Investigating Climate Alarmism

Prior to launching CIV FI, I edited EcoWorld, a website dedicated to “reporting on clean technology and the status of species and ecosystems.” My belief in the urgency of many environmental challenges; declining fisheries, deforestation, 3rd world development, depleting aquifers, endangered species, etc., is undiminished. But from 1995 until the spring of 2009, while writing or editing nearly 1,000 reports on these vast topics, I slowly changed from a person who believed in the urgency of reducing anthropogenic CO2 emissions, to someone who is a confirmed skeptic.

One reason I began to question the conventional wisdom on climate change was because whenever researching a particularly horrendous claim, I would inevitably discover the reality was far less significant than the headline. The alleged melting of the ice caps is a good example of this, because all you need is basic competence in high school algebra in order to realize the supposedly ominous quantities of ice-melt being parroted by alarmist journalists are utterly trivial. Here are some posts from several years ago where I ran the numbers and realized the amount of melting being reported in Antarctica and Greenland was actually so minute it was below the level of detectability:

The Real Facts on Increasing Antarctic Ice, 30 April 2009
Pessimistic Reporting, Optimistic Data
, 26 December 2008
Antarctica’s Ice Mass, 17 April 2008
Greenland’s Ice Melting Slowly
, 20 October 2006
Greenland’s Ice Cap
, 04 September 2006
Antarctic Ice, 01 September 2006

In related posts, I realized mainstream journalists are completely ignoring the well-documented fact that the Pacific Decadal Oscillation, a pattern of cold and warm current oscillations that affect ocean temperatures throughout the northern hemisphere and especially in the northern polar regions, will not return to a cooling trend until 2018. Attempting to document this, I posted these entries:

Arctic Cooling on Schedule, 18 October 2007
Hottest Year? 1934, 10 October 2007

At the same time as I was noticing inconsistencies and exaggerations of data, I realized many of the steps being taken in the name of mitigating climate change, were actually causing new environmental problems whose consequences truly were beyond dispute. In particular, the European Community’s carbon offset trading had subsidized massive deforestation in the tropics to grow Palm Oil and Cane Ethanol. I published several warnings about this, including:

Land for Biofuel, 28 December 2007
Reforesting vs. Biofuel
, 17 August 2007
Deforestation for Biofuels Causes Global Warming, 11 April 2007
Biofueled Deforestation, 01 April 2007
Biofuel is NOT “Carbon-Neutral”, 12 February 2007
Biofueled Global Warming, 23 January 2007
Biofuel Monocultures
, 24 October 2006

At this point as well I realized it would make sense to begin reading the material of the so-called “deniers,” especially coming from the climate scientists who were qualified to criticize the overall theory that catastrophic climate change is caused by anthropogenic CO2 emissions. I focused on two individuals, Dr. Richard Lindzen of MIT, and Dr. Roger Pielke Sr., of the University of Colorado. Dr. Lindzen was not only one of the most qualified atmospheric scientists in the world, but had attracted a great deal of personal attacks on his character and motives – because not only did he question global warming theories, but fought back, exposing the conflicts of interest that have corrupted the mainstream academic community. I published several of his papers, and had the privilege of talking with him on several occasions. Here are some of them by Dr. Richard Lindzen:

Global Warming & Greentech, 20 April 2009
Climate Science, 30 October 2008
A Case Against Climate Alarmism, 07 February 2008
Global Warming Facts, Data & Statistics, 07 October 2006
Is there a Basis for Global Warming Alarm?, 05 September 2006

Dr. Roger Pielke Sr. has not incurred quite the same level of wrath from the alarmist community, because his approach to climate change issues is somewhat less confrontational than Dr. Lindzen’s. Both of them agree climate change is a reality – the notion that there isn’t any climate change is, after all, absurd. And both of them believe the role of anthropogenic CO2 in driving climate change is grossly overstated according to the alleged consensus. While both of them agree that changes in land-use by humans are indeed causing regional changes in climate, Dr. Pielke Sr. emphasizes this more than Lindzen. Here is material published that references Pielke’s work, including an interview with him:

Is the Earth Warming or Not?, 08 September 2008
Climate Trends: Debate vs. Demonization, 05 September 2008
Roger Pielke Sr. on Climate Change, 18 July 2008
Interview with Roger Pielke, Sr., 03 December 2007

In recent months on CIV FI I’ve continued to explore the science behind climate change theories. The more I dig into it, really studying the latest arguments as opposed to simply believing the tsunami of alarmist propaganda, the further convinced I become we are embracing a fraud. One new source of skeptical information I’ve recently uncovered is the website of Dr. Roy Spencer, a man who you would think is a demon if you read anything about him in the mainstream press. Spencer’s own reasoning, however, I find to be measured and compelling. His commentary, updated weekly, is online at the Science & Environment Policy Project.  Dr. Pielke Sr.’s commentary is on his blog Climate Science. Another good source of new information can be found at the website for a new book about to be released entitled “Slaying the Sky Dragon.” One may also review the material published on CIV FI in the Climate category, including Credible Climate Skeptics, The Hijacked Public Interest in California, Public Sector Deficits & Global Warming “Mitigation”, California’s Proposition 23, Who Are The Carbon Criminals?, Implementing California’s Global Warming Act, The Climate Money Trail, and The Climate Alarm Industry.

The emphasis on the topic of climate change in recent posts here on CIV FI is prompted by the failure of California’s Proposition 23 on November 2nd. That initiative would have delayed the implementation of California’s Global Warming Act, AB32, a 2006 piece of legislation, set to take effect in 2012, that will regulate virtually every aspect of California’s economy. California already has the strictest environmental laws in the U.S., if not the world, and AB32 ratchets them all up several notches, by applying the metric of CO2 emissions (or CO2 emissions equivalents and offsets) to laws affecting land use, transportation, energy, manufacturing, agriculture, timber – literally all economic activity. Ironically, climate change alarmists fail to realize that Prop. 23 was demolished because a handful of incredibly wealthy individuals who stand to make billions off of “clean energy” stepped up and donated over $30 million to fund a massive and thoroughly deceptive campaign against it.

One major problem with AB32, and CO2 mitigation laws in general, is they rest on the assumption that by making energy, water, transportation, and land use – all basic resources – cost more, we will stimulate economic growth. This is a ridiculously flawed premise. AB32 will redirect wealth into inefficient uses, redirecting discretionary wealth away from new innovations that would otherwise accelerate developments to raise our quality of life. It will make basic resources cost more, it will create artificial scarcity – this does not cause faster economic growth.

Climate alarmism based on flawed and distorted science. The alarm is promulgated because the policies being designed to supposedly mitigate climate change will result in a huge expansion of government power, corporate monopolies, and benefit other special interest groups such as big labor, big finance, academia, the legal profession, the accounting profession, the insurance industry, and all those once noble high-tech entrepreneurs who have been corrupted and seduced by the prospect of guaranteed profit, captive consumers, and trillions in subsidies. Any conscientious individual, whether they are liberal or conservative, should examine for themselves the premises that underlie the alleged science of climate change. Once they realize there is no environmental benefit that will accrue to climate change mitigation policies, they may start to see the economic and political trends attendant to climate change mitigation in an entirely different light.

