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  • Energy Policy (or lack thereof) Killing the Consumer

    Posted by Dan from Madison on September 21st, 2012 (All posts by )

    Around a decade or so ago a lot of things began to change in the world of residential HVAC (Heating, Ventilation and Air Conditioning). What I am going to discuss here is HVAC centric, but can apply across any industry where the government can (and does) make rules that on the surface mean “well” but in reality, just end up costing the consumer bucks$$$.

    About five years or so, the manufacture of central air conditioners was mandated to be no less than thirteen SEER (Seasonal Energy Efficiency Rating). The previous minimum was ten SEER.

    On the surface, this doesn’t appear to cause too many problems, besides cost the consumers more money on their initial installation, since the 13 SEER product cost more money (more raw materials to get that energy savings). Sadly, the engineering and physics (which can’t be mandated) told us different.

    From an article by Michael Prokup (sorry can’t find the link):

    Older evaporator coils operate at lower temperatures and pressures than modern evaporator coils.

    Without getting into too heavy of an engineering discussion, this means that basically, the new 13 SEER units won’t work well with the old evaporator coils that sit on top of the furnace. The air conditioning cycle uses condensation and evaporation of a chemical (at this time, it was R-22) to move the heat from inside the house to the outside. Moving from 10 SEER to 13 SEER changed the whole game. No longer could a contractor come to your house and simply replace the outside condensing unit – now the evaporator had to be replaced, adding a lot of cost to the job – especially if the inside unit was sheetrocked into a closet, or was in some other type of area that was difficult to access. Apartment building owners were also affected by this.

    But the industry adapted and 13 SEER became standard practice. I should add that in the Northern tier of states where we run our air conditioners much less than our counterparts in the Southern states, the consumers took it on the chin with this higher SEER standard.

    A few years ago, units that held R-22 as a holding charge were completely banned for manufacture in favor of more environmentally friendly R-410a units. Distributors and contractors were allowed to sell what R-22 units they had in stock (more on this later) but after that, no more were allowed to enter the system. But…

    The law was so poorly written that the Chinese started importing to the US units that held NO CHARGE, but used R-22 – so the contractor could go back to simply replacing the condensing unit (cut ’em out and cut ’em in as we say in the field). The US based manufacturers went ballistic and tried to get this loophole closed, but it was all for naught. A new day had dawned. They are called dry r-22 units and they now account for HALF of all units sold in the United States.

    But – remember this quote from above?

    Older evaporator coils operate at lower temperatures and pressures than modern evaporator coils.

    That hasn’t changed. But contractors were ignoring this (and still are, by and large) or making workarounds such as adding thermal expansion valves to the systems. Again I don’t want to get into too heavy of an engineering or physics discussion, but lets just say that there are millions of these time bombs waiting to go off (figuratively, not literally) in peoples residences.

    Look at this from a distributor standpoint (the business I am in). We spent a lot of money and time educating the contractors on the new chemical R-410a, adjusted our inventory to serve the new market, and then we had to go back to the future with the dry R-22 units. We were all sort of happy when R-22 went away (less inventory) but now we are back in the exact place we were before the R-22 ban hit.

    This year R-22 took a drastic jump in price as the EPA accelerated the phase out of this chemical (which shouldn’t really be phased out at all, but that is a different discussion). The price literally tripled in one week earlier this year when the EPA came out with a ruling saying that they would be cutting allocations to manufacturers. Each manufacturer is allocated “x” number of pounds they can make during each year, and that number keeps getting lower and lower as the phaseout comes closer (2015 if memory serves). Sadly, the EPA STILL has not told the refrigerant manufacturers what their allocations are for this year! Pricing is swinging wildly right now since the EPA could make the allocations retroactive to January 1, and the manufacturers don’t want to be in violation. Distributors are all on allocations from the manufacturers and, of course, we are protecting our big dog customers with allocations to them. It is insane.

    Still, the price increase in R-22 hasn’t slowed down the dry unit installations much. It likely will when we are hit with the next spike.

    May 1 of next year, the next shoe falls in my industry, this time on the heating side. The minimum efficiency of a forced air furnace will be 90%. Right now it is 80%. This doesn’t sound like a big deal but it is huge. Here is why.

    80% furnaces can be vented through a traditional chimney. 90% furnaces cannot. The products of combustion for a 90% furnace are too cool, and will condense on the inside of a chimney, rotting it from the inside. In addition, 90% furnaces produce condensate (cooler products of combustion, once again) and that must be removed somehow.

