You and I know it was never about facts, it was about hyping the green dream. Just look at the numbers. First from the opposition:
Of course they don’t dare mention the amount of money their side has put into it, because, well, that would look imbalanced. Now have a look at the other side of the issue from the legislator who spearheaded the effort:
Logue: Big money beat Proposition 23
AB32 was passed and signed by the governor in 2006. It provides that between 2012 and 2020 greenhouse gas emissions will be reduced to 1990 levels.
Proposition 23 would have postponed implementing major parts of AB32 until the state’s unemployment rate stood at 5.5 percent for a year. Now the jobless rate is around 12 percent.
In June, when Proposition 23 qualified for the ballot, the Enterprise-Record interviewed Logue and Robin Huffman of the Chico-based Butte Environmental Council. At that time, Logue was thrilled, and Huffman expressed concern.
Full story here at the Chico Enterprise Record
Here’s the REAL “dirty secret”, from the LA Times:
But it was pure spin. As they say in the movie, “Follow the money.”
Two Texas-based oil refiners, along with California business trade associations and anti-tax activists thought they could halt the nation’s most ambitious effort to curb greenhouse gas emissions. But they were able to raise only $10.6 million. Most of California’s biggest companies, including Chevron, Pacific Gas & Electric and Sempra Energy, stayed neutral or actively opposed the initiative.
Backers were steamrolled by a $31.2 million campaign funded by such wealthy philanthropists as San Francisco hedge fund manager Tom Steyer, such big environmental groups as the National Wildlife Federation and the ClimateWorks Foundation, and such Silicon Valley green-tech moguls as John Doerr and Vinod Khosla.
10.6 million from “big oil”
31.2 million from “big green”
Yep, that’s some dirty secret alright. But you won’t see this reported on one side news outlets or green blogs.
There’s lot of hype about green jobs, but read this from a man who actually created some of them:
I know firsthand about green jobs. SunPower Corp., a company I chair and the second-largest U.S. producer of solar cells, has produced about 800 green jobs in California. But that’s just a fraction of the 4,700 jobs lost when Toyota pulled the plug on its local Nummi automotive plant due to the high cost of doing business in California.
That “pull the plug” meme will be repeated again and again in the coming months.
And then there’s this absolute rubbish:
Here’s why, when you look at California’s energy supply…
Energy Generation in California: Source: Figure E-1
California Energy Commission – http://www.energy.ca.gov/2009_energypolicy/
…and you see all that hydro, nuclear, natural gas, and renewables, you have to ask yourself: “where’s the dirty energy problem?”
With coal making up only 18.2%, “dirty energy” and up to 40% of the electricity coming from out of state (remember Enron’s manipulation of California?) “dirty energy” was really a non-issue.
But when we are talking green jobs, green energy, green money, green envy or just about anything else “green”, such facts don’t matter.
Congratulations to California, you got the government and legislation you deserve.
Maybe Keith Olberman of MSNBC will name me the “worst person in the world” for writing this fact check. Oh, wait.
davidmhoffer says:
November 6, 2010 at 8:53 pm
“Omigosh, where do I even begin? You are confusing theory and practice.”
No, I’m not. Like many of the people on this forum, you are evidently inflicted with catastrophism. You see something that could be a problem, but fail to appreciate how people and economies will adapt. You see one side of the issue, but not the other. This is endemic in economics: the question of “what is seen, and what is not seen”. Those who expect one bad policy decision to sink California are almost as misguided as those who believe in the catastrophism of AGW. They will both be sadly disappointed.
“Emperical evidence suggests otherwise, your observation is anecdotal. ”
My observation is a fact. That single observation is all that is necessary to disprove the theory that petrol prices cannot remain significantly different in the same locality. Whatever you wish to believe, it is a fact that some suppliers (such as supermarkets) compete strongly with each other on price – but others do not. Presumably, customers are obtaining some other satisfaction from those other suppliers; one possibility, which would be relevant to the California question, would be the satisfaction of supporting local businesses.
“Your example is “several hundred yards”. ”
That’s several hundred yards on the main road just before reaching Tesco’s. Easy access to both of them – almost identically so. Lots of other, somewhat less clear-cut, examples across the Island.
“It means that goods produced outside of California are by default more competitive pricewise than goods produced inside of California.”
Do try to think it through! If that were the case systematically, then businesses would prefer not to produce goods in California with those higher costs. Thus there would be less demand for land and labour in California than before. Thus rents and wages in California would fall. They would fall until the local and imported products were once more competitive. The precise mix would not in general be the same as before, because energy does not contribute the same proportion of the factor costs to all products. If any factor cost increases, there will be a shift in favour of those economic goods which use less of that factor.
Competitiveness is a matter of the relative costs of particular goods; it is not mathematically possible for one economy to be absolutely more “competitive” than another. This is the Law of Comparative Advantage.
” energy intensive…. ”
Look at the aggregate cost of energy as a fraction of GDP. It’s typically around 10%. Some places higher, some lower. It tends to be lower for more advanced economies, which have a higher proportion of quarternary or service industries. A figure at hand for the UK some years ago was 5.6%. I’d expect California to be higher than that (say 10%). So if you double the cost of energy, you add 10% to aggregate costs without adaptation. Because of the mathematics of costs on the margin, the effect after adaptation will tend to be about half as great, that is ~5%. The price of energy is nothing like as important in the economy as you imagine.
“You can’t claim that energy costs doubling on a TEMPORARY basis caused a recession AND that business adapts. ”
The worst effect of the price hike was the immediate one, before any major adaptation could take place. Even that was not great (~5%). Factory output prices did not double, nor anything like it. After a year or two, as business adapted, the economy quickly recovered, even though energy prices continued high for years after.
“Business is ALWAYS evolving to reduce costs.”
But the optimum usage of the various factors of production depends upon the relative (not absolute) costs of those factors. If one factor increases in cost relative to the others, businesses will use less of that factor and more of the others. That is how businesses, labourers and consumers adapt to changes in factor costs.
Paul Birch;
Good lord, you’ve just accused me of being an alarmist. Can I make the assumption that you are an economist? You are certainly not from a business background, because if you were you would know just how ridiculous some of your statements are. You keep trying to describe a system burdened with high energy costs in economic terms. I keep trying to explain to you that there are consequences of businesses competing under different energy cost scenarios that are out of proportion to the energy cost differential. I wasn’t predicting a catastrophe, at most I was exagerating. Do I think China will launch nuclear missiles to prevent themselves from being forced into CO2 reduction schemes? No. Do I think they will go along with them? NO! So what is the effect to the economy when some jurisdictions have different energy cost structures than others?
