Welcome back class, for this special summer school session! It’s been about three years since we concluded our Economics for Politicians series. For those of you who are new here, this series was written to address a need. It’s apparent that many of you in power in our nation’s capitol and various state houses have followed a career path that has kept you insulated from the real world. And in the case of this lesson, we’re offering advice for a certain religious leader as well. The purpose of the lessons was to break down basic economics in a manner that even a politician can understand. In addition to the ten core lessons, there were also a few sidebars, such as how to look realistically at our national debt, how both leftists and conservatives need to take a hard look at some of their beliefs regarding taxes, and even though it came after the series, an idea for tax reform that is both constructive and politically viable, the Neutral Tax.
While I’m not planning on reviving the series, I have noticed the need for a few more lessons that we didn’t teach the first time around. So every so often I’ll be providing a new lesson on various economic topics written in a manner that even a politician can understand. If you need to get caught up on various subjects links to the previous class are at the bottom of this post.
Over at the New Republic, Jonathan Cohn is arguing that we raise carbon taxes, emphasis mine. (h/t Vodkapundit):
Naturally, there are arguments to be had over how high taxes should go, exactly who should pay more, and what form those levies should take. Personally, I’d opt for some combination of taxes on wealth and taxes on carbon, figuring it’d be good to fight inequality and stop global warming. And while taxes should go up for most people, they should be a little lower for some of the working poor.
Cohn never quite makes the case how disproportionally taxing the poor doesn’t worsen income inequality while also granting the power to control the weather. Sadly, many of you share his views. Focusing on expensive renewables while avoiding the cheaper, more efficient sources is hurting the poorest Africans:
The refusal of many rich countries to fund aid for coal-fired electricity in Africa and Asia rather than renewable projects (and in passing I declare a financial interest in coal mining) leaves more than a billion people without access to electricity and contributes to 3.5 million deaths a year from indoor air pollution caused by cooking over open fires of wood and dung.
Beyond denying access to inexpensive electricity, Matt Ridley paints a very real picture of how elitist western politics are hurting Africa:
In what is probably the silliest comment on climate since a Ukip councillor blamed floods on gay marriage, a green journalist opined of the refugees dying in the Mediterranean: “This is what climate crisis looks like . . . We know there is evidence that the violence triggered by the Arab Spring uprisings of 2011 were in part fuelled by protests over soaring food prices.”
The soaring prices were actually exacerbated (as the Food and Agriculture Organisation of the UN confirmed) by the diversion of much of the world’s farmland into making motor fuel, in the form of ethanol and biodiesel, for the rich to salve their green consciences. Climate policies were probably a greater contributor to the Arab Spring than climate change itself.
Many refugees are fleeing Islamist persecution in Libya and the Sahel but as Dr Kandeh Yumkella, UN under-secretary-general, told the BBC, the “long-term push factors” that are driving people to make the “miserable journey” include the lack of energy in sub-Saharan Africa.
Without abundant fuel and power, prosperity is impossible: workers cannot amplify their productivity, doctors cannot preserve vaccines, students cannot learn after dark, goods cannot get to market. Nearly 700 million Africans rely mainly on wood or dung to cook and heat with, and 600 million have no access to electric light. Britain with 60 million people has nearly as much electricity-generating capacity as the whole of sub-Saharan Africa, minus South Africa, with 800 million.
The advice that the Greens have had for us hasn’t been the most practical. we’ve had former UN Secretary General Koffi Annan told us to eat bugs, while others among you pretend you’re helping the environment while driving coal fired cars
“People who own all-electric cars in places where coal generates the power are actually making the air dirtier, according to a new study…They also are significantly worse at heat-trapping carbon dioxide that worsens global warming, it found.”
Even that shining example of green energy every leftists likes to cite, Germany, has failed to create the promised green utopia:
Thus, over the past decade, the total amount of carbon-free power that Germany has produced under its oppressive green-energy policy has actually decreased by 3 GW. The deficit, as well as all requirements for new power, has been met by burning increased amounts of lignite, which emits not only more carbon dioxide than practically any other power source, but large amounts of real pollutants as well. Germany has brought the world many remarkable political innovations, including government by bureaucracy, the welfare state, regimentation of education, Red, Brown, and Green parties, theoretical and applied racial science and engineering, the precautionary principle, and the systematic philosophical and practical negation of Judeo-Christian ethics. Its heartless energy policy is entirely consistent with that history.
Unfortunately, much of what you’re basing your assumptions on is junk science, as Heartland’s Richard Trzupek summed up:
“Proof is for mathematical theorems and alcoholic beverages. It’s not for science.” – Mann
“Bound by honesty, the scientific consensus (sic) is going to struggle to overcome this problem, appearing unable to actually back up its results with tangible events…” – Blogger Guest
Cross out the word “appearing” and you have as concise a statement of the problems that alarmists like Mann increasingly face with each passing day.
