Category: Government

No Increase in Public’s Concern with Income Inequality Since 1978

(p. 4A) DENVER (AP) — Income inequality is all the rage in public debate nowadays. Political figures from Sen. Elizabeth Warren on the left to Republican presidential prospect Jeb Bush on the right are denouncing the widening gap between the wealthy and everyone else.
But ordinary Americans don’t seem as fascinated by the issue as their would-be leaders. The public’s expressed interest in income inequality has remained stagnant over the past 36 years, according to the General Social Survey, which measures trends in public opinion.
In 2014 polling, Republicans’ support for the government doing something to narrow the rich-poor gap reached an all-time low. Even Democrats were slightly less interested in government action on the issue than they were two years ago.
The survey is conducted by the independent research organization NORC at the University of Chicago. Because of its long-running and comprehensive questions, it is a highly regarded source on social trends.
In the latest survey, made public last week, less than half of Americans — 46 percent — said the government ought to reduce income differences between the rich and the poor. That level has held fairly steady since 1978. Thirty-seven percent said the government shouldn’t concern itself with income differences, and the rest didn’t feel strongly either way.

For the full story, see:
AP. “Income Inequality? Pols Want to Talk about It; Public Yawns.” Omaha World-Herald (Monday, March 23, 2015): 4A.

For more details on the National Opinion Research Center (NORC) General Social Survey (GSS) results through 2014, see:
Inequality: Trends in Americans’ Attitudes URL: http://www.apnorc.org/projects/Pages/HTML%20Reports/inequality-trends-in-americans-attitudes0317-6562.aspx#study

Pentagon Seeks Innovation from Private Start-Ups Since “They’ve Realized that the Old Model Wasn’t Working Anymore”

(p. A3) SAN FRANCISCO — A small group of high-ranking Pentagon officials made a quiet visit to Silicon Valley in December to solicit national security ideas from start-up firms with little or no history of working with the military.
The visit was made as part of an effort to find new ways to maintain a military advantage in an increasingly uncertain world.
In announcing its Defense Innovation Initiative in a speech in California in November, Chuck Hagel, then the defense secretary, mentioned examples of technologies like robotics, unmanned systems, miniaturization and 3-D printing as places to look for “game changing” technologies that would maintain military superiority.
“They’ve realized that the old model wasn’t working anymore,” said James Lewis, director of the Strategic Technologies Program at the Center for Strategic and International Studies in Washington. “They’re really worried about America’s capacity to innovate.”
There is a precedent for the initiative. Startled by the Soviet launch of the Sputnik satellite in 1957, President Dwight D. Eisenhower created the Advanced Research Projects Agency, or ARPA, at the Pentagon to ensure that the United States would not be blindsided by technological advances.
Now, the Pentagon has decided that the nation needs more than ARPA, renamed the Defense Advanced Research Projects Agency, or Darpa, if it is to find new technologies to maintain American military superiority.
. . .
The Pentagon focused on smaller companies during its December visit; it did not, for example, visit Google. Mr. Welby acknowledged that Silicon Valley start-ups were not likely to be focused on the Pentagon as a customer. The military has captive suppliers and a long and complex sales cycle, and it is perceived as being a small market compared with the hundreds of millions of customers for consumer electronics products.
Mr. Welby has worked for three different Darpa directors, but he said that Pentagon officials now believed they had to look beyond their own advanced technology offices.
“The Darpa culture is about trying to understand high-risk technology,” he said. “It’s about big leaps.” Today, however, the Pentagon needs to break out of what can be seen as a “not invented here” culture, he said.
“We’re thinking about what the world is going to look like in 2030 and what tools the department will need in 20 or 30 years,” he added.

For the full story, see:
JOHN MARKOFF. “Pentagon Shops in Silicon Valley for Game Changers.” The New York Times (Fri., FEB. 27, 2015): A3.
(Note: ellipsis added.)
(Note: the online version of the story has the date FEB. 26, 2015.)

Starting in Late Middle Ages the State Tried “to Control, Delineate, and Restrict Human Thought and Action”

(p. C6) . . . transregional organizations like Viking armies or the Hanseatic League mattered more than kings and courts. It was a world, as Mr. Pye says, in which “you went where you were known, where you could do the things you wanted to do, and where someone would protect you from being jailed, hanged, or broken on the wheel for doing them.”
. . .
This is a world in which money rules, but money is increasingly an abstraction, based on insider information, on speculation (the Bourse or stock market itself is a regional invention) and on the ability to apply mathematics: What was bought or sold was increasingly the relationships between prices in different locations rather than the goods themselves.
What happened to bring this powerful, creative pattern to a close? The author credits first the reaction to the Black Death of the mid-14th century, when fear of contamination (perhaps similar to our modern fear of terrorism) justified laws that limited travel and kept people in their place. Religious and sectarian strife further limited the free flow of ideas and people, forcing people to choose one identity to the exclusion of others or else to attempt to disappear into the underground of clandestine and subversive activities. And behind both of these was the rise of the state, a modern invention that attempted to control, delineate, and restrict human thought and action.