My point about the gas stations stands. Gas stations work very hard to differentiate themselves. They have points programs, some of them pump the gas for you, some of them have those dark chocolates that your wife is fond of. They turn themselves in nots to differentiate themselves because gas is viewed as a commodity, and even SLIGHT differentiators result increased market share. When three gas stations at one intersection, assuming relatively equal access to all of them, are differentiated by only one thing, a slightly lower price, that low price providor has a line up and the other two don’t. The longer the lineup the more likely someone will cross the street and pay more. Have to go around the block to get into the low price station from the other side? More defectors. One station sells milk and bread, they snatch back some share from the other stations by capturing thos customers who would rather pay the higher price and get their milk and bread at the same time. So anecdotaly, I have no idea what drives the behaviour you observe. What I’m trying to explain is that all other things being equal, a SLIGHT price difference has HUGE impact to profitability and market share. The smaller the price differential, the less likely someone will make the effort. The larger the price differential, the more effort they will expend. The less disposable income they have, the more likely it is they will seek the lower price. These aren’t things I made up these are the results of multiple studies into consumer behaviour and the fact of the matter is the all come to the same conclusions. When products are considered equal, and availability is equal, very small price differences result in very large changes in market share.
You conclude your explanation with:
But the optimum usage of the various factors of production depends upon the relative (not absolute) costs of those factors. If one factor increases in cost relative to the others, businesses will use less of that factor and more of the others. That is how businesses, labourers and consumers adapt to changes in factor costs.>>
Right out of your economics text book? It is one of those things that is right in theory and still completely wrong. There are factors “in control” and “out of control”. Small highway towns thrive on through traffic. A town of 500 people might earn considerable imported local income from a couple of gas stations and restaurants on the highway through the middle of their town. But that’s not efficient in terms of managing highway traffic which has to keep reducing speed at every little town, so the highway gets rebuilt. The town is now 1 km off the highway. Drop in business from highway traffic? Well over 90%. It doesn’t matter how much those restaurants juggle their “factors”, that small reroute will kill them. They can relocate, or perhaps they make the best cinnimibuns on the planet and they can entice people with that. But juggle factors? Use less what? flour?
A business that manufactures houses finds that the price of plywood has gone up and aspenite is now less expensive. Due diligence regarding properties of the materials must be done, and the switch is made, but only for those applications where aspenite is suitable. So yes, now they use less of one more expensive material and more of another. For a while, the price of aluminum studs was actually less than the price of wood ones, and lots of people made the capital investment in tools and training to switch. These are the “factors” that businesses juggle all day long every day.
But energy pricing, like that highway being relocated, is not a factor you are in control of. There’s no substitute for energy like there is for plywood. Oh, you can look at your processes and choose to get rid of less energy efficient equipment and replace it with more energy efficient equipment, BUT SO CAN YOUR COMPETITION! Every options YOU have to “adapt” your competition ALSO has. So when one jurisdiction introduces a measure which artificialy raises energy costs, you are having a major impact on the competitiveness of those businesses.
There’s a town named Lloydminster which is split in two by the borders of Alberta and Saskatchewan. Alberta got rid of their sales tax and Saskatchewan kept theirs at 5%. Within months every business on the Saskatchewan side was getting ready to relocate, or else go bankrupt. You see, there was no way they could drive any of their costs down by any means that their Alberta competition couldn’t. Their only choice was to relocate a few blocks. The government of Saskatchewan finaly woke up and granted them an exemption.
So, yes, you are right. There are capital costs, finance costs, access to transportation hubs, skilled labout and on and on and on. But an enormous amount of jobs are in energy intensive industries. Even if energy only accounts for 5% of their input costs, if it doubles while their competitors get the same price they did before, they’re screwed. There is no energy saving strategy that a steel mill in California can come up with that a steel mill in Nevada cannot also take advantage of, and WILL. You seem to think that doubling energy costs somehow results in a magical adaptation that only occurs in the companies faced with the increased energy costs. It doesn’t, every competitor takes advantage of every cost reduction they can.
Suppose you’re building a sky scraper and you put out a tender for $100 million in steel beams that must meet a specific specification. Suppose that due to energy prices doubling, this gives just a 1% increase in price to the steel mill in California. That’s a differential of $1 million. No order.
That’s the piece you don’t seem to get. Its not just one factor that businesses can adapt to. It is one factor that is large enought that if YOU have to adapt and your competition doesn’t, your business is toast.
davidmhoffer and Paul Birch, thanks for the great discussion. Regarding the hydro dam, I agree with in part with Roger Sowell. I live on the Shenandoah and have watched a few floods. There is a benefit to the silt deposited and many native plants flourish the following year. But as for my own interests, I would much much rather give up my flood plain to a retention area and relocate my more valuable native plants in my own maintained areas. The giant black walnut in my neighbor’s flood plain will have to be turned into a lot of veneer: nature loses, cabinetry gains.
As it works now, plants benefit the most in floods, not animals. In last January’s flood I watched a number of critter emerge from hibernation in 35-40 F temperatures to face the water on diminishing islands. I also know that the natural bedrock dams and the indian-built weirs are, without a doubt, the best fishing spots.
If you still live in California, you really need to leave now while you still can.
Can’t move out of state because you can’t afford to? Think seriously about that – can you really afford to STAY? It’s NOT going to get any better. What will you do after you’ve lost your job and are 6 months behind on your mortgage, facing foreclosure on a house worth less than half what you paid for it? (I realize that’s probably not REALLY the case with most of you, but you get my point)
@richard Sharpe – Try Raleigh NC.
With our CA legislature about to tax all the busineses out of the state, Cali may actually be able to reach 1950 levels.
Of course, unemployment (outside of the gov’t) is likely to be around 70%.
At least in time, the legislative beast is likely to be starved.
There are steel mills in CA?
I’ve enjoyed the discussion between Davidmhoffer and Paul Birch. I would categorise it as an argument between and economist and a management accountant. My vote goes to David.
The idea that by observing motorists going into gas stations that charge 5p/ltr more than the one down the road, somehow refutes the theory that raising prices will cost sales is not credible for a number of reasons. Firstly, certain outlets, such as Tesco, offer gas discount vouchers to shoppers spending more than a certain amount. Secondly, a sample must be of sufficient size to remove random variation effects. Thirdly, if a few pence increase would make no difference, why are many arguing that a 2.5 percent increase in VAT will have a severe impact on the economy?
