Tag Archives: Money/Economy/Taxes
Nuclear energy runs on government subsidy
The true costs of nuclear power are another subject carefully fudged and obscured by nuclear power advocates. From its inception in federally funded labs, nuclear power has been highly subsidized. A recent report by the Union of Concerned Scientists found that “more than 30 subsidies have supported every stage of the nuclear fuel cycle from uranium mining to long-term waste storage. Added together, these subsidies have often exceeded the average market price for the power produced.” When it comes to producing electricity, these subsidies are so extensive, the report concludes, that “in some cases it would have cost taxpayers less to simply buy the kilowatts on the open market and give them away.”
If the nuclear club in Congress, led by Senate Republican leader Mitch McConnell, gets its way, billions more in subsidies will be forthcoming, including massive federal loan guarantees to build the next generation of nuclear plants. These are particularly important to the industry, since bankers won’t otherwise touch projects that are notorious for mammoth cost overruns, lengthy delays, and abrupt cancellations.
The Obama administration has already proposed an additional $36 billion in such guarantees to underwrite new plant construction. That includes $4 billion for the construction of two new nuclear reactors on the Gulf Coast that are to be operated in partnership with Tokyo Electric Power Company — that’s right, the very outfit that runs the Fukushima complex. Yet when I debate nuclear advocates, they always claim that, in cost terms, nuclear power outcompetes alternative sources of energy like wind and solar.
That government gravy train doesn’t just stop at new power plants either. The feds have long assumed the epic costs of waste management and storage. If another multi-billion dollar project like the now-abandoned Yucca Mountain repository in Nevada is built, it will be with dollars from taxpayers and captive ratepayers (the free market be damned). Industry spokesmen insist that subsidizing such projects will be well worth it, since they will create thousands of new jobs.
(Read more from tomdispatch.com)
Peter Schiff: Japan’s Broken Window
Who are the poor?
When we hear of the poor, we envision a massive group of people without food and shelter. In reality, most of the poor in capitalistic countries such as the United States are not in such a state. Data from a recent census reveals that of the official “poor”:[1]
* 76 percent have air conditioning.
* 66 percent have more than two rooms of living space per person.
* 97 percent own at least one color television.
* 62 percent have either cable or satellite television.
* Almost 75 percent of households own a car (30 percent own two or more).
* 73 percent own microwave ovens.
* More than 50 percent have stereos.
* 33 percent have automatic dishwashers.
* 99 percent have refrigerators.
* Virtually none lack running water or flushing toilets.
* 46 percent own their own home, the average of which is a three bedroom house with 1.5 baths, that has a carport and porch or patio, and the average value of which is 70 percent of the median American home.
If we observe our presumably poorest citizens on our public transportation systems we see that they have cell phones, adequate clothing, personal audio devices, and are generally clean and free of disease and deformities. They also have the comfort of using a heated and air-conditioned transportation car that has carpet and flat-panel televisions for their amusement (paid for primarily by the wealthy, of course).
If you were to compare these American poor to the poor in Bolivia, Honduras, Cambodia, or India (or even to many of the poor in Mexico, Romania, Thailand, and Russia), you would see a stark difference. The poor in these countries often literally live in open-air huts with large leaves for roofs and stacked bricks that serve as a shared stove for multiple families. For the poor of the third-world countries, there is, for the most part, no money, no exchange of goods — just basic survival by subsistence farming or by hunting or fishing for food. To these people, American street sweepers and factory workers live a life of luxury. (Read more from mises.org)
Larry Summers: Natural Disasters boost the economy
A friend of mine: Any time you think that the government employs people who are in any way cognizant of reality…remember this: High ranking Obomba economic adviser claims tsunami could “temporarily boost” the japanese and global economy. Broken window fallacy…did anyone fail to learn this in econ 101? if you burn down your house and have to build another, are you better off?
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Tsunami an economic disaster? Not necessarily
HONOLULU (HawaiiNewsNow) – The natural disaster of a tsunami could actually provide a temporary boost to the global economy.
Larry Summers, former director of President Obama’s economic council and a former head of the World Bank, said rebuilding could temporarily boost the Japanese economy.
Summers suggested this in an interview Friday on CNBC. He added that the global economy is more resilient than most people think.
In Hawaii, disruptive weather events are good for some businesses but bad for others.
Stores that sell generators and hardware supplies experience a run on these items when a tsunami or bad weather approach; other retailers find their usual sales interrupted as people focus on evacuating and stockpiling essential supplies instead of their usual shopping.
