Bacon's Rebellion

At last! Dominion Virginia Power is moving ahead with a pilot program for one of the potentially most effective electricity-conservation strategies available. The power company will test demand-response technology in 2,000 homes in Richmond, Hampton Roads and Northern Virginia this summer, deploying small, programmable communicating thermostats (PCTs) and intelligent load-control switches in approximately 2,000 homes.

In theory, the demand-response solution will allow utilities to respond to rising peak loads by reducing energy usage at critical times. The load management system will send a communication signal to the demand-response devices installed at the home to cycle air conditioners. Additionally, the program allows participating residents to program and control the temperature setting of their home thermostats using the Internet.

Dominion hasn’t released details of the initiative, but Comverge, Inc., developer of the technology, has. (Read the Comverge press release.) You, the readers of the Bacon’s Rebellion blog, find out first because your editor is all seeing, all knowing!

By curtailing peak power demands, the demand-response system potentially could save Dominion Virginia Power hundreds of millions of dollars, maybe billions of dollars, in avoided costs. The key to making it work is making it worth the while of electric consumers to endure reductions to their power supply when they need it most. Will DVP offer them a rate cut? Details to come.

In one of the coolest parts of his new book, “Who’s Your City?”, creative-class guru Richard Florida argues that regions, like people, can have personalities. He identifies five standard personality types — openness to experience, conscientiousness, extroversion (sociability), agreeableness and neuroticism — and, based upon 600,000 survey responses from individuals around the country, plots the responses geographically.

VCU and its President Eugene Trani are coming off very badly in a public relations disaster that is largely to their making. In a recent front page article, The New York Times asked reasonable questions about taking money from Philip Morris USA under provisions that appear to violate even VCU’s rules in terms of research disclosure and academic freedom. But Trani – and the Richmond establishment – obfuscated, giving the school and the region a national black eye.

VCU spokespeople confirm that the language in the so-called “research services agreements” from Philip Morris USA forbade anyone from even talking about the contract. In a creepy stipulation, if the news media even asked questions, they were to be reported right away to the tobacco firm. Even VCU admits that its other “research service agreements” do not claim such stringent language.

Trani says the Times misunderstood and that all is on the up and up. The American Association of University Professors does not agree. Some 15 elite universities have banned tobacco funding altogether. And even when the nation’s No 12 researcher, Duke University, accepted a $30 million grant from Philip Morris to get people to stop smoking, it insisted on tough language that gave it complete freedom over research and the scientific inquiries, unlike VCU.

The research from the VCU contracts will be published after a review for proprietary information from Philip Morris. There may not be a massive erosion of academic freedom in the VCU case. It seems more that a less prestigious school anxious for corporate funding agreed to contract language that a more prestigious school might have refused on principle.

Philip Morris is what it is – a rich, secretive company that makes deadly products and is not afraid to throw its weight around. VCU is what it is, a third tier school. Trani and VCU have some soul-searching and some answering to do, especially since they hope to boost the school’s R&D at the Virginia Biotechnology Research Park, heavily funded by Philip Morris. Sleazy and secretive just isn’t the way to go. Read the column in Bacon’s Rebellion.

The June 2, 2008, edition of the Bacon’s Rebellion e-zine is now available for viewing. You can read it in all of its original splendiferous glory here, and you can sign up for a free subscription here. Or, you can simply read the current sampling of column here:

Personalities and Prosperity
Ever wonder why New York is full of neurotics and L.A. full of surfer dudes? In his latest book, Richard Florida suggests that regions, like people, have personalities — with big implications for prosperity.
by James A. Bacon

Riding the Tiger
Many citizens, abetted by the MainStream Media, are clinging to oil and autonomobile dependency to the bitter end. A dismal reality of ever-climbing energy awaits them.
by EM Risse

Time for Systemic Reform
Crafted for the industrial, post-World War II era, Virginia’s government institutions are failing. More money won’t work. Tinkering won’t work. We need systemic reform.
by Chris Braunlich

Give Charters a Chance
The Richmond school board has just approved the state’s fourth charter school — a rare victory over political forces that sacrifice children’s welfare at the altar of left-wing ideology.
by Norman Leahy

VCU and the Evil Weed
VCU President Eugene Trani blew Richmond ’s reputation by going along with a noxious Philip Morris research contract.
by Peter Galuszka

Nice & Curious Question
Big Government in Virginia: Does Size Really Matter?
by Edwin S. Clay III and Patricia Bangs

Sen. John C,. Watkins (R-Chesterfield) said a mouthful when he stated re the upcoming special session on transport:

“I don’t think anyone has put something out there that solves the problem.”

