One ray of hope in the current political scene comes from the land of deep blue. However one views the immense expenditure on solar panels, windmills and electric cars, (produced in the US by US union labor, of course), plus forced electrification of heat and cooking, a portion of the blue-state left has noticed that this program cannot possibly work given laws and regulations that have basically shut down all new construction. And a substantial reform may follow.
I am prodded to write by Ezra Kleins' interesting oped in the New York Times, "What the Hell Happened to the California of the ’50s and ’60s?," a question repeatedly asked to Governor Gavin Newsom. The answer is, of course "you happened to it." For those who don't know, California in the 50s and 60s was famous for quickly building new dams, aqueducts, freeways, a superb public education system, and more.
Gavin Newsom states the issue well.
"..we need to build. You can’t be serious about climate and the environment without reforming permitting and procurement in this state.”
You can't be serious about business, housing, transportation, wildfire control, water, and a whole lot else without reforming permitting and procurement, but heck it's a start.
Hitting these [climate] goals requires California to almost quadruple the amount of electricity it can generate — and shift what it now gets from polluting fuels to clean sources. That means turning huge areas of land over to solar farms, wind turbines and geothermal systems.
or, heaven forbid, nuclear, which among other things works at night. I don't think most of San Francisco's progressive gentry really understand how massive their envisioned "transition" really is.
It means building the transmission lines to move that energy from where it’s made to where it’s needed. It means dotting the landscape with enough electric vehicle charging stations to make the state’s proposed ban on cars with internal combustion engines possible. Taken as a whole, it’s a construction task bigger than anything the state has ever attempted, and it needs to be completed at a speed that nothing in the state’s recent history suggests is possible....John Podesta, a senior adviser to President Biden on clean energy, said in a speech last month. “We got so good at stopping projects that we forgot how to build things in America.”
Newsom:
“I watched as a mayor and then a lieutenant governor and now governor as years became decades on high-speed rail,” he said. “People are losing trust and confidence in our ability to build big things.
Losing? That train left long ago, unlike the high speed one.
The part that really caught my eye: Klein complains that Newsom's current proposal is
a collection of mostly modest, numbingly specific policies. When a lawsuit is brought under the California Environmental Quality Act, should all emails sent between agency staff members be part of the record or only those communications seen by the decision makers? Should environmental litigation be confined to 270 days for certain classes of infrastructure? Should the California Department of Transportation contract jobs out by type, or does it need to run a new contracting process for each task? Should 15 endangered species currently classified as fully protected be reclassified as threatened to make building near them less onerous? And on it goes.
Maybe, as Klein suggests, this is a measure of the bill being small and marginal. But I think the point is deeper: this is what regulatory reform is all about. Which is why regulatory reform is so hard. "Stimulus" is easy to understand: Hand out money. Regulatory reform, especially reform to stop the litany of lawsuits and dozens of veto points which are the central problem in the US, is all about the mind-numbing details. "should all emails sent between agency staff members be part of the record" sounds like a mind-numbing detail. But think how these lawsuits work. Is discovery and testimony going to allow this entire record to be searched for an email where staffer Jane writes to staffer Bob one line that can be used to restart the whole proceedings? "Only" 270 days rather than 10 years? That matters a lot. Contracting process, which can be the basis for a lawsuit.
I'll retell a joke. Fixing regulation is a Marie-Kondo job; long hard and unpleasant, each drawer at a time.
The article is also interesting on the fight within the left. There is really a deep philosophical divide. On the one hand are basically technocrats who really do see climate as an issue, and want to do something about it. They believe their own ideology that time matters too. If it takes 10 years to permit every high power line, Al Gore's oceans will boil before anything gets done.
On the other side are basically conservatives and degrowthers. "Conservative" really is the appropriate word -- people who want to keep things exactly the way they are with no building anything new. Save our neighborhoods they say, though those were built willy nilly by developers in the 1950s. (Palo Alto now applies historic preservation to 1950s tract houses, and forbids second stories in those neighborhoods to preserve the look and feel. How can you not call this "conservative?") "Degrowth" is a self-chosen word for the Greta Thunberg branch of the environmental movement. Less, especially less for the lower classes, not really for us who jet around the world to climate conferences. Certainly do not allow the teeming billions of India and Africa to approach our prosperity. I think "deliberate impoverishment" is a better word. Some of it has an Amish view of technology as evil. And some is, I guess, just habit, we've been saying no to everything since 1968, why stop now.
