Liberals’ Utopia

Green Energy: Subsidies for Affluent Liberal Yuppies

A new paper from researchers at the University of California, Berkeley, on the “The Distributional Effects of U.S. Clean Energy Tax Credits.” “Distributional effects” is just a way of saying “from whom is government taking money, and to whom is it giving it.” The bottom line:

Since 2006, U.S. households have received more than $18 billion in federal income tax credits for weatherizing their homes, installing solar panels, buying hybrid and electric vehicles, and other “clean energy” investments. We use tax return data to examine the socioeconomic characteristics of program recipients. We find that these tax expenditures have gone predominantly to higher-income Americans. The bottom three income quintiles have received about 10% of all credits, while the top quintile has received about 60%. The most extreme is the program aimed at electric vehicles, where we find that the top income quintile has received about 90% of all credits. By comparing to previous work on the distributional consequences of pricing greenhouse gas emissions, we conclude that tax credits are likely to be much less attractive on distributional grounds than market mechanisms to reduce GHGs.

One example, the Chevy Volt: According to autoblog (writing in 2011):

In order for the Chevy Volt to really be a success, the car needs to be affordable for the masses.

But for now, the car is mostly the province of the wealthy. General Motors, which makes the Volt, said Monday that the average income of Volt buyers is a whopping $175,000 a year. That rarefied space is usually reserved for buyers of German luxury cars.

“The Volt appeals to an affluent, progressive demographic,” says Bill Visnic, senior editor for Edmunds.com “It’s rare. It’s hard to get one. ... It’s the same reason that people buy the really rare exotic cars: Because other people can’t have one.”

Median family income in 2011 was $50,502.

So the liberal Yuppies have it really good. They get to feel very self-righteous, and do so largely with the money of people at whom they look down their noses.

“Fair Trade” Hurts Third-World Poor

We’ve never been impressed with the self-righteous moral preening of the “Fair Trade” crowd. Simply paying a few cents more for some politically correct coffee doesn’t sound like much of a sacrifice to us.

Further, the “Fair Trade” crowd typically has certain political views — opposition to free trade and to globalization, for example — that are sharply adverse to the interests of poor people in the Third World. It’s long been clear that the real path to a better life for Third World poor lies in market-oriented economic development. Impeding that does vastly more harm than “Fair Trade” schemes can even begin to repair.

But now the evidence is becoming clear that “Fair Trade” actually does little (if any) good.

Thus we have a large study, funded by the British government and conducted with a high degree of academic rigor. The results are summarized on the website of the University of London.

Research finds Fairtrade fails the poorest workers in Ethiopia and Uganda

24 May 2014

Fairtrade certified coffee, tea and flowers do not improve lives of the very poorest rural people in Ethiopia and Uganda, according to a four-year research project conducted by leading development economists at SOAS, University of London. The project studied rural labour markets in areas producing crops for export, under different institutional conditions that included, in some research sites, Fairtrade certification.

Low pay for wage workers, particularly women, and limited access to schools, health clinics, improved sanitation and other social projects in rural areas were among the findings in ‘Fairtrade, Employment and Poverty Reduction in Ethiopia and Uganda’, a report published today.

Teams of highly-trained fieldworkers studied wages and working conditions in twelve areas growing coffee, tea and flowers in Ethiopia and Uganda. As well as reviewing existing studies, the researchers collected new, detailed micro-level comparative evidence from areas producing agricultural exports on how rural labour markets affect poor people’s lives.

The study reveals that wage workers are commonplace on ‘smallholder’ farms in the areas studied, where between a third and a half of listed adults were recent agricultural wage workers. The research also found that these agricultural workers were much poorer than others. Wages were lower on average in research sites defined around Fairtrade certified producer organisations than in sites without Fairtrade certified producers.

Key findings from the report:

• Most rural people in Ethiopia and Uganda enjoy a much higher standard of living than seasonal and casual agricultural wage workers. In rural areas, manual agricultural wage workers are the very poorest.
• Where Fairtrade flowers were grown, and where there were farmers’ groups selling coffee and tea into Fairtrade certified markets, wages were very low – especially women’s wages. In fact, wages in other comparable areas and among comparable employers producing the same crops but where there was no Fairtrade certification were usually higher. This was not because the Fairtrade certified cooperatives were in more marginalised, deprived areas.
• In some areas dominated by Fairtrade certified cooperatives workers in the samples did appear to have greater access to some fringe benefits (e.g., free meals in two sites, or on other sites more access to loans) than workers in areas without Fairtrade certification. Even here, though, other aspects of work conditions were often worse.
• The findings on lower wages held true even after the effects of scale and other differences across workers and sites were taken into account in detailed statistical analysis, contrary to the claims made in the Fairtrade Foundation’s own statement about this research.
• Fairtrade publicises its contribution to the funding of schools, health clinics, improved sanitation and other “social projects” in rural areas. From hours of quantitative and qualitative interviews with respondents and others, including in some cases cooperative managers, the SOAS researchers found that the poorest often had no access to these ‘community’ facilities in the research sites, even when they were or had been wage workers on the processing stations or for producer members.

A trenchant commentary on a British website describes the mentality behind “Fair Trade.”

