Economic Segregation

In yesterday’s post, I examined how “affordable housing” advocates are using the race card to explain Houston’s segregated housing. The advocates are pointing to differences between wealthier neighborhoods and low-income neighborhoods to support their claims. Such claims are an attempt to cloud the issue and push a Leftist agenda.

Houston is a segregated city, but that segregation is not based on race. It is based on economics.

Visit any of Houston’s wealthier neighborhoods–such as River Oaks, Tanglewood, or West University–and you will see individuals of many races and ethnicities. There is great racial and ethnic diversity.

Whatever racial or ethnic differences the residents of these neighborhoods have, they share one thing in common–the wealth to be able to afford to live there. It is wealth, not race, that determines where individuals live. An individual making $50,000 a year cannot afford to live in River Oaks, no matter his race. And an individual making $250,000 a year probably won’t choose to live in a low-income neighborhood, no matter his race–he can afford better housing.

It is economics, not race, that has shaped Houston’s allegedly segregated neighborhoods. And anyone who meets the financial requirements can live in any neighborhood of his choosing, no matter his race.

Yet, this isn’t acceptable to the advocates of “affordable housing.” They want individuals to live in wealthier neighborhoods regardless of their income or wealth. Indeed, they want to erect subsidized housing projects that will allow individuals to live in wealthier neighborhoods because they lack the financial requirements to otherwise do so. And they want the residents of those neighborhoods to foot the bill. In other words, the needs of low-income Houstonians are to supersede the rights of wealthier Houstonians.

This is altruism, which holds that individuals must self-sacrificially serve others. Altruism holds that the needs of one individual are a claim on the property of others, who have a moral duty to satisfy those needs. Altruism holds that those who have must sacrifice for those who don’t have.

The”affordable housing” movement depends on altruism to justify the injustice it advocates. It paints low-income individuals as victims of a corrupt system dominated by rich, white people. In doing so, the movement ignores the fact that one’s income is primarily a consequence of the choices one makes. That will be the subject of tomorrow’s post.

Playing the Race Card

In the wake of a recent ruling by the U.S. Department of Housing and Urban Development that Houston is in violation of federal housing mandates, “affordable housing” advocates are playing the ace that Leftists always keep up their sleeve–the race card. A recent opinion piece in the Chronicle claims that Houston is a segregated city, and the cause is Jim Crow laws.

Playing the race card is often effective in influencing public officials and public opinion, but it seldom addresses the fundamental issues. The “affordable housing” debate is no exception.

It is important to remember that the Jim Crow laws, which proliferated throughout the South, were enacted by Democrats to mandate racial segregation. While the laws varied to some degree, they generally prohibited blacks and whites from marrying and mandated separate facilities for blacks and whites. Such laws no longer exist, yet that doesn’t stop advocates from using the evils of Jim Crow to push their agenda:

In the past, Houston’s communities of color were legally denied basic municipal services like street lights and drainage and amenities like parks and up-to-date educational services. Even after the courts struck down overt Jim Crow segregation, its patterns and effects remain in place. Myriad local, state and federal policies, to this day, result in those neighborhoods bearing an undue burden of the city’s failing schools, environmental hazards, crumbling infrastructure and service disinvestment.

Two generations have passed since Jim Crow was struck down. Yet, we are to believe that racism guides housing policies at every level of government.

It would be naive to claim that racism doesn’t exist, but it is far less prevalent than many would have us believe. And it certainly doesn’t exist on the institutionalized level that it did during the Jim Crow era. Claims to the contrary simply evade the fundamental issues.

Consider what typically happens when someone is accused of racism: He apologizes (even when his words were innocent or misconstrued) and scrambles to assure everyone that he isn’t racist. Whatever point he was trying to make is quickly forgotten and the focus shifts to his transgression (real or imagined).

Houstonian’s should discuss the “affordable housing” issue. But that discussion will only be clouded if accusations of racism dominate. The discussion will never address the fundamental issues.

“Affordable housing” advocates claim that Houston is a segregated city. This is largely true, but that segregation isn’t racial. It is economic. That will be the subject of tomorrow’s post.



Democracy and the Astrodome

State Sen. John Whitmire has announced plans to introduce legislation that will require a referendum on the proposed $105 million project to refurbish the Astrodome. “I’m trying to allow the public to have a vote, the taxpayers to have a vote, before we spend over $100 million on the Dome with no stated purpose,” Whitmire is quoted in the Chronicle.

This means that if a majority of voters approve the project, all taxpayers, including those who are opposed, will be forced to fund it. This is democracy in action–the majority can do as it pleases simply because it is the majority. Individuals are forced to subordinate their own judgment and values to the “will of the people.”

