The E15 Mandate Is Poor Environmental Policy

Here’s an unpublished Letter to the Editor of the Wall Street Journal:

To the Editor:

Concerning “Trump Gives Farmers a Jolt of Fuel” (Op-Ed, Oct. 16), it certainly is true that corn farmers and ethanol producers stand to gain from President Trump’s decision to allow year-round sales of E15 motor fuel (corn-based ethanol blended with gasoline). But raising gasoline’s ethanol content to 15 percent—E15 contains 50 percent more ethanol than today’s E10 blend—is costly both for consumers and for the environment.

The so-called Renewable Fuel Standard has outlived its usefulness. At its inception in 2005, the RFS was promoted primarily as a means of reducing U.S. reliance on foreign oil. But we now are on track to become a net oil exporter. Thanks to technological advances that led to the shale revolution and more drilling offshore, U.S. oil production has grown significantly, while imported oil as a share of total domestic oil consumption has fallen sharply.

Identity Groups: Am I Eligible for This Award?

I am a faculty member at Florida State University, and received an announcement that nominations are open for the Martin Luther King Distinguished Service Award at my university. One criterion for nomination is: “Nominees from the faculty must demonstrate scholarly excellence and a personal commitment to diversity.” I do have a sustained record of scholarship, and at a university–an institution committed to the transmission of ideas to our students–my libertarian-leaning commitment to individual freedom and limited government (the ideas on which our nation was founded) puts me distinctly in the minority among faculty members and shows my commitment to diversity of thought in an institution whose faculty members often promote a left-wing ideology.

Can one be any more committed to diversity than to teach the ideas of liberty at an institution of higher learning when so many faculty members advocate more government control over our lives?

Law of the Land: Feds Can Sell to Private Developers

If the federal government wants to sell land in California, California’s State Lands Commission must have the first shot at purchase, not any private developer. That was according to Senate Bill 50, by Santa Monica Democrat Bill Allen and signed by Jerry Brown in October of 2017, but it’s not going to happen.

Last week U.S. District Judge William Shubb tossed SB 50 which he ruled violates the Constitution’s supremacy clause and the property clause that gives the federal government the right to dispose of its own property. The properties include Admiral’s Cove in Alameda, which the Navy seeks to sell to a developer; 78 acres owned by the Army in Dublin, and U.S. Postal Service property in Sacramento, among others. The possibilities are indeed vast because the federal government owns 45.8 percent of California, 52.9 percent of Oregon, and a whopping 84.9 percent of Nevada, practically the entire state.

The federal government owns 28 percent of all land in the United States and 47 percent of land in the western states. Farmers, ranchers, and developers support more sales of federal land, and the funds could help pay down massive government debt. Politicians often oppose sales of federal land, unless a state government is the exclusive buyer, per SB 50. Last year, when the Trump administration filed suit against the measure, California Lt. Gov. Gavin Newsom, a member of the State Lands Commission, proclaimed: “We will use every legal and administrative tool to thwart Trump’s plans to auction off California’s heritage to the highest bidder.” Newsom is now seeking to replace the outgoing Jerry Brown as governor.

***

K. Lloyd Billingsley is a Policy Fellow at the Independent Institute and a columnist at The Daily Caller.

Bolton: National Debt Constitutes “Economic Threat”

John Bolton is President Trump’s National Security Advisor. While speaking at an event hosted by the Alexander Hamilton Society in Washington D.C. on October 31, 2018, he weighed in on the national security implications of the U.S. government’s budget deficit and the national debt:

“It is a fact that when your national debt gets to the level ours is, that it constitutes an economic threat to the society. And that kind of threat ultimately has a national security consequence for it.”

Bolton went on to describe how the White House will seek to deal with the threat:

“In the near term, the budget deficit problem is in the discretionary spending. The entitlements come in a few years and that problem’s going to have to be addressed. But right now, you can have significant impact on both the deficit and the national debt by cutting government spending on the discretionary programs.”

Why America Is Increasingly Divided (and James Madison Would Have Predicted It)

In 1925, President Calvin Coolidge famously said that the “chief business of the American people is business.” Today, however, this could be reworded as “the business of the American people is redistribution.” And government redistribution of income and wealth—violations of personal property rights—is tearing apart the social fabric of the country.