John, my friend – and all politicians are my friends – no one can put something out there if you are looking for facility or finance “solutions.”

Wilfred Owen said it almost sixty years ago, restated it in every book he wrote and repeated it every time we talked during the last decade of his life:

“There are no transport facility (or we would add, transport facility finance schemes) that will solve transport problem – there are only land use (human settlement pattern) solutions.”

THIS JUST IN:

The regular Friday “See My Pigs Fly Higher” convention of Tiger Riders United and the Association of It’s Government’s Fault Conspiracy Theorists has been relocated the Millennium Dome. It is the only venue that was not already booked and is large enough to hold everyone who has RSVPeed via Blogs due to the invitation extended to the League of 12 ½ Percenters. Tip of the Hat to Larry Gross for forwarding this information.

EMR

Virginia metropolitan regions are among the biggest contributors to global warming, asserts a new Brookings Institution study, “Shrinking the Carbon Footprint of Urban America.” According to the study…

Washington: The average resident in metropolitan Washington emitted 3.115 tons of carbon from highway transportation and residential energy in 2005 — ranking it 89th out of the 100 largest metropolitan areas in the United States in energy efficiency. Another way of putting it, Metro Washington residents had the 12 largest carbon footprint per capita. What’s more transportation and residential energy use increased 7.2 percent between 2000 and 2005.

That compared to 2.24 tons of carbon emitted by the average 100-metro resident and 2.60 tons of carbon emitted by the average American from transportation and residential energy.

Hampton Roads: The average resident in Hampton Roads emitted 2.340 tons of carbon from highway transportation and residential energy in 2005. That made it the most energy-efficient of Virginia‘s three major metros, with the 36th smallest carbon footprint in the country. What’s more, the region has been trending positive: Energy use declined 0.86 percent between 2000 and 2005.

Richmond: The average resident in metropolitan Richmond emitted 3.039 tons of carbon from highway transportation and residential energy in 2005, giving it the 15th largest carbon footprint per capita of the top 100 metros. Richmonders can take some consolation, however, that transportation and energy use decreased 2.68 percent between 2000 and 2005.

Commenting upon the Brookings study, Trip Pollard with the Southern Environmental Law Center said:

Virginia has lagged far behind other states in funding energy efficiency, but has taken some initial steps to promote a more balanced transportation program. Governor Kaine has recognized the importance of global warming and the threat it poses to Virginia, including creating the Governor’s Commission on Climate Change.

We must be particularly careful, though, when reviewing new transportation funding, not to advance more oversized, expensive highway projects that would lock us into decades of sprawl, driving, and pollution by subsidizing fossil fuel-dependent development patterns and increasing greenhouse gas emissions.

Here are strategies that Brookings recommends for metro regions to pursue:

• Promote more transportation choices to expand transit and compact development options

• Introduce more energy-efficient freight operations with regional freight planning

• Require home energy cost disclosure when selling and “on-bill” financing to stimulate and scale up energy-efficient retrofitting of residential housing

• Use federal housing policy to create incentives for energy- and location-efficient decisions

• Issue a metropolitan challenge to develop innovative solutions that integrate multiple policy areas

Memo to: James Atticus Bowden
From: Peter Galuszka

Re: Reading Assignment

Okay, I got my copy of Thomas Sowell’s “Basic Economics,” have skimmed through it and am ready to make some points. I know your views are generally the polar opposite of mine, but I think I deserve at least a Gentleman’s C” for my efforts.

Sowell has written a very good, clear primer on economics. I wish I had this book when I took Economics 101 back in 1971. Those were the days when every college intro econ. course had you get the umpteenth printing of Paul Samuelson’s classic textbook. I went to a liberal, northeastern school for which I make no apologies, but I will admit that the mindset was very Keynesian and all the teaching assistants who drilled us on Samuelson really liked government spending. It didn’t matter if the government didn’t have the money, we were told.

