The EV Boondoggle

In his Washington Post column Charles Lane looks at the scorecard for electric cars:

Mass adoption of electric cars, however, cannot occur unless they can do everything gas-powered vehicles can do — including the ability to go hundreds of miles before refueling, and refueling easily — at a comparable total cost of ownership. Otherwise, electric cars will be a niche product for upper-income folks. And government subsidies for them will be a regressive transfer of social resources in return for little climate benefit, given that the U.S. power grid the cars draw from is 64 percent fueled by coal and gas.

Nothing happened in the past decade to undermine this basic critique. Government, both federal and state, subsidized electric-car sales and production to the tune of several billion dollars, yet as of March 2019, there were 1.18 million electric vehicles on the road in the United States — less than one-half of 1 percent of the total. Households earning $100,000 or more per year own two-thirds of EVs, with many of the owners benefiting from a $7,500 federal tax credit.

It’s actually worse than that. It’s hard to believe that, absent the billions in subsidies, as many EVs would have been sold as have. And 60% of those subsidies are going to the top quintile of income earners. It’s welfare for the prosperous.

To add insult to injury we still have little evidence that manufacturers can boost production of EVs to the levels necessary to achieve proponents’ goals. The Volt has been discontinued. Toyota is selling fewer Priuses now than it did a few years ago. Tesla is producing more vehicles every year but its production is still minuscule.

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It Ain’t the Weather

Now that the Census Bureau has published its preliminary census results, quite a few people have been pointing out that California and New York are likely to lose seats in Congress as a result of outmigration. Not to be left behind, Illinois is also losing population and is likely to lose a seat in Congress right along with them. The editors of the Chicago Tribune react:

Preliminary numbers from the U.S. Census Bureau released Monday demonstrate once again the shrinking state of Illinois. For the sixth straight year, the state’s population dropped while every bordering state’s population grew.

The early numbers show Illinois’ net population dropped from July 2018 to July 2019 by 51,250, down slightly from last year’s net loss of 55,757 residents, an updated number. The figures continue to confirm a sorry trend. The state is bleeding residents while each of its six neighbors — yes, we’re counting Michigan, which shares a lake border with Illinois — has grown every year since 2011.

Get that? It ain’t the weather or, at least, it ain’t the weather alone. Indiana’s weather isn’t nicer than ours and Indiana has gained almost as many people as Illinois has lost. Indeed, our adjoining states have gained more people than Illinois has lost. The editors offer an explanation for the trend:

It is loss of opportunity, high taxes and frustration at fiscal mismanagement by government leaders that penalizes taxpayers. Who is going to pay for all the pension debt, interest on the debt and the mountain of unpaid bills at the Illinois comptroller’s office? Taxpayers who stay.

Since 2013, the last year Illinois’ population grew, the state’s net population has plummeted by more than than 223,000 residents. That number includes births, deaths, and domestic and international migration. That means it also reflects the Illinois Exodus about which we have been writing, urging state leaders to implement pro-growth policies. We’ve pushed legislators to allow voters to loosen the Illinois Constitution’s pension clause to protect what government workers have earned so far, but also allow lawmakers to scale back future benefits. That would ease income and property tax pressure across the state. It would give frustrated residents a reason to stay.

But elected leaders, including Gov. J.B. Pritzker and Chicago Mayor Lori Lightfoot, don’t support putting pension reform on the ballot. Higher taxes? They’re on board for that. Both of their spending plans for the next fiscal year include a smorgasbord of tax hikes. None of them can reverse decades of government overpromising and overspending. Thus, the exodus.

Unmentioned in the editorial is the large proportion of those erstwhile Illinoisans who are departing from the Chicago area.

Fewer Illinoisans is not a progressive solution. Fewer people means fewer people to pay the bills for all of the things that progressives want to do and fewer people to shoulder the burden of all of the things to which the state government has committed to be paid at a future date.

The assumptions have failed but our state’s legislators are staying the course, hoping for some miraculous fix. There is no miraculous fix. There is no silver lining.

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Ignatius’s 2020 Predictions

In his final Washington Post column for the year, David Ignatius puts his predictions in the form of a quiz, e.g.:

1) During 2020, Saudi Crown Prince Mohammed bin Salman will: (a) take the additional title of prime minister and declare elections for a Saudi parliament; (b) offer China a larger role in the development of his futuristic city of Neom; (c) expand commercial and academic ties with Israel and announce an interfaith study center in Riyadh; (d) create a royal commission to ensure that the murder of journalist Jamal Khashoggi could never happen again.

