Around the public policy horn …

Pittsburgh Mayor Bill Peduto has been in Poland this week, representing U.S. mayors at the United Nations’ annual climate change conference.

He’s of course a big advocate for supposed remedies to address the issue. Never mind that such “solutions” invariably have a dubious cost-to-benefit relationship. That is, the cost so outpaces the benefits that the touted cure is worse than the claimed disease.

In Pittsburgh, Peduto’s plan revolves around city operations that, by 2030, are to use 100 percent renewable energy; a fossil fuel-free vehicle fleet and ancillary disinvestment in fossil fuel companies; and a 50 percent reduction in overall energy and water usage and transportation emissions.

Again, at what cost? Again, at what benefit? High and marginal, respectively, it would seem.

Peduto’s trip comes on the heels of the release of an updated draft plan to cut carbon emissions statewide. Strategies include requiring more solar and wind power coming onto the grid (likely heavily “incentivized,”aka subsidized by tax dollars), a transition to electric vehicles (again, likely subsidized) and cutting home and business electricity usage.

Backers lament that such efforts could be for naught given that emissions from the growth in transportation, natural gas production and waste are expected to rise over the next 30 years.

What draconian, economic growth-arresting steps next will be advocated to offset that growth are anybody’s guess. But the concept of “cap and trade” looms large.

As the Post-Gazette recently characterized it, cap-and-trade “is a market-based approach that both sets a shrinking limit on how much pollution can be released and offers economic incentives for companies to make further reductions and to earn valuable allowances they can sell to others.”

Never mind that a government-created market is an oxymoron. As the Capital Research Center recently reminded:

“The tax can only be called ‘free market’ in the sense that it sets up a phony market based around a kind of commodity – carbon dioxide emissions – and forces companies to work within it or face heavy fines from the federal government.”

Not only is it a perversion of free markets, critics cringe at how it directly assaults U.S. manufacturing and competitiveness and is nothing more than the latest attempt at wealth redistribution.

That’s hardly sound public policy.

In a rare spate of common sense, Pittsburgh City Council is refusing to fast-track legislation from the Peduto administration to spend up to $100,000 to better “brand” city services.

As the Post-Gazette reports it, one councilor doesn’t think “branding” should be any kind of priority in a city not long – less than a year — out of state financial oversight.

Another flat out called it a waste of money.

Still another council member said expending $100,000 for re-branding – and that would be just for the concept and no implementation – would involve spending “a significant amount of money for what we think is going to be a little return.”

So, why spend the money? A mayoral spokesman says “Pittsburgh is growing” and says it’s “getting an international reputation.”

But the reality is the city continues to shrink, at least in population.

And one can only wonder what that “international reputation is,” what with its perennially underperforming public schools; its out-of-whack public transit (bus) cost structure; its market-perverting subsidies to airlines; the equally perennial failure to reassess property for taxation purposes (a political practice that has only exacerbated inequities in the taxation regimen) and slavish devotion to economic “development” practices that too often retard true economic growth instead of enable it.

Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).

 

The Airport Authority mess grows (again)

It was revealed a year ago that the state Legislature had re-upped a provision that redirects $12.4 million annually in state gambling proceeds – that is, gamblers’ losses – to the Allegheny County Airport Authority.

The authority had been receiving the money for a decade. But without the reauthorization, the transfers would have ended with the close of the 2018-19 fiscal year.

The money is designed to boost economic development efforts at and around Pittsburgh International Airport (PIT) and to reduce costs to airlines that operate at the Findlay Township facility.

Said Airport Authority CEO Christina Casottis at the time, to the Post-Gazette:

“It’s incredibly important because it’s a validation of the strategy. It’s a validation of what we’re doing and how we’re using the money.

“The fact the Legislature made that choice, to me, is a sign that they are comfortable with how we are administering those funds and what we are using them for,” she said.

One can only wonder — a year later and millions of dollars wasted on a number of failed exercises in bribing airlines to fly in and out of PIT and being played for suckers – if legislative leaders and rank-and-file lawmakers feel the same way.

That same news story also laid bare Cassotis’ economically unsound and market-perverting practice of using public dollars to bribe airlines:

“(Airlines) are taking risks when they add service to an existing market or to a new market,” she said. “They are expecting communities everywhere to step up and show their commitment by making an investment.”

But, as the Allegheny Institute has repeatedly noted, there are, or should be, strict parameters governing such “investment.” That would include providing a place for airlines to operate their planes and for customers to park their vehicles.

Public dollars should not otherwise underwrite these airlines. The market system demands that those seeking to do business, having gauged demand, risk their own money in pursuit of profit. The only role the public should have is buying tickets.

