Coyote Blog

Kevin Drum says:

The Consumer Product Safety Improvement Act makes it illegal to sell toys that haven’t been tested for lead content.  In general, I think that’s a perfectly fine idea.

He can’t understand, though, why its effects seem so perverse and Draconian when its core is such a “perfectly fine idea.”  It is amazing to me that the law of unintended consequences is so hard even for seasoned political observers to grasp.

A sensible restriction might be that a child cannot by any reasonable use of the product ingest more than X concentration of lead.  But of course that is not what the government does.  The government requires that every toy undergo expensive testing and batch tracking (almost like that of an aircraft part).  This is not by any means the same as simply requiring products to limit lead exposure.  It is a one-size-fits-all regulation of process, rather than true safety.  It imposes huge testing and tracking expenses on products that can’t possibly have any lead in them.

And, like many laws of this kind, it imposes a huge penalty on small competitors and new entrants and rewards larger toy makers who both have the scale to pay for the testing and the political clout to shape the law in their favor.  In fact, the big winner from the legislation has actually been Matel, the company whose recalls actually led to the law in the first place.

The Consumer Product Safety Improvement Act (CPSIA) requires third-party testing of nearly every object intended for a child’s use, and was passed in response to several toy recalls in 2007 for lead and other chemicals. Six of those recalls were on toys made by Mattel, or its subsidiary Fisher Price.

Small toymakers were blindsided by the expensive requirement, which made no exception for small domestic companies working with materials that posed no threat.

…

So while most small toymakers had no idea this law was coming down the pike until it was too late, Mattel spent $1 million lobbying for a little provision to be included in the CPSIA permitting companies to test their own toys in “firewalled” labs that have won Consumer Product Safety Commission approval.

The million bucks was well spent, as Mattel gained approval late last week to test its own toys in the sites listed above—just as the window for delayed enforcement closed.

Instead of winding up hurting, Mattel now has a cost advantage on mandatory testing, and a handy new government-sponsored barrier to entry for its competitors.

Update: Brad Warbiany has similar thoughts.

Joe Romm of Climate Progress is a leading climate alarmist, telling the world that burning fossil fuels will increase CO2 concentrations by 0.04% of the atmosphere over the next century and thus destroy mankind.  As such, he is a supporter of the current cap-and-trade bill in Congress, whose purpose is to raise the price of fossil fuels (either directly as a tax or by restricting their supply) so that less will be used.

On a different but related topic, Joe Romm is also apparently a peak oil alarmist.  As I have written, I suspect real oil prices will rise steadily over the coming decades, but we aren’t going to fall off some cliff and see a sudden hyperinflation of oil prices (temporary spikes are a different story).  He writes

The IEA’s work makes clear that for oil to stay significantly below $200 a barrel (and U.S. gasoline to be significantly below $5 a gallon) by 2020 would take a miracle

I tend to doubt it, in part because I have seen so many very similar predictions ever since the mid-1970s, but I suppose some day someone will be right with one of these.   I wonder if there is some kind of psychological profile that causes people to see positive feedback-driven accelerating curves everywhere.

But here is my confusion — he is absolutely convinced that oil is going up by $140 a barrel or more.  Let’s look at this in the context of Co2.  The CBO estimates the clearing price for a ton of Co2 emissions under the current bill will be between $20-$30 a ton.  Since a barrel of oil creates about a third of a ton of CO2 emissions, this implies the cap and trade bill might increase the price of oil by $7-$10 per barrel.  But if Romm think oil is going up by natural market forces by $140+, why even bother?  Why not just put a tax on coal and be done with it?

I congratulate Mr. Romm, however.  If he is so sure of 2020 oil prices, there are all kinds of fabulous ways to become ridiculously wealthy with this knowledge.

Postscript:  There are two reasons why people have been making this same forecast for 30 years and have been wrong most of the time.

First, there is a very human tendency to assume current conditions and trends will go on forever.  Everyone is subject to this bias, even the smartest analysts.  Romm might argue that these are savvy, detail-oriented commodities analyst, but I only have to point to the recent behavior of savvy detail-oriented debt security analysts.