    Imagine if you are a homeowner with an 80% furnace vented through the chimney, and that the same space shares the venting of a water heater. If you need to replace that system with a 90% furnace instead of another 80, your install costs will likely triple. Here is why.

    The 90% furnace must be vented through the side wall of the house. If the house doesn’t have sidewall access where the current furnace stands the furnace will have to be moved to another location of the house. The sheet metal will have to be redone. Holes will have to be drilled through your walls. You will now need a condensate pump to remove the resulting condensate. If the furnace is in an attic or other cold space, the condensate lines will have to be heated to prevent freezing. The water heater that is still good now does not have the furnace products of combustion to share in the chimney and cannot produce enough warm products of combustion to push those up and out of the house (new larger column of cold air pushing down). So the chimney will have to be lined to a smaller size for the water heater venting. These are the basic things, but there could be more. So in the past when a contractor could simply replace the 80% furnace and move on, now we have a very large project on our hands.

    There are millions and millions of installations like this in the US. This isn’t even beginning to address the nightmare that apartment and/or high rise application issues that will arise.

    Lets add another wild card to all of this. The Department of Energy (as of now) is not allowing sell through for distributors or contractors on 80% product. Where in the 10 SEER to 13 SEER conversion, we could buy as many units as needed up to the manufacture cut off date and sell those through, with this rule, May first of next year is the drop dead date. Imagine if you are in the middle of a project and May 1 passes and you can no longer legally install that furnace. Distributors such as myself are already paring down inventory. There are lawsuits out there, and the DOE is doing the worst possible thing. They aren’t saying if this rule will really apply, or if there will be an extension, or what. They are saying NOTHING to ANYONE.

    In 2015, the next shoe drops as in the Southern tier of states the minimum SEER rating rises to 14 (if memory serves). We do not know if the manufacturers will simply scrap all of their low SEER production and run with a new nationwide minimum, or how that is all going to pan out.

    This long story does have an ending. The ending is YOU because by now I am sure you know who will be bearing the cost of all of this government rule making and uncertainty – the CONSUMER. Once again, as always, it is proven that when you have people in government having hearings on everything from chemicals to baseball to foreign policy, it is impossible for them to understand and/or predict how the market will work.

     

    30 Responses to “Energy Policy (or lack thereof) Killing the Consumer”

    1. Mark Says:

      Thanks for the info Dan. I own a rental that I’ve been on the fence about unloading. It has a 15 year old furnace with a 25 year old condenser, so this is just one more bit of info to consider.

    2. Dan from Madison Says:

      We have a lot of contractors right now actively marketing apartment owners on furnace replacements.

    3. Capitalist Roader Says:

      Condenser went out last year on a rental and it played out exactly how you described. After a frustrating time trying to get an R-12 car repaired a few years ago, when faced with a bad condenser I decided to bit the bullet and replace a rental unit’s R-22 system with R-410. It more than doubled the expense over just replacing the condenser.

      The 90% furnace must be vented through the side wall of the house.

      So a 90% furnace can’t share a an existing masonry chimney with the water heater? This is really troubling as I have another rental with the furnace in the center of the basement and it’s due for replacement in the next few years.

    4. Dan from Madison Says:

      CR – In a technical sense the 90% can share the chimney (depending on local codes, of course) but it has to be vented separately. The real issue is that the products of combustion are cooler with a 90% furnace. With many chimneys, the gases cool on their way up the chimney to the point of condensing and this rots the chimney from the inside. What you could do is vent the 90% with PVC out through the chimney, and then line the chimney for the water heater so both appliances have exclusive venting, basically using the chimney as a chase.

    5. Capitalist Roader Says:

      Thanks for the heads-up, Dan. Time to start shopping for a couple of 80% furnaces while I can still get them.

    6. Dan from Madison Says:

      CR – exactly. Unless the DOE gives a stay or has some sort of mercy on us.

    7. Jeff the Bobcat Says:

      We had a similar situation last year in the trucking business. We had about a month’s notice that commercial vehicle drivers would be banned from using cell phones without being hands-free devices. Well replacing the phones and getting the speaker microphones installed for 40 or 50 trucks takes a little while and is not cheap. Total cost was a couple thousand dollars in equipment, an hour of compliance training for everyone, and the loss of efficiency due to reduced effectiveness of in cab communications.

      The fine for non-compliance? $2,750 to the driver and $11,000 to the trucking company. Of course, sixteen year old drivers are still permitted to just talk on the phone when driving in most states.

      Another head scratcher, CB radios are not effected!