If one can cite anecdotal evidence as ‘fact’, I can say that personally I make a mental note of the price of petrol at every station and will always go to the cheapest. I will go to Tesco’s (which is not the cheapest) if I have a 5p/ltr discount voucher, otherwise I go elsewhere.
Richard Sharpe, re steel mills in CA. Yup.
But isn’t a 2.5% increase in VAT an increase in taxes at every stage of production?
So if a product changes hands 3x for value added services, would that not be a 7.7% increase by the time it gets to the consumer?
JG says:
November 7, 2010 at 4:02 pm
But isn’t a 2.5% increase in VAT an increase in taxes at every stage of production?>>
It depends on implementation. New Zealand pioneered a value add tax system that was adopted almost identicaly by Canada. I don’t know how it evolved in NZ since then, but I can tell you how it works in Canada.
In Canada, there is a federal tax call GST (goods and services tax). Everyone pays with the exception of provinces because governments aren’t allowed to tax each other. But everyone else pays, including the federal government itself and the crown corporations they own, and all private industry and all consumers. BUT, everyone EXCEPT the consumer gets a GST number.
If you have a GST number, you must collect 5% GST in everything you sell, and remitt it to the governnment. You may also collect a refund on on every single cent of GST that you had to pay to run your business. Since the consumer doesn’t have a GST number, they neither collect/remitt nor do they get a refund (unless they are below a certain income level. Very low income level).
In any event it sounds complicated, but it really isn’t. By the time the consumer pays for a product, the only GST in the sale is based on the net value add of the process, so the layers of taxation don’t turn into taxes on taxes. The system in place previously was a value add tax that was a “hidden” tax in that it was paid by manufacturers directly to the government on everything they sold, no matter who they sold it to. So Canadian manufactured goods were burdened with an 11% (ELEVEN!) value add tax that KILLED them on the international stage. The GST is roundly hated in Canada because it isn’t hidden and people don’t like it. But the fact is that the previous tax DID result in taxes on taxes and also made exports higher in price. Since foreign entities are not subject to the Canadian government’s taxation, they don’t have to pay and Canadian companies don’t have to collect on goods going outside the country.
davidmhoffer says:
November 7, 2010 at 7:55 am
“Good lord, you’ve just accused me of being an alarmist.”
Then do you accept that AB32 will have only a minor damaging effect on California’s economy – on the order of a few percent? Or do you persist in claiming that it will cause it to crash by ~50%? If the latter, then this is certainly alarmist.
“My point about the gas stations stands. Gas stations work very hard to differentiate themselves.”
Your point does not stand. It is flatly untrue to contend that sharp differences in prices cannot be sustained. For a variety of reasons, they often can. Local and political preferences are among those differentiating influences; and such will certainly come into play here. A differential increase in energy costs in California will lead to Californian businesses promoting other aspects of their products or services – such as their extra “greenness” – which will offset, and in some cases eliminate and even reverse, any fall in market share that would otherwise eventuate from their higher prices. To whatever extent this occurs, it will also offset the reduction in Californian rents and wages that would otherwise result.
Any change in business conditions will benefit some businesses and hurt others; not every business will successfully adapt to higher Californian energy prices; some will go bankrupt; some will leave the state. But others will flourish. Firms whose total energy costs subject to increase (including their indirect energy costs in the goods and services they buy) are a smaller fraction of their total costs than average will see a competitive benefit; their rents and wages bills will fall (or increase less than they otherwise would have done) by more than their energy bills rise. Some of those firms who would otherwise have gone bankrupt will now survive. Some new start-ups will be discourages; others will be encouraged. The net effect will be a less energy-intensive economy in which the average standard of living is modestly – not drastically – reduced.
“There’s no substitute for energy like there is for plywood. Oh, you can look at your processes and choose to get rid of less energy efficient equipment and replace it with more energy efficient equipment, BUT SO CAN YOUR COMPETITION! Every options YOU have to “adapt” your competition ALSO has. So when one jurisdiction introduces a measure which artificialy raises energy costs, you are having a major impact on the competitiveness of those businesses.”
Shouting doesn’t make you right. Energy is neither more nor less substitutable at the margin than plywood. If your competitors have lower costs for one factor of production, and you have lower costs for another, then your optimal production processes are different from theirs. If California has higher costs for energy, it will have lower costs for rents and wages, because Californians will be less well off. If California has higher costs for energy, it will have a comparative disadvantage in more energy-intensive industries and a comparative advantage in less energy-intensive industries. The economic mix will adjust to reflect that.
“Suppose you’re building a sky scraper and you put out a tender for $100 million in steel beams that must meet a specific specification. Suppose that due to energy prices doubling, this gives just a 1% increase in price to the steel mill in California. That’s a differential of $1 million. No order.”
But the Californian steel mill now has cheaper labour and rents. It does not have to increase it’s price by 1%. It may even be able to reduce its price. Now, if the trades unions have enough power to prevent the firm cutting wages, even in the face of bankruptcy, then the firm will likely go under; the Californian wages bill will fall even further. Californian irms which now have a comparative advantage will replace steel mills in the Californian economy.
… its not it’s, firms not irms!
@Paul Birch.
The only problem is that you are talking deflation in real estate prices.
This is the very thing that is crushing CA now. Tax revenues from real estate have plunged since the housing crash. Where are they going to get the revenue since they refuse to renegotiate union contracts? They refuse to cut spending. As Karen Bass indicated, we have a revenue problem, not a spending problem.
The crowd in Sacremento has just received carte blanche to raise taxes via simple majority, and our Governor-elect thinks that taxes are too low.
JG says:
November 8, 2010 at 8:34 am
“@Paul Birch.
The only problem is that you are talking deflation in real estate prices.
This is the very thing that is crushing CA now. Tax revenues from real estate have plunged since the housing crash.”
Yes, one would certainly expect real estate prices and tax revenues to fall. I disagree that this would “crush” California, or that it is doing so at present. It might crush (or at least, mildly dent) Californian governments (state and local), but I’d see that as a plus to the economy, not a minus. Though they might try to deny reality for a while, with persisently falling revenues they will be forced to cut spending – just like Greece and Ireland.
“As Karen Bass indicated, we have a revenue problem, not a spending problem.”
All revenue problems are spending problems, because if you don’t spend you don’t need revenue. (If you have a debt problem, that’s a problem due to past spending.)
