If you really care about global warming, there are a whole bunch of things you probably think you shouldn’t be doing that you should, and vice versa. The environmental religion of the modern age, in which an angry Gaia will punish us for our sinful ways, but we can redeem ourselves by sacrifice and self-denial, has spawned a mythology of classical proportions. The problem is that many of those myths, spouted as accepted wisdom by an uncritical media and special-interest activists, appear to be just plain wrong.

Wired magazine goes to the actual science — remember science? — and makes some proposals for those who really care about climate change, and think not only that reducing carbon emissions will actually help, but delude themselves that it is possible to reduce them enough to make even a little dent in anticipated warming.

Here is its list, each of which is explored further in a separate article:

• Live in Cities: Urban Living Is Kinder to the Planet Than the Suburban Lifestyle
• A/C Is OK: Air-Conditioning Actually Emits Less C02 Than Heating
• Organics Are Not the Answer: Surprise! Conventional Agriculture Can Be Easier on the Planet
• Farm the Forests: Old-Growth Forests Can Actually Contribute to Global Warming
• China Is the Solution: The People’s Republic Leads the Way in Alternative-Energy Hardware
• Accept Genetic Engineering: Superefficient Frankencrops Could Put a Real Dent in Greenhouse Gas Emissions
• Carbon Trading Doesn’t Work: Carbon Credits Were a Great Idea, But the Benefits Are Illusory
• Embrace Nuclear Power: Face It. Nukes Are the Most Climate-Friendly Industrial-Scale Form of Energy
• Used Cars — Not Hybrids: Don’t Buy That New Prius! Test-Drive a Used Car Instead
• Prepare for the Worst: Climate Change Is Inevitable. Get Used to It

It doesn’t say all of these are good ideas, of course. There are excellent reasons to slash-and-burn overgrown, bug-infested jungles, to plant more productive crops, sure. But there are also plenty excellent reasons not to cut down old-growth forests. However, if your policy goal is to reduce carbon emissions, which seems to be the sole fetish of environmentalists and policy makers, then all of these points, including razing the rainforests, are valid.

Meanwhile, the US Congress is about to debate a cap-and-trade scheme that will vastly expand government powers and revenue, cost consumers trillions in bureaucratic red tape, tax and lost economic growth, and achieve very little indeed. In welcoming an open floor debate on these mushy measures, the Wall Street Journal writes:

The vehicle is a bill that principal sponsors Joe Lieberman and John Warner are calling “landmark legislation.” They’re too modest. Warner-Lieberman would impose the most extensive government reorganization of the American economy since the 1930s.

Ouch. Nothing like a fat bureaucracy to infringe on the liberty and prosperity of the people. Nothing like a first-country moral crusade to give developing-country leaders ideas to foist upon their long-suffering people. Nothing like an overbearing state to hold down the development of the poor.

As if $130 oil isn’t reason enough to consider more fuel-efficient cars, reduce energy usage in industry and invest in alternative energy sources.

While we wait for this legislative disaster, however, would the disciples of St Al please report to the consistory, so they can get cracking on Wired’s measures?

(Hat tip: Climate Skeptic.)

The US government (and popular media) has a long history of blaming oil companies for “excessive profits” when the oil price is high. They don’t particularly care that when the oil price is low, oil companies risk huge losses, or that massive, long-term industrial investment projects can only be justified by future profits. No, every time Americans suffer at the pump, or think they do, oil companies are hauled before Congress to testify about their “price gouging”.

Turns out that they make less profit than you’d think, as Sterling T. Terrell shows eloquently in an article here. It’s a must-read, because it makes the price of fuel at the pump really, really simple. Taking into account inflation and tax, and despite higher demand from growing economies, higher demand from countries buying in currencies other than dollars, and restricted supply because of draconian environmental restrictions on exploiting domestic oil resources in the US, it turns out Americans aren’t paying all that much at all. Of the excess over base costs, two thirds goes to the government in the form of taxes. The “record profits” of billions of dollars that you hear about on TV might sound like a lot, but once you work it out in terms of the value of a typical oil company’s asset base, the volumes of product supplied, the cost base, and total revenues, they’re not “record profits” at all. Even water utilities make more profit, as do many other industries.

He argues, correctly, that price caps will lead, inevitably, to shortages. But that doesn’t stop politicians, here and abroad, from expressing grave concern about the impact of the high oil price on consumers. Smoothing the political path for intervention, no doubt.