Despite 2018’s multimillion-dollar failures at attempting to command the marketplace, Cassotis has indicated she pretty much plans to stay the course. Which should – but likely won’t – prompt state legislators to review the Airport Authority’s performance, if not reconsider how those gambling dollars are being used and abused.

Sadly, however, the activities of Cassotis and the Airport Authority board of directors cry out for a more formal and deeper review. And that should be an audit, if not a full investigation, by the state Attorney General’s Office, which, by statute, has auditing oversight.

That need was driven home like a truck through a brick wall last week when 51 investors in the now-liquidating OneJet airline filed a lawsuit in Allegheny County Common Pleas Court.

That lawsuit, first reported by the P-G, seeks to recover more than $10 million from OneJet. But it also makes serious allegations about as damning as they can get.

Among them being that David Minnotte, chairman of the Airport Authority board, himself was a shareholder in the failed airline. It previously had been reported that two other board members, including the vice-chairman, Robert Lewis, were investors.

That clear conflict prompted the authority to bar such behavior. Why that wasn’t the order of the day to begin with has baffled good-governance critics.

Minnotte and Lewis are among those being sued, as well as several officials of OneJet.

The authority, which is not named in the investor lawsuit, itself is suing OneJet in an attempt to recover $763,000 of its $1 million subsidy, part of an overall $3 million subsidy package.

The investor lawsuit not only alleges that OneJet officials told investors Minnotte and Lewis “could secure favorable treatment of OneJet with the Airport Authority,” it also alleges the pair “touted the fact that the Airport Authority had ‘approved’ OneJet’s operations, as a marketing tool to solicit investments in OneJet.”

The authority’s solicitor, Jeffrey Letwin, told the P-G that the lawsuit’s allegations are “an absolute bunch of garbage.” But it’s the same Letwin who steadfastly holds that it was not, and is not, a conflict of interest for board members to have invested in OneJet because they never directly voted on anything concerning the airline while holding those investments.

Sound public policy begs to differ.

And sound public policy also demands a deeper look into the growing mess that is the Allegheny County Airport Authority. It’s past time for Attorney General Josh Shapiro to get involved.

Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).

The Airport Authority’s economic perversions

So what does a marketplace-meddling bureaucrat do when government-sponsored interventionism predictably fails?

If you’re Christina Cassotis, the CEO of the Allegheny County Airport Authority, you double-down. After all, interventionists have to cover up the lie of each successive interventionist failure.

In a Wednesday Post-Gazette story, mind-boggling for its concomitant hubris and economic ignorance, Cassotis defends millions of dollars in public subsidies to a number of airlines that predictably grabbed the carrot off the stick then, in their incentivized failures, used the stick to bludgeon sound public policy.

“I’m not rattled,” Cassotis told the newspaper. “None of this bothers me.”

Guess that’s the kind of haughtiness that is bred when failure is underwritten by other people’s money. In this case, it’s all public money, whether it be from county and state grants and loans or even gambling money and proceeds from shale gas drilling at Pittsburgh International Airport (PIT).

The latter two categories, by the way, were designed to lowers costs at PIT, not turn public coffers into venture capitalist or corporate wealthfare troughs.

As the P-G’s Mark Belko reports, “Cassotis chalks up the losses to market adjustments more than anything else.”

The more accurate characterizing phrase would be “market perversions” wrought by government believing it can pick winners that, invariably, create losers.

The list of subsidized failures was long in 2018 for Cassotis, whose Airport Authority board has granted her sole power to grant subsidies of any amount. The bill of particulars has been oft-stated but worth repeating:

OneJet, subsidized even though it was a federal tax scofflaw, isn’t flying and was forced into liquidation. Oh, and now there’s word that at least three clearly conflicted authority board members had a financial interest in the airline.

Delta Air Lines, subsidized by the Allegheny Conference, reduced flights to Paris when the subsidy ran out. Then, when the authority announced a $3 million subsidy to international competitor British Airways, Delta said it would pull out.

The authority incentivized Qatar Airways to fail with a contract that paid the cargo carrier $1.48 million to not reach tonnage goals. Incredibly, Cassotis is talking about future “partnership opportunities.”

And WOW Air, heavily subsidized by a number of airports and no longer flying to most of them, is re-evaluating its subsidized Pittsburgh service because of financial woes. As with OneJet, this deal calls into question what kind of due diligence was performed on WOW’s financials.

Part of Cassotis’ ancillary defense of her failures is that, hey, passenger traffic is up at PIT and the Findlay Township facility is on track to host the most travelers since 2007.

But as the number-crunching scholars at the Allegheny Institute have pointed out (in Policy Brief Vol. 18, No. 41), in the least some of that is more due to a national economy improving following the Great Recession than to anything Cassotis has done.

