How Much Do The Climate Crusaders Plan To Increase Your Cost Of Electricity?

In yesterday's post, I gave a rough estimate that it would take an increase in the price of fossil-fuel-derived energy of at least a multiple of three to five to achieve the kind of usage reductions that climate crusaders are seeking.  (And of course in the process the poor would get priced out of air conditioning, not to mention air travel and lots of other things.)  Today I find a report of some real world experience indicating that actual price increases could be far higher than that.  

Paul Homewood is a British guy with a blog called Not a Lot of People Know That (notalotofpeopleknowthat.wordpress.com) that chronicles various sorts of climate craziness.  I recommend the blog to you.  A few days ago Homewood had a post titled "One small island's dream of energy self-sufficiency."    The post comments on an enthusiastic story from the Korean news site Hankyoreh, reporting on the efforts of the people on the very small (0.85 sq.km.) Korean island of Gapa to make their energy sources 100% renewable.  The Hankyoreh article quotes glowing reviews of the project from some of the island's residents.  Homewood then drily  comments that he thinks he has spotted "one tiny little problem that our Korean friends seem to have overlooked."  In other words, looked at with a touch of realism, the project is an unmitigated disaster.  The problem is cost.  See whether you agree with the residents or with Homewood.

Gapa has a total of 178 residents in 97 families.  According to Hankyoreh, it has average daily electricity usage of 142 kW, and maximum peak usage of 230 kW.  To supply that demand with "renewables," the Gapans acquired for themselves two big wind turbines, each with a rated capacity of 250 kW, plus they installed solar panels on 49 of the 97 homes, with a total rated capacity of 174 kW.  That would be a total capacity of 674 kW, against maximum peak usage of 230 kW, so nearly triple the peak demand and well over four times the average demand.  And finally, the Gapans were fully aware that wind and solar don't work all the time, so they also got themselves a gigantic battery with a capacity to store 3.86 MWh of electricity, which should theoretically be enough to go more than a full 24 hours at their usage level with the wind and solar not functioning.  (The battery pack of a Tesla Model S supposedly has a capacity of 85 KWh, meaning that Gapa's battery is equivalent in storage capacity to about 35 Teslas.)

So with all that the Gapans should have way more than sufficient capacity to supply all their electricity needs with just the renewables -- right?  Actually, not even close.  According to Hankyoreh, in the most recent measuring period of April 23 to July 12, the renewable resources supplied just 42% of Gapa's power -- 32% from the wind, and 10% from the solar.  And where did they get the rest?  From backup diesel generators, of course!

Between Apr. 23 and July 12 of this year, Gapa Island had a cumulative energy self-sufficiency rate of 42%. The island is meeting 32% of its energy needs from wind power and 10% from solar power. The rate climbed above 50% in May, but fell again in the monsoon season. The other 58% of energy is still supplied by diesel generators.

Oh, and the renewables-based electricity system, even with the diesel backup, only produced enough power to supply just four (!) electric cars.  So it seems that the large majority of the Gapans must also continue to drive gasoline-powered vehicles.  That means that the renewable contribution to Gapa's total energy usage is likely to be less than 20%.   

Now, can we please get an idea how much has been spent to get the Gapans all the way up to generating 42% of their electricity (and perhaps 20% of their total energy usage) from renewables.  Hankyoreh has the figures:

A total of 14.3 billion won (US$12.49 million) was invested in the project. Two 250kW wind turbines were installed, along with 174kW solar panels in 49 locations. Other installations included an energy storage device, a system control center, power conversion equipment and remotely controlled power meters.

That's $12.49 million for 97 households -- $128,000 per household.  Homewood points out that, assuming a 15 year useful life for the system and zero return on the invested capital, that would mean $8000 per year per household, or about $670 per month per household.  (By contrast, 2014 data from the U.S. EIA here show average monthly household electricity bills in the continental U.S. ranging from a low of $84 in Maine to a high of $145 in Alabama.)  But wait a minute: add a 4% rate of return on invested capital, and the cost per household goes up to more like $13,000 per year, or close to $1100 per month.  That's close to ten times what the average American currently pays for electricity -- and this is to get up to maybe 20% or so of energy usage from renewables!

