Presiding over spilled milk

The United States has applied its central planning acumen to the dairy industry for many decades. It has worked as you might expect.

Not only does America have milk – it’s got a surplus of over 8 million metric tons, forcing dairy farms to shutter and farmers to simply start dumping millions of gallons of milk that far exceeds domestic and foreign demand

The State of Wisconsin has seen a net loss of more than 400 dairy farms this year alone, and in December last year, the state’s farmers dumped a record 160 million pounds of skim milk they couldn’t sell. That’s three times the amount they were forced to dump in 2012, according to CSMonitor.

By July, farmers in the Northeast had dumped 145 million pounds of milk, and 23.6 million pounds of that was dumped in July alone, according to Bloomberg.

Predictably, we have a bureaucrat to step in for comic relief:

“Dairy farmers are free-market guys – they don’t want to be told how much to produce,” Richard A. Ball, commissioner of New York’s Department of Agriculture and Markets, told Bloomberg.

Ahem. The free market is what would be telling dairy framers how much to produce; if there was one. Since there isn’t, maybe they do have to be told. Which, to be fair, is what they asked for.

With just the right combination of lobbyists, legislators, and bureaucrats I’m sure we could convert this glut into a shortage, or maybe a bigger glut, in short order. At least we could ensure a glut of lobbyists and bureaucrats as a source of campaign contributions to legislators.

As to signs of dairy farmers being “free market guys,” I don’t think lobbying for protective tariffs, USDA price regulation, demanding trade war, or rent-seeking after subsidies actually qualify.

U.S. dairy imports are restricted through quotas, tariffs and licensing requirements. Prices are regulated through a complex system managed by the USDA, which sets minimum prices. When prices fall below regulated minimums, farmers can apply for federal assistance.

US dairy farmers didn’t manage to get into this situation all on their own, they have had a lot of government “help.” They did, however, ask for it – including their share of $20 billion a year in subsidies from the farm bill, a hodge-podge of other price support programs, and the building of America’s strategic cheese reserve.

The wind in Maine blows mainly into Spain

Job creation, EPA style.

PORTLAND, Maine — The corporate subsidy watchdog agency Good Jobs First found Central Maine Power Co. parent company Iberdrola topped the list of all recipients of federal grants and tax credits, primarily in tax credits for its renewable energy developments.

Energy companies generally topped the list of grants, as the review by Good Jobs First included tax credits wind power companies can receive for each unit of electricity they produce…

John Carroll, spokesman for Iberdrola U.S.A., said that the $2.2 billion in federal grants and tax credits came to the company primarily through the massive American Recovery and Reinvestment Act.

Iberdrola is a Spanish company. TWT here.

Warren Buffett, of course, is also aware of this windfall

“I will do anything that is basically covered by the law to reduce Berkshire’s tax rate,” he said. “For example, on wind energy, we get a tax credit if we build a lot of wind farms. That’s the only reason to build them. They don’t make sense without the tax credit.”

To a capitalist, then, they don’t make sense. Period.

Paying Tribute to Sean Penn, Michael Moore, Oliver Stone and Alec Baldwin

Governor Snyder suggested in his budget plan that film subsidies should be eliminated. Nevertheless, he left $25 million on the table and gave the movie industry a reason to complain about uncertainty.

Here’s why he should simply have been a “semi-tough guy of near average intelligence,” and cut it completely:

Movie math
Why can’t states grasp the absurdity of giving welfare to film and TV producers?
By Michael Kinsley
March 1, 2011

Film subsidy fans ignore critical facts
Movie industry tax breaks don’t pay for themselves, they’re a drain on the state
March 04. 2011 1:00AM
Frank Beckmann

Firefighters or Mitch Albom’s Movie Subsidy?
By Kathy Hoekstra
Feb. 28, 2011

State Film Subsidies: Not Much Bang For Too Many Bucks
By Robert Tannenwald
December 9, 2010

Ernst & Young, however, says good things are happening in New York:
Study Says Film Subsidies Create Jobs, in New York
By MICHAEL CIEPLY
January 27, 2009

And Ernst & Young claims that for every $1 spent on film subsidies in Michigan the state gains $6: 
New study says film incentives bring millions of dollars to Michigan
February 21, 2011
By Jackie Headapohl

If Ernst is correct, it is hard to see why Michigan shouldn’t spend $250 million on film subsidies.