Entrepreneurial vs. Casino Capitalism

This week’s New Yorker editorial “Puppetry” by Hendrik Hertzberg properly takes Fox Commentator Glenn Beck to task for distorting the life-story of financier George Soros. There are plenty of reasons to criticize George Soros, but how he survived the Holocaust as a pre-teen in wartime Hungary is not one of them. What bears mention is the fact that Glenn Beck may have overplayed the “holocaust” card, but Glenn Beck is one man, a frothy, overwrought pundit who offers a lot of useful insights to his viewers, but isn’t always right. Beck may be condoned by his network, but he hardly represents a movement.

It is indeed appropriate for the New Yorker to condemn Glenn Beck for demonizing George Soros, but the New Yorker is being hypocritical. New Yorker writers routinely participate in character assassination when they criticize climate change skeptics, and they too devalue the holocaust, every time they taint anyone who may disagree with the theory that anthropogenic CO2 is going to destroy our planet as a “denier.”

In last week’s New Yorker editorial, for example, entitled “Uncomfortable Climate,” author Elizabeth Kolbert leads off by calling attention to the behavior of Congressman Darryl Issa, who as a teenager was accused of car theft. This, along with the fact that Issa is “one of the richest men in Congress,” precedes Kolbert’s discussion of Issa’s intention to reopen investigations regarding whether or not it is justifiable to regulate CO2 emissions. In her editorial, Kolbert also makes sure to cherry-pick the most easily mocked quotes attributable to Republican members of Congress, ridiculing their Christianity, reminding us how wealthy they all are, deploring that “the recent election represents a new low.”

Kolbert also uses New Yorker as a forum for her to play the holocaust card, as in a March 2009 post entitled “Donating to the Deniers,” a piece where, again, she references a handful of political donations, that altogether amounted to less than $50,000, made by energy companies to politicians who were known global warming skeptics. Is this the best she could do? This scope-insensitivity is typical of alarmist journalists, who apparently either fail to grasp that the money is overwhelmingly pouring into the coffers of the alarmist lobby, or cynically provide these anecdotes to the contrary because they know most readers won’t notice the differences in magnitude.

It is interesting to note that later in the November 29th issue of the New Yorker, after defending financier George Soros in their lead editorial, the New Yorker offers a feature entitled “What Good is Wall Street?“, by John Cassidy. In this lengthy examination of Wall Street, Cassidy makes clear what pretty much everyone in America already knows, which is, as he puts it, “for years, the most profitable industry in America has been one that doesn’t design, build, or sell a single tangible thing.” Does anyone at the New Yorker see the irony – George Soros may as well be the patron saint of Wall Street! Glenn Beck got inappropriately personal regarding George Soros – that isn’t behavior exclusive to Glenn Back, or the right wing – but Beck’s more valid criticisms of big finance, and the larger-than-life individuals who play at big finance, are pretty much in agreement with John Cassidy’s.

As it stands today, Wall Street has sucked the life out of the United States of America, and the worst is likely yet to come. Big finance, along with their puppets in big government and big labor, have dismantled American manufacturing, and suckered us into national bankruptcy. Another of Glenn Beck’s primary insights has been that the notion of right-wing vs. left-wing, Republican vs. Democrats, is nothing but a smokescreen for financial elites to manipulate our government and act contrary to the interests of the American people. The New Yorker would do well to embrace this complexity, because the latest and greatest scam perpetrated by Wall Street on the world is their scheme to CO2 into a trading commodity. This scheme will further enrich big government, big labor, compliant businesses, and, most important to the big finance crowd, it will keep the lights on in lower Manhattan. But it will result in slower overall economic growth, undermine more useful innovation, transfer wealth away from addressing more compelling environmental challenges, depress development of cost-effective energy solutions, stifle the emergence of competitive new companies, empower monopolies, and deny upward mobility to aspiring individuals and emerging nations. It will do NOTHING to change whatever climate destiny nature may have in store for us.

The New Yorker remains my favorite magazine despite having become, over the past six years or so, the intellectual big brother of every left-wing alternative weekly newspaper in America. They are capable of far more nuanced editorial positions. The New Yorker editorial writers should ponder this: Capitalism as practiced by manufacturers and innovators who compete to build things that work better, faster, and cheaper, is the finest engine to uplift humanity ever conceived. Capitalism, on the other hand, as practiced by financiers who create fictitious currencies to gamble with other people’s money – currencies as diverse and fraudulent as derivatives or carbon credits – are another beast entirely. If this 2nd, more pernicious version of capitalism is a casino, and it is, then Wall Street is the house.

Credible Climate Skeptics

An article entitled “The Danger of Cosmic Genius” appearing in the December 2010 edition of The Atlantic, authored by Kenneth Brower, refers to the brilliant physicist Freeman Dyson, and his “dangerous” skepticism regarding climate change. As Brower puts it, “Among intelligent nonexperts who have weighed in on climate change, Freeman Dyson has become, now that Michael Crichton is dead, perhaps our most prominent global-warming skeptic.”

In an article that exceeds 6,000 words, Brower repeatedly launches scathing attacks on Dyson’s credibility, stating at one point “how could someone as smart as Freeman Dyson be so dumb,” or “many of Dyson’s facts on global warming are wrong… but more disconcerting is the selective way he gathers his information or the peculiar conceptual framework into which he inserts it,” or “how is it possible to misapprehend so profoundly how the real world works,” or “he is emotionally incapable of seeing the true colors of the rampant ingenuity of our species…”

Not content with merely attributing the dangerously delusional nature of Freeman Dyson’s climate skepticism to the apparent failings of his personal emotional and intellectual architecture, Brower then applies what quite likely is a template used to discredit any climate skeptic – especially since some of them, such as Dyson, are too widely respected to be simply demonized. Brower shares these theories, suggesting Dyson may be a “contrarian,” since “physicists, astronomers, scholars of every stripe, have always been charmed by the counterintuitive – and why not, as it so often turns out to be right.” Brower then ventures another theory, “he doesn’t really mean it,” suggesting “it is not always apparent when he is inhabiting some Dali-esque experimental landscape between his ears and when he has touched down on Earth.” Making sure he doesn’t miss anything, Brower continues with an “educated fool” theory, noting that even the brilliant Albert Einstein couldn’t make change, and explaining that “it seems only right that some leveling principle should deprive the geniuses among us of common sense, street smarts, mother wit. It is tempting to try to explaining Dyson this way.” Brower concludes his theories by considering, than dismissing, the possibility that the 86 year old Dyson is becoming senile.