His answer is all except d. Here’s a prediction that should give us all pause:

The “sleeper” military crisis of 2020 will be: (a) Russian deployment of hypersonic nuclear weapons for which the United States has no defense or counterpunch; (b) Chinese space weapons that can blind U.S. spy satellites, hack communications satellites and limit projection of military power; (c) new bioweapons being developed by China, Russia and other countries that can target specific populations — and create super-empowered warriors that are tougher, faster and smarter than others on the battlefield; (d) all of the above.

His answer there is d, all of the above. Cheery.

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The NYT Fights for 15!

The editors of the New York Times argue for increasing the federal minimum wage to $15/hour:

Over the past five years, a wave of increases in state and local minimum-wage standards has pushed the average effective minimum wage in the United States to the highest level on record. The average worker must be paid at least $11.80 an hour — more after inflation than the last peak, in the 1960s, according to an analysis by the economist Ernie Tedeschi.

And even as wages have marched upward, job growth remains strong. The unemployment rate at the end of 2019 will be lower than the previous year for the 10th straight year.

The interventions by some state and local governments, however, do not obviate the need for federal action. To the contrary. Millions of workers are being left behind because 21 states still use the federal standard, $7.25 an hour, which has not risen since 2009 — the longest period without an increase since the introduction of a federal standard in the 1930s.

Across much of America, the minimum wage is set to rise again in the next few days. In Maine and Colorado it will reach $12; in Washington, $13.50; in New York City, $15. Workers in the rest of the country also deserve a raise. The time has come to increase the federal minimum.

Since Seattle was the first major U. S. city to move on raising the minimum wage there have been lots of studies of the effects. Unfortunately, there have been just about as many different conclusions about the increase as there have been studies and seem to depend as much on the economists’ policy preferences as they do on anything else. Here’s a brief history of studies of Seattle’s increased minimum wage from a post at Warton’s business school:

The first Seattle study was conducted at the University of California Berkeley by Michael Reich, Sylvia Allegretto, and Anna Godoey and sheds favorable light on the minimum wage increase. This study evaluates the effect of the increased minimum wage between 2009 and 2016, specifically examines the restaurant industry to draw its conclusions, and only evaluates the wage increase up to thirteen dollars given that data collection ended in 2016. Ultimately, the study finds that for every 10% increase in Seattle’s minimum wage, restaurant industry wages for low-wage employees (upon whom the minimum wage has the greatest effect) increased by 1% and wages specifically within the limited-service (fast food) restaurant industry increased by 2.3%. Fast food employees enjoyed greater wage increases with an increase of 16.7% compared to the full-service industry of 4.2% likely because restaurants in the full-service industry were able to use the tip credit component of the minimum wage law to their advantage so they didn’t have to increase wages to as large a degree. This study also found no distinguishable decrease in employment in Seattle due to the increased minimum wage; the study concluded that the increased minimum wage was essentially a success [5].

The Seattle Minimum Wage Study Team at the University of Washington also performed a study to evaluate the impact of the wage increase, but produced a much more negative analysis of its effectiveness. Rather than using restaurant data, this study relied upon unemployment insurance (UI) data from the Washington Employment Security Department (ESD) [6]. The study defined low-wage workers as those who made less than eleven dollars during the second quarter of 2014, and found that wages indeed increased by $1.18 per hour for these workers; specifically, it found that the higher minimum wage accounted for $0.73 of the $1.18 increase. However, the likelihood that these low-wage workers remained employed decreased by 1.1% and the average number of hours each employee worked decreased by between 7.5 and 9.9 hours each quarter during the 4th quarter of 2015 [7]. The University of Washington’s study illustrates a significant negative impact of an increase in minimum wage: during the period of increasing minimum wage, including the second wage increase to $13 an hour, the number of hours worked by low-wage workers fell by 3.5 million per quarter. The researchers at the University of Washington found that there were thousands of jobs lost and a reduction in hours worked by those who retained their jobs. The total payroll accruing to low-wage workers fell by about $120 million per year, with workers losing $125 per month on average, suggesting that businesses are more sensitive to wage rate hikes than expected. Although this evidence seems to indicate that the minimum wage increase has not been as successful as the Berkeley study concluded, other experts have identified several possible reasons for this incongruence.