Klein characterizes the opponents:
More than 100 environmental groups — including the Sierra Club of California and The Environmental Defense Center — are joining to fight a package Newsom designed to make it easier to build infrastructure in California.
... opposition groups say that moving so fast “excludes the public and stakeholders and avoids open and transparent deliberation of important and complicated policies.”
...The California Environmental Justice Alliance sent me a statement that said, in bold type, “Requiring a court to resolve an action within 270 days to the extent feasible is harmful to low-income and EJ” — which stands for environmental justice — “communities.” It doesn’t get much clearer than that.
I am delighted to see in the New York Times, finally, the word "communities" adorned with scare quotes. But there is the tension: You can't both be really serious that climate change is a looming existential threat to humanity that demands an end to carbon emission by year 20X in the near future, and the view that in 270 days we cannot possibly figure out how to do so in a way that protects "communities." Climate must not really be that bad, or perhaps it was just an unserious talking point in a larger political project.
These are the beginning stages of a transition from a liberalism that spends to a liberalism that builds. It’s going to be messy. Until now, progressives have been mostly united in the fight against climate change. They wanted more money for clean energy and more ambitious targets for phasing out fossil fuels and got them. Now that new energy system needs to be built, and fast. And progressives are nowhere near agreement on how to do that.
The last three sentences are telling. Did they really want just to announce goals and spend a few hundred billions and feel good? Or did they actually want all the windmills, solar cells, and power lines involved?
But the fight isn’t just about this package. Everyone involved believes there are many permitting reforms yet to come, as the world warms and the clock ticks down on California’s goals and the federal government begins to apply more pressure.
Once something becomes partisan in the US, it freezes and little gets done. I am hopeful here, because it plays out within one party. California is a one-party state, but that does not put it above politics. It does mean that progress is more likely. Can we hope that "a liberalism that builds," in reasonable time and somewhat less than astronomical cost, projects that might be actually useful, could emerge from all this?
In the larger picture, a movement among good progressive democrats in places like California has figured out that if we want more housing at more reasonable prices, just letting people build houses might be a good idea. Houses, apartments, any houses and apartments, not just dollops of incredible expensive government-allocated ("affordable") and homeless housing. This is the YIMBY movement in California. It is sadly instantly opposed by Republicans, but maybe that's for the better given how reviled that brand is in Sacramento. And it is also making slow headway.
Degrowth? Try this:
ReplyDelete"The Unabomber’s Ideas Aren’t So Marginal Now: While Theodore Kaczynski spent the last three decades of his life in prison, many of his radical views were gaining support on the right and the left" By Adam Kirsch • June 15, 2023 https://www.wsj.com/articles/the-unabombers-ideas-arent-so-marginal-now-af5211c6
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ReplyDeleteCan Republicans govern without borrowing and spending? No.
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DeleteThe US economy is founded on illegal labor. If every lawyer had to pay their babysitter, cleaner, gardener, construction-folks, and farmer legalliy, they would have to double their fees to make it worth putting in the hours.
ReplyDeleteThere's no way the US can compete with the world while forbidding its citizens from competing with each other to be the best they can be
Sort of like the assassination of Julius Caesar, progressives see fossil fuels as an evil that must be removed but have no plan to going fully green.
ReplyDeleteBeing built and being funded are two different issues. Hundreds of billions of dollars are allocated for the green new deal, hundreds of millions into the billions of dollars being spent, and not a spade of Earth turned. The decision makers are monetizing, for their own benefit, the climate change hysteria. Some token projects will be done in California to enhance Newsom’s legacy and ego. It is irrelevant whether combating climate change is deemed successful; Mother Earth will be fine next year, decade, century and beyond.