Second, analysts tend to apply current understandings of what technologies and substitutes are economic at $60 oil to a world where oil is priced at $160.  It just doesn’t work that way.   The market for petroleum and its substitutes is enormously multi-variate and complex.  A $100 bump in prices will do things that are sometimes hard to predict in detail to the markets for exploration, new technologies, substitutes, conservation, etc.  But in all this complexity, the one thing we do know is that time and again, such changes have occurred quickly and decisively in response to rising oil prices, and have acted to mitigate and reverse price increases.

One ironic way of looking at it, since this is Joe Romm, is to say that there are negative feedbacks that cut in to slow and even reverse sharp rises in oil prices.  Romm seems to reject these negative feedbacks, in favor of a price model that rapidly accelerates.  This is all ironic, since this issue of negative vs. positive feedback is what separates climate alarmists like Romm from many climate skeptics like myself.

Two large drivers of high health insurance costs in certain states is 1) bans on interstate competition for health insurance and 2) state-by-state mandates for minimum coverage.  These two government actions lead to some states having remarkably higher health insurance prices than others.  Via Carpe Diem:

The average health insurance ranges from a low of $1,254 in Wisconsin to a high of $8,537 in Massachusetts, and the national average is $2,613. That kind of variation couldn’t exist in a competitive market for health insurance. Interstate competition for health insurance would go a long way towards bringing health insurance costs down.

That Massachusetts model sure is doing wonders, huh?  If reimportation of drugs from Canada makes sense, why not of policies across state lines? See where your state ranks here.

It used to be said that it was the young who distrusted police and authority, while as people aged they became more conservative and comfortable with authority and the police, ostensibly because they had more wealth and position to protect.  Al Franken had a sketch on SNL where he explicitly poked fun at this, saying something like “when I was young, I opposed the draft, but now that I am over draft age, I support the draft to protect me, Al Franken… etc. etc.”

Oddly enough, I have had exactly the opposite progression.  In high school I was a police-loving, authority trusting, border-closing little conservative, cheering on Clint Eastwood and Charles Bronson in 1970′s movies where loan heroes fight against the degradation of police departments by civil libertarian pinko bleeding hearts.

The older I get, and the more experience I gain, the less I trust any authority and in particular the less I trust police officers who are given the power to use force and the authority to cover up its misuse.  Yet another good example.  So Dirty Harry and Death Wish have been replaced in my favorites list by the Wire.

Usually an article like this would blame the US:

Global carbon dioxide emissions in 2008 rose 1.94 percent year-on-year to 31.5 billion tonnes, German renewable energy industry institute IWR said on Monday, based on official information and its own research.

Several other leftish / alarmist sites picked up the story, but still didn’t hammer the US, saying only that the US is the largest contributor to total emissions but not whether it contributed significantly to last year’s rise.  It turns out there is a reason for this.  US emissions were actually way down, falling far faster than the drop in economic growth:  (from the EIA)

The story tries to put a positive spin on Europe  (again, the preferred story line is always Europe-good-America-bad):

Carbon dioxide emissions from heavy industry participating in the European Union’s Emissions Trading Scheme fell 3.1 percent last year compared with 2007, the EU’s executive Commission said in mid-May

This is a carefully worded cherry-picking on one sector of the economy.  I would be willing to bet almost any amount of money that the rest of Europe’s economy saw less of a drop or even an increase.  Even so, the cherry-picked sector, the one subject to cap-and-trade, still underperformed the US.  Overall, US emissions have fallen since 2000 without any real regulatory program and just the normal incentives of economic efficiency at work.

The US is NOT the problem when it comes to future emissions growth.

From CNN via NRO:

NEW YORK (CNNMoney.com) — What are people trading their clunkers in for? It depends on who you ask.