      Who gets to pay for these additional costs? The shipping public which passes the costs onto the final consumer.

      The real problem is that bureaucrats, technocrats, & regulators all need something to do to fill the hours of their government job day. New rules mean new enforcement responsibilities, which means more training, resources and people. Regulation is strangling the American Dream, and the signals from the top of this administration in terms of message and the appointment of top management people is to strangle away.

    8. Jonathan Says:

      You see issues like this discussed in almost every industry you look at. Yet much of the discussion never makes the news. There are too many new regulations and no one can keep up with all of the negative side-effects. We are on the third or fourth generation of low-flow toilets and they almost work OK but are still inferior to the old models. Everyone knows there is a problem but there is no regulatory relief. It appears that few of these issues will be addressed unless there is fundamental reform of our regulatory system.

    9. Bill Brandt Says:

      The main reason I have kept my 25 year old + funky Sears Washing Machine is that the Federal Government has mandated that the newer machines use les water – so they don’t clean as well.

      Because, ya know, they are there to help us.

    10. Dan from Madison Says:

      @Jeff interesting comment. As always, the consumer loses.

    11. Jason in LA Says:

      The law of unintended consequences seems not to exist for government regulators, environmentalists and sometimes even corporate executives.

      A couple years ago I worked as a Project Manager for a medical supplies company. A small firm >$250mm in sales, where everybody knew everybody, and about 100 of us were housed in a building, owned by the company, that was built in the 1970’s. About a year or so before my arrival the Controller, trying to make himself look fantastic to the CFO no doubt, sold him on installing new waterless urinals that were designed by NASA (snazzy!). Sure enough, whenever a male went to the restroom to urinate we never had to flush. Probably saved the company a penny and a half each time I took a piss.

      But there was a problem. About once a month a team of five or six plumbers had to be called in to flush out the pipes. Seems these no flush urinals increased the ratio of sludge in the pipes from other solid waste. Inevitably, every month or so, the whole building would be botched up. The cost/benefit of this environmentally friendly pursuit was clearly not worth it.

      Knowing that company as I do I am certain they got some sort of California tax credit for installing those urinals. But they also put the plumber in a higher tax bracket. Yet again the law of unintended consequences….

    12. Shannon Love Says:

      The real perverse thing her is that the changes won’t save any energy overall and will inevitably increase energy consumption long term.

      (1) Cost is merely proxy for resource use and labor and all resources and labor can be distilled down to energy use one way or the other. So if a product cost more, it uses more over it’s entire life cycle. Life cycle cost includes all the inputs to a units functioning from design and manufacturing to distribution and installation, to consumable/energy use, to maintenance, to removal and scrapping. The only way a new technology actually saves energy is when it’s total life cycle cost is lower than the total life cycle cost of the technology it replaces. Almost all “energy saving” technology doesn’t actually save energy but merely shifts the energy consumption from the its runtime back along the chain to manufacturing. Unless the total cost up to installation of the new tech is lower than the remaining cost of the old tech over the new techs expected life cycle, the consumer will be digging themselves in a hole.

      That’s one of the reason that house insulation, espeically retrofitting has always been so subsidized. The insulation would not pay off for over a decade if ever in some cases.

      You can at times conserve specific energy sources such as moving from heat fuel oil to natural gas or electricity but the over all energy consumption will go up. Unless you switch from a carbon emitting source to a non-emitting e.g. fuel oil to hydroelectric, you won’t gain any CO2 reduction either.

      (2) Jevon’s Paradox or Effect is an iron law lf economics thats says that increasing the efficiency of use for any input, such as energy, will cause the technology to eventually use more energy in the long run. Increasing efficiency lowers the marginal cost of using the technology just a little more. More fuel efficient vehicles make it cheaper to drive just one more mile. More efficient lightbulbs make it cheaper to leave the lights on a little longer or put one where they don’t already exist. Raising the efficiency of heaters lowers the marginal cost of keeping a house just a bit warmer or make the house just a bit larger.

      Jevon’s paradox/effect has occurred in the history of every single technology without exception since Newcomb’s steam engine at least. All our modern technologies are vastly more energy efficient than the original tech but we use them more and more.

      Computers are a good example. A modern computer uses literally one-millionth the amount of electricity per computation as did a computer circa 1960. By the resoning behind the EPA standards, we should use only a millionth of the electricity for computation as we did in 1960. Instead, computation energy use in 1960 was to small to measure, now it consumers something near to 5% of our entire energy budget.

      So, not only do these regulations raise cost and lower standards of living, especially for the poor, no only do they not save energy but they actually increase energy use long term.