But there’s another aspect to the P-G story that is bothersome. And that’s the continuing oddball pronouncements of aviation consultants observing the mess at Pittsburgh International.

One applauded the authority for suing OneJet to recover the bulk of a $1 million subsidy. As the newspaper reported, the strategist said it sent a message to the industry that if incentives are awarded for a flight, the airline has to deliver. “I think that was bold and right move,” he said.

Odd, considering the first no-brainer, bold and right move would have been to better investigate OneJet’s financials. Perhaps the discovery that the airline was a federal excise tax deadbeat would have raised some red flags? Of course, the better move would be to not subsidize any airline.

Another consultant who, in the past has repeatedly lauded announcements of subsidized “progress” at PIT as nothing less than slam-dunks, was chastened a bit in the P-G story. He used a baseball analogy to defend Cassotis.

When you swing for the fences, “you strike out sometimes,” he said. “But if you don’t swing, you’re not going to hit anything. I look at it as being a positive thing and an airport that isn’t afraid to try anything.”

As if trying the same thing over and over again and failing, and then doubling-down on the failure isn’t bureaucratic insanity?

“There are a lot of opportunities still to be tapped,” Cassotis told the newspaper. “I’m incredibly bullish on the market.”

Whether that refers to the free market or the market perverted and rendered dysfunctional by Cassotis’ subsidies is the question.

Which brings this At Large to a final point: Last March, Cassotis was awarded a bonus of $146,020 for her 2017 “performance,” on top of her annual salary of $325,000. By contract, she’s eligible for an automatic bonus of 15 percent, or nearly $49,000, each year.

But by any reasonable standard, Cassotis’ strikeouts outpaced her hits in 2018. Should the Airport Authority board award her anything above what it, sadly, is contractually obligated to – a string of pearls, you might say, for a string of failures – the perversion will be complete.

Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).

 

Pittsburgh Mills TIF comes back to bite

Once upon a time, in a universe far, far removed from reality, developers and government jurisdictions were wont to argue that “But for the TIF, this project would not be possible.”

But as time is telling more and more often, TIF, or tax-increment financing, perverted how projects came to fruition that simply were not sustainable to begin with. Thus, the “but for” argument takes on a new, and more accurate, import.

TIF long ago became a common (though too often imprudent) way to finance new developments. The “too often imprudent” part is applicable when TIF proceeds – from bonds sold to be paid off by respective projects’ expected increased property tax-generating capabilities – are used to subsidize the fickle, churning world of retail development that has little or no multiplier effect.

Which brings us to the Galleria at Pittsburgh Mills mall in Frazer. It was built nearly two decades ago along Route 28 north of Pittsburgh with the aid of $50 million in tax-increment financing.

“But for” this TIF, backers argued the mall could not be built and, oh, the region would lose out on multiple millions of dollars in direct and ancillary economic development.

Paraphrasing one editorial writer of the day, the new mall would change life as it had been known in the Alle-Kiski Valley. But not as that scrivener imagined.

And never mind that the massive new retail complex was opening as the mall form of retailing already was on a trajectory to reach its nadir.

Long story short, Pittsburgh Mills never performed as touted. And by 2015, it was a certified bust. Wells Fargo foreclosed on the property. Last January, the bank took possession of the badly struggling mall for $100. And the TIF mess is a mess that only begets new messes.

As the Post-Gazette detailed in a painstakingly reported Nov. 30 story, property owners that are part of the mall and nearby retail developments “could be facing a total of $5.4 million in special assessments next year if property tax revenues fall short of what is needed to make the debt payment on the TIF bonds that were floated as part of the mall’s development.”

In a Catch-22 nutshell, the values of the mall-related properties have fallen with the fortunes of the mall. Property owners have appealed their high assessments. Should they win those appeals, there will be less money generated to pay off the outstanding TIF bonds, now valued at about $23 million.

One real estate mogul with skin in the game laments that the special assessment that could be coming – a requirement of an ancillary neighborhood improvement district established to guarantee TIF bond repayments – could have further devastating consequences, the P-G reports.

And then there’s this hardly unexpected spate of hubris from the same real estate retail broker: He hints that perhaps “the state and/or county step in to assist with these impending special assessments.”

But taxpayers at large have no business being expected to come to the rescue. Those who entered into this TIF deal knew the risks – or at least they should have – and agreed to the guaranteeing neighborhood improvement district.

The Allegheny Institute has pointed out the inherent problems with retail TIF over the years. Yet, simply put, backers chose to swim with the TIF sharks and they alone should be held responsible.

As the Allegheny Institute again noted in September 2016, when it was becoming evident that the fortunes of Pittsburgh Mills were flagging, “This just calls into stark relief the problem with subsidizing retail ventures.”

