Business & Economics — VOICES for REASON

Forbes.com has just published the latest column by Yaron Brook and me, “What’s Missing from the Budget Debate.”

House Budget Committee Chairman Paul Ryan’s budget has come under severe attack for daring to curtail some elements of the entitlement state. Although we are certainly not defenders of the plan’s details–it doesn’t even cut spending–what’s striking is how easily its supporters have been put on the moral defensive, and to how devastating an effect.

You can read the whole column here.

One popular view of environmentalism is that while there are some “extremists” or radicals who are truly anti-development, anti-industry, and anti-capitalist, the core of the movement is advocates and intellectuals devoted to making our environment a better place to live.

But if one looks at many of the statements of “mainstream” environmentalists, one finds some truly disturbing ideas. I shared some of these statements recently on my Facebook page.

Here’s one from Stanford’s Paul Ehrlich, an environmentalist icon: “A massive campaign must be launched to de-develop the United States. De-development means bringing our economic system into line with the realities of ecology and the world resource situation.” That quote was actually co-authored by White House science “czar” John Holdren (in the book Human Ecology: Problems and Solutions) and not renounced by either.

Another revealing quote from Ehrlich is

A cancer is an uncontrolled multiplication of cells; the population explosion is an uncontrolled multiplication of people. We must shift our efforts from the treatment of the symptoms to the cutting out of the cancer. The operation will demand many apparently brutal and heartless decisions.

This quote is from The Population Bomb, the best-selling book that, due to its embrace by the environmentalist left, transformed Ehrlich from an obscure butterfly scientist to a celebrated “ecologist” at Stanford.

Or take this one, from billionaire Ted Turner, a “mainstream” environmentalist if ever there was one. “A total [world] population of 250-300 million people, a 95% decline from present levels, would be ideal.”

Why is it that Ehrlich and Turner (as well as many others) are not outcasts but heroes in the environmentalist movement? A good place to start in answering that question is my discussion of environmentalism with Dr. Onkar Ghate on Power Hour. On that episode, Dr. Ghate explains how environmentalism–the philosophy that untouched wilderness takes precedence over human life–is dangerous in any dose, whether it is used to stop vital drilling in Alaska or to pine for a world in which 95% of us don’t exist.

(To subscribe to Power Hour—”the show where today’s top energy experts break down today’s top energy issues”—click here.)

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On the latest episode of Power Hour–the monthly Internet Radio Show where I interview today’s top energy experts to discuss today’s top energy issues–I talked to energy consultant Tom Tanton, an expert on the technology and the politics of “alternative energy.”

We hear all the time about the exciting promise of “alternative energy”–and the variations of it: “green energy,” “clean energy,” “renewable energy.” “Alternative energy,” roughly speaking, refer to sources of energy that are not successful on the market now but that proponents claim will be superior to market sources of energy, if only the government gets involved.

For instance, Al Gore, in arguing for the abolition of all CO2-emitting electricity, and much of CO2-emitting transportation by 2018, said that he knows of ”renewable sources that can give us the equivalent of $1 per-gallon gasoline.”

On past shows we’ve looked at some of these so-called alternative energies on a technical level, understanding why it’s so hard for, say, solar panels to be affordable and reliable as a major source of energy. On this show we take a different angle. We are going to look at some of the history of how government-led alternative energy works in practice. How does it actually work when the government promotes wind turbines or electric cars?

To talk about this issue, I brought on Tom Tanton, a man who knows as much about the reality of alternative energy as anyone–because he worked for three decades at the California Energy Commission, which has spearheaded numerous alternative energy programs over the decades, including programs for just about every “new” technology we hear about today. I think you’ll learn a lot from this episode.

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Recently on his blog, Paul Krugman claimed that he predicted the recent housing bubble as early as 2004. His cited 2005 op-ed certainly does speak of an impending housing bubble. But whatever credit he deserves for seeing it should be revoked because by his own admission he was calling for the Fed to maintain low interest rates, which was a major cause of the housing bubble. (For more information, see this course by Yaron Brook. For more general information on the impact of central banks on boom-and-bust cycles, read up on Austrian Business Cycle Theory, which is most famously advanced by Ludwig von Mises and Friedrich Hayek.)

