WORD ON THE STREET

Is the real estate double bubble back?

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Average U.S. commercial real estate prices are now far over their 2007 bubble peak, about 22 percent higher than they were in the excesses of a decade ago, just before their last big crash. In inflation-adjusted terms, they are also well over their bubble peak, by about 6 percent.

In the wake of the bubble, the Federal Reserve set out to create renewed asset-price inflation. It certainly succeeded with commercial real estate – a sector often at the center of financial booms and busts.

Commercial real estate prices dropped like a rock after 2007, far more than did house prices, falling on average 40 percent to their trough in 2010. Since then, the asset price inflation has been dramatic: up more than 100 percent from the bottom. In inflation-adjusted terms, they are up 83 percent.

This remarkable price history is shown in Graph 1.

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Bank credit to commercial real estate has been notably expanding. It is up $238 billion, or 21 percent, since the end of 2013 to $1.35 trillion. It has grown in the last two years at more than 7 percent a year, which is twice the growth rate of nominal gross domestic product, although not up to the annual loan growth rate of more than 9 percent in the bubble years of 2000-2007.

The Federal Reserve also succeeded in promoting asset-price inflation in houses. U.S. average house prices are also back over their bubble peak—by about 2 percent, in this case. They have rebounded 41 percent from their 2012 trough. In inflation-adjusted terms, house prices a have climbed back to the level of 2004, when we were about two-thirds of the way into the bubble. See Graph 2.

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The rapid house price increases since 2012 have not been matched by growth in bank residential mortgage loans or aggregate mortgage credit. Banks’ total residential mortgage loans were $2.45 trillion in 2012 and $2.41 trillion in the first quarter of 2017. Total U.S. 1-4 family mortgages outstanding went from $10.04 trillion to $10.33 trillion in the same period. Thus, there is a marked difference between the two real estate markets, with commercial real estate having even more price inflation and more bank credit expansion than houses. The interest rate environment is, of course, the same for both.

House prices and commercial real estate prices are closely related. As shown in Graph 3, they made an obvious double bubble, a double collapse and a double big rebound. The statistical correlation between the two since 2001 is 86 percent.

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Is what we have now a new double bubble, or something else?  Considering where these charts may go from here, we may ponder three key questions:

  1. If interest rates go up 1 percent or 2 percent, what will happen to commercial real estate and house prices?
  2. If the Fed stopped being a big buyer of mortgage-backed securities and bonds, what would happen to interest rates?
  3. Having driven asset prices up, by buying and maintaining huge long positions, can the Fed get out of these positions without driving prices down?

We will know the answers when, sometime in the future, somebody explains it all to us ex post. For now, we know that real estate prices are back to the levels of the last bubble, reflecting the Federal Reserve’s production of asset-price inflation through its interest rate and bond market manipulations.


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New DOJ asset-forfeiture rules trample basic rights

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In a speech Monday to the National District Attorneys Association annual conference, Attorney General Jeff Sessions announced the U.S. Justice Department plans to ramp up the use of civil asset forfeiture to “combat crime.”

If this sounds like a cliché ripped from a 1980s political speech, that’s not far off. The truth is, the DOJ new effort has less to do with fighting crime than it does with funding for law enforcement.

Sadly, what Sessions actually is doing is green-lighting escalation of DOJ and local law-enforcement efforts to seize property from people who have never been convicted of a crime, thus allowing government agencies to reap major monetary rewards. To put it another way, if the government can’t convict you of a crime, they will just take your stuff instead.

One could argue the road to asset forfeiture was paved with good intentions. The practice re-emerged at the height of the 1980s drug war, when law-enforcement agencies across the country were trying to bring down the drug trade. Civil asset forfeiture programs gave government agencies the power to seize cash, cars, guns or anything else of value that was potentially bought with drug money. Suspected drug dealers would then be forced to prove in civil court that they obtained everything legally. Once seized, the cash and other items would be used to fund both federal and local agencies’ drug war efforts, creating something of a vicious circle.

Like any power the government is granted, the practice has been expanded massively, with the end result being blatant violations of Americans’ civil rights. This country was founded on the principles of property rights and protections from unreasonable government search and seizure. Indeed, we have drifted a long way from the inalienable rights outlined in our founding documents that all men are protected under the due process of law.

