Saturday, June 14, 2014

Editorial: Let's Clear the Air

President Obama rightly took the initiative in imposing limits on carbon pollution from power plants. Fossil fuel producers are screaming bloody murder, but the consensus of climate scientists is clear: Immediate action is needed to reduce carbon in the Earth’s atmosphere as we attempt to throttle down on global warming.

Using authority under the Clean Air Act, the Environmental Protection Agency on June 2 unveiled regulations that offer the states flexibility to get to the goal of cutting carbon pollution from power plants by 30% by 2030, compared with 2005.

In coal country, the new rules are seen as job killers and Obama is vilified for conducting a “war on coal” that threatens coal-mining families.

Paul Krugman noted in the New York Times that the Chamber of Commerce has predicted the cost of reducing carbon dioxide emissions will be more than $50 billion a year between now and 2030. That almost certainly is overstated and it’s supposed to sound like a big deal. But Krugman noted that the US has a $17 trillion economy, which will grow over time. “So what the Chamber of Commerce is actually saying is that we can take dramatic steps on climate — steps that would transform international negotiations, setting the stage for global action — while reducing our incomes by only one-fifth of 1%. That’s cheap!”

He also noted that the chamber’s estimate of costs per household — $200 per year — would be a fraction of 1% of the average American household income of more than $70,000 a year, which also is going to rise over time.

“One more useful comparison: The Pentagon has warned that global warming and its consequences pose a significant threat to national security. (Republicans in the House responded with a legislative amendment that would forbid the military from even thinking about the issue.) Currently, we’re spending $600 billion a year on defense. Is it really extravagant to spend another 8% of that budget to reduce a serious threat?”

Krugman also has noted that back in the 1980s conservatives claimed that any attempt to limit acid rain would have devastating economic effects. “In reality, the cap-and-trade system for sulfur dioxide was highly successful at minimal cost. The Northeastern states have had a cap-and-trade arrangement for carbon since 2009, and so far have seen emissions drop sharply while their economies grew faster than the rest of the country. Environmentalism is not the enemy of economic growth.”

At this point, Krugman noted, coal mining accounts for only 1/16th of 1% of overall US employment. “Shutting down the whole industry would eliminate fewer jobs than America lost in an average week during the Great Recession of 2007-9,” he wrote.

“Or put it this way: the real war on coal, or at least on coal workers, took place a generation ago, waged not by liberal environmentalists but by the coal industry itself. And the coal workers lost.”

Employment in coal mines already has been reduced by coal companies, along with the tops of Appalachian mountains. Automation enabled by strip mines, which take the tops off the mountains and fill in the valleys below, has reduced the number of jobs from 177,848 workers in 1984, when 3,496 mines produced 895 million tons of coal, to about 88,000 jobs at 1,300 mines that produced more than one million tons in 2012.

Ironically, an EPA crackdown on mountaintop removal in 2009 — which the industry complained was the first shot of Obama’s war on coal — actually forced coal companies to return to more labor-intensive underground mining and put more miners back to work. Jobs increased from an average of 76,470 jobs under George W. Bush to an average of 88,152 under Obama, according to an analysis by Appalachian Voices.

West Virginia was the nation’s second leading producer of coal, and the leader in coal mining jobs, with an average of 22,626 under Obama, up from 17,976 under Bush.

Kentucky was the nation’s third leading producer of coal, and ranked second in coal mining jobs, with an average of 17,168 under Obama, compared with 15,826 under Bush, an increase of 8.5%.

It doesn’t make much sense to sacrifice the environment simply to keep coal mines open. And Central Appalachia’s coal appears to be running out, as many of the thick, easy-to-mine seams have been harvested. The US Energy Information Administration estimates that coal production in eastern Kentucky and West Virginia will soon be half of what it was in 2008, plunging from 234 million tons to 112 million tons in 2015, Brad Plumer reported at in November 2013.

Another big problem for Appalachia’s coal industry is competition from cheaper, low-sulfur coal from the West, particularly from Wyoming’s Powder River Basin. Wyoming is the nation’s leading coal-producing state, producing 388 million tons of coal nearly 40% of the nation’s coal production, from 18 mines that employed more than 6,500 miners in 2013.