    13. Joe Citizen Says:

      I am not quite sure I follow your logic here. Jevon’s paradox seems to be paradoxical because on the surface, one forgets to consider that a more efficient technology will be used more. So yeah, you might not see a sum-total decrease in energy use from a more energy efficient technology. You will see more energy use (at a higher efficiency) because you have more overall economic activity.

      This is a good thing, no? Why on earth would you oppose the implementation of a higher energy efficiency standard if that standard will eventually lead to higher energy use from more economic activity?

      I can understand why the environmentalist might be frustrated that energy use is up, rather than down as a result of these regulations. But the flip side of that is that people like you should be thrilled.

    14. Mike Doughty Says:

      Dan, I think regulators in all areas strive for “continuous improvement” as means of justifying their continuous existence. This continues far past the point where it makes any sense, economic or otherwise, except to continue to provide high paying positions and power over others. The criminalization of many violations of arcane regulations is another manifestation of this. The sad part is that at least some of them actually believe they are doing “good”.

    15. Joe Citizen Says:

      “This continues far past the point where it makes any sense, economic or otherwise,”

      I think it necessary to bear in mind that what may seem to make sense on a local level – say, what makes sense for one particular business – may not be the same as what makes sense for the nation as a whole.

      It is perfectly understandable that one would complain loudly at some of the pressures they may feel carrying out these regulations. If it doesn’t work well for the individual, it is hard for that particular individual to assess its value fairly on the larger scale.

    16. carl from chicago Says:

      This is a great article Dan and an eye opener for lots of people.

      I will ask around in my family about the state of their furnaces.

    17. John Says:

      Joe:

      This is a good thing, no? Why on earth would you oppose the implementation of a higher energy efficiency standard if that standard will eventually lead to higher energy use from more economic activity?

      Shannon can probably answer this better than I can, but in brief, you’re almost right, but more economic activity as such is not necessarily a good thing. More wealth generation is, by definition a good thing. The first part of Shannon’s remarks deal with the economic inclusion of energy costs (though I don’t know that he’s addressed externalities, but that’s a side issue in this case, I think).

      So, absent a compelling economic reason for the higher efficiency, therefore present only a coerced reason from central planning, the economic tradeoffs are thrown out of whack. Remember Bastiat’s broken window. What is unseen here is the other benefits the economic resources would have procured had they not been derailed by force into efficiency improvements in a particular area, and had part skimmed off for legislators, regulators, and enforcers.

      To over simplify slightly, apart from a very few weird corner cases, the only time governmental action brings a net gain is in controlling the creation of externalities. Central planning and enforcement is a dead weight on the system…. which brings me to your second point…

      To me, absent externalities, coerced central planning is also immoral, unjust, and tyrannical.

      It usurps the individual’s right to self determination. It is rather absurd to believe that by making every individual a little more miserable, a little poorer, a little less free, that somehow we will make the whole happier, wealthier, and freer. It is rather like designing in a kind of perpetual motion machine where one expects that by introducing more and more sources of friction into the system one can take out more energy than one puts in.

      You contend that the personal picture makes it hard for the individual to assess the value of a policy on a larger scale. There may be some truth in that, but of course the larger scale is a vector sum of the smaller scale. Furthermore, the individual making the policy is also operating locally, just in a different and usually distant locality. They have no special enlightenment, and as a matter of practice usually less understanding than the individual directly involved. As hard as it may be for the affected individual to see the whole picture, it is just as difficult for the central planner, but the central planner lacks the perspective of being right on top of the problem and directly affected by its implications.

      And, returning once more to your original point by way of tying it back in, don’t forget to account for regulatory uncertainty. Bastiat again, we’ll never know how many people limp along with a half baked repairs on 60% efficient furnace because new costs too much. We’ll never know how many nascent HVAC contractors decided to take up a career in fast food management instead. In this case, I don’t know enough about HVAC to guess what it might be, but usually regulation and/or subsidy also creates distortion in the market for alternative goods. What cool new HVAC tech never saw the light of day because of these distortions?

    18. Dan from Madison Says:

      @Mike Doughty – I agree with you completely.

      “The criminalization of many violations of arcane regulations is another manifestation of this.”

      Oddly, when asked who will enforce the new regulations, the DOE replied as of now that they believe it will be guys like me, the wholesalers. So now we are supposed to enforce laws? Heh, won’t they be surprised when EVERY wholesaler says to the DOE “not our job”. We have enough “job” trying to kill each other in the market each and every day like a bunch of crazed animals (like every other industry).