Kenneth Brower is the son of David Brower, a man who actually cared about the environment, instead of our current generation of environmentalists, who have become tools of corporate monopolies bent on controlling global energy output by encouraging us to believe the earth is about to poison itself with CO2. Some of the original Brower comes through when Kenneth Brower admonishes Dyson for his optimism regarding our species, reminding us, among other things, that “many of the large cities of Africa, South America, and Asia are megalopolises of desperate poverty ringed by garbage. Vast tracts of tropical rainforest… disappear annually, burned or logged or mined. Illegal logging is also ravaging the slow-growing boreal forests of Siberia… African wildlife is in precipitous decline…” If only today’s environmentalists would return their focus to these obvious challenges. Instead Brower observes, correctly, that Dyson has compared alarm over climate change to a religion, and turns that around, claiming it is Dyson who is abandoning reason for faith, a faith whose “tenets go something like this: things are not really so bad on this planet. Man is capable of remaking the biosphere in a coherent and satisfactory way. Technology will save us.” As Brower sums it up, “Environmentalism worships the wisdom of nature. Dysonism worships the indomitable ingenuity of Man.” But Brower contradicts himself.

Throughout Brower’s article he provides – in between the slurs and the theories regarding Dyson’s climate heresy – abundant evidence that Freeman Dyson is one of the most capable scientists alive. It is abundantly clear to anyone reading this article – or independently familiar with Freeman Dyson and his body of work – that he is an intensely rational individual, whose conclusions are governed by logic, whose articles of faith are the product of his reason. Listen to these accolades:

“Freeman Dyson is one of those force-of-nature intellects whose brilliance can be fully grasped by only a tiny subset of humanity, that handful of thinkers capable of following his equations. His principal contribution has been to the theory of quantum electrodynamics, but he has done stellar work, too, in pure mathematics, particle physics, statistical mechanics, and matter in the solid state. He writes with a grace and clarity that is rare, even freakish, in a scientist…”

Another prominent climate skeptic, Richard Lindzen of MIT, has argued that climate science is a multi-disciplinary field where it is very unusual, if not impossible, for any single individual to acquire sufficient technical expertise in the diversity of fields necessary to intuitively apprehend what may be actually driving global climate trends. Lindzen claims that many scientists who feel peer pressure to embrace the theory of anthropogenic CO2 driving potentially catastrophic climate change preserve their integrity by limiting their contrarian observations and theories to their own narrow areas of expertise. The glaciologist will deny that glaciers are shrinking worldwide. The atmospheric scientist will point out that the troposphere is not exhibiting temperature trends that reflect what the computer models indicate they should. The oceanographer reminds us that the Pacific Decadal Oscillation will not drive the Arctic to begin to show significant cooling again until 2018. The paleontologist points out we are still emerging from the mini ice age. But none of them challenge the conventional wisdom. This fact – that most scientists are unwilling to risk being politically incorrect with respect to the big picture – nullifies Brower’s point that “he [Dyson] is such a scientific minority on climate change that his views are easy to dismiss.”

And if global climate theories are indeed best ventured by scientists with diverse qualifications, qualifications so diverse, in fact, that it is impossible for one individual can acquire them all, it is disingenuous to suggest Dyson is unqualified to have an opinion on global warming. Does this sound like someone who is not allowed to have a credible opinion on climate change? “Freeman’s gift…it’s cosmic. He is able to see more interconnections between more things than almost anybody. He sees the interrelationships, whether it’s in some microscopic physical process or in a big complicated machine… He has been, from the time he was in his teens, capable of understanding essentially anything that he’s interested in. He’s the most intelligent person I know.”

Brower is not sparing in his discussions of just how powerful and multi-faceted Dyson’s intellect is, saying “His career demonstrates how a Nobel-caliber mind, in avoiding the typical laureate’s dogged obsession with a single problem, can fertilize many fields, in his case particle physics and astrophysics, the history of science, religion, disarmament theory, literature, and even medicine, as Dyson was a co-inventor of the TRIGA reactor, which produces medical isotopes.” This sounds like just the man to take a good look at the current alleged consensus regarding anthropogenic CO2 and its supposed role in inducing catastrophic climate change. Brower – along with his fellows in the AGW alarmist community – simply didn’t get the answer from Dyson that they wanted to hear.

Michael Crichton, who Brower identified as the internationally recognized “non-expert” climate skeptic who Dyson has now replaced, in one of the last public appearances of his life, had this to say about how politicized and corrupted environmental organizations have become, stating “what more and more groups are doing is putting out lies, pure and simple, falsehoods that they know to be false.” Crichton also understood, like Dyson and Brower, that sometimes faith distorts what properly belongs in the realm of science, and had this warning:

“In the end, science offers us a way out of politics. And if we allow science to become politicized, then we are lost. We will enter the Internet version of the dark ages, an era of shifting fears and wild prejudices, transmitted to people who don’t know any better. That’s not a good future for the human race.”

The Hijacked Public Interest in California

If you consider yourself an environmentalist, and someone who – unlike libertarians – believes in a strong role for government in our lives, it’s hard to watch what has been done to environmentalism and government in California. Environmentalists have been hijacked by the global warming lobby, and our state and local governments have been hijacked by labor unions. And if you don’t accept the premises of California’s environmentalists today – that reducing CO2 emissions is going to address an urgent environmental crisis at the same time as it helps the economy, or the premises of California’s public employee unions – that public employees are NOT over-compensated and therefore we must raise taxes so we can afford to pay them, you may logically conclude that California is akin to an occupied nation.

Notwithstanding the spectacular failure of the Meg Whitman campaign – more on that later – the problem in California politics is simple. The environmentalists get their backing from Wall Street plutocrats, who have correctly identified the opportunity to trade CO2 “emissions credits” and “offset credits” as the biggest opportunity for them to rob from the poor and give to the rich they’ve ever seen. Public sector unions get their backing directly from California’s taxpayers, since these unions pretty much compel California’s public employees to join and pay dues. Estimates of California’s public sector union total political spending reach a half-billion dollars on politics every two year election cycle (ref. Public Sector Unions & Political Spending). And these unions, just like the environmentalists, are best friends of Wall Street – those unsustainable pensions granted unionized public employees, retirement benefits that are anywhere between 3x and 10x more generous than social security – pour far more money into Wall Street pension funds than any other category of investment in America.

Because environmentalists have shifted their concern from the environment to becoming tools for Wall Street CO2 emissions brokers, and because public sector unions have succeeded in empowering public sector workers but have done nothing for the private sector workers whose taxes fund the public sector, these groups no longer operate in the public interest. While fiscal conservatives have been screaming about this for years, even liberals are beginning to see the light – particularly with respect to the antics of public sector unions, but recently, even the environmentalist agenda has begun to concern conscientious liberals who sincerely care about the public interest.