“The crowd in Sacremento has just received carte blanche to raise taxes via simple majority, and our Governor-elect thinks that taxes are too low.”
I was under the impression that Californian state taxes and fees could now only be increased by supermajority. Have I misunderstood?
“”””” Kum Dollison says:
November 5, 2010 at 9:34 pm
Kadaka, This has nothing to do with “global warming.” I’ve said from the start that global warming was a crock. I’m looking at it from an economic, and “future cost of fuel” standpoint (as well as a “pollution in general” view.)
I simply think it makes sense to start preparing for the escalation in the cost of fossil fuels that is on the horizon. “””””
Well I am just waiting for the first solar panel that puts out plastics, and cosmetics, and fertilizers, and agri-chemicals as well as free clean green renewable alternative energies.
I can remember when “oil” was priced at $2 per barrel, and people sitting on huge deposits of oil shale, were predicting that if oil ever got to $6 per barrel, that they would be making a bundle off their shale oil.
Well oil did go to $6 per barrel, and the oil shale folks siad if oil ever got to $11 per barrel, that they would be making a bundle off their shale oil.
Well oil is now close to $87 per barrel, and nobody is yet making a killing off shale oil.
Likewise, as the price of crude oil or other fossil fuels rises; so too will the cost of making solar panels; so they will never gain an economic edge either.
Saturday night I had a long chat with a friend who works fo Solyndra; the Obama sanctified solar panel manufacturer in Fremont CA. They are just about finished burning through the last of the $577M taxpayer funded expansion loan; and instead of hiring a whole bunch of new green job workers in California; now protected by the AB-32 Carbon Tax umbrealla, they in fact will be laying off 1000 workers, and are closing one of their plants.
He says the problem is NOT that they don’t have sales; they do to dummies like schools; who wouldn’t know an efficient solar panel if they tripped over it; and other taxpayer funded institutions who don’t care how inefficient it is, or how much it costs.
He says the problem is the cost of making their panels; they need to get that down. Howcome; it costs them nothing now, because the taxpoayers paid for their manufacturing plant; so where’s the cost ? Hey the way you cut costs is to get rid of people doing unnecessary things. So there aren’t going to be an influx of green jobs; not here in the USA and California; not anywhere else either; althought what jobs there are will be someplace else. I’ve seen estimates by reputable economists who say there will be 50 jobs lost in petroleum or other fossil fuel industries; for each possible new green job.
One in eight people (formerly working people) in California, now has no job; and not likely to get one here. California currently borrows $40M EACH AND EVERY DAY ! to pay for unemployment benefits; for unemployed workers.
But it has a welfare system that gives people debit cards that they can use instead of money. If they use the card at a grocery store for example; the card machine has a special button (screen menu) for them to push; it tells the machine whether they are buying food; or CASH.
If they push “food”, they can’t get beer or wine or liquor; or cigarettes either. But if they press the CASH button; then they can use the cash to buy all those things; and then go to the local Pot Clinic to buy their medicinal marijuana.
This really is a great State to live in; even Mother Gaia, doesn’t have anything that works as well as the State of California.
I guess the Marxists were expecting Nancy Pelosi to hang on the the House Speakership; and then bail out California next Congress. Ain’t gonna happen ! And Californians voted this future for themselves; and Governor Moonbeam to give it to them.
Well I first wrote about this problem some 40-45 years ago. (NO I didn’t say I was the first to write about it.).
The problem is that in any free market, the ultimate bottom line cost is simply the sum of all the energies associated with the entire enterprise; raw materials, processing equipment; workers to operate all of the system; literally everything that goes into producing the end result.
It takes a lot of energy to produce solar cell panels; and that energy is NOT being produced from OTHER solar cell panels; it is being produced from fossil fuels; and as the price of fossil fuels goes up; the price of solar cells will go right along with it in lockstep; solar cells will never get ahead; the technology just takes too much damn energy to compete with fossil fuels.
The way to prove the efficacy of ANY alternative energy system; is simply to use the energy output of such a system; plus all the raw materials in the universe in their natural state; and nothing else, to simply build a duplicate of that system. Don’t forget, that includes the entire life cycles of all of the personell required to build and operate the system; you have to get those people and their lives from scratch; because everybody else already is busy doing something else; so they aren’t available to be a part of your system. Gee you have to raise and educate their children too.
That’s why shale oil has never taken over from Arabian crude. If another energy source could do that; it already would have done so; you have to asterisk Nuclear Power; because it basically is banned by political fiat.
T.J. Rogers, is the CEO of Cyprus Semiconductor, a successful producer of niche products (some very nice niches too). He basically went from school to AMI; a no longer existing Si-Valley MOS company; and he was the inventor of the V-MOS proces.
Vertical MOS, where the structures were laid out on the steeply sloped walls of Vee troughs, and inverted pyramids etched into the silicon suface with highly anisotropic etches. The morning that he gave his paper on VMOS to an IEEE symposium on Electron Devices (pretty sure that’s what it was), I actually had breakfast with him and a couple of other now unknown folks at the hotel where the convention was. His paper was highly anticipated; but of course nobody could have known the part he would eventually play in the semi-business, as one of its smartest businessmen; quite apart from his engineering skills.
VMOS ended up not being an easy way to go; but it did teach a lot of good basic solid state technology ideas. And TJ is a big part of SunPower Systems, which is one of the better solar technology compaies; with among the very top if not the best solar conversion efficiency.
The soalr cell problem is not a problem of cost; althopugh that is a problem. Even if soalr cells were free; truly zero cost; maybe they grow on trees; the real cost is the cost of all the real estate it takes to set them up on. It is an area limited energy source established by Mother Gaia’s strict allowance of just 1 kW per square metre of interception area.
So the only thing that matters with a solar panel is its conversion efficiency from air mass one solar insolation to AC on the grid; all the rest of it is just window dressing.
But Rogers knows that Sunpower will be successful providing local power to places where the real estate is already committed; like parking lots, and building or home roofs. Unfortunately; building codes do not reflect (no pun intended) the solar energy collectibility of building construction.
So dream on all you free clean green renewable alternative energy fans; but don’t forget to put a fence around your system so that nothing but sunlight can get in and contaminate your economics. And also good luck on providing the petro-chemicals products that currently come from that dirty “big oil”.
When electric cars fail, here is the working green vehicle. The “green job” is obvious. For trucks, it will have to be this.
@JG
“I was under the impression that Californian state taxes and fees could now only be increased by supermajority. Have I misunderstood?”
