Efficiency Standards, Unfunded Mandates. . . and Success

Front page of the Business section of the New York Times today notes that old incandescent bulbs aren't fading away; they're. . . evolving.

Why is that? Pressure from CFLs is one piece. But the real push came from the Big Bad Gummint, in the Federal Energy Bill of 2007.

The feds set energy efficiency standards that appeared to make the demise of the incandescent bulb inevitable--starting in 2012, tightening the final screws in 2014. Two years later (and three years early), there's an incandescent bulb on the market that already meets the standard.

This is interesting in that it belies the constant yammering on the right that gummint has no place “interfering in the market.”

Okay, so what what you want is the withdrawal of all subsidies, giveaways, and tax incentives given to the hydrocarbon industries, right?

Hello? Hello? He hung up. I wonder why he hung up.

It's a weird kind of adolescent-doesn't-want-to-clean-her-room argument: “I'll do it as soon as you stop telling me to do it--in my own way, in my own time!”

But when you come back the next day, the pile of damp towels on the floor is even higher.

I don't think regulation is The Answer. But when they talk about “market forces,” a key part of what that means is action to define, and consistently enforce, the parameters of what is and is not acceptable, in both commercial and environmental terms.

I had thought the 2007 bill banned incandescents (and I thought that was the way to go; I stand corrected). Turns out, instead, the bill did what the free marketeers always say they want: set the bar and let the market compete to produce cost-effective solutions.

It has started to do so. Doubtless, we will now begin to see Republicans, en masse, lauding freemarket greentech solutions.

Hello? Hello. . . ?

In other news: I wonder how this happened. It's a mystery. . .

Waxman-Markey Bill Weak and Meaningless

I'd like to find cause for celebration in the recent passage by the House of Representatives of the Waxman-Markey bill (the American Clean Energy and Security Act), but I don't think this is good news. Sadder still, a bad bill is likely to be made worse in the Senate.

Republicans in the House continue their militantly delusional approach to the climate change issue. In today's New York Times, columnist Paul Krugman refers to this as a form of “treason against the planet.”

“If there was a defining moment in Friday’s [Congressional] debate,” he writes, “it was the declaration by Representative Paul Broun of Georgia that climate change is nothing but a 'hoax' that has been 'perpetrated out of the scientific community.' I’d call this a crazy conspiracy theory, but doing so would actually be unfair to crazy conspiracy theorists. After all, to believe that global warming is a hoax you have to believe in a vast cabal consisting of thousands of scientists — a cabal so powerful that it has managed to create false records on everything from global temperatures to Arctic sea ice.”

This rant, Krugman notes, was met with applause, presumably from most of the 212 representatives who voted against the bill (168 Republicans and 44 Democrats—a few of the latter, presumably voting “no” because the bill was not strong enough). Voting breakdown here.

The Republicans, however, are only half of the sad story.

Writing on the op-ed page of the Financial Times, Clive Crook links together President Obama's approach to both climate change and health care reform, in a piece entitled, “Obama is Choosing to be Weak.”

“The cap-and-trade bill is a travesty,” Crook writes. “Its net effect on short- to medium-term carbon emissions will be small to none. This is by design: a law that really made a difference would make energy dearer, hurt consumers and force an economic restructuring that would be painful for many industries and their workers. Congress cannot contemplate those effects. So the Waxman-Markey bill, while going through the complex motions of creating a carbon abatement regime, takes care to neutralise itself.”

On the opposite page, the editors concur, with an editorial titled “Cap-and-trade mess: The US climate bill might be worse than doing nothing.” I think the title is sufficient. . .

This is not “change you can believe in.” This is not change.

The value of Obama's electoral mandate—and his charisma, and his rhetorical gifts—is that it equips him to tell the American public some Inconvenient Truths (Al Gore, btw is in favor of Waxman-Markey; climate scientist James Hansen is against the bill).

But influence dissipates like smoke.

You use it or you lose it. . . and we all lose.

How the US Lost the Second World War

Here’s a short unbalanced history of Chrysler: Founded in 1925 (out of the detritus of Maxwell-Chalmers). Buys a stake in Mitsubishi in the 1970s and responds to the threat of Japanese imports by selling re-badged Japanese imports. Is purchased by the German automotive titan Daimler-Benz in 1998; burped back up in 2007. Effectively taken over by Italy’s Fiat in 2009.

So. . . remind me again, because I’m easily confused these days: Who won World War II?

I don’t ask this out of xenophobic pique. It’s just. . . interesting.

The typical explanation for the post-War industrial success of Germany and Japan is that the war destroyed aging and outdated industrial infrastructure and required companies to start over from scratch. Devastation wrought desperation as well; producing high quality, efficient products was taken to be a matter of personal survival as much as national pride.

The US, meanwhile, brimming with national pride and Victor’s Hubris (cousin of the guy who wrote Le Miz), was spared domestic war damage, chased efficiency experts like W. Edwards Deming out of the country (to Japan, BTW, where he was paid rapt attention) and continued to make cars in Model T barns into the 1970s.

