Inconvenient Truths Come in Many Packages

Inconvenient truths come in many packages. I remember as a child the "debate" about the source of smog in Los Angeles. While I would get sick and my eyes would sting, I listened to adults argue about where smog came from. (Later on when I was working at Cal-Tech-JPL which is in the foothills of the San Gabriel mountains north of Pasadena, I would have morning coffee outside and watched the grey stuff literally form like a vapor trail along the valley's freeways). For years the public read and listened to industry, oil and auto companies protest loudly that cars were not the source of smog. Technically, this is true. Smog is formed from the action of sun and warm temperatures on the chemicals emitted by refineries, power-plants and cars. Today it is universally accepted that cars pollute and contribute to smog. A similar so-called debate about tobacco raged on for years about whether tobacco did it or did not cause cancer. Lies and more lies by the tobacco industry came to light after a whistleblower and other heros produced documents about the deliberate scientific-speak obfuscation by the tobacco industry.

As Ronald Reagan famously said, and I paraphrase, "here we go again" with the so-called global warming, climate change debate. This is not a debate but a calculated effort by a few to cast doubt in the public's mind about whether or not we should be changing our fossil fuel habits.
 On the one hand the oil spill in the gulf may take care of this conundrum by the sheer tragedy of killed sea mammals, birds, fish and biota due to the spill as well as the tens of hundreds of thousands whose way of life and livelihood are gone or derailed. The public may well ask the industry as Sarah Palin likes to say "how you do'in with that oil spill".

At a recent city council meeting (June 15th) a resolution was considered as requested by the American Lung Association to support the California Air Resources Board implementing strategies to reduce air pollution including greenhouse gases. A couple of people spoke against this resolution citing three main reasons the council should favor an upcoming proposition, if it qualifies, to suspends AB 32 the California Global Warming Solution Act of 2006: Loss of jobs, serious questions about whether or not there is global warming and California's oppressive business climate forcing businesses to flee the state taking jobs with them. There were citations and facts given by the speakers which I knew to be untrue, wrong and misleading. I do not fault the speakers as it was clear they were reading from "talking points" from the Chamber of Commerce (state and federal level) and the oil companies and their allies who are sponsoring the initiative to effectively overturn AB 32.

Okay, lets take a look at a each of these reasons:

1. AB 32. Two Texas oil companies are spending millions on a ballot proposition that effectively stalls and may kill California clean energy and air pollution reduction standards. Four years ago, California passed a clean air law – AB 32 – that holds polluters accountable and requires them to reduce air pollution that threatens human health and contributes to global climate change. This law has launched California to the forefront of the clean technology industry – sparking innovation and clean energy businesses that are creating hundreds of thousands of new California jobs.
The primary funders of the ballot proposition are the Valero and Tesoro Texas oil companies. They are among the nation’s biggest polluters, and their California oil refineries are among the top ten polluters in our state. Valero and Tesoro claim their proposition will only "suspend" AB 32's air pollution and clean energy standards until California's economy gets better.

Air pollution is a major threat to public health in California, with alarming rates of asthma and lung disease, especially among children. Each year, California’s air pollution crisis contributes to 19,000 premature deaths, hundreds of thousands of asthma attacks, and thousands of trips to the hospital for California families. The proposed proposition will let the Texas oil companies and other polluters off the hook – drastically increasing air pollution and public health risks. That’s why the proposition is strongly opposed by the American Lung Assn. in California and AARP (American Association of Retired Persons).

2. Jobs. According to California’s nonpartisan State Legislative Analyst’s Office, rolling back AB 32 could “dampen additional investments in clean energy technologies or in so-called „green jobs‟ by private firms, thereby resulting in less economic activity.” Clean energy businesses and technologies are exceptional bright spots in our economy. AB 32 has put California in a unique position to lead the clean energy and technology market, both in the United States and abroad.

o 500,000 employees work in clean technology or green jobs in California. ii

o Since 2005, California green jobs have grown 10 times faster than the statewide average. iii

o California’s clean technology sector received $9 billion cumulative venture capital investment from 2005-09, including $2.1 billion in investment capital in 2009 – more than five times the investment in our nearest competitor, Massachusetts. iv

o There are more than 12,000 clean tech companies in California. iii

The proposition would suspend AB 32 until unemployment levels of 5.5% are reached - a level that California has not seen since 2007. California has one of the nation's highest unemployment rates: 12.4%.