From its very inception, the concept of Fairtrade was rooted in maintaining low ‘sustainable’ horizons for the poor by those who consider people in Africa and other parts of the Third World to be intrinsically different to the rest of us. The movement did not originate with the poor farmers of the developing world, but with Western NGOs and their army of gap-year do-gooders intent on imposing their reactionary ‘small is beautiful’ values on an Africa desperate for change.

According to the Fairtrade worldview, the poor farmers of the world are in fact quite happy with their lot and only desire a stable, if low, price for their produce. Once this is in place, they will be free to enjoy their simple idyllic existence. The fact that Western countries left extreme poverty behind through rapid industrialisation and urbanisation does not apply to Africa, they say. Instead, it is of paramount importance that Fairtrade ‘promotes and protects the cultural identity and traditional skills of small producers.’ They should receive enough money never to be in danger of starvation, but not enough to afford a foreign holiday or to send a child to university or, indeed, do any of the things we in the West enjoy, lest it undermine their cultural identity.

Thus the attitudes of contemporary urban, liberal yuppies begin to look a lot like those of the traditional European nobility. Yes, we want the peasants to live better, but we don’t want them to start rivaling us. So long as our moral and cultural superiority is recognized, we are all for making the peons better off. Noblesse oblige. But only a bit better off. And we aren’t going to be too scrupulous about whether we are really making the poor better off. The key thing is that it makes us feel better about ourselves.

Bottled Water Now Politically Incorrect

From Slate, an observation about how snobby, trendy people are realizing that a key artifact of their lifestyle is . . . well, not politically acceptable.

In March, the San Francisco Chronicle spotted a hot new food trend in the Bay Area. Instead of offering diners a choice of still or sparkling bottled water with their (inevitably) locally grown delectables, trendoid restaurants such as Incanto, Poggio, and Nopa now offer glorified tap water. Sustainable-dining pioneer Chez Panisse has also joined the crowd, tossing Santa Lucia overboard for filtered municipal water, carbonated on-site. The reason: It takes a lot of energy to create a bottle of water and ship it from Europe to California. And so of-the-moment bistros can boost their enviro cred by giving away tap water instead of selling promiscuously marked-up bottled water. “Our whole goal of sustainability means using as little energy as we have to,” Mike Kossa-Rienzi, general manager of Chez Panisse, told the Chronicle. “Shipping bottles of water from Italy doesn’t make sense.”

Chez Panisse’s decision to swap Perrier for public water highlights how quickly the culture surrounding food, drink, and the environment has shifted. Not long ago, bottled water represented the height of urban sophistication. Today, bottled water is just another cog in the carbon-spewing, globe-warming industrial machine. There is a growing conflict between those who want to drink clean, pure water and those who want to breathe clean, pure air.

Until relatively recently, bottled water was a snobbish luxury good—Perrier, Evian, and San Pellegrino, fey-sounding foreign brands, seemed absurd. Thanks to our superior infrastructure—New York City’s delicious tap water is actually believed to be a competitive advantage for the city’s bagel and pizza makers—it is perfectly safe to drink the water in the United States. Given the price—for long periods of time, a gallon of bottled water cost more than a gallon of gas—it seemed silly to pay up for this plentiful commodity. And it seemed pretentious to believe that our overburdened palates should be forced to develop a preference for what is generally presumed to be a tasteless substance. The presence of water sommeliers at the Ritz-Carlton in New York and at Alain Ducasse’s New York restaurant (now closed, soon to reopen) was more novelty than a necessity.

But like other high-end comestibles—sushi, good coffee—bottled water has become democratized. According to data from the International Bottled Water Association, bottled water in 2003 became the second-largest American beverage category. As soda sales stagnated, bottled water sales took off. Total U.S. consumption rose nearly 60 percent between 2001 and 2006. Last year, industry revenues were an estimated $11 billion. Per-capita consumption has risen almost 50 percent from 2001, to 27.6 gallons in 2006. Globally, the United States is the largest consumer of bottled water, although on a per-capita basis, we were only 10th in 2005. (That year, Italians consumed almost twice as much bottled water per capita as Americans.)

Bottled water’s swift transformation from glass-encased luxury good to déclassé, plastic-wrapped menace was entirely predictable. Over the past century, we’ve seen numerous examples of products that, so long as they were available only to a select few, were viewed by those elites as brilliant, life-improving developments: the automobile, coal-generated electricity, air conditioning. But once companies figured out how to make them available to the masses, the elites suddenly condemned them as dangerous and socially destructive.

So long as only a few people were drinking Evian, Perrier, and San Pellegrino, bottled water wasn’t perceived as a societal ill. Now that everybody is toting bottles of Poland Spring, Aquafina, and Dasani, it’s a big problem.

The yuppie lifestyle not only stakes a claim to cultural superiority, it also (we can’t help noticing) asserts the right to govern the country politically.

Thus the elitists moan and complain when people they consider their cultural inferiors — Southerners, conservative Christians, blue collar workers, people who live in Texas — get uppity and elect a President or Congress of whom the elitists disapprove. How dare people who drink tap water (or Miller Beer or iced tea) think they can govern the nation!

But the game is entirely transparent, and ordinary Americans aren’t impressed.