root of broader inflation. Instead, she insists that prices are rising today because industrialists have simply decided to extract more profit! Poof! It’s as simple as that! Well what was holding those greedy bastards back all this time?

Everyone competes for scarce resources, so prices are bid upward when supplies are short, inputs more costly, or demand is outpacing supply for other reasons. Sure, sellers may earn a greater margin on sales under these circumstances. But the higher price accomplishes two important social objectives: efficient rationing of available quantities, and greater incentives to bring additional supplies to market.

So consider the outcome when government takes the advice of a Weber: producers are prohibited from adjusting price in response to excess demand. Shortages develop. Consumers might want more, but that’s either impossible or it simply costs more. Yet producers are prohibited from pricing commensurate with that cost. Other adjustments soon follow, such as changes in discounts, seller credit arrangements, and product quality. Furthermore, absent price adjustment, transaction costs become much more significant. Other resources are consumed in the mere process of allocating available quantities: time spent in queues, administering quotas, lotteries or other schemes, costly barter, and ultimately unsatisfied needs and wants, not to mention lots of anger and frustration. Lest anyone think this process is “fair”, keep in mind that it’s natural for these allocations to take a character that is worse than arbitrary. “Important people” will always have an advantage under these circumstances.

Regulatory and financial burdens are imposed on those who play by the rules, but not everyone does. Black market mechanisms come into play, including opportunities for illegal side payments, rewards for underworld activity, along with a general degradation in the rule of law.

Price controls also impose rigidity in relative prices that can be very costly for society. “Freezing” the value of one good in terms of others distorts the signals upon which efficient resource allocation depends. Tastes, circumstances, and production technology change, and flexible relative prices enable a smoother transitions between these states. And even while demand and/or input scarcity might increase in all markets, these dynamics are never uniform. Over time, imbalances always become much larger in some markets than others. Frozen relative prices allow these imbalances to persist.

For example, the true value of good A at the imposition of price controls might be two units of good B. Over time, the true value of A might grow to four units of good B, but the government insists that A must be traded for no more than the original two units of B. Good B thus becomes overvalued on account of government intervention. The market for good A, which should attract disproportionate investment and jobs, will instead languish under a freeze of relative prices. Good B will continue to absorb resources under the artificial tradeoff imposed by price controls. Society must then sacrifice the gains otherwise afforded by market dynamism.

The history of price controls is dismal (also see here). They artificially suppress measured inflation and impose great efficiency costs on the public. Meanwhile, price controls fail to address the underlying monetary excess.

Price controls are destructive when applied economy-wide, but also when governments attempt to apply them to markets selectively. Posturing about “strategic” use of price controls reveals the naïveté of those who believe government planners can resolve market dislocations better than market participants themselves. Indeed, the planners would do better to discover, and undo, the damage caused by so many ongoing regulatory interventions.

So beware Joe Biden’s bluster about “greedy producers” in certain markets, whether they be in “Big Meat”, or “Big Oil”. Price interventions in these markets are sure to bring you less meat, less oil, and quite possibly less of everything else. The unintended consequences of such government interventions aren’t difficult to foresee unless one is blinded with the scientism of central planning.

Break the Market, Blame It, Then Break It Some More

28 Sunday Nov 2021

Posted by Nuetzel in Energy, Environmental Fascism, Free markets, Uncategorized

≈ 2 Comments

Tags

Antitrust, Asymmetric Information, Build Back Better, Capital Controls, central planning, Endangered Species Act, Energy Policy, Externalities, Fossil fuels, Fracking, FTC, Government Failure, Green New Deal, Greenbook, Hart Energy, Industrial Policy, Industry Concentration, Joe Biden, Keystone XL Pipeline, Knowledge Problem, Line 5 Pipeline, Mark Theisen, Market Failure, Monetary policy, OPEC, Price Gouging, Principles of Economics, Quotas, Regulatory Overreach, Stephen Green, Strategic Petroleum Reserve, Subsidies, Tariffs, Taxes, The Fatal Conceit

Much of what is labeled market failure is a consequence of government failure, or rather, failure caused by misguided public intervention, not just in individual markets but in the economy more generally. Misguided efforts to correct perceived excesses in pricing are often the problem, but there are myriad cases of regulatory overreach, ham-handed application of taxes and subsidies for various enterprises, and widespread cronyism. But it is often convenient for politicians to appear as if they are doing something, which makes activism and active blame of private enterprise a tempting path. The Biden Administration’s energy crisis offers a case in point. First, a digression on the efficiency of free markets. Skip the next two sections to get straight to Biden’s mess.

Behold the Bounty

I always spent part of the first class session teaching Principles of Economics on some incredible things that happen each and every day. Most college freshmen seem to take them for granted: the endless variety of goods that arrive on shelves each day; the ongoing flow of services, many appearing like magic at the flick of a switch; the high degree of coincidence between specific wants and all these fresh supplies; the variety and flow of raw materials and skills that are brought to bear; the fantastic array of sophisticated equipment deployed to assist in these efforts; and the massive social coordination necessary to accomplish all this. How does it all happen? Who collects all the information on what is wanted, and by whom? On the feasibility of actually producing and distributing various things? What miracle computer processes the vast set of information guiding these decisions and actions? Does some superior intelligence within an agency plan all this stuff?

The answer is simple. The seemingly infinite set of knowledge is marshaled, and all these tasks are performed, by the greatest institution of social cooperation to ever emerge: decentralized, free markets! Buying decisions are guided by individual needs and wants. Production and selling decisions are guided by resource availability and technology. And all sides react to evolving prices. Preferences, resources, and technology are in a constant state of flux, but prices react, signaling producers and consumers to make individual adjustments that correct larger imbalances. It is tempting to describe the process as the evolving solution to a gigantic set of dynamic equations.

