Red States vs. Blue States (Supply-n-Demand)

I wanted to share two articles to exemplify and introduction to a HERITAGE FOUNDATION article about competition between states. The first is this article found over at HOT AIR, and it shows the damage that distortions to supply and demand for some sort of egalitarian or environmental concern can have on productive endeavors that increase the wealth of the common man. Wealth creation in other words:

If you know anything about New York in the modern era (both the state and the Big Apple), you’re likely aware that it’s not exactly a friendly landscape for the oil and gas industry. The “Keep it in the ground” crowd has a lot of influence with the Democrats who control the government. That[‘s] why, back in 2013, when the new Constitution Pipeline was proposed to carry natural gas from Pennsylvania’s rich shale oil fields to New York, activists were able to block the construction despite it already having been approved by federal regulators. Similarly, when National Grid (the local energy consortium) requested an extension to the Williams Co. Transco pipeline, they were also tied up because of the outcry from environmental activists.

Here comes the surprise that nobody could have possibly seen coming. The city and its surrounding downstate region are still expanding with new construction projects, but their energy suppliers have told them that they will not be able to supply natural gas to any new customers because they’re already at capacity. (NY Post)

Long Islanders were recently hit with bad news. National Grid, which provides natural gas for nearly 600,000 Long Island residents, announced it won’t be able to provide fuel for new customers if the proposed Williams Co. Transco pipeline expansion isn’t approved by May 15.

Earlier this year, energy company Con Ed imposed a similar moratorium on new natural-gas service in parts of Westchester County due to limited capacity on existing pipelines. These crises are completely avoidable…

For too long, politicians like Gov. Andrew Cuomo and their ill-considered energy policies have hampered the development of safe, efficient energy infrastructure, subjecting American consumers to unnecessarily high energy costs and unreliable service.

So you don’t want pipelines, eh? But you say you’d like to build more houses, apartments and office buildings? Well, you’d better figure out how to cook your food and heat your living spaces with solar panels pretty quickly because (to borrow a phrase from GoT) winter is coming. And so is lunchtime…..

The second article deals with on the one hand a Utopian [mis]understanding of alternative energy and it’s own “supply-and-demand” features built into the environmentalist hypothesis (that in the end do not fit reality). I have said for years that the supply of heavy metals and lithium which are the main ingredient to make power cells for cell phones and laptops (small/reasonable), to a whole swath of them in rows in electric cars (unreasonable).

Let me explain why I just said “unreasonable.” These ventures with Tesla and other manufacturers of electric vehicles are not a “supply-and-demand” by the free market. These ventures into wind, solar, and electric vehicles ONLY EXIST because our government has funded their “viability” in a world that if left to stand on their own would go out of business. The technology is old and never really worked, and the only people that buy Teslas, as an example, are the rich, and they are given a form of welfare to do so. (In other words, the rich are getting a form of bailout by environmentalists that say the rich are ruining the environment.)

Here is POWERLINE’S article in part:

“Green” advocates aspire to power the entire U.S. electrical system with wind and solar energy. How are they going to do that, given that wind turbines produce electricity only around 40% of the time, and solar panels produce electricity, in most areas, less than 25% of the time? The truthful answer is that whenever utilities build (or contract with) a wind farm or a solar installation, they also build a natural gas plant to provide electricity during the majority of the time when the “green” resources are idle. This is why wind and solar energy, unlike nuclear power, actually lock us into fossil fuel use for the indefinite future.

Of course, green power advocates don’t admit that they plan on using natural gas forever. They hold out hope that electricity produced by wind and solar facilities will be stored in batteries–giant ones, I assume–so that it can be used when the wind doesn’t blow and the sun doesn’t shine. No such batteries exist, of course, which is why they are not already in use. And any existing or foreseeable battery technology would rely on vast amounts of lithium, which must be mined.

Currently, the Chinese are “rush[ing] to dominate the global supply of lithium.” We do have lithium deposits in the United States, notably in the Panamint Valley of California. The Los Angeles Times reports: “A war is brewing over lithium mining at the edge of Death Valley.”

