Economics and financial concepts are frequent features on this blog.
Regularly, you might see some variation of "CEO pay 5,000 times higher than the typical worker". Certainly, CEOs make more than the average worker (any why shouldn't they - their actions & decisions have an impact far beyond that of the average worker), but often these types of statements are based on biased or manipulated data. This article does a great job of bringing some real data to the discussion...
The Big Lie About 'Excessive' CEO Pay
9/14/2018
Last month a union-backed group claimed that the gap between CEO pay and average worker pay surged to 312-to-1 last year. But official government data show the gap is a fraction of that. Guess which one gets more attention?
The latest annual report from the Economic Policy Institute claims that "in 2017 the average CEO of the 350 largest firms in the U.S. received $18.9 million in compensation, a 17.6% increase over 2016. The typical workers' compensation remained flat, rising a mere 0.3%."
Outrageous? Maybe. If it were true.
But the only way EPI and other groups — such as the AFL-CIO — get to these outsized ratios is by comparing apples to, well, orangutans.
As economist Mark Perry has repeatedly pointed out, these ratios use two completely different sets of numbers.
On the one hand, they measure the total compensation — salary, bonuses, stocks and options — for only about 300 or so CEOs at the biggest companies. That's roughly the top 0.1% of all CEOs in the country.
Then they compare that to the average hourly wages paid to all rank-and-file workers nationwide.
"A more accurate comparison would be of S&P 500 CEO compensation to the average pay of employees of those same companies," Perry notes.
Nor do those pay ratios account for the fact that CEOs put in far more hours (close to 60 on average) than the typical rank-and-file worker.
Perry says that when you do a more honest pay comparison, the ratio is more like 50 to 1. That's still big, but nowhere near the eye-popping figures the press keeps reporting.
What happens if you look at the wages of all the nearly 300,000 CEOs in the country, at firms big and small?
What About All CEO Pay?
Instead of tens of millions of dollars, average CEO pay is $196,050 a year, according to BLS data.
That works out to a CEO-to-worker pay ratio of about 4 to 1.
And while the average pay for all CEOs climbed 40% from 2005 to 2017, so did average hourly wages for nonsupervisory workers, BLS data show.
The Economic Policy Institute says that looking at the pay of just the top CEOs makes sense because their companies employ so many people and "set the standards for pay in the executive pay market."
We think Perry has it right when he calls such comparisons "statistical legerdemain."
Whatever the case, these CEO-to-worker pay ratios serve little purpose other than to stoke misguided resentment among workers and create a false impression that CEOs' gains come at the expense of the working class.
If these groups really cared about workers, they'd instead be pushing pro-growth tax cuts and deregulation that will accelerate the economy and boost wages across the board.
17 September, 2018
23 August, 2018
You want to talk about separating families? Let's talk about Mollie Tibbetts.
John Kass
Chicago Tribune
Go ahead and play your word games and tell me about the cruelty of borders, the kindness of sanctuary cities and the political wisdom of abolishing ICE.
Tell me about government’s lack of compassion, and of the heartbreak of families separated from each other through broken immigration policy.
Tell me how racist it is, how cruel it is to think that a nation should control its own borders and stop, rather than reward, illegal immigration.
And then tell me about Mollie Tibbetts.
The 20-year-old University of Iowa student was separated from her family too.
She was separated from those she loved a month ago, when she went jogging near her home near Des Moines. Her accused killer, Cristhian Bahena Rivera, authorities said, was in the country illegally. He worked at a large dairy farm owned by a prominent Iowa Republican.
His lawyers, seeking a gag order in the case, insist Rivera is here legally. The truth will eventually come out, as well as the circumstances of her death, with an autopsy to be performed.
Investigators said her alleged killer stalked her, approached her, then said he blacked out and couldn’t remember much. But he remembered enough to help police find her body in a cornfield.
And ever since, Mollie Tibbetts has been pulled at by politics.
Democrats who want the Latino vote ignore her or they pivot, smoothly, making their pitch for “compassionate” immigration policy and attacking President Donald Trump.
Republicans who are pushing stronger border control use her as an emotional symbol. Republicans whose agribusiness political contributors want cheap labor for their packing houses and their farms avoid her, as if she was never here.
Apparently, they really don’t mind a few dead Americans if they can keep to their political talking points.
And Trump, who rode to the White House by tapping into a real, desperate and bipartisan American desire to stop illegal immigration, disfigures the debate. He exaggerates the threat of crime by those in the country illegally, making it seem as if they’re driving a violent national crime spree when statistics say otherwise.
But victims of violent immigrants here illegally are more than mere statistics or a point from which to pivot and attack.
They’re more than broken eggs in the political policy wars.
They were real people. They lived real lives. They were loved. They were daughters and sons and husbands and wives. And they are dead, the result of immigration policy and partisan politics.
Because if we actually did something about illegal immigration, rather than shout at each other and play politics, Mollie Tibbetts would be alive today.
She’d be alive like so many others would be alive.
Kate Steinle would be alive. She wouldn’t have died while walking along a pier in San Francisco with her father when a habitual criminal here illegally fired a gun. He claimed it was all an accident and was acquitted of murder.
“Help me, Dad,” were her last words.
We don’t know the last words of Dennis McCann of Chicago. But he’d be alive too.
Instead, McCann was dragged to his death under a car driven by a drunk in Chicago in 2012. McCann was hit so hard that his shoes were left on the pavement. The rest of him was pulled a half-mile under the car along Logan Boulevard.
The drunk was jailed and charged, but under an allegedly compassionate policy pushed by Cook County Democrats pandering for Latino votes, the driver, Saul Chavez, was not held for pickup by federal immigration authorities.
He was compassionately allowed to make bail. And once out on the street, Saul Chavez fled back home to Mexico. And there were no real answers for McCann’s horrified and stunned family.
All they were given were vague, political regrets and mind-numbing Democratic Party talk by Cook County Board President Toni Preckwinkle about process and writs. Preckwinkle’s a powerful political boss. McCann is dead. Chavez is gone.
So please, tell me about political cruelty.