Which brings us to California’s recent election, where Democrats ran the table for higher state office. Republican Meg Whitman made several mistakes – explored adequately elsewhere – but her failure was illustrative of a fundamental reality in California politics: Democrats don’t have to raise money for their candidates from the grassroots, or from independent businesspeople, because they get their money from Wall Street plutocrats who masquerade as environmentalists (note the crushing defeat of Prop. 23 because it threatened their interests), and from public sector unions. And because election laws preclude a wealthy individual from making a substantial donation to a candidate they choose, the only way a Republican can afford to run for higher office in California is if they are themselves wealthy. That is a tough one – how many good candidates are wealthy? How many wealthy people make good candidates? And even if they would do a great job – and Meg Whitman probably would have done a great job – they are tainted by their access to money from the get-go. “Queen Meg.” The irony is almost too much to bear.

For these reasons, candidates in California can’t sit on the fence, nor can they adhere to an orthodox conservative ideology. A successful reform candidate in California will have to swing for the fences, identifying phony environmentalists and insatiable public sector unions as the villains in this drama, and courting liberals alongside conservatives down a path towards restoring a government that acts in the public interest. If California simply implemented a 20% headcount reduction and 20% pay-cut across the board to their public sector employees, put a ceiling of 3x the maximum social security benefit onto their pensions combined with a 50% employee contribution, built 3 nuclear power stations and two more reservoirs, most of California’s economic problems would disappear. People who care about the environment, the dignity of workers, and the public interest in general, should wonder why more politicians aren’t asking for these solutions.

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Fighting Bad Policy With Facts

A couple of months ago in a post entitled “Inflation, Population & Government,” I criticized California Senator Denham for making the following assertion in a press release: “between 1970 and 2010, for every 1 percent increase in population, our [California’s state government] spending has increased 20 percent.” In reality, if you adjust for inflation, that statement should read as follows: “between 1970 and 2010, for every 1 percent increase in population, our [California’s state government] spending has increased 3.4 percent.”

This is still a shocking statistic. California’s state government grew over the past 30 years at 3.4x the rate of population growth. Why make an unbelievable comment – 20x – when the inflation-adjusted indisputable truth is so dramatic?

Here’s another one, just for the record. In today’s Wall Street Journal, one of my favorite writers, George Gilder, has a guest column entitled “California’s Destructive Green Jobs Lobby.” In this column he makes some fundamental points about California’s failure on Nov. 2nd to pass Prop. 23, which would have slowed down implementation of AB32, the “Global Warming Act” passed by their legislature in 2006, and set to take effect in 2012. To paraphrase Gilder:

  • CO2 is not pollution.
  • Fossil fuel is cheaper and in many respects far cleaner than “alternative energy,” and there is plenty of it available within the borders of the United States.
  • Economic growth depends on basic resources such as energy costing consumers and businesses LESS, not more.
  • “Green plutocrats” ponied up tens of millions and were prepared to spend Prop. 23’s backers into the ground to make sure it was defeated.
  • The reliance on government edict to grow venture-backed “green” companies is undermining and corrupting the most competitive, innovative sector in the U.S. economy, the venture capital industry, with potentially tragic consequences to our national security, technological leadership and economic future.

It is difficult to overstate how much I agree with Mr. Gilder on these points, as any reader of CIV FI knows. That the destroyers of Prop. 23 really believe CO2 is pollution is plausible, although they ought to do their homework because CO2 is not pollution, it is a benign trace gas that plants depend on in order to live and helps make our planet habitable. But how can they possibly think putting California through the hardship of AB32 will actually make a difference in atmospheric CO2 concentrations, or empower anything other than their own financial returns along with enhanced revenues to the public sector? These billionaires were able to persuade economists to release studies claiming that subsidized “green” jobs, producing inefficient, expensive energy solutions, and forcing consumers and businesses to buy these “solutions,” would actually create economic growth. The whole thing is ludicrous. It is laughable. The backers of Prop. 23 should have publicized the names of these plutocrats, challenged their motives, and ridiculed their premises.

Here’s where Gilder got careless, however:

“What is wrong with California’s plutocratic geniuses? They are simply out of their depth in a field they do not understand. Solar panels are not digital. They may be made of silicon but they benefit from no magic of miniaturization like the Moore’s Law multiplication of transistors on microchips. There is no reasonable way to change the wavelengths of sunlight to fit in drastically smaller photo receptors. Biofuels are even less promising. Even if all Americans stopped eating (saving about 100 thermal watts per capita on average) and devoted all of our current farmland to biofuels, the output could not fill much more than 2% of our energy needs.”

Biofuel is indeed inefficient, but it isn’t that inefficient. There are roughly 470 million acres of active farmland in the U.S. (ref. Carrying Capacity Network, “U.S. Food & Land Production“), and bioethanol from corn can yield roughly 500 gallons per acre per year (ref. EcoWorld, “Is Biofuel Water-Positive“). There are roughly 81,000 BTUs of energy within a gallon of bioethanol (ref. “Gasoline Gallon Equivalents“), which means that if you produced corn ethanol on every available acre of farmland in the U.S., you would produce about 19.2 quadrillion BTUs per year. Since we use about 100 quadrillion BTUs of energy per year in the U.S., growing ethanol on every acre of farmland would deliver us about 20% of our total energy needs, not 2%. Gilder dropped a decimal.

The reason to stop California’s global warming act isn’t that alternative energy shouldn’t be promoted. The point is alternative energy, in most cases, is still too expensive to replace conventional energy development. There are parts of the world, such as Brazil – where you can get over 1,000 gallons of ethanol per acre from sugar cane – where biofuel makes economic sense (although the environmental price paid for all that acreage of sugar cane for transportation fuel is another story). There are off-grid applications of solar electricity that also make economic sense. But these are the exceptions, not the rule, and will remain so for a few more decades. All of Gilder’s fundamental points are completely accurate. The idea that we are about to force California’s industry to trade “carbon emissions credits,” so “green” entrepreneurs can make billions, and Wall Street brokerages can rake commissions off of trillions – all on the backs of the people least able to afford this – is truly deplorable.

When the facts are on your side, there is no need to inadvertently exaggerate them. And those who want to impose bad policy onto the backs of honest working people should examine their own premises.

Public Sector Deficits & Global Warming “Mitigation”

About the same time one might belatedly realize that reducing anthropogenic CO2 emissions will do absolutely nothing to alter or avert whatever climate “change” nature may have in store for us, might also be the time to realize the real reason we have chronic government deficits is because we not only have too many government employees, but we pay them too much. Connecting the dots, on July 2nd, 2008 in a post entitled “Breaking Down California’s AB32 Global Warming Act,” I wrote the following:

“Based on the potential of offset sales, carbon fees, and sales of emissions allowances, one may dismiss claims that AB32 will cost California’s government more than it will bring in revenues. AB32 will potentially cause tens of billions of dollars of net cash per year to flow into California’s public sector. Qualifying municipalities that enforce high density may earn carbon offset fees from polluters, based on how many vehicle miles they can calculate they eliminated through high density zoning. AB 2596 sets the stage for this. Redefining public sector jobs to address global warming mitigation may encompass a huge percentage of the public sector workforce, including construction, infrastructure, education, as well as explicitly environmentally focused agencies. Already California’s 400+ cities, 58 counties, and 32 air quality management districts are imposing new global warming related fees. Since global warming mitigation is a specific program – no vote is required to assess these fees. Auctions of emissions allowances to industry could pour additional hundreds of millions, if not billions, into the public sector each year.

