Climate Change Part V – Putting It All Together

George Noga
Stanford University researchers estimate we will spend at least 100 trillion dollars to reduce temperature three-tenths of one degree by the end of this century.
Climate Change Part V – Putting It All Together
By: George Noga – April 9, 2017
      In case you missed the preheader, the Stanford University Energy Forum (as well as other scientists) believes mankind will spend $100,000,000,000,000 (one hundred trillion) to achieve a temperature reduction of .3 degrees (three-tenths of one degree) by the year 2100. Despite this insanity, progressives embrace man-made warming as their chosen means to achieve government control over every aspect of our lives. They can succeed only by scaring enough people to believe warming threatens life on Earth. That’s why debunking man-made warming is the most important issue of our time!
      MLLG’s position, first stated in 2007, is that Earth is in the midst of a secular, solar caused warming trend that began circa 1850 and is a normal part of alternate warming and cooling cycles throughout history. Increases in CO2 from human activity may add a small and inconsequential amount – perhaps 10% – to warming. Moreover, we believe moderate warming (as predicted by the UN-IPCC) would be a net benefit to mankind. Even if warming were a real problem, all of our current solutions are wrongheaded.
     The case against anthropogenic warming is strong. NASA documented warming in 10 other places in our solar system; the probability of this occurring if Earth’s warming is man-made is over 1,000 to 1 (2^10) against. There has been a hiatus in warming for 20 years and every computer model is laughably wrong. No model has been corrected since 1998 because it is impossible. There was warming from 1910-1945, cooling 1946-1975, warming 1976-1998 and nothing since. Try fitting that into a model. About 75% of the warming last century occurred from 1910 to 1945 when CO2 was low.
    Despite compelling evidence to the contrary, many people continue to believe warming is man-made and presents an existential threat; why is this so? Such people ignore numerous and powerful warning signs they are wrong. In addition to the evidence noted in the preceding paragraph, they choose to ignore the refusal of politicians and scientists to debate, an increasing antarctic icecap, failure of oceans to rise as expected, the decrease in extreme weather and serious frauds perpetrated by climate scientists. People misplaced their trust in the media, government-funded science and politicians – just as they did for 100 other junk science scares since 1950.
    Even if humans are responsible for warming, everything we are now doing is wrong. We should use strict cost-benefit analysis, maximize economic growth, prioritize spending programs, fund research for renewables, correctly apply the precautionary principle, stop exporting pollution, encourage debate and keep an open mind to new science. We must be fact based, principled and objective instead of fanatical and emotional. We must stop the utter insanity of spending more than $100 trillion to (perhaps – maybe) reduce temperature by a mere .3 degrees 80 years from now.
     Furthermore, we must vigorously challenge the assumption that warming is bad. It is true warming will cause fatalities, but far more people will be saved from the cold. On a net basis, millions more will live because of warming. In the US and worldwide, people prefer warmer temperatures; they don’t retire from Florida to Minnesota. A warmer planet also is better for agriculture, energy costs and biodiversity.
    Finally, Singapore has much to teach us. The average maximum daily temperature in Singapore is 55 degrees warmer than the global average. Singapore transformed itself from a third world swampy island into an uber-modern, clean, high tech city with per capita GDP of $65,000 (7th in the world). It is ethnically diverse and one of the most peaceful places on earth. If Singapore achieved all this despite being 55 degrees warmer, the rest of the world should easily cope with just a degree or so of warming.
    This concludes our climate change series. If you still believe in man-made warming, you must ignore, inter alia, 1,000 to 1 odds against, the failure of all climate models, no warming since 1998, the climate pattern since 1910 and Singapore. And don’t forget the record population of polar bears. I bet you thought I had forgotten about them!
The 105th anniversary of the sinking of the Titanic is the subject of our next post

