**Written by Doug Powers
You’re finished, Trump — finished! Mwa-ha-ha:
Nothing like an ethics slam coming from Maxine Waters! She’s good at tossing out red meat for the Dem base to devour, but not so good at math when it comes to the party makeup of Congress in the aftermath of the Obama era.
**Written by Doug Powers
Britain’s productivity growth has halted. The evidence is clear.
Since the financial crisis, output per hour worked has been effectively stagnant, only re-hitting the peaks seen at the end of 2007 in late 2016. This is unprecedented. To see the scale of the deviation from trend, if it had continued to grow as it did prior to the crisis (not that one might expect that to happen), it would be around 18 per cent higher today.
Everyone knows this and everybody knows instinctively that it can be a symptom of a problem. If you cannot have sustained rises in productivity, then living standards will stagnate. Absent the constant betterment of producing more with less effort, robust wage growth is impossible, however much governments might will it by jacking up the minimum wage.
Surely then governments should seek to “target” improvements in labour productivity as an ambition of policy? Should we try to emulate higher productivity levels elsewhere? In an interesting short essay for a new book Economic Ideas You Should Forget, Monika Bütler argues the opposite. In fact, she shows that targeting improvements in a country’s overall measured labour productivity can produce perverse results.
Rather than targeting “boosting productivity”, politicians should instead seek to tackle problems directly.
To see why, consider a set of statistics constantly used by our politicians. They regularly tell us that Germans and the French are 36 per cent and 30 per cent more productive than we Brits are in terms of output per hour. According to Labour politician Chuka Umunna, “it takes on average a British worker until Friday to do what equivalent workers in Germany and France will complete by the end of Thursday afternoon”.
Read that sentence again. The key word is “equivalent”. There are at least three reasons why these figures might be misleading.
First, countries with restrictive policies (high minimum wages or heavy redistribution, for example) may have inflated measured average productivity simply by virtue of low-skilled workers not having jobs. The UK unemployment rate is 4.7 per cent and we have high levels of inward migration. In France, the unemployment rate is 10.5 per cent. At least part of the difference between these countries, both looking at output per hour worked or indeed output per worker, can then be explained by the composition of the workforce.
Another crucial difference is the number of hours worked. The OECD calculates that in 2015 the average Brit worked 1,674 hours, compared to 1,482 hours in France and 1,371 hours in Germany. Given workers tend to be more productive at the start of the day than at the end, we’d also imagine that those working longer hours would tend to be less productive by the end of the week. Their average productivity would be lower because of working more hours, making deviations of GDP per hour worked with countries with shorter average working weeks starker still.
That Brits work longer hours on average is one reason why the productivity differential falls to 11 and 15 per cent with Germany and France when we look at output per worker rather than output per hour worked. Provided choices are freely made, though, it isn’t a “problem” that Brits decide to work longer but less productively — it’s a choice for which they are compensated.
A final reason why measured average productivity figures might differ between countries relates to the top-end of the labour market. If many higher-skilled older people and women tend to freely choose to spend less time in formal employment, then that again can drag down measured productivity, even though people might be “better off” in the sense of being able to fulfil their own preferences.
None of this is to say that productivity does not matter. It clearly does. Nor has anything I’ve written here implied that the recent productivity slowdown in the UK has been caused by the changing composition of the workforce (indeed, there is some evidence that, purely in terms of skill level, recent trends should be putting upward pressure on productivity levels). What they do show is that targeting some aggregate average measure of productivity with policy is fraught with danger.
Rather than targeting “boosting productivity”, politicians should instead seek to tackle problems directly. If high house prices restrict labour mobility and job matching, liberalise planning laws. If there are policies which actively deter women and old people from staying in the labour force, change them. But do not look at the outcomes of people’s free decisions to move, work longer hours or exit the formal labour market and assume that a remaining measure is necessarily a problem.
Low labour productivity can be a symptom of a problem, and recent trends suggest it may well be, but this need not be the case.Ryan Bourne occupies the R Evan Scharf Chair in the Public Understanding of Economics at the Cato Institute in Washington DC.
Sen. John McCain has the reputation of a foreign-policy maven. He pays attention to little other than foreign affairs. When he ran for president in the midst of the 2008 financial crisis, he admitted that he didn’t know much about economics, which helped doom his candidacy. Unfortunately, he shows no greater sophistication when it comes to his favorite topic.
Nor does he brook disagreement, even if well founded. In his view, those who disagree with him are little better than traitors. Especially Americans who believe that Senator McCain’s most important duty is to protect this nation.
In fact, he has routinely advocated what amounts to sacrificing U.S. interests while pushing confrontation and sometimes war with a long list of countries around the globe: Serbia, Afghanistan, Iraq, Libya, Syria, Iran, North Korea and, worst of all, Russia. There is scarcely a conflict he doesn’t want the United States to plunge into. And rarely a military deployment he does not want to make permanent. Whatever the international issue, he sees U.S. military action as the answer.