And it was prophetic about market values being reduced and the ability to repay the TIF bonds being in doubt, noting such a scenario “should serve as a warning to development officials seeking to go down this road again.”

But as so often, too often, happens, the warning will be ignored and taxpayers, in one form or another, will be left holding the bag.

Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).

 

Hubris run amok is not ‘public policy’

There is a valuable economics tutorial in an Investor’s Business Daily (IBD) editorial on General Motors’ forthcoming restructuring that Pittsburgh and Allegheny County officials should heed.

They won’t, of course. And their failure to do so raises serious questions about their fitness to prosecute public policy.

The crux of IBD’s strident point of order is that GM’s move is “a tragedy caused by embracing government subsidies, not markets.”

That is, the government (i.e. taxpayers) propped up a money-losing operation and, by the perverted government-GM financial nexus ignoring the supply-and-demand signals of the marketplace, “it only made GM’s problems worse.”

Now consider the editorial’s reiteration of some fundamental economic truisms in a narrative that should be mandatory reading for every government official, if not children from a young age:

“Government shouldn’t pick winners and losers. Period. And that’s especially what subsidies are: the government substituting its judgment for that of the marketplace. Why do we do it at all?

“It never works as expected. It can’t. The government, despite delusions to the contrary, can’t possibly know what people want and need. Yet, a perpetual leftist dream remains an economy run and funded by government ‘experts.’”

Now, let’s juxtapose those economic truths with the Allegheny County Airport Authority’s obsession to attempt to command the air-services marketplace at Pittsburgh International Airport. It has spent millions of dollars as of late in public money – tax dollars, shale gas dollars and gambling dollars – to bribe airlines (passenger and cargo) to fly in and out of Pittsburgh International Airport.

And it has not discriminated when it comes to throwing around the public’s money. To wit:

One recipient, OneJet, already was a federal tax scofflaw when it was awarded millions of local and state grants and loans anyway. These days, well, it hasn’t been flying for months, faces numerous legal challenges and most assuredly is headed for bankruptcy (if not already there).

Then one airline, Delta, armed with money from a community development group (gee, where’s that money come from), reduced its overseas flights when those dollars ran out. It then pulled out of the market all together when government threw millions of public dollars at an overseas competitor, British Airways.

Now comes WOW Air. Recipient of $800,000 in a two-year slide through the public-dollar trough, it suddenly has stopped booking flights after mid-January.

Perhaps it’s collateral damage from the British Airways subsidy, too. Or perhaps its financials are suspect, as were OneJet’s. After all, it has given up two big Airbus jetliners “in cooperation with its lessors.” You read between the lines.

Yet Allegheny Chief Executive Rich Fitzgerald says the WOW experience “is and has been a huge success for Pittsburgh” and that “the market has proven that (WOW) works here”?

Then there’s the unbelievable cargo deal with Qatar Airways – paying nearly $1.5 million to a company that, by contract, can fail (and fail miserably) but still reap a massive amount of public dollars and its benefactors pulling a positive spin out of a tar pit that’s hiding a pool of quicksand.

Worse, the architects of these deals are not chastened by their failures but double, triple and even quadruple down on them. Why? In their hubris, they can’t possibly concede the lie that recidivist attempts at commanding the marketplace represents.

But as surely as the swallows return to Capistrano and the buzzards return to Hinckley, Ohio, each spring, Pittsburgh and Allegheny County officials will continue to believe they know better. And, despite their long record of failures, they continue to misappropriate public dollars to prove their point – a point already and repeatedly disproven.

Simply put, it is a manifest failure to govern.

Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).

Airport Authority’s ‘house of cards’ collapsing

Spinning. Dodging. Bobbing. Weaving. Rationalizing. Dissembling. They are all apt words to describe Allegheny County officials as they scramble to defend indefensible public subsidies to airlines that have been playing them for suckers.

In one 24-hour span this past week, it was revealed that two government attempts to command the air-service marketplace with large dollops of public dollars – to Qatar Airways and WOW Air – have, by any proper measure, failed.

No one should be surprised. For what a tangled web government and its acolytes weave when first they practice to intercede.

The first self-inflicted slap came when the Allegheny County Airport Authority revealed on its website Monday last that, as the Post-Gazette correctly captured the perverted dichotomy:

“Qatar Airways has been paid $1.48 million in subsidies after its twice-weekly cargo flights from Pittsburgh International Airport (PIT) failed to generate anywhere near the volume needed to avoid them.”

In a nutshell, the authority entered into a contract that obligated it to subsidize each Qatar flight to the tune of $15,500 for the first six months of the deal. And that’s no matter whether Qatar met its “goal” of 60 tons of cargo per flight.