    19. Joe Citizen Says:

      “So, absent a compelling economic reason for the higher efficiency, therefore present only a coerced reason from central planning, the economic tradeoffs are thrown out of whack. ”

      Well, its hardly “central planning”. There is a huge difference between planning and regulation.

      I tend to think that higher efficiency is an objective good. What is the downside to extracting more energy per unit fuel, or more product per unit of input – to generate less waste?

      “What is unseen here is the other benefits the economic resources would have procured had they not been derailed by force into efficiency”

      “..coerced central planning is also immoral, unjust, and tyrannical.
      It usurps the individual’s right to self determination…”

      Where do you get this notion that individuals have a right to act in a manner that affects other people, without any accountability? Does the government, democratically elected by all the people, have legitimate power to prevent the individual from determining for himself that he will dump his toxic wastes into the common water supply?

      “It is rather like designing in a kind of perpetual motion machine where one expects that by introducing more and more sources of friction into the system one can take out more energy than one puts in. ”

      I think your metaphor has zero relation to the real economic world. I think a lot of governmental regulation actually serves to remove friction from the machine – the previous example of toxic waste dumping is a good example. This activity by the sovereign individual may make his personal enterprise more efficient – saves a lot of money on waste disposal, but causes enormous problems to a lot of other people. I guess it comes down to thinking about whose machine you are trying to make more efficient – and that returns me to my original point about how what may be good for the individual may not be good at all for the community at large.

      “the individual making the policy is also operating locally, just in a different and usually distant locality. They have no special enlightenment, and as a matter of practice usually less understanding than the individual directly involved.”

      That may be the case some time, but it certainly need not be, nor should not be. The person usually making the regulation is not acting locally – they are usually sitting at the top of an information pyramid and are receiving constant feedback from the base. Why the heck do you think there are thousands of lobbyists in all our capitol cities? As well as the institutional structures that may or may not work ideally, but are designed to track what is going on.
      Of course, if you cut their budgets constantly, they will be guaranteed to do a pretty bad job of it.

      “As hard as it may be for the affected individual to see the whole picture, it is just as difficult for the central planner, but the central planner lacks the perspective of being right on top of the problem ”

      No. The regulator is purposely put in a position where they can see the bigger picture. Being right on top of the problem is precisely the wrong place to be when you need to solve it, because you tend to be overwhelmed by the immediacy of the particular problem, and not see the larger context in which it exists.

      I guess it is true that we can never know what would have happened if we didn’t do any particular act – by definition. But that is hardly a persuasive argument for not doing anything and leaving problems unaddressed.

    20. Shannon Love Says:

      Joe Citizen,

      You will see more energy use (at a higher efficiency) because you have more overall economic activity.

      The important part is that you will see higher energy use in total. If you make electric lights more efficient you have to plan on providing more electricity in total down the road. If you make gas burning engines more efficient you have to plan on having more oil down the road.

      Why on earth would you oppose the implementation of a higher energy efficiency standard if that standard will eventually lead to higher energy …

      Because the notional goal is conserve energy and reduce CO2 footprint. If that is the goal buts isn’t the effect, why do we need government mandates in the first place?

      The government doesn’t have to issue an edict to force people to advance technology, improve efficiency and grow the economy, that happens naturally. The entire premise of all government energy laws and regulations is based solely on the premise that the long term cost of energy in terms of national security or global warming cannot be captured by the market and therefore the market will not choose the most energy efficient solution as quickly the government can impose it by force.

      These government mandates will have the exact opposite effect that they justified on owing to Jevon paradox.

      …use from more economic activity?

      There will be substantially less economic activity because resources will be wasted creating the new technology before it is the most economical solution or forcing the use of technology that will never be the most economical solution. To many people hear “cost” and think, “it’s just money,” but money isn’t anything of itself. It represent resources that humans have to create. Any resources we divert from the most effecient use at the time, make us all poorer than we had to be over the long run.

      As an extreme example, suppose the British government, worried about coal exhaustion, had mandated that James Watts’ first steam engine have the same efficiency of a steam engine made 50 or 100 years later? Such an engine in Watts time would have most likely been impossible but if it was, it would have been fantastically expensive and no one could have afforded to buy it so the industrial revolution would have never started.

      Dial that back a bit in intesity but spread it over thousands of technologies, essentially everything that uses energy, which is pretty much everything, and you have a big hit on the broad standard living to accomplish absolutely nothing.