HawaiiNewsNow correspondent Tannya Joaquin found three gas stations that had run out of fuel more than an hour before the first harbor wave was to have arrived.
The tsunami is an expense item for hotels, which have extensive plans in place to take care of guests’ needs, usually through “vertical evacuation,” escorting guests at least three stories up. Much of the expense comes from bringing in extra people to take care of guests. (from hawaiinewsnow.com)
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Larry Summers needs to take a break from corrupting the minds of Harvard students and see what the outside of classroom looks like. He can start by reading this:
Natural Disasters, It Turns Out, Are Bad
It seems that we may never rid ourselves of the broken-window fallacy.
Hurricane Katrina certainly did not stop economists from proclaiming the silver lining of natural disasters. On September 9, 2005, Labor Secretary Elaine Chao told USA Today that demand could create a labor shortage that could push up wage rates and that “We’re going to see a tremendous boom in construction.” On December 3rd, 2005, Nigel Gault, chief domestic economist at Global Insight, said, “We are now at the point where Hurricane Katrina’s effects are adding to job creation rather than detracting from it.”
And it’s not only that disasters just have a silver lining: economists have long believed that natural disasters and wars are actually good for the economy! Until recently they have not made any attempt to empirically test their views. However, in 2002 Mark Skidmore and Hideki Toya published a paper where they found a positive correlation between disasters and human capital, productivity, and GDP growth.
Now the good news. A recently published paper in Economic Inquiry by Cuaresma, Hlouskova, and Obersteiner brings the positive benefits of disasters into question. Not only does it counter the silver lining of new construction jobs, it also finds that disasters actually subtract from economic performance. In addition the paper provides clues to the entire confusion over this issue.
Economists have generally rested their case for the benefits of disasters on “creative destruction,” but our authors are quick to point out that Schumpeter’s view of creative destruction is one that is driven by competition, where those associated with disasters are not; they are just destruction. (Read more from mises.org)
New York public employee compensation
A very informative editorial from the New York Times that gives you some idea of what is going in New York with public employee compensation.
The Times observes:
In all, the salaries and benefits of state employees add up to $18.5 billion, or a fifth of New York’s operating budget. Unless those costs are reined in, New York will find itself unable to provide even essential services.
To point out these alarming facts is not to be anti- union, or anti-worker. In recent weeks, Republican politicians in the Midwest have distorted what should be a serious discussion about state employees’ benefits, cynically using it as a pretext to crush unions.
But after you read the editorial, you may actually come to conclude that the political power of unions could have something–maybe almost everything–to do with the problem.
. . . .
In 2000, employee pensions cost New York State taxpayers $100 million. They now cost $1.5 billion, and will be more than $2 billion in 2014. Wall Street’s troubles are a big part of that. But so are state politics. The Legislature, ever eager to curry favor with powerful unions, added sweeteners to pensions and allowed employees to stop making contributions after 10 years…
The Social Snobbery of Free Trade
7 March 2011
Mr. Ian Fletcher
Dear Ian:
In your latest essay at The Huffington Post, you allege that supporters of free trade are guilty of “social snobbery” (“The Social Snobbery of Free Trade,” March 7). You offer three, and only three, pieces of evidence for this proposition. The first is a quotation from New York Times columnist Thomas Friedman, and the second is a quotation from Barack Obama – each suggesting that working-class people too quickly blame trade for whatever economic misfortunes they suffer. The third piece of evidence is the fact that, while most members of the mainstream media are center-left on a majority of issues, they are well-paid and “lean right” on trade.
You masterfully massacre a straw man. Contrary to your explicit claim in the case of Friedman, and your implication in the case of Obama, the pronouncements of economically confused journalists and professional politicians aren’t even remotely appropriate examples of the best arguments for free trade.
Here’s a challenge for you. Search for examples of snobbery in the arguments for free trade made by scholars such as Adam Smith, Frederic Bastiat, Jagdish Bhagwati, Henry George, Daniel Griswold, Douglas Irwin, Fritz Machlup, Martin Wolf, and other economists and researchers who are recognized authorities on trade. You’ll come up empty. (Note: pointing out that many people do not understand economics is not an instance of snobbery.)
If nothing else, you have chutzpah to pin the label “snobs” on free traders – who argue that individuals ought simply be left free to spend their money in whatever ways they choose – while you promote a policy of giving third-party strangers in Washington the power to obstruct, for some allegedly higher good, these private, individual consumption choices.
