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Archive for August, 2019

While it’s very good to have a clean environment, many environmentalists don’t understand cost-benefit analysis. As such, they make our lives less pleasant – inferior light bulbs, substandard toilets, inadequate washing machines, crummy dishwashers, dribbling showers, and dysfunctional gas cans – for little if any benefit.

We can add recycling to that list.

To be sure, all the hassle and time of sorting our garbage might be an acceptable cost if something was being achieved.

Unfortunately, as Jeff Jacoby has explained, that’s not the case. Not even close.

Let’s explore the issue.

In an article for the American Institute for Economic Research, Professor Michael Munger explains that most recycling actually is a net negative for the environment.

…I was invited to a conference called Australia Recycles! …Everyone there, everyone, represented either a municipal or provincial government, or a nonprofit recycling advocacy group, or a company that manufactured and sold complicated and expensive recycling equipment. …Recycling requires substantial infrastructure for pickup, transportation, sorting, cleaning, and processing. …For recycling to be a socially commendable activity, it has to pass one of two tests: the profit test, or the net environmental-savings test. If something passes the profit test, it’s likely already being done. People are already recycling gold or other commodities from the waste stream, if the costs of doing so are less than the amount for which the resource can be sold. …The real question arises with mandatory recycling programs — people recycle because they will be fined if they don’t, not because they expect to make money… If you add up the time being wasted on recycling rituals, it’s even more expensive to ask each household to do it. The difference is that this is an implicit tax, a donation required of citizens, and doesn’t cost money from the public budget. But time is the least renewable of all resources… For recycling to make any sense, it must cost less to dispose of recycled material than to put the stuff in a landfill. But we have plenty of landfill space, in most of the country. And much of the heaviest material we want to recycle, particularly glass, is chemically inert and will not decompose in a landfill. …landfilling glass does no environmental harm… So, is recycling useful? As I said at the outset, for some things it is. Aluminum cans and corrugated cardboard, if they can be collected clean and at scale, are highly recyclable. …But for most other things, recycling harms the environment. …If you care about the environment, you should put your bottles and other glass in the regular garbage, every time.

Jon Miltimore explains, in a column for the Foundation for Economic Education, that hundreds of cities have repealed recycling mandates because they simply don’t make sense.

…after sending my five-year-old daughter off to school, she came home reciting the same cheerful environmental mantra I was taught in elementary school. “Reduce, reuse, recycle,” she beamed, proud to show off a bit of rote learning. The moral virtue of recycling is rarely questioned in the United States. …recycling is tricky business. A 2010 Columbia University study found that just 16.5 percent of the plastic collected by the New York Department of Sanitation was “recyclable.” “This results in nearly half of the plastics collected being landfilled,” researchers concluded. …hundreds of cities across the country are abandoning recycling efforts. …Like any activity or service, recycling is an economic activity. The dirty little secret is that the benefits of recycling have been dubious for some time. …How long? Perhaps from the very beginning. …there are the energy and resources that go into recycling. How much water do Americans spend annually rinsing items that end up in a landfill? How much fuel is spent deploying fleets of barges and trucks across highways and oceans, carrying tons of garbage to be processed at facilities that belch their own emissions? …It’s time to admit the recycling mania is a giant placebo. It makes people feel good, but the idea that it improves the condition of humans or the planet is highly dubious.

On a related topic, another FEE column even shows that anti-waste campaigns may actually increase waste.

To reduce waste, most governments run communication campaigns. Many try to make consumers feel guilty by telling them how much people like them waste (food, paper, water…). …The idea is that once people realise how much they waste, they will stop. Unfortunately, research has shown that when people are told that people like them misbehave, this makes them act worse, not better. In a June 2018 study, we confirm this backfiring effect in a series of studies on waste… Indeed, we found that backfiring effects of anti-waste messages happened because of difficulty. When consumer read that everyone wastes a lot, they think that it must be difficult to cut waste – so they don’t even try.

Let’s get back to the specific issue of recycling.

The fact that it doesn’t make sense is hardly a new revelation.

Way back in 1996, John Tierny had a very thorough article in the New York Time Magazine that summarized the shortcomings of recycling.