Senator McCain symbolizes a discredited foreign policy disconnected from geopolitical reality.
In his view, circumstances are irrelevant to foreign policy. Insurgency and secession in the Balkans. Terrorism in Central Asia. Dictatorship and conflict in the Middle East. Nonproliferation in Northeast Asia. The geopolitical detritus of the Soviet Union’s dissolution. In every case he pushes military intervention and action as the answer.
Most notably, Senator McCain does not appear to view a threat to the United States as necessary for going to war. Only in the case of Afghanistan was the United States attacked, and by a terrorist group located within the country, not the government. Within weeks, Washington had scattered Al Qaeda and ousted the Taliban regime, punishing it for hosting the terrorist group. Yet more than fifteen years later, he insists that America must continue its Quixotic quest to create a liberal Western-oriented republic where one has never existed, governed by a strong central government in Kabul, which has never ruled the many villages and valleys across the land.
In no other case were the targets of U.S. action interested in fighting the United States. Not Serbia, Iraq, or Iran. Certainly not Libya or Syria. Not North Korea, which wants to deter American military action rather than trigger it. Not even Russia, which desires respect and security rather than conflict. But for McCain, the military is not a last resort or even just another option. It’s a first resort almost irrespective of the issue. Bomb, invade and occupy, and if that doesn’t work, bomb, invade and occupy some more.
Senator McCain’s lack of geopolitical sense has been on dramatic display with the issue of NATO expansion. Never mind that the transatlantic alliance was created to promote U.S. security. In recent years NATO has added numerous nations that are security black holes, offering far more costs than benefits. The alliance was established to temporarily shield war-ravaged, vulnerable Europe from Soviet aggression; it has turned into a welfare agency that permanently shifts responsibility for defending prosperous and populous Europe onto America.
The latest wannabe security dependent with Senator McCain’s backing is Montenegro, a postage stamp country with maximum political conflicts and minimum military capabilities. The Obama administration sought Senate ratification of Podgorica’s membership during the lame-duck session, but Sens. Mike Lee and Rand Paul refused to give unanimous consent.
Reasonably enough, they insisted that what is supposed to be the world’s greatest deliberative body should devote at least a few minutes to debating the issuance of yet another security guarantee enforced by American money and lives. And so far Senate Majority Leader Mitch McConnell has not taken the time necessary to push the measure through. So Senator McCain again demanded unanimous consent.
But Senator Paul took to the floor to object. Senator McCain, long known for his explosive temper—which worried colleagues when he ran for president—no longer could contain himself. He complained that Senator Paul “has no justification for his objection to having a small nation to be part of NATO that is under assault from the Russians. So I repeat again: The senator from Kentucky is now working for Vladimir Putin.”
Actually, Senator McCain smeared anyone who disagreed with him. He also declared: “It there’s objection, you are achieving the objectives of Vladimir Putin. If they object, they are now carrying out the desires and ambitions of Vladimir Putin, and I do not say that lightly.”
Accusing Senator Paul—and everyone else with the temerity to oppose NATO’s inclusion of Montenegro—of being a traitor revealed Senator McCain as at best a nasty crank, and at worst a shameless demagogue. The next day Senator Paul observed that Senator McCain’s outburst made a “really, really strong case for term limits.” The venerable Arizona legislator was “past his prime” and even maybe had “gotten a little bit unhinged.” It’s hard to disagree with that assessment. The thought of such a person as president should give nightmares even in the era of President Donald Trump.
In fact, Senator McCain forgets who he represents. His spokesman Julie Tarallo said “the people of Montenegro” as well as senators “deserved an explanation from Senator Paul on the Senate floor as to why he sought to prevent this small, brave country from joining in the defense of the free world.” Of course, Tarallo misleads her listeners by suggesting that this modern variant of the Duchy of Grand Fenwick, the star of the novel The Mouse that Roared, could help protect someone else. Without a navy or air force, and with an army in name only, Podgorica isn’t defending anyone or anything.
Moreover, Senator McCain knows why Senator Paul objected since he, unlike Senator McCain, has long has made his belief that U.S. foreign policy is to serve the interests of the United States, not would-be client states. And an American senator from the state of Kentucky owes no explanation to the people of Montenegro. Whether heroic or not, they have no right to expect to be defended by the United States.
The purpose of NATO was to make America more secure, not turn defense guarantees into charity for states irrelevant to America’s defense. If Senator McCain believes Montenegro aids the United States, he is living in a parallel universe. Podgorica has 1,950 men under arms. However brave they may be, they won’t stop the senator’s imagined Russian hordes from conquering Europe, America and presumably the rest of the world.
