Richmans' Ideal Taxes Association Blog

Obama doubles down on green energy

14 May 2012 11:53:50 EST

Howard Richman, 5/14/2012

Until recentily, Spain was the leader in renewable green energy investment. When President Obama got elected, he sought to emulate the Spanish model, as he noted in his remarks to the press after meeting with Spanish President Zapatero on October 13, 2009:

(W)e pledged to work diligently to strengthen [our ties], particularly around key issues like renewable energy and transportation, where Spain has been a worldwide leader and the United States I think has enormous potential to move forward.

So how is Spain doing economically as a result of its huge investment in green energy. Not very well. It currently leads the eurozone with 24.1% unemployment accompanied by $58.1 billion trade deficits (according to statistics published in the May 5, 2012, issue of The Economist).

Why? A study by Gabriel Calzada Alvarez and his colleagues at Madrid's King Juan Carlos University calculated that Spain lost 2.2 jobs in other industries for every government-subsidized green job that was created. The problem is that renewable energy, being more expensive, wastes government resources while raising the overall cost of energy for local manufacturers. In the concluding section of their study, Alvarez and his colleagues explained:

This case is similar to the one that French economist Frédéric Bastiat denounced...

Saving Greece, Spain, Portugal, Italy, France, and the U.S. From Bankruptcy

14 May 2012 08:27:05 EST

Raymond Richman, 5/13/2012

Greece, Spain, Portugal, Italy, France and the U.S. are close to bankruptcy and they all have the same causes: profligate government, large trade deficits, and bewildered economists. They are dysfunctional and incapable of doing what is necessary to survive as prosperous nations. By contrast, Germany, China, and Japan are doing very well. As the following table reveals, the countries on the list that face economic collapse are those with large trade deficits and the countries doing well are those with large trade surpluses. No revolution is required for the former to resolve their problems.

That the troubles of Greece and the other eurozone countries and the recession in the U.S. are related to their trade deficits is evidenced in the following table relating the level of employment in various countries to their current-accounts balance:

Unemployment Related to Trade Balance, Selected Countries, U.S., Europe, Asia
			Current-account
		Unemployment	Balance, latest
Country		rate, % (est.)	12 mos., $bn

Spain		24.1	-51.8
Greece		21.7	-26.3
Portugal		13.0	-17.2
France		10.0	-62.0
Italy		9.8	-66.3
Britain		8.3	-46.3
United States		8.2	-473.4
Germany		6.8	205.1
Netherlands		5.9	76.4
Japan		4.5	101.4
China		4.1	197.6
	Source: (except Portugal) The Economist May 5th 2012

First, note that all the countries with unemployment rates above 7% have current-account balance deficits while all of the countries with unemployment rates below 7% have current account surpluses....

U.S. net exports fell in March

10 May 2012 17:04:06 EST

Howard Richman, 5/10/2012

The Commerce Department released the latest trade statistics this morning and the data were quite negative. U.S. net exports of goods and services fell from a seasonally adjusted negative $45.1 billion in February to a negative $51.8 billion in March. If multiplied by 12, the March data would be the equivalent to a negative $622 billion net exports per year.