Earlier this month, we nominated EPA Administrator Lisa Jackson for the First Economic Darwin Award. What follows is her very lengthy award citation. In red you see the excerpts from the entirety of the OpEd she wrote in the December 2nd edition of the Wall Street Journal. Everything else is my commentary. Despite the length of this post, it really ought to be triple its length to really do it any justice. Here goes:
The EPA Turns 40
‘Job-killing’ environmental standards help employ more than 1.5 million people
(P1) Forty years ago today, the U.S. Environmental Protection Agency opened its doors, beginning a history of improvements to our health and environment. We reach this milestone exactly one month after the midterm elections strengthened the influence of groups and individuals who threaten to roll back the EPA’s efforts.
We need only comment on the first sentence. In this sentence, Ms. Jackson asserts that before the passage of the National Environmental Policy Act in 1970 and the consequent founding of the Environmental Protection Agency there were no improvements to be found in the health of Americans or to their environment. Not only is this claim misleading, it is a falsehood of titanic proportions.
Let’s examine the health record. If we are to take Ms. Jackson at our word, then it must be the case that before 1970, American life expectancy must have been falling, that injury rates and morbidity rates must have been increasing, that physical quality of life must have been deteriorating, that disease incidence was on the rise, and so on. The chart below depicts life expectancy changes since 1750 across a range of countries including the US. What a wonderful job the EPA must have been doing in India and France! What a terrific job the EPA did between 1750 and 1950, when life expectancy in the US increased by 17 years (other estimates have US life expectancy at 30 years in 1750, this table is extracted from Kling and Schulz as are a few others below). The point is that the steady march of life expectancy improvements began when the Industrial Revolution began (for example, the global average life expectancy at the time Jesus was born (you know, the first Christmas) was roughly 25 years old. By 1750, life expectancies around the world “grew” to … 25 years old. It wasn’t the EPA which began in 1750, but rather a semblance of modern capitalism.
And it is just not that we are living longer, we are living healthier and dying shorter too. And these trends were accelerating long before the EPA came into existence. The table below begins to get at the issue.
And I guess by the same scientific method Ms. Jackson is relying on, the EPA will take responsibility for the increase in cancer incidents since it too the reins in 1970 (data from Reason)?
After all, the EPA was started right at the beginning of this chart, and look what has happened to cancer incidence since then! And my god, it has been worse for men. The EPA must be full of a bunch of man-hating cancer-causing maniacs! Stop the madness now! For my own sake, I am guaranteed to get 100 e-mails telling me that this comment is dumb. Indeed, that was the point. This whole internet as a medium of exchange thing is not without cost.
Maybe the EPA is responsible for changing global weather patterns? The global annual death rate from weather related natural disasters declined by NINETY-NINE percent between 1920 and 2008. In 1920 the death rate was approximately 242 per million people killed and it is now only 3 per million. Surely this pattern began its retreat before 1970. And folks should recognize that more severe weather is detected today than in the past, and it is arguable that more people are in harm’s way today than in the past. These declines have not exactly occurred because we have done things to make weather less severe – and there is an extremely important economic lesson in that which seems to be lost on Ms. Jackson.
Maybe the EPA made its way into the workplace too? After all, 100 years ago, the death rate on the job was over 61 deaths per 100,000 workers, today that rate has fallen to less than 4 per 100,000. The BLS data indicate that a good portion of this decline occurred before 1970. Great work EPA!
What about the environmental record, the second of Ms. Jackson’s claims?