Unfortunately, the Senate Fiscal Agency has another view. They tell us that we realize ten cents in tax revenue for every Michigan taxpayer dollar spent:
FILM INCENTIVES IN MICHIGAN

A Connecticut study reaches similar conclusions:
Fiddling While Rome Burns: Connecticut’s Multi-Million Dollar, Money-Losing Subsidy to the Entertainment Industry

So, there is good reason to eliminate, not reduce, the film subsidies. We should stop competing with other states to shove money into the pockets of the film industry. They’ve survived quite well on their own ever since the invention of talkies.

However, with Ernst & Young studies showing a 6 to 1 benefit (BS though that logically is) the Michael Moore Corporate Welfare Fund can’t fail to get the Governor’s approval for more than the $25 million he’s toying with.

After all, he pushed to raise the “Pure Michigan” tourism permanent bail-in fund from $15.4 million to $25.4 million. In that case a study by Longwoods International (paid for by Travel Michigan, the tourism promotion agency within the Michigan Economic Development Corporation) purported to show a mere $2.23 was gained for every tax dollar spent. Pure Spending — GOP Finds More for Tourism Subsidies
By Ken Braun
March 4, 2011

Naive hubris

Greg Main, the retiring head of the MEDC looks back on his accomplishments. This is his second term (his first stint was in the 1980s) as Michigan’s chief economic planner, and it appears he has learned little from the experiences.

“When I came back (in 2009), it was apparent that there was a good plan in place (at the MEDC) already,” Main said. “It is just a matter of executing it.”

…”It became real clear to me that it was one thing to create plans, and another thing to get them implemented,” Main said.

Well, yes, it is. Unfortunately, the plan executed during his second term is not what rational people would describe as “good.” So it is just as well it was not easy to do. In any case, no government has ever successfully executed an activist economic plan, so Main is not to be faulted for that failure. Only for the attempt, and continuing faith in it. (Note: the LSJ seems to have disappeared this next part in the online version. It was there this morning, online and in print.)

The strategies are paying off, Main said. Since he came to the MEDC, the state has captured six new manufacturing plants for advanced battery technologies.

“We are going to be the epicenter of that industry, and it didn’t even exist in the U.S. two years ago,” Main said.

Manufacturers of products needed by the solar and wind energy industries also have invested in Michigan.

Other campaigns and incentives – such as a tax credit for filmmakers who hire state residents and film in Michigan, and the state’s Pure Michigan travel ads – have elevated the state’s profile.

Windmill manufacture, battery plants that will be obsolete before they are fully operational, solar panel subsidies for India, and movie subsides(!)? Since he didn’t mention it, I guess ethanol was before his time.

This all makes me even more nervous about Rick Snyder, first head of MEDC, and his “public/private partnership” “plans.” If the “plan” requires public funding because private capital sees it as too risky, then it probably is too risky. Maybe a good test would be whether Union pension plans would provide the venture capital – with a no bailout clause.

This fascination with mini-Manhattan Projects needs to cease.

Taxation in spite of representation

FERC YOU!
From the Wall Street Journal (requires registration):
The Midwest Wind Surtax

You’d think poor Michigan has enough economic troubles without the Federal Energy Regulatory Commission placing a $300 million to $500 million annual surtax on the state’s electric utility bills. But on December 16 FERC Chairman Jon Wellinghoff announced new rules that would essentially socialize the cost of transmission lines across 13 states in the Midwest…

Let’s be very clear on what’s happening here: Mr. Wellinghoff and FERC are trying to establish by regulatory fiat a national energy policy that Congress has refused to endorse. Last summer Congress rejected the Obama Administration’s renewable energy standard law because it would have inflated power costs. So the fiefdom at FERC is unilaterally moving ahead to require that industries and homeowners pay a surtax on their utility bills for a nonexistent renewable energy policy. This is similar to the EPA’s initiatives to regulate carbon even after Congress rejected cap and trade.