I did a crude (haha) calculation myself, using various data obtained from Stats SA and the Department of Minerals and Energy Affairs. Starting with a 1998 base price of R2.28, which is what a litre of 91-octane unleaded used to cost inland, I compared the actual price to the inflation-adjusted price. For actual price I stuck to the highest octane available, as new levels (93 and 95) were introduced. If R2.28 is adjusted by inflation (average annual CPIX), the average fuel price in 2007 would have been R4.45. The average price in 2007 was actually R6.75. For the sake of simplicity, let’s put all of that disparity down to the steep oil price rise of recent years.

But we are a global leader in the production of synthetic fuel from coal. Sorry, says Sasol, we can’t give it to you cheaper than the government price. As a result, Sasol’s after-tax net profit margins, at 17%, are much higher than the 9.5% profit margin of US oil companies. Synfuel, however, accounts for only 30% or so of its business, but generates about 55% of the company’s profits. So the profit margin of the synfuels division alone is almost twice as high again, just because its costs are independent of the oil price, but its prices are determined by government and rise as the oil price goes up. So in reality, Sasol’s synfuel makes 3.3 times the profit that a typical US oil company makes. And the US companies are the ones being hauled before public hearings!

Profits would not be an issue in a free market, but they are an issue when they are made by a private monopoly in a highly-regulated, price-controlled sector. Worse than government-sponsored profits for Sasol, however, is that more than 20% of the fuel price goes towards unnecessary taxes (as opposed to the Road Accident Fund, which for all its bureaucratic chaos and mismanagement, is a more defensible levy). Take that arbitrary tax away, and the inflation-adjusted fuel price at the end of 2007 could have been R3.73, or if you account for the disparity between the inflation-adjusted price and the actual price — reflecting, in my simplification, the recent oil price rise — it could have been R5.29. (Disclaimer: So says the back of my envelope; corrections or refinements to this rough calculation would be welcome.)

Instead of R6.75 on average for 2007, we could have paid R5.29, and that’s without any change to the Sasol price policy or reduction in the price of oil. What effect might such a massive saving in transport cost have on food prices and general price inflation? Why does the government think it’s a good idea to tax fuel, and to keep raising those taxes?

Some might argue that fuel taxes discourage consumption, and therefore they are good for the environment. But fuel demand is notoriously inflexible. Face it, you’ve got to get to work, and producers have got to get bread and milk to the supermarket, no matter what the fuel price is. So the effect of taxation on demand is fractional. If you’re going to incur costs in the economy by using the fiscus to fund environmental improvement, almost any other investment would get you higher returns than fuel taxes.

So we have the absurd situation that on one hand, the US is holding hearings in populist efforts to claw back money from companies whose prices aren’t regulated, whose operations are bound by a myriad laws, and whose profits are by no means excessive. On the other, South Africa is doing nothing about sky-high monopoly profits that are a direct gift from the government, and which raise costs for every industry sector, limit economic growth, reduce our ability to alleviate poverty and create jobs, and limit our options in dealing with the energy crisis. And neither country has considered that of all the idiotic tax ideas a rapacious government can think of, slapping 20% taxes on fuel is possibly the worst. [Correction: that should read “27.2% taxes”. 27.2% tax results in a 21.4% share of tax in the final price, which I rounded to 20% here.]

Some economists say that South Africa is not headed for recession, despite the worldwide financial crisis, the weakening global economy, the critical shortage of electricity, and the rising oil price. I’m fairly pessimistic, however. I think the electricity crisis alone will be enough to cause a recession, because its effects permeate the economy. But even if the Bolt Effect, as I like to call it, is not as bad as I surmise, I’d be far more inclined to believe the optimists if the government were less keen to skim the cream off what’s left of the economy by taxing a basic commodity such as fuel.

Meanwhile, you have until this Friday, 25 April 2008, to comment on price cap proposals (Government Gazette link in PDF) on liquified petroleum gas. I’ve written about this before. If you want to know why you can’t find that nice cheap LPG at your local petrol station, look no further than government’s insistence on regulating every price in sight.

And every time we get shortages, or price inflation, or both, we wonder why. It’s because (and Mandy de Waal’s comment yesterday is a case in point) we simply don’t trust the profit motive as a driver of efficient capital allocation. We simply don’t trust the price mechanism to regulate supply and demand. In the end, we don’t trust our people with their freedom.