There is ongoing jousting about what killed Chrysler and GM and, to a somewhat lesser degree, lamed Ford: piggy executives, regulatory meddling, the Great Recession, insurmountable “legacy” costs, fat cat unions. My vote goes to “stubborn inefficiency,” on a variety of fronts, with “naïve indifference” a close second. European and Japanese auto makers have had a variety of goads to efficiency for decades: from the basic space constraints in “Little Europe” and “Island Japan” to war-ravaged infrastructure to consistently high fuel taxes over a period of many years now.

The Adam Smith purists (who seem to have done a pretty spotty and shoddy job of reading the works of their deity) fulminate about the corrosive effects of industrial policy; that’s silly: Germany, Japan, and South Korea have, for the most part, pursued effective industrial policies; for the past few decades, we have pursued short-sighted, crony-crippled industrial policies.

And the howls of protest from the likes of GM have evolved (one might better say “pirouetted”) more to the tune of momentary convenience than to long term coherence: for most of the 20th Century GM was at the vanguard of fighting off the Stalinist Specter of National Healthcare (The Canadians are coming! The Canadians are coming!); more recently, they’ve stripped their gears shifting into reverse, and started lamenting the competitive disadvantage of being saddled with a workforce with business-supported healthcare and pensions.

It’s a blow to the pride of any (Honda-driving) American, to watch one of our flagship industries finally realize the seriousness of its wounds and fall over. Sadly, I do think that “what’s good for GM is good for America.” And that’s downsizing.

But “good” doesn’t necessarily mean easy. . .

Automotive Bailouts: The Neverending Story

With GM now having elbowed its way to the front of the queue, The Detroit Three—with barely a burp or a thank you for the $25 billion they were just given to cajole them in the direction of cars efficient enough to perhaps help them survive—are back at the government nipple.

GM claims, with some credibility, that it has only months to live if it doesn’t get another cash infusion and fast. The combination of pathos and avarice is fascinating. I’m reminded of that sweet little plant in Little Shop of Horrors—the one that needed human blood (oh just a LITTLE more) to survive.

I don’t think many civilians, myself included, know what the bankruptcy of one or more of the Detroit Three would look like (I’m seeing more and more publications adopt this over Big Three, for obvious reasons).

Speculation ranges from a hardnosed: not much; Toyota would buy the viable factories and the number of vehicles sold, and auto workers employed, in the US would remain more or less the same.

To. . . apocalyptic: The. World. Will. End.

I don’t have any philosophical problem with government intervention. Within reason, and under the right circumstances, I don’t have any problem with government loans or subsidies. I have a great deal of sympathy for the plight of the line workers, both those directly employed by the industry and in the ancillary industries that domestic auto manufacturing supports. All of that said, it isn’t clear to me who, if anyone, would be meaningfully helped by another bailout or series of bailouts.

It has been alleged that almost a third of health care spending in the US every year goes to the last thirty days of life. Granted we don’t have little readouts on our foreheads that tick down those last thirty days; one could go through fifteen days of expensive and intensive intervention and then live another twenty years in decent condition; a good percentage of the time, however, that money and those efforts end up being thrown at people who clearly have no meaningful chance of recovery, and no meaningful chance of a decent quality of life if they do recover.

Similarly. . . Well going back more than thirty years now, the American automobile industry reminds me of those cancer patients still smoking by holding the cigarettes to the holes in their throats. Doesn’t make sense to give them money for cigarettes; not clear that having them on oxygen is good for them or for anyone within the blast zone either.

David Halberstam pointed out one evocative example more than twenty years ago, in “The Reckoning: How Japan Beat the United States in the Auto Industry War and Rewrote the Rules of International Business Competition.”

The short version is: In 1958 Ford invented E-Coat painting technology (give paint a positive charge; give auto body parts a negative charge; you get full coverage in every nook and cranny and substantially increased rust resistance). This quickly became the industry standard, foreign and domestic. Ford, however, took until 1975 to get the technology into *half* of their factories; it wasn’t until 1984—more than 25 years later!—that they finally upgraded every one of their plants.

Can American industry innovate? Yes. Are they willing to invest in the future at the expense of this quarter’s profits? Detroit hasn’t been much inclined in that direction for quite some time now.

Airlines mostly keep flying through bankruptcy; retail chains also, for the most part, remain in business as they work through Chapter 11; not clear why the same would not be true of the Shrinking Three.

I oppose capital punishment and can’t therefore in good conscience advocate for executing a large swath of the American Automotive Nomenklatura (although we might consider this a form of euthanasia). If the federal government is to step in (which seems all but inevitable): 1. Executives should have their epaulettes torn from their shoulders, their ill-gotten gains stripped from their Swiss bank accounts, and be shown the door—Lead Parachutes for Everyone! 2. Everything possible should be done to safeguard the pension and medical benefits of retirees. 3. The government should have its loans secured by the companies’ assets. 4. There should be ironclad fuel economy standards imposed on the industry.

