Day: June 3, 2019

The Laffer curve is in the news



Why Wind Power Can Never Work (Unless it’s Rocketing Power Prices & Environmental Destruction You’re After?)


Australian voters just rejected a massive increase in wind and solar, relegating Bill Shorten and his 50% RET to the dusty pages of history.

Having had 20 years or so to convince Australians of the purported ‘merits’ of throwing more than $4,000,000,000 in subsidies at chaotically intermittent wind and solar each year, the rent seekers behind those ‘industries’ are struggling to gain traction these days. And they’re struggling to remain relevant, sane and upbeat about their future, when the subsidies inevitably run out or get scrapped, whichever occurs first.

The “shock” election result has left many of them suicidal, which probably has something to do with the fact that they went after the Liberal Energy Minister, Angus Taylor before the election, haranguing him about his personal vendetta against subsidies for wind power. Now that he’s back in power, they understand that their nightmare has only just begun. Oops!

As to…

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The Macroeconomics of the Greek Depression: Would devaluation have helped

Mostly Economics

Gabriel Chodorow-Reich, Loukas Karabarbounis, Rohan Kekre in this NBER paper analyse the Greek depression:

The Greek economy experienced a boom until 2007, followed by a prolonged depression resulting in a 25 percent shortfall of GDP by 2016. Informed by a detailed analysis of macroeconomic patterns in Greece, we develop and estimate a rich dynamic general equilibrium model to assess quantitatively the sources of the boom and bust.

Lower external demand for traded goods and contractionary fiscal policies account for the largest fraction of the Greek depression. A decline in total factor productivity, due primarily to lower factor utilization, substantially amplifies the depression.

Given the significant adjustment of prices and wages observed throughout the cycle, a nominal devaluation would only have short-lived stabilizing effects.

By contrast, shifting the burden of adjustment from taxes toward spending or from capital taxes toward other taxes would generate significant longer-term production and consumption gains.

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one day in urban sociology class…

Pretty good list all things considered

A few years ago, I found myself subbing for the teacher of an urban sociology class. It was the last day so we covered the last chapter in the text book, which talked about policy reforms. The book covered some reasonable topics, such as the need to have better regional government in the US to help coordinate things like transportation.

To spice things up, I added four intentionally provocative proposals that might improve urban life. I want you to guess which proposal triggered the most violent reaction:

  1. End the over-policing of neighborhoods by decriminalizing narcotics.
  2. Revive dying cities, such as the Rust Belt, by liberalizing immigration. A lot of poor people in developing nations would love to live in Detroit or St. Louis.
  3. Deregulate housing construction, so we can have higher density and cheaper homes for working class people. San Francisco – I’m looking straight at you!
  4. Surge pricing for…

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Nearly 20 Years of Renewable Energy Means Unstable and Expensive Electricity Delivery

Green Jihad

From JoNova:

A big new study by electricity grid nerds (and I mean that in the nicest possible way) shows that after all the money and pain of 20 years of forced transition Australia’s electricity has shifted from 85% coal powered to 75% coal powered, which cost billions and as a bonus, made electricity more expensive and unstable. We drove out some brown coal, but swapped it for black coal. Instead of ousting coal power, the extra solar and wind power replaced some gas and hydro.

The authors are genuine independent experts, and the report is incredibly detailed — so this is rare — but still suffers from serious drawbacks:

1) The team doesn’t question the need for an artificial expensive transition. Almost all the problems they describe are caused by government policies that task our grid with changing the climate as well as producing cheap and reliable electricity.

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Economists as “Useful Idiots” for Green Socialists

Science Matters

Robert P. Murphy writes at Mises Wire Economists Have Been “Useful Idiots” for the Green Socialists. Excerpts in italics with my bolds.

In the old Soviet Union, the Communists allegedly used the term “useful idiot” to describe Westerners whose naïve political views furthered the Soviet agenda, even though these Westerners didn’t realize that they were being exploited in such fashion. It is in this context that I confidently declare that American economists have been useful idiots for the green socialists pushing extreme climate change policies. The radical environmentalists were quite happy to embrace the economic concepts of “Pigovian negative externalities” and a carbon tax in the past, but now that it is impossible for economic science to endorse their desired agenda, the activists have discarded the entire field as hopelessly out of touch. Economists who still support a carbon tax and other climate “mitigation policies”…

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