Monday, November 28, 2011

Environmentally unfriendly jobs booming

This article claims that the key to job creation in the U.S. is non-renewable domestic energy in the form of natural gas and oil. The industry has grown 80% more jobs and 20% of total new net private jobs since 2003 are in the domestic oil and gas industry. The author credits the boom in non-green jobs to new technologies like horizontal drilling and hydraulic fracturing that are renovating the harvesting processes in both oil and natural gas. Areas in the U.S. seeing the job boom are North Dakota with 200 oilrigs producing just under half a million barrels/ day and a subsequent 3.5% unemployment rate. Pennsylvania Marcellus shale formation is credited with creating 18,000 new jobs in the first half of this year. I understand where the author is coming from when he/she criticizes Obama administration and the political left for proposing a 5-year plan to ban drilling on outer shelf and delaying the Keystone pipe-laying project. However, I am hesitant to say that more jobs now is more important than a cleaner planet for future generations. All in all I do not agree. Although investing in renewable energy is not yet cost effective, I think is still an important option in terms of a healthy earth. Even though Obama’s green loan program has failed to create the 65,000 estimated jobs (only 3,500 have emerged from the $38.6 billion loan) I think it is important that the research continues hopefully resulting with a viable green energy option in our country’s future.
~Natalie Ciletti

Thursday, November 24, 2011


In our class we just completed a movie assignment with some pretty amazing results. I'm impressed by the work students put in to (in most cases) get interviews and then edit them into short, attractive, often amusing short videos. Take a look!

Tuesday, November 22, 2011

Fishing & regulations

Interesting article on cod fishing in Gloucester, Mass. Regulations limiting catch hurt people trying to make a living by fishing, and it's really hard to hold people to limits. It can be done, but in this case doing so provoked a political backlash. In the end it seems that catch shares (ITQ's) are the way things are going to go, but systems don't change lightly.

Since there are externalities in this "commons" situation, using catch shares or taxes are the way to get to the social optimum. It's not easy to figure out what that social optimum is, though, and spreading the pain around so that it doesn't hit anyone disproportionately is virtually impossible. Clearly effective regulations are necessary, but also humane implementation of the regulations is something to strive for. There's already enough pepper spray in the air these days!

Sprawl is good

So contends Marta Mossburg, op-ed writer for the Sun in this column blasting Gov. Martin O'Malley for his PlanMaryland scheme. She raises a few good points, and while I don't agree with her overall let me reiterate some of her points.

I don't doubt that people are moving away from Baltimore City, and I'll believe her that people are also leaving PG and Montgomery counties. Could this be because people prefer to live in rural areas? (She also says that more people have moved to rural areas, but this looks to be largely because of the growth of Aberdeen Proving Ground.)

She makes a valid point that O'Malley's shifting state money from rural to urban areas benefits him politically: Democrats tend to be concentrated in such areas, and this can be seen as an excuse to send money to his supporters. On the other hand, moving money from areas where there are few people to areas where there are more people could also be seen as simply efficient: investing in public goods that benefit the most people is generally a good idea, though some public goods such as wilderness area do not lend themselves to urban investment.

Her next contention is that high density is bad because it tends to produce highly concentrated pollution. I won't argue with that either, except to say that pollution abatement measures can alleviate some of that. For example, urban areas are more likely to impose more stringent air quality controls on vehicles. However, ultimately she's right: concentrated people produce concentrated pollution, and that is expensive to deal with. The question I'd ask is what her preferred alternative is. If everyone is commuting by car from a rural area to an urban job, the total amount of pollution is almost certainly more, though it's more distributed. And though she dismisses climate change as "subjective," I am not as sanguine about the issue.

Her dismissal of Maryland emissions and of mass transit in general don't impress me, but she is more convincing when she says that limiting growth will raise housing prices. That seems likely to me: any kind of an increase in restrictions is likely to raise prices. On the other hand, she ignores prices completely when she says that increased density means more pressure on existing systems. So, the implication is that it's cheaper to build new ones than to repair the old? That doesn't make much sense.