For the full review, see:
PATRICK J. GEARY. “Lighting Up the Dark Ages.” The Wall Street Journal (Sat., May 30, 2015): C6.
(Note: ellipses added.)
(Note: the online version of the review has the date May 29, 2015.)

The book under review, is:
Pye, Michael. The Edge of the World: A Cultural History of the North Sea and the Transformation of Europe. New York: Pegasus Books LLC, 2014.

Average Length of 10-K Reports Rises to 41,911 Words

WordLength10KannualReportGraph2015-07-05.jpgSource of graph: online version of the WSJ article quoted and cited below.

(p. B1) General Electric Co.’s chief financial officer was taken aback by the industrial conglomerate’s 246-page annual report.

The 10-K and supporting documents his finance team and others at the company produced was meant to give investors a comprehensive picture of GE’s businesses and financial performance over the previous 12 months. It did everything but.
Packed with text on the company’s internal controls, auditor statements and regulator-mandated boilerplate on “inflation, recession and currency volatility,” the 2013 annual report was 109,894 words long. “Not a retail investor on planet Earth could get through” it, let alone understand it, said GE finance chief Jeffrey Bornstein.
Companies are spending an increasing amount of time and energy beefing up their regulatory filings to meet disclosure requirements. The average 10K is getting longer–about 42,000 words in 2013, up from roughly 30,000 words in 2000. By comparison, the text of the Sarbanes-Oxley Act of 2002 has 32,000 words.

For the full story, see:
VIPAL MONGA and EMILY CHASAN. “The 109,894-Word Annual Report.” The Wall Street Journal (Tues., June 2, 2015): B1 & B10.

NOAA New Estimates Show Increase Since 1880 of Only 1.65 Degrees Fahrenheit

(p. A10) Scientists have long labored to explain what appeared to be a slowdown in global warming that began at the start of this century as, at the same time, heat-trapping emissions of carbon dioxide were soaring. The slowdown, sometimes inaccurately described as a halt or hiatus, became a major talking point for people critical of climate science.
Now, new research suggests the whole thing may have been based on incorrect data.
When adjustments are made to compensate for recently discovered problems in the way global temperatures were measured, the slowdown largely disappears, the National Oceanic and Atmospheric Administration declared in a scientific paper published Thursday. And when the particularly warm temperatures of 2013 and 2014 are averaged in, the slowdown goes away entirely, the agency said.
. . .
The Cato Institute, a libertarian think tank in Washington that is critical of climate science, issued a statement condemning the changes and questioning the agency’s methodology.
“The main claim by the authors that they have uncovered a significant recent warming trend is dubious,” said the statement, attributed to three contrarian climate scientists: Richard S. Lindzen, Patrick J. Michaels and Paul C. Knappenberger.
However, Russell S. Vose, chief of the climate science division at NOAA’s Asheville center, pointed out in an interview that while the corrections do eliminate the recent warming slowdown, the overall effect of the agency’s adjustments has long been to raise the reported global temperatures in the late 19th and early 20th centuries by a substantial margin. That makes the temperature increase of the past century appear less severe than it does in the raw data.
“If you just wanted to release to the American public our uncorrected data set, it would say that the world has warmed up about 2.071 degrees Fahrenheit since 1880,” Dr. Vose said. “Our corrected data set says things have warmed up about 1.65 degrees Fahrenheit. Our corrections lower the rate of warming on a global scale.”

For the full story, see:
JUSTIN GILLIS. “Global Warming ‘Hiatus’ Challenged by NOAA Research.” The New York Times (Fri., JUNE 5, 2015): A10.
(Note: ellipsis added.)
(Note: the online version of the story has the date JUNE 4, 2015.)

The scientific article mentioned in the passages quoted above, is:
Karl, Thomas R., Anthony Arguez, Boyin Huang, Jay H. Lawrimore, James R. McMahon, Matthew J. Menne, Thomas C. Peterson, Russell S. Vose, and Zhang Huai-Min. “Possible Artifacts of Data Biases in the Recent Global Surface Warming Hiatus.” Science 348, no. 6242 (June 26, 2015): 1469-72.