Let’s assume she wants to totally ignore the massive improvements to our micro-environments that have been accomplished both through the advance of capitalism and through wise government investments in public health and sanitation measures. Those improvements are the major reason life expectancy has shot up across the globe and in the US long before the EPA was founded. Data on macro-environmental quality prior to 1970 is hard to come by. But there is considerable reason to believe that many indicators of environmental quality began their steady improvement long before the EPA got involved. For example, a good amount of empirical research has demonstrated, at least for a number of pollutants, the existence of an Environmental Kuznets Curve (EKC). Briefly, what the idea behind the EKC is that since environmental quality is a normal good with a very high income elasticity of demand, as our incomes increase we dedicate larger shares of our additional income to environmental improvements, as a matter of choice. And since global growth has been accelerating since the beginning of the Industrial Revolution, and as the share of our personal spending budgets taken up by the necessities of food, shelter, and clothing are at all time lows, we have much more disposable income to spend on other goods such as environmental quality. The empirical research on when the EKC “turns over” (i.e. at low income levels, increased development leads to degradation – think for example of how the poorest people of the world heat their homes and cook their food over open wood fires, but at high income levels additional growth leads to improvements in environmental conditions) shows that it comes are very low levels for many common pollutants, turnover levels that would have been achieved over a century ago in the United States. To cite one example:
“… Shafik and Bandopadhyay … found a consistently negative relationship between income and all indicators of environmental quality they examined. As income increases from low levels, quantities of sulfur dioxide, suspended particulate matter, and fecal coliform increase initially and then decrease once the economy reaches a certain level of income. The turning-point incomes in (wintercow edit, they did 1985 dollars)) 2010 dollars for these pollutants are $7,400, $6,400 and $2,800 respectively.
The former two income levels were reached by the year 1900 in the US, and the latter by roughly 1800.
Remember too that as our economies expand and grow, not only does the share our consumption from services increase (with its limited environmental impact) but so too have we seen our reliance on energy and other materials to generate a particular amount of GDP. The following chart from Mark Perry is but one of many illustrations:
I don’t think the EPA is going to claim responsibility for shifting the U.S. Economy from an agricultural one to a manufacturing one (which happened in the 19th century) and from a manufacturing one to a service one (a trend well underway long before 1970). I also do not think Ms. Jackson hopes to take credit for inventing the idea in 1970 that producers want to make profits. Why do I say this? Because producers wish to economize on the use of all materials, including physical inputs and energy. It does not take the EPA to convince firms that they can get richer by “exploiting” their inputs to a greater extent, does it?
The history of common-law protections for the environment also shows that prior to 1970 the common law did a remarkably good job at disciplining polluters, and there is every reason to believe that a strong common law tradition helped Americans realize their preferences for environmental quality once their incomes allowed them to turn attention to it. Common law also has a record of preventing pollution from happening in the first place, especially localized point source types of pollution. For a terrific work on this tradition, see Roger E. Meiners and Andrew P. Morriss, eds. (2000). Common Law and the Environment. Roman and Littlefield. They demonstrate there how a very long history of environmental controls has been ignored by comments like the one above from Ms. Jackson.
Before moving on, let me state for the record that there is no doubt that environmental policy since 1970 has done a good deal to improve air and water quality, and indeed these improvements have improved life expectancy and morbidity. But this does not mean that such improvements were not happening before it, that the EPA is the sole reason we have seen the improvements since, nor that the EPA has accomplished these goals in a reasonably efficient, fair, or just matter. Let’s move on.
(P2) Last month’s elections were not a vote for dirtier air or more pollution in our water. No one was sent to Congress with a mandate to increase health threats to our children or return us to the era before the EPA’s existence when, for example, nearly every meal in America contained elements of pesticides linked to nerve damage, cancer and sometimes death. In Los Angeles, smog-thick air was a daily fact of life, while in New York 21,000 tons of toxic waste awaited discovery beneath the small community of Love Canal. Six months before the EPA’s creation, flames erupted from pollution coating the surface of Cleveland’s Cuyahoga River, nearly reaching high enough to destroy two rail bridges.
I do not wish to get into the politics here either. But do we really want to place our faith in a leader who vilely assumes that since someone is in the opposite political party as her, or that perhaps values property rights and the rule of law, or has a different vision for how the environment might be protected that they want to defile our environment? Does she think for example that Rand Paul gets pleasure thinking about breathing in dirtier air in DC, or drinking foul water in Kentucky? This is the same sort of nonsense that “social justice” practitioners pull when folks try to propose reforms that might actually help the poor and also do less damage to the economy. For many, intentions are all that matters. And I am not even sure that is a fair assessment of what is going on.
