Cool Hand Lou (and Phil)

Speaker 2

I'm Phil Magnus, the economist. Currently have it at sixty eight degrees, which is great because it's about ninety seven outside.

Speaker 1

Obviously this is just ⁓ an audio episode, but I am currently sitting in my home office with shorts on, a beanie, and a sweater because that's how I like to I I like to keep my body guessing. I like to keep myself ⁓ very confused. But I I'm one of those people I need I need my indoors to be cool. Especially in the summer. And I ⁓ just saw ⁓ a recent tweet go out.

Speaker 2

Especially in the summer.

Speaker 1

⁓ from the mayor of New York asking New Yorkers to keep their thermostats at seventy eight degrees indoors because they're currently going through a heat wave and ⁓ they want to make sure that the grid is up to snuff.

Speaker 2

It's the warmth of collectivism, ⁓ literally coming into your home in New York City from Zoran Mamdani.

Speaker 1

The sweltering warmth of collectivism, to be exact. And here's the thing that that I'm kind of confused at because when it comes to like rolling blackouts and stuff like that, California goes through that every year. And in New York City, there's a fear that, you know, you don't want to over overload the grid. But these are the same people who think that the government can basically take care of every single need, but yet you have to be careful or you won't be able to turn the lights on.

Speaker 2

It's right. Well, it it turns out that the the states and regions of the world that have the greatest problems with these sorts of things, the California and New York, also tend to be the most heavily regulated electricity markets. So the ones where the government invests in trying to actually artificially suppress electricity consumption because of climate change or all sorts of other environmental goals. And one of the things here is when you start to do that, you actually distort the signals that are being sent on the electricity market. Because you know, if there's a need for consuming electricity to run your air conditioner at a normal temperature, ⁓ in the 68 to 72 range, which is what most people find comfortable, you know, that's a signal that, hey, ⁓ electricity is desired to produce more of it. And we'll pay for it because it's on a market. And yet you have someone like Zoran Mamdani and other figures on the left saying, No, ⁓ you should actually self-ration your electricity because we have this greater goal of serving the collective good. ⁓ again, the warmth of collectivism. ⁓ we need to protect the planet and ⁓ reduce climate change and not strain our grid that we've artificially suppressed from meeting actual signaled capacity of what people want and desire and ⁓ a and reflect in their eating preferences.

Speaker 1

Yeah, and when it comes to preferences, we prefer it comfortable, we prefer it cool, and I'm happy to pay for that. Absolutely. What are, you know, some of the things getting in the way of the market doing what it does? ⁓

Speaker 2

All comes down to policy decisions. And, you know, we've had this big push, ⁓ I'd say really over the past twenty to twenty-five years, that climate change is supposedly this existential crisis. And of course, climate change is caused by CO two emissions. CO two emissions come from ⁓ primarily from the generation of electricity, the generation of energy. And the idea here is that we can reduce CO two emissions by making our electricity use much more efficient by using the government to to forcibly regulate people into consuming less electricity. And this takes all sorts of forms from straight up banning and regulating pollutant heavy power production. So coal, for example. ⁓ they've made that much more expensive and even ⁓ cost prohibitive to maintain. And the idea is to drive coal producing power plants out of business, which they've largely succeeded in doing. Then there are also these little nudge efforts around the edges than that's everything from the the soft nudging of ⁓ ⁓ Mob Donnie tweeting to turn your thermostat up to 78. ⁓ it's also building and construction codes that prioritize and preference what are considered high efficiency ⁓ forms of insulation and heating and cooling systems, ⁓ or to deter the installation of air conditioners, which is currently the situation that we're seeing over in Europe. ⁓ they've actually gone much further than the United States in a lot of these types of policies.

