Energy Characteristics:
- Tradeable good- price, buy at price offered at
- Price affects production and consumption
Policy Analysts- leave entirely to marketplace
- Should have not govt. regulation of energy
Energy Policy defined as:
- Govt. regulation of price, production, consumption
Bush Administration Energy Bill- costs $50 bn
- Almost all of it is unnecessary / give away to business
- Rent seeking- business trying to get special favors from govt. to have profits go above and beyond
- Department of Energy- doing some things that aren't energy policy
- Dems are no better than Repubs on energy policy
- Rossell- what is necessary shouldn't be called energy policy
Rossell- abolish Department of Energy and do nothing in the field of energy
- Govt. should intervene only where there is market failure
- Dept. of Energy is pro-business
- Dept. of Environment would be anti-business
- No market failure in energy- consumers consume based on price, producers produce based on price
- Govt. should intervene in moral, social injustices / inequalities
- Govt. should intervene to enforce the rules of the game- technical monopolies
- Negative externalities- pollution
- More efficient to attack problem directly (regulate pollution itself rather than regulate energy)
- Energy is unlimited, energy is regulated much better and more efficiently by marketplace than by govt. (Rossell)
Price increases over time = consumption decreases overtime
Price of traditional energy increases over time = production of alternative energy increases overtime
Direct government regulation produces 4 negative outcomes:
- $ used to pay for something the marketplace can regulate, $ is taken away from something valuable that only govt. can provide
- Govt. subsidies and tax breaks to business encourage inefficient businesses that wouldn't exist without subsidy
- Govt. subsidies / tax breaks create an immoral climate of rent seeking and cheating
- Govt. has no idea what will be the most efficient energy of the future will be- the marketplace does
Deal with Energy Negative Externalities Directly
- Defense and economic policy- OPEC
- Welfare policy- give money to poor as a function of the cost of living
- Environmental policy- deal with pollution directly (impose sanctions, negative incentives)
Possible Market Failure?
- Research policy- most research and development accomplished in private sector- little or no market failure
Environmental Policy
Goal: clean air, clean water, safe food, and visually attractive, natural landscape
Environmental Policy Strategies
- Command and control- regulations specifying pollution standards, emissions, and technology
- Our policy mostly
- Hybrid C&C / M.I.- govt. market in pollution rights (TDPs)
- Market incentives- pollution tax / effluent fees (charge for pollution)
- Favored by policy analysts- least government regulation
Pollution must be controlled in some way by the government
- Market incentive: pollute, pollute, pollute
History of U.S. Environmental Protection- command and control
Water Pollution
- Refuse Act of 1899- limits debris in navigable streams
- 1948-1966- state enforcement with federal funding
- Problems- pollution doesn't respect state boundaries, companies can go to state with more lax policies, a race to the bottom to attract businesses
- Clean Waters Restoration Act 1966- water quality enforcement by Department of Interior
- Water Pollution Control Act and Amendments 1972
- Goal by 1985- end all discharge of pollutants into waterways
- Goal by 1983- water safe for fish, shellfish, animals, and people
- Goal by 1977- best practible control technology to eliminate contaminants
- Goal by 1983- have best available technology
- Emphasis on discharge control, not water quality
- Outcome: lengthy legal battles
Air Pollution
- 1955-1965 Federal funding for research
- Motor Vehicle Air Pollution Control Act 1965- first federal program to directly regulate air pollution, HEW to set emissions standards
- Clean Air Act Amendments 1970- goal: eliminate all air pollution by 1977
- National Environmental Policy Act 1970- created advisory group, environmental impact statement, important tool for environmental groups challenging federal projects
- Environmental Protection Agency (EPA) 1970
- Responsible for: water pollution, air pollution, solid waste management, radiation control, pesticide and toxic substances
- Power to enforce policy with lawsuits and fines
- Comprehensive Environmental Response Act 1980- created Hazardous Waste Superfund providing EPA with authority and funds
- Bubble Concept of 1980s- whole plant needs to meet one standard
Market Incentives Model
- Two Strategies
- Make existing market arrangements operate better by regulating
- Prices- pollution feels or taxes (pure M.I.)- what policy analysts really want
- Information- mandatory disclosure laws, govt. disclosure
- Create a market in previously untraded goods
- TDPs (hybrid)
- Deposit refund systems