Milton Friedman and the Chicago School existed but hadn’t penetrated the Northeastern elites yet. Free market principles, such as those of the Chicago School or at the Hoover Institution which is Sowell’s home, wouldn’t become really fashionable until Margaret Thatcher took power, and of course, Ronald Reagan gained the White House even though he turned out to be the biggest Keynesian of all.

Sowell’s approach favors a free market view, which does have its merits. He is right about issues such as productivity, letting the market make choices and limiting government regulation and interference. Sowell gives the standard Ricardo line that “all boats rise” with free trade and that we are a lot better off with deals like NAFTA than not. Rule of law is critical for unleashing the laws of economics. Communism doesn’t work (like Duh) and he even quotes some Soviet economists and critics such as Nikolai Smelev whom I interviewed as a Business Week correspondent in Moscow back in the late 1980s. Good choice on Sowell’s part.

My criticisms of Sowell’s work are ones of ideology and omissions.

On ideology, he’s very anti-labor and though he’s right that unions are greatly diminished and now represent mostly government workers. However, they still play a needed role especially since corporate loyalty is a thing of the past and management is becoming more bloodless and ruthless. A counterweight is needed and unions can help provide it.

Sowell’s arguments against “rent control” are over the top. He says that rent control in New York and San Francisco has kept apartment prices artificially high. I know about San Francisco but I have lived in New York City and rent controlled-apartments started to become rare about 20 years ago. The reason rents are high is that real estate in specific areas is very desirable and lots of rich executives and creative elites compete for it. This really doesn’t have much to do with rent control.

Sowell doesn’t really tell us much about how executive compensation got way out of whack over the past 15 years or so and has led to plenty of CEO arrogance, hubris, stupidity and criminality. The pay given to CEOs if many times greater than it is for average workers than it was before. Are the today’s CEOs suddenly worth that much more than yesterday’s?

Sowell skimps on the impacts of free trade. Sure it tends to be an overall win-win but try telling that the textile workers in Danville or in Kannapolis, N.C. where 6,000 lost their jobs in one afternoon.

Sowell doesn’t even the topic of dysfunctional living patterns or mass overconsumption that are dear to the hearts of some Baconauts.

On foreign ownership and investment, Sowell rightly points out that this is nothing new. Foreigners held significant shares in U.S. railroads at the end if the 1800s, for example. But what you are seeing is the emergence of “stateless” corporations that are new-fangled entities answerable to no specific country. Major U.S. construction firms linked to the Bush Administration end up headquartered in Dubai. How can you hold these firms accountable to shareholders, the true owners? Global securities regulation is only starting to take hold. Sowell doesn’t talk much about it. Yet decisions made by these companies can kill or create thousands of jobs overnight in Virginia or elsewhere.

I really don’t see any specific application to Virginia any more than to anywhere else. Still, a good book.

The disconnect between the general public and the special interests pressing for taxes for transportation (the Axis of Taxes) seems to widen with each passing day. As the General Assembly gears up for a special session to address transportation funding, according to the latest Commonwealth Poll, transportation ranks only fourth among the topics that the state should make “a top priority.”

Here’s how the issues compared:

Public schools (67 percent of respondents listed as “a top priority”)
Job situation (54 percent)
Environment (49 percent)
Transportation (46 percent)
Illegal immigration (45 percent)
Mental health services (37 percent)

The breakdown did vary by geography. Fifty-nine percent of Northern Virginians rated transportation a top priority, but the figure in Hampton Roads — where the Axis of Taxes is determined to raise billions in regional revenues for regional bridge and highway projects — rated only 43 percent.

I hate to say I told you so, but… I told you so. Back in February, I took note of major shifts in global trading patterns resulting from the declining value of the U.S. dollar. In “The Inscrutable Meaning of the Shrinking Trade Deficit,” I noted that a weaker dollar would translate into greater U.S. exports and lower imports. That’s Economics 101 — not exactly a leap of genius. But I went a step further, writing:

[Virginia] lawmakers are being urged to make massive infrastructure investments based on those global trading patterns. Hampton Roads is undergoing a massive expansion of port capacity predicated on the view that the volume of imported containers, mostly from China, will continue basically forever.