The Impossible Conceit

No human planner or government agency is capable of solving this problem as seamlessly and efficiently as markets, nor can they hope to achieve the surplus welfare that redound to buyers and sellers in markets. Central planners or intervening authorities cannot possess the knowledge and coordinating power of the market mechanism. That doesn’t mean markets are “perfect”, of course. Things like external costs and benefits, dominant sellers, and asymmetric information can cause market outcomes to deviate from the competitive “ideal”. Inequities can arise from some of these imperfections as well.

What can be much worse is the damage to market performance caused by government policy. Usually the intent is to “correct” imperfections, and the rationale might be defensible. The knowledge to do it very well is often lacking, however. Taxes, subsidies, regulations, tariffs, quotas, capital controls, and manipulation of interest rates (and monetary and credit aggregates) are very general categories of distortion caused by the public sector. Then there is competition for resources via government procurement, which is frequently graft-ridden or price-insensitive.

Many public interventions create advantages for large sellers, leading to greater market concentration. This might best serve the private political power of the wealthy or might convey advantages to investments that happen to be in vogue among the political class. These are the true roots of fascism, which leverages coercive state power for the benefit of private interests.

Energy Vampires

Now we have the curious case of the Biden Administration and it’s purposeful disruption of energy markets in an effort to incentivize a hurried transition from fossil fuels to renewable energy. As I described in a recent post on stagflation,

“… Biden took several steps to hamstring the domestic fossil fuel industry at a time when the economy was still recovering from the pandemic. This included revoking permits for the Keystone pipeline, a ban on drilling on federal lands and federally-controlled waters in the Gulf, shutting down production on some private lands on the pretext of enforcing the Endangered Species Act, and capping methane emissions by oil and gas producers. And all that was apparently just a start.

In addition to killing Keystone, there remains a strong possibility that Biden will shut down the Line 5 pipeline in Michigan, and there are other pipelines currently under federal review. Biden’s EPA also conducted a purge of science advisors considered “too friendly” to oil and gas industry. This was intertwined with a “review” of new methane rules, which harm smaller, independent oil and gas drillers disproportionately.

Joe Biden’s “Build Back Better” (BBB) legislation, as clumsy in policy as it is in name, introduces a number of “Green New Deal” provisions that would further disadvantage the production and use of fossil fuels. Hart Energy provides descriptions of various tax changes that appeared in the Treasury’s so-called “Greenbook”, a collection of revenue proposals, many of which appear in the BBB legislation that recently passed in the House. These include rollbacks of various deductions for drilling costs, depletion allowances, and recovery rules, as well as hikes in certain excise taxes as well as taxes on foreign oil income. And all this while granting generous subsidies to intermittent and otherwise uneconomic technologies that happen to be in political favor. This is a fine payoff for cronies having invested significantly in these rent seeking opportunities. While the bill still faces an uphill fight in the Senate, apparently Biden has executive orders, held in abeyance, that would inflict more pain on consumers and producers of fossil fuels.

Biden’s energy policies are obviously intended to reduce supplies of oil, gas, and other fossil fuels. Prices have responded, as Green notes:

“Gas is up an average of 57% this year, with corresponding increases of 44% for diesel and a whopping 60% for fuel oil.”

The upward price pressure is not limited to petroleum: electricity rates are jumping as well. Consumers and shippers have noticed. In fact, while Biden crows about wanting “the rich” to pay for BBB, his energy policies are steeply regressive in their impact, as energy absorbs a much larger share of budgets among the poor than the rich. This is politically suicidal, but Biden’s advisors have chosen a most cynical tact as the reality has dawned on them.

Abusive Victim Blaming

Who to blame? After the predictable results of cramping domestic production and attacking fossil fuel producers, the Biden team naturally blames them for rising prices! “Price gouging” is a charge made by political opportunists and those who lack an understanding of how markets allocate scarce resources. More severe scarcity means that prices must rise to ration available quantities and to incentivize those capable of bringing forth additional product under difficult circumstances. That is how a market is supposed to function, and it mitigates scarcity!

But here comes the mendacious and Bumbling Buster Biden. He wants antitrust authorities at the FTC to investigate oil pricing. Again from Stephen Green:

“… the Biden Administration has decided to launch a vindictive legal campaign against oil producers in order to deflect blame for the results of Biden’s policies: Biden’s Solution to Rising Gas Prices Appears to Be Accusing Oil Companies of Price Gouging.”

There’s nothing quite like a threat to market participants to prevent the price mechanism from performing its proper social function. But a failure to price rationally is a prescription for more severe shortages.

Biden has also ordered the Strategic Petroleum Reserve (SPR) to release 50 million barrels of oil, a move that replaces a total of 2.75 days of monthly consumption in the U.S. The SPR is supposed to be drawn upon only in the case of emergencies like natural disasters, so this draw-down is as irresponsible as it is impotent. In fact, OPEC is prepared to offset the SPR release with a production cut. Biden has resorted to begging OPEC to increase production, which is pathetic because the U.S. was a net exporter of oil not long ago … until Biden took charge.

Conclusion

Properly stated, the challenge mounted against markets as an institution is not that they fall short of “perfection”. It is that some other system would lead to superior results in terms of efficiency and/or equity. Central planning, including the kind exercised by the Biden Administration in it’s hurried and foolish effort to tear down and remake the energy economy, is not even a serious candidate on either count.