Every year on Earth day, non-mainstream media sources like to list the many botched predictions that enviro-alarmists have gotten wrong over the years, while Bjorn Lomborg, a climate scientist who actually bases his beliefs on actual data as opposed to the herd mentality, reported very good news about the state of the environment. And there is more good news! You’ve no doubt heard about the natural gas revolution that’s been driven by the drilling technique known as frakking. It’s been driving job creation not only in the energy production sector, but also in industries where energy and its costs are a key component.
Yet a funny thing has happened on the way to oblivion: the rustbelt’s industrial base is reviving. Cheap and abundant natural gas is luring investment from manufacturers from Europe and Asia, who must otherwise depend on often unsecured and more expensive sources of energy. The current energy and industrial boom, according to Siemens President Joe Kaeser, “is a once-in-a-lifetime moment.”
Even better, cheaper gas puts more money in the hands of all Americans, and the poor benefit disproportionately:
Every day, American motorists are saving $630 million on gasoline compared with what they paid at June prices, and they would get a $230 billion windfall if prices were to stay this low for a year. The vast majority of that will flow into the economy, with lower-income households living on tight budgets likely to use money not otherwise spent on gas to buy groceries, clothing and other staples.
But the biggest inspiration for this post came from John Hinderaker’s analysis over at Powerline, “Someone Tell the Pope: Environmentalism Crushes the Poor”
Yesterday the American Coalition for Clean Coal Electricity released a report that documents how the Obama administration’s war on coal (and on cheap energy generally) has hurt poor and middle-class Americans. While I can’t vouch for the calculations, the report is an impressive piece of work, based on energy consumption and price data from the U.S. Department of Energy’s Energy Information Administration, along with data from the Census Bureau and the Congressional Budget Office.
The study cites a few choice nuggets:
To meet rising energy costs, in 2011:
* 24 percent went without food for at least one day
* 37 percent went without medical or dental care
* 34 percent did not fill a prescription or took less than the full dose
* 33 percent used their kitchen stove or oven to provide heat
* 19 percent had someone become sick because their home was too cold
* 6 percent were evicted from their home or apartment
Personally, I don’t put much stock in stats like this. There is a lot of assuming that goes into them, but since the left cites “facts” like this constantly, I have no problem with our side doing the same. But what I found more interesting was this infographic (click to enlarge):
Again, without having vetted all of the numbers, let’s simplify this even further. Assume that gasoline expenditures are identical for two families, one with an income of $20,000 per year and the other with $100,000 per year. Assuming both spend $2,000 on gasoline per year, that expense takes up only 2% of our $100K earner’s income, but it consumes a whopping 10% of the poorer family’s income.
Now let’s say that the price of gasoline drops and both households are now only spending $1000 per year while their incomes remain the same. The $100K household sees a 1% increase in their disposable income (income after taxes), while the 20K family’s income increases by 5%. Even though both parties see the same monetary gain, it disproportionately helps the poorer one. Likewise, raising gasoline taxes disproportionately hurts the poor. Hinderaker closed with this:
It is easy for Pope Francis, Tom Steyer, Barack Obama and others who don’t have to worry about money to say that government policy should make electricity and gasoline more expensive so that other Americans–the poor and middle class–can’t afford to consume so much energy. But if you aren’t wealthy, government-mandated increases in energy costs mean very real cuts in the rest of your budget–a budget that goes almost entirely for food, clothing, shelter and health care. These are the necessities that millions of Americans have to forgo because of arrogant liberal policies.
We can’t un-elect the Pope–although perhaps we can educate him–but for God’s sake let’s not vote for any more Democrats who care more about discredited global warming theories than about the well-being of poor and middle-class Americans.
If nothing else, let’s at least start calling out leftists who claim to care about the poor while they support policies designed to hurt them.
— David Burge (@iowahawkblog) June 18, 2015
And if anyone is looking to catch up on previous lessons in the series, here is the complete set. The final chapter also has links to some side posts that also supported the lessons.
Lesson One: It’s Not Your Money
Lesson Two: Intro to Microeconomics, or Why Prices Matter
Lesson Three: Intro to Macroeconomics. or So that’s Where Government Fits In!
Lesson Four: You Don’t Create Jobs – It’s Time to Get Over FDR!
Lesson Four A: By Definition the Government Can Not Create Wealth
Lesson Five: Businesses are Greedy – That’s Not Necessarily a Bad Thing!
Lesson Six: You are Greedy – That is a Bad Thing!
Lesson Seven: You Don’t Invest; You Spend
Lesson Eight: Do You Know What an Unfunded Liability Is? It’s Why You Belong in Jail!
Lesson Nine: Unintended Consequences – Bonus Section for Journalists!
Lesson Ten: Solutions! You’re not part of the problem – you ARE the problem!
Cross posted from Brother Bob’s Blog