      Like I said, the only real mandate that the government can do is force a change in energy sources, it can’t actually save energy it can only waste it. It can’t do anything without lowering the standard of living.

      Since these mandates don’t change energy sources, they just destroy wealth overall. First, they cause increase resource usage in making and utilizing the new technology, then the new technology will eventually increase overall energy consumption. What is the point then of the mandate? If they actually saved people money/resources and actually raised the standard of living, people would adopt them voluntarily without having to be threatened.

    21. Mike_K Says:

      “Remember Bastiat’s broken window. ”

      I doubt very much that Joe has any idea of this example and, should he be exposed to it, would not understand.

      Just imagine what the Soviet Union could have accomplished with a little better planning.

    22. Shannon Love Says:

      Joe Citizen,

      Where do you get this notion that individuals have a right to act in a manner that affects other people, without any accountability?

      Well, the sexual relationships that people form influence there choice of mates and whether to marry. The choice of mates and whether to marry has a significant, easily measured impact on the intelligence, emotional stability, education and and overall socialization of peoples children e.g. their likely hood to be criminals, drive drunk etc.

      Children are the most important thing there is. They are rather the entire raison d’être of every society. By your reasoning then, the government has cart blanch to regulate every citizens sex life and family relationships.

      You could plausibly argue that any given individuals sex life will be more likely to actively harm another person than that same individual’s environmental impact or energy use ever will. Whether crazy children, disease, violence, economic harm from divorces etc personal sexual choices spread out to affect more than just the people involved often in dramatic ways.

      Every living thing on this planet affects every other living thing. People’s choices and actions on the other side of the world can affect you directly. There isn’t actually any action or decision of any kind that doesn’t affect other people. By using your standard, the government has the right and even the obligation to be total.

      Government isn’t the heart of society. It is not the main engine of change and life. Government exist to deal with one facet of life: violence. Governments only true function is to keep violence away from the citizens. Once it moves away from that goal it becomes progressively corrupt and dangerous.

      Peoples energy use doesn’t violently affect others so the government has no business threatening people with violence if they don’t adopt technologies that the government believes will reduce energy consumption. The government certainly can’t morally threaten people with violence when the technology they want people to adopt won’t actual reduce energy consumption.

      Does the government, democratically elected by all the people, have legitimate power to prevent the individual from determining for himself that he will dump his toxic wastes into the common water supply?

      You’re missing that the government, democratically elected by all the people, was the institution that made most water supplies public domain where every citizen had an equal right to dump whatever they wanted into it. Polluters weren’t transgressing against anyone else’s rights, they were exercising the right to dump in water that the government mandated everyone had. In places in the American West that had explicit water rights, you didn’t see much pollution even if there was mine parked there.

      Back in the day, if you saw someone see someone pouring a drum of benzene in private duck pond or well, you could shoot them. If you saw them pouring in a public river or lake you just had to shrug and walk on by. If you tried to stop them, the law would have shot you.

      The solution to managing pollution is an expansion of property and rights, not more threats and violence. You will note that we never had a problem with any sneaking into people’s backyards to bury waste products. That’s because all land is property that someone monitors and protects. Any violation of another’s property rights brings an instant correcting response.

      You can see the wisdom of property versus threats in the history of making emission rights for air into property that can be bought and sold. Though fiercely fought by leftists and environmentalist at the time, they are now considered the most successful pollution reduction system ever. It works better than mandates because it allows everyone who must emit the chance to figure out a particular set of tradeoffs that will best for their circumstance. If you can’t reduce emissions, you can buy emissions from someone who can. The ability to sell unneeded emission credits provides the capital to adopt new lower emission technologies and so on.

      Everybody wins and nobody has a gun held to their head.

      No. The regulator is purposely put in a position where they can see the bigger picture. Being right on top of the problem is precisely the wrong place to be when you need to solve it, because you tend to be overwhelmed by the immediacy of the particular problem, and not see the larger context in which it exists.

      That is absolutely wrong. There is no such thing as “the bigger picture.” That’s a concept we inherited from Plato who believed that the abstract was more true and real than the natural. In fact, the opposite is true. The word “abstract” is latin for “to remove.” When we abstract things we remove information. The “big picture” is just a cartoon compared to reality.

      A regulator is like someone flying in a plane at 35,000 feet trying to direct people waking on the ground. Yes, the regulator can see the broad overview of the land but he can’t see the details. He can see the line of a river but he can’t see the fords. He can patches of sand but can’t sandstone from quicksand. His orders to the people on the ground will lack the detail necessary to guid them on they walk over the ground.