Climate Change Part IV – If Humans Cause Warming 

George Noga
We are spending trillions to achieve an uncertain, infinitesimal benefit in the distant future. What actions should we take today if warming is man-made? 
Climate Change Part IV – If Humans Cause Warming
By: George Noga – April 2, 2017
      Assuming (for purposes of this posting only) that MLLG believes human activity is responsible for global warming, this post presents the ten most critical policies and actions (in approximate order of priority) that mankind should take in response.
1. Use cost-benefit analysis. EPA carbon regulations cost $100 billion over five years. The putative benefits are reductions of 1 part per thousand per year in carbon and 2.35 ten-thousandths of one degree per year in temperature. Costs are real, immediate and certain whereas the benefits are microscopic, remote and uncertain. Europe’s diesel regulations cause thousands of deaths each year due to increased soot, but the benefit is only 4 one-thousandths of one degree in 50 years. Current climate policies cost trillions and will make no detectable difference in climate even 100 years in the future.
2. Maximize economic growth. A wealthy planet is better able both to alter and to mitigate the effects of warming. In fact, mitigation may be a much better and less costly strategy to combat warming versus trying to lower temperature. This conserves resources if warming proves to be solar caused or is less problematic than expected.
3. Fund research for renewable energy and conservation. Today, wind, solar, bio-fuels and other renewables are not cost effective. Rather than squander scarce resources as described in number one supra, redirect spending toward research for the future.
4. Prioritize spending. Government spending (US and foreign) must achieve the most good for the most people – again based on cost-benefit analysis. Independent scientists and economists rank many priorities ahead of climate including third world projects for clean water, sanitation and immunization. Hundreds of millions of lives could be saved today versus the possibility of some infinitesimal and uncertain future climate benefit.
5. Don’t export pollution. Measures to reduce CO2 imposed only by rich nations result in the shifting of production to poorer countries without such regulations. This process exports pollution and exacerbates warming. Earth is better off when production takes place in the US versus India or China. The US should abandon unilateral actions that waste money and export warming. Carbon reduction must be global to be effective.
6. Correctly apply the precautionary principle. It is sensible to exercise caution but nonsensical to assert that one can’t be too careful. The worst case scenario should never dictate policy; under that logic, no one would ever get into an automobile. It is a grotesque misapplication of the precautionary principle to bankrupt ourselves today in order to lavish money on a possible but uncertain problem in the distant future.
7. Fund research in an unbiased manner. All public funding should be devoid of politics and not biased in favor of scientists with any particular point of view. Our objective is to get at the truth, not to advance an agenda. The UN-IPCC should be non political with scientists, not politicians, writing all the reports and summaries.
8. Science is never settled. Scientists should continue to study all aspects of climate change including: (1) the linkage between CO2 and temperature as well as any amplification or dampening effects; (2) whether warming is positive or negative for humanity understanding that warming kills far fewer people than cooling; (3) warming throughout the solar system; and (4) climate models that incorporate the past 20 years of data. Finally, because there is so much hullabaloo about scientific consensus, there should be an independent and anonymous poll conducted of climate scientists.
9. Encourage debates. Scientists should publicly debate each other as should politicians in unbiased media environments. That would be very enlightening.
10. Be objective and eschew emotion and fanaticism. Scientists, politicians, media and educators all should be strictly objective and dispassionate. We all seek the truth.
    Not even one of the above 10 policies is now being followed; instead, antithetical policies are in effect. There is no cost-benefit analysis, robust economic growth, prioritization of spending, debate or objectivity and we are exporting pollution.
    It is in the interest of all, believers and deniers alike, dispassionately and objectively to seek the truth, even if it ultimately shatters our current beliefs. Even those who passionately believe in man-made warming must recognize that what we are now doing is not only wrong but incredibly wasteful, counterproductive and dishonest!
The next post on April 9th is the final in our climate change series

