Among the issues most commonly discussed are individuality, the rights of the individual, the limits of legitimate government, morality, history, economics, government policy, science, business, education, health care, energy, and man-made global warming evaluations. My posts are aimed at intelligent and rational individuals, whose comments are very welcome.

"No matter how vast your knowledge or how modest, it is your own mind that has to acquire it." Ayn Rand

"Observe that the 'haves' are those who have freedom, and that it is freedom that the 'have-nots' have not." Ayn Rand

"The virtue involved in helping those one loves is not 'selflessness' or 'sacrifice', but integrity." Ayn Rand

24 December 2019

The Party of Income Inequality Is?

The Democratic Party!  For all of its huffing and puffing that it is the party of income equality, the Democratic Party has political control of by far the most areas of the US with high income inequality.  That party likes to claim that the middle class and low wage industry workers have been left behind in income growth over the years.  Let us look at a very interesting graph of the income growth in high wage, middle wage, and low wage industries since 2007:


The high wage industries wage growth over the years from 2007 into 2019 has been relatively steady.  The middle wage industries pay growth had some significant dips in 2010 and 2014 under Obama's administration.  The low wage industry wage growth rate hit lower rates of increase in 2010 and 2012 under Obama.  The Democrats will point out that after that low in 2012, the low wage industry wage growth began to get better until it was about the same rate of growth as that of the high wage industry wage growth rate in 2014.  By 2015, the wage growth rates were pretty close for all three industry groups.  However, in early 2018 wage growth for the low wage industries took off, achieving far faster rates of growth compared to the middle and high wage industry wage growth rates.  Apparently, the economic policies of the Trump administration are quite favorable to wage growth on the part of the low wage industries.

So, just as those areas of the country represented by Republicans in Congress tend to have less income inequality, Republican economic policies under Trump are enabling low wage earners to catch up with higher wage earners while in many of the years under Obama they were falling behind more and more.

Michael Strain of AEI notes that the median wages of all workers increased by 25% over the past 30 years corrected for inflation.  The wages of the poorest paid 20% of workers grew by more than one-third.  The poorest paid workers have actually been catching up in wage income therefore.  Income inequality has decreased.  Applying a broader income measure that takes into account income from fringe benefits, capital gains and dividends, Social Security, Medicaid and Medicare benefits, unemployment insurance, food stamps, and federal tax payments, this reduction of total income inequality remains substantial.  The median household income by this measure increased by 43% from 1990 to 2015.  In comparison, the households in the bottom 20% had an increase in income of 62%.  As the American economy has grown since 1990, the bottom 20% of households on the total income scale have benefited even more than the median household has.

The common claim of the Democrat Party that the poor and the middle class are falling behind and somehow suffering does not hold up.  It is true that they could have benefited more had government policies been different.  The economy overall could have grown more rapidly with policies more friendly to the free, voluntary private sector.  Had that extra growth path been chosen, median and poorer households would have had greater increases in income.  We see evidence of how that would have been the case in the recent surge in income of the low wage industries under the Trump administration with its decreased cost of regulations, its signalling of fewer arbitrary and expensive future regulations, and its tax cuts favoring business investments to increase business productivity.  The Obama regulatory chaos and extreme uncertainty with a will to wipe out entire industries extended the Great Recession period of slow economic growth, much like Franklin D. Roosevelt's capricious federal management of the economy that greatly prolonged the Great Depression and the later uncertainty caused by LBJ, Nixon, and Carter offer lessons in how to slow economic growth and with it to deny most of us the benefits of an improved standard of living relative to what the Democrats will generally allow us.

The free markets of a Capitalist society unleashed would benefit most Americans greatly and that would most definitely include most low wage Americans!


15 December 2019

No end in sight for the biofuel wars by Paul Driessen

Biofuels are unsustainable in every way, but still demand – and get – preferential treatment

The Big Oil-Big Biofuel wars rage on. From my perch, ethanol, biodiesel and “advanced biofuels” make about zero energy, economic or environmental sense. They make little political sense either, until you recognize that politics is largely driven by crony-capitalism, campaign contributions and vote hustling.

Even now, once again, as you read this, White House, EPA, Energy, Agriculture and corporate factions are battling it out, trying to get President Trump to sign off on their preferred “compromise” – over how much ethanol must be blended into gasoline, how many small refiners should be exempted, et cetera.