Two problems are obvious with this "stall": the first problem is that the above economic activity will wither [this would be the repeat of what happened after the 1974 Energy Conservation and Development Act that established the energy commission and state policy for 10% energy conservation and constrained demand management rather than all the energy the utilities could sell. While Governor Reagan signed the California law, when he became President he gutted the alternative energy programs and the 80s and 90s the state of California shrank the support for the newly emerging technologies. Not to oversimplify, but without consistent state and federal policy, business entrepreneurs can't compete with the subsidized fossil fuel and coal markets. Without federal and state investments in technology development, alternative energy development stalled. And now we in California are playing catch up with China and even midwest states to get back in the market that we created] The "suspend AB 32 proposition" will not only hurt competition from California clean energy businesses, it will also reduce consumer choices by making alternatives to fossil fuels much more expensive for consumers. This initiative will also increase household electricity costs in California by 33%. These added costs will reduce economic output in California by more than $80 billion and cost over a half million jobs by 2020.v

i California Air Resources Board(CARB), December 2008, AB 32 Scoping Plan
ii Employment Development Department – Labor Market Information Division, California‟s Green Economy, April, 2010.
iii“ Many Shades of Green,” Collaborative Economics and Next 10, Dec. 2009.
iv http://cleantech.com
v David Roland-Holst, UC Berkeley, “Energy Prices and California’s Economic Security,” Next 10, Oct. 2009.

Hostile California Business Climate" and "California Policies Job Killer" Don't Match Reality of Economic Data
The Public Policy Institute of California (PPIC) released a blockbuster 165 page report that carefully goes through all the economic numbers and debunks the idea that businesses have been leaving the state because of a hostile business climate. This is an in depth report based on a comprehensive database of virtually every business that employed California workers at any point from 1992 to 2004.

In the words of the study: "[T]he small number of California jobs moving to other states due to business relocation is relatively inconsequential—about 11,000 jobs per year out of more than 18 million (.06 percent). Business births, deaths, contractions, and expansions have a much greater effect on employment."

The PPIC released a study in 2005 showing that businesses were not relocating due to a poor business climate. Just take a look at what the San Diego Union-Tribune had to say then in "Study: Not many jobs leaving state," :

"The study debunks what has been gospel in economic development circles for years – that California's high costs and unwieldy regulations are driving businesses away. The issue reached a crescendo in the 2003 gubernatorial recall election. At the time, Schwarzenegger called the state's business climate the "worst in the nation" and pledged to make it better. …

The Washington Post took note of the PPIC study and had this to say:

"The findings stand in contrast to claims by various industry groups, including the California Chamber of Commerce, that California, the country's most populous state, is gripped by a hostile business climate.

"The claim is a constant one for business interests in the state, and Republican Gov. Arnold Schwarzenegger has routinely echoed it to propose policies backed by business groups, including resisting calls for tax increases to help balance a state budget that routinely suffers shortfalls."

In releasing the report, this is what the PPIC had to say about the in state migration of businesses:

"However, as the new study shows, some regions lost more than others to out-of-state relocation. The San Francisco Bay Area lost the largest share, followed by Los Angeles, while regions such as San Diego and the Inland Empire registered barely any net loss. Even within regions, there were county variations. For example, within the San Francisco Bay Area, the counties of Marin and San Francisco lost many more jobs to other states (4% each between 1992-2004) than other counties in the region. At the same time, some Bay Area counties—Contra Costa and Santa Cruz—actually gained jobs from other parts of the country.

"A look at business relocation within California shows similar variation. For example, the Inland Empire's employment grew five percent due to jobs moving in from other California regions, while employment in the greater Los Angeles area shrank (0.7%). With the exception of Los Angeles and the Bay Area, all of California's regions gained jobs from other parts of the state, with most relocation occurring from expensive coastal areas to less expensive inland regions.