Trump vaulted to the top of the Republican presidential pile by targeting illegal immigration. The Republican establishment was not pleased. And Democrats campaigning against Trump use his exaggerations as reason to avoid victims like Tibbetts.
Or step over them quickly, as Sen. Elizabeth Warren, a Massachusetts Democrat and presumptive candidate for president, did on CNN the other day.
“I’m so sorry for the family here and I know this is hard not only for her family but for the people in her community, the people throughout Iowa,” Warren said.
Warren will go through Iowa next year and eat corn and talk about close-knit families and demonstrate warmth as she campaigns in what her aides will call “the heartland.” She might pick up a pork chop and pose in farm clothes next to a bale of hay.
But she stepped over Mollie Tibbets and then it was time for her pivot, a pivot that was ruthless as it was obvious in its cynicism.
“Last month, I went down to the border and I saw where children had been taken away from their mothers,” Warren said on CNN. “I met with those mothers — who had been lied to, who didn’t know where their children were, who didn’t have a chance to talk to their children. And there was no plan for how they would be reunified with their children.”
Sen. Warren, isn’t that horrifying, parents not knowing the whereabouts of their children, not having a chance to say goodbye?
Like the parents of Mollie Tibbetts, after their daughter went out for a run, never to come home.
Chicago Tribune
Go ahead and play your word games and tell me about the cruelty of borders, the kindness of sanctuary cities and the political wisdom of abolishing ICE.
Tell me about government’s lack of compassion, and of the heartbreak of families separated from each other through broken immigration policy.
Tell me how racist it is, how cruel it is to think that a nation should control its own borders and stop, rather than reward, illegal immigration.
And then tell me about Mollie Tibbetts.
The 20-year-old University of Iowa student was separated from her family too.
She was separated from those she loved a month ago, when she went jogging near her home near Des Moines. Her accused killer, Cristhian Bahena Rivera, authorities said, was in the country illegally. He worked at a large dairy farm owned by a prominent Iowa Republican.
His lawyers, seeking a gag order in the case, insist Rivera is here legally. The truth will eventually come out, as well as the circumstances of her death, with an autopsy to be performed.
Investigators said her alleged killer stalked her, approached her, then said he blacked out and couldn’t remember much. But he remembered enough to help police find her body in a cornfield.
And ever since, Mollie Tibbetts has been pulled at by politics.
Democrats who want the Latino vote ignore her or they pivot, smoothly, making their pitch for “compassionate” immigration policy and attacking President Donald Trump.
Republicans who are pushing stronger border control use her as an emotional symbol. Republicans whose agribusiness political contributors want cheap labor for their packing houses and their farms avoid her, as if she was never here.
Apparently, they really don’t mind a few dead Americans if they can keep to their political talking points.
And Trump, who rode to the White House by tapping into a real, desperate and bipartisan American desire to stop illegal immigration, disfigures the debate. He exaggerates the threat of crime by those in the country illegally, making it seem as if they’re driving a violent national crime spree when statistics say otherwise.
But victims of violent immigrants here illegally are more than mere statistics or a point from which to pivot and attack.
They’re more than broken eggs in the political policy wars.
They were real people. They lived real lives. They were loved. They were daughters and sons and husbands and wives. And they are dead, the result of immigration policy and partisan politics.
Because if we actually did something about illegal immigration, rather than shout at each other and play politics, Mollie Tibbetts would be alive today.
She’d be alive like so many others would be alive.
Kate Steinle would be alive. She wouldn’t have died while walking along a pier in San Francisco with her father when a habitual criminal here illegally fired a gun. He claimed it was all an accident and was acquitted of murder.
“Help me, Dad,” were her last words.
We don’t know the last words of Dennis McCann of Chicago. But he’d be alive too.
Instead, McCann was dragged to his death under a car driven by a drunk in Chicago in 2012. McCann was hit so hard that his shoes were left on the pavement. The rest of him was pulled a half-mile under the car along Logan Boulevard.
The drunk was jailed and charged, but under an allegedly compassionate policy pushed by Cook County Democrats pandering for Latino votes, the driver, Saul Chavez, was not held for pickup by federal immigration authorities.
He was compassionately allowed to make bail. And once out on the street, Saul Chavez fled back home to Mexico. And there were no real answers for McCann’s horrified and stunned family.
All they were given were vague, political regrets and mind-numbing Democratic Party talk by Cook County Board President Toni Preckwinkle about process and writs. Preckwinkle’s a powerful political boss. McCann is dead. Chavez is gone.
So please, tell me about political cruelty.
Trump vaulted to the top of the Republican presidential pile by targeting illegal immigration. The Republican establishment was not pleased. And Democrats campaigning against Trump use his exaggerations as reason to avoid victims like Tibbetts.
Or step over them quickly, as Sen. Elizabeth Warren, a Massachusetts Democrat and presumptive candidate for president, did on CNN the other day.
“I’m so sorry for the family here and I know this is hard not only for her family but for the people in her community, the people throughout Iowa,” Warren said.
Warren will go through Iowa next year and eat corn and talk about close-knit families and demonstrate warmth as she campaigns in what her aides will call “the heartland.” She might pick up a pork chop and pose in farm clothes next to a bale of hay.
But she stepped over Mollie Tibbets and then it was time for her pivot, a pivot that was ruthless as it was obvious in its cynicism.
“Last month, I went down to the border and I saw where children had been taken away from their mothers,” Warren said on CNN. “I met with those mothers — who had been lied to, who didn’t know where their children were, who didn’t have a chance to talk to their children. And there was no plan for how they would be reunified with their children.”
Sen. Warren, isn’t that horrifying, parents not knowing the whereabouts of their children, not having a chance to say goodbye?
Like the parents of Mollie Tibbetts, after their daughter went out for a run, never to come home.
21 August, 2018
Interesting post from Scott Grannis. Good facts to add to the minimum wage conversation...
Minimum wage facts and fantasies
For years I've had fun at cocktail parties by asking this question: what percent of all the people who work in the U.S. are paid minimum wage or less? Of the hundreds of people I've asked, only one has come even close to the right answer. The great majority of the answers I've received (try it yourself!) range from 10% to as much as 50%. My conclusion: A huge number of Americans hold the fantasy belief that a significant percentage of those who work would benefit from raising the minimum wage.