Speaker 1

Well, you know, talking about Europe, ⁓ I found something very interesting. ⁓ the Paris deputy mayor, Audrey Boulevard, she said that the United States, of us over here in in the US, bears a significant amount of responsibility for the extreme heat wave across France. Okay. So to quote As the second largest emitter of greenhouse gas emissions in the world, you bear a significant amount of responsibility for global warming and the consequences we in France are experiencing. Your cities ninety percent air conditioned are not unrelated to this. In Paris, we take responsibility. And look, I don't know about you, but I know plenty of Americans who wish this were true. You know, I wish that basically the dial on my thermostat, every time I turn it down, France gets a little bit warmer. You know how I'm I might I might go all the way and just put my AC all the way down to sixty. ⁓ but yeah, w I mean what what is this butterfly effect? This is this is a pretty insane butterfly effect. This is

Speaker 2

This crazy communist lady has appear ⁓ opinions on air conditioning, is what it basically comes down to. ⁓ and what she's trying to do is she's ⁓ in like the more serious version, she's trying to deflect the predicted consequences of environmental policies that have been adopted throughout the EU and as well as the UK, even though it left the EU, ⁓ which have made it harder and more onerous and more expensive to install air conditioning. ⁓ again, basically because this runs against the goal of net zero of reducing emissions to zero. Air conditioning is ⁓ it consumes electricity, creates greenhouse gases, so therefore it's bad. It's not that that ⁓ France couldn't install air conditioning, they ⁓ very obviously could. ⁓ we have the same technology in the US and it could be quite comfortable over there, but they've made it a market impediment ⁓ through government regulation to ⁓ to really address what is a predictable weather cycle. And they've done so in in an I I'd argue probably one of the most boneheaded ways possible because Europe is cold in the winter. ⁓ they they recognize that, but all the building regulations of the past twenty and thirty years have been ⁓ geared toward heavily insulating the buildings. And this is everything from, you know, you get the the double pane windows and doors and thresholds to they call it passive heating and passive ⁓ cooling measures so ⁓ moving away from HVAC systems and toward ⁓ what they call natural alternatives that don't consume as much electricity. But one of those things is is you pack these buildings heavily with insulation, which is great in the winter because it keeps all the heat in, but you put sun on that, it doesn't mix so well. It just turns ⁓ like into a natural oven ⁓ where the sun, the building is absorbing sunlight all day. And because the temperature doesn't go down at night, it doesn't radiate out. And by five or six the next morning when the sun comes up, ⁓ it's just the whole process repeats itself. And next thing you know, it's ninety five or a hundred hundred degrees indoors.

Speaker 1

The French response on X, and apparently that's a real thing, had this to say, quote, We're not banning AC, we're making sure future summers need it less. The ⁓ community note is ⁓ re reveals a lot. It ⁓ the community note ⁓ says that while Europe does not ban AC outright, it is worth noting that French regulations, as you're saying, discourage air conditioning. What an idea the you know, we're not banning AC, we're making sure future summers need it less. I I forget, ⁓ I think it was in the book The Moral Case for Fossil Fuels, where ⁓ Alex Epstein he was quoting someone who who was discussing how hot it is in India. Yeah. The idea that, you know, if you're not going to advance and have air conditioning in India, say in a perfect world, like you'll ⁓ stop it from getting, you know, half a degree hotter in however many years. It's like, well, until then it's still over a hundred degrees. So it's probably in your best interest to just get an air conditioner and actually deal with it. ⁓

Speaker 2

And that's what's kind of being disguised here in the ⁓ the the French counter argument is they're pretending all these climate measures actually do anything. ⁓ most of them are just window dressing that have an infinitesimally small effects on on climate change, even in aggregate, assuming you could even want or desire to change the climate. And yet they they have this hubris as well we all have to be part of this collective warmth. ⁓ quite literally. We have to all do our part, even if it doesn't actually alter or change the purported problem here. ⁓ we're in it together, therefore air conditioning's bad, therefore we ⁓ are morally justified in regulating it, even though it's made everyone miserable on a predictable basis. Every summer there's like a heat wave in Europe. And it's not just discomfort that's coming out of this. ⁓ there's empirical evidence that ⁓ you know, they measure ⁓ excess deaths, death rates that occur that are reflected in seasonal ⁓ factors like ⁓ cold spells and heat spells are traditionally the ⁓ the periods when this this happens. And it turns out that like over the course of human history, a lot more people they tend to die of ⁓ heat exhaustion. You know, it exacerbates ⁓ strains on the body, especially elderly people. And ⁓ another thing you find out in Europe, a lot of the hospitals are not even air conditioned.