What about her claims on pesticides? Nonsense.
Fears began to emerge in the 1950s that chemicals caused cancer – so much so that people refused to believe that smoking was sole cause of lung cancer or even only cause. The Rachel Carson wrote the groundbreaking Silent Spring and in it she wrote, “DDT will cause approximately 100% of the human population to be wiped out from a cancer epidemic in one generation.” (UPDATE: she apparently did not say that, see here for more) Millions of young children grew up in fear of such things. Paul Ehrlich wrote the year after the EPA was founded, “Individuals born in 1971 and exposed to DDT since before birth may well have shorter life expectancy than if DDT never existed … The US life expectancy will drop to 42 years by 1980 due to cancer epidemics”
What Actually Happened?
Except lung cancer, both cancer incidence and mortality fell by 16% from 1950 to 1997, with the decrease happening well before the EPA was founded. As we showed earlier, life expectancy of individuals in the US born after 1945 is startlingly high. As Matt Ridley reminds us in the Rational Optimist, “The search for epidemics from cancer caused by chemicals has been entirely in vain … chemical pollution causes less then 2% of all cancers … cabbage has 49 natural pesticides in it, half of which are carncinogens … a single cup of coffee contains more carcinogenic chemicals than a YEAR of pesticide residual in food.”
But Ms. Jackson not only has these fear facts wrong (i.e. just saying that chemicals are lying around says nothing about whether they are damaging us), she also completely overlooks the benefits that these chemicals may be doing for human-kind. Her approach makes it seem that capitalists just open factories for the express purpose of dumping chemicals on our fields, in our rivers and into our air. Is it possible that the net effect of these chemicals (even if they caused massive cancers, which they do not) is positive? After all, DDT has a fairly stunning ability to kill malaria and prevent massive epidemics of typhus and is estimated to have saved a half-billion lives in the 1950s and 1960s, again before the EPA came onto the scene. (And no, this is not to say that things like DDT do not cause harm.)
Or another example of our irrational fears. A book in 1996 called Our Stolen Future argued that sperm counts were falling, breast cancer increasing, brains were malforming and fish were changing sex from synthetic chemicals that act as “endochrine disruptors.” Matt Ridley again demonstrated that none of that was found to be true.
On Smog, the EPA can take credit – but in a future post we’ll see what cost this came out (as a sneak preview: cozied up crony corporation was a big supporter of cleaning up Smog).
But perhaps most damning of all the things that Ms. Jackson claims is the idea that “Love Canal” is some sort of shining example of what happens when markets run wild. You think you’d be careful when making an argument like this to millions of people. In fact, “Love Canal” is perhaps the perfect case study of how government activity wrecks the environment, and then gets rewarded for doing it. David Henderson tells the amazing story in his Joy of Freedom.
The Cliff notes of the Love Canal story go like this:
- The Hooker Chemical Company dumps toxic chemicals into a site in a sparsely populated area of New York State. The company chose this site after careful investigation had shown that the soil was impermeable clay and that, therefore, the chemicals would NOT seep into ground water and harm people.
- The US Army also dumped toxic waste in that site during and after WWII, and the local city government dumped refuse into the site.
- Then, in 1952, the school board in the city where the toxic waste was buried threatened to use its eminent domain power to take the site from the company. The school board made clear that its goal was to build a school on the site.
- Rather than fight the action, the company gave in and offered to sell the land to the school board for one dollar.
- Hooker Chemical Company acknowledged the presence of the waste in the property deed.
- School officials ignored this. In March 1952, a Hooker company official escorted school board officials to the site and, with them present, made test borings into the protective clay cover to convince school board officials that chemicals really were there.
- Yet in August 1953, the school board unanimously voted to remove 4,000 cubic yards of fill from the waste site to complete the grading of another school site. The school board went ahead and built the school, which opened its doors in February 1955.
- Then in 1957, the school board considered trading chunks of the property to two developers in exchange for some other land and $11,000 in cash. The chemical company that had originally owned the land, hearing about the proposal, sent its attorney to the board meeting where the proposal was discussed.