Plant Breeders Use Old Sloppy “Natural” Process to Avoid Regulatory Stasis

(p. A11) What’s in a name?
A lot, if the name is genetically modified organism, or G.M.O., which many people are dead set against. But what if scientists used the precise techniques of today’s molecular biology to give back to plants genes that had long ago been bred out of them? And what if that process were called “rewilding?”
That is the idea being floated by a group at the University of Copenhagen, which is proposing the name for the process that would result if scientists took a gene or two from an ancient plant variety and melded it with more modern species to promote greater resistant to drought, for example.
“I consider this something worth discussing,” said Michael B. Palmgren, a plant biologist at the Danish university who headed a group, including scientists, ethicists and lawyers, that is funded by the university and the Danish National Research Foundation.
They pondered the problem of fragile plants in organic farming, came up with the rewilding idea, and published their proposal Thursday in the journal Trends in Plant Science.
. . .
The idea of restoring long-lost genes to plants is not new, said Julian I. Schroeder, a plant researcher at the University of California, Davis. But, wary of the taint of genetic engineering, scientists have used traditional breeding methods to cross modern plants with ancient ones until they have the gene they want in a crop plant that needs it. The tedious process inevitably drags other genes along with the one that is targeted. But the older process is “natural,” Dr. Schroeder said.
. . .
Researchers have previously crossbred wheat plants with traits found in ancient varieties, noted Maarten Van Ginkel, who headed such a program in Mexico at the International Maize and Wheat Improvement Center.
“We selected for disease resistance, drought tolerance,” he said. “This method works but it has drawbacks. You prefer to move only the genes you want.”
When Dr. Van Ginkel crossbred for traits, he did not look for the specific genes conferring those traits. But with the flood-resistant rice plants, researchers knew exactly which gene they wanted. Nonetheless, they crossbred and did not use precision breeding to alter the plants.
Asked why not, Dr. Schroeder had a simple answer — a complex maze of regulations governing genetically engineered crops. With crossbreeding, he said, “the first varieties hit the fields in a couple of years.”
And if the researchers had used precision breeding to get the gene into the rice?
“They would still be stuck in the regulatory process,” Dr. Schroeder said.

For the full story, see:
GINA KOLATA. “A Proposal to Modify Plants Gives G.M.O. Debate New Life.” The Wall Street Journal (Fri., MAY 29, 2015): A11.
(Note: ellipses added.)
(Note: the online version of the story has the date MAY 28, 2015.)

Tesla Cars Are Built on Government Subsidies

(p. A13) Nowhere in Mr. Vance’s book, . . . , does the figure $7,500 appear–the direct taxpayer rebate to each U.S. buyer of Mr. Musk’s car. You wouldn’t know that 10% of all Model S cars have been sold in Norway–though Tesla’s own 10-K lists the possible loss of generous Norwegian tax benefits as a substantial risk to the company.
Barely developed in passing is that Tesla likely might not exist without a former State Department official whom Mr. Musk hired to explore “what types of tax credits and rebates Tesla might be able to drum up around its electric vehicles,” which eventually would include a $465 million government-backed loan.
And how Tesla came by its ex-Toyota factory in California “for free,” via a “string of fortunate turns” that allowed Tesla to float its IPO a few weeks later, is just a thing that happens in Mr. Vance’s book, not the full-bore political intrigue it actually was.
The fact is, Mr. Musk has yet to show that Tesla’s stock market value (currently $32 billion) is anything but a modest fraction of the discounted value of its expected future subsidies. In 2017, he plans to introduce his Model 3, a $35,000 car for the middle class. He expects to sell hundreds of thousands a year. Somehow we doubt he intends to make it easy for politicians to whip away the $7,500 tax credit just when somebody besides the rich can benefit from it–in which case the annual gift from taxpayers will quickly mount to several billion dollars each year.
Mother Jones, in a long piece about what Mr. Musk owes the taxpayer, suggested the wunderkind could be a “bit more grateful, a bit more humble.” Unmentioned was the shaky underpinning of this largess. Even today’s politicized climate modeling allows the possibility that climate sensitivity to carbon dioxide is far less than would justify incurring major expense to change the energy infrastructure of the world (and you certainly wouldn’t begin with luxury cars). Were this understanding to become widespread, the subliminal hum of government favoritism could overnight become Tesla’s biggest liability.

For the full commentary, see:
HOLMAN W. JENKINS, JR. “BUSINESS WORLD; The Savior Elon Musk; Tesla’s impresario is right about one thing: Humanity’s preservation is a legitimate government interest.” The Wall Street Journal (Sat., May 30, 2015): A13.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date May 29, 2015.)

The book discussed in the commentary is:
Vance, Ashlee. Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future. New York: Ecco, 2015.

The Mother Jones article discussing government subsidies for Musk’s Tesla, is:
Harkinson, Josh. “Free Ride.” Mother Jones 38, no. 5 (Sept./Oct. 2013): 20-25.