- Arguments in favor of incentive scheme
- Efficiency- achieves same policy objective at lower cost
- Innovation- choose techniques that best max. profits rather than just trying to get below the govt. standard
- Information use- govt. can't match the info processing attributes of the market
- Instrusiveness- minimizes govt. intrusion that can be costly to business
- Admin. complexity- less govt. organization needed b/c firms comply in their own self-interest
- Arguments against an incentive scheme
- Determining precise tax level / effluent charge difficult
- Govt. calculates damage functions / production cost function- hard
- Tax must be constantly adjusted- high enough to decrease pollution, but not high enough that too many businesses go bankrupt
- Administrative costs- still require administration
- Enforcement complicated
- Utility meter- not created yet
- Self-reporting- wouldn't work
- Political / philosophical issues
- No clear civic understanding- don't know how bad pollution is
- Equity- small businesses more likely to fail; big businesses would profit and continue to pollute
- Private ownership- some valued goods should not be considered private property
- Social value- assigning prices to natural resources devalues them
- Motivation- rely on self-interests and ignoring intent creates society without morals
- Political feasibility- low
- Why have incentive schemes not been more successful?
- TDPs in limited scope- regional, utility specific, flawed design, high administrative costs, limited programs
Ranking Policy Alternatives
Equity Effectiveness (Net Benefit) Efficiency (B:C) Political Feasibility
TDP MI MI CC
CC TDP TDP TDP
MI CC CC MI
FM FM FM FM
Global Cooperation and Comparisons
- US ranked at bottom
- Kyoto Protocol 1997
- Voluntary agreement limiting greenhouse gas emissions
- Goal: global reduction in emissions 5% below 1990s levels between 2008 and 2012
- China and India exempt
- Needed countries with 55% world's emissions
- Cooperation with Kyoto
- Japan and Germany, EU, E. Europe
- Bush Administration refuses to sign
- Russia ratified = 58.7%- 2004 went into effect
- More symbolic than practical
Global Warming
- Only 3 things scientists agree on regarding global warming
- 1 degree increase in temperature since 19th C.
- Levels of CO2 in atmosphere have increased by 30% since 19th. C.
- CO2 emissions should contribute to future warming
- Predictions of bad effects of global warming based on junk science
- Sea levels have increased since the last ice age
- Models used to make predictions aren't trustworthy, unexplained occurances
- Models don't predict disaster
- Global warming might even be good- increase in production, mammal diversity, intellectual activity
- Rossell- deal with externalities of energy we consume, charge for pollution = less pollution, deal with global warming if it becomes a problem
- Incentive in almost all policy areas if for experts and scientists to trumpet alarm because they get more funding if they do (Lundzen)
- Rossell- take money from research and charge for pollution
Education Policy
Education: a private and public good
- Private- helped individuals get ahead
- Public- literacy and math for good of society
3 Levels of Governance
- Local school districts- lowest level, min. 3 schools, headed by Superintendent
- State agencies and courts- make education policy, create school districts
- Federal govt. and courts (9%)- least important, shouldn't have Dept. of Education
- Categorical programs- benefit particular group / constitutional regulations for schools
Federal Policy: Redressing of Inequality of Origin
- 1965 Elementary and Secondary Education Act (ESEA)
- Largest federal spending on schools
- Equal educational opportunity
- More money to poorer schools
- NCLB 2001 (signed 2002)
- Major change: assessment and choice
- Annual achievement assessment grades 3-8
- All students and subgroups must be "proficient" by 2013-2014 (very high standard)
- Parents can leave "failing" schools
- Subgroups: Whites, Hispanics, Asians, Native Americans, Blacks, Poor Kids, Special Education (SPED), Limited English Proficiency (LEP)
- Theoretically impossible for all groups to score at proficient level- SPED and LEP leave group if score high
- Unfunded mandate
- Unrealistic to expect equalized achievement while not funding or dealing with direct correlation with poverty
- Problem- schools explain only 20% of variations in academic achievement
- Rest explained by personal, home, family, and community characteristics
Student Achievement
- Minimum Competency Tests (State Proficiency Tests)
- In all states
- Most require a passing grade for H.S. graduation
- Can take over and over
- Criterion- reference tests- alligned with state curriculum
- Teacher Competency
- Everyone confused about tests and test scores
- Teachers take blame b/c only 1/2 students read at grade level- but this is all that is nationally possible!