Rising imports implies the need for more trucks — and highway capacity. But a leveling off of imports suggests that the anticipated surge in truck traffic may not materialize. What worries me is that the business-political establishment of Hampton Roads will plunge ahead blindly with its monumental road improvement projects, saddling the region with a massive extra tax burden in order to handle an increase in imports that never materializes.

Now comes this news from the Daily Press:

For the first time since before 2003, annual revenue for the authority’s terminals is projected to fall by nearly 7 percent in 2009, a decline officials attributed to a continuing economic downturn and the specter of losing two major customers to Portsmouth competitor APM Terminals Inc.” …

“If you look at the trend in the last few months, I think our volumes have been down three of the four months,” said Joseph A. Dorto, president and chief executive of VIT. “We look out there, read the newspaper and see what the economy looks like, and we think the rising cost of fuel, energy and food are going to cause people to cut back and not spend as much and buy as much.”

In other words, the shift in global trading patterns is now being felt in Hampton Roads. What’s not clear from the Daily Press story is how much of the anticipated 7 percent decline in container traffic represents a loss of state port business to private terminals in Portsmouth, and how much will manifest itself in a smaller number of trucks running up and down Interstate 64 and U.S. 460. Clearly, though, truck traffic, whether it originates from Norfolk or Portsmouth, is expected to decline.

Combine the port trend with yesterday’s post, “Vehicle Miles Traveled – Down 4.3 Percent.” Folks, we are experiencing a significant shift in the demand curve for transportation capacity. That’s a fancy way of saying that we won’t need as much new transportation infrastructure as we thought we did. Whether any of this will penetrate the consciousness of lawmakers before they convene this June to address transportation funding, however, remains to be seen.

As the General Assembly gears up for a special session to hammer out a transportation-funding “solution,” you’ll hear a lot about the catastrophic decline in gasoline tax revenues. Because maintenance projects get first crack at all state gas-tax dollars, the plunge in revenues translates into a dollar-for-dollar reduction in construction spending. You’ll hear a lot of panicky talk about the cancellation of all sorts of highway projects, and dire predictions of how Virginians will be consigned to traffic-congestion hell.

But there’s a flip to the declining gasoline consumption and gas-tax revenues: People are driving less. Fewer people driving translates into less traffic congestion. In an economically rational world, a decline in traffic congestion would be reflected in scaled-back construction plans. This is not an economically rational world, of course. It’s a world in which a massive share of the economy is directed not by market forces but political forces. And it’s not in the interest of those who benefit from massive construction programs to tell the whole story. So, there’s a good chance you won’t see this information anywhere else.

Estimated vehicle miles traveled (VMT) on all U.S. public roads for March 2008 fell 4.3 percent compared to March 2007, according to a Federal Highway Administration press release. The decline of 11 billion miles traveled that month was the sharpest year-to-year drop since the FHWA started tracking the numbers in 1942.

As a side benefit, fewer VMT means less air pollution. “Fewer cars on the road has translated into a 9 million metric ton decline in greenhouse emissions for the first quarter of 2008 alone,” writes Acting FHW administrator Jim Ray in the Department of Transportation’s Fast Lane blog.

In his blog post, Ray focuses on the fiscal downside. “The less revenue in the Highway Trust Fund, the less funding is available for states to keep roads healthy and efficient – resulting in more traffic tie-ups, more inefficiency, reduced driving and even less funding,” he writes. “This latest trend is yet another reason that we need to overhaul the highway financing system.”

We do need to overhaul the highway financing system to replace the gasoline tax, which will become increasingly obsolete over time. But here in Virginia we also need to re-examine assumptions on how much travel, and traffic congestion, are forecast to increase, and how much money we need to spend to address our need for mobility and access.

It would be farcical to pass a tax increase to compensate for declining Vehicle Miles Traveled and ensuing gas tax receipts without simultaneously taking a fresh look at the lower Vehicle-Miles-Traveled assumptions upon which Virginia’s highway-spending wish lists are based. But don’t expect it to happen. Politics is nothing if it is not a farce.

Update: What’s happening nationally may not be happening in Virginia. In the comments section of a previous post, “Bob” the blogger points to the March 2008 Commonwealth Transportation Fund Revenue Report , which indicates that the Motor Fuels tax in Virginia increased 4.4 percent in March. Something seems out of sync. Perhaps the difference between U.S. and Virginia trends can be attributed to differences in what is being counted or in methodology.