Fact: only 0.5% of those who work take home minimum wage or less.
The facts can be found in a BLS publication from earlier this year: Characteristics of Minimum Wage Workers, 2017.
But here's where it gets really interesting: "The industry with the highest percentage of workers earning hourly wages at or below the federal minimum wage was leisure and hospitality (11 percent). About three-fifths of all workers paid at or below the federal minimum wage were employed in this industry, almost entirely in restaurants and other food services. For many of these workers, tips may supplement the hourly wages received."
The facts can be found in a BLS publication from earlier this year: Characteristics of Minimum Wage Workers, 2017.
In 2017, 80.4 million workers age 16 and older in the United States were paid at hourly rates, representing 58.3 percent of all wage and salary workers. Among those paid by the hour, 542,000 workers earned exactly the prevailing federal minimum wage of $7.25 per hour. About 1.3 million had wages below the federal minimum. Together, these 1.8 million workers with wages at or below the federal minimum made up 2.3 percent of all hourly paid workers.According to the BLS establishment survey, there were 147 people employed in 2017 (those paid by the hour plus those who received a salary), so the percentage of all the people working who were making minimum wage or less was 1.8 /147 = 1.2%. Furthermore, according to the BLS, some 1.3 million of all those who work in the U.S. made less than the minimum wage. In percentage terms, a bit less than 1% (1.3/147) of those who worked in 2017 made less than minimum wage.
But here's where it gets really interesting: "The industry with the highest percentage of workers earning hourly wages at or below the federal minimum wage was leisure and hospitality (11 percent). About three-fifths of all workers paid at or below the federal minimum wage were employed in this industry, almost entirely in restaurants and other food services. For many of these workers, tips may supplement the hourly wages received."
If we assume that the vast majority of those who worked in the
restaurant and food service industry (10 million) actually took home at
more than the minimum wage (thanks to tips), then in 2017 there
effectively were only about 700 thousand people (0.5% of all workers)
who actually took home minimum wage or less. Big, under-reported fact:
in all likelihood, 99.5% of those who worked in 1017 took home more than
the minimum wage for their efforts, and without any help from
government fiats.
So the next time you're at a cocktail party, ask the person next to you
to guess the percentage of U.S. workers that earn minimum wage or less.
You won't be lying when you tell them it's about ½ of 1%.
Raising the minimum wage would presumably benefit less than 1% of the working population, but it would most likely make it harder for young and inexperienced workers to get a job. It's already hard enough: the unemployment rate for those aged 16-19 is 13.1%, by far the highest unemployment rate for any age cohort. (The unemployment rate across all age groups today is a mere 3.9%.) Politicians should be lobbying to reduce or eliminate the minimum wage, not increase it. The best way for someone to make more than minimum wage is to first get a job, any job, at any wage, then work your way up.
Raising the minimum wage would presumably benefit less than 1% of the working population, but it would most likely make it harder for young and inexperienced workers to get a job. It's already hard enough: the unemployment rate for those aged 16-19 is 13.1%, by far the highest unemployment rate for any age cohort. (The unemployment rate across all age groups today is a mere 3.9%.) Politicians should be lobbying to reduce or eliminate the minimum wage, not increase it. The best way for someone to make more than minimum wage is to first get a job, any job, at any wage, then work your way up.
17 August, 2018
Is the Earth Warming?
How Do You Tell If The Earth's Climate System "Is Warming"?
August 09, 2018/
Francis Menton
The earth's climate system "is warming." True or false? The answer is that there is no definitive answer. And if someone tells you there is, then that person doesn't know what he or she is talking about.
A more precise answer to the question is that whether the earth's climate system "is warming" or "is cooling" entirely depends on who gets to pick the start date for the analysis. If you are the one who gets to pick the start date, then you can make it so that the system is either warming or cooling, whichever you would like for your purpose of the moment.
But of course, there are many people out there today with a lot invested in the proposition that the climate system "is warming." That proposition is a key tenet of global warming alarmism. To "prove" the point that the system "is warming," advocates use the simple trick of picking a start point to their liking, making for a presentation that appears to support their position. Have you been fooled by this simple trick? The advocates leave it up to you to figure out that if you picked a different start point, you could just as easily make an equally convincing presentation showing that the climate system "is cooling." A lot of seemingly intelligent people can't figure that out, and get taken in by the scam.
I raise this point today because it appears that, as part of the campaign to suppress disfavored political speech, Google has begun within the past few days adding a legend at the bottom of YouTube videos that express politically incorrect views in the field of climate science. For example, here is the legend that they have added to a video made for Prager University by eminent MIT atmospheric physicist and climate skeptic Richard Lindzen:
"Multiple lines of scientific evidence show that the climate system is warming."
The quote comes from the first two sentences of this Wikipedia entry with the title "Global warming." Well, Wikipedia says it, so I guess it must be true!
According to this post at BuzzFeed on August 7, others who have been subject to having the same legend affixed to their work include Tony Heller of the Deplorable Climate Science Blog, Mark Morano of Climate Depot, and the Heartland Institute. (So far, nothing comparable has happened to the Manhattan Contrarian; but then, I don't make YouTube videos.)
So let's investigate the question of whether the earth's "climate system" is or is not warming. You could, for example, look at the chart presented by Wikipedia in that entry. Here it is:
That looks rather dramatic. On the other hand, the whole vertical scale of the chart is only about 1.5 deg C; and they picked 1880 as their start date. (The slope here is also greatly accentuated by some very large and questionable "adjustments" that have made earlier years cooler and more recent years warmer. You can read my eighteen part series "The Greatest Scientific Fraud Of All Time" for much more detail. But those details are not critical for understanding the current issue.)
