My Pet Economic Theory Explaining the Increase in Income Inequality

 

Premise 1: All environmental laws disproportionately affect the cost of living for the poor, the lower middle class, & the middle-middle class as the cost of the most basic goods, food, housing, transportation, and wage rates are directly distorted.

Premise 2: Any environmental law not justified by the effect on the actual environment is justified by an environmental political ideology and thus cannot be rationally argued with but can only be stopped by political opposition.

Taking both premises and the fact that there has been no truly effective political opposition to environmental ideology since it began full scale on earth day 1970, it is obvious to me that the main perpetrator of income inequality in the last 50 years has been the ideological imposition of unnecessary environmental laws. Take the famous “stagflation” of the Carter years. Carter was the first President to press an extreme environmental agenda. He had inherited a soft economy from the post-Viet Nam era. However, a mysterious stagflation was occurring which none of the economic theories of the time could explain. Carter himself decided to blame the American people insisting they had a “malaise”. I was out selling scientific instruments in the “rust belt”. We had a whole new branch of the business opened up to us with EPA certified instruments designed to monitor the environment and provide the EPA with environmental “audits” from major industries. As I rode up and down the Ohio Turnpike between Detroit and Pittsburgh, I noticed people living in cardboard boxes under the underpasses. Unemployment was hitting 11% putting an incredible downforce on wages. Carter would only talk about the environment and the malaise.

Since that time all of our huge wage-related productivity increases have been absorbed by this twisted environmental obsession. Green industries, as they have been called, are by and large fantasies of the ideologues. They are economic losers even with the massive government investment in both research and direct subsidy. The poor, the lower middle class, and even the middle middle-class have had ideological environmental leeches applied to their standard of living holding them back. Of course, the wealthy who spend only a tiny percentage of their income on basic commodities, go unaffected. Even a flat tax would be more equitably spread between rich & poor.

Thus over time, massive income inequality is produced by an economy grotesquely distorted by environmental ideology.

Q.E.D.

Regards,

Jim

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  1. Jon1979 Inactive
    Jon1979
    @Jon1979

    The urban/bureaucratic mindset evolution from the start of the environmental movement seems to have gone from an effort to clean up the areas immediately around them to the current efforts to tell people hundreds of miles away from where they live how they can manage their own natural resources, based on the idea that since air and water are movable items that can transition from rural to urban areas, urbanites and the government regulators who live there should be able to tell the rural folks what to do.

    That’s what accounts for things like landowners chasing EPA and other government officials off their land, out of fears those people will see a cow tank there and declare it a navigable water, under federal control. It’s an example of virtue signaling mission creep, with the most annoying part being anyone living in Washington, D.C. or New York doesn’t want to take their environmentalism all the way, and revert D.C. to the actual swamp it was when George had his farm across the river in Mount Vernon, or turn Manhattan back into the pristine island it was when the Native Americans had their encampment at Inwood (because there was no major supply of fresh water at the southern end of the island).

    The vast majority of the urban environmental types would rebel if they had to live by the rules they demand for others outside of the big cities, and the Law of Unintended Consequences reared its ugly head (and progressives in California are getting a taste of that now, as their irked by the PG&E blackouts, but don’t want to admit their own anti-forest management plans caused the problem).

    • #31
  2. James Gawron Inactive
    James Gawron
    @JamesGawron

    Jerry Giordano (Arizona Patrio… (View Comment):

    James Gawron (View Comment):

    Jerry Giordano (Arizona Patrio… (View Comment):
    I agree with DonG that environmental policies cause some harm, both by depressing economic activity and by raising commodity prices, but I doubt that such policies are a major contributor to income inequality.

    Jerry,

    I don’t get how you can discount the nearly direct relationship. Nothing is as regressive as a bad environmental law, it murders the poor. If you passed a flat tax it wouldn’t disproportionally hurt the poor as much as a bad environmental law would. If you relentlessly maintain these kinds of policies, and they have been maintained since Carter, then it would slowly eat away at the lower third of the workforce. Other effects like demand for higher intelligence would be tiny in comparison. A basic full-employment economy, made possible by removing extreme restrictive regulation, would supply enough decent-paying jobs to support all.

    Basically, the Democratic Party has gone from being the friend of the working man, 1950s-1960s, to now being the enemy of the working man. Maybe the instincts of the Trump voters are underrated. They know that in some way they are being screwed by the Democrats and somehow Trump is helping them. Maybe they’re right.

    Regards,

    Jim

    Jim, I don’t discount the effect, I just doubt the size of the effect. It’s an empirical question, and I don’t have data on it. If you have such data, please let us know.

