While the National Association of Manufacturers and the American Council for Capital Formation take their dog-and-pony show of supposedly independent but fully deceitful analysis about global warming legislation around the country, reviews of the work are coming in from across the country. And, the common reframe:
From The Billings Gazette, in Montana, comes this review from the former chair (30 years) of the University of Montana’s Department of Economics: Opponents of greenhouse gas rules use loaded numbers. lWhile the title might say it all, let’s take a quick look at Professor Power’s powerful words and insights.
They begin by implicitly assuming that the efforts to reduce the emissions of greenhouse gases have no real purpose and, therefore, no benefits whatsoever. That allows them to focus exclusively on totaling up the costs associated with such regulation. Instead of a benefit-cost analysis, they carry out only a cost analysis, assuring a negative result.
Since there is, obviously nothing at stake and onerous regulation will be put into place simply, we guess, to create jobs for government bureaucrats, this is all about costs and there are no benefits to be had, no costs to be avoided. Yes, “CO2: we call it life” seems to be the operative NAM/ACCF philosophy. (Although, perhaps more appropriately, “Unrelegated pollution: we call that extraordinary profiteering potential”.)
Second, they assume that our economy is a completely nonadaptive system that, when faced with the need to stop doing one thing that is damaging or destructive, can only throw up its arms in despair and just quit. The only reason to make this assumption is that it allows them to grossly inflate their imagined costs of adjusting to a new reality.
Okay, Powers is good. I like how he writes. He also highlights issues that merit highlight. Yup, the NAM/ACCF are basically anti-American since we are obviously quitters in the face of adversity, in the face of challenge. Might as well go home with our tails behind our legs according to them.
Third, they assume that when employment declines in the polluting sectors of our economy, those workers become permanently unemployed. The fact that workers will be needed in the industries that will help us improve the efficiency with which we use energy and to produce energy from alternative sources is ignored. Many of the alternatives to which we will turn are more labor intensive and will boost the demand for labor, not reduce it.
Green Jobs anyone?
Fourth, they spin out big numbers but never put them in any meaningful context that would allow us to understand how disturbed, or not, we should be by them. For instance, they project that the leading greenhouse gas emissions bill in the U.S. Senate will lower average household incomes by almost $7,000 a year. But that is based on a projection of what average income will be 23 years from now with and without greenhouse gas regulation.
Their projection is that average household income in 2030 would be $137,000 per year without regulation and “only” $130,000 with regulation. Those are real increases in income with inflation subtracted out. Our average real incomes will increase $52,000 per year without regulation, but we will enjoy “only” a $45,000-per-year increase in average incomes with regulation. According to these industry projections, if we acted aggressively to do our part to control global warming, we would have to wait all of two or three years to reach the same astronomical level of income, the year 2033 instead of 2030. That is not impoverishment or deprivation by any means.
Note, as well, this is a projection within a model that is opaque, to which they are not sharing information about assumptions and their data. Thus, with all the other problems, how can we trust them that there would be any cost in terms of reduced income growth?
Powers then takes them on in terms of their projections for Montana. In this case, he shows that their projections of 11-15k fewer jobs, over the next 25 years, should be in the light of Montanas 20k new jobs every year. Hmmm … might Montanans actually welcome a few fewer jobs and a few fewer immigrants (yeah, those foreigners from California and New York) moving in to fill the vacancies? The terrifying NAM project: less than 2% of projected job creation over 25 years. (Again, a projection within their biased and distorted modeling.)
The cost to Montana, America and the world of doing nothing about global warming is likely to be catastrophic. The cost of aggressively acting now to end our wasteful use of energy will be quite bearable.
We have the ingenuity and technology to head off this catastrophe. The only question is whether we have the moral courage and political will to do so.
As for the last, the answer is clear: not if NAM and ACCF have anything to do with it.
And, clearly, a serious thumbs down for SAIC’s “independent study” dictated by NAM/ACCF.
A Bravo Zulu to Professor Powers. Any other economists dipping their toes into this monstrocity masquerading as analysis?