      In military history, this is called the map-general problem. Generals sitting in the rear studying maps of terrain and deployment would miss some critical detail or worse, errors in information gathering would cause their representation the battle to strongly diverge from reality. Many of histories greatest generals were know precisely for their tendency to leave the command center and go right up to the front where they could see what was going on and double check their grasp of the situations. Patton and Rommel would be two prominent examples.

      Regulators are in the worst possible position to understand the effects and tradeoffs of their decisions. They don’t see the regulation working in the real world but must rely on second hand information like a map general. Worse, unlike business people or generals they don’t pay any consequence for being wrong even if it can ever even been proven that they were wrong. Generals who err to much loose wars and might even die. Business people who err get fired or go bankrupt. Government regulators both as institutions and as individuals just go sailing right on along.

      Hell, the government mandated insulation of houses in the 70s and 80s caused and estimate 40,000-60,000 cancer deaths from natural radioactive radon being trapped in houses built atop granite. They only twigged to the problem when entire neighborhoods started dropping dead. None of the people who advocated or managed the forced insulation programs were ever held accountable. The CAFE auto standards cost at least severa hundred lives a year because they force people to buy smaller and inherently less safe cars. Nobody held responsible. I could go on.

      If the big picture idea actually worked communism would have worked. It didn’t. If you even look at the details of the WWII era militarized economy there were some massive screw ups that centralized planning by the war board caused. The centralized production was only possible to any extent by the massive simplification of everything. 17 airframes for all aircraft. Three tanks, one jeep, six types of rifles and so on. The war only lasted four years. If it had gone one for a couple of decades, the entire economy would have collapsed just from accumulated error.

    23. Dan from Madison Says:

      “Just imagine what the Soviet Union could have accomplished with a little better planning.” The natural resources there are/were absolutely staggering.

    24. John Says:

      Joe:

      I’ve been kind of giving you the benefit of the doubt and trying to explain some of the things you don’t seem to understand about the approach and understanding many of the people posting and reading here tend to share. I want to believe that you’re a person of good will suddenly finding himself coming to grips with a culture and world view he doesn’t understand.

      But this:

      “..coerced central planning is also immoral, unjust, and tyrannical.
      It usurps the individual’s right to self determination…”

      Tests my willing suspension of disbelief. You misrepresented my statement through selective editing and then went after the straw man you had created. Am I truly to believe that was done in good faith?

      Shannon, bless him, has taken you at face value on that and given you the standard answer from a particular perspective. If you’re following closely you’ll have just noticed one of the quaint distinctions in the culture of the natives, and a bit of nuance.

      I really hate it when people in comments shut down discussion by instructing someone to educate themselves, so I hesitate to do that, I think it is usually done in part as a kind of back-handed insult, so please don’t mistake me here. I don’t know what you’ve read and not read, but, if you truly want to understand (not just argue, and not necessarily agree), and if you haven’t already done so, I’d strongly recommend reading up on Bastiat, especially the broken window (it’s short, no big deal), JS Mill (on Liberty), externalities positive and negative, and rights positive and negative. I’m not claiming that there’s agreement on the these things, but I do claim that nearly everyone you see posting or commenting here is familiar with them and is, in part, reacting to them either by partially or completely embracing or rejecting them.

      Some disagreements can never be settled, once the discussions and arguments have all been aired and the logic has all been verified, we’re left with axioms. If they differ the disagreement continues. To my mind the value of such discussions is to cause us to examine our reasoning and to reveal the axioms.

    25. David Foster Says:

      In the 1920s, the writer Rose Wilder Lane–who was then still a Communist, or at least strongly leaning in that direction–visited the Soviet Union. In Russian Georgia, the villager who was her host complained about the growing bureaucracy that was taking more and more men from productive work, and predicted chaos and suffering from the centralizing of economic power in Moscow. At first she saw his attitude as merely “the opposition of the peasant mind to new ideas,” and undertook to convince him of the benefits of central planning. He shook his head sadly.

      “It is too big – he said – too big. At the top, it is too small. It will not work. In Moscow there are only men, and man is not God. A man has only a man’s head, and one hundred heads together do not make one great big head. No. Only God can know Russia.”

      RWL herself later wrote:

      “Centralized economic control over multitudes of human beings must therefore be continuous and perhaps superhumanly flexible, and it must be autocratic. It must be government by a swift flow of edicts issued in haste to catch up with events receding into the past before they can be reported, arranged, analyzed and considered, and it will be compelled to use compulsion. In the effort to succeed, it must become such minute and rigorous control of details of individual life as no people will accept without compulsion. It cannot be subject to the intermittent checks, reversals, and removals of men in power which majorities cause in republics.”