Granted, there is a long history of subsidies to the oil and gas sector. I cannot defend those, but the development of the technology (even fracking) largely preceded the fruits of the industry’s rent seeking. At this point, green fuels receive far more subsidies (despite some claims to the contrary). Furthermore, the primacy of fossil fuels was not achieved by tearing down competing technologies and infrastructure. In contrast, the current round of central planning requires destruction of entire sectors of the economy that could otherwise produce efficiently for the foreseeable future, if left unmolested.

The Biden Administration has adopted the radical green agenda. Their playbook calls for a severe tilting of price incentives in favor uneconomic, renewable energy sources, despite the economy’s heretofore sensible reliance on plentiful fossil fuels. It’s no surprise that Biden’s policy is unpopular across the economic spectrum. His natural inclination is to blame a competitive industry victimized by his policy. It’s a futile attempt to avoid accountability, as if he thinks doubling down on the fascism will help convince the electorate that oil and gas producers dreamt up this new, nefarious strategy of overcharging customers. People aren’t that dumb, but it’s typical for the elitist Left presume otherwise.

Hyperbolic Scenarios, Crude Climate Models, and Scientism

07 Sunday Nov 2021

Posted by Nuetzel in Climate science, Global Warming

≈ 6 Comments

Tags

Carbon Efficiency, Carbon forcing, carbon Sensitivity, Cloud Feedback, COP26, G20, Global Temprature, IEA, Intergovernmental Panel on Climate Change, International Energy Agency, IPCC, Joe Biden, Joe Brandon, Judith Curry, Justin Ritchie, Net Zero Emissions, Nic Lewis, Precautionary Principle, Prince Charles, RCP8.5, rent seeking, Representative Concentration Pathway, Roger Pielke Jr., Scientism, United Nations

What we hear regarding the dangers of climate change is based on predictions of future atmospheric carbon concentrations and corresponding predictions of global temperatures. Those predictions are not “data” in the normal, positive sense. They do not represent “the way things are” or “the way things have been”, though one might hope the initial model conditions align with reality. Nor can the predictions be relied upon as “the way things will be”. Climate scientists normally report a range of outcomes produced by models, yet we usually hear only one type of consequence for humanity: catastrophe!

Models Are Not Reality

The kinds of climate models quoted by activists and by the UN’s Intergovernmental Panel on Climate Change (IPCC) have been around for decades. Known as “carbon forcing” models, they are highly simplified representations of the process determining global temperatures. The primary forecast inputs are atmospheric carbon concentrations over time, which again are themselves predictions.

It’s usually asserted that climate model outputs should guide policy, but we must ask: how much confidence can we have in the predictions to allow government to take coercive actions having immediate, negative impacts on human well being? What evidence can be marshaled to show prospective outcomes under proposed policies? And how well do these models fit the actual, historical data? That is, how well do model predictions track our historical experience, given the historical paths of inputs like carbon concentrations?

Faulty Inputs

The IPCC has been defining and updating sets of carbon scenarios since 1990. The scenarios outline the future paths of greenhouse gas emissions (and carbon forcings). They were originally based on economic and demographic modeling before an apparent “decision by committee” to maintain consistency with scenarios issued in the past. Roger Pielke Jr. and Justin Ritchie describe the evolution of this decision process, and they call for change:

“Our research (and that of several colleagues) indicates that the scenarios of greenhouse gas (GHG) emissions through the end of the twenty-first century are grounded in outdated portrayals of the recent past. Because climate models depend on these scenarios to project the future behavior of the climate, the outdated scenarios provide a misleading basis both for developing a scientific evidence base and for informing climate policy discussions. The continuing misuse of scenarios in climate research has become pervasive and consequential—so much so that we view it as one of the most significant failures of scientific integrity in the twenty-first century thus far. We need a course correction.”

One would certainly expect the predicted growth of atmospheric carbon to evolve over time. However, as Pielke and Ritchie note, the IPCC’s baseline carbon scenario today, known as RCP8.5 (“Representative Concentration Pathway”), is remarkably similar to the “business as usual” (BAU) scenario it first issued in 1990:

“The emissions scenarios the climate community is now using as baselines for climate models depend on portrayals of the present that are no longer true. And once the scenarios lost touch with reality, so did the climate, impact, and economic models that depend on them for their projections of the future. Yet these projections are a central part of the scientific basis upon which climate policymakers are now developing, debating, and adopting policies.”

The authors go on to discuss a few characteristics of the BAU scenario that today seem implausible, including:

“… RCP8.5 foresees carbon dioxide emissions growing rapidly to at least the year 2300 when Earth reaches more than 2,000 ppm of atmospheric carbon dioxide concentrations. But again, according to the IEA and other groups, fossil energy emissions have likely plateaued, and it is plausible to achieve net-zero emissions before the end of the century, if not much sooner.”

Pielke and Ritchie demonstrate that the IPCC’s baseline range of carbon emissions by 2045 is centered well above (actually double) the mid-range of scenarios developed by the International Energy Agency (IEA), and there is very little overlap between the two. However, global carbon emissions have been flat over the past decade. Even if we extrapolate the growth in atmospheric CO2 parts per million over the past 20 years, it would rise to less than 600 ppm by 2100, not 1,200 ppm. It’s true that a few countries (China comes to mind) continue to exploit less “carbon efficient” energy resources like coal, but the growth trend in concentrations is likely to continue to taper over time.

It therefore appears that the IPCC’s climate scenarios, which are used broadly as model inputs by the climate research community, are suspect. As one might suspect: garbage in, garbage out. But what about the climate models themselves?