As if that’s not outrageous enough, Qatar was, by contract, incentivized to not meet that goal in the second six months of the deal. To wit, as the P-G further chronicles it:

“During the second half of the year, the support fee would have decreased ‘based on calculations agreed to by the parties’ if the 60-ton-per-flight goal was met.

In other words, it was in Qatar’s best financial interests, at the public’s expense, to not meet any goal. In fact, the P-G notes that Qatar “never came close” to moving the average of 480 tons monthly to decrease those subsidies.

That one-year deal ended in October. The Airport Authority says Qatar continues to fly out of Pittsburgh International, now subsidy-free. But, a spokesman says, talks are underway “about what, if any, contractual relationship would exist moving forward.”

Airport Authority CEO Christina Cassotis pretty much telegraphed that the possibility of a new deal when she called Qatar a “good partner.” As did the headline on the authority’s grossly spun announcement of the success of the Qatar failure on its blog: “PIT cargo: In for the long haul.”

On what planet? The public kitty has been smacked around for $1.48 million and Cassotis is hearing it say “Thank you, ma’am, may I have another?!”

Really?

The rationalization continued on KDKA Radio on Thursday morning with Allegheny County Chief Executive Rich Fitzgerald’s claim that Qatar had invested $20 million into its operations at Pittsburgh International Airport.

Thus, he argued, the public dollars are “a very small part of the cost of doing business” here. But why were they a part of this deal at all?

And what of fellow cargo carriers UPS and FedEx, apparently unsubsidized and who, by the Airport Authority’s own admission, carry about 90 percent of the cargo that moves through PIT? They certainly can’t be happy that such a minor cargo carrier as Qatar has been incentivized by contract to fail and rakes in public cash.

Then there’s this gem from the Airport Authority’s blog:

“Still, an economic impact study commissioned by the authority found that the Qatar flights could produce nearly $43 million of economic output ($23 million direct) through increased trucking revenue from the additional activity in and out of PIT, increased demand for the warehousing/distribution center and reduced transportation costs for businesses using the service, which they can then reinvest.”

“Could” being the operative word in that passage prompts this logical question: “Well, did it?” Not likely, given the public heavily incentivized Qatar to fail.

What, if only we give Qatar more public money? How absurd.

The second self-inflicted slap came mere hours later when it was reported that WOW Air, subsidized at PIT with $800,000 over two years to fly to Iceland (and, supposedly, a gateway to Europe) had halted bookings past mid-January.

Whether it’s OneJet all over again – another publicly subsidized debacle that raises serious questions about the Airport Authority’s due diligence practices – remains to be seen. But the indicators are not good.

As the P-G also reported:

“Wow tied the (bookings moratorium) move to a decision to reduce its jet fleet by two Airbus A320s and two Airbus A330s ‘in cooperation with its lessors.’”

Sounds like a euphemism for not finding enough demand to warrant those jets, even heavily subsidized. And don’t forget that WOW ended also-subsidized service in October after only five months in Cincinnati and Cleveland. Flights to St. Louis will end in January.

Incredibly, Fitzgerald use this fact to set up his defense of PIT’s subsidies. Paraphrasing here, he told KDKA that all three of those cities subsidized WOW and lost service.

Again, really? That’s actually the argument against such subsidies.

PIT is competing with everybody else, Fitzgerald added. In a race to the economic bottom? Which brings to mind that old line about the adolescent doing something stupid because all his peers are doing it and the father asking “Would you jump off a cliff if your friends did?”

Allegheny County and county Airport Authority officials apparently have decided to hold hands and jump off the cliff together.

Further in putrid defense of this airline subsidy racket, Airport Authority spokesman Bob Kerlik reminded that no matter what happens with PIT’s Wow Air flights, British Airways will be starting nonstop service to London in April.

That would be the very same British Airways about to be paid $3 million in public subsidies to begin those flights, a subsidy that likely drove Delta Air Lines out of PIT’s overseas flights equation.

In a stark, but quite apropos, observation, Jake Haulk, president-emeritus of the Allegheny Institute, poses this pertinent question: “How much crapola do they think the public will swallow?”

Simply put, this all is a textbook example of how government interventionism begets more government interventionism. In order to attempt to save face, government intervenes more hoping to cover up the lie that the last interventionism somehow worked.

But in the case of the Allegheny County Airport Authority and Pittsburgh International Airport, the practice has become a wicked caricature in which newly publicly subsidized airlines are driving out prior publicly subsidized airlines.

The irony “is unbelievably rich,” says Haulk, a Ph.D. economist.

And incredibly tragic from a public policy standpoint.

No matter how county and authority officials attempt to spin it, this practice, a house of cards, is collapsing. And there must be serious consequences for the junior engineers who constructed it.

Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).