As I understand it:
California used to require a supermajority to raise taxes, so instead, they created all sorts of new fees. Prop 26 essentially reversed that, requiring a supermajority to create or raise fees, but only a simple majority to raise taxes.
Paul Birch says:
PB;
Then do you accept that AB32 will have only a minor damaging effect on California’s economy – on the order of a few percent? Or do you persist in claiming that it will cause it to crash by ~50%? If the latter, then this is certainly alarmist. >>
I said neither. I haven’t read AB32 and I don’t have an estimate in regard to its effects. You construed a doubling of energy costs as having “only” a -5% impact the economy. I pointed out that this is true ONLY if the doubling of costs effects all businesses equally. I went on to explain how a small competitive disadvantage can have a major effect on market share. My point was that if energy costs double in a single jurisdiction like California, suggesting that the net effect would be small is unrealistic for energy intensive industries. So you tell me. Does AB32 double energy costs? If so, then yes, the net effect will be devastating.
PB;
It is flatly untrue to contend that sharp differences in prices cannot be sustained (snip) … A differential increase in energy costs in California will lead to Californian businesses promoting other aspects of their products or services – such as their extra “greenness” – which will offset, and in some cases eliminate and even reverse, any fall in market share>>
There’s not one single thing that a company in California can do to improve their “greenness” that a company in Texas can’t. If there is consumer demand for “greenness” then all companies will provide it no matter if their energy costs are high or low.
PB;
that would otherwise eventuate from their higher prices. To whatever extent this occurs, it will also offset the reduction in Californian rents and wages that would otherwise result.>>
Since as I just pointed out, no competitive advantage occurs, there is no offset to be had.
PB;
Firms whose total energy costs subject to increase (including their indirect energy costs in the goods and services they buy) are a smaller fraction of their total costs than average will see a competitive benefit; their rents and wages bills will fall>>
Oh good grief. Let’s go back to the steel mill example. They have an enormous capital investment in plant and equipment amortized over 20 or 30 years. They probably own the land the mill is built on, or at minimum have a long term lease at least as long as the capital amortization. Let’s suppose the mill is 10 years old. It will be another 10 to 20 years before they can take advantage of lower land prices. What do they do until then? Maybe they could take on extra debt? Well maybe not, since by your own admission their equity just got slashed and the banks aren’t keen on lending money to businesses that aren’t going to be profitable for another decade or two. Perhaps lower wages will save them? Sorry, but no. The welder who can make $60/hr in Texas isn’t going to hang around in California for a $30/hr wage. Further, consider what this does to skill levels. As the wage gap widens, it isn’t the “average” welder that gets recruited to another jurisdiction. The first to go are the good ones. The wider the wage gap, the more there are who leave. If the wage gap gets so wide that it has a serious effect on the California mill’s operating costs, they will now have a different problem. Since all the high quality welders are recruited first, the only welders left are the really lousy ones. Same for machinists, electricians, millrights, any expertise at all. So now you have a quality problem too.
PB;
their rents and wages bills will fall (or increase less than they otherwise would have done) by more than their energy bills rise.>>
Are you serious? Well why only double energy costs then? How about quadruple? Quintuple? OK, let’s really turbo charge the economy, let’s increase energy by 1,000 times. You can’t claim a positive feedback. The economy shrinks if you raise energy prices, the energy intensive industries shrink the most, the industries that service them next, and so on down the food chain, but the ALL shrink. There may be an exception or two, but they will be very very rare.
PB;
Some new start-ups will be discourages; others will be encouraged.>>
OK everybody who runs a small business, or any business, please pay attention. Suppose that the price of gasoline and all other energy sources doubled today. Hands up all of you who would be encouraged to start a new business or expand an existing one because of that. Hang on PB, I’m counting…. Uhm, zero.
PB;
If California has higher costs for energy, it will have a comparative disadvantage in more energy-intensive industries and a comparative advantage in less energy-intensive industries.>>
Uhm, what less energy intensive industries would these be? Restaurants? Well the bulk of their customers are workers in energy intensive industries so they will lose revenue no matter how low their rents and labour go. Banks, same. Insurance? same. Sail boat rentals? Same. Anyone who benefits from local land and labour cost reductions is going to lose revenue from their local customers no matter what. If you know of an industry that would gain a competitive advantage in export markets and ISN’T energy intensive, could you please tell me what it is? Local revenue; screwed. Export revenue; screwed.
PB;
But the Californian steel mill now has cheaper labour and rents. It does not have to increase it’s price by 1%. It may even be able to reduce its price.>>
Incredible. First you claim that doubling energy costs will shrink the over all economy by only 5%, and now you are claiming that energy intensive industries like steel mills may wind up with lower costs? Again, let’s not double it then, let’s quintuple it, let’s reduce the economy by 25% instead of 5% and look at how competitive you’ll be. Zowie, go for 100 times, we should be able to get to the point where your operating costs are so low that you can make money without even having any revenue!
PB;
Now, if the trades unions have enough power to prevent the firm cutting wages, even in the face of bankruptcy, then the firm will likely go under; the Californian wages bill will fall even further. Californian irms which now have a comparative advantage will replace steel mills in the Californian economy.>>
You’ve truly lost it. You’re claiming that the worse your economy gets, the more competitive it will be. Huh? Which part of “worse” don’t you understand? You started out making some well reasoned, but wrong, points. Now you are postulating that increased costs are mitigated by some sort of feedback loop that creates as many or almost as many jobs as it destroys. Reminds me of a Dilbert scenario:
Accountant; we’re losing one dollar on every unit we sell.
Pointy Haired Boss; we’ll make it up in volume.
davidmhoffer says:
November 8, 2010 at 7:50 pm
Paul Birch says: Then do you accept that AB32 will have only a minor damaging effect on California’s economy – on the order of a few percent? Or do you persist in claiming that it will cause it to crash by ~50%? If the latter, then this is certainly alarmist. >>
“I said neither. I haven’t read AB32 and I don’t have an estimate in regard to its effects.”
This is disingenuous. You and others on this thread have been supporting the notion that the defeat of proposition 23 will mean a large hike in energy prices to Californian businesses, and that this will have a disastrous effect on the economy. Are you now admitting that (i) it will not increase energy costs by a large factor, or (ii) if it does the effect on the economy will be modest, or (iii) you just don’t know?
“You construed a doubling of energy costs as having “only” a -5% impact the economy. I pointed out that this is true ONLY if the doubling of costs effects all businesses equally.”