The government’s results showed small cars as the top choice for shoppers looking for Cash for Clunker deals. But an independent analysis by Edmunds.com disputed those results, and showed that two full-size trucks and a small crossover SUV were actually among the top-ten buys.

The discrepancy is a result of the methods used. Edmunds.com uses traditional sales measurements, tallying sales by make and model. The government uses a more arcane measurement method that subdivides models according to engine and transmission types, counting them as separate models.

For example, the Ford Escape is available in six different versions including two- and four-wheel drive and hybrid versions. The government counts each version as a different vehicle using guidelines from the Environmental Protection Agency. Only the front wheel drive, non-hybrid version made the government’s top ten list.

The Ford Escape crossover SUV, instead of being the seventh-most popular vehicle under the program, as the government ranked it, was actually the best seller, according to Edmunds.com. The government pegged the Ford Focus as the top seller.

Trucks tend to be available in more variations than cars. That’s because truck buyers have a wider variety of needs than car buyers, General Motors spokesman Brian Goebel said.

“There’s just so many different uses for the truck, both retail and commercial, than with car purchasers,” he said.

The Edmunds rankings, shown in the NRO link above, actually solve one problem for the Obama administration but create another.  The Edmunds list has far fewer foreign cars, overcoming the criticism the program has gotten (not from me!) for promoting sales of non-American nameplates.  But it creates another problem, in that most of the cars on the Edmunds list are relatively low MPG, obviating the whole point of the program.

From a Chicago Tribune editorial on the city aldermen blocking Wal-Mart construction in the city, via Carpe Diem:

Organized labor doesn’t like Wal-Mart because Wal-Mart doesn’t have union jobs. It just has jobs (with an average hourly wage of $12.05 in Chicago). The aldermen, of course, already have jobs. They get paid $110,556 a year and they figure that as long as they keep the labor unions off their backs, they’ll keep making $110,556 a year.

Who says the City Council doesn’t generate jobs? If you’re one of the 50 aldermen, your unemployment rate is 0 percent. But the unemployment rate for the rest of Chicago is above 10 percent. One in 10 Chicagoans is out of work.

You can actually read the health care bill.  Here.

Over the last few years, Republicans have tried to wrap themselves in the flag of the First Amendment, arguing that they were the true defenders of free speech against political correctness.  But while the left certainly has attacked speech on certain fronts, the right has been no less busy, particularly in areas related to sex, crime, and security.   One example, via Overlawyered:

Two Lee County, Florida men face possible prison sentences of five years because their MySpace pages show them making hand gestures that prosecutors say are associated with street gangs. “Their prosecutions are the first under a state law passed last year that criminalizes the use of electronic media to ‘promote’ gangs.” The bill’s sponsor, state legislator Rep. William D. Snyder, R-Stuart, says in response to charges that the measure violates the First Amendment by criminalizing expression: “none of our freedoms are absolute, and the freedom of expression is not absolute”

At the beach for a while.

Mark Perry links a story on the “cash for clunkers” program, including a small taste of the 136-pages of rules, regulations, and procedures dealers must follow to qualify for the payment.

From the Anti-Planner:

Forty states have asked the federal government for a total of $102 billion for high-speed rail. This suggests that the Antiplanner’s estimate of $90 billion for the cost of the Obama high-speed rail plan was low.

Secretary of Behavior Modification Ray LaHood says that this “shows that the country is ready for high-speed rail.” Of course, all it really shows is that state bureaucrats are ready for free federal money.

Believe it or not, I am actually in Washington DC.  I am on the executive committee of our little industry’s trade group, and as such it is expected that once a year we venture to DC to talk to Senate and House staffers about what legislation is pending that may affect our business.  I won’t call this “lobbying” as that word implies we have any influence over outcomes.  It is more of a grim due dilligence to see what we are going to have to try to deal with next.

As this activity has roughly the same appeal for me as being dragged naked by a truck down the Interstate, I have avoided this task for years.  I finally relented to my duty, and here I am.