 

Of PWSA privatization & ‘green’ energy

City of Pittsburgh officials, in concert with a number of activists, have been adamant that the city’s Water and Sewer Authority (PWSA) – long neglected, used for political purposes and now under state Public Utility Commission (PUC) oversight – should not be privatized.

After all, they “argue” (the word is placed in quotation marks because their protestations do not rise to the level of cogency), all manner of horrid things will happen. Rates will skyrocket. The “poor” will be left waterless. “Profit” will replace “public service.” And on and on and on.

Never mind, of course, that even should a private entity take over the PWSA, the PUC would maintain oversight, riding herd over rates and such. Their “argument,” heavy on class warfare and anti-capitalist rhetoric, is all heat and no light and a tutorial in ignorance about fundamental economics.

And never mind that plenty of local government jurisdictions are served quite well by private water companies.

By the way, not far from Pittsburgh, just over an hour away in St. Clairsville, Ohio, government there is entertaining water/sewer system privatization. As reported by The Times Leader:

“Faced with an aging and deteriorating water and wastewater system, the city is considering selling to a private outfit.”

Added Jim Zucal, the Eastern Ohio community’s safety and service director, “We have to prepare for the future.”

St. Clairsville’s water treatment plant is 90 years old. It last was updated 34 years ago. “(M)uch of the distribution system’s pipes, valves and fire hydrants … have never been replaced,” the newspaper notes.

City leaders have just begun to explore the privatization process. A decision is months away. Bids would have to be sought. State and federal environmental standards would have to be met. There would be state PUC oversight.

Should St. Clairsville, Ohio, decide to privatize its water and sewer system, that “dastardly” profit motive will force any private operator to be as efficient as possible in pursuit of serving customers as economically as possible.

What do Pittsburgh’s “progressives” not understand?

Perhaps they’ll argue privatizing water and sewer services in a small Ohio town cannot possibly be analogous to a major city.

What, is Pittsburgh’s “old” somehow different than St. Clairsville’s “old”?

What, are the fundamental rules of good business practices and economics somehow different in Ohio than in Pennsylvania?

What, does water and sewage somehow flow differently here than there?

Pittsburgh Mayor Bill Peduto is on record as calling for municipal operations to be completely reliant on renewable energy sources by 2030.

But, and on scales both limited and expanded, the mayor might want to review the scholarly research of Robert Bryce, a senior fellow at the Manhattan Institute.

Writing in the Nov. 19 New York Post, Bryce reminds that “renewables aren’t growing fast enough to even match the torrid growth in global electricity demand, much less displace significant quantities of hydrocarbons.”

Worldwide oil consumption is surging as well, Bryce notes. By the end of this year, he says “just the increase in the world’s oil burning will nearly be as much as the output of every solar-energy generator on the planet.”

But, surely, on a smaller scale – a Pittsburgh municipal operations scale – Peduto’s call is achievable, right? Perhaps. Renewable energy generation that powers micro-grids (and not just to power “municipal operations”) sounds all well and good.

But at what cost?

And at what tradeoff?

How much smoke?

How many mirrors?

When it comes to government operations, the supposed “benefits” always appear to be touted – sans, of course, the “niggling” details that hardly are niggling and have a nasty habit of outweighing the purported benefits.

Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).

 

Solar study eclipses sound public policy

“Pennsylvania has more than enough sun, space and interest to dramatically increase the amount of energy it gets from solar panels by 2030,” reports the Post-Gazette, citing the findings of a “study group” led by the state Department of Environmental Protection (DEP).

As the P-G dispatch continues:

“But those gains won’t be possible without policy changes that encourage more solar installations, especially large or “grid-scale” projects that have been all but absent in the state so far.”

Of course, among the great unspokens in all this:

“At what cost to Jane and John Q. Taxpayer?”

“With what kind of economic efficiency?”

“With what damage to the energy marketplace?”

The matter is of particular interest to public policy makers in Greater Pittsburgh, given all the talk of late of the “need” for “sustainable” renewable energy efforts, in general, and, more specifically, talk of creating “micro-grid” generating capacity in the City of Pittsburgh.

The goal of this federally funded (to the tune of $550,000), DEP-overseen project is to see 10 percent of the commonwealth’s electricity produced by solar by 2030.

State law – Act 13 of 2004 – mandates that 0.5 percent be solar-produced by 2021. The Keystone state now produces 0.25 percent of its electricity from solar applications.

DEP Secretary Patrick McDonnell told the P-G the plan “demonstrates that we can pursue Pennsylvania’s solar future in a cost-effective manner that complements our position as an energy leader.”

Well, if it’s so predictably “cost-effective,” why is there concomitant talk of tax incentives (public dollars) and “carbon pricing” (government creating an artificial market)?