…public sector agencies are salivating over cash flow potential associated with AB32. But why wouldn’t they? Nearly every public entity in California – and elsewhere in the USA – is at risk of bankruptcy, primarily because of grossly over-generous employee compensation, benefits and pensions. Other than carbon-related offset payments, fees and auctions – or massive tax increases – there is no new source of revenue even remotely capable of restoring solvency to public entities. Avoiding public sector reform in general, and avoiding public employee pension reform in particular, is the hidden issue that informs global warming alarm in the public sector.”

Now that California’s Proposition 23 – which would have suspended implementation of California’s Global Warming Act – has failed to pass at the same time as the looming insolvency of public sector employee pension funds is becoming common knowledge – the connection between public sector deficits and the potential revenues associated with global warming mitigation is coming more into focus. Here is more on how AB32 is going to try to rescue the finances of public entities, written in a post last week on CalWatchdog.com entitled “Expect More Population Flight,” by Wayne Lusvardi:

Utility user taxes provide a money lifeline for municipalities to raid water and power utility funds and shift them into their general operating and fiduciary retirement funds. When California’s Green Power law goes into effect in 2012 it is likely that municipal water and power funds will swell and the surplus siphoned into city and county general funds to meet pension obligations. Voters will not have a vote in determining whether existing pension obligations will be met or not. Instead lucrative union pension deals will be buried in increased water and power rates.

This may explain why expensive Green Power is being rolled out so aggressively and so fast over the voices of prominent scientists exposing global warming and C02 pollution as a fraud. Green Power may be a means to bail out broke municipalities before 2015 or 2020 rolls around whichever is the case. Green power could result in 40 percent to 60 percent higher electricity rates coupled with a 15 percent to 30 percent increase in water rates, not including the $44 billion water bond proposed for the 2012 ballot (including bond interest and matching funds).

Despite AB32 being nothing more than a mechanism to transfer wealth from lower and middle class private sector workers into the pockets of public sector workers and “green entrepreneurs” (they are neither), Prop. 23 which would have suspended its implementation was soundly defeated. The reason it was defeated was because its proponents were outspent 3 to 1. And who was it who opposed those evil oil companies? It was wealthy hedge fund oligarchs and “green tech” moguls, abetted by environmentalist “nonprofits” whose boards of directors are almost exclusively populated by trial lawyers, and, imagine this – other oil companies who have sold out. These special interests all know that implementing AB32 will pour more money into their own pockets. Take a look at how many of the super rich threw millions into defeating Prop. 23 in order to protect their financial turf: Ballotpedia Prop. 23

The failure of Prop. 23 is instructive, because it illustrates quite well the accusation by conservatives that the Democratic Party is actually the party of the “ruling class.” Because the incredibly wealthy individuals who stepped up to annihilate Prop. 23 – and they could have spent far more than the $20M+ that they donated without blinking – are nearly all Democrats. They are so wealthy that buying off the public sector workers, who in California make nearly twice as much on average as private sector workers, is more important to them than fostering an equitable society where hard work and merit can still allow people who aren’t spectacularly lucky or supremely intelligent to get ahead financially. As long as society’s administrators and enforcers – unionized public employees – can afford to pay 60% more for electricity and 30% more for water, who cares about all the other little people?

The failure of Prop. 23 is also instructive because it shows, yet again, nauseatingly, where the money really is in the debate regarding what causes climate change. Everything associated with climate change “mitigation” is regressive. It creates new – absolutely absurd, nonsensical “CO2 credits” – classes of assets for Wall Street brokerages to collect trading fees on, it creates new legal frontiers for attorneys, new carve-outs for insurance companies, new accounting rules for CPAs, heavily subsidized new “green” industries to attract entrepreneurs and investors who used to believe in competition, and it pours money into the public sector, alleviating the need for public sector union reform. Everyone wins except the ordinary Californian.

For more on AB32 and the real reason for public sector deficits, read “Implementing California’s Global Warming Act,” and “Public Employee Compensation.”

Bullet Train Boondoggles

On November 4th California’s “High-Speed Rail Authority” released a press release entitled “Federal Funding for High-Speed Rail Dedicated to the Central Valley.” Apparently an additional $715 million in infrastructure investment is going to be directed to the development of California’s bullet train, bringing the total to $4.3 billion. All of these funds are to be spent on what will be the first segment of the high-speed rail system, running between Merced and Bakersfield.

A few years ago, when I worked as CFO for a short line railroad, I learned of a term familiar to railroad professionals, “foamer,” which is used to describe rail enthusiasts whose interest in everything having to do with locomotives, rolling stock and track, matched that of rock star groupies. But pleasing the foamers – and the foreign corporations who will gobble up most of the borrowed government loot that gets sunk into high-speed rail – is not reason enough to direct money at this project.

A commenter on a previous post here said something very insightful – “if we’re going to spend money we don’t have, let’s at least spend it on things we can see.” He was referring to the folly of using deficit stimulus money simply to continue to pay over-market compensation to government employees. But I would take that a step further. If you are going to spend money you don’t have, at least spend it on things you can see that will yield a return on investment. The bullet train boondoggle will never yield a return on investment – it will be a financial drain on our economy forever. It will never make money.

The reason high-speed rail makes sense in other parts of the world are because they are more densely populated, and because they are smaller geographically. There are nearly 100 million people living along the 250 mile corridor between Tokyo and Osaka. This is the industrial and urban heartland of Japan, a megapolis where the population density per square mile is often 50,000 people or more. In places like this, high speed rail makes sense. If you are traveling within this region, you can board a train and travel 200 miles in less time than you would require to board an airplane and travel 200 miles. And because there are nearly 100 million people living along the rail corridor, there is a large population of potential passengers.

California, by comparison, is contemplating an 800 mile system, with 24 stations, in a state with not quite 40 million people. How would high-speed rail transport compare with airplane transportation in California? Here is the “high-speed” route being contemplated to get someone from San Francisco to Los Angeles:
San Francisco to San Jose – 50 miles
San Jose to Fresno – approximately 150 miles, the Rail Authority doesn’t provide information for this leg
Fresno to Bakersfield – 130 miles
Bakersfield to Palmdale – 85 miles
Palmdale to Los Angeles – 58 miles

If you fly from San Francisco to Los Angeles, your experience isn’t that different from if you take a bullet train from San Francisco to Los Angeles, except for the actual transit time. You will still have to get to the airport or the station using a car or mass transit. You will still have to go through security. You will still have to wait to board the next available flight, or train. But the travel time from San Francisco to Los Angeles on a plane is about one hour. On a bullet train, this same journey would traverse at least 450 miles of track, and a non-stop trip at an average speed of 180 MPH would take 2.5 hours. The round trip would take five hours instead of two hours. And how many non-stop trips are they ever going to have on a bullet train per day from San Francisco to Los Angeles? There are literally dozens of non-stop flights each day from San Francisco to Los Angeles. It is not practical.