It's expensive to internalize externalities, no question. That doesn't mean that it isn't the right thing to do.

Wednesday, November 16, 2011

Tax on a Christmas Icon

The Federal government is thinking of imposing a 15-cent tax on Christmas trees this year, in an attempt to improve “the image and marketing of Christmas trees.” The secretary of agriculture was going to appoint a Christmas Tree Promotion Board who was going to be in charge of researching and designing new strategies to strengthen the industry of Christmas trees in the market. The 15-cent tax was going to be levied on the sellers of fresh-cut Christmas trees, but only for sellers who met or exceeded the sale of 500 trees a year. But, the tax could be easily passed on to the consumers, who are already in a financial bind coming into the holiday season because of still high unemployment rates.

The Obama administration decided to delay their proposal for this tax the following day, as there was such a large outcry from the public. The public was upset and so was the Christmas tree industry, as many in the industry did not even want the tax. The industry has tried three prior times and after a period of time the revenue of the tax decline to the point that the programs were no longer effective to run.

This tax can be seen as another attempt by the Federal government to have a say in the market operations in the United States. The government is already extended itself further and further, while there is still an issue of a large national debt. The implementation of a tax on Christmas trees can also be seen as an infringement from the government on the ability of its citizens to choose their own religion freely. What is special about the Christmas tree to those who do not celebrate Christmas? Why should there be a tax to improve the image of the Christmas tree if not everyone cares about Christmas trees? These are the gray areas that the federal government needs to be cautious proceeding on, especially in an economically tight time where many are not happy with the government as it is.
--Meredith Springsteen


That's the headline of a Business Week article. You have to wait to the bottom of the second paragraph to find out that,"Benefits of $419 billion to $515 billion in fuel savings would offset the costs." Seems like a net benefit of around $300 billion would be a good thing, but maybe that's just me....

This article is the first for the last quiz. You don't need it or anything more recent for the 11/18 quiz #4.

Saturday, November 12, 2011

US = Spain?

An article in today's NYT looks at the large number of subsidies available for producers of solar and other alternative energy and concludes that the US will see real benefits from the major investments that have been made in these areas over the past few years. However, the glut of spending, mostly from the stimulus funds spent over the past few years, has been pretty inefficient: industry could have done more solar with less money if the incentives had been structured better. Let's just hope we're not building a house of cards like they did in Spain!

Storm-Water Fee Proposed in Arundel

Politicians are trying to solve the issue of storm-water that runs off of streets and parking lots. Nearly 1/3 of the nitrogen pollution in the Chesapeake Bay that comes from Anne Arundel County is estimated to come from storm run-off that washes fertilizer, pet waste, and other organic debris into local water sources. County council member Chris Trumbauer is proposing a fee on all property owners to finance the pollution controls needed. This $35 annual fee on homeowner’s properties will hopefully help to reduce storm-water runoff. Nonresidential properties will receive a fee based on the amount of rooftops and pavements they have. The fees would go into a fund dedicated specifically to storm-water controls, and would not be used for any other purposes. The money would go towards retrofitting storm drains, replacing pavement, and creating roof gardens. Trumbauer believes that the profit made from this bill will create local jobs and clean up the waterways in this community. The state of Maryland is being pushed to comply with the EPA’s “pollution diet” and every county will experience some sort of funding challenge.
I think that it is a good idea for homeowners to pay a fee for the storm-water runoff from their property, but I’m not sure how well the residents are going to accept it. If the nitrogen waste is caused by their own fertilizers, pet wastes, and organic debris, then it is good that the homeowners will finally become aware of the negative externalities that their wastes have on the environment. It’s important that the Chesapeake Bay becomes less polluted, and Trumbauer has come up with a smart idea for dealing with the funds that are associated with improving water quality. Do you think that residents will agree to pay this $35 fine, or will they fight it?
--Kristen Eisemann