Today more than half of Americans receive more money from government transfer* programs than they pay in federal taxes. When a majority of people benefit, on net, from government transfers and its growth, a tipping point is reached where pulling back is increasingly difficult, if not politically impossible.

The figure below shows transfers and federal taxes by household across income quintiles. The lower three quintiles receive far more in government transfers than they pay in taxes. Only the top two quintiles pay more in taxes than they receive in transfers, effectively subsidizing the bottom groups.

Sources: Congressional Budget Office, The Distribution of Household Income, 2014, 2018; and Ryan McMaken, “More than Half of America Gets More in Welfare than it Pays in Taxes,” Mises Wire, October 24, 2018.*

Government Obstructions on Importation and Immigration Are Parallel Forms of Plunder

When the government imposes tariffs or import quotas, it harms a few foreigners—exporting producers and their workers mainly—but it harms far more people in the country with these trade obstructions, who suffer an absence of superior options or face higher prices for the imported types of goods on the domestic market owing to lessened competition.

Likewise, when the government imposes restrictions or quotas on immigration, it harms a few foreigners—the foreigners who wish to enter the country mainly—but it harms far more people in the country with these obstructions, who suffer an absence of superior options in labor and other markets or face higher prices for the immigrants’ types of services, besides being deprived of their freedom to deal with their most preferred or rewarding trading partners as customers, tenants, neighbors, and friends. Not to mention that enforcement of immigration restrictions fosters the maintenance of a domestic police state that menaces everyone living in the country to which immigrants wish to come.

These two cases of government obstructions at the border thus have many parallels. The important point is that they give rise to harms imposed on the multitude for the sake of creating unearned income for a minority in the country whose government imposes the obstructions.

***

Robert Higgs is Senior Fellow in Political Economy at the Independent Institute, author or editor of over fourteen Independent books, and Editor at Large of Independent’s quarterly journal The Independent Review.

Judicial Waste, and a Warning for Post-Brown California

In an October 24 ruling, Yolo County judge Samuel McAdam reinstated the sentence of convicted murderer Daniel Marsh and sent him back to prison. This came as some relief to families of his victims, who again had been put through an ordeal.

In April, 2013, Marsh was 15 when he murdered and mutilated Oliver Northup, 87, and his wife Claudia Maupin, 76, in their Davis home. The depraved double murderer, who aspired to be a serial killer, was tried as an adult, convicted, and in 2014 drew a sentence of 52 years to life. Two years later he caught a break.

The 2016 Proposition 57 barred direct prosecution of juvenile cases in adult court. An appeal court applied the measure to Marsh, whose conviction would be reversed pending a “transfer hearing” to determine whether he was suitable for juvenile court. If so, he would serve only until age 25, in comfy juvenile facilities, prospect horrifying to victims’ families.

Defense expert Dr. Matthew Soulier said Marsh had shown substantial growth and was suitable for juvenile court, even though Marsh had a psychopathy score of 35.8 out of 40. Dr. Matthew Logan testified that anyone with such a score was a serious risk for violent recidivism and should not be out in public.

Judge McAdam ruled that the weight of the evidence favored adult court. That had already been rightly decided in 2014, so the entire hearing was a huge waste of court time and taxpayer dollars. One of Marsh’s public defenders just sat there the whole time, and the court delayed the proceedings a week to accommodate his vacation. McAdam reinstated the original sentence and sent Marsh back to prison, but the judge also left a warning.

On September 30, outgoing governor Jerry Brown signed Senate Bill 1391, effective January 1, 2019, which bars prosecution of those as young as 14 as adults, whatever the gravity of their crimes. As McAdam’s ruling stated: “It will soon be the law of California that even a 15-year-old who commits a brutal double murder of strangers in his neighborhood will be adjudicated in juvenile court and not adult court, without any weighing of factors.” So in post-Brown California, depraved double murderer Daniel Marsh could be the poster child for the juvenile justice system. As they say, no justice, no peace.