Does your skeptical mind possibly think, when they use that phrase "century scale," is that just a bias-free description of the issue at hand, or is it instead a hand-wave to provide a fake justification for picking a preferred start date? Why do we need to go back 138 years when we are considering a question phrased in the present tense -- whether the climate "is" warming? Wouldn't the present tense normally be used to cover a much shorter period, like a year or two or three at most? So you ask, what has the climate system been doing during that time? For the answer, how about looking for temperature data to the far more accurate UAH satellite-based series which provides monthly data points going back to 1979. Here is the latest chart from that source:
This time, you get to pick the start date. To cover the last few years, how about picking early 2016? After all, these last couple of years should be a much better indicator of whether the climate "is" warming or cooling than the entire last 138 years. Really, what do temperatures more than 100 years ago, or even 30 or 40 years ago, have to do with the question of whether the earth's climate "is" warming? So we look at the UAH chart, and we find our answer: since early 2016 temperatures have fallen by more than 0.5 deg C. Thus, once we get to pick our preferred start time, it is obvious that the climate system "is cooling."
Or, you can pick a different start date to your liking. How about 1998? That will give you an entire 20 year run. It's hard to say that the verb "is" should cover a period of more than 20 years. On the UAH series you can see that temperatures have also fallen about 0.4 deg C since early 1998. Again, even on this substantially longer scale, the earth "is cooling." (Note, however, that there is a significant difference between the Wikipedia chart and the UAH satellite series as to what has happened since 1998. On the Wikipedia chart the latest reading (2017?) is up about 0.3 deg C from 1998; while on the UAH series, the latest reading (July 2018) is down about 0.4 deg C from the then-records set in 1998. That's those "adjustments" in the surface temperature record that I was talking about. I would say that there is no credible position that the heavily adjusted surface temperature record that Wikipedia relies on should be used for this purpose over the far more accurate and un-tampered UAH satellite record.)
But how about if we decide that there is something to this "century-scale" thing? Let's agree that we're going to go back many, many decades to determine if the earth "is warming." But if we're going to do that, where do we stop? If you want, you can go back a hundred million years; or even a billion. And if you follow this subject a little, you probably know that the 1700s and 1800s are a very suspect era to start a series like this, because those centuries are a known cold period sometimes referred to as the "Little Ice Age." Picking a date in the "Little Ice Age" as the start point to prove warming is what's called "cheating." Let's pick something more fair. How about going back a nice round millennium? Was that time warmer or cooler than now?
OK, they didn't have networks of thermometers set up around the globe in the 11th century, let alone the highly accurate satellites that we have today. But scores of scientists have done hundreds of studies based on many sorts of "proxies" to determine at least whether it was warmer or cooler at that time than today. It turns out that the evidence is rather overwhelming that it was warmer. Actually, this is what is known as the "Medieval Warm Period." But picking a date in that period as your start date for deciding whether the earth "is warming" is no more fair or unfair than picking a date in the "Little Ice Age."
Here is a compilation of dozens of studies reaching the conclusion that the Medieval Warm Period was warmer than the present: "More than 700 scientists from 400 institutions in 40 countries have contributed peer-reviewed papers providing evidence that the Medieval Warm Period was real, global, & warmer than the present." Examples:
"Paper finds Medieval Warm Period in Arctic was much warmer than the present."
"Medieval Warming Exceeds Modern Warming, Per New Research Using 120 Proxies."
"Earth was warmer in Roman and Medieval Times say German researchers."
There are literally dozens more, if you follow the links. The conclusion is inescapable: on a centuries-scale basis, the earth's climate system "is cooling."
And by the way, if you want to keep going back farther and farther, you can keep finding time periods that were warmer than the present. Examples: the Roman Warm Period, from around 250 BC to 450 AD; and the Holocene Climate Optimum, about 5000 to 3000 BC.
So here's the real answer to the question of whether the earth's ciimate system "is warming":
If your start date is June 2018, it "is warming."
If your start date is January 2016, it "is cooling."
If your start date is January 1998, it "is cooling."
If your start date is 1880, it "is warming."
If your start date is the year 1000, it "is cooling."
If your start date is the Dark Ages, it "is warming."
If your start date is Roman times, it "is cooling."
In short, the question is completely meaningless.
It's hard to believe that the supposed geniuses at Google could be taken in by a scam so obvious and so transparent. But that's the world we live in.
15 August, 2018
Stossel - How to Save Social Security
So...Democrats would rather cut benefits or 'tax the rich' (which won't raise enough money and will depress economic growth) than use the long-term benefits of investments to help erase the shortfall. This 'privatization' is what every pension fund does - without investment, the obligations would be unsustainable.
14 August, 2018
Canada: A High Price for Free Healthcare
So, to summarize:
- Since care is 'free', patients have no incentive to moderate their use of medical services or shop around to secure the best prices
- The only way to keep costs down is to ration care, creating long waiting lists and delays
- Canadians face a media wait of 5 months for specialist treatment after referral
- Patients awaiting care suffer lost wages, which are not factored in to cost estimates
- Why would we want this system in the US? The benefits are clear for those who cannot pay, but it would be unwise to destroy the system to benefit only those who cannot pay.
SALLY C. PIPES
8/14/2018
Senator Bernie Sanders and his army of supporters of government-run health care evidently believe that American workers could use a pay cut.
That's the natural consequence of single-payer health care, as a recent analysis of Canada's healthcare system illustrates.
Last year, Canadian patients forewent $1.9 billion in wages while waiting for medical treatment, according to a report from the Fraser Institute, a Canadian think-tank. Canadian patients face some of the longest waits for care in the industrialized world due to their government-run system's strict rationing.
If progressives successfully install single-payer here in the United States, Americans will pay for the privilege of waiting in line.
In Canada, the government covers the cost of most healthcare services. Patients don't pay directly when they visit doctors or emergency rooms -- though they do indirectly, in the form of high taxes.
But because the cost of their care is hidden, they have no reason to moderate their consumption of medical services or shop around for treatments and providers that provide the best value.
To control spending, the government requires hospitals and clinics to adhere to strict budgets. Doctors and hospital administrators have to ration care to stay under budget. So patients face grueling treatment delays.
Last year, Canadians faced a median wait of more than 21 weeks to receive treatment from specialists after obtaining referrals from their general practitioners. That's double the median wait time of 25 years ago.
