US government fuels black liquor

The Nation:

"Seventy-three percent of the energy we use in our mill system we produce," says Ann Wrobleski, [International Paper's] vice president for global government relations. "We feel like we're the original green industry, if you will." (In developed nations, paper is the third-largest industrial greenhouse gas emitter, behind the steel and chemical industries.)

By adding diesel fuel to the black liquor, paper companies produce a mixture that qualifies for the mixed-fuel tax credit, allowing them to burn "black liquor into gold," as a JPMorgan report put it. It's unclear who first came up with the idea--Wrobleski told me it was "outside consultants"--but at some point last fall IP and Verso, another paper company, formerly a part of IP, began adding diesel to its black liquor and applied to the IRS for the credit. (Verso nabbed $29.7 million at just one of its mills in the final quarter of 2008 for its use of mixed fuel.)

Despite the obvious contrivance of the procedure, Wrobleski is unapologetic: "The credit is supposed to encourage the use of green fuel." Sure, I said, but isn't it a bit weird you're now adding diesel fuel to the process in order to take advantage of it? "It is what it is," she said.

Others are less charitable. "You use the toilet every day," said one hedge fund analyst who's been closely following the issue. "Imagine if you could start pouring a little gasoline into the bowl and get fifty cents a gallon every time you flushed."

No one in Congress seems to have anticipated this creative maneuver. This past fall the Joint Committee on Taxation computed the cost of extending the tax credit for three months and projected it would cost a manageable $61 million. It now appears that the extension (which was passed as part of the TARP) could cost as much as $2 billion before the credits expire at the end of this calendar year.

Woman too large for New Zealand

The Guardian

New Zealand has added another cruel cut to the myriad indignities visited upon those of larger girth: anyone with a dangerously high body mass index (BMI) is likely to be denied permission to emigrate there. Richie Trezise, 35, a Welsh submarine cable specialist, was initially rejected because of a BMI of 42 (25 or higher is regarded as overweight); he lost weight, but his wife Rowan, 33, has not found it so easy. For months she has tried to slim down enough to join her husband; if she can't do it by Christmas, he will have to give up his job and come home.

The government's reasoning is simple: it will take only immigrants of an "acceptable standard of health", ie those "unlikely to impose significant costs or demands on New Zealand's health or special education services" (a requirement that raises the even more controversial possibility of applicants being turned down for mental health reasons). Obese people are more likely to suffer from heart disease, diabetes, strokes and high blood pressure; ergo, obese people are not allowed.

The Sun has pictures.

New Zealand can't be blamed for Mrs. Trezise's weight. It can be blamed for causing its own citizens to be overweight. Its healthcare policy has weakened the incentive to stay fit.

Evidence? Obesity is an epidemic in New Zealand. As one news source points out,

The country's health care system cannot afford to open its doors to overweight immigrants, a spokesman for New Zealand's Fight the Obesity Epidemic explained to the Daily Mail.

Over half of New Zealand adults and nearly one-third of New Zealand children are already overweight or obese, according to the group. Those figures are expected to rise, as are the health problems associated with being overweight, such as high blood pressure and diabetes.

The UAE does not limit immigrants by weight, but then it doesn't let them participate in the health plan for citizens. Obesity among UAE nationals is a considered a social problem and is related to the high rate of diabetes.

The UAE welfare state

Bloomberg:

All 800,000 Emirati citizens get free education and health care, and subsidized utilities. Emirati men can claim free land and no-interest loans to build homes. Other benefits include a $19,000 payment toward wedding costs.

The handouts, based on traditions of royal patronage dating back centuries to Bedouin society, now discourage citizens from working, academics say. Expatriates outnumber Emiratis and dominate fields such as banking, law and technology. The quandary for Sheikh Mohammed is how to reduce the culture of dependence without alienating his people.

``The relationship between work and income is broken,'' says Kenneth Wilson, Dubai-based director of the Economic and Policy Research Unit at Zayed University, a school for Emirati women that opened in 1998. ``That's unlikely to change until the government starts trying to give incentives to work in the private or corporate sector.''

The phrase "culture of dependency" bothers me. Suppose I inherited stock and could live very comfortably off of the dividends if I chose. Would you say I was dependent on the stock? And does it create an incentive for me to stop working? No; Bill Gates is still working plenty hard.

The UAE is a very rich country and it is only natural that the wealth owned by the government/rulers is shared with the citizens. Where economists begin to worry is when the size of the transfers creates adverse incentives. For example, suppose you get more from the government if you earn less. This cuts your incentive to work. Or suppose underpricing of utilities causes you to waste water and electricity -- there are more efficient ways to make transfers. Or suppose that government jobs are require little effort and pay much more than the private sector -- where's the incentive to choose the private sector rather than engaging in rent-seeking activities (wasta) to get a government job? Or suppose you are guaranteed a government job as long as you have any college degree -- where is the incentive to excel in college?

It's not the size of the transfers. It's their design.