The decreased hours for low-wage workers could be the result of other factors. The Economic Policy Institute argues that the decrease in hours for low-wage laborers illuminated by this study is simply due to an increase in higher paying jobs, compounding the effect of the increased minimum wage [8]. Furthermore, the data used in this study does not include any workers employed by franchises (businesses with more than one location), which leaves out 40% of the labor market [9].

However, minimum-wage advocates argue that the negative findings by University of Washington are disproportionately large and likely inaccurate due to errors in research. Ben Zipperer and John Schmitt of the Economic Policy Institute pointed out objections to the methodology and data used in the University of Washington paper, claiming that the study is biased in the direction of finding job losses, even where there may have been no job loss [10]. The University of Washington study excludes workers in businesses that have more than one location, such as big box retailers and chain restaurants, whereas almost 40 percent of workers in Washington state work at multi-state businesses. And, the researchers at the University of Washington are unable to capture earnings in the informal sector, where there may be missing job data [11]. The biggest contention lies in the fact that the University of Washington study uses data not available publicly. This might be one reason why research the University of Washington report departs from other research observations. Ben Zipperer and John Schmitt also noted that Seattle’s increase in wage “is within the range of increases that other research has found to have little to no effect on employment”, although Seattle’s minimum wage increase is the largest ever studied [12].

As I have said every time this subject has come up, it’s difficult to disaggregate all of the various effects and what works in Seattle may not work in Yazoo City, Mississippi where the median wage is around $20,000 per year, i.e. a lot smaller than $15/hour. One size may not fit all. The editors of the NYT have an answer for that, too:

One simple corrective, proposed by Senator Michael Bennet of Colorado, would be to include exemptions from the $15 standard for low-wage metropolitan areas and rural areas.

Simple is in the eye of the beholder. Who makes the determination and how is it to be determined? To me that sounds like a full employment plan for federal bureaucrats, busily working out which towns, cities, and counties are eligible for a $15/hour minimum wage and which are not.

Fortunately, we already have a system in place to address that: a network of city, county, and state governments. In my view the editorial does not make a case for a $15 federal minimum wage but that state and local governments should be prepared to raise their minimum wages as appropriate for each. Of course that doesn’t address the problem that may have motivated the editors in the first place—high minimum wages can place large, expensive cities at a competitive disadvantage.

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Putting Humpty Together

I frequently allude here to the classic movie, The Red Shoes. To refresh your memory at the end of the movie, despite the prima ballerina having committed suicide the performance of her ballet goes on, a member of the company carrying her red shoes to the places on the stage she would have been. She’s not there but her presence is unmistakeable. The reason I refer to it is that it confers meaning on things that would otherwise be surreal.

Like today’s editorial by the editors of the Washington Post, who never met a war they didn’t like. Consider this passage:

LIBYA, WHICH has lived with civil war off and on since 2011, now is on the brink of joining Syria as the site of a major multinational conflict. Last Thursday, Turkish President Recep Tayyip Erdogan announced that he would ask his parliament as soon as this week to authorize the deployment of Turkish troops to defend Libya’s Tripoli-based government. The intervention is a response to the appearance of more than 1,000 Russian mercenaries in the ranks of rebel forces besieging the capital — something that has caused a shift in front lines for the first time in months.

Also pouring in resources to the insurgency led by warlord Khalifa Hifter are Egypt, the United Arab Emirates, France and Jordan, according to a recent U.N. report. Qatar has joined Turkey in backing the U.N.-recognized Government of National Accord (GNA). Both sides are now equipped with fleets of drones that have caused extensive civilian casualties. The escalation of fighting could touch off a new wave of refugees to Europe and allow a Libya-based Islamic State affiliate to gain ground.

What is absent from that passage yet evident everywhere? Could it be that the United States joined Britain and France to provide air support to the forces rebelling against Moammar Qaddafi’s regime and that without U. S. support for the rebels that regime would undoubtedly still be in power? The Brits and French couldn’t sustain an air campaign for more than a few days and without that air campaign Qaddafi would unquestionably have deployed his own air force against the rebels.

Adding insult to injury our campaign was a violation of the Security Council resolution which authorized us only to protect civilians, not to bring down the Qaddafi regime. Much of Russia’s subsequent actions in the Middle East are a specific response to that. Russia had voted in support of that resolution (China abstained). They learned that our good faith could not be relied on.

Now after nearly a decade of misery and chaos in Libya with torture, extrajudicial executions, and slaves being sold in Libya’s town squares, the editors feign innocence.