Faulty Models

The model temperature predictions have been grossly in error. They have been and continue to be “too hot”. The chart at the top of this post is typical of the comparisons of model projections and actual temperatures. Before the year 2000, most of the temperature paths projected by the particular model charted above ran higher than actual temperatures. However, the trends subsequently diverged and the gap has become more extreme over the past two decades.

The problem is not merely one of faulty inputs. The models themselves are deeply flawed, as they fail to account adequately for natural forces that strongly influence our climate. It’s been clear for many years that the sun’s radiative energy has a massive impact on temperatures, and it is affected not only by the intensity of the solar cycle but also by cloud cover on Earth. Unfortunately, carbon forcing models do not agree on the role that increased clouds might have in amplifying warming. However, a reduction in cloud cover over the past 20 years, and a corresponding increase in radiative heat, can account for every bit of the warming experienced over that time.

This finding not only offers an alternative explanation for two decades of modest warming, it also strikes at the very heart of the presumed feedback mechanism usually assumed to amplify carbon-induced warming. The overall effect is summarized by the so-called carbon sensitivity, measured as the response of global temperature to a doubling of carbon concentration. The IPCC puts that sensitivity in a range of 1.5C to 4.5C. However, findings published by Nic Lewis and Judith Curry are close to the low end of that range, as are those found by Frank Bosse reported here. The uncertainties surrounding the role of cloud cover and carbon sensitivities reveal that the outputs relied upon by climate alarmists are extreme model simulations, not the kind of reliable intelligence upon which drastic policy measures should be taken.

The constant anxiety issued from the Left on the issue of climate change, and not a little haranguing of the rest of us, is misplaced. The IPCC’s scenarios for the future paths of carbon concentration are outdated and seriously exaggerated, and they represent a breach of scientific protocol. Yet the scenarios are widely used as the basis of policy discussions at both the domestic and international levels. The climate models themselves embed questionable assumptions that create a bias toward calamitous outcomes.

Yet Drastic Action Is Urged

The UN’s 2021 climate conference, or COP26 (“Conference of the Parties …”) is taking place in Glasgow, Scotland this month. Like earlier international climate conferences, the hope is that dire forecasts will prompt broad agreement on goals and commitments, and that signatory countries will translate these into policy at the national level.

Things got off to a bad start when, before COP26 even began, the G20 nations failed to agree on a goal of “net-zero” carbon emissions by 2050. Another bad portent for the conference is that China and India, both big carbon emitters, will not attend, which must be tremendously disappointing to attendees. After all, COP26 has been billed by Prince Charles himself as “the last chance saloon, literally”, for saving the world from catastrophe. He said roughly the same thing before the Paris conference in 2014. And Joe Brandon … er, Biden, blurted some hyperbole of his own:

“Climate change is already ravaging the world. … It’s destroying people’s lives and livelihoods and doing it every single day. … It’s costing our nations trillions of dollars.”

All this is unadulterated hogwash. But it is the stuff upon which a crisis-hungry media feeds. This hucksterism is but one form of climate rent-seeking. Other forms are much more troubling: scary scenarios and model predictions serve the self-interest of regulators, grant-seeking researchers, interventionist politicians, and green investors who suckle at the public teat. It is a nightmare of scientism fed by the arrogance of self-interested social planners. The renewable energy technologies promoted by these investors, politicians, and planners are costly and land-intensive, providing only intermittent output (requiring backup fossil fuel capacity), and they have nasty environmental consequences of their own.

The precautionary principle is no excuse for the extreme policies advocated by alarmists. We already have economically viable “carbon efficient” and even zero-carbon energy alternatives, such as natural gas, modular nuclear power, and expanded opportunities for exploiting geothermal energy. This argues against premature deployment of wasteful renewables. The real crisis is the threat posed by the imposition of draconian green policies to our long-term prosperity, and especially to the world’s poor.

Electric Vehicle Fueling Costs in the Real World

31 Sunday Oct 2021

Posted by Nuetzel in Electric Vehicles, Renewable Energy

≈ 1 Comment

Tags

Anderson Economic Group, Biomass, Charging Time, Commercial Power Rates, Deadhead Miles, Dispatchable Capacity, Disposal Costs, Electric Vehicles, EVangelists, Fast Chargers, Fueling Cost, Intermittency, Internal Combustion Engines, Joe Biden, Nuclear Energy, Opportunity cost, Phantom Drain, Power Failures, Power Grid, Recharging Costs, Renewable Power, Thermal Energy

While the photo above exaggerates, honest electric vehicle (EV) owners will tell you that “refueling” is often not cheap or convenient. However, less jaded EV drivers and enthusiasts seem to view recharging costs through an oversimplified economic lens. A realistic accounting involves a variety of cost factors, including the implicit cost of the time needed to recharge when away from home. An analysis recently published by Anderson Economic Group (AEG) provides a thorough comparison of the costs of fueling EVs relative to vehicles powered by internal combustion engines (ICEs).

Promoting the Narrow Focus

AEG notes the shortcomings of most cost studies quoted by “EVangelists” (not AEG’s term):

“Many commonly-cited studies of the cost of driving EVs include only the cost of electric power for EVs, but compare this with the total cost of fueling an ICE vehicle. Moreover, many presume drivers can routinely charge at favorable residential rates, ignoring the much higher costs of the commercial chargers EV drivers must use when they are away from a residential charger (if they have one).”