Climate Change Part III – Why People Believe

George Noga
There is no shortage of reasons people cling to their belief in man-made warming.  
Climate Change Part III – Why People Believe
By: George Noga – March 26, 2017
      Progressives dogmatically embrace man-made climate change because it is the key to realizing their global agenda. Whether or not climate change is real is irrelevant to them because it is the only issue that can enable them to force their agenda on all of humanity. They need us to believe climate change threatens the existence of life on Earth and only government can prevent it. If people accept that premise, they will cede total power to liberal elites to impose a carbon tax, VAT and Draconian regulations, the end result of which is absolute government control over every aspect of our lives!
    This is so critical, it bears restating. Liberals see man-made climate change as a wedge issue to gain total control, which they can’t achieve via the ballot box. We never will change progressive minds because they don’t give a hoot about climate change; to them it is only a means to an end. Liberals succeed only if they can convince enough others that climate change is real. That is how the battle of our time will be decided.
      Let’s look at the top 5 reasons other people, including many of good will, continue to believe in man-made global warming despite all the evidence to the contrary.
1. Warning signs were ignored. There have been numerous and powerful warning signs warming is not man-made. The refusal of scientists and politicians to debate was a bright red flag; if the science truly was settled, they should have been eager to debate. Warming throughout our solar system yields powerful (1,000 to 1) evidence of solar causation. The 20-year hiatus in warming and the failure of computer models are dispositive. The increasing antarctic icecap, failure of seas to rise as expected and the decrease in extreme weather are compelling evidence. Frauds were promulgated by climate scientists to show more warming. They altered data (infamous hockey stick graph) and recently, NOAA scientists substituted flawed data for correct data.
2. People wanted to believe. They uncritically accepted warming just as they did other junk science: fluoridation, pesticides, Laetrile, overpopulation, acid rain, organic food, ozone holes, Alar, silicon implants, killer bees, GMOs, vaccines, global cooling, Mad Cow, SARS, Avian Flu, Thimerosal, Swine Flu, dioxin, PCBs, BPA, pink slime, fracking and acrylamide to name but a few of the 100 cases of recent junk science.
3. They trusted the media. There is the thinnest reed of truth (a tenuous link between CO2 and temperature) to beguile even people of good will. But believers forgot that the media carry water for progressives; they are the opposite side of the same coin.
4. Science is politicized; never settled. Government funds $3,000 to every $1 funded by others for climate research; you get what you pay for. President Eisenhower said the following: “The prospect of domination of the nation’s scholars by federal allocations and the power of money is ever present and is gravely to be regarded.” Newton discovered gravity in 1665; it was settled until Einstein 240 years later. People accepted that 97% of climate scientists believe in man-made causation; the real figure is less than 50% and falling rapidly despite the torrent of government money.
5. They misunderstand data. It always is the warmest year somewhere. It is true 2012 was the hottest year in the continental US (1.58% of Earth’s landmass) but 2001, 2002, 2003, 2004, 2008, 2009, 2010 and 2011 all were cooler than 1998 (warmest recent year) by a greater margin than 2012 was warmer than 1998. Most (nearly 75%) of the warming in the 20th century occurred from 1910 to 1945 with low CO2 levels.
    For progressives, man-made warming is a religion replete with sacraments (bio-fuel, windmills) and demons (CO2, coal). It labels apostates deniers and seeks to silence or imprison them. They are impervious to facts or logic. Non-progressives misplace their trust in politicians, the media and government-funded science. They ignore abundant and compelling red flags that they are wrong and fail to use every day horse sense.
In Part IV of this series on April 2nd, I become a climate change believer 