So how do the Gapans feel about their wildly expensive energy system?  

“At first, we weren’t satisfied with the results of renewable energy. Now, though, it’s benefiting us in two ways: our electricity bills are lower and the number of tourists is higher,” said Jin Myeong-hwan, the 55-year-old mayor of Gapa Island.

"Our electricity bills are lower"?  How did that happen?  Oh, it seems that this whole wildly expensive renewable system was supplied to Gapa Island gratis by the utility company.  As Homewood puts it:

It is little wonder the islanders’ electricity bills have come down, because the capital cost of the project has been paid for by Santa Claus.   

I would have said the tooth fairy, rather than Santa Claus, but whatever.

So what exactly is the climate crusader's vision of how the United States is going to get up to say 50% of total energy usage from renewables?  If getting to 20% requires multiplying average utility bills by around 10, will getting to 50% require multiplying average bills by 20, or maybe 30?  I've never seen one of these people even remotely attempt to present honest numbers.  If any reader is aware of any such presentation, I would be glad to look at it.     

What Is The Most Preposterous Article In Today's New York Times?

On any given day, it is always a challenge to figure out which of the articles in the New York Times is the most preposterous.  But today there is a candidate that is very hard to top.  It might be the most preposterous article of the week, or even of the month.  The headline is "In U.S. Jails, A Constitutional Clash Over Air Conditioning."  The author is Alan Blinder.

Blinder travels to places like Texas, Louisiana, and Alabama to uncover the startling fact that even today many jails and prisons in these very hot areas do not have air conditioning.  Of course, during the summer the prisoners swelter.  Some have health problems that may be exacerbated by the heat.  Blinder interviews several lawyers and inmates who have brought cases alleging that the lack of air conditioning is no less than a constitutional violation, for "cruel and unusual punishment" under the Eighth Amendment.  (Is it any problem for that position that air conditioning didn't even exist for the first 140 or so years after the Bill of Rights was enacted?  I'll leave the answer to that one to you.)  Anyway, to listen to the lawyers and inmates who are Blinder's sources, the lack of air conditioning for inmates is completely unacceptable, and it is further obvious that this subject rises to the high level of a constitutional violation.  Example:

“It’s almost impossible for courts to deny the constitutional violation because extreme heat undoubtedly exposes individuals to substantial risk of serious harm,” said Mercedes Montagnes, a lawyer for three inmates with health issues who challenged conditions on Louisiana’s death row. “Now what we’re grappling with is the remedy.”

So if it is so obvious that not providing air conditioning to prison inmates is a constitutional violation, why am I saying that this article is completely preposterous?  Here is the reason: with the exception of this article, the New York Times devotes a good five percent of its news and editorial coverage to the campaign to take air conditioning away from poor and low-income people.  I am referring of course to the climate crusade.  Could it be possible that they are so dumb as not to realize that there is any inconsistency here?  Yes, it is completely possible.

Now, the Times in its advocacy for the climate crusade does not explicitly say that the program here is to take air conditioning away from the poor.  But that's only because either they can't add two plus two or they are hiding the ball from the reader.  (It could be both.  Don't assume that the left hand and the right hand know what each other are up to over there.)  In some fifty or a hundred or more articles and editorials per month, the New York Times advocates in one way or another for public policies that will "reduce greenhouse gas emissions," supposedly to "save the planet."  What are these policies?  Inevitably, they are policies that are intentionally devised to drive the cost of energy up so that many people will be forced to consume less of it.  Sometimes it's a "carbon tax."  Sometimes it's "cap-and-trade."  (Here's an example of NYT advocacy for "cap-and-trade.")  Sometimes it's regulations designed and intended to put the cheapest types of energy out of business, as by making generation of electricity from coal illegal, or by denying permits for pipelines from the Canadian tar sands.  (Here's some advocacy for the so-called "Clean Power Plan" to put the coal industry out of business.)  