The kind of incomplete assays to which AEG refers can lead to statements like the following, from none other than Joe Biden:

“When you buy an electric vehicle, you can go across America on a single tank of gas, figuratively speaking. It’s not gas. You plug it in.”

Well no, it’s not a single tank of “gas”. You still have to stop, plug into a source of power mostly generated by fossil fuels, and it might take a while to get back on the road.

Cost Categories

The AEG report concludes that vehicles powered by ICEs are far cheaper to fuel on average than EVs. The analysis considers several categories of fueling costs including:

Gasoline Prices vs. Commercial & Residential Power Rates: EV drivers recharging away from home often pay more costly commercial rates.
Registration Taxes: applied at EV charging stations, but bundled in fuel price for ICEs;
EV Charging Equipment: upgraded “Level 2” chargers are generally “encouraged” at purchase of an EV;
Deadhead Miles: usage costs on fueling/charging runs; there are far fewer EV charging stations than gas stations in the U.S., which can lead to costly “excursions”;
Charging/Refueling Time: much higher for EV drivers away from home;

Direct Costs

AEG performed their analysis using electric rates, gas prices, and other cost factors as of mid-2021. They did so for six “representative” vehicle classes: entry level, mid-priced and luxury EVs and ICEs. Direct monetary costs account for the first four factors listed above; they do not include the time costs of refueling.

AEG calculates that the direct monetary costs of driving 100 miles in a mid-priced ICE vehicle is $8.95, while the cost in a mid-priced EV using a high proportion of commercial charging is $12.95, about 50% more. The direct cost in a luxury ICE is $12.60, but for a luxury EV it is $14.15 (12% more) for mostly home charging and $15.52 (23% more) for mostly commercial charging.

In addition, AEG finds that the direct cost of EV fueling is far more variable than ICE fueling. This is due to widely varying rates for commercial and residential power, including time-of-day variation, differences in charger efficiency, and the varied structure of pricing at different commercial charging stations.

Implicit Time Cost

It should be obvious that the time costs of refueling EVs are more significant than for ICE vehicles. However, I believe AEG’s report might over-estimate the difference. They say:

“… it takes substantially longer to fuel EVs than for comparable ICE cars. Real world conditions often impose additional burdens, including these two:

Driving and charging time: … it often takes about 20 minutes to drive to a reliable DC fast charger. It often takes another 20 to 30 minutes for the charging process to complete. Of course, this is for fast DC chargers. Slower L2 chargers are much more common …
Recurrent reliability problems: EV drivers face recurring problems at chargers such as breakdowns, software bugs, delays in syncing the mobile application with the charger, charger output being significantly lower than advertised, and outright failures. This is in addition to the problem of vehicles blocking (or “icing”) EV charging spots.

Online forums are full of comments from drivers expressing frustration about these problems.”

All true, as far as it goes. The implicit value of this time depends on the driver’s opportunity cost. Whether valued at the minimum wage or at a much higher opportunity cost, AEG’s straightforward valuation of the time cost is five to six times as high for EV drivers than for ICE drivers, depending on the vehicle class. For EVs, the time cost AEG calculates can be more than $200 a month, or about $20 per 100 miles for a someone who drives 1,000 miles a month, versus about $4 for a similar ICE driver. Adding those values to the direct monetary costs (which AEG does not do) yields a total cost per 100 miles of $33 for a mid-priced EV versus about $13 for an ICE vehicle in that class. That’s 2.5 times more to fuel an EV than a comparable ICE vehicle!

However, I would discount the cost of EV fueling time, because many drivers can use this waiting time productively, whether performing certain work tasks remotely or simply enjoying it as an extension of their leisure time, reading or viewing/listening to content on their mobile devices, for example.

Other Qualifications

AEG acknowledges that their cost comparisons use commercial power rates to account for “free” chargers offered by some stores to shoppers and by some employers to workers as benefits. That’s because stores and employers compensate for that kind of service along pricing and other margins.

AEG does not account for “phantom drain” (the loss of EV battery power while not in use) and the costs of battery degradation over time. Nor do they attempt to quantify the use of battery power while charging takes place (which inflates charging time but also increases direct costs per mile).

I would also note that many of the EV cost disadvantages described by AEG are likely to diminish going forward. More charging stations are being added as the fleet of EVs grows. Battery technology is improving as well, and chargers will become faster on average. In addition, EV “engines” have far less complexity and fewer parts than ICEs, which undoubtedly confers maintenance cost advantages over a period of time.

The Green Itch

Finally, while some consumers might find that EVs scratch a certain green itch, these vehicles are not carbon neutral, as noted above. The vast bulk of the power they use comes from fossil fuels. Higher energy prices in general might or might not work to their advantage, but electric power availability is becoming less reliable as the push toward renewable power generation continues. As we have seen repeatedly, reliance on intermittent power sources has drastic consequences for users in the absence of adequate, dispatchable baseload capacity.

To put a somewhat finer point on the difficulties posed by the intermittency of renewable power, a great deal of EV charging is done at night, when solar panels are not harvesting energy. Wind turbines can harvest a greater proportion of their power at night, but they must be fairly tall to do so (the minimum height ranges from 30 to 100 meters, depending on local conditions). That requirement means that the manufacture and construction of these turbines and their towers is all the more carbon intensive. Furthermore, disposal of both solar panels and wind turbines at the end of their useful lives creates serious environmental issues that green energy advocates have been all too willing to ignore.

Ultimately, until our ability to store power at scale advances dramatically, the issue of renewable intermittency can only be dealt with via adequate baseload power. Growth in the number of EVs will require growth in the dispatchable capacity of the power grid, which means either more plants burning fossil fuels, nuclear power, hydroelectric, biomass, or thermal energy. The alternative is an increasing frequency of blackouts, which would drastically reduce the utility of EVs.