Climate Change Part II – Computer Models

George Noga
No computer models of climate change have been updated to incorporate the actual temperature record of the past twenty years. Why is this true?
Climate Change Part II – Computer Models
By: George Noga – March 19, 2017
       Computer models predicting sharply higher temperatures were not only wrong but drastically so. And the models were wrong about much more than temperatures. They predicted antarctic ice would decrease; instead, it has increased and it is ten times larger than the arctic icecap. The predicted rise in sea levels is not materializing and the rate is slowing. Extreme weather has declined as proven by decreased insurance claims. Oh, and those disappearing Pacific islands – some are actually increasing.
      Despite their serious flaws, models have not been updated with results of the past 20 years. Why is this true given the gusher of government money available for such purposes? Moreover, the first scientist to update a model with actual temperatures since 1998 and still show alarming global warming would become an instant climate warrior rock star. Everything else has been improved in the past 20 years; compare your present cell phone to 1997 models the size of a brick and with long antennas.
      Are scientists too dumb or too lazy to update and to correct their computer models? Do they lack the necessary funding? Are they too busy teaching or performing other research? Do they lack either the incentive or the desire? Following are the five main reasons why no computer models have been updated for at least 20 years.
1. It simply cannot be done. As noted in Part I, temperatures increased sharply from 1910 to 1945 then cooled 1946-1975, then warmed moderately 1976-1998 and then paused beginning in 1999. Try fitting those data into a computer model.
2. Models rely on powerful CO2 feedback loops. To show alarming future warming, models assume ultra high levels of CO2 feedback amplification. Research shows such strong feedback may be wrong by up to 10 times. Even if they continued to use 300% amplification, they still could not make models mesh with observed temperature data.
3. Accurate models would show man-made warming is not a problem. Scientists could construct a plausible computer model showing a modest amount of anthropogenic warming; however, that is unsuited to their need to portray a cataclysmic and imminent global crisis as expected and demanded by their government patrons.
4. Funding for future climate and other research would evaporate. In addition to perpetual loss of funding, scientists who updated a model to show little, if any, man-made warming would experience all-out attacks on their work, methods, motives and ad hominem attacks as well. They may even be charged with thought crimes.
5. Scientists disavowing human causation would be savaged. Instead of their current status as moral warriors occupying the high ground fighting an imminent global crisis, they instantly would be regarded as bottom-feeding pariah. They would incur the wrath of those proven wrong, would become persona non grata on campus and would be shunned by their peers. The environmental religion is unforgiving to apostates. Instead of media darlings who do no wrong, they would be tarred as heretical climate deniers.
    I turn to Occam’s Razor (simplest explanation is the most likely one) to revisit the question of why computer models have not been corrected or updated. The simplest answer clearly is that a valid climate model cannot be constructed that explains the temperature record since 1910 including the pause in warming since 1998 and still show the desired results. In this case however, I also am going to turn to Noga’s Razor, which states that when there is only one plausible answer, it is the correct one.
    The absence of updated or corrected computer models for two decades constitutes dispositive and prima facie evidence human activity does not cause climate change.
Research note: I have invested considerable time researching this post. There are many climate models and some may have been updated, at least in part. It is possible there may exist climate models which include data for the past 20 years. What I do believe is that there are no updated computer models showing the same sharply rising temperatures as the original models. If such models existed, they would be widely touted by media and climate warriors.
Our next post March 26th is Part III of our climate change series

Climate Change Part I – Causation

George Noga
Climate change is the key for progressives to impose their agenda which they can’t
achieve via elections. If they succeed, government will control every aspect of our lives.
That is the reason MLLG is publishing this fact-based and principled five-part series.
Climate Change Part I – Causation
By: George Noga – March 15, 2017
     Anyone who reads our entire five-part series on man-made climate change may never look at that subject the same way again. Following is a summary of each part.
Part I – Overview and the role of human activity in climate change
     Summary of MLLG position: Earth has been in a secular, solar-caused warming trend since circa 1850; this is a normal part of alternate warming and cooling cycles throughout history. Increases in CO2 resulting from human activity may contribute to warming to a small and inconsequential extent – perhaps 10%. Moreover, the moderate warming predicted by the UN-IPCC is a net benefit to mankind. Present attempts to lower CO2 incur ruinous costs to achieve infinitesimal benefits and are disastrous. Bottom Line: Warming is likely about 90% solar and only about 10% anthropogenic.
The Five Main Arguments Against Anthropogenic Warming
1. Warming throughout solar system: NASA has documented warming on our moon, Mars, Jupiter, Saturn, Neptune, Triton, Pluto, Enceladus, Dysmonia and Eris. (Specific temperature data are on our website.) Much of this warming has a similar pattern to Earth’s and there is not a single instance of observed non-warming anywhere in our solar system. The odds are over 1,000 to 1 (2^10) against this occurring in all ten out of ten other places (where data exist) in our solar system if temperatures on Earth were rising due to human activity. This is nearly irrefutable evidence of solar causation.
2. No warming for 20 years: There has been no net global warming at least since 1998 except possibly for the El Nino years of 2015 and 2016. Most (nearly 75%) of the warming in the 20th century occurred from 1910 to 1945 when CO2 was low.
3. Temperature patterns are consistent with solar causation: Weather since at least 1910 fits a secular warming paradigm. Temperatures increase in fits and starts; there are long pauses and even intervals of cooling. Temperatures increased from 1910-1945, cooled from 1946-1975, warmed from 1976-1998 and paused from 1999 to now. These data are consistent with solar causation but inconsistent with CO2 causation and all models.
4. Climate models are wrong: Models have not come even remotely close to predicting temperatures for the past 20 years. They haven’t been updated because it is impossible for them to account for the hiatus in warming since 1998. As shown infra, models rely on 300% amplification of CO2 feedback to achieve the high future temperatures predicted. Such feedback now appears wrong. Also, if warming is solar caused and behaves as shown in number 3 above, then no computer model could ever predict it.
5. CO2 feedback is much less than believed: Climate models assume increases in CO2 are amplified (increased) through feedback by 300%; instead, current research (now being peer reviewed) shows it could be dampened (decreased) by more than 50%. That difference means the effect of CO2 increases on climate change is lower than predicted by all climate models by a factor of up to 10 times. Increases in CO2 still may impact temperatures but by up to 10 times less than that shown in the models. Thus, CO2 can explain only about 10% of climate change, meaning the other 90% is solar. Note: Even if the amplification/dampening effects cited herein ultimately are found to be different, it would not change the fact that temperatures cannot be explained by changes in CO2.
      There is much more to the case against man-made warming, but I’ll close with this vignette. Ever since man trod this earth, climate change was 100% due to nature. Now, the climate consternation folks want us to believe that starting 40 years ago climate change is 100% due to human activity and has nothing to do with nature. Go figure.
Part II on March 19th – Why Climate Models Have Not Been Updated