Coal producers also face competition from cheap natural gas from shale fracking as well as renewable energy sources.

Emily Atkins noted at (June 6) that the Chamber of Commerce report is based on a much more aggressive policy than the one the EPA proposed, and it fails to account for new jobs that would be created in the clean energy sector.

The EPA has projected that the coal extraction industry would lose as many as 14,300 jobs from 2017 to 2020 as a result of the new rule. However, EPA said renewable energy construction could increase by up to 19,100 jobs over the same time period. The EPA also estimated that up to 112,000 jobs would be created solely by the energy efficiency sector in 2025. There already are more jobs in the renewable energy sector, which created 78,600 green jobs in 46 states in 2013, according to Environmental Entrepreneurs (E2). Solar energy employs nearly 143,000 total workers, as solar workers installed 4,751 megawatts of new solar photovoltaic capacity, good for roughly 29% of all new US electrical capacity.

Uncertainty over the federal Production Tax Credit slowed wind energy development, and 8,500 jobs created in 2013 were down from 12,600 in 2012, but the wind industry still employs 80,700.

There is substantial reason to believe that replacing more coal-fired plants with renewable energy will result in a net job gain, Atkins noted. Multiple studies over the last 10 years — from EPI to the University of California at Berkeley — show that the renewable energy sector generates more jobs per megawatt of power installed, per unit of energy produced, and per dollar of investment than the fossil fuel-based energy sector.

In terms of solar energy, a 2004 Berkeley study showed that every $1 million of investment in the solar industry generates 5.65 person-years of employment over ten years, while $1 million invested in the coal industry generates only 3.96 person-years of employment over the same time period. For the wind industry, $1 million in investment equals 5.7 person-years of employment, the study showed.

Congress should take steps to help workers who already have been displaced from their jobs in coal mines and other industries and help them to transition to renewable energy or other industries. Extension of long-term unemployment benefits would be a good first step. The Department of Labor recently announced it would award $7.5 million to help Kentuckians who used to work in the coal industry find new jobs.

More can be done to address job displacement, but people in coal country should stop denying that transition is inevitable. And depicting the Obama administration as the enemy of coal country is neither helpful nor very smart politically. We might add that Kentucky could use a Democratic senator such as Alison Lundergan Grimes to represent the state’s interests at the White House, since neither Sen. Mitch McConnell nor Sen. Rand Paul have been able to play well with the Obama administration. — JMC

From The Progressive Populist, July 1-15, 2014
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Selections from the July 1-15, 2014 issue

COVER/Sam Stein
Eric Cantor wasn’t right enough?

Let’s clear the air with carbon regs


GOP picks up Florida’s check this time

RURAL ROUTES/Margot McMillen
Organic ‘standards’ isn’t enough

Cantor upset may be nail in coffin of immigration reform;
Texas Republicans adopt immigration bashing platform;
Prog congressional candidates win;
Cal’s ‘top two’ primary eliminates 3rd party rivals;
Repubs block student loan refinancing plan;
Dems propose Social Security expansion;
GOP to GI's: We'll get to you maybe;
Nixon aide confirms campaign scuttled Viet peace talks in 1968...

Obama: True champion of the planet

Money corrupts in many ways

Racism: What’s the problem?

Fracked gas exports without restrictions

HEALTH CARE/Joan Retsinas
Obamacare will insure felons

Red states need Medicaid patch

Schizophrenic Democrats

Economic lessons from the boys of summer

On being a white people’s party

21st century India in the making?

Labor and the AT&T-DirecTV merger

Neil deGrasse Tyson gets around ‘Cosmos’

‘Hunted’; ‘Rad Gumbo’; ‘Party Girl’

and more ...

Monday, June 9, 2014

Latest bad idea from right-wing economists: cure wealth inequality with more policies that make us unequal

By Marc Jampole

Now that conservatives and their academic factotums realize that they can no longer deny that we have become a world in which inequality is growing, they are beginning to fight a rear-guard action by declaring that the way to reverse the trend of greater inequality is to promote the very policies that created it.