Of course, Krugman insists that he was calling for low interest rates, but not for a housing bubble. But these artificially low interest rates misled many people to go into debt to either build or purchase houses—houses they could not afford when interest rates rose later. Once rates were rising, the Fed faced the following alternative: either they would have to continually expand the money supply to maintain these artificially low rates and thus, through inflation, continue robbing people of the purchasing power of their savings. Or they would have to eventually let rates return to normal and thus, letting those who went into debt feel the pain. In either case, a large number of people were inevitably going to be hurt by this Fed policy, as is what actually happened when the bubble burst.

In essence, Krugman’s calling for low interest rates while insisting that he was not advocating for a resulting asset bubble is demanding for a cause without its effects. It is just as absurd as if he wanted to smack a buzzing hornet’s nest while simultaneously insisting that he has zero intention of aggravating stinging insects.

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Forbes.com has just published the latest column by Yaron Brook and me, “When It Comes to Wealth Creation, There is No Pie.”

Metaphors, to use an overused metaphor, are a double-edged sword: sometimes they clarify, sometimes they confuse. One metaphor responsible for a great deal of confusion is that of wealth as a pie–a metaphor that shows up again and again in debates over income inequality.

You can read the whole column here.

FoxNews.com has published my latest article, “Four Dirty Secrets about Clean Energy.” Here’s an excerpt:

“Clean energy” advocates often intimate that private investors and existing energy companies are too short-sighted to see the wondrous potential of their products. But this is far-fetched. Oil companies invest billions of dollars in research and development that will only pay off decades into the future. Can anyone doubt that with increasing worldwide demand for energy, they wouldn’t jump at the chance to add new sources of profitable energy to their portfolios? Or even if they are myopic, what about the enormous capital-allocating machine that is U.S. financial markets? Is Wall Street going to pass up on “one of the greatest new floods of wealth in history” by failing to make profitable investments?

But aren’t subsidies needed to correct some unfair advantage possessed by coal, oil, and natural gas? No. Solar and wind are the ones given an unfair advantage; per unit of energy produced, they already receive 90X more subsidies than oil and gas. And they have been subsidized for decades.

The one legitimate argument that energy investment in new technologies, including carbon-free ones, is too low is that heavy government taxation and environmental regulations drive many investors out of the energy sector. But “clean energy policies” such as cap-and-trade bills call for more taxes and regulations, not fewer.

The real reason why activists demand “clean energy policy” is simple: the “clean energy” sources they favor–especially solar and wind–are at present too expensive and unreliable to replace carbon-based fuels on a large scale. The only way activists can hope to have them adopted is to shove them down our throats.

Read the whole thing here, and be sure to share it on social media.

On the latest episode of Power Hour—the monthly Internet Radio Show where I interview today’s top energy experts to discuss today’s top energy issues–I talk to leading climate scientist Dr. Richard Lindzen.

Today’s discussion of energy policy is dominated by the claim that CO2 emissions from fossil fuels are warming up the planet, with catastrophic results on the climate. We’re told that this is a matter of consensus among all the top scientists, and that the time for debate is over–it’s time for action.

Power Hour is a show based on the idea that to draw the right conclusions for action, you first need to be informed. And in my opinion the time for debate is certainly not over because the vast, vast majority of us don’t even know what the debate is about, let alone what has been proven and what hasn’t, let alone what the action implications are.

That’s why I decided to do this episode on climate science and climate change. One reason I brought on Dr. Lindzen in particular is that even though he is an extremely prestigious scientist, he doesn’t count on that prestige when he explains issues—in fact, he is very critical of the phenomenon of people taking the pronouncements of climate scientists on faith.

The purpose of this episode is not to definitively establish how much CO2 is impacting the climate. Rather, it’s to get a more objective idea of where the field of climate science actually is in answering that question. Is it really known that man-made CO2 is leading to catastrophic consequences, as many prominent figures claim? Is it really known that man-made CO2 is having only benign consequences, as other prominent figures claim? Listen to the show to hear Dr. Lindzen’s intriguing views on these and many other issues.