Restoring Confidence in Police

George Noga
Confidence in police began to decline decades ago and now is low across all demographic groups. This post presents a practical plan to restore confidence.
Restoring Confidence in Police
By: George Noga – March 12, 2017

      Our September 25th post Crisis of Confidence in Police (online at www.mllg.us) was highly critical of policing in America and we received push back from some readers. When we criticize, we also like to proffer solutions; hence, we present this 10-part plan – in rough order of importance – for restoring confidence in police.

1. Engage in self-evaluation. In the post Vietnam era, the military was in shambles. Like the police today, they were poorly perceived by the public. They took a critical look at themselves and transformed the military into the most trusted institution in America. Police must perform a similar realistic and critical review to understand why there is such a wide trust gap and then take all the necessary corrective actions.
2. Create a West Point for police. In another lesson from the military, a national police service academy should be created exactly like the others. This would attract many of the best and brightest into policing and provide leadership and professionalism.
3. Enhance professionalism at all levels. Advancement to sergeant, lieutenant, captain and senior levels should require further education and training. This is another lesson from the military, where advancement to each rank requires professional development. To advance to a senior police command position should require graduation from something akin to the War College, required for all military general officers. Under no circumstances should advancement ever be linked to the number of tickets or arrests.
4. Embrace citizen review boards. All jurisdictions should have non-political review boards and then work closely with them to build better community relations. Such boards should not be viewed as inimical but rather as a valuable resource. Use every possible opportunity to learn from community leaders and to build trust.
5. Abolish the us-versus-them attitude. Police form insular cliques, walling themselves off from their communities. They protect each other, even against accusations of wrongdoing, with a blue wall of silence. In the military there is no green wall of silence despite combat situations. Duty to the public always must come before police loyalty to their buddies. Until that happens, police never will earn the full respect of the public. This means that the practice of testilying (police lying under oath) also must end.
6. Use SWAT teams only when absolutely necessary. Currently SWAT teams are used over 50,000 times a year – sometimes to serve routine subpoenas. Such lethal force should be used sparingly and only when deemed absolutely essential.
7. Police should be non-union. It is inconceivable the military would be unionized, go on strikes, engage in job actions or tomfoolery regarding pay and benefits such as overtime spiking. This same paradigm should apply to police. Public unions create enormous resentment among private sector workers, only 6% of whom are unionized.
8. Abolish civil asset forfeiture. This is an incredibly sleazy, self-serving, extra legal practice that likely is unconstitutional. It reflects incredibly poorly on police, creates widespread resentment with the pubic and can’t be terminated soon enough.
9. Clean up the atmospherics. As part of heightened police professionalism, abolish telephone solicitations which grate on the public. Uniforms should be basic, no-frills with high ranking officers wearing civilian clothes; save the five-star general uniforms for rare formal occasions. At public events be modest and avoid self aggrandizement.
10. Use broken-window policing. Implement legal and appropriate measures proven most effective at preventing and lowering crime, regardless of any political pressure to the contrary. This means fully embracing broken-window policing.

