The Independent reports “Ford to launch plug-in electric car in China as Beijing lays out strict air pollution rules to combat smog,” (April 6, 2017). (See also: “Ford to Make Electric Cars in China Amid Green Drive,” Wall Street Journal, April 7, 2017).

Screen Shot 2017-04-07 at 4.23.10 PMElectric cars offer many advantages, but reducing pollution isn’t always one of them. Instead, electric cars shift the point of pollution to the electricity source. So electric cars charged in the Pacific Northwest draw power from very clean hydroelectric dams. Electric cars in California can require importing more power from coal burning plants in other states.

Electric cars sold in the U.S., China, and E.U. receive significant government subsidies. Yet “Electric cars and the coal that runs them” (Washington Post, November 23, 2015), notes:

…Thanks to generous tax incentives, the share of electric vehicles has grown faster in the Netherlands than in nearly any other country in the world.

But behind the green growth is a filthy secret: In a nation famous for its windmills, electricity is coming from a far dirtier source. Three new coal-fired power plants, including two here on the Rotterdam harbor, are supplying much of the power to fuel the Netherlands’ electric-car boom.

A Wired article on Tesla’s electric cars (March, 31, 2016) explains:

Your electric car doesn’t need gas, but it still might get its energy from burning carbon. It depends on how your local grid generates electricity. “If you use coal-fired power plants to produce the electricity, then all-electrics don’t even look that much better than a traditional vehicle in terms of greenhouse gases,”  … But if your local grid incorporates a fair amount of renewable solar and wind energy, like California, your electric vehicle is pretty clean.

So electric cars in California can be clean on sunny, windy days, and less clean when the grid draws power from out-of-state sources (up to 50% from burning coal). California doesn’t generate much energy from coal, but does import a lot. “UPDATE: California’s quiet market for coal,” SNL (October 12, 2015):

In 2014, less than 5% of California’s total energy demand was served by coal and petroleum coke-fired plants, nearly all of it from plants outside the state, according to an Oct. 12 report from the California Energy Commission. By 2026, California will end virtually all its reliance on coal.

But at times, as much as 50% of Southern California’s electricity still comes from coal-fired plants, Steve Homer, director of project management for the Southern California Public Power Authority, or SCPPA, told SNL Energy.

Back to the China story, generating electricity from coal in United states power plants is far less polluting than electricity from coal in China. “In Coal-Powered China, Electric Car Surge Fuels Fear of Worsening Smog,” (Reuters, January 27, 2016) reports:

A series of studies by Tsinghua University, whose alumni includes the incumbent president, showed electric vehicles charged in China produce two to five times as much particulate matter and chemicals that contribute to smog versus gas-engine cars. Hybrid vehicles fare little better.

“International experience shows that cleaning up the air doesn’t need to rely on electric vehicles,” said Los Angeles-based An Feng, director of the Innovation Center for Energy and Transportation. “Clean up the power plants.”

The key policy point is the upgrade power plants before pushing (subsidizing) electric cars:

Tsinghua’s studies call into question the wisdom of aggressively promoting vehicles which the university said could not be considered environmentally friendly for at least a decade in many areas of China unless grid reform accelerates.

In addition to the problem of electricity source pollution are infrastructure challenges. “California bets on electric cars, at ratepayer risk,” (San Diego Union Tribune,  February 7, 2017), asks:

Should all utility consumers subsidize the wealthier few who like to drive electric cars?

It’s hardly a fair question. Yet that’s what the California Public Utilities Commission will eventually have to decide, now that utilities have proposed a $1 billion plan to build and effectively own the state’s retail charging network of tomorrow.

New charging stations cost money, and so does the renewable power generation grid:

… a second problem created mostly in California, a serious glut of renewable energy. Starting in 2006, lawmakers ordered utility consumers to subsidize rapid increases in wind and solar energy production.

Today the state has as much as 50 percent more power available than needed on a sunny, windy winter afternoon. And then, when the sun goes down or weather causes production to drop, fossil-fuel plants fire up because batteries are too expensive.

China where average incomes are much lower than California, has more severe infrastructure problems for charging electric cars. “What’s Driving The Electric Car Trend In China?,” (NPR Morning Edition, December 14, 2015 ) reports on government subsidies in boosting electric car sales in China. Yang Zhou discusses his new car:

ZHOU: I bought a hybrid model from a Chinese carmaker called BYD. And it stands for Build Your Dreams. I paid $24,000 for the car. And that’s 30 percent off the sticker price. But I paid no purchase tax. And the best thing that comes with the car is a free Shanghai license plate, which is worth $13,000.

Zhou explains that this special license plate allows him to rush-hour access to less-congested elevated Shanghai highways. But he also complains that charging his car is difficult:

ZHOU: I have to admit that charging the car is really a hassle. Every time I do it, I have to lower an extension cord from my apartment, which is on the 11th floor. …

ZHOU: Oh, yeah, it’s very long. And it’s really heavy (laughter). It takes seven hours to charge the car. And the car can drive 40 miles on one charge. But fortunately, I don’t have to charge the car every day. But I do expect that the infrastructure for these kind of vehicles will get better over time because China’s government has planned to build 12,000 charging stations by the year 2020.

Building 12,000 charging stations will be another expense, and money that could have been used to modernize Chinese coal power plants instead of catering to already-subsidized electric car buyers.

Shanghai does have a showcase clean coal plant. “China hopes Shanghai clean coal plant sets example,” (PEi, August 23, 2016) and “China’s drive to clean up its coal power, one plant at a time,” (New Scientist, August 22, 2016).

Yet coal still accounts for about two-thirds of China’s energy provision, and more than 200 new coal plants have been given the go-ahead. Globally, too, coal demand and production are forecast to grow until at least 2040.