But really, do go read Terrell’s article. Evidence once more that Economics 101 is, well, elementary.

2007 turned out to be a pretty good year for George W. Bush.

Late last year, voters turfed Republicans out of Congress over either lack of spending restraint or dissatisfaction with progress in Iraq or both, depending who you ask. (Robert Novak: war; Alan Greenspan: spending; Rush Limbaugh: both, and liberals suck; Reason magazine: both, and government sucks.)

This electoral loss, which meant Bush could no longer rely on a compliant Congress to send him only bills he likes, merely reinforced the view that Bush now is a lame duck, unable to govern effectively. (CNN: Is Bush already a lame duck?; Lou Dobbs: Beware the lame duck; The Guardian: ‘Lame duck’ Bush faces struggle to push through new agenda; The Telegraph: Allies desert ‘lame duck president’; Dan Froomkin: How lame a duck?)

A few voices ran against the media herd, but looked like wishful thinkers. (Christian Science Monitor: Bush’s lame-duck advantage.)

But on Friday, Stephen Moore of the Wall Street Journal, and Steve Huntley of the Chicago Sun-Times (apparently independently) noted that Bush hasn’t had a bad 2007 at all. Moore’s item is worth quoting in its entirety:

Bush on the Comeback Trail

Just as Newt Gingrich was the best thing that ever happened to Bill Clinton, so Nancy Pelosi has become a great political asset to George W. Bush. Mr. Bush is on a roll legislatively and even his poll numbers are inching up while Congress’s have sunk into the teens. There’s nothing like having a foil in Congress to rehabilitate a president. Just ask Harry Truman.

This time last year it would have been inconceivable that Mr. Bush would have a successful 2007, or that Nancy Pelosi and the Democratic Congress would have fewer than one-in-four voters approving their performance. I’ve made a list of Mr. Bush’s policy victories over the Democrats:

1. S-CHIP — Mr. Bush vetoed the Democrats’ bill expanding middle-class health care subsidies and Democrats were unable to override that veto.
2. Alternative Minimum Tax — Democrats passed AMT reform without the offsetting tax hikes they had threatened.
3. Energy bill — What was a monster at the beginning of the year is now just a fairly harmless CAFE standards bill. Environmentalists are fuming.
4. Hate Crimes Legislation — Mr. Bush blocked it. The Congressional Black Caucus is furious.
5. War funding — Mr. Bush prevailed without any pull-out date. At the start of the year this looked impossible.
6. The Budget — Mr. Bush mostly prevailed on domestic spending totals.
7. No new taxes — all of the Democratic tax proposals were killed, including tobacco taxes, hedge fund taxes and energy company taxes.

It pretty much looks like the White House ran the table. Merry Christmas, Madam Speaker.

As I’ve noted before, US economic and foreign policies matter most to me as a foreigner: whether Americans permit gays to be married, guns to be carried or God to be harried doesn’t keep me up at night.

During the 2004 presidential elections, I said to a friend that perhaps the US needs a presidential term under a Democrat, if only to remind the people in general (and Republican voters in particular) that the Democrats aren’t very good at low taxes, low spending, light-touch environmental regulation and effective foreign policy. Either a John Kerry in 2004, or a Hillary Clinton in 2008, would achieve this goal, and as a result, cement the longer-term rise of the GOP. It now appears that Nancy Pelosi, the San Francisco leftist in charge of the ineffectual Democratic Congress, may have achievedachieve this in just two years. Especially if the Democrats nominate Clinton (admittedly, Dennis Kucinich would do too), my money’s on a Republican presidential election win just less than a year from now.

Update: Repaired a grammatic blunder in stating Nancy Pelosi’s term: either she “may have achieved it in just one year”, or she “may achieve it in just two years” — my phrasing was inconsistent, and the former may yet be undone by a sparkling Congressional performance in 2008 (when Martians may land and I may win the lottery).

It is true that the Republicans, in the US, haven’t had a stellar record on government spending since 2000. It has a high standard to meet, if it is to match its own rhetoric. It has been vulnerable to attack over profligacy, and in particular over Bush’s refusal to veto fat-laden bills. (Or rather, his inability to do so in practice because he has no line-item veto.)

