Friday, February 28, 2020

Bikes are bad for economic growth

The article below is yet another instance of the wrong conclusions that non-economists routinely come to when they talk about economics.  Politicians routinely propose destructive policies (such as rent control and prohibitions on foreign ownership of land) that seem obviously right to them but are in fact counter-productive.

It's hubris.  What seems obvious can still be wrong and economically destructive.  What the galoot below has obviously never heard of is Jevons paradox.  Jevons formulated it in 1865 so there is no excuse for being unaware of it if you want to pontificate on economic questions.

The basic point of the paradox is that reductions in consumption of a particular thing will lead not to an overall reduction in consumption but to a switch to consumption of other things.  If somebody saves money on something, he might just put that money in the bank but he is much more likely to spend it on something else that he had always wanted.

So if we all saved money by switching from cars to bicycles we would spend the saved money on something else -- better accommodation, for instance.

The idea of a demand deficit was a product of the shallow thinking of John Maynard Keynes but he was another theoretician who knew little about the details of how the world works.  His ideas were politically convenient but usually resulted in inflation whenever resorted to

Simon Kuper

Like many other Europeans, I’ve begun commuting by bike in the past few months, too recently even to show up in official stats.

I bought an excellent new bike, two locks and a helmet for about €300 total. That’s about 1 per cent of the average price of a new car in Europe, and I’ll never need petrol.

Bicycle repairs rarely cost much, and if my bike isn’t stolen, nobody will earn another cent out of my urban transport for another decade or so. That’s wonderful — but the difficulty of making money out of cycling could hamper its growth.

Bikes are green, clean, healthy and take up less space than cars, but without a big industry behind them, they may be too cheap to thrive.

And if cycling does manage to grow, it will (certainly initially) decimate jobs and reduce gross domestic product. In short, the story of the bicycle is the myth of “green growth” in one device.

Europe’s dense cities were built for horses, so they proved perfectly adapted for bikes. In 1949, cycling accounted for more than 14bn vehicle miles travelled in the UK. But in the next 25 years, as driving spread, that figure shrank by about four-fifths.

Now, though, the automobile era is waning in Europe, and not only in cities. New ebikes — which can go up to 25kph — will make cycling practical for most suburbanites too.

Kevin Mayne of Cycling Industries Europe says: “Historically, we talked about cycling as a 5km solution. Now we’re talking about it as a 15km solution. That is transformational.”

For all the hype around electric cars, so far the more significant innovation is the ebike. About 3.3 million pedal-assisted ebikes were sold in the EU last year, or nearly six times the number of plug-in electric car sales, estimates the Confederation of the European Bicycle Industry (Conebi). And ebikes managed this without company-car subsidies and other tax breaks that prop up carmakers.

In many European cities, bikes are now popping up everywhere the way cars did a century ago, albeit from a similarly tiny base. Walk (or cycle) around London, Paris or Barcelona and you’ll see bike lanes in places where you’d never imagined them before.

Next month, there’ll be more. Lisbon just announced it is banning most cars from the city centre. In Seville, cycling has increased elevenfold in recent years, says Manuel Marsilio of Conebi. Biking keeps getting safer: Oslo (which aims to be carbon neutral by 2030) and Helsinki each recorded zero cyclist deaths last year.

Europe’s mighty car lobby isn’t trying to undermine urban cycling, say Mayne and Marsilio. It is too busy fighting bigger battles, notably surrounding the European Commission’s demand for more electric vehicles. The fiercest opponents of bikes in cities are motorists and small-business owners battling for their parking spaces.

But the car lobby will always outpunch the bike lobby, mostly because cars cost more. Germany’s cycling industry in 2018 had revenues of a bit more than €6bn; the country’s car industry was 70 times bigger. (The figures for both sectors include makers of components.) Even a decent ebike costs only about €1,500, just 5 per cent of the price of a car.

“The problem with a bike is that it’s just too good,” says Ross Douglas, founder of the Parisian urban mobility summit Autonomy. “The technology does not change much, and they last for ever. The car was amazing at creating jobs, as you use about two tonnes of mass and a motor of up to 350hp to move an 80kg occupant.”

