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Posted on 03/19/2009 3:22:55 PM PDT by Delacon
Protectionism is always bad policy. But protectionism during an economic downturn, after taxes have already risen, and in addition to a massive $2 trillion tax on energy consumption is, well, not good.
Yet that is exactly what Energy Secretary David Chu seems to be edging towards.
In response to the notion that American companies will move overseas when CO2 is capped, Secretary Chu suggested that the U.S. simply levy a carbon tariff on imports.
This is why Secretaries of Energy should stick with energy and not economic policy. This is why free-markets work and command and control economies do not.
At any rate, the supposed logic goes something like this.
Since energy, predominately fossil fuel, is the lifeblood our economy, industries across the board will be hit with higher energy costs. Particularly hit hard will be the manufacturing sector. In the first 20 years, the Lieberman-Warner cap and trade bill would have destroyed over 900,000 jobs, caused nearly 3 million job losses in the manufacturing sector by 2029, caused some manufacturing sectors (e.g., paper, chemicals, and plastics).
The logical solution for these companies is to move overseas where they can make more efficient use of labor and capital and won’t be put at a competitive disadvantage in the United States. In response, according to the Wall Street Journal:
Energy Secretary Steven Chu on Tuesday advocated adjusting trade duties as a “weapon” to protect U.S. manufacturing, just a day after one of China’s top climate envoys warned of a trade war if developed countries impose tariffs on carbon-intensive imports.
Mr. Chu, speaking before a House science panel, said establishing a carbon tariff would help “level the playing field” if other countries haven’t imposed greenhouse-gas-reduction mandates similar to the one President Barack Obama plans to implement over the next couple of years. It is the first time the Obama administration has made public its view on the issue.
‘If other countries don’t impose a cost on carbon, then we will be at a disadvantage…[and] we would look at considering perhaps duties that would offset that cost,’ Mr. Chu said.”
The Heritage Foundation has already documented how costly a cap-and-trade implemented in the United States would be. Our Center for Data Analysis calculated the costs of global warming cap-and-trade legislation in the U.S. alone and the cumulative GDP losses for 2010 to 2029 approach $7 trillion. Single-year losses exceed $600 billion in 2029, more than $5,000 per household. Annual job losses exceed 800,000 for several years. That’s a scary price to pay for what little, if any, environmental benefits we receive.
A carbon tax on imports makes all of that worse.
Here’s why:
• Increase costs for consumers. Not only will our energy costs be higher but now everything we import will be more expensive too. Say goodbye to affordable foreign goods.
• Could cause a trade war. Protectionism begets more protectionism. Other countries will view this as unfair, because it is, and respond by implementing more tariffs in retaliation.
• De-develop the developing world. Developing countries rely heavily on free trade to prosper. Exporting goods in which countries hold a comparative advantage is critical their economic growth, just like it is ours.
• Punishes developing world for using cleaner technology. The developing world is doing just that, developing. For that reason, the technologies they use are newer, cleaner, and more efficient. Penalizing nations for developing is nonsensical.
• Sour relations with major trade partners. One of the countries most upset by this is China. Looking at Census Foreign Trade Statistics, American purchase a lot from China. Damaging our relationship with China over a carbon tariff would be economically disastrous.
• May be illegal under established international trade law. A carbon tariff does not abide by rules established under the World Trade Organization.
Energy is the lifeblood of our economy, but free trade is one of the fundamental aspects of prosperity, not only in the United States but everywhere. When the United States specializes in the production of certain goods and services they can produce more efficiently, it allows other countries to do the same with other products. The result is lower prices and a higher standard of living for us and our trading partner.
Russ Roberts explains it well:
We export so we can have money to buy the stuff that’s hard for us to make—or at least hard for us to make as cheaply. We export because that’s the only way to get imports. If people would just give us stuff, then we wouldn’t have to export. But the world doesn’t work that way.
It’s the same in our daily lives. It’s great when people give us presents—a loaf of banana bread or a few tomatoes from the garden. But a new car would be better. Or even just a cheaper car. But the people who bring us cars and clothes and watches and shoes expect something in return. That’s OK. That’s the way the world works. But let’s not fool ourselves into thinking the goal of life is to turn away bargains from outside our house or outside our country because we’d rather make everything ourselves. Self-sufficiency is the road to poverty.”
So are tariffs, quotas, and carbon capping legislation. Having cap-and-trade with carbon tariffs would be doubly bad.
ping
Energy Secreteries should NOT be involved in environmental policy either.....
.....Unless it is to defend and improve the production of reliable - affordable - and abundant energy....which IS their job.
A link to EconTalk! Cool!
thanks, bfl
The paleos won’t come anywhere near this thread.
Hello?
Have at it.
When reporters asked Chu what he thought about a possible OPEC production cut he said the question was “outside my purview” and that he hadn't been briefed on the Administration's OPEC policy. Chu is a Chinese American and Nobel laureate. He was appointed as a figurehead and a parrot. Carol Browner is Obama’s energy czar. Browner is close to Al Gore who is preparing to unload billions in deflated EU carbon credits on a captive U.S. market once cap-and-trade becomes law and can be merged with the global carbon trade system.
Obama’s cabinet is a collection of weak or morally compromised figures. Departments are run out of the White House by Rahm Emanuel and official and unofficial czars.
Folks see their jobs being off shored, factory closings, and heard traitor McCain tell them, "those jobs aren't coming back".
So they voted for the commie....
We've made our bed, now we have to sleep in it.
I'm not defending the McCain campaign, mind you . . . but you expected to hear a politician promise he can bring those jobs back. How effed-up is that?
Obviously, from chatting here, we can't really know much about the others life experiences, but having worked my way through college doing the miserable jobs (ever hang drywall?) I know there's folks who will never be research scientist.... sorry but they simply don't have the gray matter.
So how are these people supposed to support themselves? McCain (Piss be upon him) also wanted millions more low wage dependent illegals to step and take what few jobs are remaining.
Thus every dollar the 0 wastes, I lay the blame at the free trade crowd's door.
You think those Big 3 jobs are coming back?
We've made our bed, now we have to sleep in it.
Won't Obama give you what you wanted?
So how are these people supposed to support themselves?
We need to seal the border and enforce the law.
Thus every dollar the 0 wastes, I lay the blame at the free trade crowd's door.
What does free trade have to do with the failure to enforce the law?
Hence, we now have someone in the Oval Office who believes communism works when the right people are in charge ...
And he spending yours and my money like a WestPac sailor ... (but I'm certain WestPac sailors got a better return for their investment.)
Folks who get worried about feeding their families will do strange things. Who wants to be hungry?
And one thing about Communism, it spreads the misery.
But you didn't answer my question: "How are people who lose their jobs to low wage 3rd World Sh(tholes supposed to feed themselves?
(A thousand words or less please)
PPS How ya like my new tagline?
bump for later
After we seal the border and enforce the law, millions of jobs should be available for Americans.
Did you steal that tagline from Obama, or Buchanan?
Once in a great while, the free trade crowd admits that what they perceive as free trade is nothing more than looking for the lowest labor costs - labor arbitrage if you will.
By putting the kabosh on international trade, they slowed down the growth of Germany and Japan, both of whom had the lowest labor costs in that particular time frame.
Hence, our soldiers faced a weaker opponent, for which I'm grateful.
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