To estimate what this bullet train is really going to cost to build, consider the costs currently projected for the test track just funded. Apparently this first segment will comprise the “core of the system,” which is “either Merced-to-Fresno or Fresno-to-Bakersfield.” Since it’s 60 miles from Merced to Fresno, and 113 miles from Fresno to Bakersfield, if one divides the $4.3 billion in required funding by the average of those distances, which is 86 miles, you will get a cost of $50 million per mile! If you multiply this amount by the planned 800 miles of track, you get a cost of $40 billion. Is this accurate?

When the bullet train proposal was originally sold to voters, it was marketed as costing $9.5 billion. Simply by extrapolating the costs for the first stretch of track – in the most remote, sparsely populated area of the entire system, where the land is both far cheaper and also flat as a pancake, we get to a cost of $40 billion. And does this $50 million per mile cost include all the rolling stock, all the stations, all the corridor security fences? What about the costs for land where the high-speed rail right-of-way will be traversing the land between San Francisco and San Jose, or everywhere from just north of Los Angeles all the way to San Diego – arguably the most expensive acreage on earth? What about the cost to cut routes through the mountainous Pacheco Pass in Northern California, or the Grapevine in Southern California? It is difficult to imagine that the real cost, in today’s dollars, of the entire California high-speed rail system, as it is currently envisioned, costing less than $100 billion. If this gargantuan boondoggle is ever realized, it is probably going to cost a lot more than that.

If you read the website of the California High-Speed Rail Authority, you can get additional clues as to just how expensive this system is going to be. For example, the page showing projections for the San Francisco to San Jose corridor projects passenger counts of 31,600 per day. You have to assume this is not a low-ball estimate, since the purpose of this website is to present a supportive perspective on the project. This means that 31,600 people are going to make 100 mile round trips approximately 250 times per year. Since this is the Bay Area, and not Fresno County, it is safe to assume the cost per mile will be well in excess of $50 million, but even at $50 million per mile this is a $2.5 billion expenditure to move 31,600 people to work and back. This will not make a dent in Bay Area traffic. There are nearly 7.0 million people living in the San Francisco Bay Area, and probably at least 3.0 million of them have to transport themselves to work every day. The bullet train will move 31,600 people out of 3,000,000 commuters, alleviating traffic congestion by about 1.0%. And that’s the best case, in the most likely segment of the rail system to be maximally used. Nobody who can board an airplane is going to use the bullet train to go to Southern California from Northern California. Relatively few riders will use the train to travel between the smaller urban centers, such as from Bakersfield to Fresno.

So how much will this system cost per year to pay off the bonds, if the system costs $100 billion and 30 year bonds are issued at 5.0% interest? Using an online mortgage calculator, you will see that a 5.0%, 30 year fully amortized loan will require total payments per year equivalent to 6.4%. That is $6.4 billion per year that taxpayers will pay in principal plus interest to service the debt for California’s high-speed rail system. Readers who disagree with these assessments are invited to convincingly prove that this system is going to cost less than $100 billion. Don’t count on ridership revenue to pay for this – it is highly unlikely ridership will even cover operating costs.

The question is not whether or not we need high-speed rail – if you want a 200 MPH theme park ride scarring California’s beautiful landscape for 800 miles from north to south – that is a matter of taste. The real question is what could we do instead with all that money. And the answers are plentiful. We could spend $20 billion (that will probably inflate, too) and reenact the water bond, which would invest in upgrades to our aqueducts and dams, introduce new sources of water storage, construct a peripheral canal around California’s delta, and hopefully even fund upgrades to our wastewater treatment facilities. We could invest in public/private ventures to build 2-3 nuclear power stations; for $10 billion of public money we could probably leverage construction of another 10.0 gigawatts of electrical output, plenty to guarantee California cheap electricity. And we could upgrade and widen our roads, getting them ready for tantalizing new designs for surface transport – busses and cars that operate on auto-pilot in high-speed lanes – there is no transportation medium as versatile as a simple road. We might even upgrade intercity trains in the densely populated Bay Area and Los Angeles, using existing rail corridors.

There are 12 million households in California. If this boondoggle is actually realized, it is going to cost each of them over $500 per year. Since half of the households in California don’t pay any taxes, or pay minimal taxes, however, those Californian households who do pay taxes will each be more likely to pay $1,000 per year to pay for high-speed rail. Is that worth it? Particularly when that financial sacrifice could be used instead to invest in nuclear power, water storage, conveyances and treatment, and more roads – which would deliver cheap energy, cheap water, and cheap and convenient transportation.

A legitimate role for government spending is to make strategic investments that reduce the costs for basic necessities. That is what makes a nation prosperous. That is a proper use of public funds. Artificially inflating the costs for energy, water and transportation – which is the current policy of California’s government – is a crime against the people of California, and the “environmental” justification for all of this is a smokescreen and a fraud. California’s bullet train boondoggle is just one example of this travesty.

Widespread Voter Fraud?

During the 2004 Presidential election there were allegations of voter fraud; the 2000 Presidential election was alleged to have been “stolen” by the Republicans. If you go further back in history, you can point to evidence the Democratic machine in Chicago manipulated election results to throw the 1960 Presidential election victory to Kennedy. A close reading of American history would reveal election fraud as a challenge to our democracy from the very beginning, and in every decade since then. So it shouldn’t be any surprise that we’re seeing it now.

What is a surprise is the opportunities for voter fraud, in this age of biometric identification technology and total information awareness, are actually greater than ever. Using California as an example, here are some of the reasons why:

Voters are not required to present a verifiable photo identification when they vote, nor when they register to vote. I personally experienced this when I went to my polling place on November 2nd, and once they had asked me my name and had me sign next to my name on the rolls of registered voters in that precinct, I asked them “aren’t you going to ask me for an identification?” They said no, that it was not required and they don’t do it.

Voters are able to vote by mail. This causes a variety of problems – first, it precludes anyone showing an identification, and second, it prolongs vote counts after the election as workers tabulate the ballots. And the greater the number of ballots requiring post-election, manual counting, the more opportunities there are for political operatives who have infiltrated our election workforce to manipulate results. And because voting by mail is done outside of the controlled environment of the voting booth at the polling place, there is no guarantee that these ballots are not filled out by someone other than the person supposedly voting.

There are horrendous reports coming in this week from all over the country documenting voter fraud. An article posted on RedState.com, entitled “How Unions or Their Allies Could be Stealing November’s Election Right Now,” alleges that massive, systemic, union-orchestrated fraud has been implemented across the U.S. this election and could have decided several close races in favor of Democrats. Whether or not this is true, or true at the scale being alleged, should not deter any concerned citizen from considering these charges, because they expose serious weaknesses that challenge the integrity of our voting process. Here are some of the allegations:

The SEIU and others funded the “Secretary of State Project” in 2005, pouring money into races to elect “reform minded” Secretaries of State in battleground states. In nine states since then they have successfully elected their candidates. Since the Secretary of State oversees elections, who sits in that position can potentially have a corrupting influence on election outcomes when there are recounts – or when there is a high percentage of mailed absentee ballots. In California, the employees who count and verify ballots are members of the SEIU. Is this appropriate? Are these people disinterested parties to election outcomes?