And I pointed out that you are wrong. It is true even though businesses are affected differently. The total contribution of energy costs to the economy is 10% or less – too small to have the drastic effects you imagine even before the economy adapts to the shift in factor costs.
“There’s not one single thing that a company in California can do to improve their “greenness” that a company in Texas can’t.”
The Californian company gets “greenness” automatically by virtue of the governmentally imposed greenness of Californian energy; the Texan company cannot follow suit because it is indelibly tarred with the dirty energy of Texas.
PB; Firms whose total energy costs subject to increase (including their indirect energy costs in the goods and services they buy) are a smaller fraction of their total costs than average will see a competitive benefit; their rents and wages bills will fall>>
“Oh good grief. Let’s go back to the steel mill example. They have an enormous capital investment in plant and equipment amortized over 20 or 30 years. ”
On which they pay rent. It makes little difference economically whether or not they own it, or lease it. If they own it, they are their own tenants; the notional rent they pay falls along with the actual rent paid to other landlords. As landlords, they receive less rent (or profit) than previously. As consumers, they are worse off. It doesn’t matter whether the source of consumer income is rents, profits, interest, dividends or wages; they will all take a hit of approximately the same magnitude.
“The welder who can make $60/hr in Texas isn’t going to hang around in California for a $30/hr wage.”
The reduction in his wage rate would only be around 5% (trades union manipulations aside). Very few people will move to Texas for the sake of $3/hr. Some people will move, of course; preferentially those whose income comes from more energy-intensive industries. Some people will move the other way too; preferentially, those whose income comes from less energy-intensive industries. This effect will parallel the movement of firms in and out of the state as the economic mix adjusts to the change in relative factor costs.
“Are you serious? Well why only double energy costs then? How about quadruple? Quintuple? OK, let’s really turbo charge the economy, let’s increase energy by 1,000 times. ”
Are you serious? Doubling energy costs will damage the economy to the tune of around 5%. This is much more modest than the 50% you seem to think would result, but it is still a loss. Quadrupling energy costs would reduce net economic output by ~10%. A thousand-fold hike gets us into non-linear territory, but could be expected to reduce standards of living in the long term by something like a factor of 7 (sqrt(1+1000×5%)).
“Suppose that the price of gasoline and all other energy sources doubled today. Hands up all of you who would be encouraged to start a new business or expand an existing one because of that. Hang on PB, I’m counting…. Uhm, zero.”
You still seem determined to ignore all the other factor costs that will decrease in consequence. Rents, wages and opportunity costs will fall. Your start-up can hire staff at lower wages, lease premises at lower rates, while many of the other things you might have done with your time and money are now less attractive or unavailable (for example, you may have been made redundant from an energy-intensive business that is down-sizing). If your operation requires significantly less energy than the Californian average, then it will comes out ahead. People do and will start such firms, even in the depths of recession or energy crisis.
“Uhm, what less energy intensive industries would these be?”
It doesn’t matter. It is a mathematically inevitable that half of the economy will be less energy intensive than average. Such businesses may lose revenue – because almost everyone will be slightly worse off – but they will still have a comparative advantage.
“Incredible. First you claim that doubling energy costs will shrink the over all economy by only 5%, and now you are claiming that energy intensive industries like steel mills may wind up with lower costs?”
You are making the assumption that steel mills are more energy intensive than average – that is, that their energy costs are a greater proportion of their total factor costs than in the rest of the economy. If they are highly unionised, this may not be true; labour costs may dominate. The tendency to outsource this industry to third world countries suggests that this may be the case – but I don’t have any hard figures, and don’t really care. My argument is a macro-economic one that does not depend on the particulars of individual industries or businesses.
“You’ve truly lost it. You’re claiming that the worse your economy gets, the more competitive it will be.”
In common with 99% of pundits, lobbyists and politicians, you do not understand the Law of Comparative Advantage. Go away and study it. Economies are not more or less competitive than another overall; they are more competitive in some areas and less competitive in others. To have a comparative advantage in one good says nothing about whether you are better or worse off than your competitors; it says only that you are better at producing that good than you are at producing some other good.
instead of these companies donating money, why dont they also try to change their ways?!
Paul Birch;
You were at first informative and interesting to discuss this issue with, but you’ve descended into cirular reasoning, deflection, misdirection, and your statements reflect either a willful intention to deceive are a complete lack of understanding of basic business issues. Some of your comments fall into the “that’s not right, that’s not even wrong” category. When pressed for specifics you retreat into arm waving about macro economics and complain about people who don’t understand the “Law of Comparitive Advantage”.
Contrary to the thoughts of an earlier commentor, I am not a management accountant. I’m a salesman. Do you know what I sell? If you looked at the list of products that customers buy from me you would think that I sell a variety of leading edge high technology products. That’s not what I sell. What I sell is competitive advantage, risk mitigation, increased efficiency and quality improvement. The products I sell are a means to an end. In order to be effective at selling them, I have to understand my customer’s business and their position in the market relative to their competitors. I need to understand their structure and processes to determine financial outcomes of various changes to their business. I have to understand their accounting procedures, how they differentiate between capital and operating expenses, and figure out of a proposed change will affect some departments negatively rather than positively due to the accounting procedures used to disburse costs within the organization. I have to understand their products, how they are designed and produced, and where they may be able to improve their competitive position and profitability through the use of the products I sell. If I can’t make the ROI case to the CFO, the technical case to the design team, and the operational case to the front line workers, then no deal, no commission, no new shoes for the kids. I’ve been doing this for 30 years, my customers range from telcos to aerospace contractors to forest industry to governments from municipal to federal, to universities and private research institutions to the movie industry (special effects). You want me to study the Law of Comparitive Advantage? I have studied it for 30 years. I’ve written more business cases than most MBA’s study in their lifetime. I’ve helped customers with low energy costs compete against companies with high energy costs, and I’ve done the opposite, helped companies with high energy costs compete against ones with lower costs. I’ve even advised (informaly) two provincial governments with very low land, and labour costs on how to approach large corporations and entice them to invest or relocate. So I won’t bother reading your prescious “Law of Comparative Advantage” because I’ve lived it in the trenches for 30 years, I can go toe to toe with an economist on the topic (and have) and if the audience is ivory tower academics, I do OK. But fill it with CFO’s, CEO’s, VP of Sales, Marketing, Engineering, Human Resources, Quality Control and I will mop the floor every time. So Mr Paul Birch, I suggest you find the opportunity to engage with the real world and discover how reality works.