The newspaper notes that in order to reach the 10 percent solar-generation threshold, “it would take about 124 square miles of land – or less than 0.3 percent of Pennsylvania’s total land area – to increase grid-scale solar to” the needed level.

Allow a little context here: It would take a land mass more than two times the City of Pittsburgh’s 58.35 square miles.

Gee, what could go wrong. Hmmm, government attempting to pick an energy “winner” with taxpayer subsidies and, not detailed herein, the predictable grand-scale economic benefits that, gosh darn, never seem to materialize.

State legislators and DEP officials might take note of what’s been going on off the coast of Virginia for an eye-popping object lesson.

Now, in advance, do note there is an apples-and-oranges quotient to what follows. But the overriding lesson is what happens when governments attempt to command markets.

As The Wall Street Journal notes, a legislative mandate by Old Dominion lawmakers requires the state to produce 5,000 megawatts of solar and wind power by 2028.

Apparently at cost and common sense be damned.

As The Journal notes, Dominion Energy, Virginia’s largest utility, plans to spend $300 million to build two wind turbines 27 miles off the coast of Virginia Beach.

But Virginia’s version of the Pennsylvania PUC – the State Corporation Commission – says the aforementioned “demonstration” project and plans to build hundreds more turbines certainly won’t be cost-effective.

To wit, while onshore wind turbines produce electricity at 9.4 cents per kilowatt hour (the cost is 5.6 cents per kilowatt hour for the same amount of solar energy), the wind turbines will cost – drum roll, please – 78 cents per kilowatt hour.

Again, that’s 78 cents per kilowatt hour.

Other offshore wind farms produce the same amount of electricity for 13.1 cents.

But wait, it gets worse: As a Journal editorial detailed, there was no competitive bidding process for the project and those comparative wind farm project costs were not gathered.

Virginia’s State Corporation Commission concluded that “Customers will pay at least $300 million (plus financing costs) to demonstrate a large-scale project that, based on Dominion’s own studies, will not be a competitive option for the next 25 years.”

So, the project was killed, right?

Nope. Because of the legislative mandate that wind power is “in the public interest,” it will proceed.

Whether it’s Pennsylvania, Allegheny County or Pittsburgh officials considering any kind of “green energy” alternatives, sound public policy demands it be truly market-based and cost-effective. Juicing the playing field with public subsidies is a more than tacit admission that solar cannot stand on its own.

The warped view that government subsidies make such projects “cost-effective” (how Orwellian is that?) must be rejected for the perversion it is. For simply put, if public subsidies are “required,” it’s hardly “cost-effective.”

Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).

Lincoln’s Thanksgiving

Sarah Joseph Hale, a magazine editor, wrote a letter to President Abraham Lincoln on Sept. 28, 1863, urging him to proclaim a national day of thanksgiving.

Not that it was necessarily an observation alien to most Americans of the day. As historians note, many Northern states already celebrated such a day but on different days.

Lincoln himself (on Nov. 28, 1861) had ordered government departments to close for a day of thanksgiving. Seventy-four years earlier, President George Washington (on Oct. 3, 1789) asked for a similar day.

Hale, however, asked Lincoln to make “our annual Thanksgiving … a National and fixed Union Festival.”

As the editor’s letter continued, “You may have observed that, for some years past, there has been an increasing interest felt in our land to have the Thanksgiving held on the same day, in all the States; it now needs National recognition and authoritive fixation, only, to become permanently, an American custom and institution.”

Lincoln agreed. And on Oct. 3, 1863, Secretary of State William Seward drafted the proclamation for the president’s signature calling for “a day of Thanksgiving and Praise” to be held on the last Thursday of November each year.

It was Congress and President Franklin Roosevelt who later moved Thanksgiving Day to the fourth Thursday of November beginning in 1942. As historians tell it, the move came at the behest of Christmas retailers who saw the holiday shopping season truncated by one week in years in which November featured five Thursdays.

Yet more proof that the “commercialization” of Christmas has been a long-running phenomenon.

Here is Lincoln’s Thanksgiving proclamation (separated into non-original paragraphs to make for easier reading). It is a remarkable document, coming as it did in the middle of the American Civil War:

Washington, D.C.
October 3, 1863
By the President of the United States of America.
A Proclamation.

The year that is drawing towards its close has been filled with the blessings of fruitful fields and healthful skies. To these bounties, which are so constantly enjoyed that we are prone to forget the source from which they come, others have been added, which are of so extraordinary a nature, that they cannot fail to penetrate and soften even the heart which is habitually insensible to the ever watchful providence of Almighty God.