    To evaluate your claim, we would need information on the relative cost differential in manufacturing imposed by strict environmental laws, and would need to compare the size of that cost differential to the (very large) size of the wage differential between the US and low-wage manufacturing countries (such as China, India, and Vietnam). My suspicion is that the wage differential has a larger effect than environmental regulation.

    Jerry,

    I do not have the conclusive data that you seek. That is why I refer to it as my pet theory. The seat of my pants is absolutely sure but those are my pants, not yours. As far as the wage rates in other countries, we don’t have a global government (yet!) and so regulation is different. Of course, the Paris accords were trying to do just that.

    Another factor that makes it difficult to calculate other countries is enforcement. The good old USA enforces the heck out of its environmental laws. This is not the case even in Europe. As I understand it, their enforcement is much more lax. That is why they are always so keen on things like the Paris accords. They figure they’ll dodge the bullet.

    Good questions.

    Regards,

    Jim

    • #32
  3. I Walton Member
    I Walton
    @IWalton

    Jerry Giordano (Arizona Patrio… (View Comment):

    James Gawron (View Comment):

     

    Jim, I don’t discount the effect, I just doubt the size of the effect. It’s an empirical question, and I don’t have data on it. If you have such data, please let us know.

    To evaluate your claim, we would need information on the relative cost differential in manufacturing imposed by strict environmental laws, and would need to compare the size of that cost differential to the (very large) size of the wage differential between the US and low-wage manufacturing countries (such as China, India, and Vietnam). My suspicion is that the wage differential has a larger effect than environmental regulation.

    You’re saying paying people more increases income differences?   That’s changing the subject but points to how major impacts have millions of implications and make it difficult to sort things out and why  government tends to always screw matters up.  It can only pay attention to a few big looking things so is always out of its depth.

    • #33
  4. Gumby Mark (R-Meth Lab of Demo… Coolidge
    Gumby Mark (R-Meth Lab of Demo…
    @GumbyMark

    James Gawron (View Comment):

    Gumby Mark (R-Meth Lab of Demo… (View Comment):
    Please note I am not arguing about the Green New Deal (which, in fact, is not law yet) and about which I agree with you on substance. You are making a historical retrospective argument.

    Gumby,

    I know I am leaping through History quickly but in this case, there is no other way to do it. First, I would caution you that if Trump were to be impeached then it is almost inevitable that something like the Green New Deal will be implemented. This is how ideologically whetted the Democratic Party is to this obsession and how dangerous the world in which we live really is.

    All of the other factors have been around for a very long time. They have an effect but the effect really isn’t that consistent. You are correct that the effect of Earth Day 1970 was mostly psychological. Generating a Malthusian mass neurosis makes the general public fearful of economic growth rather than welcoming its beneficial effects thus softening up the electorate for future exploitation. The legislation that had a massive effect was the 1978 clean air act. This puts EPA regulators directly in the way of large industrial American expansion. I can tell you that from experience it wasn’t labor problems or foreign competition but rather having a federal regulatory agency breathing down your neck that retarded or even froze big industrial investment in this country.

    Much of the early direct effects of the 1978 Clean Air Act were based on acid rain fears which never materialized. The Global Warming fears are still with us even as the data has disproved the phenomena. Such is the effect of the ideology. We are relentlessly distorting investment in favor of “renewable energy” even when it has proved itself to be a complete loser. If the Democrats get full executive power I guarantee you that fracking will be regulated out of existence and we will be back in the energy rut. There is no rational need for any of this. Virtually all of it is “unnecessary” unless you are a left-winger who so desperately wants power that you don’t mind how much havoc you render to get that power.

    Every chance that the creative productivity of this society has to produce the kind of low-cost goods and solid jobs that will help the poor & lower middle class is blocked or damaged by the environmental political elite. This is an ongoing process that since the inception of the environmental movement has been institutionalized. When Trump wouldn’t go for the Paris accords (useless but damaging to the American economy) the environmental political elite went nuts.

    You asked about the “persistence of poverty“. This isn’t what my argument is about at all. Income inequality is only about the relative income difference between the upper and lower class. Of course, in a capitalist economy that will in an absolute sense help the poor much more than a socialist economy, a much higher degree of income inequality is tolerable. However, I’m not talking about natural necessary income inequality. Unnecessary environmentalism is an artificial attack on the lower class of an already capitalist economy to subdue them and force them into a socialized economy. Of course, this only adds insult to injury as everyone including the poor will do much worse. Ideology is stupid. Q.E.D.

    Regards,

    Jim

    Again, we agree on the negative impact if Progressives come back into power at the Federal level but that isn’t your argument which spans 50 years.  And the first federal Global Warming regs don’t kick in until the Obama Administration, 40 years into your period.