Technology that improves coal-burning efficiency could be useful for retrofitting older power plants, and cut down their emissions.

Even with expanded wind and solar power in China, coal will continue to be a major power source for its expanding electric car users.

Charles C. Mann’s “Renewables Aren’t Enough. Clean Coal is the Future,” (Wired, March 25, 2014) looks at high technology coal power development in China:

GreenGen is a billion-dollar facility that extracts the carbon dioxide from a coal-fired power plant and, ultimately, will channel it into an underground storage area many miles away. Part of a coming wave of such carbon-eating facilities, it may be China’s—and possibly the planet’s—single most consequential effort to fight climate change. …

China, like most of the rest of the world, “pretty much has to use coal,” says Dean, the fuel analyst. “Or, I guess, leave people in the dark.” And since coal is not going away, coal plants around the world will need to find a way to capture and store their emissions. “It’s just crazy not to develop this technology.”

An earlier post “For Still-Poor China, Coal Pollution from Home Heating,” reviewed the challenges of China’s antiquated coal-power plants, especially those for home heat.

And here’s a short video of electric car charging challenge from South Africa.

From China Daily (March 24, 2017), “Dynamic national spirit drives China’s growth,” a discussion of The Complacent Class: The Self-Defeating Quest for the American Dream:

Tyler Cowen’s latest book has struck a nerve in the United States. He sees a failure of spirit underlying the many worrying trends his country has seen over the last 40 years – the lack of wage growth, declining life expectancy in some groups, increased inequality, growing monopolization of the economy, increasing racial and income segregation in schools and housing. …

Screen Shot 2017-03-30 at 8.00.30 AMCowen, a frequent visitor to China, is a well-known free-market-oriented professor of economics at George Mason University in Fairfax, Virginia, near Washington, D.C. His book – The Complacent Class: The Self-Defeating Quest for the American Dream – has provoked widespread discussion and has been reviewed and analyzed in all the leading newspapers and policy journals.

Cowen contrasts complacency in the U.S. with continued dynamism in China:

In contrast to his worries about the US, he writes: “Even with its recent economic troubles, China has a culture of ambition and dynamism and a pace of change that harkens back to a much earlier America. China, even though in the midst of some rather serious economic troubles, makes today’s America seem staid and static. For all its flaws, China is a country where every time you return, you find a different and mostly better version of what you had left the time before.”

Cowen sees a “make China great again” spirit than unifies elites and everyday people across China. Chinese people know the distant history of their country as leading the world in culture, agricultural productivity, and technology.

China has an advantage similar to America in the 1950s and 1960s where so many grew up poor and focused on working to get ahead. America’s Great Depression from 1929 to 1939 impoverished tens of millions and was followed by World War II.

After World War II, incomes and productivity improved across the U.S. economy through the 1950s and 1960s much as income and productivity across China has grown over the last three decades.

The China Daily on Cowen’s book continues:

He says that his experience at George Mason University leads him to believe that much of China’s dynamism comes from the opportunities it offers to non-elite young people.

“It is striking to me how many of the good Chinese students in the US come from rural areas and do not have very wealthy parents. They are not typically from the poorest families, but they are not just from the elite families in Shanghai.

“Part of it is the exam system. I think that for all the talk of corruption, China is fairly meritocratic in the sense that a smart person from a middle-class or poor family really can rise a great deal.”

More on The Complacent Class here (Mercatus Center event audio).

Many posts on China issues on Cowen’s MScreen Shot 2017-03-30 at 8.28.39 AMarginalRevolution blog.

And “Learn more about China” posts and links on Marginal Revolution University page.

Lincoln-Douglas debaters already have a right to housing along with the benefits and constraints. Free housing comes with strings attached.

He (or she) who “pays the piper calls the tune.” When we turn the music up too loud, parents, siblings or both complain. In our parent’s home we can be told what to do and when to do it. We can be told not to drink or smoke. Parent housing policies are paternalistic, as expected when we live in our parent’s home.

Children and teenagers have housing rights and responsibilities provided primarily by parents, and secondarily by extended family or various local and state government housing agencies and foster care programs. And like a “right to life” that makes suicide a crime, students exiting their “right to housing” can be pursued by police and returned home.

For the March/April LD topic, students are asked to discuss and debate housing rights for the broader public:

Lincoln-Douglas Debate – 2017 Mar/Apr
Resolved: The United States ought to guarantee the right to housing. 

How can affirmative debaters advocate a right to housing without creating (or expanding) a paternalistic system? Online definition of paternalism:

the policy or practice on the part of people in positions of authority of restricting the freedom and responsibilities of those subordinate to them in the subordinates’ supposed best interest.

Eye on Ethics: The Challenge of Paternalism in Social Work,” (Social Work Today, January/February 2005) addresses the challenge of trying to help without exerting too much social control:

To what extent do clients have the right to engage in seemingly self-destructive courses of action? How should social workers respond … To the homeless individual who prefers sleeping in subfreezing temperatures to temporary housing in a shelter?

Such circumstances force social workers to balance their commitment to clients’ right to self-determination and their instinct to protect clients from themselves, or what moral philosophers refer to as paternalism. Paternalism occurs when social workers interfere with individuals’ right to self-determination to protect them from self-harm. The concept of paternalism has been debated at least since Aristotle’s time. Perhaps the best-known statement on paternalism appears in John Stuart Mill’s 1859 essay “On Liberty,” where he argued that individuals have the right to assert sovereignty over their own lives so long as they do not pose a threat to others.