Patients in some parts of the country had it far worse. The typical patient from New Brunswick had to confront a median wait of nearly 42 weeks — about ten months. Nationwide, for the first time, more than 1 million Canadians are waiting for treatment.
A recent analysis of health systems in 11 wealthy nations found that Canadians faced the longest wait times — and not just for specialist care. Delays for family care and emergency room treatment were also the longest among peer nations.
These treatment delays can injure or even kill patients. Long wait times were a factor in 44,000 Canadian women's deaths from 1993 to 2009.
Patients waiting for surgeries and other procedures often can't work. They may be in pain or have limited mobility.
Even if they can work, they're generally far less productive and are forced to stay home sick more frequently. According to the Fraser Institute's new analysis, on average, every patient waiting for care lost $1,800 in foregone wages.
And that figure is actually a conservative, charitable estimate of the negative impact of single-payer's waits. It only factors in hours lost during an average workday; it doesn't place any value on the non-work hours that patients spend suffering in pain.
When all hours of the week are accounted for — excluding time for sleep — Canadian patients actually lost a combined $5.8 billion, or almost $5,600 per person, playing the waiting game.
Even that higher estimate doesn't account for the financial burden on friends and family who take time off to care for waiting patients. Nor does it factor in the expenses incurred by roughly 60,000 Canadians who travel to another country — often the United States — to seek non-emergency medical care each year.
Single-Payer: Health Care Fool's Gold
Americans have long opposed Canadian-style health care. But public attitudes are changing. Just over half of Americans support single-payer health care, according to a Washington Post-Kaiser Family Foundation poll from earlier this year.
Democrats are trying to capitalize on that swing in public opinion. They've introduced no less than a half-dozen plans that would ratchet up government control of the U.S. healthcare system to varying degrees — with the eventual goal of fully socialized medicine.
Senator Bernie Sanders's "Medicare for All" plan is the most radical. He's modeled his scheme on the Canadian system. During a trip to the country last fall, he asked rhetorically, "How is it that here in Canada, they provide quality health care to all people . . . and they do it for half the cost?"
But as the evidence from Canada shows, "free" single-payer health care is actually quite expensive. Americans needn't learn that lesson the hard way.
Pipes is president, CEO, and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute. Her latest book is "The False Promise of Single-Payer Health Care" (Encounter). Follow her on Twitter @sallypipes.
10 August, 2018
Who Knew That 'Free' Could Cost So Much?
Democratic Socialism: Who Knew That 'Free' Could Cost So Much?
Socialism: Since the Democratic Party took a turn for the worse toward so-called democratic socialism, the party's leading lights have laid the promises on pretty thick. Free Medicare for all! Guaranteed income! Guaranteed jobs! Subsidized housing! Free college! Universal pre-school! Wow, and all for free.
Well, not exactly. In a devastating piece that appeared on the left-of-center web site Vox (to its credit), Manhattan Institute fellow Brian Riedl went through the simple math of what free actually costs. It's a lot.
It's not just the free aspect, but the fact that the democratic socialists have made so many promises that must be paid for that will make it so tough to swallow for most voters.
Riedl looked at the 10-year costs of all the various promises made by Bernie Sanders, Alexandria Ocasio-Cortez, and other self-described democratic socialists. He was as generous as could be in his estimates, often accepting the democratic socialists' cost estimate even when it was patently and absurdly too low. It's quite a laundry-list of promises with enormous costs: "Free college" ($807 billion); Social Security expansion ($188 billion); single-payer health care ($32 trillion); guaranteed jobs at $15 per hour plus benefits ($6.8 trillion); infrastructure ($1 trillion); student loan debt forgiveness ($1.4 trillion).
Net cost: about $42.5 trillion over 10 years, give or take a few hundred billion. To paraphrase the late, great Republican Sen. Everett Dirksen: "A trillion here, a trillion there, and pretty soon you're talking real money."
As it is, current federal estimates expect about $44 trillion in tax revenues over that same period, with a deficit of roughly $12.4 trillion. Remember: All this democratic socialist spending comes on top of what we're already spending.
Long-term, the fiscal picture grows progressively (forgive the term) worse.
"The 30-year projected tab for these programs is even more staggering," wrote Riedl. "New proposals costing $218 trillion, on top of an $84 trillion baseline deficit driven by Social Security, Medicare and the resulting interest costs."
Today, Riedl notes, total federal spending typically swings between 18% and 22% of GDP. But with the democratic socialist agenda in place, it "would immediately soar past 40% of GDP on its way to nearly 50% within three decades." If you include state and local government, the total cost for this federal fantasia would equal 60% of GDP — more than any country in Europe.
Even after massive cuts in other programs, such as slashing defense by half, or adding in phantom savings from supposed cuts in state health spending and anti-poverty programs, you still come up $34 trillion short over 10 years.
To raise $34 trillion, Riedl calculates, would require "seizing roughly 100% of all corporate profits as well as 100% of all family wage income and pass-though business income above the thresholds of $90,000 (single) or $150,000 (married), and absurdly assuming they all continue working."
Or, he said, you could go to a VAT tax — a national sales tax on all goods and services. But it would have to be huge: a tax of 87% on everything you buy. Oh, and by the way, that still doesn't pay for the $12.4 trillion deficit that's already estimated and that we discussed above. So you'd need even more taxes.
Those number are scary enough. But we're not even raising the issues of: a.) massive cost overruns in these programs, which are inevitable; or, b.), whether these programs will work as described or instead end up ruining our free-market economy.
Not surprisingly, in public socialists say they won't ruin free-market capitalism. They'll save it!
Wrong again. As Meagan Day, a member of the Democratic Socialists of America, wrote (also in Vox): "Here's the truth: In the long run, democratic socialists want to end capitalism. And we want to do that by pursuing a reform agenda today in an effort to revive a politics focused on class hierarchy and inequality in the United States."
Americans should know that these are the very ideas that have destroyed the economies of the USSR, Cuba, Nicaragua, most of Africa, North Korea and, as we're now seeing, Venezuela. And they're not "democratic" at all. They're just socialism.
