What was once the indispensable state is now an asylum of decline that threatens to drag the rest of America down with it.
CALIFORNIA’S TREASURER BILL LOCKYER has a bridge he wants to sell you. No, he is not putting the Golden Gate on the market. That would actually find buyers. He is trying to foist a “bridge loan” on the country that in effect would require us to buy the entire state.
Shuffling off the streets of Sacramento into the bond market a few weeks ago seeking to raise some $14 billion in so-called “revenue anticipation notes,” Lockyer is offering notes that can be repaid only by future revenue anticipation notes, in a delusional statewide recycling binge of bonds on bonds.
Since the state at the same time officially projected $20 billion annual deficits for the next six years (Governor elect Jerry Brown says $28 billion in 2011), the end of this road is another of those bridges to nowhere that politicians believe stimulate an economy but ordinary people prefer not to drive on or off. So now Lockyer is following up with a drive to get the federal government to guarantee California’s debt against default, which means the taxpayers will have to be the ulti-mate buyers.
Before we close the deal to purchase the state, however, ordinary financial due diligence would require Congress to make California rescind a “poison pill” provision in its state laws. This poison pill is not medical marijuana. But it renders any bridge loan or “revenue anticipation note” utterly hallucinogenic.
Unrecognized by most media, conservatives lost miserably in what may have been the most consequential election on November 2. This was the California referendum to repeal Assembly Bill 32, the so-called Global Warming Solutions Act. Passed in 2006, AB 32 ordained that the state economy be ratcheted back to 1990 levels of so-called greenhouse gases by 2020, a 30 percent drop, and mandated an 80 percent drop by 2050. Together with an unsustainable $500 billion public pension overhang and $28 billion current budgetary shortfall, the effort to cap all energy production dooms the state to bankruptcy.
Although conservative pundits have lavished disdain on this California political potlatch, California is the nation’s most important state, dominant in the innovation, manufacturing, and enterprise that make the U.S. economically and militarily supreme in the world. Perhaps two-thirds of the nation’s new technology originates in the state or is financed by its venture capitalists. California cannot go down the drain without inflicting serious damage on the rest of the country.
THE IRONY IS THAT the general trend of advance in conventional “non-renewable” energy for a century — from wood to coal to oil to natural gas and nuclear — has already wrought at least a 60 percent drop in carbon emissions per watt. In the words of natural gas pioneer Robert Hefner, “As man travels down the energy path from solid wood and coal to liquid gasoline and to gaseous natural gas and hydrogen, the progression is one of carbon heavy to carbon light; from complex chemical structure to simple; from toxic particulate emissions to no particulate emissions; and finally, from high CO2 emissions to no CO2 emissions.” Thus the long-term California targets might well be achieved globally in the normal course of technology advance. Unlike the existing bonfires of ingenuity and money, moreover, an organic advance of energy efficiencies can readily propagate around the world without mandates and subsidies.
The obvious next step in this positive energy evolution is aggressive use of the several trillions of cubic feet of low-carbon natural gas, enabled by new horizontal fracking techniques, that have been found in the U.S. over the last two years. These discoveries have essentially ended the “energy crisis” in the United States.
This hugely promising breakthrough, though, collides with the massive vote against repeal of the California green law — 62 to 38 percent — which gives a patina of public support to an economy-crushing drive to suppress CO2 in natural gas and everything else. Already mounting a scare campaign against the new natural gas extraction methods, California Democrats apparently expect to pass on the huge costs of their policies to the rest of the country in a reverse gold rush on Washington.
Masking the bailouts for the state will be subsidies for green jobs and stimuli for politically oriented R&D, provisions for so-called “feed-in tariffs” for nuisance energy suppliers and boondoggles for a “smart grid” that can adapt to dumb and erratic power (but is more complex and vulnerable to sabotage). Eventually there will have to be a costly environmental cleanup for the dilapidated toxic wreckage of windmills and solar panels (replete with lead and cadmium). When all these efforts to save California fail, the last resort will be a debt-withering siege of inflation that depreciates much of the nation’s remaining wealth.
IN A PARODY OF THE supply-side economics of creative destruction, advocates of AB 32 envisaged the usurpation of existing fuels with alternative energy sources that create new jobs and industries. Thomas Friedman’s Hot, Flat and Crowded is the bible of this delusional sect, which has lamentably captured much of Silicon Valley. This economic model sees new wealth emerge from dismantling the existing energy economy and replacing it with a medieval system of windmills and solar collectors. The problem with this strategy is that its destruction of the old energy system does nothing whatsoever to enable a new one. By this logic we could all get rich by razing the existing housing plant and replacing it with fancy renewable tents.
All the so-called “renewables” are more costly, environmentally destructive, and inefficient than the existing energy infrastructure. They waste and desecrate the precious resource of arable land that feeds the world while banning the abundant subterranean troves of fossil and nuclear fuels.
The Greens, led by Amory Lovins and Al Gore, retort in an indignant chorus that non-renewables, such as oil and gas and nuclear, receive far more government subsidies, some $73 billion in 2008, than the $29 billion received yearly by the new green alternatives. But much of the so-called subsidies for conventional energy are not subsidies but deductions for tax payments already made overseas. In any case, the conventional energy companies, unlike the renewables, make vast net tax contributions while, also unlike the renewables, supplying 98 percent of the nation’s energy.
Even accepting the nonsensical idea that tax deductions and depletion allowances are a governmental bonanza for “dirty fuels,” the direct subsidies per watt are roughly 20 times greater for the renewables. Meanwhile the CO2 suppression caps and mandates represent a confiscatory new tax on all conventional energy sources. All the accumulating environmental litigation and laws pose an insuperable barrier to innovative new nuclear facilities.
The chief so-called renewables that the Greens believe can replace oil, gas, and coal are wind, solar, and biomass. All tend to cost more energy to produce and transport and adapt to the power grid than they yield in new power. Windmills, for example, not only deface the environment but they are too erratic to supply reliable base power and thus require non-renewable backup. As venture investor and engineer Andy Kessler has calculated, the inefficiency of alternative sources means that every dollar of new wages for green workers will result in at least a dollar-fifty of reduced pay and employment for the state’s other workers. The damage, sadly, will not be confined to California but will also displace and impoverish workers across the country.
A man of faith in a godless age is hitting Americans where it hurts.
Mr. and Mrs. American Spectator Reader, let P.J. O’Rourke talk sense to your kids.
In Britain, defending your property can get you life.
It won’t take long for conservatives to scratch this presidential wannabe off their 2008 scorecard.
Was the President done in by the economy, or by the politics of the economy?
H/T to National Review Online