When housing is free or subsidized, freedom to do what one wants is limited by parents, landlords, government agencies, or housing nonprofits. Consider the challenge of offering free or heavily subsidized housing to single-parent families. Society wants to help children especially, and it’s difficult for single mothers to both care for young children and work full time. A grandparent, boyfriend, or husband can make life easier, but can also abruptly end housing and other subsidies.

Housing and other benefits can create a “welfare cliff” where better wages can make families poorer. “Making Work Pay in Illinois: How Welfare Cliffs can Trap Families in Poverty,” (Illinois Policy Institute, a conservative state think tank), notes:

For single-and two-parent households in Illinois, there is a significant welfare “cliff” where the household may become worse off financially as they work more hours or as their wages increase. That is because the available welfare benefits decline by a greater amount than the increase in earned income.

This study analyzed a potential welfare benefits package for single- and two-parent households, both with two young children, in Cook, Lake and St. Clair counties. The potential means-tested benefits included tax credits, cash assistance, food assistance, housing assistance, child-care subsidies and health care.

Critical of the “welfare cliff” narrative is: “Ryan’s “Better Way” Poverty Plan Is Based On Myths From Right-Wing Media,” (MediaMatters, June 8, 2916), offering links to articles critical of claims that less state and federal benefits would incentivize and thereby help poor families. From “Federal Programs Are Working, But Growing Economic Inequality Strains The System”:

Bernstein reported that War on Poverty programs had successfully reduced poverty rates for tens of millions of Americans — especially the elderly, who were particularly susceptible to elevated poverty rates before the creation of Social Security and Medicare. He also noted that growing economic inequality — among other factors — was increasing the strain on the programs and causing poverty rates to remain artificially high, making them seem less effective than they really are.

Americans on average enjoyed tremendous economic gains through the 1950s and 1960s. The U.S. economy expanded steadily and as Social Security benefits increased for the elderly and Lyndon Johnson’s Great Society programs launched the “War on Poverty.”

Americans on average enjoy much larger houses than in the past. How is it that housing options for today’s poor (who though poor then to be wealthier than poor people in the past), lack access to housing?

An article on “Housing” (Concise Encyclopedia of Economics) reports:

The average U.S. consumer now enjoys a larger and higher-quality home than ever before. In 2001, the average home was 1,693 square feet, while in 1960 it was less than 1,200 square feet. In 2001, 58 percent of homes had three or more bedrooms, and 57 percent had 1.5 or more bathrooms. Compare that with 1970, when fewer than half of homes had three or more bedrooms and only 30 percent had 1.5 or more bathrooms. Housing amenities have also improved.  

And…

in 1970, only 36 percent of homes had air conditioning and 11 percent had central air. Housing has improved almost across the board. … The improvement has been especially dramatic for low-income households. University of California at Berkeley professors Quigley and Raphael (2003) report that the percentage of homes occupied by the poorest one-fifth of income earners that have incomplete plumbing declined from 40 percent in 1963 to essentially zero today.

The authors argue that regulatory restriction constrain low-income housing options:

In addition to land-use restrictions, governments drive up housing prices for lower-income families by dictating improvements in housing quality that the families might not otherwise choose. Governments do this by, for example, setting minimum lot sizes. Also, the federal government’s urban renewal program between 1949 and the early 1970s destroyed more than 600,000 low-income dwellings, replacing them with 250,000 homes that were mostly for middle- and upper-income buyers (O’Sullivan 1996). Martha Burt’s 1992 study found that urban renewal’s destruction of low-quality, low-cost residential hotel rooms in U.S. central cities contributed to the rise of homelessness.

Single-Room Occupancy (SRO) hotels have mostly disappeared. “A shifting SRO scene: When the housing of last resort disappears,” (Chicago Reporter, December 27, 2013):

As housing demand accelerates on Chicago’s North Side, another trend has emerged: Single-room occupancy units are being converted into upscale hotels and apartments, pushing out longtime low-income residents who have few other housing options.

ONE Northside, an Uptown community-organizing group, estimates that 14 North Side buildings that once provided affordable housing to low-income people have been sold since 2011. That’s a net loss of around 2,205 affordable units, which are designed to cost low-income renters no more than 30 percent of their income.

San Diego and other cities have tried to reduce regulations and zone restrictions to allow new SRO hotels to enter the marketplace for low-income residents. “San Diego looks to revive SRO housing,” (Public Square, June 1, 2004):

Facing a worsening shortage of inexpensive housing, officials in San Diego are devising a plan aimed at spurring construction of tiny, single-room occupancy units known as SROs.

Susan Tinsky of the San Diego Housing Commission says development of SROs surged in the late 1980s and early 1990s. “Probably 30 to 40 developments” containing a total of 3,000 units were built, she says. The best of them became exemplars of walkable, mixed-use urban design. Though the units are small and austere, without full kitchens, and in some instances with bathrooms down the hall, the typical downtown SRO building “really fits with the historic architectural designs that already existed,” Tinsky says. “It doesn’t stand out.”

The reason San Diego SROs surged in the late 1980s and early 1990s was that special waivers were passed allow developers options to build smaller and less expensive housing (without parking and 220 volt electricity, for example).

This article from 1988 tells the story. “In San Diego, the Developers Profit As Homeless Get Low-Cost Housing,” (New York Times, September 6, 1988):

By relaxing its building codes and offering low-interest loans to builders, the city has made it profitable again for private developers to build and operate single-room occupancy hotels, S.R.O.’s, long reviled as flophouses and shut in New York and other places. Such hotels are making a comeback not only in San Diego but also in Pittsburgh, Atlanta, Los Angeles, Chicago and other cities across the country as a remedy for the growing problem of homelessness.