Danger: Socialism Ahead
The bigger point is, these utopian ideas are not fiscally sane. And we mean that literally. They are a bizarre fantasy that should be discarded immediately by any reasonable person interested in an economically prosperous future.
That some believe that replacing capitalism with socialism makes you better off shows the profound failure of our nation's education system. Because it's something that has never happened in the history of mankind. And young people, who are among socialism's most ardent fans, don't seem to even know this.
The great economist, social thinker and professor Walter Williams recently summed up the struggle between capitalism and socialism: "Capitalism doesn't do well in popularity polls, despite the fact that it has eliminated many of mankind's worst problems, such as pestilence and gross hunger and poverty."
To vote for socialism is to vote for national bankruptcy, a loss of freedom, a lower standard of living and an end to innovation. And be forewarned: As Venezuelans, Zimbabweans and Nicaraguans are now discovering, once socialists control things, they never give up power peacefully.
Socialism: Since the Democratic Party took a turn for the worse toward so-called democratic socialism, the party's leading lights have laid the promises on pretty thick. Free Medicare for all! Guaranteed income! Guaranteed jobs! Subsidized housing! Free college! Universal pre-school! Wow, and all for free.
Well, not exactly. In a devastating piece that appeared on the left-of-center web site Vox (to its credit), Manhattan Institute fellow Brian Riedl went through the simple math of what free actually costs. It's a lot.
It's not just the free aspect, but the fact that the democratic socialists have made so many promises that must be paid for that will make it so tough to swallow for most voters.
Riedl looked at the 10-year costs of all the various promises made by Bernie Sanders, Alexandria Ocasio-Cortez, and other self-described democratic socialists. He was as generous as could be in his estimates, often accepting the democratic socialists' cost estimate even when it was patently and absurdly too low. It's quite a laundry-list of promises with enormous costs: "Free college" ($807 billion); Social Security expansion ($188 billion); single-payer health care ($32 trillion); guaranteed jobs at $15 per hour plus benefits ($6.8 trillion); infrastructure ($1 trillion); student loan debt forgiveness ($1.4 trillion).
Net cost: about $42.5 trillion over 10 years, give or take a few hundred billion. To paraphrase the late, great Republican Sen. Everett Dirksen: "A trillion here, a trillion there, and pretty soon you're talking real money."
As it is, current federal estimates expect about $44 trillion in tax revenues over that same period, with a deficit of roughly $12.4 trillion. Remember: All this democratic socialist spending comes on top of what we're already spending.
Long-term, the fiscal picture grows progressively (forgive the term) worse.
"The 30-year projected tab for these programs is even more staggering," wrote Riedl. "New proposals costing $218 trillion, on top of an $84 trillion baseline deficit driven by Social Security, Medicare and the resulting interest costs."
Today, Riedl notes, total federal spending typically swings between 18% and 22% of GDP. But with the democratic socialist agenda in place, it "would immediately soar past 40% of GDP on its way to nearly 50% within three decades." If you include state and local government, the total cost for this federal fantasia would equal 60% of GDP — more than any country in Europe.
Even after massive cuts in other programs, such as slashing defense by half, or adding in phantom savings from supposed cuts in state health spending and anti-poverty programs, you still come up $34 trillion short over 10 years.
To raise $34 trillion, Riedl calculates, would require "seizing roughly 100% of all corporate profits as well as 100% of all family wage income and pass-though business income above the thresholds of $90,000 (single) or $150,000 (married), and absurdly assuming they all continue working."
Or, he said, you could go to a VAT tax — a national sales tax on all goods and services. But it would have to be huge: a tax of 87% on everything you buy. Oh, and by the way, that still doesn't pay for the $12.4 trillion deficit that's already estimated and that we discussed above. So you'd need even more taxes.
Those number are scary enough. But we're not even raising the issues of: a.) massive cost overruns in these programs, which are inevitable; or, b.), whether these programs will work as described or instead end up ruining our free-market economy.
Not surprisingly, in public socialists say they won't ruin free-market capitalism. They'll save it!
Wrong again. As Meagan Day, a member of the Democratic Socialists of America, wrote (also in Vox): "Here's the truth: In the long run, democratic socialists want to end capitalism. And we want to do that by pursuing a reform agenda today in an effort to revive a politics focused on class hierarchy and inequality in the United States."
Americans should know that these are the very ideas that have destroyed the economies of the USSR, Cuba, Nicaragua, most of Africa, North Korea and, as we're now seeing, Venezuela. And they're not "democratic" at all. They're just socialism.
Danger: Socialism Ahead
The bigger point is, these utopian ideas are not fiscally sane. And we mean that literally. They are a bizarre fantasy that should be discarded immediately by any reasonable person interested in an economically prosperous future.
That some believe that replacing capitalism with socialism makes you better off shows the profound failure of our nation's education system. Because it's something that has never happened in the history of mankind. And young people, who are among socialism's most ardent fans, don't seem to even know this.
The great economist, social thinker and professor Walter Williams recently summed up the struggle between capitalism and socialism: "Capitalism doesn't do well in popularity polls, despite the fact that it has eliminated many of mankind's worst problems, such as pestilence and gross hunger and poverty."
To vote for socialism is to vote for national bankruptcy, a loss of freedom, a lower standard of living and an end to innovation. And be forewarned: As Venezuelans, Zimbabweans and Nicaraguans are now discovering, once socialists control things, they never give up power peacefully.
05 August, 2018
Tips + Minimum Wage
To further strengthen Stossel's argument, the minimum wage for restaurant workers is the same as all other workers - if tips don't raise the server's wage to the minimum, the employer must make up the difference.
27 July, 2018
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.
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.
21 July, 2018
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..
20 July, 2018
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.
06 July, 2018
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.
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.
10 April, 2018
'Equal Pay' - The Myth that Just Won't Die
Equal Pay Day Celebrates a Tiresome Myth That Just Won't Die
By Andrew Biggs & Mark Perry
April 10, 2018
Equal Pay Day falls on April 10 this year, and supposedly represents how far into 2018 women must continue working to earn what their male counterparts earned last year. The National Center for Pay Equity promotes Equal Pay Day annually to bring attention to the so-called “gender pay gap,” which claims that women receive 20% lower pay on average for doing the same work as men. But the 20% gender wage gap is actually a tiresome statistical myth that persists in the face of overwhelming evidence to the contrary.