Speaker 1

Really? Wow.

Speaker 2

Yeah. So people that are ⁓ not in the best medical shape that are like maybe trying to recover from a surgery or something, and suddenly a heat wave hits and it's ninety-five degrees in your hospital room, that's not a good recipe for recovery. And and yet that's kind of the norm that's been emerging over there. And we're starting to see evidence in the data that excess deaths are spiking precisely because of the heat wave that hit Europe over the last ⁓ couple of weeks. And and you add on to that, there are all sorts of other economic repercussions. So I just got back from a week in the UK that coincided with this major heat wave that was all over the news. And I'm looking at the temperature outside, it was actually the exact same temperature as in the mid nineties in London as it was in Virginia, where I left, ⁓ where I live and and and I had basically moved from nineties in the in Virginia to nineties in London. So the exact same temperature. But the comfort level was a night and day difference. Here we have air conditioning. You get over there, and the buildings are steaming hot inside, ⁓ to the point of dysfunction. They were shutting down trains on the public transit system because it was too hot in the train cars. And this was causing some things to malfunction. Businesses were closing early ⁓ because it was just too hot to operate. ⁓ You you go to a restaurant and you're sitting there in sweltering heat trying to enjoy a meal. You go to hotels, four and five star hotels that are just like heat boxes, ⁓ walking in there. And you start looking at, well, what's the reason for this? Yes, okay, Northern Europe has a traditionally colder climate, so you have less air conditioning, ⁓ in general, but it's actually way, way less air conditioning than even somewhere like Maine in the United States, where ⁓ the you know, that's on the on the colder end of our continent and is not traditionally an air conditioning central hub, but you can at least find it there. And I start asking questions about so so what's going on here? And it turns out there's a policy explanation behind it. Just like in France and ⁓ and England, they adopted very aggressive climate change control policies over the past twenty years. They refer to it as net zero. The idea is you you want to reduce emissions to ⁓ to zero ⁓ on net And therefore supposedly reverse climate change. And a big part of it was, well, they changed building codes and and installation r regulations for ⁓ putting in heating and and ⁓ air conditioning systems and all sorts of ⁓ regulatory obstacles. They don't ban it outright, but what they do is they create a barrier to being able to install air conditioning by all the hoops and codes and nonsense you have to jump through. Whereas you could drive to Home Depot in the United States and buy a portable window unit air conditioning system for about a hundred bucks and install it that afternoon. You can't do that in the UK. ⁓ you have to go through all these different hoops of regulatory obstacles. ⁓ maybe your local town council has veto power over your ability to install an air conditioning if it alters that net zero equation. It means you're now a ⁓ an energy consumer. And then one one of the other Factors I saw in this, and I I confirmed this directly, like staying at these hotels, four and five-star hotels in London and around the UK, that 10 or 15 years ago were air conditioned. No way. And I say were air conditioned, being the same ⁓ the key thing. But they had older air conditioning units that ran on Freon, which was the original stuff, and that depleted the ozone layer. So they replaced Freon with these other chemicals that were like Freon replacement. But ⁓ that fixed the ozone layer problem, but those other chemicals are carbon ⁓ based or ⁓ or they have ⁓ they're they're seen as greenhouse gases. So those two were phased out in 2015 by a regulation in the UK that said you can no longer use these types of coolants you to convert to the more energy efficient one that now fits the new ⁓ requirements. Well, what this means is all these old air conditioning units, ⁓ couldn't be updated, they couldn't be recharged. So all the economic incentives are in place to discourage hotels from staying modern. And they've actually s ⁓ slid backwards. ⁓ so whereas in 2010, 2015, you would have had air conditioning in this hotel. Here we are in 2026 and it's ninety-five degrees inside the same building and the old system's still there, you flip it on and it blows hot air.