For those too young to remember, during the 1980′s we endured a hysteria about child molestations, with a number of pretty obviously innocent men dragged to jail on the back of testimony coerced from kids by over-zealous prosecutors.  Janet Reno became particularly famous for the “Miami method” of hounding kids until they started pointing fingers at whomever the prosecutors had their eye on, and rode such fame to the US AG office (see here and here for the disturbing details).

As the kids grow up, a number of these prosecutions are finally falling apart, as in this story.  Of course, as i9s typical in such cases, despite all the witnesses coming forward and admitting they were coerced into making false accusations, the prosecutors are not giving up easily.  via Overlawyered

I really wanted to post by email in England but could not make it work. Trying again.

Update: So close, yet so far away. LOL. I will keep working on it.

The scare story, from November 2008:

Advocates for the nation’s automakers are warning that the collapse of the Big Three – or even just General Motors – could set off a catastrophic chain reaction in the economy, eliminating up to 3 million jobs and depriving governments of more than $150 billion in tax revenue.

Industry supporters are offering such grim predictions as Congress weighs whether to bail out the nation’s largest automakers, which are struggling to survive the steepest economic slide in decades.

Even if just GM collapsed, the failure could bring down the other two companies – and even the U.S. operations of foreign automakers – as parts suppliers run out of money and shut down….

Automakers say bankruptcy protection is not an option because people would be reluctant to make long-term car and truck purchases from companies that might not last the life of their vehicles.

I called BS on this at the time.  Turns out it was yet another made-up scare story to justify government coercion and more unthinking expenditure of taxpayer dollars:

One of the biggest fears of a GM bankruptcy filing — a collapse of revenue — appears to not be as prominent an issue as originally thought.

Car buyers appear undaunted by GM’s bankruptcy, assuaging one of the auto maker’s biggest fears heading into Chapter 11. Early signs point to stable demand for GM cars and trucks since the company filed for Chapter 11.

Mr. Henderson said June retail sales are tracking higher than May. “June sales are moving along just fine,” Mr. Henderson told reporters at a summit in Detroit. Sales to rental and other fleets are down from last month, he said. “We’re very gratified for the support of dealers and customers that we’ve received through this.”

We often hear that one of the reasons health care “reform” is necesary in the US is because the uninsured overwhelm emergency rooms.  We hear horror stories of overcrowded emergency rooms with long wait times, which would only be better if we had a national health care system like Canada.

A couple of interesting facts:

Average US emergency room wait time:  4.05 hours

Average Canada emergency room wait time:  8.9 to 23 hours

I confess the numbers are not apples-apples, but they are certainly in the ballpark and highly illustrative.   Have any commenters seen a direct comparison?

Update: OK, the numbers are more apples-apples than I thought.  The US 4 hour number is total time from coming in the door to leaving or getting a bed, the same as the Canadian numbers.  The CNN report linked above got their data from here.

Far be it for me to interpret actions by politicians cynically.  There is a lot of analysis about why Sarah Palin resigned.  I don’t know anything more than most, but here is what I told a friend way back in December:

Sarah Palin should resign now and go on the speaking / pundit circuit.  She is currently in the midst of her 15 minutes of fame and before it passes, she should jump on the opportunity.  In particular, there are all kinds of conservative business execs who will fork out $75,000 a pop to have Palin speak at corporate functions, sales conferences, etc.  This is not even to mention however much Fox is willing to pay her to be a talking head.

A 128GB flash drive.

I remember my first mass storage device – a 10MB PC add-in card.  My first thought — I will never be able to fill that up!  Last month I finished my do-it-yourself  $1000** version of a $60,000 Kaleidescape video server (article to follow on how I did it).    My system has a 6TB capacity Raid 5 drive using 8 one TB drives (if that does not add up, it is because one of the drives is configured as a hot spare).  And the freaking thing is over 70% full already.

** This is, of course, if you treat my time as worth zero, especially for the process of ripping 400+ DVDs.

Via Jim Kingsdale:

Since PHEV’s [plugin hybrid electric vehicles] can have so much impact on both the energy investment outlook and national security, I follow with some interest the news about their likely availability.  Recently a picture is starting to emerge.  It is not positive for American car companies, of which G.M.’s Volt is the poster child.  This is not totally surprising given G.M.’s proven history of incompetence.

