Andrew Klavan: E is for Equality

Part of a series in which the well-intended but destructive ideas of leftists are deconstructed, one letter at a time.  

I strongly recommend Andrew Klavan's podcast on the Daily Wire.  Very informative, and a unique perspective on the political and cultural scene in America.

 

Plastic Straws: Facts

The 'Plastic Straw Debate' is mostly a fact-free exercise, and the facts that are thrown around don't seem very credible (a country of 325 million people uses 500 million straws a day?).  Thankfully, Reason magazine's online division is bringing some fact-based perspective to the conversation..

Chicago's Next Really Bad Idea: A Guaranteed Basic Income

Universal income is a horrible idea from an economic and social point of view.  Universal income in Chicago, whose financial mismanagement is legendary, is even more laughable.


Chicago's Next Really Bad Idea: A Guaranteed Basic Income
Investors Business Daily

Money For Nothin': Apparently not satisfied with the already disastrous condition of its finances, Chicago this week said it would like to experiment with a universal basic income, a socialist pipe-dream that pops up every few years as a "new" idea. It's not. And it will never work. X

Chicago alderman Ameya Pawar has already proposed legislation that would give 1,000 families $500 a month. The bill looks like a shoo-in, garnering support already from a majority of the Windy City's lawmakers. Pawar is reportedly already working on the design of the program with Mayor Rahm Emanuel.

Chicago is the largest city yet to toy with this bad idea. There are many things that would help the working poor climb out of poverty. But a universal basic income (UBI), also called a guaranteed government income, isn't one of them.

Yet, even some conservatives fall for the idea, dreaming of eliminating the dozens of welfare programs at the federal, state and city levels and replacing them with one big check. It's attracted a wide range of supporters, everyone from Elon Musk and Mark Zuckerberg to union chief Andy Stern and conservative-libertarian Charles Murray embrace the idea.

Just this week, former President Obama, speaking in South Africa, said that a guaranteed income would be one way to shrink the "yawning disparities" in wealth and education.

Do these luminaries know something the rest of us don't? Sadly, no. They're just wrong.

There's already an experiment getting under way in deeply troubled Stockton, Calif., once known as the nation's home-foreclosure capital. Facebook co-founder Chris Hughes kickstarted that city's program with a $1 million donation. But it will have no more success than other "experiments" with giving money to people not to work.

Why are we so sure? It's already been tried elsewhere.

Indeed, in April, impeccably progressive Finland decided to end its limited experiment with a UBI that paid 2,000 nonworking people roughly $685 a month. The idea was that it would free up people to look for work, or be creative. It didn't happen.

"There is a problem with young people lacking secondary education, and reports of those guys not seeking work," said Heikki Hiilamo, a University of Helskinki professor of social policy. "There is a fear that with basic income they would just stay home and play computer games."

Far closer to home, as we've noted before, the U.S. has already tested a closely-related idea, the so-called "negative income tax." Essentially, it's a guaranteed income by another name. And it failed abysmally.

"In the 1970s, the government ran four random control experiments across six states to try the negative income tax, a similar policy proposal that was popular at the time," wrote Mimi Teixeira in The Daily Signal earlier this year. "In each text, the work disincentive effect was disastrous. For every $1,000 in added benefits to a family, there was an average reduction in $660 of wages from work."

So people who got checks stopped working or worked far less. What a surprise.

That's the socialist dynamic: Pay people to do nothing, and they'll do nothing. This doesn't require a Ph.D. in economics. It's simple common sense.

Yet, this is the level of thinking among our nation's mostly far-left elites. In truth, they're not overly concerned with people working less. Those who get checks will soon depend on them. And they will reliably vote for those who give them money, the leftist political elites. It's one of the most cynical political ploys imaginable, but that's what it is.

Conservatives who support such an idea naively think it will shrink the welfare state. But all it would take is one election with a Democratic president and Congress, and the welfare state would be even larger — taking more money from those who work and giving it to those who choose not to.

It's hard to imagine a more anti-work policy. Rather than empowering the poor, it turns them into wards of the state. And work is important to people, part of creating a meaningful life, a bedrock of civilization.