If you don’t want to read this long excerpt, all you need to know is that landfills are cheap, safe, and plentiful.

Believing that there was no more room in landfills, Americans concluded that recycling was their only option. Their intentions were good and their conclusions seemed plausible. Recycling does sometimes makes sense — for some materials in some places at some times. But the simplest and cheapest option is usually to bury garbage in an environmentally safe landfill. And since there’s no shortage of landfill space (the crisis of 1987 was a false alarm), there’s no reason to make recycling a legal or moral imperative. Mandatory recycling programs…offer mainly short-term benefits to a few groups — politicians, public relations consultants, environmental organizations, waste-handling corporations — while diverting money from genuine social and environmental problems. Recycling may be the most wasteful activity in modern America: a waste of time and money, a waste of human and natural resources. …Americans became racked with garbage guilt…  Suddenly, just as central planning was going out of fashion in eastern Europe, America devised a national five-year plan for trash. The Environmental Protection Agency promulgated a “Waste Hierarchy” that ranked trash-disposal options: recycling at the top, composting and waste-to-energy incinerators in the middle, landfills at the bottom. …Politicians across the country…enacted laws mandating recycling and setting arbitrary goals…, typically requiring that at least 40 percent of trash be recycled, often even more — 50 percent in New York and California, 60 percent in New Jersey, 70 percent in Rhode Island. …The Federal Government and dozens of states passed laws that required public agencies, newspapers and other companies to purchase recycled materials. …America today has a good deal more landfill space available than it did 10 years ago. …there’s little reason to worry about modern landfills, which by Federal law must be lined with clay and plastic, equipped with drainage and gas-collection systems, covered daily with soil and monitored regularly for underground leaks. …Clark Wiseman, an economist at Gonzaga University in Spokane, Wash., has calculated that if Americans keep generating garbage at current rates for 1,000 years, and if all their garbage is put in a landfill 100 yards deep, by the year 3000 this national garbage heap will fill a square piece of land 35 miles on each side. …This doesn’t seem a huge imposition in a country the size of America. …The millennial landfill would fit on one-tenth of 1 percent of the range land now available for grazing in the continental United States. …many experts and public officials acknowledge that America could simply bury its garbage, but they object to this option because it diverts trash from recycling programs. Recycling, which was originally justified as the only solution to a desperate national problem, has become a goal in itself… The leaders of the recycling movement…raise money and attract new members through their campaigns to outlaw “waste” and prevent landfills from opening. They get financing from public and private sources (including the recycling industry) to research and promote recycling. By turning garbage into a political issue, environmentalists have created jobs for themselves as lawyers, lobbyists, researchers, educators and moral guardians.

The bottom line is that most recycling programs impose a fiscal and personal cost on people for very meager environmental benefits.

Indeed, the benefits are often negative once indirect costs are added to the equation.

So why is there still support in some quarters?

In part, it’s driven by contributions from the companies that get paid to process recycled material.

But that’s only part of the story. Recycling is a way for some people to feel better about themselves. Sort of an internalized version of virtue-signalling.

That’s not a bad thing. I like a society where people care about the environment and feel guilty about doing bad things, like throwing trash out car windows.

But I’m a bit old fashioned in that I want them to feel good about doing things that actually make sense.

P.S. There’s a Washington version of recycling that is based on taxpayer money getting shifted back and forth between politicians and special interests.

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Three years ago, I shared a cartoon that succinctly summarized the problem with socialism and the welfare state.

It’s the same lesson that we also get from Thomas Sowell, which is that redistribution over time creates an ever-larger number of dependents financed by ever-higher taxes on workers.

Or, as this Wizard-of-Id parody and this Little-Red-Hen parody make clear, why work hard if you can get things for free?

Now I have a different way of illustrating the problem with socialism. Here’s a very clever tweet from Young Americans Against Socialism.

Very clever and amusing.

I will add this short video to my collection of socialism humor, but it actually makes a very serious point.

Socialists and other redistributionists want equality of outcomes, but they don’t think about the unintended consequences of such an approach.

Some people will be lured into sloth and dependency, for instance, while others – particularly those with greater ability and/or greater work ethic – will choose to be less productive (especially because they also get hit with higher tax burdens to finance all the handouts).