Unsurprisingly, asset forfeiture has become a cash cow for the federal government and a slush fund for local law-enforcement agencies across the country. Local agencies construct their budgets based on expected seizures, which has created incentives to seize assets just to keep the lights on. All in all, civil asset forfeiture is a $5 billion “industry.” The government has so perfected the art of seizure that they now outperform actual criminals. In 2014 alone, the government seized more assets than actual burglars did.

For a while, things had been looking up. During the Obama administration, the Justice Department took some real steps toward curbing civil asset forfeiture. More importantly, many states across the country started to take a stand by passing laws to make it tougher for the government to seize assets. As of today, according to the Institute for Justice, 13 states require a criminal conviction before the government can take someone’s property. However, these state-level reforms are about to become moot thanks to the Justice Department.

Along with increased interest in asset forfeiture, Sessions and the DOJ announced Wednesday that the DOJ will also reinstate “adoptive” forfeiture, which allows state and local agencies a workaround to any potential state laws by allowing them to use a federal statue to seize property. Not only is this a direct challenge to states’ rights, it also provides incentives for local agencies to continue to pursue these actions with little regard for civil liberties.

Few think criminals should profit from their crimes. There’s also no doubt that it is challenging for state and federal law enforcement agencies to investigate and prosecute complex criminal enterprises like drug cartels and human traffickers. But the current system violates some of the basic principles this nation was built upon—due process of law, innocent until proven guilty and freedom—all in the pursuit of innocent people’s property.


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Using the CPP to boost coal is just as bad

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President Donald Trump has spoken repeatedly of his support for coal mining, pledging publicly that “we will put our miners back to work.”

It probably should not be surprising, then, that the White House would give serious consideration to a pitch made by several coal-mining union representatives to the Office of Management and Budget that would see the Environmental Protection Agency rewrite the Obama administration’s Clean Power Plan in ways that help the coal industry.

Alas, the ends the industry wants to achieve using the CPP are at least as wrongheaded as the command-and-control model that was used to craft the emissions plan in the first place.

What the proposal by the AFL-CIO, the International Brotherhood of Electrical Workers and the Utility Workers Union of America recommends is for EPA Administrator Scott Pruitt to initiate only the first of the CPP’s four “building blocks.” Such a plan would reward coal-fired power plant if they improved their boiler heat-rate efficiency, even though the improvements could only cut greenhouse gas emissions by 2-3 percent, as opposed to the additional 10-12 percent the previous administration wanted to see.

The CPP’s other three building blocks—natural gas switching, renewable energy and energy-efficiency programs—would be eliminated, leaving a rump emissions plan that could pass muster in the courts.

Unlike the recent decision to exit the Paris Climate Accords, in which the United States simply said it wouldn’t follow through on a prior commitment, the Clean Power Plan’s regulation of existing power plants was finalized in June 2015. That makes it legally hazardous to jettison the plan, which remains before the U.S. Supreme Court, without a replacement. Only an unprecedented legal stay issued by the court in February 2016 – shortly before the death of Justice Antonin Scalia – kept the regulations from coming into force.

It’s worth remembering that the Clean Power Plan was the Obama administration grand attempt to regulate emissions from coal-fired power plants. The White House sought to expand the scope of the Clean Air Act beyond “the fence line” of power plants to cut state-level emissions coercively, whether states agreed to the federal actions or not.

But just because the revised rule wouldn’t be as powerful doesn’t mean it wouldn’t be just as damaging to the economy over the long run. Dictating winners and losers in energy markets is always a bad idea. This is as true of the bias against coal and nuclear energy shown by regulators during the second Obama term as it would be of this new proposal to upgrade coal-powered electricity plants to a point where they still won’t be as clean as a new natural gas-fired plant.

The natural gas fracking revolution– driven entirely by market forces and private property rights – has contributed to the 14 percent reduction in energy-related U.S. carbon emissions since 2005, leaving us roughly in the same position we were in the early 1990s. Leaving an ineffective regulatory structure in place of the original CPP may save the Trump administration a lot of time and effort, but it isn’t the principled approach to energy development this country needs in the 21st Century.


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Microsoft’s alternative power deal could be breakthrough for consumer choice

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Washington state regulators approved a settlement last week between Microsoft Corp. and their monopoly utility, Puget Sound Energy Inc. (PSE), to enable Microsoft to buy its own wholesale energy or develop its own supply. The agreement represents a more cordial approach amid a widespread trend of large customers seeking alternative power suppliers, but underscores the inherent choice-constraining limitations of the monopoly model, even with favorable amendments.