We know that the Volt’s battery is so expensive that G.M. proposes to sell the car for $40,000 – a price that would eliminate most buyers.  And even with such a high price G.M. promises they would lose money on every vehicle.  So, as I’ve previously written, the Volt may well be more of a political strategy for G.M. than a likely transportation solution.   Now a new study by Carnegie Mellon University says the design of the Volt’s propulsion system is inherently sub-optimal and uneconomical – “not cost effective in any scenario” in the words of the study.

The reason is quite obvious once you think about it.  G.M. designed the Volt battery to go 40 miles on a charge because, they “reasoned”, some 90% of all drivers go no more than 40 miles in a day.  What Carnegie Mellon points out is that the average driver goes less than 20 miles in a day.  Therefore the Volt’s battery is twice as large as necessary for some 50% of drivers .  Since battery weight and cost are the prime determinants of a PHEV’s cost-effectiveness, the Volt battery is about twice as large as is economically practical for most drivers.

Here’s how the report put it: “The Carnegie Mellon study, conducted by engineers from three different departments, constructed computer simulation models to determine the impact of additional batteries on fuel consumption and cost and greenhouse gas emissions over a range of charging frequencies.  It found that small-capacity plug-ins that get less than 20 miles per charge are more efficient than conventional hybrids. And it said that large capacity hybrids like the Volt that go 40 miles or further on a charge are never cost-effective, because the batteries cost and weigh too much.  A car with the Volt’s range, according to the study, would also be extremely uneconomical traveling fewer miles as it hauls around battery capacity it doesn’t need.”

So much for the Volt.  Ciao – and lets hope the U.S. govt. is smart enough not to fall for the Volt’s fools-gold as an excuse to keep G.M., a chronically mismanaged company, from enjoying the cleansing benefits of bankruptcy.  Among which benefits might be new management.

I am very glad to hear this from someone other than, uh, me:

China bashing during the past decade is reminiscent of the Japan bashing that occurred during the 1980s. It turned out that Japan’s substantial export surplus with the US, its extensive accumulation of US Treasury bonds, and its purchases of assets in the US did not hurt the United States, but were for the most part foolish actions on the part of the Japanese government and businesses. I believe that similar conclusions will be reached about the parallel Chinese practices.

I have been saying this for years, that the Chinese trade and exchange rate policies everyone wanted to bash were doing nothing but helping us and hurting the Chinese people.  I wrote a hypothetical post from the Chinese persepective nearly 3 years ago:

Our Chinese government continues to pursue a policy of export promotion, patting itself on the back for its trade surplus in manufactured goods with the United States.  The Chinese government does so through a number of avenues, including:

• Limiting yuan convertibility, and keeping the yuan’s value artificially low
• Imposing strict capital controls that limit dollar reinvestment to low-yield securities like US government T-bills
• Selling exports below cost and well below domestic prices (what the Americans call “dumping”) and subsidizing products for export

It is important to note that each and every one of these government interventions subsidizes US citizens and consumers at the expense of Chinese citizens and consumers.  A low yuan makes Chinese products cheap for Americans but makes imports relatively dear for Chinese.  So-called “dumping” represents an even clearer direct subsidy of American consumers over their Chinese counterparts.  And limiting foreign exchange re-investments to low-yield government bonds has acted as a direct subsidy of American taxpayers and the American government, saddling China with extraordinarily low yields on our nearly $1 trillion in foreign exchange.   Every single step China takes to promote exports is in effect a subsidy of American consumers by Chinese citizens.