Bastiat wrote that the failure to consider the “unseen” was the defining quality of a bad economist.

And since we’re on that topic, here’s an example of Crazy Bernie failing to appreciate that actions have unintended consequences.

A perfect metaphor for what would happen to the economy if some of his policies were imposed on the economy.

Except Bernie would still have his comfortable life. It’s the rest of us who would suffer.

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It’s time to add some new material to our collection of gun control satire.

We’ll start with this clever use of rhetoric from the debate over illegal immigration.

Seems like a very humane approach.

Next, fans of Willy Wonka will appreciate this side trip into the land of make-believe.

By the way, I’m always happy to share clever humor from the other side, such as this depiction of an American breakfast.

So enjoy this German-language explanation of how to smuggle candy into an American theater.

This next bit of satire is amusing, though I wish its creator just used a random collection of David Hogg-types for the lower frame. As explained by the Pink Pistols, gun rights are especially important for sometimes-persecuted groups.

Three years ago, I shared an amusing comparison of how Europeans and Texans respond to terrorism.

Well, here’s a left-wing version of Paul Revere, warning neighbors of a looming terror attack.

Finally, let’s close with an amusing modification of the one-liner that Elizabeth Warren uses to denigrate gun owners.

We can safely assume that Ms. Warren has never seen this image. Or, if she has, she reached the wrong conclusion.

P.S. On a more serious note about gun control, I invite readers to peruse my collection (here, here, here, here, and here) of honest leftists.

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A few days ago, I observed in a television interview that economists are lousy forecasters.

This was not a new revelation. Back in early 2010, I shared a graph that succinctly illustrated why economists shouldn’t be trusted when they make economic forecasts (later that year, I pointed out that macroeconomists were the real problem).

In 2013, I wrote “Don’t Trust Economists, Part II” based on a remarkable example of fraud in Portugal.

Now it’s time for Part III.

We’ll start with a reminder that economists can’t forecast their way out of a wet paper bag. Here’s an excerpt from a 2001 article in the Economist.

As recently as February, 95% of American economists said it wouldn’t happen, but it has. America is now in recession… Even in early September few economists were forecasting a recession. Now it appears that one had already been under way for almost six months. …Why are recessions so hard to forecast? A study published last year by the International Monetary Fund looked at the economists’ record. It is bad. Of 60 recessions in developed and developing economies during the 1990s, two-thirds remained undetected by consensus forecasts as late as April of the year in which the recessions occurred. In one-quarter of cases, the consensus forecast in October of that year still expected positive growth.

Robert Samuelson has a more recent and comprehensive list of how economists are miserably bad when they try to forecast major economic trends.

The most intriguing and indisputable thing we have learned about economists in recent decades is that they don’t know nearly as much as they thought they knew. …As an economic journalist for roughly half a century, I have slowly and somewhat reluctantly come to the conclusion that many economists (and this applies across the political spectrum) often don’t know what they’re talking about… Time after time, economists have failed to foresee major economic trends. In recent years, global interest rates have plunged to historically low levels. …But most economists did not anticipate the declines and still can’t fully explain them. Going back a bit further, economists did not predict double-digit inflation (monthly peaks of 12 percent in 1974 and 1975 and 15 percent in 1980). …Now, ironically, inflation has unexpectedly remained low (generally less than 2 percent annually ), and many economists have been baffled by that, too. …Over the past five decades, I cannot remember one instance when economists have correctly forecast a major shift in productivity growth, whether up or down. …Of course, the most conspicuous example of this ignorance gap is the 2008-2009 financial crisis and the Great Recession. “Why did nobody notice it?” Queen Elizabeth famously asked. …The larger cause of the ignorance gap is the very complexity and obscurity of a $20 trillion economy (the United States) or an $85 trillion economy (the world). To say it is changing in detailed and often-unanticipated ways is simply to affirm that mere mortals, including economists, have never been very good at predicting the future.

In other words, this cartoon is very accurate.

So what’s the solution?

In my fantasy world, everyone would simply ignore economic forecasts and instead would focus on the conditions necessary for stronger long-run growth.

Sadly, that won’t happen.