Stagflation and the Supply of Bad Public Policy

20 Wednesday Oct 2021

Posted by Nuetzel in Inflation

≈ 2 Comments

Tags

Anthony B. Kim, Breakeven Inflation Rate, Brian Dunn, Consumer Price Index, Core CPI, corporate taxes, Cost-Push Inflation, Dunkin’ Donuts, Energy Policy, Federal Reserve, Jen Psaki, Joe Biden, Labor Force Participation, Mark Theisen, Median CPI, Non-Pharmaceutical interventions, Overton Window, Patrick Tyrell, Semiconductors, Stagflation, Supply Chains, Trimmed CPI, Unemployment By State, Vaccine Mandate, Work Disincentives

Price inflation is getting more attention now than it has in many years, but not everyone is convinced it will persist, most conspicuously bond investors. The Biden Administration’s initial narrative was plausible even if there were seeds of doubt: a price spike was to be expected relative to the low-ebb of price changes during the pandemic. However, the inflation data has come in strong since the spring, and events point to continuing price pressures and the potential for expected inflation to drive escalations in contract pricing. Once embedded like that, the phenomenon broadens and gets harder to squeeze out.

Broadening Price Hikes

The evidence at hand is never enough to take much comfort in predictions, and the uncertainties now are similar to those I discussed in June. At the time, the price moves had been pronounced only in the prior month or so, and there was no evidence of any breadth. Now, it’s at least clear that increases in the so-called “core” Consumer Price Index (CPI), which excludes food and energy prices, have escalated. In addition, the growth in the median component of the CPI basket reported by the Federal Reserve Bank of Cleveland has begun to jump. So has the “trimmed CPI”, which excludes the most extreme 8% of prices changes in both directions within the index. The chart below shows one-month changes in these gauges:

So the recent upward price trends have expanded in breadth, and their persistence is making it a little harder to argue that the changes are transitory rebounds from pandemic weakness.

Bond Investors Still Nonchalant

Investors are by no means convinced that the recent price pressures will persist. They have an incentive to bid-up bond yields to compensate for expected inflation, so these yields can be used to infer inflation expectations. The chart below from the Federal Reserve Bank of St. Louis shows the five-year “breakeven” inflation rate, which is derived from inflation-indexed versus unindexed Treasury securities.

The pattern does not suggest that a meaningful change in inflation expectations has taken place. In fact, the implied five-year inflation forecast has edged down a bit. Of course, we’re still worrying about a fairly short period of high month-to-month changes in prices, and five years is a long time in that context.

This “casual” reaction of interest rates to the inflation spike undoubtedly reflects investors’ belief that the Federal Reserve will tighten policy in an effort to contain inflation. Some of us have strong doubts about the Fed’s inflation-fighting resolve, however. There is little the Fed can do to relieve supply-side problems, and many would argue that the Fed should take an accommodative stance in an attempt to minimize output and job losses, but that would reinforce the inflationary effects. There is no easy way out. Risks loom in both directions, and though I might regret it, at recent yields, I’m not buying Treasury bonds.

Sources of Price Pressure

Economists have tended to divide price pressures into those driven by demand and those driven by supply. Sometimes the terms “demand-pull” and “cost-push” inflation are used for shorthand. The former is usually associated with economic growth, where rising prices indicate that demand is outpacing gains in capacity. With cost-push inflation, however, rising prices indicate that production snd supply is somehow impeded. You get higher prices and lower output. This is so-called “stagflation”. Today we seem to have a combination of those inflationary forces in play: demand has rebounded from the pandemic lows of 2020, while breakdowns in the supply chain have choked production, with a consequent need for more severe price rationing. If the latter forces win out, we will have entered a stagflationary episode.

Unfortunately, administration policies are exacerbating supply-side inflationary pressures. Officials first insisted that the jump in inflation measures would be transitory. More recently they’ve said that it really only hurts “the rich”, an assertion that is decidedly false. Biden flaks are doing their level best to put lipstick on a pig. “Peppermint” Psaki says it shows that people just want to buy things! On the other hand, the Washington Post encourages us to “lower our expectations”. Um, yeah… I think we’re there!

Burning Energy Producers and Consumers

Energy policy is an obvious case: while a hurricane moving through the Gulf of Mexico took a big bite out of domestic oil production, Biden took several steps to hamstring the domestic fossil fuel industry at a time when the economy was still recovering from the pandemic. This included revoking permits for the Keystone pipeline, a ban on drilling on federal lands and federally-controlled waters in the Gulf, shutting down production on some private lands on the pretext of enforcing the Endsngered Species Act, and capping methane emissions by oil and gas producers. And all that was apparently just a start.

As Mark Theisen notes, when you promise to destroy a particular industry, as Joe Biden has, by taxing and regulating it to death, who wants to invest in or even maintain production facilities? Some leftists with apparent influence on the administration are threatening penalties against the industry up to and including prosecution for “crimes against humanity”! This is moronic, of course, but perhaps these extremists are just trying to move the Overton Window. Fossil fuels have been and still are a miracle in terms of human well-being, and renewable (but intermittent) energy sources are simply not capable of replacing the lost power, as Germans, Californians, and Texans are learning. Furthermore, the effort to kill fossil fuels amounts to a war on the poor. Americans are facing steep increases in their utility bills and blackouts during the times when power is needed most. Now, Biden is actively trying to wheedle more oil production out of OPEC, as if it’s okay for those nations to extract it, but not for us to do so!