Whitmire’s proposal is only marginally better than that being pushed by the advocates of the $105 million boondoggle. Individuals will have an opportunity to express their desires on the matter, but if the proposal passes, the desires of the minority will be rendered irrelevant. They will be forced to spend their money on something that they don’t want.

The most moral solution is to sell the Astrodome to private developers, and they can decide the best use of the facility. A second moral solution is to solicit voluntary contributions for the refurbishing project. Instead of forcing all taxpayers to fund the project, let those who are in favor put their money where their mouth is rather than reaching into everyone’s wallet.

Say No to Upgrades to NRG Stadium

With Super Bowl LI behind us, we are hearing that NRG Stadium needs a major upgrade if Houston is to host another major sporting event. Even though the stadium is only fifteen years old, we are being told that it is obsolete. The Chronicle reports:

“There’s a difference between being architecturally obsolete and being obsolete from a sports-business and revenue-producing perspective,” said David Carter, executive director of the USC Sports Business Institute. “The fans, the taxpayers, look at (a) stadium and say, ‘Well, it’s only 10 years old or it’s only 20 years old.’ But it in fact is really generations behind.”

If NRG is obsolete from a sports-business perspective, then why shouldn’t those who are in the sports business pay for any desired upgrades?

The two primary users of NRG are the Houston Texans football team and the Houston Livestock Show and Rodeo. It’s doubtful that the rodeo will threaten to go elsewhere if the upgrades aren’t provided, but we can’t say the same about the Texans.

For decades, professional sports teams have extorted cities across the nation to build taxpayer funded sports stadiums. If a city refuses, the owners take their ball to another city that is more than happy to play the game.

Those who are promoting the upgrades talk about the value to the community.

“Best-in-class facilities are an essential component of a bid for the Super Bowl or any other high-profile sporting event,” Texans president Jamey Rootes said. “These are ultra-competitive processes, and it is critical that NRG Stadium remains state of the art if we want to be considered a viable candidate for these major sporting events that create such enormous tangible and intangible value for our community.”

Joel Cowley, president and CEO of the Houston Livestock Show and Rodeo, echoed that sentiment:

“In order for the Houston Livestock Show and Rodeo to sustain its community impact through scholarships, grants and other educational opportunities for Texas youth, it is important that this facility remain on the forefront with regard to presentation capability and fan comfort,” Cowley said.

But what about those who will foot the bill—individual taxpayers? Few people seem to have any concern for them, and that isn’t surprising. It’s all about the community, and the individual must do his “fair share,” whether he wants to or not.

While debate over upgrades to NRG is just beginning, debate over the fate of its next door neighbor—The Astrodome—has been waging to years. Again, the debate shows little concern for individual taxpayers.

Slowly but steadily, Houston is becoming just like other cities. Land-use regulations and “green” building codes increasingly slow development (see the Ashby High Rise as one example). Shoving light rail down our throats is another example.

Houston’s greatness was the result of individuals who rejected the conventional wisdom and blazed a new trail. It’s time for Houston to quit trying to be like other cities and tell the owners of sports teams that if they want a new stadium, they are welcome to build it.

Renewable Energy is Unreliable

While great efforts are being made to develop public support for renewable energy, much of the information that is reported is misleading. As an example, when new renewable electricity sources, such as wind and solar, are brought online, industry groups and the media usually report the capacity that has been added to the electrical grid. Indeed, the World Wide Web is filled with easy to locate stories about the added capacity of wind and solar. For example, the Solar Industries Association website reported that America would have almost twenty-eight thousand megawatts of solar capacity by the end of 2015. Similarly, the American Wind Energy Association reported that the nation has more than 60 gigawatts of wind capacity. However, the generating capacity means very little in actual practice.

Generating capacity is based on operations for 24 hours per day, 365 days per year. But no power source operates at full capacity all of the time. For example, nuclear and coal plants (two of the most reliable sources of electricity) must be shut down on occasion for repairs and maintenance. To account for this, experts calculate the capacity factor, which indicates the percentage of capacity that is typically achieved in actual performance. To speak of generating capacity without considering the capacity factor is at best naïve, and at worse intellectually dishonest, because the numbers can be significantly different.