It’s got so bad, I’m told, that the Democrats are now the party of fiscal responsibility, and if I’m a small-government libertarian, I should prefer to see Democrats in charge in the US.

Luckily, some people keep track of these things. Witness the House and Senate “RePORK Cards”, published by the Club for Growth, for example. It ranks senators and members of Congress on their voting record against pork barrel spending. These votes all involve amendments to bills aimed at removing discretionary spending earmarks on totally unrelated items.

Some highlights from the Senate, where 15 anti-pork measures came to a vote:

• Only three senators received a perfect score of 100% (and were present for a majority of the votes). All three are Republicans. A fourth, John McCain (R-AZ), was only present for two votes.
• Thirty-six senators scored below 10%. Of those, two are independents, the other 34 are Democrats.
• Next lowest on the list, at 11%, is the junior senator from New York, Hillary Clinton, who voted for one anti-pork amendments out of the nine for which she was present. Barack Obama scored 33%, or two out of six.
• Minority Leader Mitch McConnell (R-KY) scored a 53%; Majority Leader Harry Reid (D-NV) scored a 7%, voting for only one amendment.
• The average Republican score was 59%; the average Democratic score was 12%.
• Thanks to this dismal voting record, only two amendments were successful: one to cut funding for spinach growers from the Iraq Supplemental Bill, the other not to spend $1 million on a museum dedicated to the Woodstock Festival. Those that failed included funding a visitors’ center in Louisiana instead of providing shelter for victims of Hurricane Katrina (and they bash Bush over Katrina?), millions of dollars for bicycle paths instead of using the funds to improve bridge safety, and $100 million for the 2008 Republican and Democratic nominating conventions (go figure).

In Congress, where 50 anti-pork amendments were considered, these figures stood out:

• Sixteen members scored 100%. All of them are Republicans.
• The average Republican score was 43%. The average Democratic score was 2% — on average, Democrats voted for one anti-pork measure out of 50!
• The only Democrat to score over 20% was Rep. Jim Cooper (D-TN) who received an admirable 98% grade.
• 105 congressmen scored a round zero, voting against every single amendment. The “Pork Hall of Shame” includes 81 Democrats and 24 Republicans.
• The Democratic Freshmen — the new blood that was going to restore fiscal responsibility to Congress — scored an abysmal average of 2%. Their Republican counterparts scored 78% on average.

Let nobody ever again tell me (a) to support a Democrat for their spending restraint, and (b) to believe Democrats when they promise to clean up Congress. The only positive from this report is that Americans can hold their representatives accountable for their wasteful spending. Let’s hope they do so.

Economics, that is. And free market economics, at that.

A national test given to high school kids in the US came back with some surprising results. According to a Wall Street Journal editorial, more than half believe that poverty is best reduced by economic growth - not government intervention. Given multiple choices and a supply curve chart, a plurality also believed that setting a price floor on chocolate would cause a chocolate surplus. Would these kids reach the same, logical conclusion if the test replaced the term “chocolate” with “labour”?

While about half of the kids fail at science and history, almost 80% passed the economics section of the test. That’s a pleasant surprise, for a non-mandatory subject. Where do they get this knowledge? Surely not from the media? Could it be (gasp) common sense?

The Wall Street Journal suggests a few politicians might like to take the test themselves. I’m thinking perhaps Congressional approval ratings lower than even those of George W Bush don’t need yet another knock.

Patricia De Lille, all is forgiven. It appears the idiots that run our government aren’t any worse than the idiots that run the US Congress. Perhaps if you’re too stupid and unselfconscious for any real job, you put on a big toothy grin and get voted into a position where you can spend your days proving to the world just how Luddite and illiterate you really are. Check out this bizarro hearing of the Committee of Oversight and Government Reform, chaired by Henry A. Waxman (D-Calif.):

On Tuesday, July 24, 2007, the Committee held a hearing to examine recent developments regarding inadvertent file sharing over peer-to-peer (P2P) networks, the impact of such sharing on consumers, corporations and government entities, and whether such sharing creates privacy or security risks for users.

No, seriously. They want to pass laws to make sure that “inadvertent file-sharing does not jeopardize the public’s privacy and security”. CNET News.com reports:

Also at the hearing, Mark Gorton, the chairman of Lime Wire, which makes the peer-to-peer software LimeWire, was assailed for allegedly harming national security through offering his product.

Wait till these people hear about e-mail. They’d have to ban the internet.