Ominously for cycling and other green modes of transport, activities that can be monetised tend to get encouraged. There’s a cigarette industry and a gambling industry, but there isn’t a walking industry.

There’s also scarcely an escooter industry. Partly as a consequence, cities aren’t now building scooter lanes, leaving scooters to annoy pedestrians on pavements.

Carmakers employ millions of mostly blue-collar men, so governments care about them. In the UK, the fate of Nissan’s plant in Sunderland has become a central plot line of Brexit.

Conversely, the absence of serious Dutch and Danish car industries freed Amsterdam and Copenhagen to adopt mass cycling early, says Douglas.

The other danger of the rise of cycling: it may exacerbate the urban-rural divide that is already the bane of our politics.

While bikes proliferate in cities and inner suburbs, they’re fading from the countryside, even in Denmark, notes Mayne, as older people move to villages and bring their cars with them.

In other words, the town mouse and the country mouse are each acquiring their own mode of transport. That could leave carmakers with a rural, ageing and generally poorer customer base.

In the short term at least, we probably won’t see “green growth”. Instead, if we shift from cars to bikes, and buy less stuff, and carry around reusable shopping bags, going green will mean less growth.


"Water towers" are crucial to 1.9 billion people but are at risk

Groan! Another instance of the Green/Left ignoring basic physics.  Global warming would deliver MORE rain and snow so the danger would be floods, not water shortage

Global warming is putting supplies of fresh water to almost a quarter of the world’s population in grave danger.

Around 1.9 billion people on four continents depend on fresh water that originates in the planet’s “water towers” - the mountains where snow and ice melt after winter becomes a steady supply of water to communities downstream.

High mountains contain about half of all the fresh water humans use.

These water towers - in the Himalayas, the Alps, the Rockies and the Andes - act like giant storage tanks with valves.

It works like this: Snow falls, filling the tank, then that ice and snow melts out slowly over days, weeks, months, or years, running into streams then rivers that supply water to millions - for day to day use, irrigation, power generation, and storage for times of drought.

Now, research published in Nature identifies the most important and vulnerable water towers in the world, and ranks their vulnerability to disruption, chiefly from global warming and political upheaval.

The scientists identified 78 water towers, with the Indus basin - fed by the Himalayan, Karakoram, Hindu-Kush, and Ladakh mountain ranges - identified as the most important storage unit on the planet, and its most vulnerable.

The number of people directly dependent on the water it supplies is set to substantially increase from approximately 235 million by 2050. At the same time, regional temperatures are projected to rise by 1.9 degrees, dramatically increasing instability in weather patterns and increasing the risk of drought.

High mountains are warming faster than the world’s average, with temperatures in the high Himalaya having increased 1.5 degrees from pre-industrial levels, similar to increases seen in the Arctic and Antarctic Peninsula.

Last year was the second warmest in recorded history. Fears are things will become even hotter.

And that spells danger for fragile ecosystems, and usually-reliable water supplies.

Disrupted rainfall in water tower areas, coupled with increased glacier melt, creates myriad risks.

The researchers noted that worldwide, the vast majority of glaciers are losing mass, snow melt dynamics are being altered, and rainfall and snow patterns are shifting, all leading to future changes in the timing and magnitude of mountain water availability.

But it’s not only water supply changes that are a hazard. Climate change also increases the risk of natural disasters such as avalanches and floods.

But the changes in climate and water supply could have a knock-on effect on geopolitical issues in many vulnerable water tower regions.

Increasing demand for diminishing water supplies is just one.

“If, basically, the demand is higher but the supply decreases, then we really have a problem,” said research team-member Dr Tobias Bolch from the University of St Andrews, UK.

“And this is, I think, one of the major strengths of our study - that we have looked closely at both sides, so the supply index and the demand index.” he told the BBC.

In many of the water tower regions, different governments - sometimes hostile to each other - control different parts of the catchment and downstream areas.