Sincerely,
Donald J. Boudreaux (Read more from cafehayek.com)
Protectionists are to Economics What Astrologers are to Astrophysics
Here’s a letter to the editor of the website Economy in Crisis:
Setting up a straw man for the slaughter, Dustin Ensinger asserts that “Proponents of unfettered free trade have long claimed that lowering trade barriers will allow America to export more and more goods, eventually leading to trade surpluses and economic prosperity” (“Exports Won’t Solve America’s Many Trade Woes,” March 6).
Wrong.
Proponents of unfettered free trade have long claimed that lowering trade barriers will allow America to import more and more goods, eventually leading to greater economic prosperity. Period.
Proponents of unfettered free trade – at least those who understand economics – don’t give a damn about trade ‘deficits’ or ‘surpluses.’ They agree with Adam Smith that “Nothing, however, can be more absurd than this whole doctrine of the balance of trade.”*
Sincerely,
Donald J. Boudreaux (Read more from cafehayek.com)
Michael Moore: America Is NOT Broke . . .
. . . because we can steal from all those evil rich people.
The Specter of Municipal Default
Jimmy John Liautaud, founder of the Jimmy John’s sub chain, just applied to move his residence from Illinois to Florida — and his company’s headquarters could soon follow. “All they do is stick it to us,” he says of the state legislature’s move to jack up the personal income tax from 3 percent to 5 percent — and the corporate income tax from 7.3 percent to 9.5 percent.
. . . .
However, California’s state treasurer, Bill Lockyer, says the idea of states going bankrupt is ludicrous.
“It’s a cynical proposal, intended to incite a panic in response to a phony crisis,” Mr. Lockyer said on a conference call with journalists. “Killer bees, space aliens, and now it’s the invasion of the bankrupt states.”
I’m a little surprised Lockyer is so cocky. After all, California was forced to issue IOUs in lieu of cash to pay taxpayers, vendors, and local governments back in 2009.
Mr. Lockyer’s big plan is for his state to refrain from issuing any general-obligation bonds until the second half of the year, cutting down borrowing costs. That doesn’t sound like any great trick, except California hasn’t done that since 1988. If that doesn’t work, well, “Then, the next option, if you run out of deferrals, is to issue IOUs,” Mr. Lockyer said. “It’s a possibility. It’s not one that anyone wants to do. It’s at the bottom of the list of choices. But it is on the list.”
Nicole Gelinas of the Manhattan Institute also thinks the idea of states going bankrupt is nonsense. Because states pile up debt indirectly, issuing bonds through tens of thousands of separate legal entities. She writes that New York “state” doesn’t owe all of that $78.4 billion in debt; it owes only $3.5 billion in “general-obligation” debt, so relax.
“Who owes the rest?” she writes,
The MTA, the Dormitory Authority, the Triborough Bridge & Tunnel Authority and so on. Legally, each is not a government but a “public-benefit corporation.” Each has its own board, its own rules, and its own contractual agreements with creditors, from bondholders to unions. Each of those agreements offers creditors different protections.
So New Yorkers, in this case, are supposed to sleep better at night secure in the knowledge that dozens of government entities owe this debt instead of just one? Meanwhile any one of these public-benefit corporations could default out of the blue, because more than likely nobody will get a heads-up if the Dormitory Authority runs out of dough to pay bond holders. (Read more from mises.org)
Peter Schiff: Labor force, Greenspan, National Debt
* Labor force participation rate reveals truth. Unemployment rate hides the non-working.
* Greenspan: we’ll have to wait and see if QE2 works!?
* Greenspan acts as if the question of inflation is a game of chance. No logic applies.
Providence, RI Mayor Fires all public school teachers!
What kind of privileged, conservative, white, tea-pary mayor would do such a thing? His name is Angel Taveras, and he’s an alumni of Providence’s public schools.
Quien es mas creÃble Bernanke, Bullard o Madoff?
SA@TAC – End All Foreign Aid
Obama Pencils In $37 Billion Budget Increase For DHS, Naked Body Scanners
The Obama administration is to propose a $37 billion increase in federal spending for the Department of Homeland Security, earmarking funds for more radiation firing naked body scanners in airports around the country.
The DHS’ budget will grow by almost 3 percent over the 2011 budget level, as Reuters reports, while the overall national security budget will increase by almost 2 percent.
The 2012 budget proposal requests $43.8 billion for homeland security across the entire federal government, excluding the Defense Department, up $800 million from 2011.
The DHS plans to add an additional 275 naked body scanners to the 500 already installed and operated by the TSA at 78 airports nationwide.
The administration has proposed deploying 1,275 body scanners in airports by the end of 2012. (Read more from infowars.com)