Because Iowa and the Dakotas want to build windmills, you (and taxpayers in Illinois, Indiana, Minnesota and Wisconsin) are going to pay to build new power lines to distribute the intermittent windmill electricity. This should become known as the “Dumb Grid.”

Without billions of dollars in new power line infrastructure, the windmills are uneconomic. However, like the health care individual mandate, I’m sure we will hear a defense of this based on the Commerce Clause: Michiganders must pay for windmill transmission lines they neither need nor want, because not to do so is a restraint of interstate commerce.

Imminently-former-Governor Granholm’s desire to manufacture windmills now moves from merely stupid to surreal. You are subsidizing the manufacture of windmills so they may be sold to people who have just arranged to tax you in order to enable distribution of electricity from the windmills. That electricity will charge the batteries Ms Granholm has also subsidized, in cars the Feds have forced you to pay for, built by a company whose union you were made to bail-out. All with no law being passed.

FERC may, justifiably, have assumed Michigan would be happy to cough up half a billion annually to subsidize other States’ crackpot energy schemes. “Green” – the hue of Frankenstein’s monster – “jobs.”

Fred Upton, call your office. And don’t return to this state unless you spike this taxation by the unelected of people they do not represent.

Batteries not included

So, the battery technology bet our governor made looks premature. Neither recipient of Michigan’s largesse, LG Chem nor A123, are mentioned re: this potential breakthrough.

Printable batteries at 400 Watt hours per kilogram and other ARPA-E funded battery projects

Energy policy checklist

Fuel ethanol is the perfect illustration of statist ability to pick economic winners. That is, fuel ethanol is an economic and environmental disaster.

Ethanol may be passé on the merits, but, philosophically, it precisely represents what our once and future governors consider to be an ideal “public/private partnership.” Practically speaking, our federal representatives think it still is.

Legislators claim to support ethanol subsidization in order to “save jobs and the planet.” In reality, once they started on this gateway drug, more appropriations became the only way to avoid admitting the withdrawal symptoms: Stupidity and venality.

Engine Makers Sue to Block E15 Fuel
Read that and come back.

So here’s the government energy policy of the last 30 years:

1- Prevent drilling for new US petroleum supplies.

Result: Less US petroleum supply.

2- Subsidize giant corporations like Arthur Daniels Midland to produce ethanol.
2a- Encourage Governor Granholm to subsidize other minor players who go bankrupt.

Result: Wasted taxpayer dollars and a glut of ethanol. No environmental improvement. Likely environmental degradation.

3- Pass a law requiring an increase in the use of fuel ethanol.

Result: ADM is happy. Jenny learns nothing.

4- Continue a 54 cent per gallon tariff on Brazilian ethanol.

Result: Encourage Brazil to sign a deal with China for oil extraction.

(Good thing we’ve got that tariff to keep nasty foreign ethanol out. We wouldn’t want a glut of a liquid that is going to save the planet. Good thing gas prices are up. We wouldn’t want a glut.)

5- Subsidize electric cars built by a failed union and pay people to buy them.

Result: $40,000 Chevy Cobalt Volt.

6- Mount bird killer windmills on 5 ton concrete platforms all over the fruited plain.

Result: Tiny amount of intermittent power. Exemption for the Kennedys’ view.

7- Blame the dead birds, high oil prices and ethanol glut on unregulated capitalism.

Result: Demand regulation. It’s all the fault of big business.

(True, but not an iota of that truth is the result of a free market.)