A universal basic income would destroy any incentive people have for bettering themselves through further education, training, relocating to a better area to find a job, or even just getting up from the couch to look for work down the street. Why bother? Check's in the mail.

Worse still, it is indiscriminate. Most Americans agree on the need for a safety net for the truly needy and destitute. Giving money to those who are neither needy nor destitute undermines that, too.

Then there's the money problem.

One of the most common suggestions we've heard is that every American should get the equivalent of about $10,000 a year. But as the American Enterprise Institute's Robert Doar recently noted, that would come to about $3 trillion a year. That's far more than we now spend on welfare, and more than we currently collect in income taxes.

Where will the money come from? Those who work. It will be a massive redistribution scheme, as we noted, from those who work to those who don't.

Which brings us back to Chicago, a city that has been misgoverned for years by leftist politicians and is in dire fiscal straits, thanks to reckless spending and lavish public sector pensions. It can ill afford a program as wasteful and economically damaging as a universal basic income.
Chicago: City On The Brink

Last year, The Fiscal Times ranked 116 cities with populations greater than 200,000 for their fiscal soundness. Chicago ranked dead last. Just like the state of Illinois, it is broke. And the current incompetent regime seems to think that raising taxes to stratospheric levels and spending more is how to fix the problem.

Rather than put in place policies that would attract investment, encourage work and lure entrepreneurs to start new businesses, such as cutting taxes, useless regulations and wasteful spending, Chicago's politicians instead engage in moral preening of the worst kind.

Advocacy of a universal basic income is perhaps the worst example of this. It is a ruinous "experiment" that everyone knows will fail.

Nor is it "welfare reform." It's just socialism, dressed up as compassion.

Americans would be wise to beware politicians who promise them a workless utopia paid for by others, those they call "the rich" but are really the hard-working middle class. Such an idea won't work, because it can't.

The Economics of Solar Power

Interesting article outlining the faulty economics behind rooftop solar for homes. 

Solar as an energy source should stand on its own merit or lose to cheaper, more effective sources of energy.  Market-distorting subsidies and regulations should not be competitive advantages.

The Incredible Scam of Rooftop Solar
By Norman Rogers

A modest proposal:

We've all heard about "shop local" and "get your food from local farmers, not distant corporate farms." Lots of people have apple trees in their backyards. Often they can't begin to eat or give away all the apples. In the meantime, big supermarkets sell corporate apples for one dollar a pound and up. I propose that people with backyard apples be able to take them to the supermarket and sell them to the supermarket for the same price at which the supermarket is selling apples. Furthermore, they should be able to take them at any time and receive payment. If the store gets too many local apples, it can reduce its purchase of corporate apples.

My apple proposal may seem ill advised, but that is exactly how rooftop solar power works. The homeowner gets to displace power from the power company, and if the homeowner has more power than he needs, the power company is obligated to purchase it, often for the same retail price at which it sells electricity. That policy is called net metering. In order to accommodate the homeowner's electric power, the utility has to throttle down some other power plant that produces power at a lower wholesale price.

The exact arrangements for accepting rooftop solar vary by jurisdiction. In some places, net metering is restricted in one way or another.

A large-scale natural gas-generating plant can supply electricity for around 6 cents per kilowatt-hour. Rooftop solar electricity costs, without subsidies, around 30 cents per kilowatt-hour, or five times as much. Average retail rates for electricity in most places are between 8 cents and 16 cents per kilowatt-hour. Yet, paradoxically, the homeowner can often reduce this electric bill by installing rooftop solar.

It is actually worse than forcing the power company to take 30-cent electricity that it could get from a natural gas plant for 6 cents. When the company throttles down a natural gas plant to make room for rooftop electricity, it is not saving six cents, because it already has paid for the gas plant. All it saves is the marginal fuel that is saved when the plant is throttled down to make room for the rooftop electricity. The saving in fuel is about 2 cents per kilowatt-hour. So 30-cent electricity displaces grid electricity and saves two cents.