The Bloomberg article goes on to suggest that the transfers buy political allegiance. If that is true then the trick to solving the Emiratization problem will be to reform the welfare system without cutting the benefits to most citizens.

Price ceilings on healthy foods suggested

The Gulf News reports:

Healthy foods such as fruits and vegetables may soon be cheaper due to government efforts to control rising obesity in the society, experts said.

In the UAE, modifications to the Diet and Physical Activity Strategy (DIPAS) for Gulf countries include selling fruits and vegetables and other health foods at lower prices, and involving various government agencies and ministries.

Dr Huda Al Suwaidi, consultant in family medicine at the Health Ministry, told Gulf News that the initiative was important as unhealthy diet and lifestyle gave rise to many health problems in the region, including diabetes and cardiovascular disease.

She said the government would first seek voluntary participation from supermarkets.

"We might even get the Ministry of Finance to come up with legislation that would control the prices of vegetables and fruits, because it will be a way of getting people to eat more healthy food," she said.

She said the Health Ministry would lend its name in promoting supermarkets and cooperatives that take up the initiative voluntarily, as an incentive.

Introducing a price ceiling to lower the price of healthy foods would give consumers the incentive to seek to consume more healthy food, but it will also give suppliers less incentive to provide healthy foods. Consumers will end up consuming less, not more healthy food -- exactly the opposite of the good intentions of the Health Ministry.

If the ministry wants to spur consumption of healthy food it needs to either convince consumers to buy more at given prices, or subsidize healthy food in the marketplace.

The Gulf News article continues:

A Diet and Physical Activity Strategy also calls on the UAE to conduct a survey on social, demographical, economic and psychological factors influencing health in the UAE, which will be part of a global WHO and UN survey.

The survey could begin by the end of the year and will collect information on all age groups in the population, including their body mass index, blood sugar levels and cholesterol levels, as well as lifestyle.

About 70 per cent of men above 30 in the UAE are overweight and 30 per cent obese, while 78 per cent of women in the same age group are overweight and 50 per cent obese, according to 2005 WHO statistics. More than 20 per cent of schoolchildren aged 12 to 16 in the UAE are overweight, while 12 per cent are already obese.

Let's be honest and say what the article does not say directly. The population described here is not the UAE population, but the 20 percent who are nationals. A commenter at UAE community blog has marshalled the statistics and made this point very well. See also this excellent comment.

Because the government also provides health care to nationals it may well be that the government will save money by subsidizing health foods. Except of course that it would subsidizing healthy foods for the entire population of the UAE. Perhaps the government should stop subsidizing bad health habits -- which is what free health care does. Turn the savings over to nationals as a lump sum and let them decide what is in their best interest. It may be that it is in their best interest to take care of themselves.

The timing of the Dr Al Suwaidi's remarks are ironic given the recent announcement of an expansion in our unhealthy eating options in the UAE. On Thursday we learned a Krispy Kreme outlet opens tomorrow :

US doughnut and coffee chain Krispy Kreme will open its first UAE outlet in the Deira City Centre shopping mall tomorrow, the first of seven stores planned for the country this year. The North-Carolina-based food company, which is listed on the New York Stock Exchange, aims to roll out 100 stores throughout the Middle East in the next five years.

Unfamiliar with Krispy Kreme? -- here's some background. Nothing works like the profit motive.

The 52g original Krispy Kreme donut provides 10g of sugar and 200 calories (100 from fat). (For more on nutrition go here.)

Mmmm, donuts. If there is a Donuts Anonymous, I need to join.

New Sri Lankan law to affect migrant workers :: Khaleej Times

Khaleej Times opens its story with this paragraph (my emphasis):

Sri Lanka’s new legislation restricting mothers with children below five years from taking up low-end jobs overseas, will adversely affect migrant workers in the UAE where a large number of Sri Lankan women are employed as housemaids and in garment factories.

Then it further reports:

Sri Lankan Ambassador to the UAE Nabawi Junaid said the legislation approved by the cabinet early this month and to be enforced soon will restrict the number of women, particularly mothers of young children, from seeking overseas employment.
...
Further, he noted that “The new legislation is undoubtedly in the interest of mothers with little children and will eliminate the social problems facing the Sri Lankan society with large numbers of women taking low-end jobs as domestic maids and tailors in garment factories in the Middle East compelled to leave their children in the custody of husbands, parents or relatives.”

Statistics released by the Sri Lankan government show that children of many mothers who take up overseas jobs to support their families have in fact become helpless and vulnerable to abuses, and suffer from malnutrition and lack of proper healthcare.

How could the introduction of the legislation adversely affect workers who are already in the UAE (as claimed in the first paragraph of the KT)? It can't. It can only benefit them by constricting the supply of labor inflow and thereby driving up wages or improving working conditions (at the end of your contract in the UAE can negotiate better terms for staying).