His mental confusion is even greater if he actually believes Montenegro is under attack. Russia would gain nothing from war. The country does not even border Russia. Vladimir Putin has made no territorial claims against the quaint movie set for Casino Royale. The ruling regime blames a recent coup attempt on Moscow, but the evidence is thin: in fact, the country’s political divisions are real and, as Senator Paul pointed out, as many Montenegrins oppose as support NATO membership, hardly the kind of backing one would want from a military ally.
Ultimately, Senator McCain’s nastiness is less important than his willingness to sacrifice American interests, wealth, and lives in an endless attempt to transform the globe. Social engineering is difficult enough at home. The presumption that Washington politicians can transcend differences in history, religion, geography, ethnicity, culture, politics and more to remake other nations is a fantasy. Tragically, over the last sixteen years this hubris, shared by Senator McCain and so many other policymakers, has killed thousands and injured tens of thousands of Americans, slaughtered hundreds of thousands of foreign civilians, generated millions of refugees, wasted trillions of dollars, multiplied terrorist threats, and created geopolitical chaos.
The United States continues to pay the price for Washington’s bipartisan commitment to promiscuous intervention. Senator McCain symbolizes a discredited foreign policy disconnected from geopolitical reality. If anyone is serving the interests of Vladimir Putin, it is Senator McCain, who advocates squandering American lives and wealth in an endless succession of counterproductive crusades abroad.Doug Bandow is a senior fellow at the Cato Institute and a former Special Assistant to President Ronald Reagan.
Marian L. Tupy
Recently, I came across a report by Fritz Vahrenholt, Professor in the Department of Chemistry at the University of Hamburg, entitled Germany’s Energiewende: a disaster in the making. It made for interesting reading.
In the aftermath of the Fukushima disaster in 2011, the German government decided to shut down its 19 nuclear power stations, which supply nearly 30 percent of the country’s electrical power, by 2022. Driven by social pressure, the German government now plans to get rid of all fossil fuels, thus increasing the share of renewable energy to 95 percent of total energy supply by 2050.
To accomplish its goal, the government has introduced a “renewable” levy on power bills, thus doubling the price of electricity. This additional cost amounts to €25 billion ($26.8 billion) annually. In a nod to rationality, the government has exempted energy-intensive industries (steel, copper and chemicals) from the renewable levy, thus maintaining their competitiveness.
An overcommitment to renewables has already had negative consequences.
There have been no blackouts so far, Vahrenholt argues, because of “typical German over-engineering of its grid, which was set up with a very wide safety margin. Even if a power line or a power station fails, the power supply remains secure, at least for now.”
Moreover, Germany has nine neighbors with whom power can be exchanged. Surplus can be sold to the neighbors’ electricity grids on sunny or windy days. In return, Austrian oil-fired power stations, Polish coal plants, and French and Czech nuclear power stations, provide stability when German renewables fall short.
This is a situation unique to Germany. If the Energiewende were to happen in the UK, for example, the electricity system would have imploded already. As things stand, there is currently no political party in Germany that opposes the Energiewende in parliament.
Nevertheless, the report argues, a crisis is coming. The problem with German drive toward renewable energy is not capacity, but intermittency. If for example the capacity for wind energy were to triple, then there would be a huge oversupply of wind energy on windy days and an energy shortage when there is no wind.
One way to cope with this volatility is to establish a backup system based on fossil fuels with dramatic economic and environmental consequences. Alternatively, the government could dramatically expand the nation’s energy storage capacity, but the needed technologies are still prohibitively expensive.
Furthermore, wind parks and other renewables sometimes oversupply energy so much that they have to be temporarily taken off the grid. Yet the producers still get paid under German law—even if they produce no energy whatsoever. The cost of this particular scheme amounts to €1 billion per year.
Even so, the oversupply sometimes becomes so large that the price for energy turns negative and Germany has to release its excess power onto the grids of neighboring countries and pay for them to take it!
Also, wind is more abundant in the north of Germany than in the south. As such, according to the report, a “total of 6100 km of cable will have to be built by the time the last nuclear power stations shut in 2022. 400 km have been given the go-ahead and 80 km have been built, just 1.3% of the intended total. The government underestimated the opposition that their plans would meet. Building power lines on this scale has brought protests like those against nuclear power in the past.”
Renewables are also the most land-demanding form of energy generation, threatening biodiversity in Germany. Transforming grassland into corn monocultures to produce bio fuel and the increase of wind turbines has led to an appalling reduction of songbirds and bats in Germany.
If Angela Merkel, the German Chancellor, wins this year’s election, she might wish to continue on the current course towards economic disaster, because a serious move away from the Energiewende would be seen as an admission of a mistake. If she is defeated, the new government might find it convenient to opt for a policy correction. In either case, it will take a long time to repair the serious damage caused by the current German energy policy.Marian L. Tupy is a policy analyst at the Cato Institute’s Center for Global Liberty and Prosperity and editor of www.humanprogress.org.