“Permanent stagflation”
Saturday, November 22nd, 2008Putting aside the science of global warming, imagine “permanent stagflation.” That was the dire warning that Heartland Institute’s James Taylor, senior fellow in environment policy, gave to a packed audience at the Independence Institute last Thursday night. Taylor was in Denver to provide the Denver Regional Council of Governments with a free market environmental perspective. DRCOG should be commended for seeking a perspective beyond the prevailing global warming alarmism.
Taylor’s warning referred to the economics of the Lieberman-Warner Climate Security Act of 2008, which would have cut green house gas emissions nearly 70 percent by 2050. Fortunately the bill died in the Senate.
In his presentation, Taylor referred to the Science Applications International Corporation (SAIC) which ran the U.S. Energy Information’s National Energy Modeling System on Lieberman-Warner. SAIC came up with low cost and high cost scenarios at both the national level and the state level.
The numbers for Colorado are ugly:
- Low Cost Scenario — by 2030 more than 55,000 jobs lost, 75 percent rise in baseline gasoline prices, 95 percent rise in baseline electricity rates, and $4000 lost in annual household income.
- High Cost Scenario — by 2030 more than 75,000 jobs lost, 140 percent rise is baseline gasoline prices, more than 130 percent rise in baseline electricity prices, more than $7000 lost in annual household income.
Taylor referenced another study from CRA International that had more sobering economic forecasts, although much better than what SAIC predicted. By 2030 Colorado would lose 57,000 jobs, $1182 in lost household income and 2.3 percent loss in annual GSP (Gross State Product).
If that isn’t bad enough, Taylor cited more economics facts about our rush to halt climate change, which has lead to renewable energy mandates and a love affair with wind and solar. Hopefully we can pay for it. The US Energy Information Administration states that the average retail price of electricity in states with renewable power mandates is 42 percent higher than the price of electricity in states without mandates. According to Business Week Magazine, wind is 2.5 times more expensive than coal power, and solar is even more expensive than wind.
Need more? According to economists at MIT, mandatory greenhouse gas reduction would cost the typical family of four close to $5,000 each year.
All of this assumes that we can actually reduce greenhouse gas emissions and that the benefits would be worthwhile. After sharing these facts and many more, Taylor then asked the audience to “think of our current economic crisis;” imagine “permanent stagflation.” That’s what our economy would look like had the Lieberman-Warner Climate Security Act passed.
Even though Lieberman-Warner died, president-elect Barack Obama is even more aggressive and wants to reduce greenhouse gas emissions 80 percent below 1990 levels by 2050. With a super majority in the House and a near fillabuster proof Senate, he may be able to do so.
Even if Congress doesn’t pass greenhouse gas emissions legislation, Colorado residents still should prepare for dire economic consequences. Just one year ago Colorado Governor Bill Ritter released his Climate Change Action Plan, which his press release describes as ”an ambitious call to action that establishes firm goals and clear strategies to reduce harmful greenhouse gas emissions, and also provides simple suggestions so everyone in Colorado can address global warming.”
The Governor’s plan assumes “everyone” agrees that the science is settled, that we are willing to endure “permanent stagnation” for what would be miniscule eco-change, and that reducing greenhouse gas emissions 80 percent below 2005 levels is even possible. For an economic critique of the Governor’s Climate Change Action Place, check out the Peer Review by Benajim Powell.
Ritter has said “Climate change is our generation’s greatest environmental challenge. It threatens our economy, our Western way of life and our future.”
I’d say he is right. If Ritter and global warming alarmists mandate massive cuts in greenhouse gas emissions, they will destroy our economy, our Western way of life and our future. The only thing we will have to look forward to is “permanent stagflation.”