The carbon-restriction policies favored by the New York Times are not small-time policies that would reduce fossil fuel usage by some few percent.  No, the Times wants fossil fuel usage reduced by half or more, and immediately if not sooner.  The "cap-and-trade" program or carbon tax that would accomplish such a dramatic goal would have to raise energy and electricity prices by a multiple, probably three to five times, if not more.  Now ask yourself, in such a squeeze which must raise prices sufficiently that people in the aggregate give up half or more of their energy usage, exactly who is going to be forced to give up what?  You can be sure that the losers will not be the editors of the New York Times.  Of course the people who will have to consume less energy will be poor and low income people.  And what will they be forced to give up?  It is obvious to anyone who thinks about it that air conditioning is at the top of the list.

And the Times is not completely oblivious to the fact that enforcing anti-greenhouse gas restriction mandates very likely means that the poor cannot have air conditioning.  Instapundit today points to this article from the Times in 2012, making exactly that connection:

But as air-conditioners sprout from windows and storefronts across the world, scientists are becoming increasingly alarmed about the impact of the gases on which they run. All are potent agents of global warming.

Well, nobody ever accused the New York Times of actually having any understanding of how an economy works.  It just all comes from the tooth fairy, to be allocated in accordance with perfect fairness and justice by all-knowing government bureaucrats.  Still, New York Times, in the perfect world where fossil fuel usage goes down by 90% and the government decides who gets what, do people in the bottom half of the income distribution get air conditioning, or no?  If yes, how does that possibly work?

On Hillary's "Economic Plan"

Just over a month ago on July 6 I had a post on "The Most Important Thing Disqualifying Hillary From The Presidency."   After reviewing Hillary's demonstrated willingness to undermine national security to evade public records laws, I nevertheless concluded that there was something even more disqualifying her from office than abuse of national security, namely that she "has literally no idea how the economy works."

But that was early last month, when we still had to search around for tidbits from one speech or another to try to get an overall picture of what Hillary's economic plan might be.  On Thursday Hillary went to Michigan to deliver her big economic address to lay it all out in one place.  Here is a transcript of the address.  You will not be surprised to learn that the lead New York Times editorial on Friday was an excited paean to the brilliance of Hillary's economic ideas ("Mrs. Clinton's Plan for a Fair Economy").  (Doesn't that really tell you all you need to know?)

So, was I right?  Of course I was right.  The speech is devoid of any recognition that the wealth of society comes from the hard work of free people in the private sector, or that the private sector needs freedom from oppressive government taxation and other meddling in order to do its job.  Instead, in this vision, wealth either magically pre-exists or comes from government initiative, and then the government brings about perfect fairness and justice by an ever-expanding list of handouts and programs that will always work perfectly and never have any downsides.

So let's look at a few specifics.  Like most everyone running for president, Hillary says that her first priority is "creating jobs."  That's up to the private sector, right?  Wrong!

First, which candidate has a real plan to create good-paying jobs? . . .  So let me tell you how we would do that.  I believe every American willing to work hard should be able to find a job that provides dignity, pride and decent pay that can support a family.  So starting on Day One, we will work with both parties to pass the biggest investment in new, good-paying jobs since World War II.  We will put Americans to work building and modernizing our roads, our bridges, our tunnels, our railways, our ports, our airports. . . .  We will also help cities like Detroit and Flint connect underserved neighborhoods to opportunity, expanding affordable housing, and we will repair schools and failing water systems as well. You know, I happen to think we should be ambitious: while we’re at it, let’s connect every household in America to broadband by the year 2020.

