Category Archives: The New Religion

Why Shouldn’t the Energy Department Run the Entire Economy?

New Energy Department standards for dehumidifiers promise massive benefits. Depending on which set of numbers you prefer (the link goes to the Energy Department’s own numbers), they will cost somewhere between $110 million and $190 million annually. Estimated annual benefits range from $2.0 billion to $3.6 billion. If these numbers are accurate, this regulation will cause a net benefit to consumers between 18- and 19-fold.

Not 18 or 19 percent, mind you, but 18- or 19-fold. That’s 1,800 or 1,900 percent. The stocks that comprise the Dow Jones Industrial Average yield returns of around 8 percent, or 1/225th as much. The U.S Department of Energy, according to the U.S Department of Energy, can create some very impressive returns.

Which brings up an obvious question: Why not just have the Energy Department run the entire economy?

The reason is that entrepreneurs in every sector of the private economy constantly have their ideas put to a profit-and-loss test. The Energy Department only obeys political winds, which blow differently from year to year. Private entrepreneurs must create value for other people; political entrepreneurs need only create value for the right people.

Despite the massive improvement in living standards that entrepreneurs’ market-tested betterment has brought to most of the world for two centuries and counting, they have only brought a 2 or 3 percent rate of growth over that long time, on average. The Energy Department promises 1,800 percent. That is at least 600 times as much as market-tested entrepreneurs, and 225 times as much as the mercenary Dow Jones.

Again: if Energy Department officials are smarter than entrepreneurs, to the point of being able to earn a 225-fold greater return—why not have the Energy Department run the entire economy? Why don’t Energy Department officials enter the private sector, where their ideas could make enormous profits, and do enormous social good?

As Deirdre McCloskey asked many years ago, “If You’re So Smart, Why Ain’t You Rich?” These are serious questions which deserve serious answers. Energy Department officials could learn much from her intellectual humility.

Human Achievement of the Day: Guitars

When Human Achievement Hour rolls around each year, I make sure to do two things. One is to play an electric guitar. The other is to play an acoustic guitar.

Guitars are simple things. Stretch some thin metal wires over a plank of wood, and you’re most of the way there. Electric guitars add a few magnets wrapped in copper wire mounted underneath the strings, called pickups. This deceptively simple invention is one of the pinnacles of human achievement. Music made on guitars has brought unfettered joy to billions of people, most of whom have idea how to play one. Whether you like jazz, punk rock, flamenco, blues, death metal, or classic rock, guitars have enhanced your life. In a way, the guitar is one of the defining objects of modern Western culture.

Regular readers will likely be familiar with CEI’s “I, Pencil” video from a few years ago, inspired by Leonard Read’s famous pamphlet. Nobody can make a pencil on their own. It takes a network of literally millions of people cooperating to make something you can buy in a store for less than a dollar. The network of human cooperation surrounding guitars is arguably even greater.

For example, guitars made by Gibson, such as the Les Paul and the SG, are often made of mahogany wood, which grows mostly in Central and South America. Tennessee-based Gibson has to arrange with people more than a thousand miles away to harvest the lumber and ship it to Nashville, most of whom speak different languages and use different currencies. The fingerboards placed on top of the guitar’s neck are usually made of rosewood, native to Africa and Asia, presenting another coordination problem.

Fret wire, usually made of either nickel or stainless steel, relies on mining and smelting technologies, and requires precise math, skill, and specialized tools to install. Other hardware, such as a guitar’s bridge and nut, pickguard, and tuning pegs, present their own challenges.

Acoustic guitars use a soundboard, chambers, and soundholes in such a way that makes the instruments both loud and tuneful. Electric guitars instead use pickups, potentiometers, wires, soldering, and standardized connections leading to an amplifier powered by electricity. If a pencil is a miracle of cooperation, guitars are even moreso.

Part of the point of Human Achievement Hour is to celebrate modernity. So on March 28, sometime between 8:30 and 9:30, instead of merely leaving on the lights, I will pick up my electric guitar, plug it into my amplifier, and take in the pure, simple joy that comes with banging out distorted power chords. After that, I will pick up my acoustic and admire all the skill, elegance, and mastery of geometry and sound that went into making it. Nobody within earshot may much enjoy my point, but they will likely be thankful for two other human achievements: walls and doors.

CEI Podcast for July 1, 2014: John Holdren’s Poor Data Quality Control

General Counsel Sam Kazman talks about presidential science advisor John Holdren’s refusal to comply with the federal Data Quality Act when CEI questioned some discredited scientific statements in a video he put up on an official White House website. Click here to listen.

CEI Podcast for June 3, 2014: EPA Proposes Major Carbon Emission Regulation

springfield nuclear power plant
Have a listen here.

Senior Fellow William Yeatman breaks down a proposed EPA regulation intended to significantly reduce carbon emissions in the U.S.

CEI Podcast for May 29, 2014: Rachel Was Wrong

screen-shot-2014-05-27-at-9-34-56-amHave a listen here.

Google recently commemorated Rachel Carson and her influential book Silent Spring with a Google Doodle on its homepage. Seeing as Carson’s book set malaria prevention back decades, CEI Senior Fellow Angela Logomasini thinks there are other figures more deserving of such tributes.

CEI Podcast for February 27, 2014: Can the EPA Regulate Greenhouse Gas Emissions?

Have a listen here.

The Supreme Court heard oral arguments this week in a case that could determine whether or not the EPA has the authority to regulate greenhouse gas emissions. CEI Senior Fellow Marlo Lewis has written about the case for Forbes.

CEI Podcast for February 6, 2014: Keystone XL Pipeline Inches towards Approval

keystone xl construction
Have a listen here.

Marlo Lewis examines a State Department report finding that Keystone serves the national interest and finds opposing arguments wanting.