Fake Prices: Trump’s Attack on Economics

Trump Executive Order Blocks Consideration of the “Social Cost of Carbon”

NJ climate careerists now support SCC

Nowadays people know the price of everything and the value of nothing.” ~~~  Oscar Wilde, The Picture of Dorian Gray

[Update below]

There’s been an avalanche of reporting on “fake news” and it’s also been widely reported by the mainstream corporate media that President Trump considers the scientific consensus on climate change (global warming) a hoax perpetrated by the Chinese to undermine US economic growth.

So, I guess it logically follows in Trump’s mind – but has been virtually ignored by the media – that if global warming is a hoax then it couldn’t possibly impose costs on the economy – and that what economists call the “social cost of carbon” also must be a hoax – perhaps a campaign scheme by Russian hackers?

So, in case you haven’t heard: President Trump’s wrecking ball, the: Presidential Executive Order on Promoting Energy Independence and Economic Growth among other even more significant horrors, abolished consideration of the “social cost of carbon” and prohibited implementation by federal agencies, disbanded all federal workgroups, and withdrew all prior documents including:

(i)    Technical Support Document:  Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866 (February 2010);

(ii)   Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis (May 2013);

(iii)  Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis (November 2013);

(iv)   Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis (July 2015);

(v)    Addendum to the Technical Support Document for Social Cost of Carbon:  Application of the Methodology to Estimate the Social Cost of Methane and the Social Cost of Nitrous Oxide (August 2016); and

(vi)   Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis (August 2016).

Luckily, all those documents have been preserved, despite Trump’s Orwellian effort to scrub federal websites and send them “down the memory hole”.

Ironically, the Trump promotion of “fake prices” (which ignore what economists call “externalities”) and “fake economics” comes at a time when even corporate polluters and fossil energy giants have reluctantly agreed to support some form of carbon tax, see:

• Exxon Mobil Lends Its Support to a Carbon Tax Proposal

• Leading corporations support US carbon tax campaign

• Corporations support a carbon tax? A paradox that will lower emissions

My take on corporations supporting a carbon tax, my sense of the fossil strategy is:

1. A tax is a market mechanism that derails stronger “keep it in the ground” bans and regulatory alternatives;

2. The tax can be passed on to consumers and have little impact on corporate profits (kind of like a bottle deposit law).

3. The relative inelasticity of demand for fossil fuels means that small price increase of a small carbon tax that could gain political support in Congress would have little effect on demand or profits.

Some economic criticisms I’ve read on carbon tax note that it would have to be very high – $300 – $400 or more per ton and double current gas prices – to reflect the true external social costs of carbon and to provide an effective market price signal to investors in renewables. Such a high tax is politically infeasible.

4. Politically they can blame the Democrats when the backlash hits.

Finally, after years of failing to report on the social cost of carbon – other than to mention it as a “zero carbon emissions credit”, benefit of and reason to bailout nuclear energy – I guess that corporate support now makes it safe for NJ Spotlight and their “climate dignitaries” to report on and support inclusion of the social costs of carbon in State level policy and regulation.

Oh the cruel irony!

[Update: 10/10/17 – these are the lies you can tell, based on Fake Prices:

A leaked draft of the repeal proposal asserts that the country would save $33 billion by not complying with the regulation and rejects the health benefits the Obama administration had calculated from the original rule. ~~~ EPA Announces Repeal of Major Obama-Era Carbon Emissions Rule (NY Times) – end update]