So the bulk of "job creation" will come from the government directly hiring people on its own payroll to build things.  Stalin would be proud.  But can't the private sector do anything?  The answer is, maybe a little, as long as it takes its direction from my pals in Washington:

And here’s something that you don’t always hear enough of from Democrats: a big part of our plan will be unleashing the power of the private sector to create more jobs at higher pay. And that means for us, creating an infrastructure bank to get private funds off the sidelines and complement our private investments.

An "infrastructure bank" sure sounds like a taxpayer-backed mechanism for the government to pick the economy's winners and losers.  Or, to put it another way, the private sector will be restricted to crony capitalism.  A government investment bank gets to pick which projects get funding and which do not, and maybe you can get funding if you can win the insiders' favor.  Can there be any doubt that contributions to the Clinton Foundation will have a lot to do with it?  And there are all those wonderful loser operations that could never get off the ground at all without massive government handouts.  "Renewable energy" anyone?

And let’s build a cleaner, more resilient power grid with enough renewable energy to power every home in our country as well. Some country is going to be the clean energy superpower of the 21st century and create millions of jobs and businesses. It’s probably going to be either China, Germany, or America. I want it to be us!

But don't businesses that can only exist on government handouts destroy wealth and make the people poorer?  You would think that that would be the first principle that every politician would need to know as the basic qualification for the job.  Well, Hillary hasn't figured it out.

Of course, raising taxes is another central feature of the Hillary program.  Don't worry, none of her proposed tax increases will hit you; these are only for the official bogeymen -- Wall Street, the "corporations," and the "super-rich":

And Wall Street, corporations, and the super-rich, should finally pay their fair share of taxes. That’s why I support the so-called ‘Buffett Rule,’ because multi-millionaires should not be able to pay a lower tax rate than their secretaries.  We should also add a new tax on multi-millionaires, crack down on tax gaming by corporations and close the carried interest loophole – something I’ve advocated for years.

I love the part about the "Buffett Rule."  If you have any critical thinking ability at all, do you really think that Hillary will propose a tax that will hit Warren Buffett?  Buffett makes almost all of his money in the form of unrealized capital gains.  Currently those are not taxed at all, and nothing Hillary proposes would tax them.  These are just empty words to deceive the suckers.

And finally, there's the laundry list of programs spending the free money from the infinite government credit card.  Free college!  Student loan forgiveness!  Handouts to everyone for childcare!  Sure, Hillary.

At National Review, Larry Kudlow calls Hillary's plan "insanity."  I'd call that charitable.  The sad news is that Donald Trump's proposals aren't a whole lot better.  But Trump has recently taken on Stephen Moore as his economic advisor, so maybe there is some hope.  

Justice Department Accepts Responsibility For Deficiencies Of Baltimore Police Department

Yesterday the U.S. Justice Department, Office of Civil Rights, came out with its big (163 page) Report excoriating the Baltimore Police Department for a laundry list of outrageous, deficient, discriminatory and unconstitutional policing practices.  This is the Report that has resulted from the Justice Department investigation launched in the aftermath of the death of Freddie Gray in the custody of Baltimore police in April 2015.

You can get some idea of the extent of the systemic deficiencies that the feds uncovered by looking at a few of the section headings in the table of contents:

BPD Engages in a Pattern or Practice of Conduct That Violates the United States Constitution and Laws . . . .; BPD Makes Unconstitutional Stops, Searches And Arrests; BPD Discriminates Against African Americans in its Enforcement Activities; BPD Uses Unreasonable Force; BPD Fails To Supervise Its Officers' Enforcement Activities; BPD Fails To Adequately Support Its Officers; BPD Fails To Hold Officers Accountable For Misconduct; BPD Lacks Adequate Systems To Investigate Complaints And Impose Discipline . . . .