PB; Are you now admitting that (i) it will not increase energy costs by a large factor, or (ii) if it does the effect on the economy will be modest, or (iii) you just don’t know?
You argued that doubling enery costs world wide only shrank the world economy by 5%, and then attempted to construe a similar shrinkage if California did it in isolation. My point being that if onlyu California is burdened by doubling the cost of energy, then the loss of economic activity to other juridictions will be much more than 5%. In your “world energy costs doubled” scenario, the high energy jobs have no where to flee to, in an isolated jurisdiction they do. That’s macro economics.
PB; The total contribution of energy costs to the economy is 10% or less – too small to have the drastic effects you imagine even before the economy adapts to the shift in factor costs.>>
Your lack of business experience is blatant. Businesses make decisions based on revenue and PROFIT MARGIN. Some industries range as high as 50% or more, but these are rare. Most are in the 10 to 20% range and you would be shocked how much of industry lives under 5%. So your energy costs are “only” 10%, double them and your profit margin may go from +5 to -5.
PB; The Californian company gets “greenness” automatically by virtue of the governmentally imposed greenness of Californian energy;
Odd. I keep getting these RFP’s asking for green initiatives as part of the selection criteria. I just skip that section because I know it is there for show. They’ll buy the proposal that gives them the best bang for their buck.
>>It makes little difference economically whether or not they own it, or lease it.
Well if they own it, they spent the money and can’t recover it because they would be selling at a loss. If they lease it, they are locked into the lease. So BULL.
PB; The reduction in his wage rate would only be around 5% (trades union manipulations aside). Very few people will move to Texas for the sake of $3/hr. >>
Yes true, if your numbers were right. But they’re not. The lowest cost labour, land, and energy costs in western Canada is Manitoba. The highest is Alberta. There’s no apprentiship program for welders in Manitoba. Why? Not enough journeyman welders to support it. Welders make $18-$28 per hour in Manitoba, and in Alberta $40 to $100. And that’s why there aren’t enough welders left in Manitoba to run an apprentice program. This is the real world bud, not a text book.
PB; Are you serious? Doubling energy costs will damage the economy to the tune of around 5%.>>
You continue to cite a number based on WORLD economic damage from energy costs doubling and pretent that it is the same for a single jurisdiction doing it in isolation. That’s and outright lie.
>>You still seem determined to ignore all the other factor costs that will decrease in consequence. Rents, wages and opportunity costs will fall.>>
You can’t damage something and get more back than the damage done. Even macro economists will tell you that.
PB;but I don’t have any hard figures, and don’t really care. >>
There is precisely your program. No business experience, no hard numbers, and you don’t care. You’ve made up your mind and will not be swayed by facts, you refuse to even look at them. Are you a climate scientist too?
PB; My argument is a macro-economic one that does not depend on the particulars of individual industries or businesses.>>
Your argument is buffoonery spouted by someone who clearly has no experience or understanding of macro-economics and how changes affect individual businesses. They aren’t two things. They are part of each other.
PB; In common with 99% of pundits, lobbyists and politicians, you do not understand the Law of Comparative Advantage. Go away and study it. >>
The last refuge of the ivory tower theorist is to denounce the education level of the opponent and tell them to go read a book. Guess what, I’ve read the books. I could clobber you by using the studies and facts in them. Instead I tried to show you how the real world works, because that is more relevant top most people. I was unaware when I began that you understand neither the economic theories you claim to have studied, nor the real facts on the ground issues, and your ability to follow a logic chain seems also impaired. The best you can do is “I don’t have hard numbers and I don’t care because it is you who doesn’t understand them”.
Pathetic.
davidmhoffer says:
November 9, 2010 at 9:08 am
“You were at first informative and interesting to discuss this issue with, but you’ve descended into cirular reasoning, deflection, misdirection, and your statements reflect either a willful intention to deceive are a complete lack of understanding of basic business issues. ”
I have done nothing of the sort. If I have repeated myself it is because you have completely failed to address my arguments, or to show any indication of understanding them.
“When pressed for specifics you retreat into arm waving about macro economics and complain about people who don’t understand the “Law of Comparitive Advantage”.”
I have not retreated. The subject is not, and never has been, whether some individual firms or persons will suffer or go bankrupt. Of course they will. The subject is whether the economy of California will take a nose dive. This is intrinsically a macroeconomic question. It cannot be answered merely by looking at those businesses that are most badly affected. And it cannot be understood without understanding comparative advantage. It is quite plain to me that in fact you do not understand Ricardo’s Law – like most people you confuse it with being more profitable or able to produce goods more cheaply than your competitors. Those are good things; doing the best one can in that way is very important and may mean the difference between success and failure in business; but they do not comprise comparative advantage. Even the most unproductive person or group has a comparative advantage in some activity (and a comparative disadvantage in others); and the most productive person or group imaginable has likewise a comparative disadvantage in it (and a comparative advantage in others). In simple terms, it’s “playing to your strengths” even if you are extremely weak.
It should not be necessary to explain such basic economics, but evidently it is. So here goes. Person A takes 1 hour to produce good G and 2 hours to produce good H. Person B takes 3 hours to produce good G and 4 hours to produce good H. Even though B is absolutely less productive than A, who can produce either product more “cheaply” than B, both of them will be better off if A concentrates on producing G, and B on producing H. A has a comparative advantage in G, because his ratio of costs G:H is 1:2, whereas B’s ratio of costs is the comparatively inferior 3:4.
(Transport or distribution costs complicate this simple rule, by improving the relative cost ratio for the local producer, limiting the benefit from external trade; if the raw comparative advantage is slight, the addition of these costs defines a set of goods in which there is neither comparative advantage nor comparative disadvantage, and external trade – which is arbitrage between differing cost ratios – is then not profitable.)
“You argued that doubling enery costs world wide only shrank the world economy by 5%, and then attempted to construe a similar shrinkage if California did it in isolation.”
That wasn’t my argument, in fact, but I take your point that a hike in Californian costs alone is a little different. However, that only strengthens my case, since there is then an additional means of adaptation that would not be available if costs had risen worldwide: by changing the economic mix differentially between California and the rest, California specialising more in relatively less energy-intensive industries, where it would then have a comparative advantage, and vice versa. This means that the overall economic damage will be less than it otherwise would be.
“So your energy costs are “only” 10%, double them and your profit margin may go from +5 to -5.”