This policy of raping the domestic market in pursuit of exports and trade surpluses was one that Japan followed in the seventies and eighties.  It sacrificed its own consumers, protecting local producers in the domestic market while subsidizing exports.  Japanese consumers had to live with some of the highest prices in the world, so that Americans could get some of the lowest prices on those same goods.  Japanese customers endured limited product choices and a horrendously outdated retail sector that were all protected by government regulation, all in the name of creating trade surpluses.  And surpluses they did create.  Japan achieved massive trade surpluses with the US, and built the largest accumulation of foreign exchange (mostly dollars) in the world.  And what did this get them?  Fifteen years of recession, from which the country is only now emerging, while the US economy happily continued to grow and create wealth in astonishing proportions, seemingly unaware that is was supposed to have been “defeated” by Japan.

We at Panda Blog believe it is insane for our Chinese government to continue to chase the chimera of ever-growing foreign exchange and trade surpluses.  These achieved nothing lasting for Japan and they will achieve nothing for China.  In fact, the only thing that amazes us more than China’s subsidize-Americans strategy is that the Americans seem to complain about it so much.  They complain about their trade deficits, which are nothing more than a reflection of their incredible wealth.  They complain about the yuan exchange rate, which is set today to give discounts to Americans and price premiums to Chinese.  They complain about China buying their government bonds, which does nothing more than reduce the costs of their Congress’s insane deficit spending.  They even complain about dumping, which is nothing more than a direct subsidy by China of lower prices for American consumers.

And, incredibly, the Americans complain that it is they that run a security risk with their current trade deficit with China!  This claim is so crazy, we at Panda Blog have come to the conclusion that it must be the result of a misdirection campaign by CIA-controlled American media.  After all, the fact that China exports more to the US than the US does to China means that by definition, more of China’s economic production is dependent on the well-being of the American economy than vice-versa.  And, with nearly a trillion dollars in foreign exchange invested heavily in US government bonds, it is China that has the most riding on the continued stability of the American government, rather than the reverse.  American commentators invent scenarios where the Chinese could hurt the American economy, which we could, but only at the cost of hurting ourselves worse.  Mutual Assured Destruction is alive and well, but today it is not just a feature of nuclear strategy but a fact of the global economy.

I concluded in another post

Napoleon said to never interrupt an enemy when he was making a mistake.   I don’t consider China an enemy, but it just flabbergasts me that the Chinese taxpayers and consumers see fit to subsidize lower prices for our consumers, and we feel the need to stop them.

More here

I don’t have to explain to readers that I oppose the idea of government stimulus.   So I am loathe to argue about stimulus methodology, because I think one is just arguing over gradations of suck.

But if I were to discuss stimulus for employment, my first thought would be reducing the employer portion of FICA — reduce the cost of employment, the quantity employed would likely go up  (of course, rather than doing this, the administration has done just the opposite, by requiring union shops on government contracts, effectively increasing the cost of employment).

My second thought was the SBA.  Most stats show that job creation is mainly in small businesses, and it appears to be small business credit that is impacted most for the 2008 banking crisis.  So, instead of sending more money to state governments; or welfare recipients; or large companies who have, by failing, proven themselves to have bad management or a bad business model or both  (none of whom are likely to be huge engines of private job creation).  Why not find a way to increase funding to small businesses?  Temporarily reduce the federal guarantee fee on SBA loans, provide tax credits for banks making such loans, something.

I called the SBA today.  They said they have no idea, just like the rest of us, what is in the bill.  Apparently there were a few incremental changes proposed, but nothing concrete.  The only specific proposal the SBA rep made was an early provision in the stimulus plan to raise the government gaurantee fee, which hardly seems like a way to promote small business credit.  It probably makes fiscal responsibility, but since when did the stimulus have anything to do with fiscal responsibility?

A key birthday today, February 6.  Find out who.

That I never get my business in a situation where I have to spend $45,000 just to lay off a worker.

General Motors is offering buyouts to virtually all of its remaining hourly workers, becoming the latest automaker to try to cut labor costs by giving nervous workers an incentive to leave the company.

The move follows a similar move by Chrysler LLC, which made an offer to its hourly workers on Monday.