ReplyDeleteThe Democrats have three wings: 1) Fascist that is in bed with all major corporations, 2) Eco Communists who hate all industry, development and mankind in general and finally 3) Cultural Marxist/Postmodern that truly hates all institutions and want them destroyed from the family to education to medicine and all else to bring in their Communist Dystopia.
ReplyDeleteRight now groups two and three are in almost total control.
Gavin Newsom has one shining accomplishment: UHaul Salesman of the Year. So many productive people were fleeing California in 2021 and 2022 that California ran out of UHauls.
Actually this is just the distorted picture provided to us by social media algorithms and broadcast news. The former are designed to get us to click more so that we will provide the platform with ad revenue; the latter are interested in milking their target demographic. Both do this by honing in on and amplifying the most outrageous instances of political behavior in order to provoke our 'fight-or-flight' instincts--anger, fear, etc.--since that's the easiest way to get our attention. (playing to the long-gestating but more powerful sentiments of trust and good-will takes too much time) Thus we've all come to believe that our least favorite political party is full of nothing but extremists.
DeleteIn reality, the biggest bulk of the Republican and Democratic parties are made up of pragmatic moderates. Polling pretty much irrefutably confirms this. But you don't consistently get on Twitter or Facebook feeds, or Fox News or CNN by being a pragmatic moderate. And pragmatic, moderate people don't draw as much attention as loudmouth extremists, so they often don't get enough media exposure to make the ballot.
This is why polls demonstrate that two-thirds of the country hates the political class. There's a huge disconnect between the loudmouth political elites and the common people, because the former are far more extreme.
But, as I said, our media ecosystem has addicted us to the dopamine hits we get by focusing on this extreme behavior. There's a certain 'rush' one gets when consuming a news item that enrages you; and though it makes you angry, to a large degree you want *more*. So you go looking for more, and pretty soon you're convinced half the country is composed of neo-nazis/eco-fascists/[insert favorite group to despise].
When Mancur Olson, in The Rise and Decline of Nations (1982), noted that numerous small-ish (not encompassing) interest groups create bottlenecks to growth, he found empirical evidence in post-war Japan and Germany. Their governments, necessarily including their bureaucracies, were destroyed, enabling them to grow rapidly thereafter. This knowledge has been around for decades, but not taken up by our rulers.
ReplyDeleteIt's very sad to see so many intelligent people accept the claims of the environmental left that CO2 causes global warming. This is bogus science despite the "fact" that thousands of scientists claim it's true. New published research shows that our climate is controlled by adiabatic heating from atmospheric pressure and changes in the amount of solar radiation that is absorbed by the planet. "It doesn't matter how beautiful your theory is, it doesn't matter how smart you are. If it doesn't agree with experiment, it's wrong." ~Professor Richard Feynman, Nobel Prize Physics 1965, The greenhouse gas theory of climate change has no experimental credibility. The 181 IPCC models do not come close to predicting actual temperature changes but they are supported by governments and billions of dollars of "research" money.
ReplyDeleteLike the blog author, I live in Palo Alto. In my latest utility bill, I paid a mandatory $1.73 (one dollar and seventy three cent) charge for full carbon offsets to my natural gas use for May. Nevertheless, the city just approved $200 million to upgrade the electrical grid for a forced transition away from natural gas - around $7000 per household - and that's on top of an official estimate of $15,000 or more per residence for upgraded electrical service and new appliances. All to save $1.73/month? The City ignores the energy cost of extracting the metals for these new appliances, and the energy cost of fabricating, transporting, and installing them. The net result will be vast spending and an *increase* in carbon dioxide emissions. In this case, permitting delays (in which Palo Alto is a leader) will have the benefit of slowing down this crazy extravaganza.
ReplyDeletePerhaps their real goal is not to reduce carbon emission. Upgrading electrical service and new appliances means revenues and profits for certain businesses and government affiliated organisations.
Delete"permitting delays...will have the benefit of slowing down this crazy extravaganza."
DeleteAh, but if it were only so! Permitting delays just mean even more energy is required to keep the lights on, the computers running, the building heated and cooled, the bureaucrats clothed and fed, their cars driving back and forth to work, then off to the gym (because they sit all day emailing) to use manufactured exercise equipment when they could be out walking on the empty sidewalks that were built at great expense and energy emissions to make their neighborhoods "walkable" - and finally of course pushing each bureaucrat to greater seniority, higher pay and greater retirement earnings, while ever less actually gets accomplished.