So what about some sort of “quality control”?

That might be nice in theory, but it wouldn’t work in practice.

Which is why I’m happy that there isn’t much support in the profession for occupational licensing.

Let’s set aside the problem of economic forecasting.

Binyamin Applebaum of the New York Times has a column that criticizes economists for a different reason.

He frets that economists have enabled a big shift toward free markets.

As the quarter century of growth that followed World War II sputtered to a close, economists moved into the halls of power, instructing policymakers that growth could be revived by minimizing government’s role in managing the economy. They also warned that a society that sought to limit inequality would pay a price in the form of less growth. …In the four decades between 1969 and 2008, economists played a leading role in slashing taxation of the wealthy and in curbing public investment. They supervised the deregulation of major sectors, including transportation and communications. …they demonized trade unions and opposed worker protections like minimum wage laws.

While I hope his overall premise is accurate, his specific assertions are an incoherent mess.

He wants readers to believe that economists were largely ignored prior to 1969 and suddenly wielded great influence thereafter. Yet he offers zero evidence for that hypothesis.

Moreover, it was Arthur Okun’s work for Brookings (hardly a citadel of libertarian thinking) that increased awareness of the tradeoff between redistribution and growth.

Much more troubling, though, is his assertion that the free-market orthodoxy ruled between 1969-2008.

That’s ahistorical nonsense. The Nixon years, for instance, were probably the most statist period in America’s post-WWII history.

And we also got plenty of bad policy under Bush I, Bush II, and Obama.

Yes, policy did shift in the right direction under Reagan and Clinton. And it’s also quite possible that the progress during those years more than offset the bad policies of other presidents.

But it’s utterly absurd to think of 1969-2008 as an era of continuous economic liberty.

Here are some further excerpts.

Economists even persuaded policymakers to assign a dollar value to human life — around $10 million in 2019 — to assess whether regulations were worthwhile.

This is actually part of life-saving cost-benefit analysis.

And it’s not some sort of libertarian scheme, unless Applebaum thinks the folks at Brookings are part of some laissez-faire conspiracy.

Though I’m glad he gives some credit (from his perspective, blame) to Milton Friedman.

The most important figure, however, was Milton Friedman, an elfin libertarian who refused to take a job in Washington, but whose writings and exhortations seized the imagination of policymakers. Friedman offered an appealingly simple answer for the nation’s problems: Government should get out of the way. He joked that if bureaucrats gained control of the Sahara, there would soon be a shortage of sand.

He concludes by fixating on inequality.

The rise of economics is a primary reason for the rise of inequality. …Markets are constructed by people…and people can change the rules. It’s time to discard the judgment of economists that society should turn a blind eye to inequality. Reducing inequality should be a primary goal of public policy. …Willful indifference to the distribution of prosperity over the last half century is an important reason the very survival of liberal democracy is now being tested by nationalist demagogues. …our shared bonds will last longer if we can find ways to reduce the strain.

If he cares about the well-being of poor people, he should be fixated instead on growth.

For what it’s worth, I suspect he shares the IMF’s perspective and would willing to subject the poor to lower living standards if the rich suffered even bigger losses.

By the way, Ramesh Ponnuru is also quite critical of Applebaum’s column.

Let’s close with some humor.

Professor Michael Munger wrote a column for FEE analyzing economist jokes.

The whole thing is worth reading, but I’ll limit myself to sharing two of the jokes.

An economics graduate student was crossing a road one day when a frog called out to him and said, “If you kiss me, I’ll turn into a beautiful princess.” He bent over, picked up the frog and put it in his pocket. The frog spoke up again and said, “If you kiss me and turn me back into a beautiful princess, I will stay with you for one week.” The graduate student took the frog out of his pocket, smiled at it, and returned it to his pocket. Desperate, the frog then cried out, “If you kiss me and turn me back into a princess, I’ll stay with you and do anything you want.” Again the grad student took the frog out, smiled at it and put it back into his pocket. Finally, the frog asked, “What is the matter? I’ve told you I’m a beautiful princess, that I’ll be your girlfriend and do anything you want. Why won’t you kiss me?” The grad student said, “Look, I’m an economist. I have no idea what it would even be like to have a girlfriend. But a talking frog has got to be worth a fortune.”