The monopoly model, premised on a single power provider with captive customers, does not easily accommodate customer preferences. However, a glimmer of choice has emerged recently. Microsoft is just one of many corporate customers to pursue third-party purchases or direct-access policies that enable one-off customer choice within a monopoly footprint.

Spurred by less expensive alternative suppliers and corporate commitments to clean energy, corporations have procured more than 6 gigawatts of wind and solar in the last two years alone. In 2016, Microsoft and Amazon led the pack in corporate clean-energy procurement. Based on public commitments, this trend looks likely to continue, with the likes of Google, Apple, Johnson & Johnson and more committing to source all of their consumption from renewables.

At a time when climate and clean-energy policy too often reverts to a culture war, voluntary clean-energy procurement by corporate leaders marks a refreshing intersection of the conservative and green agendas. Bill Hogan, a Harvard professor and electricity markets expert, emphasizes that customers spending their own money to contract for green power is consistent with market principles. He clarifies that the “problem comes when governments spend other people’s money, using their power to mandate, that is a public policy concern.”

This may blossom into the new chapter of voluntary environmentalism, which has roots in the kinds of conventional pollution reduction (beyond legal requirements) that preceded today’s amplified climate discussion. For some companies, the reputational or branding benefits of contributing to a cleaner environment can provide substantial incentives. It appears those benefits are magnifying at the same time that the cost of renewables has fallen, spearheaded by merchant wind developers providing very competitive power purchase agreements.

Some have voiced concerns that an exodus of big customers from monopoly service may leave other customers with higher bills. A large customer’s departure could create stranded costs for the utility, which it will shift to other customers if permitted by regulators. To cover these costs, regulators may require customers seeking to leave the monopoly to pay exit fees. Companies like Microsoft might even go beyond the exit fee by pledging support for local community programs.

Proper exit fees can prove technically challenging to calculate. In addition, monopoly utilities often leverage those fees to impose a regulatory barrier to exit. In particular, they frequently will underplay the benefits to their remaining customers of the reduced costs and expanded opportunities to sell excess power.

Litigated exit fee cases have proven contentious and inefficient. In Nevada, numerous cases have led to prolonged regulatory battles and deterred some companies (e.g., Las Vegas Sands Corp.) from seeking to buy power on the open wholesale market. In a recent filing before the Nevada Public Utilities Commission (PUC), Wynn Las Vegas argued the exit fee imposed by the PUC—whose staff changed their methodology from the one applied to the previous exit request of the data storage company Switch—was unfair and discriminatory.

In fact, Switch incurred regulatory headaches of its own. The PUC rejected its initial proposal to switch to an alternative provider in 2015. Other Nevada resorts and casinos, including Caesars Entertainment Corp., are either considering or already have applied to leave monopoly service, with the MGM Grand agreeing to pay an $87 million exit fee.

Even with direct access, regulatory delays and inflated exit fees can serve as chronic limits to customer choice, not to mention that clinging to the monopoly model results in an underdeveloped market for alternative suppliers. Even the Microsoft settlement revealed differences between the customer and the utility over how to calculate the exit fees. In its initial testimony, Microsoft argued that its departure would provide a net benefit and estimated that, using generally accepted rate-setting standards, the utility would compensate Microsoft between $15 million and $35 million to leave (the two sides differed over the timeframe used to calculate the useful life of the utility’s assets and market value of excess generation).

However, in the end, Microsoft agreed to pay an inflated $24 million exit fee. The settlement represents a deal between numerous parties that is likely more efficient than prolonged litigation. Such a collaborative approach may serve as the preferred interim model in monopoly states (i.e., negotiated special contracts), short of a new customer tariff that would streamline the process.

Despite the niceties of settlements, such agreements retain undertones of the fundamental rift between increasingly heterogeneous customers and the choice-constraining monopoly model. In restructured or “retail choice” states, customers choose their power provider freely, and large customers often negotiate contract terms tailored to their unique profile.

Restructured states present a big advantage for corporate consumers, and policymakers increasingly have noted this advantage for retaining and attracting businesses. Enabling third-party service or direct access is certainly not the “end game” regulatory structure, but it offers a great incremental step to introduce customer choice, with benefits both for customers and for the environment.