- Merit Pay
- Difficult to express merit when schools only account for 20% of achievement
- What is "merit"?
- CMCC- teachers salaries need to be raised
- However: starting salaries good on an hourly rate, teachers with experience and degrees can make over $100,000, retire at 57 with 3/4 salary for life (defined-benefit plan), tenure after 3 years, 3x more sick leave
- Problem: equity- suburbs paid same as city
- Rossell- teaches well-paid on average with extraordinary benefits
- Merit-pay possibilities are expensive- peer review and principal
- Bilingual Education
- Goal: raise achievement of immigrants / limited English proficient children to be equal of Anglos / native speakers- impossible because just learning English = score lower
- True B.E.:
- Teach to read and write in native tongue
- Teach in native tongue
- Teach English about 1 hour / day
- Increase English, decrease native tongue when reach native tongue proficiency
- Many states have 3 yr. limit- largely ignored
- 1971 Chapter 71A Massachusetts
- 20+ LEP students of a single language in a district must be taught in full-time B.E.
- Widespread cheating and no one cares
- Rossell conditions for true B.E.
- Enough students of a single language to fill a classroom by combining no more than 2 grades
- Native tongue with a Roman alphabet
- Teacher and students must all speak same language
- Published textbooks in native tongue that follow curriculum
- Nationwide and in MA- only Spanish-speakers get true B.E.
- Does B.E. work?
Classroom Type Instruct Language Rank Program Name
Self-contained English 1 Structured Immersion / SEI
Mainstream English 2 ESL pullout
Mainstream English 3 Do nothing
Self-contained Native 4 B.E.
* SEI works best, but should only be in program for 1 year (Rossell)
- MA- voters amended 71A with Question 2 (English for Children) in 2002
- Similar to Proposition 227 in CA (1998) and Proposition 213 in AZ (2000)
- Default assignment is SEI
- Parents must sign a waiver after 30 days in SEI if want alternative
Relationship of Education to Individual Income and Economy
Crisis in Education
- 1983- A Nation at Risk
- Misunderstanding
- NAEP- less than 1% and less than 3% advanced
- But designed so that only 5% scored advanced
- US tests scores can't be compared to other countries
- Most egalitarian education system in world
- Drop out rate is lowest in world (not considering Japan)
Individual Rate of Return- benefit to you as an individual
- Human capital theory- education makes you more productive
- No evidence beyond elementary 3 Rs (reading, writing, arithmetic)
- Years of schooling still has a positive rate of return
- Education is a signaling device to match workers to jobs / screening device
Social Rate of Return- benefit to society
- Nothing beyond 8th grade skills used in most jobs, most people are overqualified
- Most efficient job training is on-the-job
- Jobs are fixed- over-educated
- Too many college educated students
- Fastest growing sector: low skill and service
- Education inflation
- US ins most productive country in world- no evidence this is linked to test scores
- Rossell- need mix in intellectuals and workers
Evaluation of Current Education System
- Reasonably equitable system compared with rest of the world
- Race and ethnic disparities a problem
- Preschool and childcare disparities a problem
- Somewhat inefficient and ineffective in supplying workers for economy (over-educated)
Solutions to Problems
- Solution to Childcare and Preschool- subsidized childcare, off-hours, universal preschool at age 2
- For every $1, $3-5 in benefits
- Solutions to problem of too many people in college- nothing politically feasible
Model of Policymaking- incrementalism
Model of Regulation
- C&C- state regulation on hours, curriculum, minimum standards (98%)
- M.I.- vouchers, school choice, charter schools (2%)
- Vouchers are equitable, efficient, and may decrease race gap if limited to low income
- CMCC- don't like vouchers for all- little effect because would increase disparities
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