8- “Fix” the ethanol glut by forcing people to buy 50% more of it.

Result: ADM is HAPPY!  Half of American’s cars will have to drive farther to find usable gasoline.

9- Future tasks: Subsidize gas stations who were forced to install new underground tanks for a 3rd type of fuel.

Result: Blame capitalism. Reset. Look for a new winner. Like lithium batteries.

10- Continue the ban on drilling on the US continental shelf and in ANWR. Choke off drilling in the Gulf of Mexico.

Result: Dependence on foreign oil higher than necessary.

11- Blame capitalism for high gasoline prices.

Rinse. Repeat.

The Road to Lithiumdumb

Once again Michigan Capitol Confidential nails it. “It” being the foolishness of our present governor, and what I fear to be the fatal conceit of the former MEDC czar who is about to become governor: Picking economic winners. Given his history, it may be even harder for Rick Snyder to resist the Sirens of Corporatism than it was for Jenny. Statism is very much a characteristic of “moderates.” Just look at George Bush.

Projections vs. Reality

An article in the July 24 Detroit Free Press reported, “Companies are searching for a billion-dollar breakthrough in battery design. General Dynamics is working on a zinc-air cell battery. Ford is actively interested in a sodium-sulfur cell. Gulton Industries and General Motors are tinkering with lithium…All the activity is bound to pay off probably within the next five years…”

The promise sounds so bright that readers might imagine that the Michigan Legislature’s recent authorization of $500 million worth of subsidies and tax breaks for car battery makers is a good investment. Unfortunately, that article appeared on July 24, 1967.

Read the whole thing.

I will note that 1967 was contemporaneous with envirostatist predictions of a new ice age. From “Ice Age” we went to “Global Warming” and have arrived, temporarily, at “Climate Change.” Credit where it is due, while the labels have been contradictory, scientifically corrupt and consequently increasingly ephemeral, the economic instincts have been unwavering.

Paul Ehrlich, call your office.

Our first clue should have been that they didn’t name it ‘MichiganWatt’

GlobalWatt Sells Someone Else’s Solar Panels – on eBay 

Saginaw-based GlobalWatt, beneficiary of soon-to-be-former Governor Granholm’s “green jobs” subsidies, has this to say about their solar panels,

“These are Made in India. But they are using very high content of US made material. The cells are from Suniva, from Georgia.”

To be sure, someone should check whether Suniva, Georgia shares a border with Florida or with Russia.  In either case, no manufacturing occurred in Michigan.

I’m all for free trade, and if the Indians can make solar panels that save money for Americans, good for them. What I’m not so much in favor of is subsidizing those Indian manufacturing workers via Michigan tax credits.

I’m also all in favor of creating jobs in Michigan, but by the unsubsidized private sector. Rather than tax credits, let’s just eliminate corporate income tax and pass right to work legislation. I am confident GlobalWatt would be able hire more people under such conditions. Some of them maybe even in manufacturing positions.

Governor Granholm is taking a last kick at the catastrophe by revealing an utter inability to learn. Remember, she’s the Governor who poured money into the “green jobs” ethanol revolution. The favored Michigan companies in that instance are now all bankrupt. Hopefully, we can arrange some damage to federal corporatist ethanol bandits like ADM, too. 

Despite bad reviews of ethanol and an unrequited flirtation with windmills, the Governor thinks she has a clue about THE NEXT BIG THING: How to win the race for jobs

In Michigan, we are trying our own version of this race — focused on the lithium-ion advanced battery for electric cars, a high-tech product previously manufactured almost exclusively in Asia.

We offered irresistible state tax incentives for manufacturers of “advanced energy storage.” We pancaked our state incentives on top of the competitive federal Department of Energy grants to advanced-battery companies and suppliers. We also created robust public-private partnerships.

Next it would be ‘irresistible’ subsidies to some genetic engineering startup who promise to create a goose that lays golden eggs. But, if there are golden eggs, why would anyone need a subsidy?