Will the law benefit the women and families whom the government of Sri Lanka will now compel to stay home? What is driving the women to leave their children is the lack of economic opportunity in Sri Lanka. The opportunities in the Middle East are not compelling them to leave. What the government is suggesting is that the families are consistently underestimating the cost of leaving in terms of the consequences for children. That's an empirical question that has not been answered. Indeed, the government may have the cause and effect reversed -- in which case the children will be made worse off.

There are other possible unintended consequences of the legislation which would be adverse. First, fertility may increase, not decrease. Second, there will develop a black market -- women will still want to take up positions overseas but they have to do so out of sight of the government, including the protections provided by the Sri Lankan consulates. As a result, they will be more vulnerable to unscrupulous recruiters and employers.

Their intentions are good.

Environmentalists give a whole new meaning to bottled dressing. And burn more fossil fuel in the bargain.

Urine :: Markets in everything

Urine tests are given to test whether you are a drug user. That's resulted in a variety market responses. Church-going folks get together and sell their drug-free urine to drug users looking for jobs with that test employees for drugs. The Whizzanator is invented and marketed.

But here's the latest. You can extract meth from the urine of users. As you crack down on the manufacture of meth you encourage an increase in this sort of recycling. Here's the news report. Here's what farkers are commenting.

Gives a whole new meaning to circular flow.

Biofuels and unintended consequences :: NYT

Quote:

The demand for palm oil in Europe has soared in the last two decades, first for use in food and cosmetics, and more recently for fuel. This versatile and cheap oil is used in about 10 percent of supermarket products, from chocolate to toothpaste, accounting for 21 percent of the global market for edible oils.

Palm oil produces the most energy of all vegetable oils for each unit of volume when burned. In much of Europe it is used as a substitute for diesel fuel, though in the Netherlands, the government has encouraged its use for electricity.

Supported by hundreds of millions of euros in national subsidies, the Netherlands rapidly became the leading importer of palm oil in Europe, taking in 1.7 million tons last year, nearly double the previous year.

The increasing demand has created damage far away. Friends of the Earth estimates that 87 percent of the deforestation in Malaysia from 1985 to 2000 was caused by new palm oil plantations. In Indonesia, the amount of land devoted to palm oil has increased 118 percent in the last eight years.

In December, scientists from Wetlands International released their calculations about the global emissions caused by palm farming on peatland.

Peat is an organic sponge that stores huge amounts of carbon, helping balance global emissions. Peatland is 90 percent water. But when it is drained, the Wetlands International scientists say, the stored carbon gases are released into the atmosphere.

To makes matters worse, once dried, peatland is often burned to clear ground for plantations. The Dutch study estimated that the draining of peatland in Indonesia releases 660 million ton of carbon a year into the atmosphere and that fires contributed 1.5 billion tons annually.

The total is equivalent to 8 percent of all global emissions caused annually by burning fossil fuels, the researchers said. “These emissions generated by peat drainage in Indonesia were not counted before,” said Mr. Kaat. “It was a totally ignored problem.” For the moment Wetlands is backing the certification system for palm oil imports.

But some environmental groups say palm oil cannot be produced sustainably at reasonable prices. They say palm oil is now cheap because of poor environmental practices and labor abuses.

“Yes, there have been bad examples in the palm oil industry,” said Arjen Brinkman, a company official at Biox, a young company that plans to build three palm oil electrical plants in Holland, using oil from palms grown on its own plantations in a manner that it says is responsible.

“But it is now clear,” he said, “that to serve Europe’s markets for biofuel and bioenergy, you will have to prove that you produce it sustainably — that you are producing less, not more CO2.”

The value of an intact hymen :: Gulf News

I read this morning in Gulf News about the black market for hymen restoration in the UAE. The price is Dh10,000. It is illegal for an unmarried woman to have her hymen surgically restored, but not illegal for a married woman to do so. Why a married woman would want such surgery I couldn't tell you, but it does give cover for the clinics that offer these procedures.

Why an unmarried woman would want the procedure is easy to explain: this culture highly values virginity in a bride and uses an intact hymen as the test. Vaginal intercourse, however, is not the only way the hymens are broken. An unintended consequence of the high value of a hymen is that girls avoid sports and other exercise. The GN article makes it sound as if only girls who are not vaginal virgins would want the procedure -- false, of course.

Secret Dubai has also posted on the story. She is wrong, though, in concluding that hymen restoration will make the value of an intact hymen zero. It will, though, mean that girls who have been raped will no longer be unmarriageable. That is, as long as: their identities are not made public, they can afford the surgery, the authorities do not crack down on the black market, and mothers of the husband-to-be do not insist on an invasive inspection to determine whether there has been surgery.

There is a way, actually, that Secret Dubai could be right. That is if the ready availability of hymen restoration changes behavior and more women engage in premarital sex. Then having an intact hymen would prove very little about whether you were a virgin or not.

GN has a companion piece entitled, 'If cosmetic operation is to deceive someone it is a crime', which explains why hymen restoration is regarded as a religious crime.

What about breast augmentation (deception of fertility) or nose jobs (deception of beauty of future children)? These are legal in the UAE.