November 19, 2012

Posted by orrinj at 7:57 PM


10 reasons a carbon tax is trickier than you think (David Roberts, 11/19/12, Grist)

Here are 10 reasons for a more tempered and realistic attitude toward a carbon tax.

1. It's conservative.

There's a reason so many conservative (and neoliberal) economists support carbon taxes: They fit comfortably in a worldview that says problems are most effectively solved by markets, with minimal government intervention.

Current markets have a flaw: They do not reflect the external costs associated with carbon dioxide emissions (namely, the impacts of a heating planet). The answer, economists argue, is to determine the "social cost of carbon" and to integrate that cost into markets via a carbon price, tax, or fee. With an economy-wide, technology-agnostic carbon tax in place, the market will eliminate carbon wherever it is cheapest to do so, insuring that we don't "overpay" for carbon reductions.

Implicit (and often explicit) in this view is the notion that other attempts to tackle carbon -- say, EPA power plant rules, or fuel-economy standards, or clean-energy tax credits -- are merely backdoor, inefficient ways of pricing carbon. If you get the social cost of carbon right and levy an economy-wide tax that prices all tons of carbon equally, then you have optimized the market, carbon-wise. All other regulations and subsidies will only serve to disrupt market efficiency. They are sand in the gears, as it were. [...]
7. The carbon lobby will want to axe EPA regulations in exchange.

Exxon has been supporting a carbon tax (notionally) for several years, but it's made clear that it sees such a tax as "an alternative to costly regulation." This is what everyone's favorite dirty-energy lobbyist Frank Maisano recently wrote (behind a paywall):

No carbon tax should be considered before serious regulatory reform is undertaken. The U.S. EPA is moving forward on an approach that regulates carbon, which is akin to fitting a square peg in a round hole. Not only is it legally dubious, but it is not likely not work in practice, either.

Suffice to say, the fossil fuel lobby would never give a carbon tax their OK unless EPA regulations on carbon (and possibly other pollution regs) were scrapped. 

Posted by orrinj at 7:54 PM


Google's Internet Service Might Actually Bring the U.S. Up to Speed : In a radical departure from its core business, the search giant is installing high-speed fiber neighborhood by neighborhood. (David Talbot, November 19, 2012, Technology Review)

Compared to many countries, the United States has slow and patchy Internet service. While a few areas enjoy very fast service, overall the United States ranks 24th worldwide in speed, with consumers receiving an average of 11.6-megabits-per-second download speeds.

An affordable service that is nearly two orders of magnitude faster began in one neighborhood in Kansas City, Missouri, last Tuesday.

In planning the deployment, Google carved the metropolis into 202 neighborhoods, and asked interested residents and businesses to pay $10 to preregister for the service. Once a critical mass did so--ranging from 5 to 25 percent per neighborhood (Google calls them fiberhoods), depending on the population density--Google went ahead with the street-level installation. If people reneged on their pledge to subscribe, they'd lose the $10.

The actual service is a bargain compared to many services that provide much slower speeds. Google's gigabit Internet service is priced at $70 per month. When bundled with TV, the price rises to $120--and Google is certainly pushing that additional service (see "Searching for the Future of Television" and "Google Launches a Superfast Internet and TV Business"). Users subscribing for a TV service get a two-terabyte storage box for recorded shows and a Nexus 7 Android tablet to use as a remote control. (As a budget alternative, Internet at five megabits per second is available for a one-time fee of $300.)

The US mail is faster than our local FairPoint service.

Posted by orrinj at 6:54 PM


Economist magazine bets professor over China's future (Laurence Knight, 11/11/12, BBC News)

"China has grown very rapidly in the last 30 years, but it has been following a model that is not unique," says Prof Pettis.

"In the 50s and 60s almost everyone 'knew' that the Soviet Union would overtake the US in the 70s - even Jack Kennedy - but it didn't happen. Instead, the Russian economy got mired in debt and years of stagnation."

Other examples include the Brazilian economic "miracle" of the 1960s and 1970s, says Prof Pettis, that ended in a 1982 financial crisis and a "lost decade" of growth, or Japan's rapid ascent up until its own 1990 crisis and subsequent two-decade stagnation.

What these countries have in common is an enormous level of government-led investment - in roads, trains, schools, hospitals, education and training.

"You can get tremendous growth by keeping investment levels high," he explains. "And in the early days, growth is healthy and sustainable.

"But later... you very easily reach a point where you can't identify economically viable projects any more, and you overshoot and start misallocating capital in a pretty significant way. That's when debt rises more quickly than the economy's capacity to service it."

