Too many Republicans these days have lost their economic bearings. Look no further than a GOP Senate bill that would enact a carbon tariff—i.e., a new tax. In the name of punishing China, the legislation would punish American consumers and businesses.
The Foreign Pollution Fee Act, sponsored by Louisiana’s Bill Cassidy and South Carolina’s Lindsey Graham, could well have been written by the Sierra Club and AFL-CIO. Among the carbon tariff’s biggest advocates is Donald Trump’s former trade adviser Robert Lighthizer, who favors tariffs in principle. So it’s worth deconstructing the misleading arguments that Mr. Cassidy and others are making for climate protectionism.
The bill would impose tariffs on 16 categories of goods produced in countries with higher CO2 emissions than the U.S. They include steel, aluminum, critical minerals, solar panels, wind turbines, crude oil, gasoline, petrochemicals, plastics, paper and lithium-ion batteries. Companies could lobby to have products added to the list, and you can bet they will.
Tariffs would be based on a foreign good’s relative “carbon intensity,” as calculated by a new National Laboratory Advisory Board on Global Pollution Challenges. The bill would expand the administrative state by creating a new bureaucracy with sweeping powers that would be hard for future Congresses to rein in.
U.S. production of most goods on the tariff list doesn’t come close to meeting domestic demand. Yet tariffs could be reduced only in limited circumstances—namely, for national security needs or if U.S. companies produce less than 5% of domestic demand. That means importing businesses won’t have an alternative to paying the tariffs, which would be filtered through supply chains and passed to consumers.
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The Louisiana Senator is also selling the bill with a misdirection worthy of Al Gore. He argues that “the Chinese Communist Party (CCP) and other foreign governments have ignored international norms and agreements regarding environmental protection and pollute the world without consequence,” and the bill would hold these “polluters” accountable.
In Foreign Affairs he conflates hazardous air pollutants such as sulfates with carbon emissions, as the climate lobby also does. As a physician, Mr. Cassidy knows the difference. Particulates harm public health. Carbon emissions are ubiquitous, and if he really thinks they’re dangerous pollutants he should be honest and try to eliminate his state’s oil industry.
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Some of the GOP’s strongest supporters of free trade and markets have recently retired, and the party’s protectionist wing is on the rise. But the GOP won’t be worth a dime’s worth of economic difference from Democrats if it embraces an idea that expands the administrative state, raises taxes, and increases prices amid damaging inflation.
Here’s the abstract a paper by Gerald Auten and David Splinter forthcoming in the Journal of Political Economy: (HT Phil Magness)
Concerns about income inequality emphasize the importance of accurate income measures. Estimates of top income shares based only on individual tax returns are biased by tax-base changes, social changes, and missing income sources. This paper addresses these shortcomings and presents new estimates of the distribution of national income since 1960. Our analysis of pre-tax income shows that top income shares are lower and have increased less since 1980 than other studies using tax data. In addition, increasing government transfers and tax progressivity have resulted in rising real incomes for all income groups and little change in after-tax top income shares.
GMU Econ alum Paul Mueller continues to write informatively about ESG ‘investing’ (so-called).
Fiona Harrigan reports on “the good Samaritans who saved Syrian refugees.”
Steve Hanke and Matt Sekerke call for the Argentine government to dollarize Argentina.
Mark Jamison argues that “the FCC’s regulatory overreach threatens American broadband prosperity.” A slice:
Contrary to its name, net neutrality is not about impartiality but about government control of the public internet under archaic laws called Title II. Crafted nearly a century ago for telephone utilities, these laws would allow the FCC to dictate almost every aspect of broadband service, just like when the FCC and the state utility regulators did when telephone companies were government-franchised monopolies. While the FCC initially imposed Title II on the internet in 2015 under pressure from the Obama White House, the regulations were largely reversed in 2017 during Republican leadership. The FCC’s new effort would add to those monopoly-era regulations a vague “general conduct standard,” which would allow the FCC to whimsically prohibit anything it deems “unreasonable.” This could result in reduced broadband availability, lower performance, and increased costs for consumers, as per top economic research on the subject.
Robert Tracinski isn’t impressed with Patrick Deneen’s work. Two slices:
The new conservative opponents of “liberalism”—which they define, correctly, to include not just the old center-left but also the “classical liberalism” of the pro-free-market right—have been very clear about what they’re against, but less clear about what they’re for. One of the leaders of this movement is Notre Dame political theorist Patrick Deneen, and his new book “Regime Change” is a much-anticipated attempt to fill this gap by offering some positive substance to the anti-liberal program.
It does not in fact do so, offering only a few, surprisingly small-ball specifics. For example, a section on breaking down the separation of church and state in favor of “integration”—seemingly the most dramatic idea in the book—contains only one semi-concrete proposal: more public prayer. There is no discussion of how this would be different from what grandstanding politicians already do. One suspects, from the general principles he espouses, that Deneen wants a lot more. After all, he laments the loss of religion’s “political status as a governing authority.” But it remains a generality.
That captures the approach of the whole book. It offers a lot of vague generalities in what is essentially a 50-page pamphlet padded out to about 250 pages through constant repetition. Yet this lack of specific detail reveals Deneen’s actual theme. It is not about what we should do. It’s about who should do it, who should be in charge. “Regime Change” is not Deneen’s agenda for reform, but a fantasy about seizing power on behalf of his own faction.
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In contradiction to Tocqueville, Deneen regards all change in American society as somehow foisted on us from above by elites, as “the forced imposition of radical expressivism.” It’s like a stolen election theory, but for the culture wars: People did not really choose change because the vote was rigged.