And that's just a sample.  As you might suspect, there is a pervasive theme of discrimination against and unfair treatment of African Americans by the Baltimore police.  For instance, from the executive summary:

[I]n Baltimore, . . . law enforcement officers confront a long history of social and economic challenges that impact much of the City, including the perception that there are “two Baltimores:” one wealthy and largely white, the second impoverished and predominantly black. Community members living in the City’s wealthier and largely white neighborhoods told us that officers tend to be respectful and responsive to their needs, while many individuals living in the City’s largely African-American communities informed us that officers tend to be disrespectful and do not respond promptly to their calls for service. Members of these largely African-American communities often felt they were subjected to unjustified stops, searches, and arrests, as well as excessive force. 

What time period is covered by this Report?  It's very unspecific.  The Report is all written in the present tense.  The clear impression conveyed is that they are talking about both right now and at all recent times.   

Well, this is quite the disaster.  So who is responsible?

Funny, but somehow they seem to have omitted the answer to that question from this Report.  Let's consider some of the possibilities:

• There's the Mayor.  The Police Department ultimately reports to her.  That would be Stephanie Rawlings-Blake, Mayor since 2010.  Of course, she is an African American.  So was her predecessor, Sheila Dixon (2007-2010).  Before that it was Martin O'Malley (2000-2007) -- white, but serious left-winger to make Bill de Blasio look small time.  And before that, Kurt Schmoke (1987-1999), another African American.  All of them Democrats, of course.  (Baltimore hasn't had a Republican mayor for over 50 years.)  Anyway, you won't find any of these names, let alone race or party affiliation, in this Report.
• How about the police commissioners?  The current guy, Kevin Davis, is white; but he only got the job in October 2015, after the Freddie Gray fiasco, to clean up the perceived mess.  On whose watch did Gray's death occur?  That would be Anthony Batts (2012-2015), an African American.  Here's a review of Batts at the Marshall Project: "Batts came to town as the darling of progressive police reformers, who were excited by his PhD in public administration and the enlightened views he honed researching at Harvard rather than his record as an urban police chief. But in Baltimore he was regarded by the rank and file as a carpetbagger and an egghead — misgivings that turned to open hostility after scores of officers were injured in riots following the death of Freddie Gray in police custody."  Going  back before Batts, the police commissioner was a guy named Frederick Bealefeld (2007-2012), who was white; and before that, Leonard Hamm (2004-2007), who was black.  Anyway, you won't find any of these names in this Report either.
• But maybe the Baltimore police force is overwhelmingly white, in a city that is majority black.  Actually not.  Again, although this Report harps at length on alleged racial discrimination by the Baltimore police, you won't find this information here.  But the Daily Caller compiled some statistics in May 2015, immediately after Gray's death:  

  Here’s what the data shows about the racial makeup of Baltimore’s finest:

  * Of the 2,745 active duty police officers in the department — 1,445 — more than half are African-American, Hispanic, Asian or Native American, according to data provided by the Baltimore police department to The Daily Caller News Foundation.

  * Four of its top six commanders are either African-American or Hispanic.

* More than 60 percent of the incumbents at the highest command levels hail from minority communities.

* Among the 46 Baltimore police officers who hold the rank of captain and above, 25 are from ethnic or racial minority groups. That constitutes 54 percent of the command leadership.

If you are looking in this Report for some explanation of why a series of African American mayors, African American police commissioners, and a majority-minority police command structure, not to mention the police rank-and-file, systematically discriminate against African Americans, you will not find it.

So could it be that there has been this completely pervasive misconduct going on totally in the open for years upon years and absolutely nobody bears any responsibility?  I would only point out that in a world where the Justice Department claims the right and privilege to tell the Baltimore police department how to behave, then the Justice Department itself must accept the responsibility for the situation.  After all, these problems all occurred right under the nose of the feds, in the nearest city of any consequence to Washington, just about 40 miles up the road.  If you have the right to tell them what to do, then you bear the responsibility if they didn't do what you think they should have done.  (Oh, the Attorneys General for the past almost-8 years have also been African Americans, not to mention the President.  So?)