The reality is that men and women make very different career and work choices, and frequently play very different family roles, especially for families with children. While gender discrimination undoubtedly occurs, it is individuals’ choice – not discrimination – which accounts for the vast majority of gender differences in earnings.
Labor economists have conducted numerous studies over many decades to explain differences in earnings among all types of workers. Economists believe that two main factors influence the earnings received by a given worker.
The most important factor is the skills and productivity that an employee brings to the job. This can include both formal education, skills learned on the job through work experience and the sheer amount of time that a person works. Data show that male employees tend to have more years of work experience than females, and also work more hours per week on average than women.
Men also tend to gravitate toward college majors with greater market value than women. For instance, roughly 80% of engineering and computer science majors are male while two-thirds of liberal arts, drama, dance, education and fine arts majors are female. There is nothing wrong with these choices, but it’s also reasonable to expect these choices to translate into wide variations in earnings after graduation, since market forces in the labor market determine salaries for different educational specialties.
But there’s a second component of earnings, which labor economists call “compensating wage differentials” that also explains gender variation in salaries. Compensating wage differentials are differences in pay that are designed to attract employees to jobs that otherwise would be undesirable. As Adam Smith said in The Wealth of Nations, “The wages of labor vary with the ease and hardship … of the occupation.”
The undesirable aspects of certain jobs can range from the mundane to the gruesome. For instance, men have longer average commute times to their jobs than women. In the U.S., the average male spends 33 more hours commuting to work each year. How much extra pay would you demand to spend the equivalent of four additional eight-hour days sitting in traffic or on a bus riding to work?
While a long commute is an inconvenience, men are also much more likely to be injured or killed on the job. Economists have long found that, all else equal, more dangerous jobs pay higher average wages than safer jobs. And the 20 jobs with the highest occupational fatality rates are on average 94% male and 92.5% of workplace fatalities overall are men. Relatively safe occupations such as office and administrative support and education, training, and library occupations are roughly three-quarters female. If you think it’s reasonable for dangerous jobs to pay higher salaries, then you should also conclude that men on average should earn more than women.
But there are positive factors as well. For instance, employees might willingly accept a lower salary if their job is rewarding or focuses on issues the employees believe in, be it helping children, protecting the environment, or fighting cancer. This is the realm of non-profits, and 7-in-10 employees of non-profit organizations are female. The typical claim that women are underpaid relative to men accounts for none of these factors.
Proponents of the gender pay gap myth would have you believe that any difference in earnings between men and women is the result of gender pay discrimination. The reality is that men and women are different – they gravitate to different college majors, they have different levels of work experiences, they play different family roles, and they often work in very different types of jobs.
It is bizarre to imagine that men and women would earn precisely the same on average despite those differences. It would also be completely unrealistic to suggest that the 20% difference in annual earnings is exclusively or even largely the result of gender discrimination. But to celebrate Equal Pay Day, those are some of the statistical fairy tales that you have to accept.
By Andrew Biggs & Mark Perry
April 10, 2018
Equal Pay Day falls on April 10 this year, and supposedly represents how far into 2018 women must continue working to earn what their male counterparts earned last year. The National Center for Pay Equity promotes Equal Pay Day annually to bring attention to the so-called “gender pay gap,” which claims that women receive 20% lower pay on average for doing the same work as men. But the 20% gender wage gap is actually a tiresome statistical myth that persists in the face of overwhelming evidence to the contrary.
The reality is that men and women make very different career and work choices, and frequently play very different family roles, especially for families with children. While gender discrimination undoubtedly occurs, it is individuals’ choice – not discrimination – which accounts for the vast majority of gender differences in earnings.
Labor economists have conducted numerous studies over many decades to explain differences in earnings among all types of workers. Economists believe that two main factors influence the earnings received by a given worker.
The most important factor is the skills and productivity that an employee brings to the job. This can include both formal education, skills learned on the job through work experience and the sheer amount of time that a person works. Data show that male employees tend to have more years of work experience than females, and also work more hours per week on average than women.
Men also tend to gravitate toward college majors with greater market value than women. For instance, roughly 80% of engineering and computer science majors are male while two-thirds of liberal arts, drama, dance, education and fine arts majors are female. There is nothing wrong with these choices, but it’s also reasonable to expect these choices to translate into wide variations in earnings after graduation, since market forces in the labor market determine salaries for different educational specialties.
But there’s a second component of earnings, which labor economists call “compensating wage differentials” that also explains gender variation in salaries. Compensating wage differentials are differences in pay that are designed to attract employees to jobs that otherwise would be undesirable. As Adam Smith said in The Wealth of Nations, “The wages of labor vary with the ease and hardship … of the occupation.”
The undesirable aspects of certain jobs can range from the mundane to the gruesome. For instance, men have longer average commute times to their jobs than women. In the U.S., the average male spends 33 more hours commuting to work each year. How much extra pay would you demand to spend the equivalent of four additional eight-hour days sitting in traffic or on a bus riding to work?
While a long commute is an inconvenience, men are also much more likely to be injured or killed on the job. Economists have long found that, all else equal, more dangerous jobs pay higher average wages than safer jobs. And the 20 jobs with the highest occupational fatality rates are on average 94% male and 92.5% of workplace fatalities overall are men. Relatively safe occupations such as office and administrative support and education, training, and library occupations are roughly three-quarters female. If you think it’s reasonable for dangerous jobs to pay higher salaries, then you should also conclude that men on average should earn more than women.
But there are positive factors as well. For instance, employees might willingly accept a lower salary if their job is rewarding or focuses on issues the employees believe in, be it helping children, protecting the environment, or fighting cancer. This is the realm of non-profits, and 7-in-10 employees of non-profit organizations are female. The typical claim that women are underpaid relative to men accounts for none of these factors.