So our strategy is to “hope” something tangible is produced other than partisan talking points? That the “deep blue” areas you mentioned realize the error of their ways and start building things they have promised (and been funded)?
ReplyDeleteWhat is the political or economic incentive to do so?
Until there is an event that forces some change, we get the same stuff, different day. Maybe I’m a cynic but an article or talking points doesn’t give me much hope.
It’s not realistic to expect the same bureaucrats who created the issue to get us out of it.
John, all very well said but I don't find it encouraging. Ultimate the left will do what it has to, which is just make exceptions for itself on everything. That will protect it's legions of numbskull bureaucrats from losing their jobs sucking the public dry exchanging bazillions of emails on how we can build locomotives to promote gender equity and how we can preserve the East 61st street Coneflower, which grows nowhere else in the world but in the cracks of the sidewalk at the corner of East 61st and BlaBla Road! OMG what will happen to the genetic stock of coneflowers if this delicate species is allowed to disappear!
ReplyDeleteIt's funny that doomers are actually the source of the doom. If the left stays in power the country is doomed. The way forward is to simply eliminate large swathes of government and/or public agencies. Transit should be the first to go.
" Transit should be the first to go."
DeleteRussia's experiment in 'shock therapy', among other things, indicates privatizing infrastructure is not economically efficient. All it does is raise the cost of doing business by adding extractive rent overheads to production costs.
Bureaucratic reform is definitely part of the answer to our ills, though.
"Russia's experiment in 'shock therapy', among other things, indicates privatizing infrastructure is not economically efficient. "
DeleteNo, it doesn't, it indicates that Russia is run by a criminal mob more or less similar to the criminal union mobs that ran part of the US for a while.
Also your claim above that most legislators are moderates is wrong. What I always hear from the left is something along these lines: "Why can't we all get over this polarization so we can come together as one people and enact the left wing agenda?" Aw!
"Russia's experiment in 'shock therapy', among other things, indicates privatizing infrastructure is not economically efficient. "
DeleteNo, it doesn't, it indicates that Russia is run by a criminal mob more or less similar to the criminal union mobs that ran part of the US for a while.
Also your claim above that most legislators are moderates is wrong. What I always hear from the left is something along these lines: "Why can't we all get over this polarization so we can come together as one people and enact the left wing agenda?" Aw!
Perhaps it's worth pointing out that most of the Republican and Democratic party consists of ordinary *voters*, not legislators. And polling makes clear that the lion’s share of these are moderates. But, again, the social media algorithms do not put them on your Twitter/Facebook/etc. feed, because political pragmatism isn’t good at generating clicks.
And the effect the privatizations had on the cost structure of production in Russia is fairly clear cut. The amount of money newly-blooming Russian businesses had to spend to afford the use of infrastructure to facilitate production grew precipitously in the 90s, as the owners of said infrastructure leveraged their monopoly privileges to extract rent. (analysis of the oligarchs vs small- and mid-size firms are instructive here: https://pubs.aeaweb.org/doi/pdfplus/10.1257/0895330053147994)
But, just in case you’re tempted to claim this is something unique to Russian capitalism, I’d note that the ill effects were repeated when telecommunications were privatized in developing countries as well: https://siepr.stanford.edu/publications/working-paper/telecommunications-privatization-developing-countries-real-effects
This is something that was clear by the end of the 19th century, but forgot during the latter half of the fight against communism—namely, that forcing private industry to bear the costs of infrastructure adds to production overhead. Infrastructure is one of the few instances where public ownership tends to *add* to economic efficiency and lower the cost of doing business.
But that requires, as always, a political willingness to uphold decent standards of public administration. And there are of course various nuances depending on the infrastructural context.
Most people, regardless of their political stripes, are NIMBYs. Both conservatives and liberals will try to talk as if they’re not, but all you have to do is look in the right precincts to see through the rhetoric—the gated communities full of ‘socialist’ firebrands and free-market evangelists, where attempts to deregulate the property market and make housing more affordable is fought tooth-and-nail.