For more on this episode of Power Hour, and to be notified of future episodes, sign up for my free monthly newsletter (“Life, Liberty, and the Pursuit of Energy”) here.

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May 15 is the 100th anniversary of the Supreme Court’s breakup of Standard Oil, history’s most notorious “monopoly.” In a new piece in The Daily Caller, I challenge the conventional story of Standard Oil—a story often used to disparage capitalism—and explain how Standard Oil earned its incredible success, thanks above all to the genius of John D. Rockefeller.

Here’s an excerpt from the piece.

In 1865, when Rockefeller’s market share was still minuscule, a gallon of kerosene cost 58 cents. In 1870, Standard’s market share was 4%, and a gallon cost 26 cents. By 1880, when Standard’s market share had skyrocketed to 90%, a gallon cost only 9 cents — and a decade later, with Standard’s market share still at 90%, the price was 7 cents. These data point to the real cause of Standard Oil’s success — its ability to charge the lowest prices by producing kerosene with unparalleled efficiency.

John D. Rockefeller had a rare business mind. He was at once a visionary, foreseeing a world in which his kerosene illuminated millions of homes, and an accountant obsessed with day-to-day penny-pinching.

Read the whole thing here. And for an in-depth examination of Standard Oil, monopolies, and antitrust law, read my essay “Vindicating Capitalism: The Real History of the Standard Oil Company.”

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The subject of this month’s Power Hour–my monthly podcast/Internet-radio-show–is nuclear power and nuclear safety. This is the most prominent energy issue in the news these days, following the damage to nuclear power plants in Japan following the country’s once-in-a-century earthquake and tsunami. We have heard ominous media report after ominous media report about releases of radiation, radiation above government-approved levels, radioactivity, radioactive waste, meltdowns, and on and on. The net effect of all this has been to make many Americans very worried about the safety of nuclear plants in this country, and even worried about radiation coming from Japan, thousands of miles away.

What is urgently needed in this situation, I believe, is education—education in what nuclear power really is, how it really works, what its dangers really are and aren’t. So on today’s Power Hour, we’ll give you a step-by-step breakdown of all things nuclear and then break down the situation in Japan. Joining the program to explain all this will be Dr. Jay Lehr, Science Director of the Heartland Institute and a scientist with 50 years of experience in the nuclear industry

For more information on Power Hour, as well as other commentary on energy issues subscribe to my newsletter “Life, Liberty, and the Pursuit of Energy” by sending an email.

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Former chairman and CEO of BB&T Corporation John Allison will debate Washington Post columnist Ezra Klein tonight in New York City.  The topic is “Capitalism: Is It Moral?”  This debate is the third event of the three-part “First Principles” debate series co-sponsored by the Ayn Rand Center, the think tank Demos, and WNYC, the local NPR affiliate.

On WNYC’s site, Mr. Allison has written a blog post describing the nature of capitalism and his experience as a commercial banker for thirty years. Mr. Allison writes:

But capitalism is not exploitative. I spent nearly twenty years as the CEO of one of America’s largest financial institutions, BB&T, and one of the things I saw again and again was that a businessman who abandons principle and tries to make money at the expense of others, although he may succeed in the short run, is doomed in the long run. Taking advantage of people is not truly selfish, it is self-defeating: people will not trust you. You might fool Fred and Suzie, but they will tell Tom, Dick, and Harry and no one will trust you. Being untrustworthy will put you out of business.

The reason BB&T has been so successful is because we help our clients achieve economic success and financial security. They voluntarily pay us for this service, allowing us to make a profit. Both BB&T and our customers are better off from this win-win relationship. On a free market, where you can’t seek favors or bailouts from Washington, business is about creating these types of win-win relationships–by figuring out ways to benefit your clients while making a profit doing so. (And, if you do defraud your customers or engage in some other crime, the government in a free market is there to put a stop to it.)

Read the rest of John Allison’s post here.

Tonight’s debate can be watched live via ARC’s Facebook page starting at 6 p.m. ET.  And if you missed the last two debates, check them out on our YouTube page.