Labor Shortage

Have you heard it’s hard to get help these days? You’ll notice it pretty fast if you have regular occasion to deal with service establishments. Goods are getting scarce on the shelves as well. Food and paper goods are getting pricier. The semiconductor shortage has been prominent, impacting production and pricing of electronics, computers, and new cars, with a big cross-effect on the used car and rental car markets. Everywhere you look, sellers seem short of inventory. This year it might be tough to fill the space under the Christmas tree for lack of availability.

This isn’t just about cargo ships unable to unload at the ports, although that’s significant. Patrick Tyrell and Anthony B. Kim note the difficulty of overcoming the supply chain breakdowns even with 24/7 operations at the ports. Tyrell snd Kim offer this quite from the Financial Times:

“The US is facing a shortage of warehouse space and truck drivers, and shifting to 24/7 operation will require enormous co-ordination between the publicly operated ports and private sector groups, including large retailers and freight companies.”

There are several reasons for the labor shortage: a few workers and businesses might still be living in fear of COVID, especially in “blue” states and urban areas where the fear factor seems to have been more palpable. That’s where the high unemployment is. There has also been an apparent wave of retirements among late baby-boomers who were already on the cusp of hanging up their skates. However, the Biden Administration has instigated a set of ill-advised policies that blunt work incentives, leading to reduced labor force participation: the repeated extensions of pandemic-related unemployment benefits; increased child and dependent care tax benefits; the moratorium on evictions from rental property; the elimination of work requirements for expanded Medicaid coverage; and increased EBT and SNAP benefits. This is not hard to understand: if you pay people to stay home, they will stay home, even as you suffer through an interminable wait for your fast food. But there might not be a wait at Dunkin’ Donuts, because they’ve been running short on donuts due to “supply chain issues”!

Destructive Public Policy

COVID policy contributed to the early plunge in demand in 2020. Economic output declined, and ramping-up production is not always a simple thing. In this case, it was hindered by repeated non-pharmaceutical interventions and confused messaging from public health authorities. These are issues I’ve felt compelled to address too many times on my blog over the past 18 months. The negative economic effects of these policies continue to linger, and it should surprise no one.

The Democrats’ so-called “social infrastructure” bill, which looks mercifully unlikely to pass without major curtailments in scale and scope, would exacerbate many of the problems cited above. As I’ve noted recently, it’s more of an “infra-shackle” bill for the private economy than an infrastructure bill. For $3.5 trillion (an understatement based on budget gimmickry), we get heavy regulation and taxes, particularly on fossil fuels, subsidies for uneconomic technologies, assorted entitlements with no means testing, wage- and job-killing (and inflationary) hikes in corporate taxes, and other tax disincentives to private investment. The bill would represent a huge reallocation from the private to the public sector via coercion and public competition for scarce resources.

As if that wasn’t bad enough, now Biden has issued his legally dubious vaccine mandate, which has been met with outrage among many workers, from Chicago cops and other public servants, health care workers, truckers and workers at such corporate giants as Boeing, Southwest Airlines, and many others. Unions are furious. People are walking out. This represents a negative “supply shock”, an unexpected event that hinders production and boosts prices. Joe Biden looks to be well on his way to earning the title of “The Stagflation President”.

I’ll leave you with this gem from Brian Dunn:

Inflation: The Leftist “Tax the Poor” Policy

23 Thursday Sep 2021

Posted by Nuetzel in Deficits, Inflation, Redistribution

≈ 2 Comments

Tags

Asymmetric Information, Bank of International Settlements, Biden Administration, budget deficits, Budget Reconcilation Bill, Claudio Bario, Confiscation, dependency, Federal Reserve, Fixed-Rate Debt, Inflation, infrastructure, Joe Biden, John Maynard Keynes, MMT, Moderm Monetary Theory, Money Illusion, Money Printing, Noah Smith, Patrick Horan, Redistribution, Regressive Tax, Scott Sumner, Social Infrastructure, Unexpected Inflation

Recent years have seen explosive growth in federal deficits along with growth rates in the money supply that would have made John Maynard Keynes blush. It’s no coincidence that a new school of thought has developed among certain “monetary economists”. But as someone trained in monetary economics, I wish I could make those quote marks larger. This new school of thought is known as Modern Monetary Theory (MMT), and it asserts that the money spigot is a perfectly legitimate means of financing government spending and, furthermore, that it is not necessarily inflationary. Here is how Scott Sumner and Patrick Horan describe MMT:

“A central idea of MMT is that a government that issues its own fiat currency can pay its bills in that same currency. These governments need not worry about budget deficits when contemplating additional spending. Thus because the US government has a monopoly on money creation, our federal government does not need to raise all its revenue through tax or bond finance. A government with its own currency cannot go bankrupt because it can always issue more currency to cover any budget deficit. … MMT advocates argue that this why the US government can afford expensive programs such as a jobs guarantee and universal healthcare.”

Spend and Print

Joe Biden’s $3.5 trillion “social infrastructure” package would be just a start, but that’s likely to be more like $5.5T once the budget gimmicks are stripped out. We can be somewhat hopeful, because that initiative looks increasingly likely to fail in Congress, at least this time around. But the tax side of that bill was already $2.6T short of the latter spending figure, and the tax provisions keep shrinking. Now, it’s looking more like a shortfall of $3.5T would require financing. Moderate Democrats may not support this crazy bill in the end, but Dems from deep blue states want to reinstate state and local tax deductibility, which would cut the tax component still more. Well who cares? Print the money, say the brave MMT advocates.