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Jonathan Coppage all over your TV screen

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Visiting Senior Fellow Jonathan Coppage’s recent Washington Post op-ed taking apart the alarmist coverage of a purported trend of millennials living at home as adults (tl;dr, it’s a normal thing, historically, and there’s a lot to recommend it in practice) drew quite a bit of attention, earning Jon invitations to sit down on a pair of national cable news shows. First, there was a two-part spot on CNBC’s Squawk Box:

Next, he was on CNN, discussing the piece with Smerconish host Michael Smerconish:

Why quality will trump quantity in the net-neutrality debate

Also appeared in: TechDirt

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If you count just by numbers alone, net-neutrality activists have succeeded in their big July 12 push to get citizens to file comments with the Federal Communications Commission. As I write this, it looks as if 8 million or more comments have now been filed on FCC Chairman Ajit Pai’s proposal to roll back the expansive network-neutrality authority the commission asserted under its previous chairman in 2015.

There’s some debate, though, about whether the sheer number of comments—which are unprecedented not only for the FCC, but also for any other federal agency—is a thing that matters. I think they do, but not in any simple way. If you look at the legal framework under which the FCC is authorized to regulate, you see that the commission has an obligation to open its proposed rulemakings (or revisions or repeals of standing rules) for public comments. In the internet era, of course, this has meant enabling the public (and companies, public officials and other stakeholders) to file online. So naturally enough, given the comparative ease of filing comments online, controversial public issues are going to generate more and more public comments over time. Not impossibly, this FCC proceeding—centering as it does on our beloved public internet—marks a watershed moment, after which we’ll see increasing flurries of public participation on agency rulemakings.

Columbia University law professor Tim Wu—who may fairly be considered the architect of net neutrality, thanks to his having spent a decade and a half building his case for it—tweeted July 12 that it would be “undemocratic” if the commission ends up “ignoring” the (as of then) 6.8 million comments filed in the proceeding.

But a number of critics immediately pointed out, correctly, that the high volume of comments (presumed mostly to oppose Pai’s proposal) doesn’t entail that the commission bow to the will of any majority or plurality of the commenters.

I view the public comments as relevant, but not dispositive. I think Wu overreaches to suggest that ignoring the volume of comments is “undemocratic.” We should keep in mind that there is nothing inherently or deeply democratic about the regulatory process – at least at the FCC. (In fairness to Wu, he could also mean that the comments need to be read and weighed substantively, not merely be tallied and dismissed.)

But I happen to agree with Wu that the volume of comments is relevant to regulators, and that it ought to be. Chairman Pai (whose views on the FCC’s framing net neutrality as a Title II function predate the Trump administration) has made it clear, I think, that quantity is not quality with regard to comments. The purpose of saying this upfront (as the chairman did when announcing the proposal) is reasonably interpreted by Wu (and by me and others) as indicating he believes the commission is at liberty to regulate in a different way from what a majority (or plurality) of commenters might want. Pai is right to think this, I strongly believe.

But the chairman also has said he wants (and will consider more deeply) substantive comments, ideally based on economic analysis. This seems to me to identify an opportunity for net-neutrality advocates to muster their own economists to argue for keeping the current Open Internet Order or modifying it more to their liking. And, of course, it’s also an opportunity for opponents of the order to do the same.

But it’s important for commenters not to miss the forest for the trees. The volume of comments both in 2014 and this year (we can call this “the John Oliver Effect”) has in some sense put net-neutrality advocates in a bind. Certainly, if there were far fewer comments (in number alone) this year, it might be interpreted as showing declining public concern over net neutrality. Obviously, that’s not how things turned out. So the net-neutrality activists had to get similar or better numbers this year.

At the same time, advocates on all sides shouldn’t be blinded by the numbers game. Given that the chairman has said the sheer volume of comments won’t be enough to make the case for Title II authority (or other strong interventions) from the commission, it seems clear to me that while racking up a volume of comments is a necessary condition to be heard, it is not a sufficient condition to ensure the policy outcome you want.

Ultimately, what will matter most, if you want to persuade the commissioners one way or another on the net-neutrality proposal, is how substantive, relevant, thoughtful and persuasive your individual comments prove to be. My former boss at Public Knowledge, Gigi Sohn, a net-neutrality advocate who played a major role in crafting the FCC’s current Open Internet Order, has published helpful advice for anyone who wants to contribute to the debate. I think it ought to be required reading for anyone with a perspective to share on this or any other proposed federal regulation.