In the midst of a civil war of unequalled magnitude and severity, which has sometimes seemed to foreign States to invite and to provoke their aggression, peace has been preserved with all nations, order has been maintained, the laws have been respected and obeyed, and harmony has prevailed everywhere except in the theatre of military conflict; while that theatre has been greatly contracted by the advancing armies and navies of the Union.

Needful diversions of wealth and of strength from the fields of peaceful industry to the national defense, have not arrested the plough, the shuttle or the ship; the axe has enlarged the borders of our settlements, and the mines, as well of iron and coal as of the precious metals, have yielded even more abundantly than heretofore.

Population has steadily increased, notwithstanding the waste that has been made in the camp, the siege and the battle-field; and the country, rejoicing in the consciousness of augmented strength and vigor, is permitted to expect continuance of years with large increase of freedom.

No human counsel hath devised nor hath any mortal hand worked out these great things. They are the gracious gifts of the Most High God, who, while dealing with us in anger for our sins, hath nevertheless remembered mercy. It has seemed to me fit and proper that they should be solemnly, reverently and gratefully acknowledged as with one heart and one voice by the whole American People.

I do therefore invite my fellow citizens in every part of the United States, and also those who are at sea and those who are sojourning in foreign lands, to set apart and observe the last Thursday of November next, as a day of Thanksgiving and Praise to our beneficent Father who dwelleth in the Heavens.

And I recommend to them that while offering up the ascriptions justly due to Him for such singular deliverances and blessings, they do also, with humble penitence for our national perverseness and disobedience, commend to His tender care all those who have become widows, orphans, mourners or sufferers in the lamentable civil strife in which we are unavoidably engaged, and fervently implore the interposition of the Almighty Hand to heal the wounds of the nation and to restore it as soon as may be consistent with the Divine purposes to the full enjoyment of peace, harmony, tranquility and Union.

In testimony whereof, I have hereunto set my hand and caused the Seal of the United States to be affixed.

Done at the City of Washington, this Third day of October, in the year of our Lord one thousand eight hundred and sixty-three, and of the Independence of the United States the Eighty-eighth.

By the President: Abraham Lincoln

William H. Seward,
Secretary of State

Indeed, our great republic, commonwealth and region face many challenges. They always have. They always will. But giving thanks for what we have surely is an important foundation on which to build the wherewithal to make those challenges more manageable.

Happy Thanksgiving!

Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).

 

The public policy of Thanksgiving

It was in 1836 that William Leggett, the outspoken editorial writer for the New York Plaindealer, wrote of finding “something exceedingly impressive in the spectacle which a whole people presents, in thus voluntarily withdrawing themselves on some particular day, from all secular employment, and uniting in a tribute of praise for the blessings they enjoy.”

Mr. Leggett, generally recognized as the “intellectual leader of the laissez-faire wing of Jacksonian democracy,” was speaking of Thanksgiving Day. But his comments prefaced a most contrarian argument for his day, one that sometimes engenders the same kind of public policy debate to this day.

Against “a custom so venerable for its age” and “so reverently observed,” Leggett took great exception to the practice of our constitutionally elected leaders issuing Thanksgiving proclamations.

After all, he argued, in framing our grand institutions of governance, had not “the great men to whom that important trust was confided taught, by the example of other countries, the evils which result from mingling civil and ecclesiastical affairs”?

Indeed, they had. So, how can such a “failure” to keep separate affairs of church and of state be justified as an acceptable public policy practice?

Harry Truman not only did a pretty good job of that on the Sunday before Thanksgiving in 1952 (at the cornerstone-laying of the Westminster Presbyterian Church in Alexandria, Va.), he defined what the role of religion ought to be in our constitutional republic:

“In Thanksgiving,” President Truman said, “we have a purely American holiday — fashioned out of our own history and testifying to the religious background of our national life. That day expresses what we mean when we say that our form of government rests on a spiritual foundation.

“It is from a strong and vital church — from the strength and vitality of all our churches — that government must draw its vision,” he continued. “In the teachings of our Savior, there is no room for bigotry, for discrimination, for the embittered struggle of class against class, or for the hostilities of nation against nation.

“St. Paul, in writing to the early church at Colossae, said, ‘Here there cannot be Greek and Jew, circumcised and uncircumcised, barbarian, Scythian, slave, freeman, but Christ is all, and in all.’”

Concluded Mr. Truman, in churches we find “the seeds of our vision of society. But we cannot keep that vision strong, or carry it out, without God’s help. And the churches must help us keep that vision always before us.

“Religious faith is the strength of our nation, and the hope of all mankind.”

Truman’s words are those we ask everyone to ponder this week as they prepare to partake in what even contrarian William Leggett had to admit was a nation’s exceedingly impressive spectacle of pausing in unison to give thanks.

Happy Thanksgiving.

Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).