Historian John Steele Gordon, writing on Barack Obama’s economic policies in the April issue of Commentary, says that the president’s plan to raise taxes on high earners and increase regulations on business will curtail job creation and slow economic growth.
This is nominally an article about cap and trade, the carbon-reduction strategy proposed by Obama that sets an absolute limit on emissions, and allows corporations or governments to trade emissions allowances under that overall cap. Gordon discusses how that theoretically environmentally friendly strategy would have severe economic consequences in places like Elkhart, Indiana—one of those places in the Midwest with a huge unemployment rate and an entrenched, failing industry. Elkhart manufactures RVs. The author points out, validly, that the drawbacks to these sorts of environmental laws would be felt more by working-class people in Indiana than by the “bi-coastal elites”:
The cap-and-trade tax will inescapably and adversely impact the economic recovery and future growth rates. If passed, it will act on the economy as a whole exactly the way a governor acts on a steam engine, increasingly resisting any increase in revolutions per minute. With the supply of licenses to emit carbon dioxide fixed, the price of the permits will inevitably rise as economic activity picks up. That means that any increase in overall demand will increase the price of energy, and thus, in a feedback loop, nearly everything else. That will damp down demand. The more the economy tries to speed up, the more the carbon tax will work to prevent it from doing so.
A carbon tax would have consequences, but Gordon’s point is also ridiculously over-simplified. In the first place, Gordon ignores the way policymaking actually works. As a result of industry lobbyists and legislators’ desire to attract certain voters, the carbon tax will be altered and amended as it comes up for reauthorization. No matter what the carbon tax looks like now, it will surely be modified to promote economic growth in certain sectors.
The other point is that, despite certain creepy parallels, this is not 1930; emitting carbon is no longer the main byproduct of economic growth. Ours is an increasingly technological economy, and the best American jobs—those the country ought to create and improve—don’t necessarily require big carbon emissions.
Gordon’s basic argument is that the underpinnings of Obama’s economic strategies don’t really help the little guy. But, then, Gordon’s gloss on “the little guy” is decidedly odd:
We have become overwhelmingly a country not of haves and have-nots but, one might say, of haves and have-yachts (including the land-yachts called RV’s). Over 3.5 million families today have net worths in excess of $1 million. Three-fifths of American families own financial securities in their own name. Millions more count on pension fund investments to make their old age comfortable. Only about 10 percent of non-farm families owned their own homes in 1936. Today more than 60 percent of American families do. This gives them the substantial financial assets that only the “rich” possessed in the 1930’s. The sort of desperate, grinding poverty seen in the FDR-era photographs of Walker Evans has simply disappeared. Today, even people of modest means enjoy a level of comfort, security, and even luxury undreamed of when Roosevelt was president. It is not the bicoastal elite that buys RV’s. RV’s are the vacation homes of the middle class. Plumbers talk about their 401-K’s and factory workers send their children to medical school.
Come on. “The sort of desperate, grinding poverty seen in FDR-era photographs” did not “simply disappear”; in fact, it disappeared—to the extent that it has actually disappeared—as a result of concerted public policy designed to address it. The mere fact that there has been an increase in the number of rich people does not mean there has been a corresponding decrease in the number of poor people. In fact, the top 1 percent of American households owns 33.4 percent of all the country’s wealth. The bottom 80 percent of American households own only 16 percent. Some 35.9 million people in the United States still live below the poverty line.