”We used to say tear down S.R.O. hotels,” said Judith F. Lenthall, a senior planner for the city of San Diego. ”Now we are saying they are not so bad. This is last-rung housing. If you lose that, you are on the street.” Rents Begin At $220.

It is worth asking: “Are micro-apartments a revolutionary trend? Or are developers exploiting an out-of-control market?

And Seattle’s later story of regulating away very small apartments: “How Seattle Killed Micro-Housing: One bad policy at a time, Seattle outlawed a smart, affordable housing option for thousands of its residents.”

SRO and micro-housing along with the tiny house movement, lower housing costs as they reduce housing space and costs. For low income people and families, small housing is better than no housing, and usually preferred to shelters and government housing.

Hotel rooms can get a lot smaller too, if local regulators allow. Consider “China’s capsule hotel: A room with no view.” (Baltimore Sun, August 12, 2013)

For 61 yuan or $10 U.S. the newly opened capsule hotel in Haikou, south China’s Hainan province, offers guests some amenities in a very small space. The hotel covering 200 square meters has 26 capsules stacked into two rows. The length and width of a single bed, the capsules are equipped with ventilating fans, flat-panel televisions, wi-fi and a foldable table.

Screen Shot 2017-03-28 at 1.02.53 PM

S China’s Haikou has its first capsule hotel (China.org.cn, August 13, 2013)

2017 Apr Public Forum Topic Area: Election Reform
Resolved: The United States ought to replace the Electoral College with a direct national popular vote.

For the April Public Forum topic students can research the history, politics, and incentives created by the Electoral College system. The U.S. was founded as a republic and the Electoral College helped small states maintain influence. Without an Electoral College, few Presidential candidates would bother making multiple trips to Iowa and New Hampshire each election cycle.

But maybe that would be a good thing. Should Iowa farmers and New Hampshire coffee shops have such an outsized role in each Presidential election? Consider the tens of millions of Republicans in California and Democrats in Texas who had no voice or impact in the recent election.

Presidential candidates and their campaign managers knew California and Texas mattered only for raising campaign funds, so focused their time and money on swing states instead. In what sense do Texas and California voters give their consent to Presidential elections if their votes won’t matter in the winner-take-all Electoral College system?

Supporters of the Electoral College could advocate reform so state electors could be split to reflect the popular vote. “Faithful Electors: If Every State Split Electoral College Votes, No One Would Be President-Elect,” (Medium, Nov. 11, 2016) discusses the challenges of a system of “faithful” electors voting as their state’s citizens vote. Looking at the November votes:

Based on an analysis of the latest tallies as of the morning of November 10th, a state-by-state popular vote split of Electoral College votes would result in a lot of redistribution of votes. As a result, no candidate would have the required majority of Electoral College votes needed to become the next president. …

This is a big part of the reason why anything beyond two party system is guaranteed to fail in the Electoral College system. More candidates would earn Electoral votes, but none of them would meet the threshold to become president. We would need to switch to instant-runoff voting (or similar) in order for candidates to achieve a majority of support.

A problem with judging the direct election of the President alternate, or a split Electoral College system, by the last election is that if the rules were different the campaigns would have been different.

The Presidential campaign teams focused their money, time, and ground game on winning key states to win the Electoral College. They didn’t focus on the popular vote, so spent less time with campaign stops and rallies in Texas, California and New York. Nearly 67 million people live in California and Texas, or nearly 1/5 of total US population. With New York/New Jersey population of 29 million added, nearly 100 million live in these four states, approaching 1/3 of US population.

“Here’s How Campaigns Would Work If We Abolished the Electoral College,” (Time, November 17, 2016), discusses how direct election would shift the system:

But strategists who have worked on presidential campaigns say that would change the way elections run dramatically, possibly exacerbating some of the complaints Americans have about their current system.

They say that under a national popular vote, they would push their candidates to spend more time in TV interviews; hold more rallies in big cities like New York, Houston and Los Angeles; raise vastly more money for nationwide advertising, direct mail and voter outreach; and focus more on their party base than swing voters.

Screen Shot 2017-03-28 at 9.09.07 AMWith direct popular vote Presidential campaigns would like focus their efforts in big population centers in New York/New Jersey, California, Texas, Florida, and other big states. But that’s where the people are. The U.S. Census report lists ten largest US cities.

The Pew Research Center post “Trump’s victory another example of how Electoral College wins are bigger than popular vote ones,” (December 20, 2016), notes:

…Donald Trump won 304 electoral votes to Hillary Clinton’s 227… That result was despite the fact that Clinton received nearly 2.9 million more popular votes than Trump in November’s election,…

This mismatch between the electoral and popular votes came about because Trump won several large states (such as Florida, Pennsylvania and Wisconsin) by very narrow margins, gaining all their electoral votes in the process, even as Clinton claimed other large states (such as California, Illinois and New York) by much wider margins. Trump’s share of the popular vote, in fact, was the seventh-smallest winning percentage since 1828, when presidential campaigns began to resemble those of today.

An additional rationale for the Electoral College was to check populist enthusiasm that the Founders feld majorities were susceptible to.

The Electoral College Was Meant to Stop Men Like Trump From Being President,” (The Atlantic, November 21, 2016) explains:

Most of the men who founded the United States feared unfettered majority rule. James Madison wrote in Federalist 10 that systems of government based upon “pure democracy … have ever been found incompatible with personal security or the rights of property.” John Adams wrote in 1814 that, “Democracy never lasts long. It soon wastes, exhausts and murders itself.”