If you want to weigh in on net neutrality and the FCC’s role in implementing it—whether you’re for such regulation or against it, or if you think it can be improved—you should follow Sohn’s advice and file your original comments no later than Monday, July 17, or reply comments no later than Aug. 16. If you miss the first deadline, don’t panic—there’s plenty of scope to raise your issues in the reply period.

My own feeling is, if you truly care about the net-neutrality issue, the most “undemocratic” reaction would be to miss this opportunity to be heard.


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Alabama backs down on targeting margarita pitchers

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In these hot summer months, nothing refreshes like a margarita. But in Alabama, the state Alcoholic Beverage Control Board had banned pitchers of this limey and refreshing libation. Seriously.

R Street’s Cameron Smith exposed the ban and advocated for its repeal in AL.com after a series of email exchanges with ABC representatives:

The Alabama Alcoholic Beverage Control Board (ABC) doesn’t want you wasting away in Margaritaville, so they’ve banned pitchers of the frozen concoction outright.

No, I’m not joking.

But we shouldn’t be surprised. This is the ABC that cracked down on people drinking while dining on the sidewalks in Mobile. It’s the same ABC that cut a deal to impose a 5 percent liquor mark-up to help the legislature and the governor enact a back-door tax hike.

Now the agency has taken to reminding licensees of its legal ‘interpretation’ that beer is the only alcoholic beverage that may be served in a pitcher…

ABC claimed it was concerned with the tequila in margarita pitchers “settling” over time, which could lead to situations where the first few drinks poured from the pitcher had less alcohol than the ones from the bottom of the pitcher. As Smith pointed out, this amounted to an argument that a group of legal adults “can’t figure out how to handle a pitcher of margaritas shared among them.”

Smith’s column generated enough outcry among Alabama residents that Dean Argo, ABC’s government relations manager, took to AL.com to announce that the board would no longer target margarita pitchers. In short, ABC has backed off, at least for now. (The Associated Press also covered the reversal).

While this was a clear win for margarita lovers across the state, Argo ominously suggested that the state may still draw a line between which types of drinks can be served in pitchers and which cannot. The dividing line would appear to be if the drink in question is “customarily” served in pitchers. So, margaritas and beer would seem to be safe, but what about less clear cases like mojitos? Mojitos are certainly served in pitchers sometimes, but is it “customary” to serve them that way? And how about bottled cocktails, which have become all the rage in the cocktail world? Are they a “pitcher,” and if so, are they “customary”?

The ABC’s decision to draw the line at what types of drinks are “customarily” put into pitchers is the type of ambiguous legal phrase that only a government lawyer could love. Call it “pitcher ambiguity,” and suffice it to say R Street’s team will be the first to blow the whistle if more pitcher shenanigans go down in Alabama.

Note: Cameron Smith has also been tracking and writing about the Alabama ABC’s attempt to enact a stealth tax increase by increasing the state liquor mark-up. Read more about that here.


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Welcome to Climate Junior High

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The new kid in the class is glib and loud, while the gal in charge of the “cool kids” pretended he hadn’t even entered the classroom. At least, that’s the way it seems from watching President Donald Trump and German Chancellor Angela Merkel in Hamburg last weekend at the Group of 20 (G-20) summit involving a majority of the world’s most industrialized countries.

In the weeks before the meeting, analysts and partisans were praying for some kind of moral reckoning for Trump on his arrival in Hamburg, the heart of Germany’s political left. Trump’s withdrawal from the Paris Climate Accords in early June had sent many European leaders into a state of shock, given that the European Union’s plan to cut its climate emissions dramatically is its pre-eminent geopolitical strategy.

Speaking before the German Parliament in late June, Merkel said of the U.S. withdrawal that “the climate treaty is irreversible and is not negotiable” – a direct rebuke of Trump’s decision to go it alone concerning climate change.

In other words, a beat-down in the lunchroom was expected.

Nevertheless, Trump and Merkel played nice in front of the dignitaries during the July 8-9 summit and the United States dissented from the 19 other countries’ consensus language on climate change in the final joint declaration with relative ease. The White House even was allowed to insert language saying the United States “will endeavor to work closely with other countries to help them access and use fossil fuels more cleanly and efficiently.”