ReplyDeleteIt’s impolite to say, but ‘cheaper housing’ is generally associated with ‘poorer tenants’ who are generally associated with crime, gangs, drugs, etc. No matter what people say on the soapbox, when it comes to their neighborhoods and their communities, they don’t want any of that anywhere near them. This problem cannot be fixed, except by some politically exogenous event—a multi-generational depression that forces prices downwards for a prolonged period, say, or an environmental catastrophe that drastically shrinks the population. Anything that can be thwarted by politics will be, as this is one of the few fronts the left, right and center are united upon.
If there had been immigration from south of the border to California, the population would be around half what it is today. What do you think house prices would be if demand was cut in half? How many more neighborhoods and school districts would be "good" such that a middle class person would accept a home in them?
DeleteHow much more building would have been done if CA stayed Red?
There's a limit to how much people can build and a limit to how much social dysfunction middle class people will put up with in their neighborhood. If YIMBY just means "ignore all that" its going to keep beating its head into a brick wall.
"How much more building would have been done if CA stayed Red?"
DeleteWe can only speculate. But I don't think there would actually be all that much more. Like I said, the degree of NIMBYism doesn't really correlate all that much to Red/Blue/Dem/Repub/Liberal/Conservative. It's pan political, and as such correlates much more to increases in population density due to population growth. The more concentrated the population becomes in a state, the more the density rises in that state's urban cores, and so the more NIMBYist it gets, the less those cores build, and ultimately the more expensive the state's housing gets. This is why the percentage of households that can afford a new home in Florida (approximately 31%) is about on par with California, at 33%, and Texas, at 35%. (using the NAHB estimates here, see: https://www.nahb.org/-/media/NAHB/news-and-economics/docs/housing-economics-plus/special-studies/2021/special-study-nahb-priced-out-estimates-for-2021-february-2021.pdf?_ga=2.137281264.1550207758.1615477129-1559745574.1615477129)
"There's a limit to how much people can build and a limit to how much social dysfunction middle class people will put up with in their neighborhood. If YIMBY just means 'ignore all that' its going to keep beating its head into a brick wall."
Bingo. That's why I said this problem will require some 'secular' intervention that is external from politics. Unfortunately I can't think of many pleasant ones. Most of those that come immediately to mind are of the darkly catastrophic variety...A technological revolution in housing, maybe? Perhaps the 3D-printed houses of the future will save us from an interminably dysfunctional property market? One can only hope.
I think part of the problem is the obsession with growth in economics versus building a framework for daily life that is sustainable. I think the underlying dream of Capitalism makes sense, but the way it has rolled out has created a sort of lingering and nagging inner voice that the intent of the models have to change.
ReplyDeleteBut, in true Darwinian fashion, the economy is now a place where ideas, like species, have their time in the sun and realize the sun is setting.
But, through competition better stuff is made. Innovation is largely driven by need and the rapturous greed for profits. It's a dual edged sword.
We can model the future all we want with clever models, but modeling the reality would help. The problem with relying on models for forming policy or regulation is that they exist in perfect mathematical world. Reality is far messier, especially as externalities or frictions emerge from implementing policy unforseen, some seen.
A long rant that I believe we're in the midst of migrating from a growth mindset to a sustainable one, and that's frustrating for some economists.
I think what you wrote is all fluff.
DeleteTwo weeks ago we were notified that our homeowner's insurance will not be renewed when it expires in August because the insurer is exiting the business in California. Of course that puts me in automatic default under my mortgage.
ReplyDeleteFortunately we found replacement insurance, at a significantly higher price. While going through the exercise I learned that several other insurers have done the same thing.
Apparently a major reason for this is California's regulations which make it difficult to increase premiums (or is it premia?).
Just one more example of how California makes it difficult to live and do business here.
I still read some of your economics posts, I think you are one of the best living economists. But stopped reading any of your political ruminations when it became apparent your neocon position and your desire to bomb Russia out of existence. Enjoy communism in California, enjoy fascism in Ukraine - they are basically the same thing - enjoy guns and butter in the West and enjoy WW3.
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