In a Wall Street Journal article titled “The Blue-State Path to Inequality,” Stephen Moore, chief economist of the right-wing Heritage Foundation, and Richard Vedder, an economics professor at Ohio University, compare the inequality of income in red states and blue states and finds that there is a greater spread in the blue states, which they aver without proving have greater social safety nets. 

Moore and Vedder cook up a stew of bad math and faulty logic to try to prove their point.  Their reasoning is so laughably inept that I think I’ll refer to them as the “Keystone Profs,” in honor of the Keystone Cops, a fictional crew of incompetent police officers from the silent movie era.

Let’s start with the bad math. To demonstrate that inequality of income is greater in the blue states, the Keystone Profs use the Gini coefficient, a single number cooked up by an Italian statistician Corrado Gini more than a century ago.  The Gini coefficient takes a set of raw data and tries to turn it into a single number that can be compared to similar sets of raw data of other populations; the lower the Gini the less inequality of income exists in the population being measured. 

The problem is that the Gini coefficient is highly inaccurate. One of the first things that Thomas Picketty does in his Capital in the 21st Century is to discredit the Gini coefficient as a viable tool for measuring wealth inequality.  Even the Keystone Profs admit there are many flaws in the Gini coefficient.

We cannot assume the Gini coefficient sorts out the states accurately. The differences in Gini coefficients in the red and blue states the article references are slight; all are in the .400s. For example, the difference between red state Texas (.477) and blue state California (.482) is slight—certainly within the margin of error of a Gini coefficient comparison.  We cannot depend on a Gini ranking of the states to reflect reality. Yet the Keystone Profs persist in using it.

But even if we accept the flawed Gini coefficient as our tool for measuring inequality of income, Moore and Vedder’s argument doesn’t hold water for two reasons. First of all, they assume that the wider social welfare net in blue states causes inequality when in fact social welfare programs are a response to inequality.  Large inequality of wealth developed earlier in the blue states, which industrialized and urbanized first and include those two big-wealth magnets, New York City and California. While the wealthy and ultra wealthy live everywhere, no one can deny that more of them make their money or end up living in New York City and the state of California.  The large 19th and early 20th century fortunes were made in or transferred to New York and Chicago. Today’s high income professions are focused in New York and California—entertainment, banking, high tech. New York and California have always spawned multimillionaires at a higher rate than other states. No wonder blue states communities recognized the problem of inequality earlier than red states and have done more about it.

But while the blue states do more than red states to foster equality of income and wealth, it isn’t much more on the world’s scale. All states are providing less support to public school and university education than 30 years ago and all have put the lid on or cut property and state income taxes. All have suffered from lower federal taxes, a federal policy that has been anti-union or neutral for more than three decades and the decline in local jobs generated by the federal government.

The bigger mistake, then, is to limit the comparisons between blue and red states. That’s like reciting the alphabet from C to E. 

There isn’t that great a difference in what blue and red states do to counteract the tendency of free market capitalism to create wide inequalities of wealth when compared to what governments do in western Europe and Japan, which take more taxes from the wealthy and provide better educational, healthcare and retirement benefits to everyone.  While wealth and income inequality have grown in western Europe and Japan (see Picketty’s book for a great analysis) over the last 35 years, the populations of these countries still enjoy more income and wealth equality than we do in the United States. By excluding western Europe and Japan in the discussion, the Keystone Profs cook the books.

Vedder and Moore follow Picketty in saying that economic growth removes inequality, but they advocate policies that are not pro-growth, but pro-corporation. They assume that unions, minimum wages and high income taxes are bad for economic growth when in fact the economic history of not just the Unites States but the entire world proves that high taxes on the wealthy and high incomes for workers lead to high growth because more of the wealth circulates to people who will spend it as opposed to accumulating it in overvalued assets, which is what the ultra-wealthy do with all of the extra wealth they have from lower taxes. 

And all you Wall Street Journal subscribers in the audience thought it was the fish bones that stank so putridly when you entered the kitchen this morning. No, it was the newspaper you wrapped them in!