- The city government did not listen to the recommendation not to sell the land. During the period that the land sale was contemplated, city workmen were busy constructing a sewer that punctured the walls of the site and its clay cover. They were doing this even though articles in the local paper at the time were regularly warning that the construction was “dangerous” and “injurious.”
- Then, in 1978, a reported named Michael Brown began reporting health problems for residents of the areas that were apparently connected with the release of the toxic waste. The issue soon got national attention, and President Carter declared the area a national disaster.
- So, what happens in the face of this massive government screw up? A reward of course – a dramatic expansion in the funding and power of the EPA. Love Canal was the spark for the passing of the Superfund law, which really should be called the SuperPork law. Recent research has demonstrated that rather than the toxicity of a cleanup site being the largest determinant of what Superfund sites get cleaned up, the contributions of Construction Political Action Committees explain the selection better.
What of the flaming Cuyahoga? Maybe it was due to some angry Cavaliers fans anticipating the departure of LeBron James? One might profitably ask why the river was polluted in the first place. Again another story for another post.
(P3) These are issues that are above politics. The last 40 years have seen hard-won advances supported by both sides of the aisle, and today the EPA plays an essential role in our everyday lives. When you turn on the shower or make a cup of coffee, the water you use is protected from industrial pollution and untreated sewage. In fact, drinking water in Cleveland was recently shown to be cleaner than a premium brand of bottled water. You can drive your car or catch a bus without breathing dangerous lead pollution. At lunch, would you prefer your food with more, or less, protection from pesticides?
Above politics? What is this article all about? We’ve addressed much of this above. Again, not only do we want to ask, “at what cost,” and “to whose backroom benefit,” and so on.
(P4) The most common arguments against these protections are economic, especially as we continue to recover from the worst downturn since the Great Depression. Fortunately, the last 40 years show no evidence that environmental protection hinders economic growth. Neither the recent crisis nor any other period of economic turmoil was caused by environmental protection. In fact, a clean environment strengthens our economy.
Nice to see again how we are above politics! Just gotta throw in that line about the worst downturn since Julius Caesar. Now, what about the idea that there is no evidence that environmental protection hinders economic growth? Who ever claimed that environmental protection caused the recession? At best, the small body of research that has been done suggests there is no relationship between the costs of environmental protection and state level measures of economic growth. But generally pollution control costs now make up over 2% of our GDP, exceeding $320 billion in direct and indirect costs. This is a rather large amount, and while I am not familiar with a study looking at the total amount, microanalyses of specific EPA policies suggest that we could get the same environmental improvement for considerably lower costs than we pay for now. Good sense should tell you why – it costs the government twice as much to produce anything as compared to the private sector, and the direct regulatory approach and the special interest favorable treatment in EPA policy tells us that there exist far more efficient ways to achieve these reductions. Estimates by Brookings Institution suggest that moving to a complete system of taxes/permits/market instruments would save as much as 1% of GDP on pollution reduction. In other words, we would get the same environmental outcomes, but instead only spend 2% of GDP to get it, a savings of $145 billion in aggregate, or about $470 per person in America!
(P5) Special interests have spent millions of dollars making the case that we must choose the economy or the environment, attacking everything from removing lead in gasoline to cleaning up acid rain. They have consistently exaggerated the cost and scope of EPA actions, and in 40 years their predictions have not come true.
Well, I guess if Ms. Jackson says it, it must be true. But of course, when it comes to EPA programs, sometimes the government itself says it! In implementing the 1990 Clean Air Act, the EPA instituted what was at the time (and even today) regarded as the most successful demonstration of the use of a permit scheme to clean up a toxic pollutant, Sulfur Dioxide.
Economist Robert Crandall writes about that act that:
”The new procedure for obtaining permits is more heinous than anything imagined by the Russian Gosplan. Not only must all major sources of pollution obtain permits (and “major” is not very large at all), but any change in process resulting in a change in the nature or magnitude of this pollution may be undertaken only after obtaining a change in the environmental operating permit. This requirement will handicap pharmaceutical, chemical, and electronics companies, which must move quickly in response to changes in market conditions.”