      More about RWL, her political thoughts, and her novels here:

      https://chicagoboyz.net/archives/27828.html

    26. Joe Citizen Says:

      John,

      Wow. I will say, you are not the only one with this affliction around here, but your comment does win some prize for obnoxious condescension. Do you really think that hoisting yourself up on some pedestal before you deign to address me does anything but make you look quite ridiculous?

      “I really hate it when people in comments shut down discussion by instructing someone to educate themselves..”

      Then don’t do it.

      “I’m not claiming that there’s agreement on the these things, but I do claim that nearly everyone you see posting or commenting here is familiar with them…”

      As am I, you twit.

    27. Joe Citizen Says:

      Shannon,

      Lets see what we have here. Everything is connected to everything else, so if you allow government to do one thing, you are implicitly allowing it, actually inviting it to do everything.

      The solution to environmental pollution is to privatize the environment. Perhaps you could own the Mississippi River, and I will get to own the stratosphere. That way we could shoot anyone who tries to pollute them.

      You write this: “The solution to managing pollution is an expansion of property and rights, not more threats and violence.”

      And also this: “Back in the day, if you saw someone see someone pouring a drum of benzene in private duck pond or well, you could shoot them.”

      Hmmm..

      “You can see the wisdom of property versus threats in the history of making emission rights for air into property that can be bought and sold”

      Yes, so why does the right now oppose it?
      And why do you imagine that there is no “violence” involved? These “rights” will be enforced, if necessary, in the same manner that governmental regulation is enforced – through the legal system with the barrel of the gun behind it.

      “There is no such thing as “the bigger picture.””

      Ah, yes there is. If you run a mine and all you know about is the finances of your mine, and I am a regulator sitting in an office collecting information, I may end up knowing the finances of your mine, and every other mine in your industry. And I can also then read the collected data on water quality in the region, or air quality, or employment statistics – so that I can evaluate your mine in the larger contexts of your industry, and of the social and natural environment within it operates.

      “If the big picture idea actually worked communism would have worked.”

      One again, we in America do not use “big pictures” in order to plan and run things from the top. We use them to develop effective regulations to define the boundaries within which free enterprise will work, and some basic operating standards.

      I would find it stunning that you, and so many people here, seem not to understand the basics of our economic system – with your seemingly terminal confusion between planning and regulation. But actually I think you understand it perfectly well – I think what I am seeing is the standard type of political propaganda-speech that believes that an effective way to argue is to try to portray the position you are arguing against as actually being some monstrous other thing that everyone agrees is bad. “Strawman” is the operative word here – a fancy, erudite way of saying “you’re all a bunch of Commies”!

      Sorry I can’t spend a bit more time with your argument this weekend, I am off now to a wedding in another state. I’ll check back in in a few days.

    28. Tony G. Says:

      “One again, we in America do not use “big pictures” in order to plan and run things from the top. We use them to develop effective regulations to define the boundaries within which free enterprise will work, and some basic operating standards.”

      But running things from the top is what happens when you micromanage via regulations.

      Just as it’s hard to define pornography, it’s difficult to set the ideal level of regulation.

      You know, the level above which, the perpatrators need to be introduced to tar and feathers.

      The problem we face, is the increasing belief that everything can be made safe, and use zero net energy to save mother gaia.

    29. Shannon Love Says:

      Joe Citizen,

      Sorry I can’t spend a bit more time with your argument this weekend, I am off now to a wedding in another state. I’ll check back in in a few days.

      No problem, I’ve decided to turn my response into a post since your position so neatly captures the naive view held by many on the Left. Not sure when I’ll have it up but if you send your email, mine’s on the upper right of the page, I will send you a link.

      Have a good time.

    30. grey eagle Says:

      I am shocked an horrified that home furnaces are emitting condensateas that rot out the inside of chinneys.

      Dear Lord! Imagine what happens when millions of home emit these condensates and what they will do to our lungs. I remember the Killer Smog of 1952. And Black Lung disease.

      It seems home furnaces need scrubbers to destroy these particulatess and condensates. A smsll electric furnace operating at 1000 degrees can be placed on top of the home furness, clean the exhaust and send heated exhaust up the chinney – elimiating the need to tear down and rebuild the house and the exhaust system.

      I think the people at EPA who unleashed this home made horror should suffer the full penalty prescribed by Sharia Law (assuming Obama is re-elected).