The lesson of Libya is that liberal interventionism is no more able to create liberal democratic governments in places where there is little domestic support for them than neoconservative interventionism is. We can defeat armies; we can occupy countries; we can maintain a shaky peace as long as we’re willing to maintain a sufficient troop presence and take the casualties. We cannot create liberal democratic governments.

We surrendered any moral authority to produce peace in Libya nearly a decade ago. What should we do now? Maintain a low profile. We certainly shouldn’t lead any stabilization efforts.

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Most Detailed and Wrong Prediction

This is the time of year that pundits of all stripes make their predictions for 2020. I used to do so as well but abandoned the practice as meaningless. Not that my accuracy was bad—I typically ran about 85%—it’s more that picking the big news for the coming year is extremely difficult. I’d get sure things right but the most important events frequently come from out of the blue.

I found Stephen L. Carter’s predictions at Bloomberg for 2020 interesting and, probably, mostly correct but I am skeptical about this, his fifteenth and last prediction for the year:

In the presidential election, the Democrats will flip Arizona, Pennsylvania, and Wisconsin but the Republicans will flip New Hampshire. The result will be a tie in the electoral college. Under Article II, section 1, of the Constitution, the choice must then be made by the House of Representatives. Democrats cheer the perspicacity of the Framers until they realize that when the House sits to break an electoral tie, each state gets one vote. At that point Democrats remember that the Framers were white supremacists trying to protect slavery, and that the opinions of such monsters should play no role in contemporary governance.

The 26 states that have a majority red House delegation will vote Republican; the 22 states that have a majority blue delegation vote Democratic. The other two states, where the delegations are divided, will cast no vote, resulting in another tie.

The issue will be thrown to the courts. A letter signed by several hundred law professors will argue that all judges and justices appointed by President Donald Trump should recuse themselves, as they are likely to be biased. Television commentators will take up the cry. Conservative bloggers will reply that the argument is “another” attempted coup d’état.

Before the courts can rule, the political parties will agree to hold a new presidential election in February of 2021. Under the agreement, Trump will remains in office until that time but can take no action without the concurrence of Congress. Lawsuits will immediately be filed to block the plan, including by Trump himself, who will claim that not having been defeated in the election, he should win by default.

I will bet a shiny new dime that this prediction will be wrong in whole or in some particular. Heck, I’ll even give odds.

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Pro-Immigration or Just Anti-Black?

In the past I have documented how, far from “doing jobs that Americans won’t do”, Mexican and Central American immigrants have actually pushed American workers out of jobs that they were doing both in the southeast and northwest of the country. The New York Times reports that the same is true of the chicken processing plants in the South:

By the end of the 1960s, black workers predominated on the lines.

It was an important win for African-Americans looking for an alternative to housework in wealthy white homes, or for those who had seen fieldwork dry up in an increasingly mechanized agricultural sector.

“The chicken plant,” Dr. Stuesse quoted a civil rights veteran saying, “replaced the cotton field.”

But as American chicken consumption boomed in the 1980s, manufacturers went in search of “cheaper and more exploitable workers,” Dr. Stuesse wrote, chiefly Latin American immigrants.

At the time, the Koch plant in Morton was owned by a local company, B.C. Rogers Poultry, which organized efforts to recruit Hispanics from the Texas border as early as 1977. Soon, the company was operating a sizable effort it called “The Hispanic Project,” bringing in thousands of workers and housing them in trailers.

and when recent immigration raids on those plants resulted in jobs opening up, black workers were eager to take them.

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A System for Reduced Carbon Emissions

Although I recognize that merely mentioning Bjorn Lomborg’s name will cause some to wrinkle up their noses in disgust, I think he has a point in his assertion in an op-ed at MarketWatch that becoming vegetarian or driving a Prius is a lot more about showing to others how virtuous you are than it is about doing anything meaningful about carbon emissions:

Significantly cutting CO2 emissions without reducing economic growth will require far more than individual actions. It is absurd for middle-class citizens in advanced economies to tell themselves that eating less steak or commuting in a Toyota TM, -0.18% Prius will rein in rising temperatures. To tackle global warming, we must make collective changes on an unprecedented scale.

By all means, anyone who wants to go vegetarian or switch to an electric car should do so, for sound reasons such as killing fewer animals or reducing household energy bills. But such decisions won’t solve the problem of global warming.