But where does the other 28 cents come from? Who pays for that? Part is paid for by the federal 30% subsidy for solar energy construction cost. That takes care of about nine cents per kilowatt-hour. That leaves the homeowner with electricity costing him 21 cents per kilowatt-hour. The cost comes from his monthly payments on the loan to build the solar system divided by the number of kilowatt-hours generated that month. If he pays cash for the solar system, then the monthly cost is his lost investment return on the cash he paid. If he lives in a jurisdiction where electricity costs 11 cents, then he is losing 10 cents for each kilowatt-hour generated (21 cents minus 11 cents). But if he lives in California, where larger home users of electricity pay 53 cents per kilowatt-hour if they consume beyond a baseline limit, he saves 32 cents for each kilowatt-hour of solar electricity generated. In that case, the power company is losing kilowatt-hours it could have sold for 53 cents. Other customers have to pay more to make up the lost revenue.

From the standpoint of society, rooftop solar substitutes 30-cent electricity in order to save two cents. If the homeowner is at least breaking even, as he usually is, he hasn't lost anything due to the substitution. The money to pay for the 30-cent electricity comes from the taxpayer-provided subsidy and revenue that is no longer paid to the power company. The taxpayers and power company pay for 30-cent electricity that could have been obtained for two cents by burning a little more natural gas. If the homeowner makes a profit on the solar power, then the burden on everyone else is even greater. Since the power company is guaranteed a rate of return, or at least has to break even, rates have to be raised enough to pay for the overpriced rooftop electricity. The burden falls on society to pay for the scheme. The purveyors of rooftop solar, crackpot environmentalists and rooftop solar-owners, are happy. Everyone else is screwed.

Here is an example of rooftop solar that costs 30 cents a kilowatt-hour. A 5-kilowatt rooftop system costs about $21,000 installed. It will generate 7,000 kilowatt-hours per year. If it is financed over 20 years at 8% interest, the annual payment will be $2,139. The cost per kilowatt-hour is $2,139/7,000 = $0.306, or 30.6 cents per kilowatt-hour. Of course, costs and interest rates vary, as does sunshine. If you think 8% is too high for the interest rate, ask yourself if you would loan your neighbor $21,000 for 20 years for less. Rooftop solar is expensive compared to utility-scale solar, because it is a small custom installation. The orientation and slope of the house roof may be less than ideal. Large-scale utility solar, in contrast, can be as cheap as seven cents per kilowatt-hour.

An increasing problem, already present in California, is too much solar. The electric grid has a combination of base load power and additional peaking loads. The base load runs 24 hours a day and is not easy to throttle down. Solar power peaks around midday. If there is so much solar as to threaten the base generation, solar has to be curtailed. In California, this happens in the spring, when sunshine is plentiful but the air-conditioning load is not yet large. When solar dies, in the hour before sunset, peak power consumption is often being reached. In that case, solar aggravates the rate at which the rest of the grid has to increase power output to handle the early evening peak. If the homeowner is at least breaking even, he is probably generating surplus electricity during the middle of the day, adding more solar during the critical midday period and increasing the size of the sudden surge in power demand when the sun fades.

Utility-scale solar costing seven cents is a big waste of money. Rooftop solar costing 30 cents is insane. Special interests – the solar industry and environmentalist crackpots – have convinced legislatures and public utility commissions to stack the deck with net metering and absurdly high tiered electric rates. The result is to make it profitable for homeowners to invest in what otherwise would be very expensive electricity. Society as a whole pays for the economic waste, amounting typically to 28 cents per kilowatt-hour of rooftop electricity.

It is foolish to justify rooftop solar on the grounds of reducing CO2 emissions, because if you work the numbers, it costs about $800 to avoid emitting a metric ton of CO2 using rooftop solar. You can buy a carbon offset that does the same thing for $10. Reducing CO2 emissions is dubious in any case. Global warming-climate change ideology is struggling because warming is not remotely meeting expectations. Believers are starting to lose their faith in global warming. It is dawning on them that global warming is another scary disaster in a long parade of scary disasters that never materialize but make money for interested parties. Fewer people want to waste billions on a quixotic quest for renewable power.

The most prominent remaining global warming believers are now advocating nuclear power as the best means of reducing CO2 emissions. CO2 is plant food that makes plants grow better with less water. It greens deserts and increases agricultural productivity. Bring it on.