Speaker 1

That is so insane because it's kind of like you've had the cure all along. You were using the cure freely. Yes. Yeah. I don't know. It's almost like anti-science. Right, right. When I look at the new tech and stuff like that, I'm like, ⁓ human beings are really good at adapting and inventing and innovating. And I think no matter how warm it is or how warm it's going to get, we will find a way to keep my office. Cool. Right. Just seems so backwards to be to be fighting that for

Speaker 2

Yeah, i it's Luddism merged with an anti-capitalist political agenda at at the core of it. I mean, ⁓ let's accept, okay, maybe climate chlimate change is happening, the world is getting warmer, and yes, there are a mixed bag of effects that come out of that. Some of them are bad. It may mean more extreme weather cycles, it may mean ⁓ more hurricanes or more ⁓ heat waves and certain events like that. But the question is what do you do about it? If we have the technology to mitigate it, you know, that in itself is a solution, but they don't want that solution. And we've seen people making this argument in the last ⁓ couple of weeks around the European heat wave. They're saying, well, if we install air conditioning, then people won't take climate change seriously enough. Therefore, we must make them suffer so they know that ⁓ this is something they have to take seriously. ⁓ it's kind of like we're we're we're self-inflicting punishment ⁓ on people, making their lives harder and more miserable. up to and including increasing those excess deaths that I mentioned that come about from ⁓ heat exhaustion. All to kind of stick it to them and say, hey, well, well, you need to take climate change more seriously. And i it it's kind of like, well, taking climate change seriously is I'm installing an air conditioner. That's me taking climate change seriously. You know, upgrading the infrastructure system ⁓ against flooding from hurricanes. That's me taking climate change seriously. Sitting here doing this frivolous window dressing to try to change the climate itself in the other direction. ⁓ there's nothing serious about that at all. It's a bunch of political symbolism. But what it does do is it allows government to exercise greater control over the economy. It allows regulators to step in and say, No, you aren't allowed to build this ⁓ building because it's not compliant with this arbitrary code of environmental ⁓ practices that we have imposed on you. No, you are not allowed to upgrade your air conditioner because the old system used Freelon or it used a Freelon replacement that we deem contributing to global warming. No, you are not allowed to ⁓ alter the heating system in your home because it's not net zero. If you do so you're consuming more energy now. That is all A series of mechanisms for economic and political control in the name of that we're in this together and we're supposed to be saving the planet.

Speaker 1

That kind of reminds me of just the idea of like arsonists starting fires to raise awareness about climate change's impact on forest fires. Sit there, suffer, sweat, and it don't complain about it, 'cause if you complain about it, you're a bad person. But you know what, like we've been talking about, you know, mentioning these excess deaths due to to heat. I mean, that's a big thing. And and I d I wonder if are most of the deaths kind of elderly people?

Speaker 2

Yeah shit.

Speaker 1

⁓ do Europeans have a different relationship to, you know, mass deaths of elderly where it's sort of like they're off the dole, they've moved on to the you know, to the next hopefully air conditioned paradise. I I just find it really wild to to be facing death every year and saying we're gonna put up with that. Well

Speaker 2

Yeah, and they they almost don't want to talk about it, even though the data are there, the statistics are there. And that's the other interesting thing. There's a there's a hypocrisy element to it because remember, we just went through COVID six years ago. And what was the line there is you first you have to trust the science, and the science says if it saves even one life, we must all go into lockdown forever. And if you even question that on civil liberties grounds, on economic grounds, and any on moral grounds, that meant you wanted to kill grandma. And yet the very same people that were using and deploying those types of arguments, you raised the question of ⁓ heat exhaustion and the lack of air conditioning. ⁓ you know, Europe was locked down haven ⁓ the better part of a year during COVID. And yet you raise the same question about air conditioning. So you point out, wait a minute, this is also killing grandma. ⁓ this is also straining people that are on ⁓ have comorbidities or in poor health. It's also very bad to have a hospital that's not properly. ⁓ air conditioned. You point that out to them and it's like, ⁓ well, we can't talk about that because ⁓ we're actually in it for the greater goal of saving the climate. ⁓ and I think what this points to is a lot of these policies originate from a political objective and then they rationalize backward to a moral cause like saving the climate from it. ⁓ and it's really the political objective that's the cart that's driving the horse here. They they want you to think that hey, net zero is the scientifically advised thing that we must do to control climate change. The reality is net zero is the political end they want for regulatory purposes and government control. ⁓ and climate change is just the pretext, among many other pretext, to get there. Yeah.