"Of particular note, more relocations also occurred over short distances, with businesses moving to neighboring regions or counties rather than across the state. "These patterns suggest that businesses are moving in search of cheaper real estate, rather than for differently skilled or cheaper labor," says PPIC research fellow Jed Kolko who co-authored the report with PPIC senior fellow and UC Irvine professor David Neumark."

The two authors of the report are economists--with Ph.D's from Harvard. They write in the restrained tones of what has been called the "dismal science." But there are a few colorful passages, among them this one:

"Over the past 15 years, it has been argued that California’s hostile business environment has caused businesses to leave the state, taking valuable jobs with them. Critics of various policies affecting the state’s businesses have pointed to these claims in their arguments for more business-friendly policies and legislation. In the economic downturn that followed the dotcom bust early in this decade, these claims about California’s poor business climate flared again and did so also during the 2003 gubernatorial recall election". After his election, Governor Arnold Schwarzenegger embraced AB 32 based in large measure on the economic studies showing job growth and economic opportunities were superior to business as usual. He remains committed to AB 32 and one hopes he does not waffle on his legacy.

"The evidence indicates that job loss from interstate relocation is small across virtually all industries although more prevalent in finance and insurance. Some industries, such as manufacturing and information, are more footloose in the sense that relocation occurs more frequently. However, relocation in these footloose industries is often more common not only out of California but also into California, resulting in a small net effect."

"The data reveal some trend toward more dispersion of firms’ activities across states, with California firms employing more workers and opening more establishments out of state. However, this is offset by non-California firms doing the same within the state. Thus, the changes in firm behavior seem more likely to be a subnational reflection of some of the same forces spurring increased globalization—such as reductions in communications costs from improvements in information technology—than a reflection of the lack of attraction of California as a place to do business. This conclusion is reinforced by the timing of the changes in the geographic dispersion of the operations of California-headquartered companies. In particular, the large outward shift was concentrated during the height of the boom of the late 1990s, a period for which it would be simply implausible to argue that California was suffering from a bad business climate."

As Frank Russo has written, "old myths die hard. For the sake of better public policy and not being deluded into thinking that progress made for the "little guy" and gals of this state, the words of this report should be remembered. We don't have to forsake the environment and taking care of Californians to remain competitive. Just the opposite is true." And as Council member Mike Ioakimedes said at our city council meeting, "we don't have to make that false choice."


3. Scientist "Debate". One of the speakers in opposition to the American Lung Association Resolution began to read something from the London Times (he referred to the New York Time which was quoting from the London TImes) about the Royal Society of Science "is being forced to review its statements on climate change after a rebellion by members who question mankind's contribution to rising temperatures.

The London Times and other news media’s provided intensive coverage of a series of climate science controversies unearthed and highlighted by skeptics since November. These include the unauthorized release of e-mail messages from prominent British climate scientists at the University of East Anglia that skeptics cited as evidence that researchers were overstating the evidence for global warming and the discovery of errors in a United Nations climate report.
Two independent reviews later found no evidence that the East Anglia researchers had actively distorted climate data, but heavy press coverage had already left an impression that the scientists had schemed to repress data. Then there was the unusually cold winter in Northern Europe and the United States, which may have reinforced a perception that the Earth was not warming. (Data from the National Oceanic and Atmospheric Administration, a United States agency, show that globally, this winter was the fifth warmest in history.)

Royal Society of the United Kingdom
The Royal Society of the United Kingdom has not changed its concurring stance. According to the Telegraph, "The most prestigious group of scientists in the country was forced to act after fellows complained that doubts over man made global warming were not being communicated to the public." In May 2010, it announced that it "is presently drafting a new public facing document on climate change, to provide an updated status report on the science in an easily accessible form, also addressing the levels of certainty of key components." The society says that it is three years since the last such document was published and that, after an extensive process of debate and review, it hopes to publish the new document in the summer. The review had been planned for some time but "was given 'added impetus by concerns raised by a small group of fellows'" who "complained that so far the message has not reflected the uncertainty in the debate." The society has stated that "this is not the same as saying that the climate science itself is in error – no Fellows have expressed such a view to the RS".

Accuracy and Truth matter. When I said at the council meeting that "there was not a scintilla of truth" about the job killing AB 32, jobs loss out of the state because of environmental regulation and the global warming debate - the above is why.


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