   The erosion of confidence in the police to its present low level happened over decades and has myriad causes. The ten-part plan presented herein will not be quick or easy but it will restore the public’s confidence in the police to protect and to serve!

On March 17th MLLG begins its five-part series about climate change 

Trump Derangement Syndrome

George Noga
TDS, or Trump Derangement Syndrome, is a mental disorder that causes loss of all sense of proportion, civility and ability to think or act in a controlled manner.
Trump Derangement Syndrome
By: George Noga – March 5, 2017
     Trump Derangement Syndrome or “TDS” is a mental illness with a known cause but no known cure. It’s most prevalent on both coasts and college campuses. Sufferers avoid treatment because the malady releases endorphins, makes them feel smug about themselves and is virtue signalling. The main symptom is uncontrollable expressions of outrage at even the slightest non provocation. Victims lose all sense of proportion, civility and ability to think or act in a controlled manner. In the disease’s end stages, victims lose their grip on reality and can’t tell fact from fiction. TDS sufferers are mired in a state of denial. Note: there are no electoral votes in the state of denial.
      TDS struck the 60 Democrat congressmen boycotting the inauguration. Madonna had a severe case, making her muse about blowing up the White House. Meryl Streep became unglued with TDS during the Golden Globes. The Rockettes were afflicted as were many celebrities asked to perform at the inaugural. Among senators, Cory Booker and Pocahontas, err, Elizabeth Warren suffered severe amnesia, forgetting their earlier passionate support for school choice when questioning Betsy DeVos.
      When conservatives lose elections, liberals and the media always attribute the loss to repudiation of their candidates and policies. When progressives lose, it is always because of fear, anger, hate, bigotry, Fox News, Drudge, talk radio, internet memes and now Russia. Obama attributed the 2016 loss to voters “afraid, suspicious and fearful“. This follows his remarks claiming voters “get bitter, cling to guns or religion or antipathy toward people who aren’t like them or anti-immigrant sentiment or anti-trade frustrations“. Liberals can’t imagine voters rejecting their vapid ideas, hence TDS.
     TDS caused liberals to draw the wrong conclusions about the election, to deny reality and to set a disastrous course for 2018 and 2020. They face erosion in support from both blacks and private sector unions in the rust belt. Their leadership in the House is all over 75 years old. How will a party led by Chuck Schumer, Tom Perez, Nancy Pelosi, Bernie Sanders and Pocahontas fare in 2018 senate races in states like North Dakota, which Trump carried by 36 points and Heitkamp won with 50.2% last go-round?  Their main presidential candidates for 2020 are Andrew Cuomo, Cory Booker and Pocahontas – George McGovern redux. Meanwhile, Republicans are only one state legislature short of the two-thirds needed to call a constitutional convention.
     The Sturm und Drang on college campuses is a TDS symptom but also is due to the realization their liberal god has failed. Obama was likely the most liberal president America will ever have and he failed to accomplish anything. Students have total control over campuses yet demand even more; they are beginning to eat their own. Progressives spent like drunken sailors, still the economy is sclerotic. For the first time ever, they will be worse off than their parents. And then along came Trump!
     The entire world is moving rapidly to the right; the black swans are circling and the Gods of the Copybook Headings, with terror and slaughter, are beginning to return.
Next Post on March 12th is: Restoring Confidence in the Police 