This all got started in the 1970s, when publicly spirited citizens persuaded Congress that “growing our own energy” would safeguard the USA against oil embargoes and price gouging by OPEC and other unfriendly nations, especially as our own petroleum reserves rapidly dwindled into oblivion. Congress then instituted the Renewable Fuels Standard in 2005, when the Iraq War triggered renewed fears of global oil supply disruptions. The RFS requires that almost all gasoline sold in the USA must contain 10% ethanol – which gets a third fewer miles per gallon than gasoline and damages small engines.

But, we were told, these fuels are renewable, sustainable, a way to prevent “dangerous climate change.”

It’s all bunk. In recent years, the horizontal drilling and hydraulic fracturing (fracking) revolution has given America and the world at least a century of new oil and natural gas reserves. America has become the world’s largest oil and gas producer and within five years could be producing far more oil and gas than any other country in the world. Terminals built years ago to import fuel from distant lands are being reconfigured to export abundant US oil, liquefied natural gas and refined products to distant lands.

Average global temperatures – as actually measured by satellites and weather balloons – are now almost a full degree Fahrenheit lower than predicted by climate models (the average of 102 IPCC computer model forecasts) that also foretell the daily litany of climate and weather cataclysms. However, hurricanes are less frequent and intense than a half-century ago, and Harvey was the first Category 3-5 hurricane to make US landfall in a record 12 years. Violent F4-5 tornadoes have also been less frequent over the past 34 years than during the 35 years before that, and not one F4-5 tornado hit the USA in 2018.
Over their full life cycle (from planting, growing and harvesting crops, to converting them to fuel, to transporting them by truck or rail car, to blending and burning them), biofuels emit just as much (plant-fertilizing) carbon dioxide as oil-based gasoline and diesel. Those biofuels also require enormous amounts of land, water, fertilizer, insecticides and energy. None of this is renewable or sustainable.
In fact, corn turned into E85 fuel (85% ethanol/15% gasoline) and grown where rainfall is insufficient requires irrigation – and up to 28 gallons of water from rivers or groundwater supplies per mile traveled!
US ethanol production utilizes 38% of America’s corn and 27% of its sorghum – grown on cropland the size of Iowa: 36 million acres, much of which would otherwise be wildlife habitat. And the fertilizers used to grow those crops, especially the corn, result in nutrient-rich runoff that increases nitrogen levels in the Gulf of Mexico, causing deadly algal blooms. When the algae die and decompose, they create low and no-oxygen zones the size of Delaware – killing marine life that can’t swim away quickly enough.
In short, biofuels have huge downsides and do nothing to address the scary scenarios that have either shriveled amid the winds of history – or were wildly exaggerated or imaginary to begin with.
But once these biofuel programs were launched, they became permanent. They created a biofuel industry that wants to get bigger every year, and supports politicians who want to get reelected year after year. That brings us back to the Executive Branch biofuel battles – and to issues that I myself struggle to comprehend, amid the morass of acronyms and conflicting policies and mandates.
Congress and the Environmental Protection Agency require that refiners blend “conventional biofuel” (mostly ethanol) into gasoline – and also meet various “advanced biofuel” and biomass-based diesel requirements. However, too much ethanol in gasoline damages engines in older cars, generators, garden equipment and boats; that puts a limit on how much ethanol can actually go in the fuel supply (the “blend wall”). As a result, while ethanol blending continues to increase gradually, American motorists have never been able to consume enough ethanol to satisfy applicable Renewable Fuel Standards.

However, biofuel interests want the government to keep mandating even more ethanol – a desire that faces multiple problems. Gasoline demand is decreasing, as people drive less, in more fuel-efficient cars, and in electric and hybrid vehicles (that are heavily subsidized under other laws).

Tariff wars with China and other countries have hurt corn and sorghum farmers, who want to be “compensated” via more biofuel mandates under the Renewable Fuels Standard – even though beef, pork and poultry farmers get hurt by higher grain prices resulting from so much corn devoted to ethanol.

Declining fuel demand and the blend wall mean refiners cannot mix all the mandated 15 billion annual gallons of ethanol into gasoline. They are thus forced to over-comply with the “advanced biofuel” part of the RFS mandate by buying expensive foreign biodiesel and “renewable” diesel. Refiners that do not control the point where biofuel can be blended into gasoline (eg, large distribution terminals or local gas stations) must buy “credits” called Renewable Identification Numbers (RINs) that show (or pretend to show)  the required (foreign) biofuels were mixed with the gasoline they make domestically.