It’s easy to forget (or never learn) the more important role the states had before the Progressive Era, World Wars, and New Deal:

The Constitution says nothing about the people as a whole electing the president. It says in Article II that “Each State shall appoint, in such Manner as the Legislature thereof may direct, a Number of Electors.” Those electors then vote for president and vice-president. They can be selected “in such Manner as the Legislature thereof may direct.” Which is to say, any way the state legislature wants. In 14 states in the early 19th century, state legislatures chose their electors directly. The people did not vote at all.

Many online posts and articles can be found defending the Electoral College system as well as advocating replacing it with direct popular elections. However, Public Choice economists tend to focus on a different problem, one of rational voter ignorance.

Jason Brennan in “Trump Won Because Voters Are Ignorant, Literally,” (Foreign Policy, November 10, 2016) outlines the role of incentives in keeping voters uninformed:

Trump owes his victory to the uninformed. But it’s not just Trump. Political scientists have been studying what voters know and how they think for well over 65 years. The results are frightening. Voters generally know who the president is but not much else. They don’t know which party controls Congress, what Congress has done recently, whether the economy is getting better or worse (or by how much).

Public choice economists note that people are more likely to research new cars or smartphone because their “votes” matter in the quality and functions of the cars and smartphones they end up with.

Not so with politics. How all of us vote, collectively, matters a great deal. But how any one of us votes does not. Imagine a college professor told her class of 210 million students, “Three months from now, we’ll have a final exam. You won’t get your own personal grade. Instead, I’ll average all of your grades together, and everyone will receive the same grade.” No one would bother to study, and the average grade would be an F.

The New Yorker reviews Jason Brennan’s Against Democracy (November 7, 2016) begins:

Screen Shot 2017-03-28 at 10.04.16 AMRoughly a third of American voters think that the Marxist slogan “From each according to his ability to each according to his need” appears in the Constitution. About as many are incapable of naming even one of the three branches of the United States government. Fewer than a quarter know who their senators are, and only half are aware that their state has two of them.

Amazon link to Against Democracy (Princeton University Press, 2016), with free “Look Inside”.

Brennan, in this LearnLiberty.org video “How to Vote Well,” discusses problems like cognitive bias, that add to the challenge of rational voting with a system of direct election of President. YouTube video:

 

Federalism is a messy political system. Every state has its own housing policy, as does every city and county. Plus the federal government runs federal housing policies, enforces federal regulations, and offers state and private housing providers various housing subsidies.

For students debating the March/April topic–Resolved: The United States ought to guarantee the right to housing–the political and economic background to this value resolution is complex.

In addition to the horizontal separation of power across the legislative, executive, and judicial branches, outlined in the U.S. Constitution, “federalism” refers to the vertical delegation of powers to federal, state, and local governments. Housing powers and policies were not among the powers originally delegated to the federal government, but later legislation created federal programs and departments like HUD (Housing and Urban Development).

The resolution says “The United States” ought to guarantee a “right to housing.” Online resources offering an overview and history housing rights include the National Institute for Housing, “The Case for a Right to Housing,” which discusses limited codified housing rights:

How have housing rights evolved in the United States?
Some specific, although quite limited, rights/ entitlements exist in the housing area. Local housing codes (varying enormously with respect to coverage and standards) provide something of a right to decent physical conditions. But enforcement is a problem and market realities limit the benefits these regulations offer.

An essay in The Federalist (a conservative website) argues housing inequality and lack of affordable housing should be blamed on restrictive local housing regulations. “Local Governments Are The Source Of Housing Inequality,” reports on research by Matthew Rognlie on the key role of housing costs in the inequality debate (referencing Thomas Piketty‘s Capital in the Twenty-First Century):

Matthew Rognlie, a Massachusetts Institute of Technology doctoral student in economics, dismantles Piketty in his paper, “A note on Piketty and diminishing returns to capital.” Rognlie’s contention: “Recent trends in both capital wealth and income are driven almost entirely by housing…” Ronglie deploys sarcasm with effect, suggesting Piketty’s book would have been more accurately named, “Housing in the Twenty-First Century.”

Federalism provides housing researchers an avenue to compare the impact of policies across U.S. cities, counties, and states. Scott Beyer’s “Houston, Dallas & New York City: America’s Great 3-Way Housing Supply Race,” (Forbes, March 20, 2017) argues:

…a look at the numbers shows that…housing construction (or lack thereof) seems to be the driving factor behind whether or not large U.S. metros remain affordable.

Beyer draws from Census Bureau housing data to show that fast job and population growth need not raise housing costs. Cost are way up in Seattle, San Francisco, and around the Bay Area not because of the booming job markets but instead because homebuilding is blocked or delayed. The housing story from Texas cities contrasts sharply with California cities:

Houston and Dallas are the most notable examples of where such scarcity has not occurred–in fact, it’s almost been the opposite. Between 2010 and 2015, these two metros had the most net population growth, at 736,531 and 676,582, respectively. They are also perennially among the leaders in corporate and business relocation, job growth, and wage growth. But they have the 2nd and 3rd cheapest median home prices of the 11 metros, at $176,000 and $202,000, respectively (all housing price figures are from Zillow). Atlanta–with the nation’s 5th most permits since 2010–was just under Houston at $174,000.

Even more crucially, the prices in these two Texas giants have stabilized even amid this incredible population boom–especially in Houston. …

The Center for American Progress offered “Expanding Opportunities in America’s Urban Areas” in 2015, outlines five areas for reform, including “Ensure access to quality housing and transportation” and “Expand access to affordable housing.”

wooden-houses-796386_1280

Wooden Houses, Old Town, River, Finnish

Finland’s success in ending homelessness started nonprofit assistance to provide housing and rental contract rather than complex housing and homeless assistance programs. “What can the UK learn from how Finland solved homelessness?,” (theguardian, March 22,2017)

This week’s report by EU housing organisation Feantsa has found every country in the EU in the midst of a crisis of homelessness and housing exclusion – with one exception: Finland.