***

K. Lloyd Billingsley is a Policy Fellow at the Independent Institute and a columnist at The Daily Caller.

What Bitcoin Taught the Public and Economists

Today marks the 10th anniversary of the release of the famous Bitcoin white paper authored by the pseudonymous Satoshi Nakamoto. The pioneering cryptocurrency, as well as its platform of a decentralized “blockchain,” has unleashed changes in society that we are only beginning to appreciate. Writers with expertise in programming and/or public key cryptography are penning tributes celebrating Nakamoto’s technical innovations, but I want to discuss the profound impact Bitcoin has had as a new potential form of money. The brute fact of Bitcoin’s existence—and the other cryptocurrencies it inspired—has forever changed the way both the public and economists think about money.

Before Bitcoin, most of the public simply assumed that money, as well as any electronic payment system built upon it, had to be orchestrated by the government. After all, the actual monies in day-to-day use—whether the dollar, peso, euro, or yen—were all issued by sovereign political entities. And although the banking system and online payments (in the age of the Internet) are largely handled by privately run companies, the entire network is heavily regulated by the world’s governments. Thus it is understandable that most people have simply assumed the state had to create the money and regulate its use.

Bitcoin changed all that simply by being; it is a glaring counterexample to this widespread belief. As more and more people become aware of it, and especially as more people begin using Bitcoin either for commercial or speculative purposes, they realize that a totally private-sector money is possible. The state had nothing to do with the creation of Bitcoin, and the blockchain’s decentralized, “trustless” network has no single person “in charge” at all—so there’s nobody to regulate. (The blockchain is the electronic public ledger—of which there are copies held in thousands of computers around the world—that records every Bitcoin transaction ever made.)

Exploiting Elections to Expand Government Power

As the late Malcolm Muggeridge said, the real advantage of elections is to remove those in power, and voters often do just that. The ruling class, by contrast, can exploit elections to expand government, redistribute wealth, reward cronies, and provide a soft landing for washed up politicians. Consider Proposition 71 on the 2004 ballot.

This $3 billion measure promised live-saving cures for a host of diseases by creating the California Institute of Regenerative Medicine. At one point, this new state agency had directed a full 91 percent of its research funding to institutions with representatives on its governing board. Though some offered to serve with no salary, CIRM hired non-scientist Art Torres, a former state senator, and promptly tripled his salary to $225,000. CIRM bosses drew salaries of nearly $500,000 but the state agency has produced none of the promised cures and therapies, so no royalties are flowing into state coffers, as Proposition 71 promoters also promised in 2004.

The 2008 Proposition 1A authorized $10 billion for a high-speed rail system whose costs are now estimated at nearly $100 billion. The vaunted “bullet train” has carried no passengers but boasts a Sacramento headquarters and three regional offices. Board member Lynn Schenk is a former congresswoman and chief of staff for governor Gray Davis.

Ten years later comes Proposition 10, which the official voter guide says “expands local government authority to enact rent control on residential property.” To control rents, government will establish hundreds of rental boards, many doubtless headed by political cronies. The boards will be staffed by government bureaucrats with inflated salaries, lavish benefits and the gold-plated pensions allowing the early retirement typical of government. So in addition to shrinking the supply of housing, the measure will also bulk up government. It would be hard to blame developers, homeowners, renters and taxpayers if they choose to oppose the measure.

***

K. Lloyd Billingsley is a Policy Fellow at the Independent Institute and a columnist at The Daily Caller.

The Rise of Zombie Governments

Just in time for Halloween, Truth In Accounting has updated its Zombie Index for state governments.

TIA’s Bill Bergman explains what the Zombie Index is and why ranking at the top of the list is not a good thing for the residents of the states that do:

This index is inspired by the work of Edward Kane, Professor of finance at Boston College. Kane wrote books warning about the developing crisis in the deposit insurance system in the late 1980s. Kane coined the term “zombie bank,” referring to banks and thrifts that were effectively insolvent but allowed to remain open via untruthful accounting and regulatory forbearance.

Kane called them “zombies” because they were really dead but allowed to walk among the living, and false accounting delayed loss recognition. Zombies had incentives to take large risks to try, in Kane’s words, to “gamble for resurrection” – especially considering moral hazard generated by expectations that taxpayers would get the downside of the gambles. These incentives, in Kane’s view, amplified the cost of the savings and loan crisis for taxpayers.

  • Catalyst
  • MyGovCost.org
  • FDAReview.org
  • OnPower.org
  • elindependent.org