The researchers cited the Indus basin as the most important, and most vulnerable, water tower area.

Four nations - Pakistan, India, China and Afghanistan - share the area. The population of approximately 235 million people is projected to increase by 50 per cent by 2050. Annual GDP is projected to increase. The area is getting warmer. Rainfall less certain.

With a growing population, demand for water will increase dramatically.

The researchers then give a stark warning: “Combined with increased climate change pressure on the Indus headwaters, an already high baseline water stress and limited government effectiveness, it is uncertain whether the basin can fulfil its water tower role within its environmental boundaries. It is unlikely that the Indus WTU can sustain this pressure.”


Lights Go Out at Massively Taxpayer-Subsidized Solar Power Tower

Solar thermal sounds a great idea and many plants have been built over the years.  They have all had big problems, however.  Basically, working with very high temperatures is difficult.  Amusingly, some of them CONSUME fossil fuels rather than replacing them

Tonopah, Nevada, is home to one of the most ambitious alternative energy projects ever subsidized by the U.S. government. Due to its unique clean-energy technology, the Crescent Dunes Solar Energy Project was designed to produce up to 1 megawatt of electricity generate power even when the sun isn’t shining.

The solar plant had 10,347 mirrored panels, called heliostats, each about 1,245 square feet in size (or about 35 feet square), spread over a two-mile-wide circular area in the Nevada desert. Each panel was aimed at the top of a 640-feet tall tower, where reflected light and heat from the sun would be concentrated to generate temperatures high enough to melt 70 million pounds of salt. The molten salt would then then be circulated in the tower to produce steam, which was supposed to generate up to 110 megawatts of electricity at full capacity, enough to furnish power to 75,000 homes during peak periods.

Unfortunately, the plant never came anywhere close to that level of power output during its years of operation, from November 2015 to April 2019, before it was shut down following the catastrophic failure of its molten salt containment technology. It was expected to generate an average of more than 40,000 megawatt-hours of energy each month, but never achieved that level of power output during its operating life.

Worse, because the Crescent Dunes Solar Energy Project benefited from $737 million in loan guarantees provided by the Department of Energy, it represents one of the largest failures of a government energy program, surpassing even the Solyndra fiasco. The project’s powerful political backers, it’s worth noting, managed to secure approval for the power plant just one week before the Obama administration’s green energy federal loan program expired in September 2011.

The Crescent Dunes Solar Energy Project was also an environmental menace. During its operation, the mirrors generated enough heat to cause birds attracted to the glow of the power generating tower to burst into flames while in flight.

While it operated, the plant was phenomenally expensive. According to the non-profit Institute for Energy Research, the cost to generate power at the facility exceeded $132 per megawatt-hour, nearly four times the cost of electricity from an average fossil fuel power plant.

No wonder then that NV Energy, the primary utility customer for power generated by the plant, threw in the towel in October 2019 and terminated its contract with the project because it had “failed to produce the requisite energy levels required.”

Bloomberg Businessweek describes the current state of the project, which is now mired in litigation:

Almost no one associated with Crescent Dunes will talk about it anymore. That includes the once-friendly politicians and regulators, the financiers, and the executives who’ve been in place during its failure. (SolarReserve didn’t respond to repeated requests for comment for this story, and a lawyer representing the company said he wasn’t authorized to comment.)

One exception is Bill Gould, a SolarReserve co-founder who retired as its chief technology officer last year. He blames the contractor. “It was a tragedy of mismanagement,” he says. Spanish company ACS Cobra, he says, delayed necessary work on Crescent Dunes and designed a salt tank that leaked, crippling the plant. SolarReserve similarly blamed ACS Cobra in its Delaware suit but doesn’t appear to have filed any legal claims against the contractor. Grupo Cobra, ACS Cobra’s parent company, didn’t respond to requests for comment....