The report goes on to claim the SEIU has been attempting to manipulate the electoral system across the United States, engaging in actions ranging from submitting forged initiative signatures, to invalid voter registrations, to hacking into voter machines, to destroying evidence of hacked machines. The report discusses how fake IDs are being used to exploit lax voter registration procedures, that illegal immigrants are being signed up as “permanent absentee voters,” and that early voter “rallies” are being held where voters are instructed, as a group, how to mark their mail-in ballots.

Is all of this true? Are unions engaging in electoral manipulation that eclipses any potential manipulation by the other side? One thing is certain, they certainly have the financial power to do this. Unions, who compel employees to join their ranks and pay them mandatory dues, exercise financial clout that can overwhelm most other special interests, particularly when most other special interests are either terrified of unions or working with them. It is naive to dismiss the idea that big labor, big business, and big government would not have a common interest in colluding to squelch competition by emerging entrepreneurs and disruptive technologies.

If the primary practitioners of voter fraud in 2010 are indeed labor unions, it is an amazing feat to see their interests defeated nearly everywhere in the nation. Because if it is true, that they have gone into legal gray areas – if not engaged in blatant criminal activity – using their millions of well-paid, highly organized foot soldiers to penetrate every race, local, state and national, exploiting every weakness in the system, AND spent literally hundreds of millions of dollars in political campaigning to promote their agenda, why did they lose so badly?

The reason, of course, is because America doesn’t want unions to run their country – their President, their Congress, their State Legislatures, their school boards, their public utilities, their local city councils. American workers don’t want to be forced to pay dues to a union boss. They don’t want to see their upward mobility in the workforce governed by seniority and diversity quotas instead of merit and hard work. They don’t want to see competition erased from our economy. They don’t want to see unions and environmentalists provide cover for each other, as they dismantle our economy. They don’t want to see their taxes turned over to public sector pension funds and gambled on Wall Street, distorting the market and destroying small investors. They don’t want to listen to a bunch of well-heeled leftist politicians, funded through coercive dues instead of voluntary contributions, tell us capitalism is evil, that wealth is inevitably ill-gotten, and that equality of outcome is superior to equality of opportunity – legislating accordingly.

Whether or not unions manipulate our elections, they certainly buy them. Any reforms to improve the integrity of our elections or impose yet another restriction on campaign finance must first address this fact – unions compel millions of American workers to become members, impose upon them mandatory dues, and use this illegitimately acquired wealth to exercise far too much influence on our democracy. This must be stopped, via initiative, via legislation, and via court action.

California’s Initiative Ecosystem

Only one initiative in the history of California passed without requiring professional signature gatherers to qualify it; that was the legendary Proposition 13 enacted in 1978 to lower property tax rates. But the lack of funds to take an initiative from concept to ballot to voter-approved law doesn’t discourage initiative proponents from filing them. In California, for a few hundred dollars, anyone can file a state initiative with the Secretary of State, wherein they will have 150 days to gather the required signatures – allowing for an inevitable percentage of disallowed signatures, an initiative that will amend California’s constitution will require (allowing for the inevitable percentage of unverifiable submissions) about 1,000,000 signatures. You can view California’s latest and greatest initiative filings here: Initiatives and Referenda Cleared for Circulation. For more on how to file an initiative, read “Laws governing the initiative process in California,” and “California signature requirements.”

California’s initiative laws have created a political ecosystem, where simply reviewing the dozens, or even hundreds of initiatives that have been filed provides an insightful glimpse into what sentiments roil the body politic. Some of them are the product of fringe groups and fanatics, others are clearly the product of serious and measured analysis, still others are spawned by powerful special interests, often filed as warning shots.

There are currently only six initiatives cleared for circulation that haven’t expired, plus ten more that have recently expired but haven’t been removed yet. Here’s the one most recently filed:  “1475. (10-0022), Creates Special Constitutional Rule for Speech Based on the Bible. Initiative Constitutional Amendment. Summary Date: 10/25/10 | Circulation Deadline: 03/24/11 | Signatures Required: 694,354: Exempts speech based on biblical authority from existing constitutional and statutory restrictions applicable to all other speech, including restrictions against discrimination and hate crimes. Repeals constitutional provision denying protection to acts of religious expression inconsistent with the peace or safety of the State.”

Moving from the social issues to fiscal issues, here’s the next one in line:  “1474. (10-0021), Requires Lender or Other Mortgage Holders, Upon Borrower’s Request, to Convert Adjustable-Rate Loan to Thirty-Year Fixed Rate Loan and Reduce Loan Principal to Property’s Current Fair Market Value. Initiative Statute. Summary Date: 10/14/10 | Circulation Deadline: 03/14/11 | Signatures Required: 433,971: Limits new loan’s value to sum of the property’s current market value, plus amount of certain cash distributions under the first mortgage. Extinguishes borrower’s obligations on prior loans secured by the property. Prohibits reporting loan conversion to consumer credit agencies.”

As a clearing house where the dreams of social conservatives and fiscal liberals – or social liberals and fiscal conservatives – are put on public display, it’s hard to beat California’s “Initiatives and Referenda Cleared for Circulation.” Also still actively filed is number 1472 (10-0019), that “Eliminates the Law Allowing Married Couples to Divorce,” and number 1471 (10-0018) that “Requires Parental Notification Before Terminating Pregnancy of Female Under 18.”

Since there are only six unexpired initiative proposals out there, here are the final two of them, number 1473 (10-0020), that “Prohibits State Retirement Funds from Investing in Companies Engaged in Certain Business Activities in Israel,” and, expiring today, the inflammatory number 1470 (10-0017), that “Imposes New Annual Surcharge and New Annual Tax on All Pension Income Over $40,000. Initiative Statute.” Watch out, pensioners, that one could get legs.

How crazy or fringe these initiatives seem may often depend on whether or not you agree with them. Few of us are likely to scoff at a futile or even extreme initiative proposal if it fulfills some cause in which we fervently believe. Imagine if all of them passed – we could engage in hate speech if we claimed the bible justified it, we could buy overpriced homes and then have our mortgage reduced to the “market value” if the price came down to earth, we would be prohibited from getting divorced, etc. At least there would no longer be a pension crisis… On the other hand, even if enacted, how many of these initiatives could withstand a challenge in court?