And here’s the second example.

A physicist, a chemist, and an economist are stranded on an island, with nothing to eat. A box washes ashore, and when they open it, it turns out to be a box of canned soup. But how to open the cans? The physicist says, “Let’s break the can open with a rock, using precisely the correct vector of force so the contents aren’t spilled.” The chemist says, “Let’s build a fire and heat the can just to the point where the contents break the metal but don’t explode.” The economist says, “Well, let’s do this in an a priori manner. First, assume that we have a can-opener…”

Last but not least, here’s Adam Smith’s contribution to the game of rock-paper-scissors.

Not as good as my collection of jokes about communism and socialism, but clever is a subtle way.

P.S. Are economists useless, despicable, and loathsome? I report, you decide.

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My primary job is dealing with misguided public policy in the United States.

I spend much of my time either trying to undo bad policies with good reform (flat tax, spending restraint, regulatory easing, trade liberalization) or fighting off additional bad interventions (Green New Deal, protectionism, Medicare for All, class warfare taxes).

Seems like there is a lot to criticize, right?

Yes, but sometimes the key to success is being “less worse” than your competitors. So while I’m critical of many bad policies in the United States, it’s worth noting that America nonetheless ranks #6 for overall economic liberty according to the Fraser Institute.

As such, it’s not surprising that America has higher living standards than most other developed nations according to the “actual individual consumption” data from the Organization for Economic Cooperation and Development.

And America’s advantage isn’t trivial. We’re more than 46 percent higher than the average for OECD member nations.

The gap is so large that I’ve wondered how lower-income people in the United States would rank compared to average people in other countries.

Well, the folks at Just Facts have investigated precisely this issue using World Bank data and found some remarkable results.

…after accounting for all income, charity, and non-cash welfare benefits like subsidized housing and Food Stamps—the poorest 20% of Americans consume more goods and services than the national averages for all people in most affluent countries. …In other words, if the U.S. “poor” were a nation, it would be one of the world’s richest. …The World Bank publishes a comprehensive dataset on consumption that isn’t dependent on the accuracy of household surveys and includes all goods and services, but it only provides the average consumption per person in each nation—not the poorest people in each nation. However, the U.S. Bureau of Economic Analysis published a study that provides exactly that for 2010. Combined with World Bank data for the same year, these datasets show that the poorest 20% of U.S. households have higher average consumption per person than the averages for all people in most nations of the OECD and Europe… The high consumption of America’s “poor” doesn’t mean they live better than average people in the nations they outpace, like Spain, Denmark, Japan, Greece, and New Zealand. …Nonetheless, the fact remains that the privilege of living in the U.S. affords poor people with more material resources than the averages for most of the world’s richest nations.

There are some challenges in putting together this type of comparison, so the folks at Just Facts are very clear in showing their methodology.

They’ve certainly come up with results that make sense, particularly when compared their results with the OECD AIC numbers.

Here’s one of the charts from the report.

You can see that the bottom 20 percent of Americans do quite well compared to the average persons in other developed nations.

By the way, the report from Just Facts also criticizes the New York Times for dishonest analysis of poverty. Since I’ve felt compelled to do the same thing, I can definitely sympathize.

The bottom line is that free markets and limited government are the best way to help lower-income people enjoy more prosperity.

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I’m getting worried that Senator Bernie Sanders is fading in the polls.

That doesn’t make me happy. I want Crazy Bernie to stay relevant.

Why? Because he’s an endless source of clever satire.

Previous editions of Bernie humor can be found here and here.

For today’s edition, let’s start with the fact that Bernie has used political office to become a millionaire, yet he doesn’t put his money where his mouth is (the federal government actually has a website for people who are foolish enough to pay extra tax).

Bernie also has an opinion on the protests in Hong Kong. At least according to the satirists at the Babylon Bee.