The GM (GM, Fortune 500) offer, which takes effect Friday, is less lucrative than the deal proposed by Chrysler, or even offers that GM has made to its hourly staff in the past. The automaker will give most of its 62,000 U.S. hourly workers $20,000, as well as a voucher good towards the purchase of a GM car worth $25,000.

In the past, GM offered between $45,000 to $62,500 to workers to retire early, and $140,000 to employees who left the company and agreed to give up post-retirement health care coverage. Those offers were all cash.

Seriously, is this driven by GM contracts, or is this just GM’s choice as an alternative to firing everyone?  There are cases when it makes sense for a company to go through the added expense of worker buyouts vs. layoffs.   The buyouts avoid the bad press of a layoff, they help maintain the company’s reputation in the remaining workforce and community, and may not be a bad investment for a company temporarily on hard times that knows good times, and the need to hire more quality employees, are just around the corner.

But seriously, do automakers really have anything to lose at this point to lose?  And if the main reason for buyouts over layoffs is reputational, is this really what we want our tax money funding, the maintenance of the good name of GM management?

Yesterday, while I was waiting for my sandwich at the deli downstairs, I was applying about 10% of my conciousness to CNN running on the TV behind the counter.  I saw some woman, presumably in the Obama team, defending some action of the administration being based on “peer reviewed” science.

This may be a legacy of the climate debate.  One of the rhetorical tools climate alarmists have latched onto is to inflate the meaning of peer review.  Often, folks, like the person I saw on TV yesterday, use “peer review” as a synonym for “proven correct and generally accepted in its findings by all right-thinking people who are not anti-scientific wackos.”

But in fact peer review has a much narrower function, and certainly is not, either in intent or practice,  any real check or confirmation of the study in question.  The main goals of peer review are:

• Establish that the article is worthy of publication and consistent with the scope of the publication in question.  They are looking to see if the results are non-trivial, if they are new (ie not duplicative of findings already well-understood), and in some way important.  If you think of peer-reviewers as an ad hoc editorial board for the publication, you get closest to intent
• Reviewers will check, to the extent they can, to see if the methodology  and its presentation is logical and clear — not necesarily right, but logical and clear.  Their most frequent comments are for clarification of certain areas of the work or questions that they don’t think the authors answered.
• Peer review is not in any way shape or form a proof that a study is correct, or even likely to be correct.  Enormous numbers of incorrect conclusions have been published in peer-reviewed journals over time.  This is demonstrably true.  For example, at any one time in medicine, for every peer-reviewed study I can usually find another peer-reviewed study with opposite or wildly different findings.
• Studies are only accepted as likely correct a over time the community tries as hard as it can to poke holes in the findings.  Future studies will try to replicate the findings, or disprove them.  As a result of criticism of the methodology, groups will test the findings in new ways that respond to methodological criticisms.  It is the accretion of this work over time that solidifies confidence  (Ironically, this is exactly the process that climate alarmists want to short-circuit, and even more ironically, they call climate skeptics “anti-scientific” for wanting to follow this typical scientific dispute and replication process).

Further, the quality and sharpness of peer review depends a lot on the reviewers chosen.  For example, a peer review of Rush Limbaugh by the folks at LGF, Free Republic, and Powerline might not be as compelling as a peer review by Kos or Kevin Drum.

But instead of this, peer review is used by folks, particularly in poitical settings, as a shield against criticism, usually for something they don’t understand and probably haven’t even read themselves.  Here is an example dialog:

Politician or Activist:  “Mann’s hockey stick proves humans are warming the planet”

Critic:  “But what about Mann’s cherry-picking of proxy groups; or the divergence problem  in the data; or the fact that he routinely uses proxy’s as a positive correlation in one period and different correlation in another; or the fact that the results are most driven by proxys that have been manually altered; or the fact that trees really make bad proxies, as they seldom actually display the assumed linear positive relationship between growth and temperature?”

Politician or Activist, who 99% of the time has not even read the study in question and understands nothing of what critic is saying:  “This is peer-reviewed science!  You can’t question that.”