BCA on the EPA

The House Republicans plan to cut more than $3 billion dollars from EPA funding (about one third of their budget) would have a major impact on the agency's plans to reduce carbon emissions and limit water pollution. EPA administrator Lisa Jackson said that, “Big polluters would flout legal restrictions on dumping contaminants into the air, into rivers, and onto the ground, […] There would be no EPA grant money to fix or replace broken water treatment systems. And the standards that EPA is set to establish for harmful air pollutants from smokestacks and tailpipes would remain missing." Without the regulations to control pollution and money to fix these plants, people are at a greater risk to contaminated drinking water. Many Republicans feel that the EPA regulations go to far and make it very difficult for people to make a living. However, the regulations are in place to help protect people. The cost-benefit of enacting the 1990 Clean Air Act would be about $2 trillion by 2020 but it would save about 230,000 lives. So I guess the question is: Is the cut to the EPA’s budget worth it to save that money if there is a greater risk to public health? I personally do not think it is. I realize that the country is in a great deal of debt, but citizens lives should not be put in greater danger in order to save some money.
--Sara Poe

Thursday, November 10, 2011

Big Action Down Under

In addition to implementing a carbon tax, Australia is proposing a law that would force cigarettes to be packaged in plain boxes. About 75% of the new boxes would be covered with graphic warnings about the effects of smoking, leaving much less space for trademarks and such. Unsurprisingly, the tobacco industry intends to sue.

Nearly 100 years ago US law established a doctrine of "clear and present danger" to describe the situations in which the right to free speech might be abrogated. My best reading of Wikipedia tells me that in 1969 the standard was changed to ban only incitements to "imminent lawless action." Obviously Australian legal proceedings will proceed from a different background, but the question is intriguing: if tobacco consumption is legal but expensive to the state, can governments limit advertising?

Dirty Deeds Done Dirt Cheap

Business Week seems to have forgotten the second half of the title of the iconic AC/DC song in this long but interesting article on the changing face of the American work force. The new heavy-handed restrictions on immigrants in Alabama have a variety of problems, but one of them is that the Alabama economy still relies to a large extent on cheap labor. They aren't the only ones- agriculture and aquaculture operations all over the US, including crab pickers on the Eastern Shore of our home state- will take advantage of the availability of Latin American workers who are able to come north to work for low wages as "guest workers" doing jobs the natives don't want.

I confess that I stopped reading the article when they started talking to a sociologist about the stigma associated with doing dirty job, and how once a job goes to immigrants it doesn't go back. No doubt I'm blinded by my training as an economist, but the issue here isn't that the job is "dirty," whether by association with dirt itself or by a despised group of people. The issue is that the jobs don't pay enough for people to put up with the physical punishment associated with doing the job. Americans do some nasty, nasty jobs, and they do them because they pay. The aquaculturist in the article complains that he "can't pay people $13 an hour" because of overseas competition.

I hate to be cold-hearted, but if you can't stand the heat, stay out of the kitchen. Find a niche, dude- try raising your catfish on organic meal and then charge a premium price when you sell them. Then maybe you could afford to pay your workers a decent wage, and you wouldn't have to go try to convince people to come work for you out of the goodness of their hearts. (The employer hasn't bothered to learn the language of his workers, but that's another story.) Try switching to shrimp, which is also a product with heavy international competition, but one that still goes for a good price.

I can't say I like the means by which this end was achieved: the racially-tinged regulations make me sick to my stomach. But if it brings an end to the economy of serfdom, that would be a lotus flower: a beautiful thing rooted in muck.

Menhaden Restrictions... for real!

The headline has it as, "Menhaden harvest limit sharply cut," but is 5% really a "sharp" cut? I'd call it more of a trim, but I'm not that up on the science behind this one. Anyway, people seem pretty happy about this, so I guess I'll take it for what it's worth. Hopefully this will mean more, healthier stripers and osprey up and down the coast, and maybe even less algae clogging up the Bay, creating fewer dead zones. It could also cost some Virginians their jobs, if Omega Protein needs fewer employees. Time will tell.