The Federal Energy Regulatory Commission has reported the following capacity factors for new power plants using various forms of fuel:

  • Coal—85 percent
  • Natural gas—87 percent
  • Nuclear—90 percent
  • Solar –25 percent
  • Wind—35 percent

For solar to actually generate the same electricity as coal, natural gas, or nuclear, more than three times as much capacity must be built. And for wind, it is nearly two and a half times. For example, if a new coal plant is built with a capacity of one hundred megawatts, it will actually generate eighty-five megawatts. However, for a solar facility to actually generate eighty-five megawatts, a capacity of three hundred and forty megawatts will have to be built.

This isn’t a problem limited to the United States. It is a universal problem, because of the very nature of wind and solar. The wind does not always blow. The sun does not always shine. As one example of the undependability of wind and solar, at the end of 2012 wind and solar power represented 84 percent of Germany’s electricity generating capacity. However, in 2012 wind and solar actually generated only 11.9 percent of Germany’s electricity. For the year, solar generated only 11 percent of its capacity, and wind generated only 17 percent of its capacity. Despite the massive buildup of wind and solar capacity, Germany has also been building fossil fuel plants to meet its electricity needs. Indeed,

Germany is planning to back up every gigawatt of wind and solar average capacity with another gigawatt of gas or coal. As it builds its intermittent fleet [wind and solar] it will not be able to shut down existing fossil-fueled plants; they will remain in service, complete with staff, maintenance, and overhead expenses and the infrastructure of transmission lines, coal mines, and gas pipelines.

In other words, despite spending billions of dollars on wind and solar, Germany remains dependent on fossil fuels. If Germany—or any nation—wants reliable electricity, renewables are not going to provide it.

Even if the necessary capacity is built, problems still abound. Because electricity cannot be stored, power must be generated when it is needed. As Germany has demonstrated, the undependability of solar and wind requires back up generation if electricity needs are to be met. And this requires coal, nuclear, natural gas, or all three. Any nation that depends on renewables for its electricity will have an unreliable electric grid, and all of the problems that result from that.

Despite the massive subsidies and all of the media attention, wind and solar will not meet America’s energy needs anytime in the foreseeable future, if ever. As Germany has demonstrated, enormous capacity will be required, and even then the vagaries of nature make wind and solar unreliable for the energy needs of a modern society. However, unlike Germany, while America moves to become more dependent on wind and solar, it is not building the backup capacity required. Instead, it is closing proven, dependable plants.

Moving from the dependable to the unreliable is regressive. It is a move founded on manipulating the market and misleading Americans through government coercion.

This post is an excerpt from my book The Innovator Versus the Collective.

Subsidies are Cronyism

In a free market, businesses compete, not only for customers, but also for the capital that is required to start, operate, and expand a company’s operations. Investors seek the best return possible for their money, and they judge businesses on the basis of risk and potential reward.

Investors are concerned with a company’s ability to generate a profit. A business with proven profitability or an idea that investors think can be profitable will easily attract investment capital. When investors judge a business idea as risky, they will require a larger potential reward. And when the risk is judged to be too high, they will simply refrain from investing.

The purpose of government subsidies to renewable energy companies (or any company) is to provide businesses with the capital that they cannot otherwise obtain. The financial markets have determined that these companies cannot efficiently make products that will generate an acceptable return on investment. Private investors have judged the green energy companies too risky. And the string of bankruptcies by subsidized companies testifies to the validity of the market’s evaluation.

Consider further: In 2009, the American Recovery and Reinvestment Act established a loan-guarantee program for renewable energy projects. Of the twenty-six projects that received loans under the act, twenty-two were rated as “junk” grade investments, and the other four received the lowest “investment” grade rating. In other words, the credit rating agencies concluded that these projects carried a high risk of default.

Given the fact that financial experts—people who make their livelihood by judging the quality of investment opportunities—have determined that these companies and projects are not economically viable, what criteria do government officials use when selecting the recipients of taxpayer money? It certainly isn’t the quality of the company or project.

In a free market, investors voluntarily choose which companies they will invest in. Government subsidies remove that choice, and force taxpayers to “invest” in companies that they have determined are too risky.

If a businessman came to your house and seized your money to finance his venture, you would recognize his action as theft. The principle does not change if government acts as his proxy and delivers your money to him in the form of a subsidy.

If investors deemed green energy companies as worthy of investing, those companies would have no problem raising the necessary capital. Investors have concluded otherwise. But rather than accept the decisions of investors, government officials have decided to force taxpayers to act contrary to their own judgment. Government officials have decided that you will “invest” in those companies whether you like it or not. Government subsidies not only deprive you of your money, but also of your freedom to act on your own judgment.

As the Solyndra exapmles cited in yesterday’s post demonstrate, having “star power in D.C.” and “socializing” with political leaders is perceived to be effective. In other words, when companies are competing for government subsidies, developing the proper political connections becomes an important consideration. And political connections translate to political power, which is increasingly used to gain economic benefits.