This all gets really expensive, really fast, which is why the law allows exemptions to small refiners that  face “disproportionate economic hardship” from costs that have gotten so high that courts have ordered the EPA to grant more “small refinery exemptions” (SREs) – waivers from the RFS mandates.

However, biofuel has been blended into the fuel small refiners make anyway. This situation resulted in ample supplies of RFS compliance credits, and RIN prices have dropped from over 90 cents apiece to 12 or 20 cents over the past two years or even lower at times. Of course, this all angered the biofuel lobby, which has attacked the Administration for issuing SREs, falsely claiming the exemptions are   “destroying demand” for biofuel and “hurting American farmers.” 

They levied these attacks on EPA, despite the fact that the Trump Administration granted the biofuel industry its biggest request in 20 years: an air quality waiver that allows E15 to be sold year round. So some in the Administration have proposed to “reallocate lost biofuel gallons” the biofuel industry says were caused by SREs. But there’s nothing to reallocate, since ethanol is being blended despite the SREs.

The reallocation proposal thus has the practical effect of increasing the biofuel mandate by over 700 million gallons above the 15-billion-gallon statutory ceiling on ethanol. That brings us back to the fact that America is not producing enough advanced biofuels, biodiesel or renewable diesel. That means refiners have to buy more foreign supplies of these fuels, from Argentina, Brazil, Indonesia, et cetera.

Of course, that does nothing to help American farmers. It just turns the Renewable Fuel Standard into a big foreign biofuel mandate. It also means President Trump is caught between trying to placate two of his core constituencies: farmers, primarily in the Midwest, and the oil and refining industry with all its jobs.

This is mind-numbingly complicated. But the bottom line is pretty simple: Every time Congress gets involved in trying to fix complex energy and economic problems – instead of letting free market industries and innovators sort things out – it creates a legislative, regulatory, legal and lobbying mess. Every attempted additional fix makes things worse. And trying to justify all the meddling, by claiming we’re running out of oil or face manmade climate cataclysms, just makes things worse.

We should end this crazy-quilt biofuel program. But anyone who thinks that will happen in Washington, DC or Des Moines, Iowa is smoking that stuff that’s now legal and widespread in Boulder, Colorado. But President Trump and his EPA should at least reduce – and certainly not increase – any biofuel quotas.

Paul Driessen is senior policy analyst for the Committee For A Constructive Tomorrow (www.CFACT.org) and author of books and articles on energy and environmental policy.


Charles' Comments:

Crony-capitalism is a self-contradiction.  The correct term is mercantilism, the common practice of kings and the aristocracy who granted special business privileges and monopolies to friends and supporters since ancient times.  We still are governed by an aristocracy, though their titles have changed from king, baron, earl, and count to President, Senator, Representative, and about a million bureaucrat titles.  The aristocracy still believes that force makes right and they know the needs and what the aspirations should be of the serfs / deplorables better than they do.

Washington, DC is a swamp predominantly controlled by predatory special interests who feed on the vast majority of Americans.  When anyone threatens their control, a vast coalition of usually disparate groups arises to oppose that threat, though in normal times these groups behave more like hyenas fighting over a carcass -- the stolen fruits of production of the American people.  We see a great example of that in the effort to remove Trump from office by many denizens in the bowels of our thieving government even before he took the oath of office.

A recent study by researchers at the University of Minnesota, says that the production of a gallon of ethanol from corn takes anywhere from 5 to 2,138 gallons of water, depending on the irrigation needs of the area in the United States where the corn is grown.  As the amount of corn dedicated to ethanol production has grown, the amount of land dedicated to corn planting has increased.  That increase has required that land less and less suitable to corn production be used.  When ethanol production was doubled between 2005 and 2008, the amount of water used in ethanol from corn production more than tripled.  The proposal to make 15% ethanol in gasoline the requirement will cause a further increase in corn production for ethanol and still more water use.  In many areas of the U.S. water aquifers have been depleted at alarming rates as it is.  The huge Ogallala aquifer stretching from South Dakota to Texas is a particularly important and very stressed aquifer.