Recently, the Australia-based firm Battery Mineral Resources Ltd. asked the federal government for permission to drill four exploratory wells to see if the hot, salty brine beneath the valley floor contains economically viable concentrations of lithium. …

The drilling request has generated strong opposition from the Center for Biological Diversity, the Sierra Club and the Defenders of Wildlife, who say the drilling project would be an initial step toward the creation of a full-scale lithium mining operation.

That is the idea, I suppose.


Does it matter? There is great demand for lithium used in existing technologies–phones, laptops, electric vehicles, and so on. But the idea that batteries of any foreseeable design will combine with wind turbines and solar panels to satisfy America’s need for electricity is a fantasy. For one thing, batteries of the requisite capacity would be prohibitively expensive. It has been calculated that, using the most advanced battery technology on the market, Tesla’s 100 MW, 129 MWh battery in use in South Australia, it would cost $133 billion to store the electricity needs of my state, Minnesota, for 24 hours. That is more than one-third of the state’s annual GDP…..

AGAIN, the immutable law of supply-and-demand will come into play in rising prices of “alternative energy” and scarcity of availability… based on egalitarian environmental concerns. N O W, here is the intro to the HERITAGE FOUNDATION article noting the differences between blue-state policies and red-state policies… much of which is based on supply-and-demand regarding energy needs:

The competition among the states is becoming more intense as businesses become more mobile. Toyota and Boeing are two high-profile employers in America that have crossed state borders because of the policy advantages of one state over another. Toyota moved from high-income-tax California to no-income-tax Texas, and Boeing, based in Washington, a forced-union state, opened a new plant in South Carolina, which has a right-to-work (RTW) law. Texas Governor Rick Perry and California Governor Jerry Brown have openly sparred in recent years about which state is more pro-business. Interstate competition allows governors and legislators to learn from each other about which policies create wealth and which policies diminish wealth inside their borders.

In recent years, governors have generally divided into two competing camps, which we call the “red state model” and the “blue state model,” raising the stakes in this interstate competition. The conservative red state model is predicated on low tax rates, right-to-work laws, light regulation, and pro-energy development policies. This policy strategy is now common in most of the Southern states and the more rural and mountain states. Meanwhile, the liberal blue state model is predominantly found in the Northeast, California, Illinois, Minnesota, and, until recently, Michigan and Ohio. The blue states have doubled down on policies that include high levels of government spending, high income tax rates on the rich, generous welfare benefits, forced-union requirements, super-minimum-wage laws, and restrictions on oil and gas drilling.

In no area are the effects of these competing models more evident than in tax policy changes of recent years. California, Connecticut, Hawaii, Illinois, Minnesota, New York, and Oregon have raised their income tax rates on “the rich” since 2008.[1] In four of these states, the combined state and local income tax rate exceeds 10 percent, reaching 13.3 percent in California and 12.7 percent in New York.[2] Meanwhile, the “red states” of Arizona, Arkansas,[3] Kansas,[4] Missouri,[5] North Carolina, Oklahoma, and Idaho[6] have cut their tax rates. This has widened the income tax differential between blue states and red states for businesses and upper-income families.

Similarly, red states such as Oklahoma, Texas, and North Dakota have embraced the oil and gas drilling revolution in America. Blue states such as New York, Vermont, Illinois, and California have resisted it. Blue states have raised their minimum wages; red states generally have not.

In this study, which is a summary of our recent book with Rex Sinquefield and Travis Brown, An Inquiry into the Nature and Causes of the Wealth of States: How Taxes, Energy, and Worker Freedom Will Change the Balance of Power Among States, we examine whether these policy differentials matter and, if so, by how much.

The answer is that the states’ policy choices on taxes, regulation, energy policy, labor laws, educational choice, and so forth have a large and in most cases a statistically significant impact on the prosperity of states over each 10-year time frame examined on a rolling basis from 1970 to 2012. There are always exceptions to the rule, but in most cases the red state model is substantially outperforming the blue state model.

We find in particular that two policies matter most. Right-to-work states substantially outperform non–right-to-work states, and states with no or low income taxes have a much better economic record than high-income-tax states…..