So how has the country done it? By giving homeless people permanent housing as soon as they become homeless, rather than muddling along with various services that may eventually result in an offer of accommodation.

 

Food safety is always a challenge. Insuring food safety from suppliers in distant countries like China is even more of a challenge. “Blockchain: A Better Way to Track Pork Chops, Bonds, Bad Peanut Butter?,” (New York Times, March 4, 2017) report new applications of Bitcoin’s Blockchain to food security:

Frank Yiannas has spent years looking in vain for a better way to track lettuce, steaks and snack cakes from farm and factory to the shelves of Walmart, where he is the vice president for food safety. When the company dealt with salmonella outbreaks, it often took weeks to trace where the bad ingredients came from.

Then, last year, IBM executives flew to Walmart’s headquarters in Arkansas to propose a solution: the blockchain.

Blockchain, the encryption protocol backing Bitcoin security is deployed for supply chain security. Modern manufacturing as well as food production is often spread across a wide network of suppliers around the world. All major companies from Ford and Toyota to Nike and Walmart hire third-party certification services both to monitor quality standards and working conditions with suppliers.

Nike never wants their shoes made by untraceable factories using low-quality materials, nor face news stories of Nike subcontractor factories with unsafe working conditions. Similarly Walmart and other companies selling food want to certify standards and safety from the original farms, through processing and distribution.

Blockchain provides an accounting system that makes it hard for later links in the supply chain to falsify earlier links (to hide low-cost unapproved suppliers, for example).

Nearly half a trillion dollars world of goods were shipped (or flown) from China to the US in 2016, and a significant part of the cost is documenting these goods. Maersk is a major shipping firm facing this challenge:

For Maersk, the problem was not tracking the familiar rectangular shipping containers that sail the world aboard its cargo ships — instead, it was the mountains of paperwork that go with each container. Maersk had found that a single container could require stamps and approvals from as many as 30 people, including customs, tax officials and health authorities.

…The cost of moving and keeping track of all this paperwork often equals the cost of physically moving the container around the world.

What’s more, the system is rife with fraud. The valuable bill of lading is often tampered with or copied to let criminals siphon off goods or circulate counterfeit products, leading to billions of dollars in maritime fraud each year.

Shipping fraud leads to food safety risks for companies like Walmart (and, of course, for customers).

FDA and USDA food safety agencies, apart from turf fights with each other, are challenged by incentive, information, and budget issues.

FDA/USDA Catfish fights offer a turf-war example. “Senate votes to end USDA catfish inspections, which just got underway,” (Food Safety News, May 26, 2016)

The U.S. Senate has voted to shut down the nation’s only catfish inspection program, a move that would put more Americans at risk of exposure to carcinogens and antibiotics from Asian white fish, such as Vietnamese pangasius.

…If it passes the House, it would still have to be signed by President Obama before the U.S. Department of Agriculture (USDA) catfish inspection program would be shut down. If that happens, catfish would likely revert back to the U.S. Food and Drug Administration (FDA), where only 1 to 2 percent of seafood imports are inspected because of budget constraints.

Sounds scary, but Food Safety News has its own perspective and bias, according to a NPR story discounting a Food Safety News scare story on supermarket honey, “Relax, Folks. It Really Is Honey After All,”

Maybe we’re too inclined to believe the worst about supermarket food.

How else to explain the reaction to a recent report about honey on the web site Food Safety News? Food Safety News is published by a lawyer who represents plaintiffs in lawsuits against food manufacturers and processors.

The post, by journalist Andrew Schneider, claimed that most honey on supermarket shelves isn’t really honey. As evidence, the site cited tests showing that there is no pollen in most of that honey. (Raw honey contains lots of pollen, which bees collect along with the nectar that they turn into honey.)

The Food Safety News story in NPR post focused on allegedly unsafe honey from China:

The article implied that this was part of a deliberate attempt to prevent anyone from detecting illicit honey from China. (The United States blocks imports of Chinese honey because U.S. officials decided that it was being sold at artificially low prices, undercutting American honey producers.) Schneider also reminded his readers that Chinese honey has had a history of safety problems, including contamination with banned antibiotics and lead.

This 2011 NRP story is valuable for its in-depth research on the honey industry, and gives a glimpse of the way many food safety scares (and lawsuits) develop.

One avenue to incentivize companies to keep food safe is to avoid expensive litigation and awards to customers hurt by unsafe food. Bad publicity provides a powerful incentive as well, as Chipote management and stockholders learned recently.

Most of economics is about incentives, and it is an open debate whether food safety regulations, potential litigation, or fear of bad publicity plays the larger role in maintaining and improving food safety. Critics of the FDA and USDA regulatory approach focus in agency incentives.

Government agencies suffer from incentive and information problems that slow innovation and hamper alternative food safety systems. Students have an opportunity to research the dozens of food safety certification systems that have developed to protect consumers.

A major concern with both domestic and imported food is possible overuse or misuse of pesticides and herbicides. Interesting to see how significantly U.S. pesticide and herbicide use has fallen, even as agricultural production has increased:

May 2014, the National Agricultural Statistics Service at the U.S. Department of Agriculture (USDA) issued its comprehensive report Pesticide Use in U.S. Agriculture. The agency found that herbicide usage peaked at 478 million pounds in 1981—a decade and half prior to the introduction of the first biotech crop varieties—and fell to 394 million pounds in 2008. So instead of the massive increase in herbicide spraying claimed by Benbrook, the USDA actually reports a modest decline. Insecticide applications peaked in 1972 at 158 million pounds, dropping to 29 million pounds in 2008. [Source: Chipotle Treats Customers Like Idiots, Aug./Sept. 2015 Reason]

For more on certification and regulation, here is a 2011 post on Certified Humane discussing the debate over expanded federal regulation and inspection of food, and critical of the claim that private sector food producers and importers can “self police.”

