Big Government

Energy Policy (or lack thereof) Killing the Consumer

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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.

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“Disabled WWII and Korean War Veteran Faces Eviction, Freddie Mac Refuses to Return Calls”

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It seems like this guy could use a break.

This kind of story is the flip side of Solyndra, Senator Dodd’s mortgage and other offenses of crony capitalism. The rich and connected get bailouts and special favors while ordinary people who are badly down on their luck get no consideration. That’s inevitable when government is big enough to do all of the things that people who want bigger government want government to do.

I hope publicity brings Mr. Scott some relief.

(Thanks to Rich Vail.)

We’re Barely Capitalists (Part II)

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Recently I wrote a post titled “We’re Barely Capitalists” talking about the “crony capitalism” that lies in our midst. Since I live in the city of Chicago examples abound as far as the eye can see.

Let’s say, for example that you want to open up a bar in the City of Chicago. You find an architecturally interesting building in a “hot” location in River North, for instance, such as an antique store. Then you just turn it into a gigantic Wal-Mart sized bar, right?

The City of Chicago officially has been limiting the number of liquor licenses and tavern licenses that are allowed, particularly in residential areas. Per this article in USA Today:

Opening or buying a tavern in Chicago can be complicated, says Mike Costanzo, a real estate broker with Jameson Commercial. Aldermen can seek liquor license moratoriums in areas as small as two blocks, and buyers are required to purchase the corporate entity that owns an existing tavern and license, he says. “Getting a new tavern license issued in a residential neighborhood is brutal,” Costanzo says. “It’s virtually impossible.”

River North today is heavily populated with condos and apartments; there are thousands of residents packed in an area that is overrun with bars, taverns and restaurants that serve lots of booze (I realize that the city differentiates but walking around late at night they are all virtually the same). So if you or I just went over and tried to use one of the supposedly diminishing liquor licenses on an antique store, we’d be laughed right out of the room. And yet that didn’t slow down this company (which also owns bars in Lincoln Park and Wrigleyville) from getting clearance…

And how do you get something like that cleared up with the city? By employing someone like the guy whose license plate on his Mercedes says it all – “CLOUT”. These sorts of connections are like property rights, and you have to partner or utilize contacts from someone in order to get anything done. I find it amazingly brazen that someone would get out of a Mercedes with plates like this and do business, but hey, this is Chicago.

The use of formal and informal intermediaries to accomplish business goals through a bureaucratic maze is the essence of “crony capitalism”, on display before our eyes.

Cross posted at LITGM

In the Post

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I’ve been thinking for a while based on my own use of the service that the good old US Post Office is something well past its best-if-used-by date. Oh, no not that it should be done away with as a government service entirely. But I can contemplate delivery of the mail only two or three times a week with perfect equanimity … which is at least a little tragic for there were times when the daily arrival of the mail was a much-looked-forward-to thing. When I was overseas, or in a remote location like Greenland (and in military outposts today I am certain) the arrival of the mail (three times a week) was anticipated with keen interest, since it was our lifeline to the outside world. There were letters from family, loved ones, magazines, catalogues and packages with goodies in them sometimes gifts, sometimes items ordered … the whole world, crammed into a tiny box with a locking door in the central post office; the magical envelopes, the catalogues and magazines in a tight-packed roll, the little pink slips that meant a package … and then, between one or two decades, it all changed.

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Pay Government Employees When You Pay Suppliers

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Recently the city of Scranton, Pennsylvania (yes, home of the fictional “Office”) was forced to pay employees $7.25 per hour (minimum wage)

As a desperation measure to keep the city’s books balanced

Employees were furious and took the mayor to court, until a “rescue”
plan was put into place where the state gave a one time $250,000 grant and a $2M state loan, enabling the city to pay back the short paycheck. The plan raises Scranton property taxes by 33% over three years.

It is interesting that any sort of pay delay merits a large article in a major news media source (the WSJ), and yet paying SUPPLIERS late isn’t news at all.

The state of Illinois, for instance, is famous for delays to various suppliers, and it hits small businesses particularly hard, since they generally have a lower cash “cushion” to begin with. There has been a periodic scuffle about this issue, but not a long term plan to fix it.

In Europe under austerity it has gotten so bad that there are many cases of business people committing suicide, at least per this article (originally appeared in the NY Times).

The Italian state alone owes more than $90 billion to entrepreneurs. Some have been waiting to be paid for up to two years.

There doesn’t seem to be a compelling moral basis for why any government would routinely pay their own employees regularly while waiting an interminable amount of time to pay suppliers, who are citizens and taxpayers, too. Late payments to these suppliers don’t raise hackles, and in fact is “business as usual”, while delays of even a single paycheck cause howls of protest and are written up in newspapers.

If paying employees late is such a heinous act, then apply that same logic who provide services to the government but AREN’T government employees and treat them with respect, as well. Failing that, pay both the employees, the elected officials, and businesses at the same time.

Cross posted at LITGM