Regional cap-and-trade schemes are always going to struggle for viability, but California’s might be the worst of the lot. It’s been gasping for air since its inception, and there’s no sign that the state is capable of turning this green policy disaster around.
Nearly two-thirds of the Europe’s renewable energy comes from burning wood. No, this isn’t some time capsule report from 500 years ago—that’s actually what the European Union is doing to meet its vaunted climate targets.
This trend undermines the ability of state and local governments to invest in their public services by recruiting and retaining high-quality civil servants. For example, according to a report from Bellwether Education Partners we reported on last Spring, teachers could be making an average of 15 percent more if it weren’t for the unfunded liabilities that pension funds had accumulated over the years.
Amazon is building stores without cashiers and checkout lines. . . In Seattle, where Amazon is building its first cashier-less store, raising the minimum wage just $1.53 to $11 has already decreased the share of workers with jobs by 1.2 percent. By the time Seattle hits $15 in 2021, many more job positions will have been priced out. Raising minimum wages accelerates the elimination of low-wage work through automation and raises the barrier to entry for new companies that don’t have advanced capabilities.
Germany already lays claim to the dubious distinction of having some of Europe’s highest electricity prices, but its households will be forking over even more next year as they shoulder the costs of the country’s renewables-at-any-price energy policy, better known as the energiewende.
Pork barrel politics is colliding head on with starry-eyed green policymaking in California, and the result isn’t pretty. The fact that this latest quarterly auction generated such dismal revenues is only the beginning of the state’s cap-and-trade problems.
Impact fees are just one of the ways that local government regulations have artificially raised the cost of housing in recent years. Such restrictions have benefitted the wealthy—suppressing new construction enhances the property value of people who already own real estate—while making it harder for young people and working families to start building home equity. They have also probably dulled the (sluggish) economic recovery by swallowing up a big chunk of wage growth that has taken place since the Great Recession.
Soaring rents also have undesirable demographic effects: They drive middle class families (generally a moderating force in city politics) out of urban areas, and make it difficult for young people not in fields like finance, tech, or consulting to get a footing in the housing market—a critical step toward achieving adulthood. Getting rents under control should be a major priority for any reform-minded politician—Left or Right—who wants to prioritize fairness, growth, and political stability. And that means beating back corrupt and outdated building restrictions.
Too many greens get caught up in the trap of advocating for the subsidization of current-generation renewable energy projects, neglecting to understand that in doing so they’re consigning governments to continue propping up technologies incapable of competing with fossil fuels on their own merit while diverting valuable funds away from the pursuit of more lasting solutions. . . Gates’ focus on R&D is both smart and necessary, and it could pave the way towards a greener future.
The crazy cost structure in the U.S. also bears scrutiny. America’s infrastructure is so hard to fix in part because it is so much more expensive to do stuff here than in many other countries. It’s a bit like our health care system, in that regulatory capture, cronyism, and sweetheart deals involving both business and labor combine to drive up public costs. It ought to be getting cheaper to fix infrastructure—we use materials more efficiently, the machines are more powerful and faster, designs have improved—but costs are instead exploding.
This is a classic case of blue model disruption. On the one hand, it chips away at embedded costs—high prices for trucking are like a tax on the economy, making everything more expensive. On the other hand, the beneficiaries of the old system, included truckers who benefitted from fixed rates and union wages, are in the crosshairs. Global competition and technological innovation made the old system harder and harder to maintain, and now technological innovation could be poised to kick out the last leg of an already tottering stool.
Reich has a different vision: that government should mandate that all employers offer higher wages, and that people who can’t find jobs at those wages should be denied the chance to work. But creating a permanent underclass of people who can never get the skills for a meaningful career is not moral; it is cruel.
“Take the fast food industry, for example, an industry that virtually every economic and social policy of the contemporary progressive movement is trying to maim. From the $15-an-hour minimum wage in the industry demanded by New York to the fight against fast food on nutritional grounds by the Broccoli Police and the Nutrition Nannies, to this new NLRB ruling mandating that the employees of franchises be considered for certain regulatory purposes employees of the parent companies, the progressive movement is trying to do to McDonalds and related companies what Bill deBlasio and the taxi lobby want to do to Uber. The net effect of these changes will be to narrow the choices of food that poor people have, to raise the price of the food they have to buy, and to accelerate the automation of the restaurant industry, further reducing the already limited number of jobs open to people with few skills. Progressives will look on the consequences of this disaster and conclude that with urban unemployment higher and the cost of living for the poor rising, we obviously need more food stamps and rent subsidies—and so we must impose heavier taxes on the companies and industries that are still profitable in order to pay for these necessary benefits.”
The reform of California is a major test of the American system. California has wrecked its middle class even as it has produced plutocratic elites in Hollywood and Silicon Valley. The state has serious poverty, too—perhaps the worst in the country. That our largest state is a hopeless muddle, its infrastructure is in disarray, and its cost structure is increasingly uneconomic—this isn’t something that the rest of the country can just slough off. This is a national concern partly because the U.S. economy can’t do really well if California is sick; and partly because many of the same problems now choking California have taken root in other states as well as at the federal level.
Los Angeles’s entertainment and San Francisco’s tech industries are the state’s two big cash cows, home to powerful, rich, and mostly left-leaning industry leaders who support the state’s deep blue and green politics. All too often, the policies championed by the LA and San Francisco elite make life harder for people in poorer, inland parts of the state by increasing red tape and taxes and driving much-needed businesses to neighboring states.