Institutional Improvements Can Sometimes Be Designed, Rather than Only Spontaneous

A distinguished school of libertarian and neo-Austrian economic thought argues, following F.A. Hayek, that institutional improvements only arise from spontaneous order, and never from conscious design. There is something to their argument, but the designs of Alvin Roth provide counter-examples.

(p. A13) Mr. Roth’s work has been to discover the most efficient and equitable methods of matching and implement them in the world. He writes with verve and style, describing many market malfunctions–from aboriginal tribes in Australia arranging marriages for children not yet born to judges bending every rule in the book to hire law clerks years before they have graduated from law school–and how we ought to think about them.

Mr. Roth’s approach contrasts with standard debates over free markets versus government regulation. We want markets to be thick, quick, timely and trustworthy, but without careful design markets can become thin, slow, ill-timed and dangerous for the honest. The solution to these problems is unlikely to be regulation legislated from on high. Instead what Mr. Roth practices is nuanced market design created mostly by market participants. Mr. Roth found, for example, that even though the problems in the market for gastroenterologists and law clerks looked the same (hiring started years before schooling ended), the solutions had to be subtly different because of differences in culture, history and norms.

For the full review, see:
ALEX TABARROK. “BOOKSHELF; The Designer of Markets; In some markets, price isn’t the determining factor. You can choose to go to Harvard, but Harvard has to choose to accept you first.” The Wall Street Journal (Tues., JUNE 16, 2015): A13.
(Note: ellipses added.)
(Note: the online version of the review has the date JUNE 15, 2015, and has the title “BOOKSHELF; Matchmaker, Make Me a Market; In some markets, price isn’t the determining factor. You can choose to go to Harvard, but Harvard has to choose to accept you first.”)

The book under review is:
Roth, Alvin E. Who Gets What — and Why: The New Economics of Matchmaking and Market Design. New York: Houghton Mifflin Harcourt Publishing Co., 2015.

How Home Solar Panel Subsidies Increase Inequality

(p. A13) Well-meaning–but ill-conceived–federal, state and local tax incentives for rooftop solar give back between 30% and 40% of the installation costs to the owner as a tax credit. But more problematic are hidden rate subsidies, the most significant of which is called net metering, which is available in 44 states. Net metering allows solar-system owners to offset on a one-for-one basis the energy they receive from the electric grid with the solar power they generate on their roof.
While this might sound logical, it isn’t. An average California resident with solar, for example, generally pays about 17 cents per kilowatt-hour for electric service when the home’s solar panels aren’t operating. When they are operating, however, net metering requires the utility to pay that solar customer the same 17 cents per kilowatt-hour. But the solar customer still needs the grid to back up his intermittent solar panels, and the utility could have purchased that same solar power from a utility-scale solar power plant for about five cents per kilowatt-hour.
This 12-cents-per-kwh cost difference amounts to a wealth transfer from average electric customers to customers with rooftop solar systems (who also often have higher incomes). This is because utilities collect much of their fixed costs–the unavoidable costs of power plants, transmission lines, etc.–from residential customers through variable-use charges, in other words, charges based on how much energy they use. When a customer with rooftop solar purchases less electricity from the utility, he pays fewer variable-use charges and avoids contributing revenue to cover the utility’s fixed costs. The result is that all of the other customers have to pick up the difference.

For the full commentary, see:
BRIAN H. POTTS . “The Hole in the Rooftop Solar-Panel Craze; Large-scale plants make sense, but panels for houses simply transfer wealth from average electric customers.” The Wall Street Journal (Mon., May 18, 2015): A13.
(Note: ellipses added.)
(Note: the online version of the commentary has the date May 17, 2015.)

Army Corps of Engineers Blamed for Hurricane Katrina

(p. 13) NEW ORLEANS — Nearly 10 years on, one might assume that the case of Hurricane Katrina is closed.
That the catastrophic flooding of this city was caused not merely by a powerful storm but primarily by fatal engineering flaws in the city’s flood protection system has been proved by experts, acknowledged by the United States Army Corps of Engineers and underscored by residents here to anyone who might suggest otherwise.
But the efforts to establish responsibility with ever more precision — to ascertain just how many of those flaws were due to engineering, politics or money — have not stopped.

For the full story, see:
CAMPBELL ROBERTSON and JOHN SCHWARTZ. “Decade After Katrina, Pointing Finger Firmly at Army Corps.” The New York Times, First Section (Sun., MAY 24, 2015): 13 & 16.
(Note: the date of the online version of the story is MAY 23, 2015, and has the title “Decade After Katrina, Pointing Finger More Firmly at Army Corps.”)