Paper Companies' Windfall of Unintended Consequences 284
Jamie found a post on ScienceBlogs that serves as a stark example of the law of unintended consequences, as well as the ability of private industry to game a system of laws to their advantage. It seems that large paper companies stand to reap as much as $8 billion this year by doing the opposite of what an alternative-fuel bill intended. Here is the article from The Nation with more details and a mild reaction from a Congressional staffer. "[T]he United States government stands to pay out as much as $8 billion this year to the ten largest paper companies.... even though the money comes from a transportation bill whose manifest intent was to reduce dependence on fossil fuel, paper mills are adding diesel fuel to a process that requires none in order to qualify for the tax credit. In other words, we are paying the industry — handsomely — to use more fossil fuel. 'Which is,' as a Goldman Sachs report archly noted, the 'opposite of what lawmakers likely had in mind when the tax credit was established.'"
Re:lawmakers (Score:2, Interesting)
Corporations in any country will do the same thing, those that do not will die. There are countries where they're legislated out of existence or they become the welfare provider for the state and never really do much good.
Since /. going farther and farther left this is AC signing off.
It's only the Paper industry so far? (Score:2, Interesting)
Re:lawmakers (Score:5, Interesting)
In the short term the solution for this is for the president to order the IRS to withhold these payouts until congress can close the loophole. If the paper companies sue, they would get laughed at or scolded by the judges as this is an obvious and evil perversion of the intent of the law.
Government interfearence screws up everything (Score:3, Interesting)
There is a limit to the amount of profit a car manufacturer on an individual car in the U.S. This only applies to basic passenger cars, not luxury cars or trucks. The answer? This is why the big 3 pushed trucks and SUV's so hard - which granted a large part of their customers wanted, but they largely ignored another large crowd that wanted small U.S. made economy cars. They produced crap instead, so we bought Japanese. Thank you Uncle Sam.
Some Americans With Disabilities Act rules apply only to companies of certain size, as in number of employees. Compliance is incredibly expensive in many cases. Some companies put the brakes on at a certain number of employees due to the expense of compliance sentencing said companies to stagnate growth at a certain size giving their mega corporation competitors an upper hand. Thank You Uncle Sam. The same can be said of certain FDA regulations and any other regulatory agency you can name.
My sister works for the Department of Agriculture. She writes checks to farmers to not grow crops.
Here's an idea:
KEEP THE FUCKING GOVERNMENT OUT OF IT
Unless something really needs regulating, leave it the hell alone. Food? Fine we need an FDA to make sure our food isn't nasty and contaminated. They probably overstep their usefulness in some cases, and under step it in others, but that's expected.
Yes, we do need an agency to keep track of Plutonium and Uranium. Just saying, yeah, track that.
We need an EPA - but it needs to know it's place.
ATF? We don't need that. It's a redundant agency originally created for tax purposes, not what they're doing now. It's also limiting freedom.
No government regulation usually helps huge companies by keeping the small competitors down. Create an agency to regulate an industry, then the companies buy the candidates they want and put them in the regulatory committees. The little guys can't do that.
Re:lawmakers (Score:5, Interesting)
Exactly, and in this case, they did just that : they pursued their own intrest the way the law forced them to, instead of the most profitable (and therefore, at least in this case, most environmentally friendly, way).
In general, the cheapest way for factories is often the one using the least raw material, and therefore at least close to the most environmentally optimal way.
but I think copious legislation should be applied to ensure that you can only have achieve this by benefiting society.
You're assuming that laws always benefit society. I guess women should be glad they get stoned in muslim countries. After all, it benefits society, right ? That's what the law does. Of course, very nearly all muslim countries are, at best, third world countries, racist dictatorships or worse. Seems their laws are less than optimal ... for both society and the environment.
But of course, "America is different !". Oh wait, not at all in this case. I guess that what happened here, totally in compliance with the law, and bad for BOTH society and the environment ... means nothing to you ?
But this was in compliance with the law, and against market forces, so surely it must have been good for society and for the environment ... oops ...
Why don't we look at the environmental situation in a country where "copious legislation", in fact as copious as it gets, was in force.
And there we find ... chernobyl, in the soviet union.
It seems to me your argument is flawed, both in theory and in practice.
You see, you assume laws are in the intrest of society, which is a standpoint that's idiotic, to say the least. In fact, given the world's current situation, the less laws a society has, the better it does.
Re:Laws are used as written, not intended (Score:4, Interesting)
The problem has nothing to do with intention. The problem is that the law was very badly written for every purpose. The law gives a $0.50 tax credit for every gallon of diesel mix used but the credit should have been based on some fraction of the price of diesel. The paper makers scam only works because the price of diesel has fallen so much.
Indeed, if diesel and biofuel prices fell far enough we could all make money simply by burning gallons of it in our back yards: spend $0.40 on a gallon of mix; claim $0.50 from the IRS.
If the law had been drafted by someone who wasn't retarded this situation would never have arisen.
Re:Well, folks... (Score:4, Interesting)
Capitalism seemed to work pretty well until we gave up on it early last century (it was just too damn hard for large companies to compete in an open market). We could always try that again.
Re:Government interfearence screws up everything (Score:5, Interesting)
"So, even then, Government is too easily corrupted. Unfortunately, I don't have a better idea."
I do. You have to take the law back to principles, rather than specifics. Here's a few many of you are familiar with:
THOU SHALT NOT KILL.
THOU SHALT NOT STEAL.