President-Elect Obama says he wants to rejuvenate the American Economy by getting us off imported oil and facilitating the growth of a sustainable transportation and industrial infrastructure. Well, Green Power to him! He’s likely to be involved in an automotive bailout even before he takes office. If he does what he’s said he wants to do, I’ll be very happy.

We Really Do Need Gummint Action

There’s all sorts of stuff we can and should be doing individually to create more sustainable energy systems and lifestyles. But in the end, the important changes that have to take place are systemic. We need gummint.

President Bush, in comments yesterday about the wonderful state to which his policies have brought the US economy said, in response to questions: 1. The government should not interfere in the economy by bailing out private investors, (“If your question is, ‘Should the government bail out private enterprise?’ the answer is no, it shouldn't.”) and; 2. Don’t worry, the FEDERAL Deposit Insurance Corporation (FDIC) will continue to resuscitate failed banks (“My hope is, is that people take a deep breath and realize that their deposits are protected by our government”).

Well, he got that last part right, anyway (even a broken clock is right twice a day).

The VP, Lord Cheney, has famously derided conservation as “personal virtue.” While I applaud his willingness as a politician to publicly come out foursquare against virtue, this says a lot more about the real attitude of the hydrocarbon(aholic) industries than a New York Times full of pious ads about how they are diligently working to transition us off oil, coal, and gas, into a bright, clean, sustainable future.

The allegedly market-driven conservatives (subsidies for me, the bill for you) seem constitutionally unable even to get “incentivizing” right. Attempting to burnish both his green and bidness credentials, John McCain has suggested a $300 million dollar prize for the next gen battery capable of powering a plug-in hybrid.

News Flash: The company that develops this battery is not going to need the money once they succeed!

It would make a lot more sense to parcel this money out for research, cut any way you want. For purposes of comparison, MITs Technology Review reports that, “In 2008, the U.S. Department of Energy (DOE) devoted nearly $50 million to research and development for vehicle-related energy storage.”

We have inflated and popped any number of alternative energy bubbles in the last three decades (recall Uncle Reagan, upon taking office, tearing the solar panels off the White House roof—take that Saudi Arabia!).

We don’t price energy to reflect its true cost; we consistently and heavily subsidize rich, polluting, unsustainable energy companies, and; we turn on and off the trickle of subsidy to alternative energy companies—giving and then taking away tax breaks, for example.

We need government policies that support and help create a sustainable future rather than pouring money down the rat hole of the unsustainable hydrocarbon-based technologies of the past. We need politicians willing to do more than simply mouth supportive but empty platitudes.

Where Have All the Grownups Gone?

I’m a little confused lately about where all the grown ups have gone.

President Bush has, mildly, changed his tune about global climate change. He concedes that it’s a problem; someone needs to do something about it; but, y’know, not him, not now, and not in any way that might be, uhm, burdensome.

John McCain has offered a “gas tax holiday.” We’ll see if Obama caves on this too. . .

Some Congressional Democrats want to break into the Strategic Petroleum Reserve in hopes of lowering gas prices (given the possibility that someone might bomb Iran—or Iran might bomb someone—and the Persian Gulf might become “less navigable” that doesn’t sound like a great idea).

And they’re also holding hearings to look into the possibility that high prices are the result of nefarious speculation.

They used to call Social Security “the third rail” of American politics; touch it and you’re dead. Is the third rail now the making of logical connections?

1. We are running out of oil—finite supply; growing demand from China and India, among other places—and 2. If we had an infinite supply, this would only allow us to more quickly and efficiently poison our environment. (I’m sure I’ve mentioned yeast before but they’re worth mentioning again: feed them sugar and they piss out alcohol until they poison themselves; silly yeast; would that we were smarter.)

I don’t hear this leading to, 3. We have to radically and as quickly as possible change our behavior, the way we live, the way we power our lives.

I do see that you can’t buy a Toyota Prius anymore because they’re sold out; I do see that sales of ridiculously large pick ups and SUVs have gone down—possibly taking General Motors down with them; I do see that we are driving fewer miles.

So people are beginning to change in response to economic reality.

But I mostly hear politicians commiserating with how difficult this is (it is and, to some degree, they should) and stopping there. Wouldn’t want to suggest more painful changes. . .

Perhaps the problem is that there has been no Pearl Harbor moment—9/11 would have fit the bill, but we were told that the patriotic thing to do as the towers burned was to go shopping.

We are now belatedly springing into action on the energy front with legislation like the Energy Independence and Security Act of 2007 which mandates that we get CAFÉ standards up to 35 mpg by 2020—in the last year my family got rid of two cars that got that kind of mileage because it wasn’t enough for us.

Imagine if the response to Pearl Harbor had been a twelve year plan—because politicians felt that the American people couldn’t handle the kind of sacrifice that a faster and more direct response would take. Imagine if the gist of Churchill’s famous “We Will Fight Them on the Beaches” speech, in 1940 had been “we are studying the problem and coming up with a balanced approach and we will fight them in 1952!”