Saturday, November 5, 2011

Sharing the costs

In 1995 and 1996, conservationists' lawsuits to bring back wolves in the Yellowstone Park area (in Idaho, Montana, and Wyoming) succeeded: wolves were reintroduced after having been poisoned and trapped almost out of existence. The species thrived, paring back excessive growth in elk and coyote populations, but also paring back growth in nearby ranchers' herds. Today, ranchers contend that, "People who want it here should share the costs" and are in some cases taking money from conservation groups to pay for measures like electric fences and mounted riders. However, such measures are often inadequate, and other times, ranchers have taken conservationists' money and put it to other uses, such as hiring helicopter-riding wolf hunters.

A complicated problem with no easy solution; at least sharing the costs seems like a good way to start.

Wednesday, November 2, 2011

Menhaden Restrictions Again Considered

Nice story in the Sun over the weekend on some restrictions being suggested for menhaden. Everyone who has studied the subject is in favor of restricting catches, except for basically one group: industry. Shocker, I know. Actually, Omega Protein continues to surprise me. That one firm harvests 80% of the menhaden catch, and they don't have any competitors, so you'd think that they would be interested in maximizing their long-term return by getting the population to a level that would allow them to have a large, sustained catch. Instead, they seem determined to drive themselves out of business by sucking up all the fish as quickly as possible. The only way this approach makes sense is if they're strategically competing against someone else- say, environmentalists- and they sense that their true best outcome will be achieved in a balance when they are inevitably forced to compromise. If they can pull that off, then they get the best of both worlds! I just don't know why they have to get to their optimal outcome that way- why not just accept reality (i.e. the work of these scientists) and go to that best place sooner?

Tuesday, November 1, 2011

Fracking Water in Niagara Falls

With New York State looking into potentially allowing hydraulic fracturing, or fracking, as a means of obtaining natural gas, Niagara Falls is attempting to position itself as a town on the cutting edge of this new industry. Fracking involves pushing millions of gallons of water deep into the bed rock where there is shale. This water fractures the shale, allowing the natural gas that is trapped underneath to exit via the well. The water that was used comes out extremely salty and laced with poisonous elements including barium, strontium, and radium. This water needs to meet EPA standards, which are currently being reworked, before it can be sent to municipal water treatment plants to be released back into regular water supplies. Niagara Falls has a water treatment plant, which was originally designed for the area’s chemical industry, that can handle the waste water, and clean it to where it meets EPA standards. Since the chemical industry has pulled out of Niagara Falls, the plant has been operating at a fraction of what it can handle, prompting the plant owner and local government to look into the economic possibility of using the plant as a site to clean fracking water.

Currently Niagara Falls is a city of only 50,000 residents, which has been, and is continuing to decline. Also, the current per capita income of the city is only $19,000 compared to the rest of New York's average of $30,000 income. These factors have led to a push for the use of Niagara Falls’s plant. Opponents point to the Love Canal incident of the 1970s, when the Hooker Chemicals and Plastics Corp. dumped waste chemicals into the abandoned Love Canal. These chemicals were found seeping into backyards and basements throughout Niagara Falls. The situation got so bad that President Jimmy Carter declared the area a federal emergency in 1978, and the Superfund Cleanup Act was passed in 1980. This recent environmental disaster is the reason why many are uneasy about bringing in more potentially dangerous waste products.

The problem in Niagara Falls is an interesting one. On one side we have a city that was once a popular destination for honeymoons and family vacations declining at a staggering rate. And on the other side, we have the potential for another environmental disaster that could rock a town already struck by one in recent memory. Personally, I too have mixed feelings about it for the same reasons that are listed above; however, I do believe that the situation is much safer now than it was with the Hooker Corp. The EPA has already begun legislation to prevent toxic waste water from re-entering the water supply. The major downfall of this proposal that I see is the current condition of the Niagara Falls plant. It does not say how new the plant is and how much, if any, retrofitting the plant will cost. This is the major unknown. If the plant is up to code, or perhaps even above standards, I think that this would be a good idea; though, if the plant needed extensive retrofitting, or if the plant just barely met standards, I would think that the plan should be scrapped.
--Colin Alban