As soon as Bernie Sanders heard about the democratic protesters in Hong Kong, he knew something had to be done. The U.S. senator quickly chartered a flight to Hong Kong… Sanders bravely stood in the middle of the conflict between police and protesters, shouting at the “ungrateful little dissenters”… “Remember, you could have it a lot worse—you could be in America!” Sanders bellowed as police officers for the totalitarian regime beat protesters in the background. …Sanders continued his long-winded rant about the need for the government to own the means of production, how great breadlines are, and how bad things are in capitalist America as protesters got dragged away by police to be disappeared. “Just think—in America, we have to pick between 14 different types of deodorant!” he said, his fingers flopping around like limp sausages.

While this story is amusing, the folks at Babylon Bee screwed up. The people of Hong Kong aren’t protesting because they live in a communist system.

They’re protesting because they’re worried that China will sooner or later absorb them into a communist system.

But since so much real media is “fake but accurate” (or is it “accurate but fake”?), I’m not going to worry about details.

Let’s now shift to another example of Babylon Bee satire.

Showing himself to be a compassionate man of the people who cares deeply about the plight of the downtrodden, Senator Bernie Sanders selflessly offered a stack of bills to a homeless man on the street Monday after fishing the money out of a purse sitting next to a woman on a park bench. Sanders had been…on the prowl for people who looked like they had too much money when he leaped out to steal the wallet from the purse… The Vermont senator..saw a homeless man sitting nearby, begging for money. Moved by the pathetic sight of the man’s disheveled appearance, Sanders found it in his heart to commit a random act of kindness, digging through the wallet until he was able to find several $20 bills and slipping them into the man’s hand. “It’s not theft—it’s redistribution,” he told reporters later. “I was simply…doing what any old citizen couldn’t do without committing a crime. But it’s different because I’m the government, see?” At publishing time, the Senator was seen pocketing the rest of the money.

How very generous he is with other people’s money!

Last but not least, here’s a game from Imgur that allows anyone to prepare a Bernie speech. For some reason, it reminds me of State-of-the-Union bingo during the Obama years.

For other examples of Bernie humor, you can click hereherehereherehereherehere, and here.

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When I wrote last month about the Green New Deal, I warned that it was cronyism on steroids.

Simply stated, the proposal gives politicians massive new powers to intervene and this would be a recipe for staggering levels of Solyndra-style corruption.

Well, the World Bank has some new scholarly research that echoes my concerns. Two economists investigated the relationship with the regulatory burden and corruption.

Empirical studies such as Meon and Sekkat (2005) and De Rosa et al. (2010) show that corruption is more damaging for economic performance at higher levels of regulation or lower levels of governance quality. …Building on the above literature, in this paper, we use firm-level survey data on 39,732 firms in 111 countries collected by the World Bank’s Enterprise Surveys between 2009 and 2017 to test the hypothesis that corruption impedes firm productivity more at higher levels of regulation. …estimate the model using sample weighted OLS (Ordinary Least Squares) regression analysis.

And what did they discover?

We find that the negative relationship between corruption and productivity is amplified at high levels of regulation. In fact, at low levels of regulation, the relationship between corruption and productivity is insignificant. …we find that a 1 percent increase in bribes that firms pay to get things done, expressed as the share of annual sales, is significantly associated with about a 0.9 percent decrease in productivity of firms at the 75th percentile value of regulation (high regulation). In contrast, at the 25th percentile value of regulation (low regulation), the corresponding change is very small and statistically insignificant, though it is still negative. …after we control for investment, skills and raw materials, the coefficients of the interaction term between corruption and regulation became much larger… This provides support for the hypothesis that corruption is more damaging for productivity at higher levels of regulation.

Lord Acton famously wrote that “power corrupts, and absolute power corrupts absolutely.”

Based on the results from the World Bank study, we can say “regulation corrupts, and added regulation corrupts additionally.”

Not very poetic, but definitely accurate.

Figure 4 from the study shows this relationship.

Seems like we need separation of business and state, not just separation of church and state.

This gives me a good excuse to recycle this video I narrated more than 10 years ago.

P.S. Five years ago, I cited a World Bank study showing that tax complexity facilitates corruption. Which means a simple and fair flat tax isn’t merely a way of achieving more prosperity, it’s also a way of draining the swamp.

The moral of the story – whether we’re looking at red tape, taxes, spending, trade, or any other issue – is that smaller government is the most effective way of reducing sleaze and corruption.

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