A Personal Memoir On Regulation

George Noga
My experience owning and managing a highly regulated business for 35 years
A Personal Memoir On Regulation
By: George Noga – March 1, 2017
      After a decade in large corporations, I started a financial services business. Before conducting any business, I formed a broker-dealer firm to comply with regulations for sale of investments. Within weeks of registering, I was subjected to a surprise SEC examination and found in violation of a few paperwork regulations A full blown investigation ensued which took 3 years and $150,000 (today’s dollars) to settle. In the end, I was formally censured by the SEC, which became part of my permanent record. All this occurred before I had even one client or had sold even one product.
      Fast forward many years and my growing business now was regulated by the SEC, NASD, FINRA and 20 states. Agents from one of the states arrived for a surprise inspection; after poking around for several days, they discovered (horrors) that a newly hired broker had made a single $5,000 sale a few days before his registration in that state had become effective. This broker had been duly registered with the SEC and NASD and we had submitted his state registration over 3 weeks previous but it had not been timely processed. This became a cause celebre; my firm was reprimanded, fined and subjected to further examinations; another indelible violation was on my record.
      In my career these were the only two regulatory hiccups; yet I was tarred with the same broad brush as truly dishonest brokers who caused great harm. My cost and sanctions were more severe than if I never had registered in the first place. Regulations are so numerous, complex and arcane it is impossible to be in full compliance and I was perpetually at the mercy of any benighted regulator with a chip on his shoulder. My firm with 50 brokers was subject to the same regulations as industry behemoths, which could afford to hire a veritable legion of high-priced compliance professionals.
    Despite all the lunacy, I would not object to the onerous regulatory regimen if it actually protected investors. Instead, regulation confuses and harms investors. It gives them a false sense of security that the government is looking out for them; whereas, in reality, the rules are the same as always, i.e. investors must know what they are doing and who they are doing it with. Investors can’t distinguish good brokers from dangerous ones because everyone in the industry for awhile has a record of violations. And, of course, the not inconsequential cost of regulation is passed on to clients.
     Prospectuses were required to provide investors full informative disclosure but have been subverted to become nothing more than insurance policies for promoters. The list of risk factors is endless; yet most investments that go bad do so because of unknown and/or unknowable risks not among the factors listed. The prose has become turgid with horrors such as indecipherable 257 word sentences explaining tax consequences.
     Regulators behave in accordance with the tenets of public sector economics, i.e. they respond to personal incentives and not to the interests of investors. There has been a long train of frauds, abuses and Ponzi schemes such as Madoff that have gone on for decades despite ongoing SEC and FINRA examinations and even after regulators were tipped off about the wrongdoing and given a road map to uncover the fraud.
     The goal of regulators is not about promoting honest, ethical, moral, client-friendly or even lawful behavior. It is only about mindless compliance with ever-changing and expanding esoteric and complex rules promulgated by politicized, bureaucrats and requiring a phalanx of specialists to interpret and to enforce. Moreover, the regulations are only tangentially, if at all, related to serving the interests of the public.
     I close with one final outrage. I retired in 2009 and have not been licensed since then. Nevertheless, by virtue of continuing to receive compensation as a retired broker, I remain subject to regulation until the day I die and beyond. After I cross that final bar, my heirs remain subject to regulation. It never ends; even the grave is no respite.
   My lifetime of experience convinces me government regulation is a vast Kafkaesque wasteland that benefits no one except the regulators. And the band plays on!
The next post on March 5th  addresses Trump Derangement Syndrome

Excess Regulation Costs America $5 Trillion

George Noga
This post quantifies the true cost of excess regulation and explains how it impedes growth.
Excess Regulation Costs America $5 Trillion
By: George Noga – February 26, 2017
     The USA has not achieved 3% economic growth since 2005, a stretch of 11 years and counting. Previously, the longest period without 3% growth was a mere four years from 1930 to 1933! Excessive government regulation is the primary cause, yet few Americans truly understand the grave harm this causes and how it wreaks its damage.
    If the regulatory burden had been held constant at 1980 levels, when regulation already was pervasive, the US economy would be 25% larger today. That translates to unrealized economic growth of $5 trillion, equal in 2017 to $15,000 for every man, woman and child in America, or $60,000 for a family of four, each and every year forever. The regulatory cost for the average business is 21% of payroll. The costs used herein are only incremental costs since 1980; the total costs are vastly higher.
     The cumulative effect of new regulations since 1980 costs us nearly 1% per year in GDP. If the US regulatory burden were its own country, it would be the world’s fourth largest economy, bigger than Germany, France, and the UK. Source Note: Most data cited herein are from the Mercatus Center at George Mason University; some data have been extrapolated from 2012 (when their study concluded) to 2017 by MLLG.
 