The Chairman of the Appropriations House Subcommittee, Jack Kingston (R-GA) said, “The food supply in America is very safe because the private sector self-polices, because they have the highest motivation.  They don’t want to be sued, they don’t want to go broke. They want their customers to be healthy and happy.”

The Centers for Disease Control (CDC) estimates that 28,000 Americans are hospitalized every year and 3,000 die every year from tainted food.

Even the Grocery Manufacturers of America are in support of doubling the FDA’s food safety budget, in light of the recent food scandals.Rep. Kingston also claims the high level of food safety is due to the private sector without the “nanny” state.  “That’s the private sector working,” he’s quoted as saying.

In reality, do you want to risk your life and the lives of your families on Rep. Kingston’s fantasy?  We saw the result of   de-regulation and lack of oversight in the financial sector, as we watched homes being foreclosed and savings and pension plans evaporating

If you want the FDA and the Food Safety Inspection Service at USDA fully funded, please write your Senators and let them know they need to put the funding back to provide us with safe food oversight. …

According to the article, increased federal funding for FDA and USDA inspectors could save lives, and those who say the private sector can “self-police” to keep food safe are living in a fantasy world.

However, today’s food industry relies on independent food safety certification organizations. These are generally NGOs (non-government organizations) that are in compliance with regulatory agencies like the FDA and USDA.

Here is page for Global Food Safety Initiative (GFSI) Certification with this introduction:

Due to complex challenges in today’s food supply chain, many of the world’s largest food retailers are mandating supplier certification to Global Food Safety Initiative (GFSI) schemes, which include SQF, BRC, IFS, FSSC, GLOBALG.A.P. and BAP and CanadaGAP.

NSF companies are the leading global certifier to GFSI benchmarked standards, with exceptional technical expertise, consistently calibrated auditors and capacity for a timely path to certification.

GFSI was established to ensure confidence in the delivery of safer food to consumers, while continuing to improve food safety throughout the supply chain.  These global standards address food, packaging, packaging materials, storage and distribution for primary producers, manufacturers and distributors.

So Third-Party Certification is key. Big grocery chains like Kroger and Safeway would like to believe the farms and food-processors who deliver food to their shelves each day have clean and modern facilities with strict procedures to keep equipment clean and free of microbes. However, the food industry runs on “trust, but verify.” They can’t afford to just believe what suppliers claim nor can most afford to hire their own inspectors to investigate each supplier.

Companies can’t just rely on government agencies like the FDA or USDA since they can be sued when customers are hurt even when they comply with federal regulations. FDA and USDA tend not to be up to speed with the latest technologies and data analytics.

So, instead, private sector firms rely on certification. Here is the NSF page: What Is Third-Party Certification?

Third-party certification means that an independent organization has reviewed the manufacturingScreen Shot 2017-03-24 at 9.14.48 AM process of a product and has independently determined that the final product complies with specific standards for safety, quality or performance. This review typically includes comprehensive formulation/material reviews, testing and facility inspections. Most certified products bear the certifier’s mark on their packaging to help consumers and other buyers make educated purchasing decisions.

NSF Certification
Recognized by regulatory agencies at the local, state, federal and international level, NSF certification demonstrates that a product complies with all standard requirements. NSF conducts periodic facility audits and product testing to verify that the product continues to comply with the standard. See the complete NSF product listings.

NSF’s programs include testing and certifying drinking water treatment products and water filters, commercial food service equipment and a wide array of consumer products such as bottled water, nutritional supplements, private label goods, personal care items and home appliances (washers, dryers and dishwashers).

Why Do Companies Seek NSF Certification?
Independent, third-party testing and certification through NSF helps organizations:
• Demonstrate compliance with national or international standards and regulations• Demonstrate independent validation and verification of their commitment to safety and quality  • Increase credibility and acceptance with retailers, consumers and regulators  • Benefit from enhanced product quality and safety

A Wall Street Journal headline writer likely sensed something amiss with calls by U.S. steel producers for more protectionism. The August 12, 2015 WSJ print edition article by John W. Miller was titled: “Steelmakers Lodge New Trade Gripe.” The online version, dated August 11, drops the “Gripe” for a less skeptical headline: “U.S. Steelmakers Again Ask for Tariffs on Imports” (as usual Google full title to find article ungated).

The article notes this was the third trade complaint of summer 2015 by U.S. steel producers, claiming foreign firms were “dumping” steel below costs:

The request targeted imports of hot-rolled coil—used in making cars—from Australia, Brazil, Japan, South Korea, the Netherlands, Turkey and the U.K. China wasn’t named in the petition because the U.S. already has tariffs on imports of that kind of steel from China. The petition was filed with the U.S. Commerce Department and the U.S. International Trade Commission.

This Wall Street Journal article doesn’t mention “dumping” by name, but a July 15, 2015 Duluth News Tribune article does: “Trade commission agrees foreign steel was ‘dumped’ in U.S.

The U.S. International Trade Commission on Friday announced a preliminary determination that imports of corrosion-resistant steel from China, India, Italy, South Korea and Taiwan injured the U.S. steel industry.

And:

 The companies claim that the increased below-cost imports of steel have reduced demand, in some cases forcing mill closures that have led to layoffs at Minnesota operations. …

“We are pleased the ITC has confirmed that the flood of unfairly traded imports of corrosion-resistant sheet steel has materially impacted our shipments, pricing and profitability,” said Mark D. Millett, chief executive office of Steel Dynamics. “SDI believes in fair trade, but the U.S. has become a dumping ground for world excess steel capacity.” 