Therefore, undisclosed mercury in Tuna and defrauding an energy subsidy as a paper mill would be considered BREAKING THE LAW.
While we're at it, I have another recommendation. Since waterboarding is simply "enhanced interrigation", I'd suggest it should be a viable questioning technique for these types of white collar crimes. I have a strange belief system where if someone elses' countrymen are trying to kill me, I can at least see they were raised and taught that way. When my OWN countryman are trying to kill me, they should be punished ten times worse.
Re:Government interfearence screws up everything (Score:3, Interesting)
Now, I am with you in some respects, that the regulations are custom tailored to the corporate giants as/is, and that needs to stop. I miss the days of the trust-busting, breaking up big business to give the little guy the shot at the top, Theodore Rooseveltites. Now that was how to regulate.
Re:Laws are used as written, not intended (Score:4, Interesting)
The real problem here is that the law is basically an attempt to circumvent the fundamental principals of the Constitution, which was written to limit the powers of the Federal government. The founders didn't trust government, and sought to mitigate the necessary evil of having a government at all by restricting it to some very specific powers.
The 16th amendment gave the Feds all kinds of new power, so that's what they always use to try things like controlling behavior (a power they really shouldn't have). So whenever they pass a law offering a "tax credit", people sit around going "hmmm... how can we get some of that?" And why not? That's what people do. The more of your money goes to taxes, the greater the motivation to limit your liability or to have some benefit from government giveaways.
Same thing with all government handouts. About 40% of the budget of Medicaid and Medicare is spent on fraud. 40%. Because if people can get something for free, they will. Some will find legal ways (like these paper companies), and others don't care whether it's legal or not (like people that commit Medicare and welfare fraud).
So the real problem is $3.8 trillion of government spending. It attracts corruption, fraud, waste, opportunists, and everything else bad that people keep complaining about. And the 535 or so deciding how to spend that money aren't really very interested in being very diligent with it, because it's other people's money - so who cares about a few billion wasted here or there?
Repeal the 16th amendment, institute very strict term limits, hold the Federal government to the Constitution, and these problems would go away.
Re:lawmakers (Score:3, Interesting)
Precious metals are the obvious choice but the global supply of them does not grow at the rate the economy usually does, which is a problem.
I would argue that the real economy does not grow much at all, only that living standards get continually better through advance of technology, and that the inflated economy we see today is a result of profit from a position of debt.
Ultimately, IANAE (Economist), and I don't have a great answer for you, other than many economists from the Austrian school of thought believe in a return to commodity-backed money, and the economists from the Keynes school of thought have got us into this mess in the first place and ought to be duly ignored.
Re:lawmakers (Score:3, Interesting)
and the dissolution of the gold standard
How does basing money on rocks change anything? Money just provides a means to trade. If we want to base it on something of intrinsic value, I would suggest energy over shiny rocks.
Re:Well, folks... (Score:3, Interesting)
There aren't any problems with capitalism. It is the most efficient, kindest, and most progressive economic system possible. Every singe "failing" either points back to the government, or to the admittedly messy transition from feudalism to capitalism. You have to understand that EVERY TIME the government "steps in", it produces numerous unintended consequences, and creates the opportunity for the various leeches and moochers (think AIG or any of the bailed out banks) to come in and take undeserved money from the taxpayers, or from the holders of dollars through inflation. It also creates an enormous bureaucracy that produces nothing, and only decreases the productive capacity of businesses, effectively stopping small start-ups from being competitive with big corporations. Why do you think we haven't had any new car companies emerge in this country in the last 50 years? Regulation. Why don't we have hundreds of choices when it comes to cell phone companies, like in Japan? Regulation. Why is it that most places in the US have only one choice when it comes to cable, or internet? Regulation. Why are there only two satellite television providers? Regulation. Why are so many radio stations owned by so few companies? Regulation. Why can't anyone open up a lottery in a state with a state lottery? State monopoly. Why can't an effective airline like Southwest fly to anywhere east of Dallas? Regulation spawned by favoratism.
No human is smart enough to control the economy without creating opportunities for graft and/or elimination of competition. The Soviets, who had some of the smartest, best educated economists in the world, saw their economy fall apart as people stopped working hard. There was no incentive to produce, and great incentive to consume. Under such conditions, the only thing that can moderate people's behavior is force, and they thus had to resort to massive application of force, to the point that the place that was supposed to become a worker's paradise instead became a worker's inferno. Those who weren't afraid of government action against them did nothing, only pretending to work. Those who were afraid of government action against them were worked to death to cover for the loafers and moochers. The same is happening here, only this time it is in the shadows. The government steals our productive power by printing money and spending it, as though they had contributed something to the economy, basically compelling labor, giving the money to the banks, then forcing them to lend, increasing demand for goods. It also taxes us, such that there is an incentive to stay in a lower tax bracket, suppressing productive capacity. Thus far, foreigners have made up the difference by lending us money, and supplying us with goods while not consuming much themselves. That is ending though. This new corporatist communism has now led us to the brink of an abyss from which there is no easy escape. The government will try to stop it with more spending, more regulations, and more force, but those actions will do nothing to fix the situation, and will instead only make them worse. These United States will not survive the coming storm in their current form, just as the USSR did not survive their fall from superpower status. We will go from being the richest country in the world due to the very capitalist economic system you seem to hate so much, to one of the porest; a newly de-industrialized nation with power on par to that of Eastern European countries. We might be able to survive, but the era of American hegemony is fast coming to a close.