President Obama, like most heads of developed (=comfortable) nations, wants major legislation to save the environment. A lot of European governments are way ahead of us (what did you expect after eight years of Oilman Bush?) and there is nothing wrong with their policies except that they are largely incoherent, hurt their respective economies, and are bad for the environment.
President Obama's current big idea is Cap & Trade. The Waxman-Markey Bill, introduced in Congress last week, would set strict limits on total U.S. greenhouse gas emissions (that's the cap); and it would give credits to industries that do the job quicker, which credits could be sold to industries that are having a harder time meeting goals (that's the trade). Waxman-Markey aims to reduce U.S. greenhouse emissions 83% by 2050. Whether that's possible or a good idea is a big question. Such a reduction would have negligible effects on global warming, but hey, anything is progress, right? But despite what the proponents are saying about 'green' jobs, the policy will be very expensive and that will mean a drag on the economy and a loss of jobs and wages.
Ronald Bailey, writing in Reason, is impolite enough to point this out:
To achieve these goals, the U.S. will have to spend money on clean energy technologies which are far more expensive than conventional energy technologies.
All rhetoric aside, mandates cost money. Today, for example, President Barack Obama declared that new U.S. automobiles must get an average of 35 miles-per-gallon by the year 2016. Yet it is widely acknowledged that meeting this new standard will add $1,300 to the cost of each new car. In general, when prices go up, people buy less. So, all other things being equal, less demand for a product (like cars) means fewer jobs, not more. (Of course, there is one way to raise prices and create more jobs: reduce worker productivity. If policy makers deliberately encourage inefficiency in an industry, more jobs will likely follow. But that reduced productivity also means workers will receive lower wages.)
Well… yes. Cap and Trade legislation will mean lost jobs and lower wages. That might be worth it if you think that we are avoiding environmental disaster. But that requires some confidence that such policies are coherent. Do we really have a good grasp of the costs of these policies, and the effect those costs will have on a dynamic economy?
Consider Honda's attempt to create an affordable, environmentally friendly car. Jeremy Clarkson, writing in the London Telegraph, has a review of the hybrid (=gas and electric engine) Honda Insight. It might be the most devastating car review I have ever read.
Much has been written about the Insight, Honda's new low-priced hybrid. We've been told how much carbon dioxide it produces, how its dashboard encourages frugal driving by glowing green when you're easy on the throttle and how it is the dawn of all things. The beginning of days. So far, though, you have not been told what it's like as a car; as a tool for moving you, your friends and your things from place to place.
So here goes. It's terrible. Biblically terrible. Possibly the worst new car money can buy. It's the first car I've ever considered crashing into a tree, on purpose, so I didn't have to drive it any more.
Clarkson goes on to describe, in the lethal prose that the Brits are best at, why the car is Biblically terrible. But does the car really add up to environmental progress? Clarkson is skeptical.
Honda has produced a graph that seems to suggest that making the Insight is only marginally more energy-hungry than making a normal car. And that the slight difference is more than negated by the resultant fuel savings… But I cannot see how making a car with two motors costs the same in terms of resources as making a car with one.
The nickel for the battery has to come from somewhere. Canada, usually. It has to be shipped to Japan, not on a sailing boat, I presume. And then it must be converted, not in a tree house, into a battery, and then that battery must be transported, not on an ox cart, to the Insight production plant in Suzuka. And then the finished car has to be shipped, not by Thor Heyerdahl, to Britain, where it can be transported, not by wind, to the home of a man with a beard who thinks he's doing the world a favour.
Why doesn't he just buy a Range Rover, which is made from local components, just down the road? No, really — weird-beards buy locally produced meat and vegetables for eco-reasons. So why not apply the same logic to cars?
That middle paragraph is exquisitely lethal. I am guessing that Clarkson is right. Like corn ethanol, and wind power, Joe Biden, the Honda Insight is something that sounds good at the time and makes certain voters feel better about themselves, but in fact makes worse all the problems it is supposed to solve.
I wish I could believe that Cap and Trade legislation is more intelligently designed.