Subsidies are a form of cronyism, of using political power to award economic benefits to supporters and allies. It is not a coincidence that the beneficiaries of subsidies are also supporters of the regime distributing the subsidies.

As one visible example, former Vice-President Al Gore has been pushing a green agenda for decades. When he left office in 2001, he had a net worth of less than $2 million. During Obama’s tenure, Gore invested in companies that received or benefited from more than $2.5 billion in loans, grants, or tax breaks. And his net worth soared to an estimated $100 million. And Gore is hardly the only politician to benefit from his political connections.

In 1997, Maine Governor Angus King signed a bill that required utilities within the state to generate at least 30 percent of their power from renewable sources, such as wind. Ten years later, King started a company to generate electricity with wind power. King’s company later received a $102 million loan guarantee from the Department of Energy. King himself received a $407,000 “success” fee from the company for his part in securing the loan.

Perhaps these examples are merely a coincidence. Or perhaps political connections really do provide economic benefits.

This post is an excerpt from my book The Innovator Versus the Collective.

The Push for Renewable Energy

Following the Arab oil embargo of 1973, the federal government began to develop a national energy policy. In 1975, President Ford proposed a ten-year plan to build two hundred nuclear power plants, two hundred and fifty major coal mines, one hundred and fifty large coal-fired plants, thirty new oil refineries, and twenty synthetic fuel plants. The cost of the proposal prevented it from gaining political support.

In 1976, Jimmy Carter made energy a central part of his presidential campaign. His focus on energy culminated with the National Energy Act of 1978, which included five separate statues. Among the provisions of the act were incentives for energy conservation and the loosening of some federal regulations. Interestingly, the act also included incentives for industry to switch to coal. Today’s efforts to bankrupt coal-fired plants is another example of the shifting, inconsistent, and often contradictory nature of government policies. Yesterday, the government encouraged businesses to invest in certain technology; today the government will bankrupt those businesses that did so.

As a part of his energy policy, Carter sought to encourage the development of renewable sources of energy. The Synthetic Fuels Corporation Act, passed in 1980, established a government funded corporation for the purpose of developing synthetic fuels. As a part of the legislation creating the Synthetic Fuels Corporation, Congress mandated production targets of a half-million barrels of synthetic fuel per day by 1987, and one and a half million barrels per day by 1992. After a series of scandals, the company was closed in 1985 without coming close to meeting its production goals. But this was only the first in a long string of failures involving government and renewable energy.

In 2007, Range Fuels received a $76 million grant from the Department of Energy for the purpose of turning wood chips into ethanol. The plant closed in early 2011 without producing a single drop of ethanol. In seeking to rid the nation of “dirty” energy sources, such as coal, Obama has offered $80 billion to “green” energy companies. To date, more than thirty of these companies have failed.  The most spectacular failure has been Solyndra, a maker of solar panels. The company went bankrupt in 2011, sticking taxpayers with a $535 million bill. But the real story is not the massive waste of your money. The real story is the cronyism that underlied this boondoggle.

In regard to Solyndra, the Washington Post has reported that “Obama’s green-technology program was infused with politics at every level…. Political considerations were raised repeatedly by company investors, Energy Department bureaucrats and White House officials.” The paper says that memos, company records, and internal e-mails “show that as Solyndra tottered, officials discussed the political fallout from its troubles, the ‘optics’ in Washington and the impact that the company’s failure could have on the president’s prospects for a second term.”

In one memo, a Solyndra board member described mistakes made by company founder Christian Gronet, saying that some “border on moronic.” But Gronet retained his position, the board member suggested, “only because of his close relationship with Energy Department leaders and because he had ‘star power in D.C.’” Solyndra’s lobbying firm emphasized the need of company officials to “‘socialize’ with leaders in Washington and to mobilize a lobbying effort described variously as quiet, surgical and aggressive” as the company sought additional funding from what one Solydra executive called the “Bank of Washington”—that is, taxpayers.

In short, as Solyndra stumbled towards bankruptcy, government officials were primarily concerned with the political ramifications. At the same time, company officials focused on securing more taxpayer money, rather than economizing or finding other ways to compete more effectively. In fact, when government is offering subsidies, the primary competition among companies does not occur in the marketplace, but in Washington. Companies and their lobbyists compete to win government favors at the expense of taxpayers. Solyndra is not an isolated example. The very nature of government subsidies makes them rife with cronyism.

This post is an excerpt from my book The Innovator Versus the Collective.

