Beacon on the hill?

We've all learned not to expect much from the "experts" at the John Locke Foundation, but today's story in the Carolina Journal reaches a hilarious new low.

RALEIGH – A model the Appalachian State University Energy Center used to project the economic impact of N.C. climate change policies has “serious flaws” that undermine its credibility. That’s the verdict of a new peer review report (pdf version) from a Boston-based economic research group.

The John Locke Foundation is drawing attention to the peer review it commissioned from the Beacon Hill Institute at Suffolk University. The peer review raises red flags about the model’s projections. “The Appalachian State Energy Center used this model to predict hundreds of thousands of new jobs and a major positive impact on North Carolina’s economy,” said Dr. Roy Cordato, JLF Vice President for Research and Resident Scholar. “Trained economists conducting this new peer review found that the model is so flawed that no one should trust the results.”

And just who might those trained economists be? Well goodness me, they're (gasp) free-market extremists! From the Beacon Hill website:

Grounded in the principles of limited government, fiscal responsibility and free markets, the Beacon Hill Institute engages in rigorous economic research and conducts educational programs for the purpose of producing and disseminating readable analyses of current public policy issues to voters, taxpayers, opinion leaders and policy makers.

I know someone will criticize me for not speaking to all of the substance of the Beacon Hill "report" that was bought and paid for by the boys at JLF with Art Pope's Free Market Money, but the truth is, those boys went shopping for a "peer review" that would reach the conclusions they already had. The only thing that's surprising is that they didn't go to NC State first, where they've already paid for the entire economics department faculty. So to speak. To my knowledge. As far as I know. Rumor has it.

In any case, here's the bottom line from Beacon Hill:

It is not straightforward to analyze the economic impact of state policies that are designed to reduce greenhouse gas emissions. The North Carolina Energy Scenario Economic Impact Model (NC-ESEIM) represents a serious and concerted effort to measure the relevant effects on jobs, incomes, Gross State Product, and energy use. But the results of the NC-ESEIM model are not compelling, for the reasons we have set out in this note. By using a demand-driven input-output analysis at its core, the model assumes that the state economy has slack capacity; and it lacks an adequate mechanism for energy prices to feed back into measures of real incomes or investment decisions. These could be addressed by developing a computable general equilibrium model in which prices are allowed to adjust, but such models are themselves complex and difficult to construct. The NC-ESEIM also makes unduly optimistic assumptions about the future course of cost reductions in the production of energy from renewable sources, and is too sanguine about the
potential for state spending to trigger private investment, and influence individual behavior, in energy conservation.

In other words: "This is really hard stuff and we think our assumptions are better than your assumptions."

Go figure.