UPDATE, August 12:  Somehow I had missed that the New York Times ran two big articles yesterday on this Report.  The bigger one, starting on page A10, is headlined "Police Bias Found in Baltimore, and Many Ask What Took So Long."  Excerpt:

“Mere words by officials mean little when it’s people on the ground who are living with these material conditions every day,’’ said the Rev. Heber Brown III, a Baptist pastor who was among a small group of community leaders who met privately last year with Attorney General Loretta E. Lynch. “From the streets to the suites, everybody is skeptical and furious.’’  In one stark statistic after another, the department’s report helped validate the experiences of Mr. Brown, Mr. Kelly and countless others in poor African-American neighborhoods who regard the police as an occupying force.    

So perhaps they might at least ask the question of who here bears any responsibility?  Really, don't be ridiculous.  With one exception, they don't so much as mention the name, race or political affiliation of any individual in a position to bear responsibility, whether (starting from the top) it's Obama, Holder, Rawlings-Blake, Batts, or anyone else in the police command structure of Baltimore at the time of the Gray incident.  The one exception is Rawlings-Blake, whose name they mention, but not race or political affiliation.  And responsibility?  Don't be silly.  She is merely said to have "accepted the findings."  And don't forget, she just got rewarded with the honor of chairing the Democratic convention!

Why Capitalism Works And Socialism Doesn't: Arbitrage

If you can buy something cheaply and immediately turn around and sell it for more, chances are you will do it.  Why shouldn't you?  Is there something wrong with that?  This is completely normal and pervasive human behavior.  This behavior is also a source of a very large percentage of the wealth in wealthy countries where such behavior is permitted.  It is also the reason why, in market economies, comparable things almost always trade for very comparable prices.  

But of course, in a world of socialism -- that is, where a government attempts to create perfect fairness and justice by means of coercive distribution -- arbitrage poses a mortal threat.  Do you understand why?  If not, there are some good examples coming out of Venezuela, not to mention the ongoing saga of "affordable housing" here in New York.

At the Washington Post's Wonkblog on Monday, a guy named Matt O'Brien reports on the ongoing disaster in Venezuela.  The title of the article is "Venezuela's death spiral is getting worse."   I will give serious credit to Mr. O'Brien for actually doing some investigation of what is causing Venezuela's problems.  (Contrast that to the likes of idiots from such outlets as the New York Times, CNN and Time Magazine, cited in my posts from May here and here, who purport to give reasons for Venezuela's economic disaster without ever mentioning socialism, price controls, nationalizations, or anything else of significance.)

Venezuela of course has made a run at creating perfect justice and fairness by the device of price controls.  Included among items with controlled prices are most consumer staples, as well as the currency itself.  As a result, the consumer staples with controlled prices have completely disappeared from stores.  As to the currency, you can't buy anything with a bolivar, so you need to get dollars; but you can't get dollars at the controlled price unless you are somehow connected.  On the other hand, if you are importing, say, butter, and you have the right connections, you can get the dollars.  Yet somehow butter still does not appear in the stores.  The government blames "hoarders" -- but is someone really hoarding tons of butter somewhere?

O'Brien describes how this works in the real world.  And really, it's extremely simple.  It's just people engaging in obvious arbitrage that presents itself.  For example, as to butter, O'Brien links to this 2014 article from The New Republic.  The essence is this:  Suppose you get the government license to import butter, and are given the right to buy enough dollars to do it at the official rate of about 7 bolivars to the dollar.  So you buy a dollar for 7 bolivars.  Now, are you actually going to buy butter with that dollar, or are you going to turn around and go to the black market, where you can now get well over 1000 bolivars for that dollar?  Probably, you'll buy a little butter to cover your tracks, and bolivars with the rest.  From TNR:

If you can persuade the state to sell you $17 to import butter, you'd have to be insane to spend it on five kilos of butter that you can only sell for 545 bolivars, because that same $17 in the hands of your local black market currency operator will buy you almost 1,450 bolivars. [It would be far more bolivars today.] 

