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Economic Suicide: A Crash Course In Supply Side Economics

Sarah Palin wrote an op-ed on Cap and Trade the other day. You know, just in case you hadn't heard. Aside from sending lefties into a tizzy about her actual "authority" to write an op-ed, it was good to see her actually put her energy knowledge to use.

She does a pretty solid job outlining why this is catastrophic legislation, summarizing it with this line:

The ironic beauty in this plan? Soon, even the most ardent liberal will understand supply-side economics.

Just a brief definition of supply-side economics for those who don't know: in short, economic growth can be achieved by providing incentives for people to supply goods and services... i.e., cut income tax and capital gains tax. Allowing business to make their own decisions, and not burdening them with unreasonable regulations benefits everyone: consumers receive lower costs, and businesses can remain competitive. In short, it's the reason capitalism works.

Cap and Trade is, first and foremost, economic suicide. Without access to energy, our entire world comes to a standstill. The fact that we have easy access to these resources now is at the root of our growth as an industrialized nation. Our world is reliant on access to affordable, accessible energy. Palin stresses the importance of becoming energy independent:

There is no denying that as the world becomes more industrialized, we need to reform our energy policy and become less dependent on foreign energy sources. But the answer doesn't lie in making energy scarcer and more expensive! Those who understand the issue know we can meet our energy needs and environmental challenges without destroying America's economy.

Nail on the head. No one is going to argue that things need to be better than they are right now. We are currently too dependent on foreign energy sources. The effects of cap and trade force domestic energy producers to cut back. The first thing to go? Jobs. Lots of them. From Palin:

Job losses are so certain under this new cap-and-tax plan that it includes a provision accommodating newly unemployed workers from the resulting dried-up energy sector, to the tune of $4.2 billion over eight years. So much for creating jobs.

Common sense application. More money spent to meet government standards = less money they can spend on employing people. The mythical jobs that will be created under this plan are certainly no substitute. The even larger problem is that, even though job loss directly related to energy could be economically crippling, it doesn't stop there. The costs of Cap and Trade get passed on from energy providers to consumers. Which, just to clarify, is you. When fuel costs more, transportation costs more. This means everything costs more - from gas and air fare down to your grocery bill.

(Side note: I'm amazed that the job loss from the auto sector was viewed as economically devastating, to the point where we spend billions of dollars bailing them out, and yet no one sees the job loss in the energy sector as a problem...?)

One hang up I have: She briefly mentions nuclear energy, but does not present it as a viable alternative to fossil fuels. Which it is. The main complaint about nuclear energy is the danger involved. They get all flustered and indignant about Chernobyl. First of all, do you want to know how many people have died of a nuclear meltdown in the United States? Zero. Second, besides vodka, what has Russia ever done right in the history of the world? We're going to use them as a reason to refuse to develop clean, sustainable, abundant energy? Bad choice.

This has been the failure of so many opponents of cap and trade - if we are to be successful in defeating it, we need to have an alternate solution. Nuclear energy is it. In the mean time, we have the resources right here in our back yard to sustain us. Drill, baby, drill.


Comments

John wrote re: Economic Suicide: A Crash Course In Supply Side Economics
on 07-17-2009 8:32 AM

Cap & Trade alone is not a bad thing.  In fact there are several success stories in the US of it working well (sulfer dioxide and CFC emissions were reduced as both are clearly harmful).  Saying that you need to understand that your individual energy bill WILL increase using Cap & Trade.  Doing this in a recession is idiotic (you don't raise taxes in a recession!) and will hurt those in the lower income brackets more than the higher ones -- in effect you are taxing the poor the heaviest.  However if you offset the effective tax increase with a tax reduction (income tax, payroll tax, something) then it becomes a wash and you can hopefully accomplish the goal of reducing carbon emissions.

Now whether or not the amount of carbon emissions reductions will do anything to truly help the environment is a whole other argument ... and I don't believe Al Gore has the science knowledge to be a credible source.

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