Off to a slow start today so links are a bit late:
The House is currently taking up a bill called the Energy Consumers Relief Act, which looks to put stricter rules on the Environmental Protection Agency (EPA). The bill requires the EPA to report to Congress on any rule that has costs greater than a $1 billion. It also allows the Department of Energy to veto any rule that it believes will cause “significant adverse effects to the economy.” Of course, the vague wording gives the DOE the ability to vacate nearly any rule it wants.
But I want to focus on two similar amendments to it. The first comes from Rep. Tim Murphy (R-PA) and it would prevent the EPA from considering the social cost of carbon (SCC) when it creates rules that have costs greater than $1 billion. The second amendment, from Reps. Duncan Hunter (R-CA) and John Culberson (R-TX), would only allow the agency to take into account the SCC if it put out a separate rule finalizing what the cost would be.
Preventing the EPA to consider the SCC is absurd. Pollution is the quintessential example of a negative externality in every economics class. Basically, companies emit huge amounts of carbon and other chemicals into the air, harming the environment and hurting society, but don’t have to pay for those costs. Since no one “owns the air,” companies can offload pollutants into it without hurting their bottom line. That’s where the EPA comes in. They set regulations to limit this behavior and force companies to pay for the pollutants they emit through regulatory compliance. The SCC is a major way of doing so. It estimates the social costs to society of releasing a ton of carbon dioxide into the air. In May, the Office of Management and Budget (OMB) increased the SCC from $21/ton to $35. That’s a big change.
The SCC increases the estimated benefits of regulation.
The way this works is that when the EPA creates a rule that will, for example, reduce carbon emissions by 100,000 tons, the social benefit of that regulation would be $3.5 million (100,000 tons*$35/ton). That would then be compared to the costs of the regulation. When the SCC is higher, the total benefits and net benefits will be higher as well. Companies want the SCC to be low – the lower it is, the less chance the EPA’s proposed rules will produce net benefits and the lower the chance the industry will have to comply with them. But economists love the SCC. It internalizes the negative externality of carbon pollution, creating more efficient, fair markets.
But Reps. Murphy, Hunter and Culberson aren’t buying it. The SCC is not an easy number to determine and the EPA and other agencies have tried to estimate it for a while. That means figuring out a final number, such as Reps. Hunter and Culberson want the agency to do, is challenging and will take a while. In the meantime, we shouldn’t just ignore the SCC because we don’t have a final answer. We should use the best numbers we have while continuing to research climate change and develop a more perfect metric. Rep. Murphy, on the other hand, doesn’t even care if the EPA comes up with a final number. He wants to ban the agency from using it altogether (for rules with costs greater than $1 billion).
The OMB’s decision to increase the SCC infuriated conservatives, but the correct response is not to prevent the EPA from using it. If it wants to develop a more accurate number, then increase the agency’s funding so that it can do more research on the social costs of carbon. But these amendments attempt to fix the problem by ignoring the SCC altogether. They do not promote free markets. In fact, they do the opposite. By preventing the EPA from internalizing the negative externality, they allow companies to pollute the environment without facing the costs.
For a party so committed to laissez-faire economics, that’s incredibly anti-capitalistic.
Yesterday, MLB suspended Milwaukee Brewers outfielder Ryan Braun for the remainder of the 2013 season for violating MLB’s drug policy. He’s not contesting the penalty so it’ll go into effect immediately. The suspension stems from a list provided by Anthony Bosch, the founder of Biogenesis Lab, that had the names of MLB players who the company sold performance enhancing drugs to. The list also included Alex Rodriguez, Melky Cabrera, Nelson Cruz and other big leaguers. For months now, MLB has been investigating the connection between the players and the lab and rumors have heated up in recent weeks that the players on the list would be facing lengthy suspensions. Braun, like most other players on the list, was not cooperative with the league and refused to comment on the investigation.
This all comes just a couple years after Braun tested positive for a banned substance, but had his suspension overturned thanks to a mistake in the chain of custody in processing his urine sample. He got off on a technicality.
Braun is very lucky.
Now, Braun is finally suspended, but the punishment is much more lenient than fits the crime. Of the 65 games he’s suspended for, 50 are for him purchasing PEDs from the Biogenesis Lab and the other 15 are for his actions during the appeal process of his previous failed test.
Braun has lied repeatedly about using PEDs. He tested positive for steroids and then stood in front of the cameras and declared that he never ingested a banned substance. After he got off, he released a statement saying, “I am very pleased and relieved by today’s decision. It is the first step in restoring my good name and reputation. We were able to get through this because I am innocent and the truth is on our side.” What a bunch of BS.
So after all of this, what’s his punishment? A lousy 65 games, the $3.25 million in salary that goes with it and nothing else. He’ll be back for spring training and Opening Day next year, ready to go on as if none of this every happened. Of course, his legacy and career will always be significantly tainted. Buster Olney called him the Lance Armstrong of baseball, a fitting title. But the actual punishment is weak.
The Brewers are terrible this year – so Braun won’t miss out on a pennant race or the playoffs. He’s just taking a long offseason. And the punishment only goes down as his first violation – if it had been his second, it would’ve come with a 100-game ban and a third failed test is a lifetime ban. His decision not to appeal the ban also means that MLB Players Association won’t get involved, which could’ve been really ugly for Braun as the MLBPA was considering not supporting him in his case.
In addition, both MLB and the Players Association released statements commending Braun for taking responsibility for his actions. Taking responsibility?! He cheated, lied and is escaping with missing less than half a season! And his statement on the suspension? He spends more time looking for sympathy than apologizing.
I know MLB wants to get these suspensions over with and move past Biogenesis. It wants to put stories about performance enhancing drugs behind it and focus on the game. I bet A-Rod will work out a deal with the league in the next few days as well. But this isn’t enough. The punishment against Braun is weak.
And it’s not just fans who want a clean league, the players are sick of it as well. They wanted Braun to go down hard, but will surely be disappointed by this outcome. This wasn’t a tough punishment. It was a weak deal to put this episode in the past. And once again, Ryan Braun got off easy.
Danny Vinik 