As it turns out, there's a simple fix: fudging the receipt. Say you import 1 kilo of butter—just get your foreign supplier to give you paperwork showing you've imported 2 kilos. The first $17 will buy 5 kilos of butter and net you a modest 545 bolivars. But the second $17 you can sell on the black market, for 1,450 bolivars. In this example, 73 percent of your income comes from the currency deal rather than the sale of butter. . . .

It's easy to see how the actual butter becomes an afterthought in a deal like this. The more the official and black market exchange rates diverge, the bigger the profits to be made out of dollar arbitrage, the more onerous the clean part of the business becomes. In the end, "butter importers" are no such thing: They're currency arbitrageurs, with a loss-making side-business in butter imports.

By the way, the divergence between the official and black market exchange rates has widened greatly since 2014.  Of course people more and more spend their time arbitraging the currency rather than distributing butter (or anything else).  People are not stupid.  A version of the same process goes on with every price-controlled product in Venezuela.

As usual, you would think that here in the U.S. we would not succumb to such idiocy; but you would be wrong.  Fortunately, we don't have much in the way of a price-controlled economy.  But New York housing is certainly one large exception.  We have about a million apartments subject to what is called "rent stabilization," plus we have the big new so-called "affordable housing" initiatives of our genius Mayor de Blasio, whereby small numbers of low and mid-income people win lotteries and are awarded the lifetime rights to apartments at as little as 10% of market rents.

Would anybody be so crass as to think of arbitraging these opportunities?  Of course, that's what makes Airbnb such a hit in New York.  Needless to say, our legislature is outraged at tenants handed subsidized and discounted apartments and turning around and making a profit for themselves.  The Wall Street Journal today reports that a bill has passed both houses of the New York legislature that would impose criminal penalties of up to $7500 on any Airbnb host who advertises rentals of fewer than 30 days in a New York multi-family building, unless the tenant will be present during the rental.  The bill currently awaits the signature (or veto) of Governor Andrew Cuomo.  Well, this kind of economic thinking sure works in Venezuela!  But somehow, literally everyone in New York thinks this "affordable housing" thing is a good idea.    

"A Culture Of Cheating . . ."

The Business Section of today's Sunday New York Times has a very long article on the situation in Puerto Rico, headlined "A Surreal Life On The Precipice In Puerto Rico."  For those who haven't been following the situation, Puerto Rico has gotten itself into a situation of a way unsustainable debt load (over $70 billion for a population of only about 3.5 million with a per capital income only about half that of Mississippi).  On June 30 the feds approved a quasi-bankruptcy law for Puerto Rico, by which it can restructure its debts under the supervision of a federally-appointed control board.  The next day, July 1, Puerto Rico defaulted on a debt service payment of $2 billion, with lots more defaults to follow.  The Times article reports on how things are going down there amidst the big debt crisis. 

In something unusual for Pravda, the article reports more or less straight on the end game for a jurisdiction that has followed all the official prescriptions of Krugmanomics -- i.e., take on all the debt anyone will lend to you and use the money for blowout spending programs thought to "grow the economy" and help the poor.  Here's the short version of what happened: the economy didn't grow, the poor are still poor,  taxes went up beyond what the economy could support, and much economic activity was either driven off the island or underground.  Oh, and the debt can't be repaid.

And here's the most remarkable part about this article:  It reports more or less honestly on the pervasive culture of corruption and stealing that has been brought about by all the government (federal and local) handout programs in Puerto Rico.  I say this is remarkable because back here in New York Pravda has what can only be an absolute rule that prohibits any mention of the pervasive corruption in the handout programs in its own home jurisdiction of Manhattan, where we are supposed to believe that close to 300,000 people live in "poverty" in the richest county in the country despite tens of billions of dollars of annual federal, state and local handouts supposedly designed to fix the problem.  Anyway, contrast that to this reporting on Puerto Rico.