    Now that we have quantified the horrific cost of excess regulation, let’s look at how it savages economic growth. The direct cost of compliance alone is $2 trillion per year. Regulation results in less investment, misallocation of resources and increased unemployment. Following are specific insights and examples of how the 1+ million regulations now in existence destroy economic growth and harm American families.
     The first insight is that regulation must be viewed from a cumulative perspective. The effect of adding one incremental regulation onto the mass of existing regulations creates an endogenous effect that is far greater than the impact of just the newly added regulation and is compounded by the uncertainty and likelihood of future regulations.
    Most industries succeed in regulatory capture, i.e. manipulating the regulators and using regulation as a weapon to prevent competition. Big companies use regulation to quash smaller firms. Researchers found that stocks of companies heavily committed to lobbying outperform the S&P 500 by 25%. The lesson is not lost on business: better to invest in gaming government rather than in creating new products and jobs.
      The World Bank Ease of Doing Business Index lowered the US from third to eighth place during the past eight years. During the same period, getting a construction permit increased from 40 to 81 days. Enforcing a contract now takes 420 days compared to 300. Regulatory risk has jumped 80%; capital expenditures dropped $32 billion and jobs shrank by 1.1 million. Alarmingly, many more regulations now carry criminal penalties whereas in the past they were simply civil. Remember the collapse of  Arthur Anderson, the giant CPA firm, when it was slapped with ersatz criminal charges?
      Progressives believe society would be better if governing elites (i.e. progressives) used highly credentialed experts in every field to establish enlightened rules to govern behavior. This is a fundamentally flawed view of human nature and of how the world really works. As has been repeatedly demonstrated throughout human history, free people and free markets work best without the heavy hand of government.
     President Trump recently signed an executive order requiring that every dollar of cost imposed by new regulations be offset by eliminating two dollars of other regulatory costs. This is a good start not only for obvious economic reasons but because it can change the culture and incentives from rule making to deregulation.
Next from MLLG on March 1st – A Personal Perspective on Regulation

Americans Vote With Their Feet

George Noga
People vote with their feet and 1,000 Americans each day are leaving blue state
progressive hellholes and moving to red states with greater economic freedom. 
Americans Vote With Their Feet
By: George Noga – February 19, 2017

     As far back as 260 years ago Americans voted with their feet; witness this excerpt from a 1775 letter in the Boston Gazette.

“Taxes continue very high. A great many of our industrious inhabitants are gone into the country; the burden now falls on a smaller number – and they less able to bear it.  Some have moved and others are about to move to country towns where their taxes are greatly eased. I love my native town but as my taxes are so large, I am resolved to move my family into the country.”
     Liberal politicians in California, New York, Illinois and other blue states have not learned the lesson from 1775. Nearly 1,000 people every day move from blue to red states. There are critical shortages of moving vans in California and New York and corresponding gluts in Texas and Florida. Illinois is hemorrhaging people. Folks fleeing blue states earn $20,000 more (per IRS) than those moving in and the gap is widening. The divide in education and social pathologies undoubtedly is just as great.
     Why is this so, given that blue states claim to be creating utopias for workers? The main reasons cited by those escaping are: (1) no right to work law; (2) high income tax rates; (3) high minimum wages; (4) pro-union work rules; (5) extravagant welfare benefits; (6) expansive regulations; and (7) green energy policies. Instead of workers’ paradises, progressive policies always result in impoverished snake pits.
     In a recent year, Florida gained nearly $10 billion in income from blue state defectors and Texas gained $6 billion. Five of the seven states with the biggest income gains have no income tax at all. New York was the biggest loser, shedding 115,000 people and $6 billion while Illinois lost over 110,000 people and $4 billion of income. In the past 10 years, a net of 1.5 million refugees abandoned California.
     Throughout human history, productive, hard-working people gravitate to where there is economic freedom. According to Gallup’s Index of Well Being, states with greater economic freedom also rank higher in happiness and well being. The five states ranking highest in economic freedom are SD, ND, TN, ID and OK (all red), while the five worst are NY, CA, NJ, HI and VT (all blue). The top 10 states in freedom enjoy median a household income $9,000 or 21% higher than the bottom 10. Moreover, all minority groups and immigrants in the freedom states also earn considerably more.
      States with more laissez-faire policies and greater economic freedom enjoy higher median incomes, more equitable income distribution, less poverty, greater success for immigrants and minorities and better overall well being. Despite hyperventilation by liberals, it is crystal clear in the real world which policies work and which fail. Smaller, less intrusive government always triumphs over big brother statism. America is voting with its feet resulting in a landslide for more liberty and less government!
      P.S. Will the last person leaving Illinois kindly turn off the lights?
Our next post February 26th takes on government regulation