Sumner gets to the heart of the problem in this piece. Progressives, with false assurance from MMT, want loose monetary policy to make their expansive programs “affordable”. As he explains, if this happens while the economy is near its production potential, inflation is a sure thing. These lessons were learned long ago, but have been conveniently forgotten by the political class (or they simply prefer to ignore them), instead jumping onto the MMT bandwagon.

Inflation Is Taxation

No conscientious observer of government finance should ever forget that inflation is a form of taxation. Assets whose values are either fixed or subject to some inertia are devalued by inflation in terms of purchasing power, or in real terms, as economists put it. Strictly speaking, this is true when inflation is unexpected… if it is expected, then lenders and borrowers can negotiate terms that will compensate for these changes in real value. But when inflation is unexpected, the losses to lenders are offset by gains to borrowers. Of course the federal government is a gigantic borrower, so inflation can represent a confiscation of wealth from the public.

It’s not small potatoes. Currently, about $22T of U.S. Treasury debt is held by the public, and its average maturity is more than 5 years. If the Federal Reserve engineers an unexpected 1% jump in the rate of inflation, it shaves over $1T off the real value of that debt before it’s repaid, and it reduces the real interest cost of that debt as well. Of course, the holders of that debt will suffer an immediate loss if they are forced to sell prior to maturity for any reason, since new buyers will be demanding higher yields to compensate for higher inflation if it is expected to persist.

The Poor Losers

Inflation causes redistributions to take place, especially when it is unexpected inflation. We’ve already discussed lenders and borrowers, but similar considerations apply to anyone entering into fixed price contracts for goods or labor. Here’s what Claudio Bario of the Bank of International Settlements (BIS) has to say about these shifts:

“Inflation shifts income and wealth away from those who are least aware of it, or least able to protect against it. These segments of the population often coincide with lower-income groups, which explains why inflation has often been portrayed as a most regressive form of tax. The ‘inflation tax’ takes its toll through the erosion of the value of financial assets and contracts fixed in nominal terms.”

Inflation is a regressive tax! In this respect, economist Noah Smith echos Bario in a recent op-ed in which he discusses “money illusion”, or the confusion of real and nominal income:

“Workers … who are slow to perceive the rise in prices they pay for goods like cars and groceries, won’t realize this, and will be happy with their unusually large raises. But companies, whose accountants and managers certainly know the true inflation rate, will also be happy, because they know they’re not actually paying more for labor.

That information asymmetry between workers and employers may be exactly what keeps wages from rising faster than inflation. If workers take a year to realize how much prices have gone up, they may be satisfied with the raises they got during the time of high inflation — even if that inflation ultimately turns out to be transitory. By then, it might be too late to negotiate for a real, inflation-adjusted raise.”

Inflation taxes and redistributions become more acute at higher rates of inflation, but any unexpected escalation in the rate of inflation will take a toll on the poor. Bario elaborates on the mechanisms by which inflation inflicts budgetary pain on the those at the lower end of the socioeconomic spectrum.

“As regards wealth distribution, the financial assets that are most vulnerable to inflation are cash and bank accounts – the typical savings vehicles held by the poorest segments of the population. This is mostly because the poorest have access only to limited investment options to protect their savings. …

… wages and pensions – the main sources of income for a large majority of households and even more so for the poorest half of the population – are typically fixed in nominal terms and hence vulnerable to inflation. Indexation mechanisms, such as those adopted in many [advanced economies] in the 1970s, are no panacea: they may fail to keep pace as inflation accelerates; …”

In addition to the inflationary gains reaped by government, it’s clear that inflation gives rise to redistributions between private parties: generally from those with lower incomes and wealth to their employers, producers, financial institutions, and pension payers (businesses, state and local governments). An exception is some low income debtors might benefit if they owe long term obligations at fixed interest rates, but low income individuals are often constrained from obtaining this form of credit.

Causing, Then Exploiting, Inequality

Another especially galling aspect of the Left’s focus on money finance is how its consequences fly in the face of their concerns about income and wealth inequality. Inflation is typically manifested in rising equity prices: nominal stock values tend to escalate in an inflationary environment, protecting their owners from losses to the real value of their investments. Stocks are generally a good inflation hedge. Yet we know that stocks are disproportionately owned by those in the highest strata of the income and wealth distributions. Later, of course, the Left will seek to level the burgeoning inequality wrought by their own policies by “taxing the rich”! Apparently, for the Left, consistency is never considered a virtue. This is not unlike another trick, which is to blame “greedy corporations” for the inflation wrought by Leftist policies.

It’s a great irony that the Left, which purports to support the poor and working people, would propose a form of government finance that is so regressive in its effects. To be generous, perhaps it’s just another case of “progressives” unknowingly hurting the ones they love. The expansive programs they advocate will confer government benefits to many individuals in higher income brackets, not just the poor, but those government alms will help to compensate for higher inflation. But this too takes advantage of money illusion, because those benefits might well buy progressives the loyalty of beneficiaries unable to recognize the ongoing erosion in their standard of living, and who are unwilling to come to grips with their increasing dependency.

But Tut, Tut, They Say

Advocates of MMT, in combination with expansive government, also have a tendency to deny that inflation has ever been a consequence of such policies. As Sumner points out, they have forgotten historical episodes that run contrary to the theory, and most “popular” advocates of MMT fail to recognize the important role played by limits on the economy’s production potential. When money growth outruns the economy’s ability to produce real goods and services, the prices of goods will rise.

Sacred Cow Chips

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