However, the WSJ mentions the actual price of the hot-rolled coil steel used by U.S. carmakers and other manufacturers is actually higher than in Europe and Asia:

steel-mill-616536_1280The problem for U.S. steelmakers is sluggish prices, which are held down by inexpensive imports. The U.S. index price for hot-rolled coil, a benchmark product, has fallen more than 20% this year to $468 per ton.

That is still about $100 higher than the price in Europe and $200 above that in Asia, according to steel buyers, making the U.S. a tempting market.

Wait… what?  This hot-rolled coil steel–key for U.S. automakers–is 20% less expensive in Europe and 40% less expensive in Asia? Doesn’t that give a significant cost advantage to European and Asian automakers and other foreign manufacturers with access to significantly less-expensive steel?

If steelmakers in “Australia, Brazil, Japan, South Korea, the Netherlands, Turkey and the U.K.” are dumping steel in the U.S., they must be ultra-dumping steel in Europe and Asia. Either that or shipping costs are extraordinary low to U.S. buyers.

Imports of hot-rolled steel have increased according to steel industry executives, with the implication that foreign firms are dumping excess capacity onto U.S. markets:

Imports of hot-rolled steel from the seven countries named in the latest petition increased by about 73% from 2012 to 2014, rising from 1.9 million tons to 3.3 million tons, AK Steel said.

Wow, 73% is a big increase!  But also between 2012 and 2014 was a huge increase in U.S. demand, with booming rail and oil and gas infrastructure as well as auto manufacturing expanding, rising 19% in 2012, 7% in 2013, and 5.4% in 2014.

A May, 7, 2015 WSJ article, “U.S. Steel CEO Says Tariffs Could Be Needed On Chinese Imports” quotes Mr. Longhi, the new head of U.S. Steel, who has been cutting costs, laying off workers and boosting stock prices (and his pay). In addition to streamlining steel production, Mr. Longhi is trying to raise tariffs on imported steel, particularly steel from China:

Mr. Longhi blames the bulk of his latest woes on imports, especially from China. The U.S. imported 615,171 tons of steel from China during that time, up 25% from the same period a year before. Mr. Longhi said a failure to impose more tariffs on Chinese imports was an American political “weakness.”

In this article, steel tube is the focus, where demand has been hit hard and unexpectedly this year, after oil prices dropped by half last fall, and demand for steel pipe by shale drillers dropped soon after. The article blames imports:

Imports have been especially hurtful to the company’s business of making steel pipe and tubs for the oil and gas industries. 

Consider though that for U.S. manufacturers and U.S. consumers, lower prices for steel is a good thing. Only for the U.S. steel industry is lower-cost imported steel a problem.

Students researching U.S. trade policy with China can research these ongoing debates over steel imports and tariffs.

Tim Worstall in Forbes puts the question of steel tariffs this way in a June 4, 2015 column:

There’s two ways that we can describe the attempt by the US steel industry to gain anti-dumping tariffs against China and other countries. The first is that it is an attempt by that US business sector to protect themselves from that foreign competition. The other is that it’s an insistence that all Americans should become poorer in order that those profits and those jobs should be protected. Both of these descriptions are true: and the second follows logically from the first.

U.S. steel producers have continued their call for higher tariffs on Chinese steel. “U.S. steel producers to file charges against Chinese competitors,” (Reuters, September 22, 2016) reports:

The U.S. Commerce Department last week set preliminary antidumping duties ranging from 63.86 percent to 76.64 percent on stainless steel sheet and strip imports from China after preliminary findings showed the imports were being dumped in the U.S. market at below fair value.

The petition alleges that Chinese producers diverted their steel shipments to Vietnam “immediately” after the duties were imposed.

According to the petition, Chinese steelmakers sent their shipments to Vietnam, where they were modified to make them corrosion-resistant, and then sent them to the United States by paying Vietnam’s U.S. tariff rate, which is lower than for China.

Economist Richard Ebeling posted on Facebook a quote from an 1830s economics textbook, to give people a sense of economic principles taught nearly two centuries ago:

Here is what economics books used to sound like, from Thomas Cooper’s “Lectures on the Elements of Political Economy” (1830), on the principles and policies of economic logic and understanding on the benefits of freedom of trade and enterprise:

“The true principles of Political Economy, teach us that a system of restrictions and prohibitions on commercial intercourse, cuts off the foreign market, diminishes the number of buyers, and the demand for our national produce; hence, the consumer is compelled to pay more to the home monopolist.

“Hence, the wealth of the nation is wasted; every consumer is abridged of comforts that he might otherwise procure, and his means of purchasing even home-commodities are diminished.

“They teach us also, that men should be permitted, without the interference of government, to produce whatever they find it their interest to produce; that they should not be prevented from producing some articles, or bribed to produce others.

“That they should be left unmolested to judge of and pursue their own interest; to exchange what they have produced when, where, with whom and in what manner they find most profitable and convenient; and not be compelled by theoretical statesmen to buy dear and sell cheap; or to give more, or get less, than they might do if left to themselves, without government interference or control.

“That no favored or privileged class should be fattened by monopolies or protections to which the rest of the community are forced to contribute.

“Such are the leading maxims by means of which Political Economy teaches how to obtain the greatest sum of useful commodities at the least expense of labor. These are indeed maxims directly opposed to the common practice of governments, who think they can never govern too much; and who seek to prey upon the vitals of the community.”

This remains wisdom for our own time. 

Students debating U.S./China policy have an opportunity to learn the principles of international trade, and apply these principles to various reform proposals.

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