A buyer might try to bring Crescent Dunes back on line, or its owner could sell it for parts. For now, the plant is mostly a punchline in a part of Nevada that’s seen its share of booms and busts. The nearest town, Tonopah, was the site of a silver rush in the early 1900s. It’s now home to 2,400 people, a motley collection of saloons and casinos, a mining museum, and the Clown Motel, which calls itself “America’s scariest motel” because it’s close to a cemetery and filled with creepy red-nosed tchotchkes.

The solar plant’s workers don’t boost business like they used to, says Linda Taylor, the motel’s manager. “It took our money,” she says of the giant mirror matrix up the road. “It’s dead. But real pretty, though. You can see it for miles.”

For their $737 million contribution, shouldn’t U.S. taxpayers have something more than a useless public art display in the middle of the Nevada desert?


Oregon Republicans blocking cap and trade bill

A day after the Senate Republicans denied quorum over Oregon's cap-and-trade bill and vacated Salem on Tuesday. House Republicans followed suit. In addition, Senate Republican Leader Herman Baertschiger, Jr. (R-Grants Pass) held a conference call to update reporters.

House Minority Leader Christine Drazan (R-Canby) made this statement in announcing that House Republicans would also deny quorum, halting business completely in Salem:

From the first day of this short session it has been clear that Governor Brown and the majority party have not had an interest in respecting the legislative process and have repeatedly refused to compromise. Each and every amendment we offered on Cap and Trade in committee has been rejected. I had remained optimistic up until yesterday that a compromise could be reached. Unfortunately, our attempts to achieve a bipartisan consensus that would take into account the views of all Oregonians were denied. Oregon House Republicans are taking a stand, with working families, in opposing Cap and Trade and this rigged process. We will continue to keep all lines of communication open.I call on Governor Brown and the majority party to refer Cap and Trade to the people.

Later the same day, Baertschiger held a fiery press conference in which he expressed anger at the governor and legislative leadership for what he described as the Democrats playing politics with the lives of flood victims in Eastern Oregon. Legislation is pending to provide state relief after a major flood in Pendleton and Umatilla earlier this year.

I sent President Courtney a letter early on in the session to get all that work done. They decided to play politics. They knew that this cap and trade would come to a head, but yet they did not bring all this legislation forward earlier so that we could get it all passed before we had a meltdown. This is all planned by them. And what really saddens me is the Governor using flood victims for leverage for cap and trade. She right now has discretionary funds that she could fund those people that lost their houses. Yet the Governor of Oregon is playing politics with people that don't have a place to sleep tonight. I think that is disgusting, and that is not being a governor.
Baertschiger also pointed out that Senate President Peter Courtney was forced to manipulate rules just to get the bill out of the Ways and Means Committee, saying,

We secured enough no votes in the Ways and Means committee to kill it there. We thought it would die there. I think it doesn't meet the intent of the senate rules. It's a way of rigging the vote. I think Oregonians are seeing that.
In the press conference, Baertschiger reported that all but one Republican senator has left the state, but they are prepared to return to the capitol to finish the legislative session if Democratic leadership allows the cap-and-trade bill to be referred to a vote of the people on the November ballot. So far, Governor Kate Brown (D-Portland) and Democratic leadership have signaled no desire to allow that to happen.

Of course, Kate Brown led a similar walkout in 2001 over a disagreement about redistricting when she served in the House of Representatives:

Senate Democratic Leader Kate Brown, D-Portland, called the House Democrats’ actions “very appropriate under the circumstances.”

“Under certain circumstances, it’s fair to say we would use all tools available to us, and stage a similar boycott,” she said.

A day into the denial of quorum walkout, tensions have risen, and there appears no end in sight.


Zero net emissions: Look no further than New Zealand for economic impacts

In some respects, the Labor Party is as Australian as the Magic Pudding, both revel in fantasy. According to past Labor leaders, high public spending won’t raise taxes and, in any case, high taxes won’t damage economic growth. Now we have Labor’s greatest magic pudding yet, we can cut our carbon emissions to zero and no coal miner will lose their job.

The Labor Party refuses to produce numbers to explain this remarkable outcome, but fortunately others have. Last year, New Zealand passed into law a net zero emissions target and in doing so they commissioned actual economic modelling on its impact.