Please pay attention: change one factor cost (energy) and all the other factor costs (including profit) will change too. So will the optimal mix of those factors. You keep ignoring those consequences. On average, you can expect profit margins to be reduced by approximately the same factor as economic output is reduced. With no adjustment of activities, this would be ~10%; with adjustment ~5%. Some firms will of course be hit harder than others; but the corollary is that some firms will be hit less hard than others. The overall effect will be as I have said.
“Well if they own it, they spent the money and can’t recover it because they would be selling at a loss. If they lease it, they are locked into the lease. So BULL.”
None of that changes the fact that imputed and actual rents through the economy will fall. Not instantaneously, but over time. Spent costs are irrelevant; they do not change your economically optimal option. What’s done is done.
“Yes true, if your numbers were right. But they’re not. ”
My numbers are right; a doubling of Californian energy costs would have approximately that 5% effect on Californian wage rates. Your “example” was completely irrelevant.
“You continue to cite a number based on WORLD economic damage from energy costs doubling and pretent that it is the same for a single jurisdiction doing it in isolation.”
I am arguing on the basis of the small contribution of energy costs to the Californian economy, on the law of comparative advantage, and the changes in factor costs and economic mix that would result both internally and externally. (By the way, those empirical examples I mentioned did not result from a global increase in energy costs, but from political manipulations of prices not dissimilar to the current scenario).
>>You still seem determined to ignore all the other factor costs that will decrease in consequence. Rents, wages and opportunity costs will fall.>>
“You can’t damage something and get more back than the damage done. Even macro economists will tell you that.”
How many times do I have to repeat the blindingly obvious? Doubling Californian energy costs will damage the Californian economy – but by ~5% not 50%. The economy is not “get[ting] more back than the damage done”. But part of the damage is that rents, wages and opportunity costs will fall.
Paul Birch and DavidMHoffer seems to be engaged in a “my dick is bigger than your dick” contest where Paul Birch had the last say on November 10, 2010 at 4:52 am:
While I suspect that Paul Birch is correct on this point I invite him to come and live in California because the energy cost increases are simply the last straw … the bureaucratic classes, who are totally unproductive, have heaped cost upon cost on us and things are simply going downhill now.
Paul Birch;
I take your point that a hike in Californian costs alone is a little different. However, that only strengthens my case, since there is then an additional means of adaptation that would not be available if costs had risen worldwide:>>
What this comes down to Paul is that you live in a fantasy world where increasing costs in one jurisdiction provides a “means of adaptation”. This is nothing but marketing spin. You are trying to claim that increased energy costs resulting in falling land values and falling labour rates provide a “means of adaptation” that will result in “comparative advantage”. The lower land and labour rates will reduce capital and operating expenses, so business cases constrained by those factors rather than energy costs become viable. In your mind there is some portion of the economy that will be comprised of start up companies and existing companies changing their products and services to take advantage of those lower land and labour costs. You’ve got it in your head that these new business models producing goods and services based on lower capital and labour costs will significantly off set those lost due to higher energy costs. Thus, by raising energy costs in California, you envision a metamorphasis from the current economic mix to a new economic mix in which the businesses predicated on those lower costs have a “comparative advantage” to jurisdictions with higher land and labour costs, and that this emerged because raising energy costs provided for a “means of adaptation”.
Allow me to remind you of what money is. Money is an artificial construct that provides the means for direct exchange of goods and services between supplier and customer. For this artificial construct to work, money must have a value representative of the value of the products and services being bought and sold. As various economic factors fluctuate, the amount of money required to purchase any given product or service will fluctuate as well. Products, services, fixed assets and so on all gain or lose value as measured by the amount of money it takes to acquire them based on market supply and demand. In a jursidiction with falling land and labour rates, it ought to be blindingly obvious to anyone with an ounce of sense that economic activity which is intrinsincly predicated on low energy consumption and whose major input costs are land and labour will have a “comparitive advantage” over other juridictions with higher land and labout costs, despite the lower energy costs available to them.
Once again. One more time. How is the value created? How does any business take their input costs (raw materials, labour, capital amortization), which they purchase with money, and turn them into new products and services which have enough additional value that they can be exchanged for more money than the input costs. The difference is profit. The more value that can be put into the product, the more money it can be sold for. So listen carefully to my next question.
What is the most efficient way of increasing value? Answer; Energy. One truck can move goods from one end of the country to the other in less time and at less cost than a thousand labourers each carrying one box and walking, even if they did so for a buck a day. The value of using the high priced truck, driven by a well paid driver, is derived from the energy put into the task via the fuel burned, and the energy expended to build the truck, the highways it runs on and so on.
So allow me rephrase “comparitive advantage” and “means of adaptation” using the blunt truth. These are marketing spin terms intended to paint the emergence of an economy predicated on lower land and labour costs as some sort of positive future opportunity. Here is what it really is.
It is the transformation from a high value economy to a low value economy. It is a convoluted and disingenuous attempt to dress up low value jobs and low value economic activity as being a benefit created by the loss of high value jobs and high value economic activity.
It is a lie, an outright, outrageous lie, and you don’t need to study a single page of an economics text book to understand that. The fall in land and labour rates is a measure of a loss of competitiveness, a drop in comparative advantage, and a reduced ability to create value. That land values and labour costs might drop to the point that some types of economic activity become more viable may be true, but they are low value activity.
Why anyone would want to transform their economy from high value to low value and paint it as some sort of positive process is beyond me. The highest standards of living in every single country in the world are directly correlated to the highest energy consumption. The lowest standards of living in the world are directly correlated to the lowest energy consumption. There is no positive feedback to off set the damage done by raising energy prices. If your theory were true, then the fastest growing economies in the world would be those with the lowest land and labour rates. If you want to fantasize that trying to be more like Bangladesh and less like Silicon Valley is somehow a benefit that can be achieved by raising energy costs, go ahead. Those sweat shops in Bangladesh paying children 50 cents a day for manual labour are your new competition. Congratulations on transforming your economy.
But the fundamental rule of marco economics is pretty simple. Rising water lifts all ships. Falling water lowers all ships. Noting that the grounded ships rest on mud, and mud is worth something, so it must be a good thing, is an outrageous lie.
@richard Sharpe
I was about to say, it’s pretty clear to me that Paul Birch doesn’t live in California, nor has lived there any time in the recent past.
He’s absolutely right that AB32 “will have only a minor damaging effect on California’s economy” – for two reasons: 1) The California economy is already in the toilet, and 2) The California legislature is going to keep passing BS that makes it even worse. So what’s one more bit of onerous regulation on top of that?