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Paper Companies' Windfall of Unintended Consequences
Jamie found a post on ScienceBlogs that serves as a stark example of the law of unintended consequences, as well as the ability of private industry to game a system of laws to their advantage. It seems that large paper companies stand to reap as much as $8 billion this year by doing the opposite of what an alternative-fuel bill intended. Here is the article from The Nation with more details and a mild reaction from a Congressional staffer. "[T]he United States government stands to pay out as much as $8 billion this year to the ten largest paper companies.... even though the money comes from a transportation bill whose manifest intent was to reduce dependence on fossil fuel, paper mills are adding diesel fuel to a process that requires none in order to qualify for the tax credit. In other words, we are paying the industry — handsomely — to use more fossil fuel. 'Which is,' as a Goldman Sachs report archly noted, the 'opposite of what lawmakers likely had in mind when the tax credit was established.'"
In the short term the solution for this is for the president to order the IRS to withhold these payouts until congress can close the loophole. If the paper companies sue, they would get laughed at or scolded by the judges as this is an obvious and evil perversion of the intent of the law.
There is a limit to the amount of profit a car manufacturer on an individual car in the U.S. This only applies to basic passenger cars, not luxury cars or trucks. The answer? This is why the big 3 pushed trucks and SUV's so hard - which granted a large part of their customers wanted, but they largely ignored another large crowd that wanted small U.S. made economy cars. They produced crap instead, so we bought Japanese. Thank you Uncle Sam.
Some Americans With Disabilities Act rules apply only to companies of certain size, as in number of employees. Compliance is incredibly expensive in many cases. Some companies put the brakes on at a certain number of employees due to the expense of compliance sentencing said companies to stagnate growth at a certain size giving their mega corporation competitors an upper hand. Thank You Uncle Sam. The same can be said of certain FDA regulations and any other regulatory agency you can name.
My sister works for the Department of Agriculture. She writes checks to farmers to not grow crops.
Here's an idea:
KEEP THE FUCKING GOVERNMENT OUT OF IT
Unless something really needs regulating, leave it the hell alone. Food? Fine we need an FDA to make sure our food isn't nasty and contaminated. They probably overstep their usefulness in some cases, and under step it in others, but that's expected.
Yes, we do need an agency to keep track of Plutonium and Uranium. Just saying, yeah, track that.
We need an EPA - but it needs to know it's place.
ATF? We don't need that. It's a redundant agency originally created for tax purposes, not what they're doing now. It's also limiting freedom.
No government regulation usually helps huge companies by keeping the small competitors down. Create an agency to regulate an industry, then the companies buy the candidates they want and put them in the regulatory committees. The little guys can't do that.
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Exactly, and in this case, they did just that : they pursued their own intrest the way the law forced them to, instead of the most profitable (and therefore, at least in this case, most environmentally friendly, way).
In general, the cheapest way for factories is often the one using the least raw material, and therefore at least close to the most environmentally optimal way.
but I think copious legislation should be applied to ensure that you can only have achieve this by benefiting society.
You're assuming that laws always benefit society. I guess women should be glad they get stoned in muslim countries. After all, it benefits society, right ? That's what the law does. Of course, very nearly all muslim countries are, at best, third world countries, racist dictatorships or worse. Seems their laws are less than optimal ... for both society and the environment.
But of course, "America is different !". Oh wait, not at all in this case. I guess that what happened here, totally in compliance with the law, and bad for BOTH society and the environment ... means nothing to you ?
But this was in compliance with the law, and against market forces, so surely it must have been good for society and for the environment ... oops ...
Why don't we look at the environmental situation in a country where "copious legislation", in fact as copious as it gets, was in force.
And there we find ... chernobyl, in the soviet union.
It seems to me your argument is flawed, both in theory and in practice.
You see, you assume laws are in the intrest of society, which is a standpoint that's idiotic, to say the least. In fact, given the world's current situation, the less laws a society has, the better it does.
The problem has nothing to do with intention. The problem is that the law was very badly written for every purpose. The law gives a $0.50 tax credit for every gallon of diesel mix used but the credit should have been based on some fraction of the price of diesel. The paper makers scam only works because the price of diesel has fallen so much.
Indeed, if diesel and biofuel prices fell far enough we could all make money simply by burning gallons of it in our back yards: spend $0.40 on a gallon of mix; claim $0.50 from the IRS.
If the law had been drafted by someone who wasn't retarded this situation would never have arisen.
Capitalism seemed to work pretty well until we gave up on it early last century (it was just too damn hard for large companies to compete in an open market). We could always try that again.
The real problem here is that the law is basically an attempt to circumvent the fundamental principals of the Constitution, which was written to limit the powers of the Federal government. The founders didn't trust government, and sought to mitigate the necessary evil of having a government at all by restricting it to some very specific powers.
The 16th amendment gave the Feds all kinds of new power, so that's what they always use to try things like controlling behavior (a power they really shouldn't have). So whenever they pass a law offering a "tax credit", people sit around going "hmmm... how can we get some of that?" And why not? That's what people do. The more of your money goes to taxes, the greater the motivation to limit your liability or to have some benefit from government giveaways.
Same thing with all government handouts. About 40% of the budget of Medicaid and Medicare is spent on fraud. 40%. Because if people can get something for free, they will. Some will find legal ways (like these paper companies), and others don't care whether it's legal or not (like people that commit Medicare and welfare fraud).
So the real problem is $3.8 trillion of government spending. It attracts corruption, fraud, waste, opportunists, and everything else bad that people keep complaining about. And the 535 or so deciding how to spend that money aren't really very interested in being very diligent with it, because it's other people's money - so who cares about a few billion wasted here or there?
Repeal the 16th amendment, institute very strict term limits, hold the Federal government to the Constitution, and these problems would go away.
"Somebody has to do something. It's just incredibly pathetic it has to be us."
--- Jerry Garcia