Proponents of the gender pay gap myth would have you believe that any difference in earnings between men and women is the result of gender pay discrimination. The reality is that men and women are different – they gravitate to different college majors, they have different levels of work experiences, they play different family roles, and they often work in very different types of jobs.
It is bizarre to imagine that men and women would earn precisely the same on average despite those differences. It would also be completely unrealistic to suggest that the 20% difference in annual earnings is exclusively or even largely the result of gender discrimination. But to celebrate Equal Pay Day, those are some of the statistical fairy tales that you have to accept.
16 March, 2018
Stossel - Worry About Budget Deficits, Not Trade Deficits
Worry About Budget Deficits, Not Trade Deficits
Next year's $1 trillion federal government budget deficit will bankrupt us. Trade deficits are trivial.
Maybe Donald Trump is such a powerful communicator and pot-stirrer that other countries, embarrassed by their own trade barriers, will eliminate them. Then I will thank the president for the wonderful thing he did. Genuine free trade will be a recipe for wonderful economic growth.But I fear the opposite: a trade war and stagnation—because much of what Trump and his followers say is economically absurd.
"(If) you don't have steel, you don't have a country!" announced the president.
Lots of things are essential to America—and international trade is the best way to make sure we have them. When a storm blocks roads in the Midwest, we get supplies from Canada, Mexico, even China. Why add roadblocks?
Steel is important, but "the choice isn't between producing 100 percent of our steel (and having a country) or producing no steel (and presumably losing our country)," writes Veronique De Rugy of the Mercatus Center.
Today, most steel we use is made in America. Imports come from friendly places like Canada and Europe. Just 3 percent come from China.
Still, insists the president, "Nearly two-thirds of American raw steel companies have gone out of business!"
There's been consolidation. But so what? For 30 years, American steel production has stayed about the same. Profits rose from $714 million in 2016 to $2.8 billion last year. And the industry added nearly 8,000 jobs.
Trump says, "Our factories were left to rot and to rust all over the place. Thriving communities turned into ghost towns. You guys know that, right?"
No. Few American communities became ghost towns. More boomed because of cheap imports.
It's sad when a steelworker loses work, but for every steelworker, 40 Americans work in industries that use steel. They, and we, benefit from lower prices.
Trump touts the handful of companies benefiting from his tariffs: "Century Aluminum in Kentucky—Century is a great company—will be investing over $100 million."
Great. But now we'll get a feeding frenzy of businesses competing to catch Trump's ear. Century Aluminum got his attention. Your company better pay lobbyists. Countries, too.
After speaking to Prime Minister Malcolm Turnbull of Australia, Trump tweeted: "We don't have to impose steel or aluminum tariffs on our ally, the great nation of Australia!"
Economies thrive when there are clear rules that everyone understands. Now we've got "The Art of the Deal," one company and country at a time.
I understand that Trump the developer liked to make special deals, but when presidents do that, it's crony capitalism—crapitalism. You get the deal if you know the right people. That's what kept most of Africa and South America poor.
But Trump thinks trade itself makes us poorer: "We lose ... on trade. Every year $800 billion."
Actually, last year's trade deficit with China was $375 billion. But even if it were $800 billion, who cares? All a trade deficit shows is that a country sells us more than we sell them. We get the better of that deal. They get excess dollar bills, but we get stuff.
01 March, 2018
05 December, 2017
Cake Baker's POV
What I didn’t say was that I wouldn’t sell them a cake.
I’m happy to sell a cake to anyone, whatever his or her sexual identity. People should be free to make their own moral choices. I don’t have to agree with them.
But I am responsible for my own choices. And it was that responsibility that led me to decline when two gentlemen came into my shop and invited me to create a wedding cake for their same-sex ceremony.
Designing a wedding cake is a very different thing from, say, baking a brownie. When people commission such a cake, they’re requesting something that’s designed to express something about the event and about the couple.
What I design is not just a tower of flour and sugar, but a message tailored to a specific couple and a specific event — a message telling all who see it that this event is a wedding and that it is an occasion for celebration.
In this case, I couldn’t. What a cake celebrating this event would communicate was a message that contradicts my deepest religious convictions, and as an artist, that’s just not something I’m able to do, so I politely declined.
But this wasn’t just a business decision. More than anything else, it was a reflection of my commitment to my faith. My religious convictions on this are grounded in the biblical teaching that God designed marriage as the union of one man and one woman.
Obviously, not everyone shares those convictions. I don’t expect them to. Each of us makes our own choices; each of us decides how closely we will hold to, defend and live out those choices.
The two men who came into my shop that day were living out their beliefs. All I did was attempt to live out mine. I respect their right to choose and hoped they would respect mine.
They did not. And, considering all of the hate mail, obscene calls and death threats my family has received since I was sued, a lot of other people don’t see tolerance as a two-way street, either.
But the Constitution does. The First Amendment defends my right to create custom cake art that is consistent with my faith, while declining requests that ask me to celebrate events or messages that conflict with my faith. As a cake artist, I can live out my faith in my day-to-day life, and make that faith the basis for my creative decisions.
We live in a big, diverse nation. We don’t all have to agree on religion. We don’t have to agree on questions of sexual morality. We don’t even have to agree on the meaning of marriage.
What we should be able to agree on is our mutual freedom, as Americans, to live out the ideals that are most important to us.
Just as I shouldn’t be able to use the law to force others to design something that promotes my beliefs, others shouldn’t be able to force me to design a cake that celebrates theirs.
That, for me and those at Alliance Defending Freedom who are defending me, is what this case is about. I hope the U.S. Supreme Court affirms that basic freedom.
And if those who oppose me would grant me a certain measure of respect — not as someone they agree with, but as a fellow citizen free to stand by my own moral choices, well … that would be icing on the cake.
Jack Phillips is the owner of Masterpiece Cakeshop in Lakewood, Colo. Oral arguments for Masterpiece Cakeshop v. Colorado Civil Rights Commission will be heard Tuesday.
20 October, 2017
Taxes and 'Fair Share'
How exactly are the rich not paying their 'fair share' again?
Any why is it inappropriate that tax reform reduces income taxes for the people who actually pay the tax?
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