News Story

The Green Energy Bubble

Politicians and self-proclaimed environmentalist groups tell us that the salvation of our moribund economy is green jobs. We are being asked to believe in the bold new economy that will replace current forms of energy such as coal-fired power plants and gasoline-powered cars with alternative energy such as wind-powered utilities and cars that run on bio-fuels or electricity. But, are these green jobs our economic salvation or just another ill-advised attempt by politicians to steer the economy in a new direction?

Economic prosperity requires that we have access to both reliable and affordable energy to heat our homes and power our factories and vehicles. A steep run up in energy costs coincided with an economic recession in the 1970s and is once again a contributing factor to our current economic problems. Alternative energy mandates supposedly will serve as an economic stimulus by creating new jobs such as building wind mills and solar panels.

Claims similar to those being made by Phil Angelides of the Apollo Alliance that the development of clean energy will provide concomitant "growth in jobs, technology, equipment, suppliers and productivity if the United States actually treated the development of clean energy as a national economic priority" conveniently ignore economic realities. Mandating more expensive forms of alternative energy takes money out of the pocket of consumers and drives up business costs, resulting in the loss of jobs. An additional test for the viability of green job economic benefit claims is whether these projects require government subsides or not. If the answer is yes, the end economic results are more likely negative rather than positive.

Another significant problem with alternative energy mandates is that they often result in unintended consequences. Ethanol mandates are a prime example. The promise of ethanol to power our automobiles was simply too good for politicians to resist. After all, who could oppose growing our own fuel rather than relying on oil imports from hostile nations with the added benefits of assisting the nation's farmers and reducing the CO2 emissions that many environmental activists and scientists believe contribute to global warming?

But, alas, ethanol did not deliver the promised benefits. In fact, the negatives of ethanol far outweigh its positives. "A Note on Rising Food Prices," a report released in July 2008 prepared for the World Bank, concludes "the most important factor [for world food price increases] was the large increase in bio-fuels production in the U.S. and the EU."

The energy bill passed by Congress last year requires a 400 percent increase in the use of renewable fuel in gasoline from the current 9.0 billion gallons per year to 36.0 billion gallons per year in 2022. In a Congressional Research Service report ("Biofuels Provisions in the 2007 Energy Bill and the 2008 Farm Bill: A Side-by-Side Comparison"), updated June 27, 2008, the authors conclude: "Although this is not an explicit ethanol mandate, it is expected that much of this requirement will be met using corn-based ethanol." This expanded renewable fuel mandate caused increases in food prices.

Many environmentalists who formerly pushed for ethanol subsidies and mandates now have dropped their support for corn-based ethanol. Two studies published by the journal "Science" in February of 2008 posit that ethanol production actually increases the release of greenhouse gases. According to researchers at Princeton University, it would take 167 years of producing ethanol to offset the release of carbon dioxide from converting lands to agricultural production. Even with federal and state government subsidies, several ethanol plants across the country have gone bankrupt and plans to build new plants are being shelved.

Solar and wind are now the darlings of advocates for the "new green economy." Producing solar panels and wind turbines are supposed to replace lost manufacturing jobs from industries such as steel and automobiles (never mind that solar energy has been shown to have only limited applicability and that the best wind farm in the world only operates 30 percent of the time). This economic transformation, of course, can be achieved only with government subsidies and mandates. Taxpayers are being asked to foot the bill and the end result will be increased utility bills. Increasing the cost of energy for consumers and businesses can only result in one outcome — fewer jobs.

First we had the dotcom bubble and then the housing bubble. Is the green energy bubble next? American taxpayers would be better served by being told the truth by politicians, rather than the economic nonsense that surrounds the hype regarding the green economy.

(Note: Michigan lawmakers approved two bills relating to the subject matter of this article during December of 2008, as part of the "lame duck" session of the 2007-2008 Michigan Legislature. Brief descriptions of these bills and the Michiganvotes.org roll calls are noted below.)

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Russ Harding is director of the Property Rights Network at the Mackinac Center for Public Policy. He may be reached at harding@mackinac.org.

For additional information and an opportunity to comment on this issue, please see www.mackinac.org/10207.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.

News Story

A Little School — A Big Idea

Chassell Township Schools’ transparent spending

One of the smallest public school districts in Michigan is Chassell Township Schools. Located on the Keweenaw Peninsula that juts out into Lake Superior, Chassell students live closer to Fargo, N.D., than to Lansing. All grades are housed in one school building and during 2007-2008 it had 264 students, taught by 20 teachers. The senior class had 17 and all of them graduated.

