Thursday, December 27, 2012

FEE: Closer to the Beltway?

The Foundation for Economic Education (FEE) recently moved its headquarters to the suburbs of Atlanta.  However, is it possible that they are also moving their message closer to the beltway?

In a post today, “Climate Consensus: Do Little for Now,” author Daniel Sutter takes on the politics of climate change from a utilitarian, cost-benefit viewpoint.  Who is Daniel Sutter?

Daniel Sutter is the Charles Koch Professor of Economics at the Johnson Center for Political Economy at Troy University.

From the article:

Although debate over the IPCC’s projections continues, less attention has been focused on the ultimately more important result: cost-benefit analysis implies we should do very little to prevent climate change. Instead, we should create wealth. Expanding the productive capacity of the economy will compensate future generations better than reductions in GHG will. A richer world in 2100, after all, will be able to afford to do things like relocating people affected by rising sea levels and constructing new port facilities and seawalls. 

Where to begin?  Sutter states that the debate over climate change continues, but it only continues in the minds of the politicians and bureaucrats who desire ever expanding control over society – climate change was on the fast-track to propel the world to centralized taxation, currency, and government.  The science was always questionable, and the discovery of the emails proved the purposeful deception.

Next, who is this “we” that should or shouldn’t do something to prevent climate change?  Does Mr. Sutter own a company?  Is he seeking investors into a venture?  Or is he recommending governmental policy action?  (mmm, yes.)  And what about the “we” that should be creating wealth?  Isn’t that up to each individual, to the best of his capabilities in satisfying market demands?

He then turns to the use of cost-benefit analysis as an aid to determining policy direction:

Businesses operate under the discipline of profit and loss based on market prices. Profit signals that an action generates benefits for the economy. Government does not face the discipline of profit and loss, but cost-benefit analysis, performed honestly, offers guidance about whether government actions benefit society.

Honest cost benefit analysis when it comes to governmental policy recommendations?  Setting aside the impossibility of anything honest coming from the fruits of taxation, forced by gun, of productive citizens – hasn’t Mr. Sutter been witness to complete politicization of governmental cost-benefit analysis?  And very specifically, the politicization of the climate change discussion?  Al Gore will lead a team for an honest cost-benefit analysis?

He then goes on to explain the discounting of cash flows, and the time-value of money – all quite valid concepts when someone is putting their own assets on the line.  The desire for honest analysis is rather high when one risks his own capital.  But for governmental action?  There isn’t one person in the food-chain of government largesse that benefits from an honest analysis of any proposal.

Sutter properly realizes the value of private property and the pricing mechanism…

Property rights and prices lead basically self-interested people to worry about the future. For example, property rights and markets for existing homes provide owners with incentives to keep their houses livable long after they plan to own them.

…yet he doesn’t apply this to the (so-called) problem of climate change, instead calling for an “honest” government led cost-benefit analysis.

Now let’s project ahead and consider planning for climate change.

“Planning for climate change….”  Who is to do this planning?  It is clear Sutter (and FEE?) is working in the acceptable field of governmental policy recommendations.

A number of fundamental innovations could substantially reduce if not eliminate the threat from climate change, such as effective, low-cost carbon sequestration or effective weather modification to smooth out precipitation patterns.

“Effective weather modification”?!?!?!?  is Sutter (and FEE) calling for what would be the biggest governmental boondoggle (well, besides central banking and war and public education) of all time? 

His conclusions only add to the delusion:

The economic future becomes more predictable when government controls economic activity, but then stagnation results.

Today is December 27.  No one in the United States even knows what their tax rate and withholding structure will be beginning FIVE DAYS FROM NOW!  In California, voters passed a 3% income tax increase last month, RETROACTIVE to January 1, 2012.  This is “predictable”?

Economic freedom and the institutions of the market economy, not central planning of energy use, is the prudent policy approach to a changing climate.

The contradiction in even this one statement is overwhelming – there is no “policy approach” compatible with “economic freedom and the institutions of the market economy.”

Is FEE working to be the Southern regional headquarters for Cato?  If so, this article is a good step in that direction.  And from  Koch funded professor, to boot.

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