Speaker 1

gonna ask, you know, why the lack of air conditioning seems like such a badge of honor for Europeans. and it does seem like, well if if your goal is as you describe it, then not having an air conditioner is sort of kind of like wearing the uniform. You are a soldier in the fight to get to that point. Yeah.

Speaker 2

There's a valorization of misery that's occurring here. And I saw this firsthand. You know, being over there in the middle of the heat wave, it was the only thing that people were talking about. How horrible it was outside, how miserable everything was. ⁓ it's 95 degrees outside, 95 degrees inside the building because it's this giant heat trap with no air conditioning. And ⁓ the next several nights are going to be miserable because I can't get any sleep because the temperature doesn't go down. And I'm sitting here like, why are you living this way when you could do something about it very easily and very cost effectively, but for the existence of these regulations that are

Speaker 1

⁓ man, when you describe that, I I was just imagining the last time my air conditioner didn't reach my bedroom. And I and afterwards I was so upset and I beat it. I I just took a baseball bat to it. But that that feeling of of complete discomfort of of just being sweaty and blankets and pillows sticking to you and and if you have a and if you have a partner, you don't even want them near you, it's

Speaker 2

You mix that with the ⁓ what let's just say the Europeans are also not known for ⁓ deodorant.

Speaker 1

⁓ Phil, don't go there. We're gonna get so many we're you're gonna get in trouble for that. Doing it for net zero.

Speaker 2

Yeah, yeah. Exactly. Yeah, different social conventions, but ⁓ just think of that crammed into the London underground in the tube with no air conditioning. It has ninety five degrees output outside. It's like the most miserable place on earth in a ⁓ a a a packed train car, no air conditioning and a bunch of smelly people around.

Speaker 1

And how are you supposed to be productive, ⁓ with that? You know, 'cause I'm I'm wondering like, you know, can we measure kind of like the economic impact of air conditioning? Are air conditioned businesses or societies more successful? ⁓

Speaker 2

Yeah. I mean we already y you see the anecdotal evidence of that all around. There were ⁓ stores and restaurants closing early because they said we ⁓ it's just too hot inside. So we sent our employees home. There are tourist ⁓ locations that suspended operations because of a heat wave. ⁓ and you know, again, this is not a hundred and fifteen degree heat in Arizona heat wave. This is eighty-five to ninety-five degrees. ⁓ it's normal East Coast United States in the summer that we deal with at air conditioning. They have no air conditioning and therefore like half of society is shut down and suspended. That has economic consequences in addition to all the other discomforts and problems associated with it.

Speaker 1

Yeah, how much does ⁓ BO reduce productivity? I if there's ever been a boss who's just like, Look, guys, I gotta send you all home because you all stink. Well, tell you I just came back from Las Vegas, ⁓ Freedom Fest 2026, and I cannot imagine what life would have been like for those, you know, six or seven days that I was there if air conditioning did not exist. And I mean

Speaker 2

It's an added discomfort.

Speaker 1

it would basically be like the EU's standpoint that no, Las Vegas should not exist. Like there's no there's no reason or it should be underground.

Speaker 2

Right, right. It's it's it's like this weird dystopian future. Yeah. Here's a city that exists pr primarily because of air conditioning. ⁓ it was a desert before air conditioning came along. ⁓ y you sit here and think about this. What's all the economic activity that's been generated out of Las Vegas? The fact that it's now this tourist destination, precisely because it's facilitated with technology that allows us to improve upon the natural climate, which is A hundred and ten degrees in sweltering.

Speaker 1

Considering that we're, you know, gonna be wrapping up the World Cup and all of the tourists that have come to the United States, I I wonder, you know, are they going to bring back air conditioning to their homelands? Like did they get a jar of cool air from the United States that they're gonna try to get through TSA?

Speaker 2

I be worried about the European side. They get accused of trafficking ⁓ carbon dioxide or or ⁓ emissions that are bad for global warming or something.

Speaker 1

Phil, thank you so much for a cool episode. I plan to bump my AC even lower in celebration of this amazing technology that we are so fortunate to have. And we are so fortunate to have you listening to us at Happy Hour Econ. Come back next week. We'll be right here. See you then.