- The law required a large annual cut of SO2 emissions to reduce acid rain (see below for more on that “threat.”
- But, here is a strange piece of information Ms. Jackson leaves out in her wet toilet paper toss on the wall of an article … the federal government’s OWN $570 million study (the National Acid Precipitation Assessment Program) found, “no evidence of widespread forest damage from current ambient levels of acidic rain in the US”
- Of course, Congress, President Bush and the EPA ignored the study. It raises the question of why the study was done at all (I harken to the 2010 deficit reduction commission). So, we didn’t seem to need to reduce SO2 all that much.
- But hey, the EPA demonstrated that they respect markets and can learn how to harness their awesome power to achieve an inefficient outcome in as efficient a way as possible. Hip-Hip-Hooray for the EPA.
And as others have pointed out (and perhaps Ms. Jackson is proud of this) acid rain is a nice dress rehearsal for Global Warming. Acid rain was atmospheric, global and with fossil fuels as villains … “sulphuric acid and nitric acid made from smoke belched from coal power plants, fell on lakes and forests in Canada, Germany and Sweden and devastated them … in the nick of time laws passed to limit emissions and ecosystems slowly recovered.” At the time, in 1984 a German magazine reported that 1/3 of German forests were dead or dying, that all conifers would be gone by 1990, and all forests would be gone by 2002. ALL of them. The New York Times said that half of all lakes were becoming dangerously acidified … there was a “scientific consensus” and it was time for action, not further research. Some researchers argued that American trees were dying at the rate of 100%!
Well, what hat happened with acid rain? Biomass in European forests increased in the 1980s during the time when unconstrained rain was supposed to be killing them … and this was BEFORE laws were passed to limit emissions. Biomass continued to grow in the 1990s. It turns out that nitric acid is actually a fertilizer which increases the rate of growth of trees.
The report I mentioned above for the US found “no evidence of a general or unusual decline of forests in the US or Canada due to acid rain … and no case of forest decline in which acidic disposition is known to be a predominant cause.” In fact, the EPA at first tried to prevent Congress from reading the results of the study, even though Congress funded it. Despite the pressure on these scientists to find catastrophe, they did not do so. Sound familiar?
In reality there were of course small incidences of damage due to local pollution and to pest infestations, but there was no massive killing of trees due to acid rain. What about mountain lakes? Some of them were becoming more acidified due to SO2 and the permits did some good here. But even this harm was massively overstated. Rather than half the lakes in the Northeast being affected, it turns out to have been only 4%.
So I am not quite sure what predictions Ms. Jackson is referring to above, but the warnings of economists are not isolated to things being more costly than they have to be. Many of us warn that we are sometimes intervening in cases when there is no reason, and what the power of special interests to craft legislation in their favor often turns what could have been a good idea into a disaster for the unwashed masses.
(P6) We have seen GDP grow by 207% since 1970, and America remains the proud home of storied companies that continue to create opportunities. Instead of cutting productivity, we’ve cut pollution while the number of American cars, buildings and power plants has increased. Alleged “job-killing” regulations have, according to the Commerce Department, sparked a homegrown environmental protection industry that employs more than 1.5 million Americans.
In one paragraph we have the post-hoc fallacy and a case of the most massive broken window fallacy that I need to think of a new name for it. So yes, GDP has grown by 207% since the EPA was founded in 1970. It also has grown by over 1974, the year I was born. So clearly the presence of Wintercow is not harmful to growth, and indeed his existence promotes growth. And as for the broken window? Ms. Jackson is making an argument that goes something like this: you should totally ignore the fact that environmental regulations cost Americans over $400 billion per year (which by the way MAY be justified, but these are costs and not benefits of achieving some desired result). Those costs could not possibly reduce employment, raise consumer prices, and slow economic growth, even a little bit. And you should then count the millions of green jobs that have been created in response to these regulations, and directly to enforce these regulations, because you know, jobs are a benefit, and not a cost. This is such a massive fallacy that I’ll have to dedicate several future posts to it. My Environmental Economics students were subjected to them, and soon you will be too.
