American Elephants

The Experts’ New Regulations Mean Prosperity is Just Around the Corner. by The Elephant's Child


Our political elites’ agenda is power for itself. They believe they know the formula for spreading economic wealth, for engineering social  happiness, and for legal and constitutional fairness. The future will be bright, we are assured by the Federal Register, and should ease anyone’s concerns over the direction of the U.S. economy.

Hundreds of new regulations guide the economy into doing the right thing. To assure that the regulations are appropriate, agencies are required to conduct cost-benefit analysis for any regulations estimated to cost more than $100 million. The hundreds of rules underway forecast tremendous growth for our sluggish economy.

Consider one such regulation, the Utility Mercury and Air Toxic Standards (MATS), which applies to coal-fired plants. The rule was finalized by the EPA in 2011, and is estimated to cost the economy about $10 billion a year. The EPA claims the annual benefits from the rule will be between $37 billion to $90 billion — in other words, four to nine times higher than it’s costs.

The EPA says their benefits are not theoretical, but “monetized,” meaning they will show up eventually in higher gross domestic product. Our GDP is about $16 trillion, this rule should add as much as half a percent of growth to the economy.

Regulations do have costs as well. The EPA acknowledges the MATS rule will mean the loss of 200,000 jobs by 2015, and 23,000 megawatts of electricity production.  It is just one of seven major rules that will eliminate between 544,000 jobs and 887,000 jobs and cause a 1.5 reduction in the nation’s electric generation capacity.

The economic benefits trump these losses with the economic benefits of lower carbon emissions resulting from MATS. They claim the value of carbon not entering the atmosphere is somewhere between $12.60 and $119 per ton. The EPA does not explain just how this works, but they are quite sure it does. It all comes from the “social cost of carbon” as developed by a panel of  experts.

There are rules for microwaves, for cement manufacturing, for furnace fans. A single regulation for microwave ovens is said to produce benefits that are 35 times higher than its costs.

The benefits of regulation are derived primarily from the social cost of carbon, as it has been divined by a panel of experts. An interagency working group determined the price of carbon based on estimates from the Intergovernmental Panel on Climate Change of the future impact of carbon emissions.

Well, who can you trust if you can’t trust an interagency working group composed of political elites and presidential appointees? Just look at the list of working groups involved. You can tell right off that economic growth is just over the horizon. You can depend on the EPA.

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