The Bully vs. Nordstrom

After the department store Nordstrom announced that it would no longer carry Ivanka Trump’s clothing line, the nation’s leading bully, aka President Trump, tweeted:

My daughter Ivanka has been treated unfairly by Nordstrom. She is a great person–always pushing me to do the right thing! Terrible!

Whether Ivanka is a great person or not is irrelevant. Nordstrom has a right to carry whatever products it chooses, and if the Trumps don’t like the company’s decision, they are free to find someone else to sell their products. But the real issue isn’t about Nordstrom. The real issue is the President of the United States singling out a company for criticism.

The President’s job is to execute the law, not criticize the decisions of private companies. The President has the ultimate in bully pulpits. Not only do his words impact the actions of millions, he has the coercive power of the federal government behind him. Conservatives were upset when Obama used the IRS to target his critics; Trump holds the same power and has repeatedly threatened those who don’t do as he prefers.

Few conservatives have protested the immense powers vested in the Presidency. Their complaints have primarily focused on how those powers have been used. They believe that their gang will use those power more effectively. And that is where the danger lies.

Both conservatives and Leftists are statists. They believe that the individual should be subordinate to the state. They only disagree on the details. But whether the individual is shackled in the name of God or in the name of the “public,” the result is the same.

The Dowling Statue

The Houston/Harris County political shift of last year makes it somewhat more likely that measures of the liberal variety will affect county historical assets. One possibility would be the moving or otherwise forced retirement of a statue in Hermann Park commemorating a Confederate soldier, Dick Dowling, for whom Houston’s Dowling street was named (the renaming of that street would also be a possibility). Dowling was responsible for resisting a Union incursion in late 1863 at Sabine Pass which turned the ships back, ultimately preventing the establishment of a Union base in Texas.

The statue at the south end of Hermann Park has the likeness of Dowling looking east-southeast toward the location of the battle a hundred miles away, near the Sabine river. The presence of a statue of a Confederate hero in uniform is doubtless an irritant to many groups in the city. In fact, it’s a mild irritant to me, since the connection of the Confederate cause to the institution of slavery offends my strict individualist leanings. But why do I say mild? Because the tend toward removal of Confederate monuments smacks of the Egyptian/Roman practice of attempting to erase the past by changing dedication markers or even rededicating structures to unrelated personages or causes. Though I would not have supported (as Sam Houston did not support) the secessionist attempt, I find it a useful window into the past to have artifacts such as monuments from that era continuing to exist to the present day.

Diaries, swords, toys, boots, statues… any item from a lost cause (or a successful one) can assist our understanding, helping to place us into a time and context in which the benefit of contemporary hindsight was not available. To propose to erase these cues would suggest that those who would conceal the past do not trust the observer to draw the right conclusions. We must always view the control of information with grave and critical suspicion.

The Real Poop On Bathroom Regulations

Both nationally and locally, there has been much said and written about the propriety of having separate bathrooms for male and female, where at least a small percentage of the public chooses to consider themselves differently sexed than the perceptions of most would indicate. Where sexual identity reassignment is concerned, it is claimed that business or government entities violate some right when someone identifying with one sex is instructed or compelled to use the bathroom of the other. Leaving the context of government facilities aside, I’ll describe here a solution for the idea and quandary about what private businesses should do by way of providing for any and all preferences.

I propose that whatever happens in government’s realm (not that I would agree with it), no regulation or rule about how bathrooms are assigned should be leveled against a private business. Non-governmental organizations should be completely free to have neutral, gender-assigned or three-tier bathroom facilities as they choose, or to invent their own arrangement unanticipated by activists, the public or by government. Businesses should be able to provide whatever bathroom facilities they wish, and not be sued or regulated otherwise.

The reason that I propose this is the same reason that I oppose the too-big-to-fail sentiment, which states that failing businesses should be bailed out with government funds to protect worker jobs and stockholder assets. As a free market advocate, I do not abide shielding capitalists from any market effect. Depending upon the clientele of any particular business, there is a risk (properly held by the capitalist and no one else) in providing any kind of bathroom facility, since any arrangement will offend someone. Let the capitalists fall (or rise) where they may, and let them attempt to divine what bathroom arrangement will please their clientele the most. If the capitalist makes the wrong decision, his/her business will suffer the consequences. And the consequences of the market are the least forgiving (the clientele will shrink) if the business behaves contrary to the wishes of its patrons.

If one looks for an effective way to control social ills, it is far more effective than regulation to allow the market to punish unpopular businesses in the pocketbook, where it matters. And far more moral for the public, not regulators, to determine what should and should not be punished or encouraged.