What I found darkly amusing about the Green New Deal proposal is that it’s authors cobbled together a grab bag of measures to deal with things they didn’t like which suffered greatly from the opposite of synergy whatever that is. Dysergy?

If people genuinely wanted to reduce carbon emissions, they should start by recognizing that the three largest producers of carbon emissions are energy production, transportation, and cement production, in decreasing order of importance. Then realize that our economic system is a system rather than a random collection of unrelated parts.

While I think there are roles for solar or wind power, they are likely to remain niche solutions. The issues with energy storage and transmission limit them to local use. The same is true of hydroelectric. To sustain our population we need heavy industry and that necessarily means lots of energy, much more than solar or wind can provide and much more reliably. Today that means either fossil fuels or nuclear.

How about massive localization? For reducing the emissions produced by transportation there’s nothing that beats shorter commutes and shopping locally. That would mean single family homes, multi-family homes, retail, commercial, and industrial space all in close proximity. I’m pretty skeptical that you can reduce carbon emissions while importing everything you buy from 12,000 miles away.

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Separate and Unequal

The reason that I post on economic inequality is that it concerns me. I think that economic inequality leads to political inequality which leads to social inequality which spells doom for a system like ours. I’m less worried about the ultra-rich because a) there aren’t very many of them and b) there isn’t much we can do about them. There will always be a few superstars. I’m a lot more worried about the next rung down on the economic ladder who are much more dependent on rent-seeking than the relative handful of superstars.

I guess that whether you find this article at CityLab proposing a merit-based approach to increasing equality boring, outrageous, or thought-provoking depends on what you bring to the discussion. It’s hard to excerpt but here’s a snippet:

I think we can have a society that rewards people for productive or otherwise socially valuable contributions while also taking care of the poor and those who can’t work. If people were paid based on performance and we removed the political advantages that certain professional elites have carved out for themselves, we’d be much better off in terms of both inequality and economic growth.

Merit-based egalitarianism gives everyone opportunities to acquire valuable skills throughout childhood and eliminates the market privileges that come from uneven political power. Because the vast majority of people are perfectly capable of contributing to society when given a chance, this arrangement will result in an egalitarian society. There would still be rich people—because of extraordinary ideas, contributions, or luck, but their fortunes would be seen as essentially fair. Extreme inequality is unfair because so much of it is not based on merit. Low to moderate inequality could be fair and merit-based.

Where I’m skeptical about his proposal is that I don’t believe that the beneficiaries of the present system would ever stand for it. They have come to accept a neo-Calvinist model in which they are meritorious by definition and are eager to preserve their advantages in any way they can, if only to ensure that their children, who don’t have the merit however defined that they did, enjoy the same advantages that they did.

Any merit-based system depends on empirical measurements. You attack a merit-based system by pointing out the impossibility of coming up with a perfect system of measuring merit. We actually know of such a system—a market economy. We tend to reject market economies not because they aren’t merit-based but because they are. The cold equations.

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A World Without Police

I think there is a kernel of truth in the view of “criminal justice activists” that police forces should be abolished. Not only is there no way to enforce the law with perfect justice, there is a simple-minded syllogism: without law there would be no crime. That’s definitional. It’s not that people would stop doing terrible things; they just wouldn’t be crimes. IIRC there have been times when that was the case. There were no criminal penalties only civil ones. Steal someone’s money—you pay a fine. Kill someone—you pay a fine. That wasn’t just, either. It meant that the rich could do anything with impunity because they could afford to pay the fines.

It’s the view embodied in what is probably Anatole France’s most famous comment:

The law, in its majestic equality, forbids the rich as well as the poor to sleep under bridges, to beg in the streets, and to steal bread.

But I also agree with Christopher Rufo’s observation at City Journal:

If anything like police abolition ever occurred, it’s easy to predict what would happen next. In the subsequent vacuum of physical power, wealthy neighborhoods would deploy private police forces, and poor neighborhoods would organize around criminal gangs—deepening structural inequalities and harming the very people that the police abolitionists say they want to help. Even Scott, when pressed by a local journalist about how he would respond to a shooting in his district, conceded that “we live in a world where it’s not possible to turn anywhere for help on big questions like this but to the police force.”

In practice it wouldn’t be a world without crime but a world without criminal prosecution.

We’re almost there already. Wealthy individuals already have private police forces. We call them “bodyguards”. Gated communities. The state of nature that already prevails on the South Side of Chicago which the policy have already largely abandoned to the gangs.

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