Some proposed initiatives sound good, some of them seem absurd or unfair. Here’s one that recently expired that is extremely interesting, number 1469 (10-0016), that “Repeals Environmental Protection Laws and Establishes New Inalienable Rights. Initiative Constitutional Amendment and Statute. Summary Date: 05/14/10 | Circulation Deadline: 10/12/10 | Signatures Required: 694,354. Repeals the California Environmental Quality Act, the California Coastal Act, the California Endangered Species Act, and the California Global Warming Solutions Act. Establishes new inalienable rights to produce, use, and consume air, carbon dioxide, water, habitat for humanity and energy generating natural resources. Grants the people of California the right to nullify all federal powers not delegated to the United States by the federal constitution.”

Here’s another recently expired initiative that attempts to rein in the environmentalist lawsuit industry, number 1464 (10-0008), that “Precludes Anyone Other than State Attorney General from Bringing a Lawsuit Challenging Sufficiency of Environmental Impact Report. Initiative Statute. Summary Date: 03/26/10 | Circulation Deadline: 08/23/10 | Signatures Required: 433,971. Changes California law to preclude any person, city, county, or other entity, other than the state Attorney General, from bringing a lawsuit that alleges that an environmental impact report does not comply with the California Environmental Quality Act because it fails to identify ways to minimize significant environmental effects, fails to offer alternatives to the proposed project, or fails to satisfy other legal requirements. Summary of estimate by Legislative Analyst and Director of Finance of fiscal impact on state and local government: Potential additional net costs for DOJ from increased CEQA litigation workload, likely not more than the low millions of dollars annually. Potentially significant savings or costs for state and local government litigation defense in CEQA cases. Unknown, but likely positive, net impact on state and local government revenues from increased economic activity.”

You have to love the legislative analyst’s take on the fiscal impact of that one, “Unknown, but likely positive, net impact on state and local government revenues from increased economic activity.”

It’s interesting to wonder what motivates filing some of these initiatives. There isn’t another regularly scheduled statewide election until 2012. Some of these recently expired initiatives were, presumably, attempts to make it onto last week’s ballot. But most of the ones filed in late October, for example, are pretty much guaranteed to never make it onto any ballot. They are just political statements, surfacing for 150 days, and nearly always receding into oblivion, on one of the most intriguing soapboxes ever conceived.

There is perennial talk of banning citizen’s initiatives, with claims they have made California “ungovernable.” This would be a tragic mistake. What has made California ungovernable is the fact that California’s government employees have been allowed to unionize. This has created a special interest, public employee unions, of unprecedented power and uniquely corrupt. They have pursued an agenda of more laws and regulations and unsustainable compensation for an ever-expanding unionized government workforce. They have either co-opted or intimidated most of California’s business community, they work closely with the environmentalist extremists, and they have used their massive and ill-gotten financial wealth to turn our elections into travesties (ref. Public Sector Unions and Political Spending). Yet someday, perhaps someday soon, the enslaved citizens of California will rise up against their public sector union overlords and eviscerate their power before we have an economic collapse, and the citizens initiative is the last, best, and only mechanism left to accomplish this.

Pension Reform Options

Not present on the ballot this year in California is an initiative to reformulate pension benefits for state and local government employees. The subject of dozens of posts, public employee pensions are financially unsustainable and grossly inequitable. The reasons for those assertions have been fully explored in previous posts, so the purpose of this post is not to reiterate those reasons, but to enumerate some of the key reforms that would, if they were all enacted, bring pension benefits for public sector employees down to a level that would be financially sustainable while still preserving the defined benefit option. In some cases, these reforms would have to be implemented not via an initiative amendment, but via municipal bankruptcy court – but if they were included in an initiative, it would provide a roadmap for bankruptcy courts to follow. Here goes:

(1) Lower annual pension accrual to 1999 levels for new hires:
The public sector pension formula for all new hires would be based, as before, on accruing a percentage of final salary for each year worked. For public safety employees this percent would be reduced from 3.0% per year to 2.0% per year. For all other employees, this percent would be reduced from 2.0% per year to 1.25% per year.

(2) Lower annual pension accrual to 1999 levels going forward for existing hires:
Current employees would, for all years remaining in their public sector career, accrue their retirement benefit at the new reduced percentage rate. Current employees would retain the higher percentage rate they have earned in prior years, subject to the conditions in (3).

(3) Reverse any retroactive pension accrual enhancement ever granted existing hires:
Current employees whose annual pension benefit accrual was increased retroactively from 2.0% to 3.0%, or from 1.25% to 2.0%, will retain this increase for the years subsequent to that change (subject to the conditions in item (2), but will revert to their original rate of pension benefit accrual for the years prior to that change.

(4) Retired public employees will see no change to their pension benefit.
Create a “pension review commission” to audit and adjust any existing pensions where evidence of “spiking” or other inappropriate enhancements are uncovered.

(5) Spread “final year” salary calculation over five years and eliminate “spiking”:
The final salary base for which the accrued percentage based on years worked shall be applied will be calculated as follows: The average of the final five years of each retiree’s annual compensation, adjusted for inflation, but not subject to any other adjustments. Annual compensation shall not include overtime, cashed in sick time or vacation time, bonuses, or any other form of compensation not considered base salary.

(6) Establish ceiling on maximum pension benefit:
A ceiling on eligible pension compensation shall be set at no more than 75% of the average final five years salary as calculated in item (5). Additionally, a ceiling on eligible pension compensation shall be set at no more than triple the maximum benefit awarded under social security. A floor on eligible pension compensation shall be set at no less than the benefit as calculated by social security.

(7) Raise eligible retirement age:
Public safety employees shall become eligible for pension benefits no earlier than age 55, and other employees shall become eligible for pension benefits no earlier than age 62.

(8) Reduce pension benefit by amount retiree earns in new job:
Public employees shall not be eligible to receive their full pension if they engage in work subsequent to their retirement. To the extent a public sector retiree works in any job, public or private, the gross amount they earn shall be deducted from the gross amount of their eligible pension payment.

(9) Eliminate tax-free or reduced tax pensions:
No portion of public employee pensions shall be awarded tax-free status, or subject to a reduced rate of taxation, for any reason.

(10) Aggregate multiple pensions under same ceiling:
Public employees who have earned two or more pensions by virtue of working in two or more public sector jobs for a period sufficient to vest these pensions shall have the sum of these pension benefits subject to the ceiling limitations as set forth in items (6) and (7), and these reductions to benefits shall be apportioned on a pro-rata basis to the applicable benefit plans.

(11) Require conservative pension fund investment strategy:
Public employee pension funds will be required to invest 80% of their assets in low-risk annuities.

(12) Require public employees to contribute a fair share to their pension fund:
All public employees shall contribute 50% of the amount necessary to fund their pension each year in the form of withholding from their gross earnings, with the employer contributing the other 50%.

While many of these items may violate existing collective bargaining agreements, they are worth considering either as an initiative amendment, legislation, or as the product of bankruptcy negotiation. Because these twelve items represent an equitable way to move forward with pension benefits for public employees that remain considerably better than social security, retain the security of being defined benefits, and would – if all of them were enacted today – almost certainly preserve the solvency of the public employee pension system.