The analysis, by the New Zealand Institute of Economic Research, evaluates a number of different assumed scenarios. All of these incorporate optimistic assumptions on future technologies, including for example a methane vaccine (which stops sheep from “emitting”). And, in another leap of faith, 50 per cent of trucks go electric by 2050.

Even with these assumptions, the negative impact of net zero emissions on the New Zealand economy is massive. The policy would reduce the size of the New Zealand economy by 10 to 20 per cent. In Australian terms that would amount to a $200 billion to $400 billion annual impact. Employment would fall by 2 to 4 per cent. If that happened in Australia 200,000 to 400,000 people would lose their jobs.

New Zealand’s main industry of agriculture would be smashed. Its dairy industry would reduce by more than half and that leads to a much poorer nation. Depending on technological assumptions, wages reduce by 8 to 28 per cent. In Australian terms, that would mean a $7000 to $24,000 annual hit to an average worker.

Of course, the economic impact on Australia would be bigger given that we have large coal and gas industries, as well as agriculture.

As it turned out, the New Zealand Government ended up exempting agriculture from its net zero emissions target. Agriculture makes up half of the country’s carbon dioxide emissions. New Zealand’s “brave” target that was welcomed by environmental activist groups is literally an example of doing things by half.

Here in Australia, however, the Labor party has not ruled out imposing a net zero target on our farmers. A net zero target is a double hit to the agricultural industry. They pay the direct cost of having to pay more for fuel, for feed and for vehicles. They also pay the cost of having productive farmland turned to trees (so we can sequester more carbon) and the loss of future growth opportunities because more land can not be developed.

This is where the “net” part of net zero kicks in. Under “net zero”, rich people can still fly to Davos to lecture others about carbon dioxide emissions. To do so, some pay an “indulgence” to have farming land locked up. Productive farm areas, in effect, would be turned into National Parks to house more weeds and fuel for bushfires.

Net zero emissions means net zero development, net zero jobs but far from net zero hypocrisy.

Labor has been keen to quote the CSIRO’s latest National Outlook report to conclude that net zero emissions is achievable but the CSIRO report does not do what Labor is saying it does. The CSIRO concludes that agricultural production levels “experience a substantial decline once the rising carbon price improves the relative profitability of other land uses such as forestry”. Up to 24 per cent of our agricultural land would be converted plantings on the CSIRO’s analysis.

Nor does the CSIRO measure the net impact of net zero emissions. It measures the economic outcomes of two scenarios, one dominated by a protectionist world with high barriers to trade and the other a world of free trade, global cooperation on climate and magically high productivity. Surprise, surprise, free trade and high productivity lead to higher economic growth. The unique and separate impact of net zero emissions remains unmeasured by the CSIRO’s analysis.

Also, to get to net zero, the CSIRO estimates that a global carbon price of $273 a tonne is required. Once again Labor shows their addiction to a carbon tax.

In The Magic Pudding, the possum and the wombat create a fire to distract Bunyip Bluegum while they steal the pudding. A similar distraction seems to have afflicted the modern Labor Party, where this summer’s fires have distracted them away from their founding mission of defending and protecting workers. Labor once again has not seemed to learn the lesson that you can’t have your cake and eat it too.



For more postings from me, see  DISSECTING LEFTISM, TONGUE-TIED, EDUCATION WATCH INTERNATIONAL, POLITICAL CORRECTNESS WATCH, FOOD & HEALTH SKEPTIC and AUSTRALIAN POLITICS. Home Pages are   here or   here or   here.  Email me (John Ray) here.  

Preserving the graphics:  Most graphics on this site are hotlinked from elsewhere.  But hotlinked graphics sometimes have only a short life -- as little as a week in some cases.  After that they no longer come up.  From January 2011 on, therefore, I have posted a monthly copy of everything on this blog to a separate site where I can host text and graphics together -- which should make the graphics available even if they are no longer coming up on this site.  See  here or here


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