China has been overinvesting perhaps since the 1990s, according to Prof Pettis, and certainly in the last five to 10 years.

"A lot of growth is fake," he says. "If you spend $1bn building an airport, it generates the same amount of [economic output] today whether or not anyone actually uses the airport.

"If no-one uses it, however, the economic value created by the airport is not enough to repay the debt, and so future growth must decline as wealth is transferred from some other part of the economy to pay down the debt."

He says that there are three main sources of growth for China. The first, investment, is already exhausted. The second, exports, are also no longer viable, as China's main export markets in Europe and the US are depressed, and China's trade surplus has become politically contentious in those countries.

The third option is for ordinary Chinese people to increase their spending on consumer products and services.

But here the numbers just don't stack up. Consumers account for just a third of spending in China - an unprecedentedly low share for any major economy - while investment accounts for a whopping half of the economy.

Posted by orrinj at 6:23 PM


Repeat testing common among Medicare patients (Genevra Pittman, November 19, 2012, Reuters Health) 

In a new study, up to half - or more - of older adults on Medicare who had a heart, lung, stomach or bladder test had the same procedure repeated within three years.

Those tests typically aren't supposed to be routinely repeated, researchers said. For some of them, such as echocardiography and stress tests for heart function, there are recommendations specifically against routine testing.

"What we were struck by is just how commonly these tests are being repeated," said Dr. H. Gilbert Welch, lead author of the report from the Dartmouth Institute for Health Policy and Clinical Practice in Hanover, New Hampshire.

Posted by orrinj at 5:37 AM


Gorging the Beast : Tax cuts didn't starve big government. (Andrew Ferguson, November 26, 2012, Weekly Standard)

And then Niskanen, looking over 25 years of budget data, noticed something about STB: It didn't work. In fact, attempts to starve the beast by tax cuts seemed to lead to increased federal spending.

Niskanen looked at both spending and taxes as a percentage of GDP. On average, he found, if federal revenues declined by 1 percent, federal spend- ing increased by 0.15 percent. When revenues rose, on the other hand, relative spending decreased. A fur- ther study in 2009 by another Cato economist, Michael New, came to the same conclusion after the gluttonous administration of George W. Bush. Under Bush and his mostly Republican Congress, new benefits like subsidized Medicare drugs and increased federal education spending followed on the heels of large tax cuts.

Niskanen's explanation for the failure of STB was straightforward, a conjecture based on standard economics: When you cut the price of something, demand for it will increase. Lowering taxes without lowering benefits meant that tax- payers were getting the benefits at a discount. [...]

Why do tax increases lead to decreased spending? "Demand by current voters for federal spend- ing," he explained, "declines with the amount of this spending that is financed by current taxes." When you make them pay for government benefits out of their own pockets, in other words, voters will want fewer of them. The journalist Jona- than Rauch put Niskanen's point more pithily: "Voters will not shrink Big Government until they feel the pinch of its true cost."

For that reason, the great liber- tarian pot-stirrer said that spending would never decrease--that government would never get smaller--until federal revenues increased from 15.8 percent of GDP, where they are today, to higher than 19 percent of GDP: an amount totaling in the hundreds of billions of dollars.

...while today's taxes are abnormally low, 19% wouldn't be terribly high.

Posted by orrinj at 5:26 AM


Bush's Burma Policy, Obama's Victory Lap : The president inherited an effective policy of sanctions, diplomatic pressure and human-rights advocacy. (Mary Kissel, 11/18/12, WSJ)

[B]urma's political calculations had little to do with Mr. Obama or with Secretary of State Hillary Clinton. The country's change instead was prompted by--steady yourself, Foggy Bottom--the administration of George W. Bush, who put in place a diplomatic framework that nudged Burma in the right direction when the generals were finally ready to embrace reform.

The Bush foreign policy placed a strong emphasis on human rights and instituted a multilateral effort to pressure the junta, using regional bodies like the 10-member Association for Southeast Asian Nations and international organizations like the United Nations. The Bush team also maintained sanctions against the junta's leaders and steered humanitarian assistance to the Burmese people as best they could.

When the Obama crew took over the State Department, they "reviewed" these policies for months--and then discovered that the status quo was quite appealing. "The results of that review," said Scot Marciel, deputy assistant secretary for the Bureau of East Asian and Pacific Affairs said in 2009, "were first, to reaffirm our fundamental goals for Burma, that we want to see a Burma that is at peace, unified, prosperous, stable, respects the rights of all of its citizens, and is democratic. That hasn't changed."

Having made the liberation of Aung San Suu Kyi her personal cause, the former First Lady deserves much of the credit here.