For example, we are introduced to Dalia Ramos, a local Spanish teacher who lives in a public housing project in Puerto Rico which she is "dying" to leave.  Why?  Because of "the crime and a culture of cheating."  Tell us about the "culture of cheating" Dalia: 

The projects were built to house the working poor, like [Ms. Ramos], but over time they have cultivated a beat-the-system culture, in which working off the books and lying about your income means getting more money from Washington.  “I have all these people around me who don’t pay anything,” she says. “They just hang out.”

Ms. Ramos recounts to the Times reporter that many of her neighbors not only pay no rent at all to live in the project, but have what they call "negative rent" -- where the government actually pays the tenant to live in the apartment.  How could that possibly happen?  Easy!  First, when asked, a tenant can simply say that his or her income is zero:

[P]eople lie about their incomes, seeing it as the only way to protect themselves.  Federal Housing and Urban Development records say that 36 percent of the families in Puerto Rico’s housing projects have incomes of zero.

And, of course, the geniuses from HUD take the word of the tenants as to what their income is, and proceed to calculate the rent without the slightest hint of skepticism.  Now, here's how your rent is calculated:  You must pay 30% of your income, but you are entitled to a utility allowance of approximately $65 per month.  You say your income is zero?  Then you owe nothing, plus you are entitled to a $65 check!  And finally, why bother to pay the $65 over to the electric company?

Some people pocket the money and stiff the Electric Power Authority, a government monopoly with a bad track record for bill collections.

Puerto Rico has just in the last month embarked on its program to restructure things and get a fresh start.  Will they make a dent in the culture of pervasive corruption and cheating described in this article?  That kind of culture is a very hard thing to break.  

Meanwhile, back here on the mainland, we don't have any comparable pervasive corruption and cheating in our handout programs, do we?  Well, not that anyone will report on as such.  But what we do have is a situation of gradual changes in the food stamp program that seem to be leading to some ugly revelations, like when you turn over a rock and find some creepy bugs crawling around.  As you may know, during the recent recession, the eligibility requirements for food stamps were loosened to remove the requirement that able-bodied adults without children needed to work to receive the benefit.  But more recently, the work requirements for childless able-bodied adults have gradually been reinstated, at least in certain states.  From the Daily Signal on August 1, here are the results in three states that reinstated work requirements:

Maine, one of the most proactive states in reinstating work requirements for food stamps, saw its caseload of able-bodied adults without dependents decrease by 80 percent within just a few months after re-establishing the work requirement.  Kansas has experienced similar results, seeing its caseload decline by 75 percent. Accompanying the decline in caseload has been an increase in employment and earnings for able-bodied adults without dependents. . . .   Indiana reinstated work requirements in July 2015. Six months after reinstating these requirements, the state’s caseload of able-bodied adults without dependents decreased by 68 percent.

Now, one way of looking at this is that people who were not previously required to work went out and got jobs for the first time.  Sure.  I'm sorry, but far more likely is that most of these people were working all along and just not reporting it.  Once they were required to report the job in order to continue the benefit, they reported the job.

Meanwhile, one of the things that everybody seems to be worrying about these days is that the economy has gone into permanent slow-growth mode.  The current recovery is the most sluggish since World War II, and "growth" in the most recent reported quarter was a paltry 1.2%.  In considering the various factors that might have brought about such results -- from regulatory explosions, to suppression of fossil fuels, to high taxes, to Obamacare, and plenty more -- don't forget about the effect of handout programs in causing pervasive cheating on the reporting of income.  How much effect does such cheating have on the numbers for things like size and growth of the overall economy?  Nobody knows of course.  Once cheating becomes pervasive, the government numbers become worthless.