Quote of the Day

Quote of the day, from Alberto Mingardi in the WSJ:

Centralized government allocates resources badly—regardless of its intentions. The very nature of centralization makes it impossible to collect and compute all the information that is needed. This is as true for any grand scheme of industrial planning as it is for the government-led welfare systems that characterize Europe's "social model."

AM: As the article explains, this applies to both hard central planning, and softer forms of "social democracy." We are seeing the results in Europe.

Solar Panels and Subsidies

From the NYtimes

The Commerce Department said on Tuesday that it would impose tariffs on solar panels imported from China after concluding that the Chinese government provided illegal export subsidies to manufacturers there.

This really just doesn’t make much sense. Protectionism rarely does. But in this instance, the policy is utterly baffling. The U.S. government is imposing tariffs on solar panels imported from China. Why? Because, it seems, the Chinese government is “unfairly” subsidizing their solar panel exports.

Let me get this straight. The U.S. government wants to move the economy towards green energy. They make all sorts of arguments about this: energy security, sustainability, breaking the addiction to “foreign oil.” Furthermore, the U.S. government thinks that this is a compelling reason for using public monies to subsidize green energy firms. Everyone knows that no one would buy solar panels or electric cars if they had to pay the “real price”, but, the argument goes, these technologies that we want to promote need a little help.

Now, assuming one accepts this basic argument, what should be the reaction to news that the government of China wants to subsidize solar panels for American consumers and businesses? The effect of this will be to increase the number of solar panels in America, the capacity of green energy infrastructure, and ultimately, contribute to the fulfilment of the goals of domestic energy policy with none of the cost.

Not only do the Americans get more solar panels, but the Chinese are paying! Not the American tax payer; not the beleaguered American federal government with its huge, unsustainable deficits. The Chinese are paying for your policies! Hurray. Good news! Why then, would you turn around and impose taxes on these imports??

(a) The green energy domestic lobby is threatened by foreign competition… and
(b) They will contribute to your re-election campaign?

Who knows?

So maybe, just maybe, Obama’s green energy campaign is not as well intentioned as it appears. If it was just about the solar panels, there is NO CASE for import tariffs.

Governments can't pick winners: the case of green energy

More proof that (a) governments don't pick winners; (b) central planning doesn't work:

Margaret Wente writes:

Mr. McGuinty insists that his green energy investments will launch a vast new industry in Ontario, whose products and expertise can then be exported to the world. But the world is losing interest. Besides, green subsidies don’t create jobs – they kill them. In Germany, where the government has invested heavily in renewables, high energy prices are forcing companies to close factories or move abroad. Germany has pumped more than €100-billion into solar subsidies, with disappointing results. Now it has announced that it will phase out support to the industry by 2017 – news that caused solar stocks to plunge around the world. Spain, which is in serious economic trouble, has also decided to stop subsidizing new alternative energy projects.

On Kony 2012

Preface: yes, Kony’s a bad guy. Duh.

1. Overall, it’s a pretty stupid idea. TO begin, while the LRA was once a sizable force and a threat to Uganda, it’s not that anymore. So let’s be clear. No need to belabour this point, as it has been pointed out by many people.

2. Get Kony? Ok… sure, but admit it. This is arbitrary. Kony is no better or worse than leaders of other rebel groups. He’s also not that much better than many of the guys who now “run” the legitimate governments of DRC, Rwanda, Burundi, and Uganda.

3. The “White Man’s Burden” still awkwardly supports these “help Africa” ideas: this point does not need emphasis, as it has also been addressed thoroughly elsewhere.

4. The “means” to pursue Kony would invariability produce unintended consequences that might actually be worse than the threat itself. The Invisible Children people want an international effort. Consider the ramifications of an armed Western intervention in Central Africa, as unlikely as that sounds. More realistic options involve providing aid and military training to Central African governments. But in doing so, you basically aid “successful warlords”, who then deploy violence against their own people.

5. There is no “neutral” aid. Western interventions into Africa have not worked out very well, generally. We like to believe that we can rise above politics and just “do the right thing.” Think of “Live Aid” , the ultimate triumph of “the people” over politicians. Much of that aid went to poverty relief, but much of it went to through the Ethiopian military regime, which allowed it to finance a repressive, armed campaign, probably killing as many people as were saved through poverty relief. Massive “aid” inflows in the Nigerian (Biafra) war in the 1960s had a similar effect, strengthening the war economy.

Overall, what the Invisible Children people don’t understand is the nice “good guy/bad guy” narrative that has often justified western intervention breaks down in this context. Media reporting requires a simple dichotomous narrative that consists of good guys and bad guys. In this instance, the good guys are the “poor children”. But reality defies this format. In the case of Africa, the realities of “warlord” politics filter all western inputs. External resources are inevitably manipulated or appropriated by somebody or other, and these people are rarely “good guys.”

Decline in Industry: More evidence

The rate of labor force participation is also at a record low. It's tempting to argue that, "well it's the economy". Uh, no. Murray's graph here shows that labor force participation does not at all dovetail with national unemployment numbers. As you can see, the 1970s are period with high national unemployment and high workforce participation. On the other than, the 1980s and 1990s have low national unemployment rates and low work force participation rates. This would be the "test."

The more compelling story is the cultural change in white, lower class America.

Disability in the workforce

From Charles Murray's excellent book: Coming Apart: the State of White America.

The strange case of workers who have convinced the government that they are unable to work: The percentage of workers who actually are physically or emotionally unable to work for reasons beyond their control has necessarily gone down since 1960. Medical care now cures or alleviates many ailments that would have prevented a person from working in 1960. Technology has produced compensations for physical handicaps and intellectual limitations. Many backbreaking manual jobs in 1960 are now done by sitting at the controls of a Bobcat. Yet the percentage of people qualifying for federal disability benefits because they are unable to work rose from 0.7 percent of the size of the labor force in 1960 to 5.3 percent in 2010.

This is really quite remarkable. This sharp increase comes at a time when work is easier, and people work les. It does not count drug addiction, and it is not explained by changes in the criteria of disability, which have remained very similar.

Murray argues that Americans, particularly in the lower class, are growing "less industrious."