(P7) Even in these challenging times, the EPA has been part of the solution, using Recovery Act investments in water infrastructure, clean-diesel innovation and other projects to create jobs and prepare communities for more growth in the years ahead.
Oh yes, this is exactly how the EPA helps with water infrastructure. See the comments for P6 and the forthcoming posts on green jobs and subsidies. Would Ms. Jackson like to show us how many Recovery Dollars EPA has spent? Would she like to tell us how clean-diesel innovation prepares communities for more growth? And wow, “other projects” sound so … totally … awesome.
(P8) The EPA’s efforts thrive on American ingenuity and entrepreneurship. Holding polluters accountable sparks innovations like the Engelhard Corporation’s catalytic converter, which pioneered the reduction of toxic emissions from internal combustion engines, and DuPont’s replacements for chlorofluorocarbons (CFCs), which protected the ozone layer while turning a profit for the company. One executive told me that the EPA’s recent standards for greenhouse gas emissions from cars will help create hundreds of jobs in a state where his company operates—a state whose U.S. senators have both opposed the EPA’s authority to regulate greenhouse gases.
I thought it would be impossible to top the Love Canal blunder from above, or the Acid Rain blunder from above – but touting Engelhard for its catalytic converter has to take the cake. This is EXACTLY the problem with the EPA and Congress being taken over by corporations. So here is time for a simple economic lesson. Suppose we have a problem with cars spitting out too much toxic emission. We have two general ways to deal with it. First, we can pass and enforce either an “output standard” or an “input standard.’ Briefly, what an output standard does is institute a rule that says, “auto emissions must fall by x%.” An input standard, which is what the Engelhard example is, says something like, “yes, we want emissions to fall by 10%, but the way we are going to make you do this is that every single car produced must install a catalytic converter.” Can you see the difference? An input standard by definition has to be more costly than an output standard. An input standard is a one-size-fits all “solution” to a problem that has potentially many other less expensive and cleaner solutions. For example, there were some cars at the time of this creation that already had emissions levels below what the EPA required … yet they too had to install catalytic converters. And for the dirtier cars, if the EPA merely enforced an output standard, the catalytic converter could have been chosen voluntarily by those manufacturers if in fact it was the tool that reduced emissions for the lowest costs for those car companies. But nope, the EPA and Congress mandate that all cars have to do it. And it just so happens that there is a politically well connected company standing in line to make out like gangbusters once this standard is instituted. What Ms. Jackson calls a success should be viewed as more than embarrassing and wasteful, but it is the very essence of living in a banana republic. And what we get from these wise wizards in Washington is “more!” They remind me of the famous Christopher Walken SNL skit … “more cowbell.” Of course these things create thousands of jobs – at politically favored companies that end up costing us hundreds of millions more. And we never get to see the thousands of jobs and the cost savings that would have been recognized had the czars in DC not done their dance. This is absolute sophistry.
(P9) These attacks are aimed at the EPA, but their impacts are felt by all Americans. Pollutants like mercury, smog and soot are neurotoxins and killers that cause developmental problems and asthma in kids, and heart attacks in adults. We will not strengthen our economy by exposing our communities and our workers to more pollution.
What attacks? And who again is arguing that we all eat some Mercury? Ms. Jackson has slain quite the straw man.
(P10) In these politically charged times, we urge Congress and the American people to focus on results from common-sense policies, not inaccurate doomsday speculations. That is how we can confront our nation’s economic and environmental challenges and lay a foundation for the next 40 years and beyond.
Do I need to provide a history of who is doing the doomsdaying and how successful those speculations have been? Gosh, my blog queue is filling up.
Ms. Jackson is administrator of the Environmental Protection Agency.
Maybe Ms. Jackson just wants to take credit for “raising awareness?” I address that possibility here. We still need to designate an appropriate award for Ms. Jackson. Maybe a trophy depicting a shattered window (made from 100% recyclable materials of course)? Or perhaps I’ll send an e-mail off to Engelhard/BASF to see what they can design for us.