A tiny district in a remote part of Michigan obviously cannot afford to provide many of the amenities offered at large, suburban districts on the other end of the state. But plucky little Chassell Township Schools has done something important that few of those bigger — and usually wealthier — schools are doing: Providing a monthly, online check register report that allows anybody with a Web browser to see how the district spends taxpayers' money.

On Dec. 31, 2008, the district wrote a check for $187.50 to a private individual for "7.5 hrs of service" and another for $275.00 to a different person for "snowplowing." Anyone with Internet access — from a local newspaper reporter to a researcher far away in Australia — can go to the CTS Web site any time of day, and learn the name of those receiving that money and the number on the checks used to pay them. Dozens of such expenditures for December, from bus repairs to Kleenex to legal bills and more, are also provided.

CTS was one of the first school districts in Michigan to open up its checkbook after receiving a request from the Mackinac Center for Public Policy's "Show Michigan the Money" transparency project. A similar request was made of the much larger districts in Macomb and Oakland counties.

While curiosity and a computer gets you access to CTS's spending details, prying this same information from local schools in much of metro Detroit, even for the parents of children attending those districts, is a much more convoluted challenge. Anyone seeking spending information must first know what to ask for; usually they must know how to file a Freedom of Information Act request. Often they will be required to wait several days for the information to arrive, and in some cases they must be willing to pay the district to go find it for them.

What accounts for some districts doing this while others do not?

"We take stewardship of taxpayer funds very seriously, and this gives us a monthly chance to prove it to our community," said CTS Superintendent Mike Gaunt, explaining his district's online check register.

Granting the Show Michigan the Money project's request for an online check register was "no big deal," according to Farmington Public Schools Superintendent Sue Zurvalec, speaking to the Farmington Observer. That district is one of a minority in Oakland County providing this information on the Internet.

The Waterford School District is another. Assistant Superintendent Tom Wiseman told The Grand Rapids Press that his district's online check register "does not cause any problems." He also noted that the district has "always provided detailed check registers for our citizens at Board of Education meetings" and that putting them online is "just another way of getting information to our citizens."

The Montrose Community Schools in Genesee County may have been the very first district in Michigan to so widely share this information. A school employee there was convicted in 2007 of stealing more than $1 million from the district over a 10-year period. As part of the process of reassuring the community that the district was committed to keeping a judicious watch over its dollars, Superintendent Mark Kleinhans led the way to putting the district's check register on the Web. He did this following a request from Peyton Walcott, a Texas transparency advocate.

The Chippewa Valley School District in Macomb County could profit from this example. Twice in recent years, the U.S. Department of Justice has investigated and won convictions against Chippewa Valley school employees for thieving money from the district and its taxpayers. James Tague was sentenced last year to 42 months in prison after stealing more than $2 million from the district while he worked there as a purchasing agent. And Dr. Richard Zaranek, then an elementary school principal, embezzled more than $400,000 between 1996 and 2003. A press release from the U.S. Attorney's office noted that Zaranek "laundered the money by funneling cash and checks through different school-related accounts, then wrote checks on those accounts to himself, personal creditors and personal investment accounts."

There is no certainty that an online check register would have uncovered or prevented these crimes at Chippewa Valley, but in both cases the criminals needed only to hide from the watchdogs they could see: other employees, administrators and the school board. Both criminals could — with a reasonable degree of accuracy — evaluate the risk of success and proceed accordingly. But if posting spending details on the Internet would encourage anyone in the district — or the world — to watch for things that looked out of place and ask questions, then bad actors would never know whose eyes or how many eyes were on them.

Bad actors such as Bernie Madoff can happen anywhere and public servants shouldn't be the only watchdogs of the public purse. The taxpayers can and should have the tools to help out as well.

Deterring crime is just an extreme example of why a transparent checkbook is a benefit; saving money is another. Anyone can quickly find out what the Chassell Township Schools pays for snow removal. If it's a good deal, then a neighboring district paying more can ring up that same contractor and perhaps get the better price. Alternatively, if CTS is paying more than necessary, then a rival contractor can see this and propose a better deal. Similar savings could be accomplished by comparing costs for other goods and services.

For both of these reasons and more, the Show Michigan the Money project has requested that Chippewa Valley and every school district in Macomb County commit to regularly placing their check registers on the Internet. With more than 15,000 students, the Chippewa Valley School District ranked as Michigan's 12th largest public school district for 2006-2007. The combined thefts at CVSD mentioned above would amount to more than 80 percent of the Chassell Township Schools' annual budget of almost $3 million. If one of the tiniest school districts in the state can commit to opening its checkbook to the public, then it's a standard that Michigan taxpayers should be able to expect of all the others.

Ken Braun is the director of the 'Show Michigan the Money' transparency project for the Mackinac Center for Public Policy and also the senior managing editor of this newspaper. He may be reached at author@mackinac.org.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.