The addition of the clean fossil fuel language was a “poker tell” to the radically divergent strategies at the heart of the chasm between United States and European Union on energy and climate policy. The problems undermining the Paris Accord—its voluntary and top-down nature, in particular—have been highlighted repeatedly by R Street and others. The facts of the case remain unchanged.

The United States, through the development of hydraulic fracturing and subsequent very low natural gas prices, has cut its energy-related carbon emissions more than any other member of the G-20 since 2005. The reason has nothing to do with international agreements or top-down approaches.

Instead, market forces drove natural gas drillers in the late 2000s to develop the hydraulic fracturing of shale basins in Pennsylvania and Texas. The explosion of natural gas supplies soon made it the fossil fuel of choice, over coal, for electricity plants around the country. The rest is history.

Since peaking in 2007, U.S. energy-related carbon emissions are down roughly 14 percent, while Germany, which sees itself as the world leader in climate change, had its carbon emissions fall 7 percent during the same period.

Given the size of the U.S. economy, the scale of the emissions savings has been enormous, with U.S. emissions falling 600 million metric tons compared to Germany 70 million tons over the same time period. All this while the European Union spent $1.2 trillion on wind, solar and bio-energy subsidies and an emissions trading scheme (ETS) that priced carbon too low to be effective.

Merkel waited until the very end of the summit to express her disdain: “Unfortunately – and I deplore this – the United States of America left the climate agreement,” she said in her closing statement.

As it stands, the differences in energy and climate outlook between the United States and Europe could not be wider. The United States looks to export both oil and natural gas into Europe. Meanwhile, both Germany and France are constraining both nuclear power and all fossil fuel use, as they aim for a dramatic cut in emissions by midcentury.

Perhaps French President Emmanuel Macron, who is also a new kid in the class, has a different plan to bring Trump into the climate club when he hosts Trump for Bastille Day celebrations in Paris July 14.


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Kosar talks CRS reports on FedSoc podcast

In episode 2 of the Federal Society’s Necessary & Proper podcast, the R Street Institute’s Kevin Kosar discusses the Congressional Research Service, a nonpartisan government think tank in the Library of Congress. CRS assists Congress in lawmaking and oversight, and lamentably Congress has downsized the agency. CRS also has struggled to adapt to the hyper-partisan, Internet-connected Hill environment.

The full episode is embedded below:

South Miami solar mandate would trample property rights

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Expanding solar energy to rely less on oil, gas and other nonrenewable resources is an almost universal goal, regardless of one’s political persuasion.  Indeed, with growing concerns about climate and the economic and even national security implications of relying on nonrenewable and oftentimes foreign energy sources, it makes sense to look at solar as a viable means to power more of society’s needs.

But as noble as the expansion of solar energy might be, its pursuit should never infringe on individual rights, as some local governments appear to be doing. For example, the City of South Miami is considering an ordinance that would require installation of solar panels on all newly constructed homes, as well as older homes whose owners elect to renovate 50 percent or more of the square footage.

Indeed, although the cost of solar-energy-generating devices has dropped in recent years, they still remain cost-prohibitive to most. This ordinance would not only increase the price of homes in a city where cost-of-living is already way above the national average, but may actually serve as a disincentive to existing homeowners who wish to make their older homes more energy efficient. Residents who might otherwise consider remodeling their homes with energy-efficient doors, windows, roof shingles, insulation and appliances may think twice if they were also forced to purchase expensive solar panels.

But even that is not the point.

This is a clear and egregious example of government trampling on individual property rights. Local and state authorities can and should develop building codes to ensure safety; Miami-Dade County already has a strict building code due to its vulnerability to hurricanes. However, residents should not be forced to purchase an expensive product that serves no health or safety purpose as a condition to develop or improve their own properties, just so politicians can feel good about themselves.

It is fair to debate how to expand solar-energy production and who should pay for it. Should government subsidize research? Should government grants or tax credits be offered to entice individuals to install solar panels? Should utility companies purchase excess power generated by privately owned solar devices?

These are all relevant public-policy issues that well-intended people with differing opinions can debate, and they all revolve around the notion that solar-device installation is a choice, not a mandate. Government should not pick one industry over another through subsidies or unfair incentives or penalties. Allowing energy producers to compete on a level playing field will encourage them to innovate and make their products more efficient and thus more economically viable over time.


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