    If your argument was environmental laws and regulations have some impact on productivity and impact poor and middle class more than the upper class I wouldn’t be commenting.  But you are making a much broader claim here which I still don’t see supported by the evidence.

    Moreover, some of your history is incorrect.  The Clean Air Act alone was not the game changer.  The Clean Water Act passed in 1970 (amended in 1977); the Clean Air Act in 1972 (amended in 1977), RCRA (the solid and hazardous waste law in 1976, and CERCLA (the waste site cleanup law) in 1980.  These laws focused on nuts and bolts cleanup of rivers, air, and uncontrolled waste sites.  And the Clean Air Act of 1977 was not based on acid rain fears – the 77 law was about cleaning up particulates and other smog contributors.  It was the Clean Air Act of 1990 (pushed by the Bush Administration) that focused on acid rain.  And because of the lag time between the statutes passing and the regulatory process most of the industry compliance activities occurred during the Reagan Administration.

    What happened is that despite the fact that these earlier laws had great success in cleaning up the problems we all could see and understand, the environmental movement kept pressing for more and more laws and regulations for smaller and smaller problems (and often merely theoretical problems) at greater and greater costs and creating waves of hysteria to support these initiatives. 

    • #34
  5. Gumby Mark (R-Meth Lab of Demo… Coolidge
    Gumby Mark (R-Meth Lab of Demo…
    @GumbyMark

    James Gawron (View Comment):

    Another factor that makes it difficult to calculate other countries is enforcement. The good old USA enforces the heck out of its environmental laws. This is not the case even in Europe. As I understand it, their enforcement is much more lax. That is why they are always so keen on things like the Paris accords. They figure they’ll dodge the bullet.

    Good questions.

    Regards,

    Jim

    On this we agree.  I’ve worked around the world for two companies on environmental matters and the combination of laws + enforcement is stricter in the U.S. than anywhere else.  And that is why the Europeans like things like general global agreements – under their legal systems those agreements are effectively unenforceable.  In contrast, in the U.S. they would create a legal morass for us.

    • #35
  6. James Gawron Inactive
    James Gawron
    @JamesGawron

    Gumby Mark (R-Meth Lab of Demo… (View Comment):
    And the Clean Air Act of 1977 was not based on acid rain fears – the 77 law was about cleaning up particulates and other smog contributors. It was the Clean Air Act of 1990 (pushed by the Bush Administration) that focused on acid rain

    Gumby,

    How odd we were selling NOX and SOX analyzers like crazy back then. How odd that we sold a couple of these systems so that the largest industries in the USA could do their environmental audit before they were allowed to build their plants. We were the rep for the world’s leading analyzer company in the SOX and NOX analyzers at the time (50% of the market). We also had the world’s leader in particulate measurement at the time. The powerplant people were being murdered over high sulfur coal (SOX). The automobile industry was getting whacked for particulate. I sold the first dichotomous sampler (brand new technology at that moment) to Ford Research in Dearborn.

    Believe me Gumby, I’m talking GM & Ford corporate research people. I’m talking requests to build coal-fired power plants getting nixed by EPA. If the gov wasn’t worried about acid rain then what would they be worried about? Global Warming was still a couple of decades away.

    These are just details anyway. The net result is the EPA getting in the way of industrial growth in America in a huge way. With or without the unions these industries are providers of high paying jobs and low-cost consumer goods. This is relentless pressure on the bottom half of the economic scale. Almost all of the hypothetical models that the draconian regulations were based on turned out not to be true. Too bad for the millions who lost jobs. Too bad for the millions who were never hired. To bad for the USA that lost its premier industrial base to Europe, Japan, and China.

    Again these were not necessary environmental regulations but unnecessary regulations induced by a Malthusian terror panic perpetrated by a leftwing hungry for power and an uncritical media filled with leftwing sycophants willing to go along with it.

    Regards,

    Jim

    • #36
  7. CarolJoy, Above Top Secret Coolidge
    CarolJoy, Above Top Secret
    @CarolJoy

    Gumby Mark (R-Meth Lab of Demo… (View Comment):

    I think you make a mistake in conflating the original environmental laws, initially passed during the Nixon Administration, which dealt with basic air, water, and hazardous waste pollution, and then enhanced during the Carter Administration, with the continued drumbeat from environmentalists since the 1980s for additional controls which cost much more with much less impact or with some of the energy/environmental initiatives of the Bush and Obama administrations most of which had dubious benefit.

    Also, as some others have commented I do not see the connection with income inequality.

    Here’s for starters, why over reaching environmental protectiosn end up costing our society in terms of income equality:

    When those protections get too tight, we find this nation’s Big Energy and Mineral Mining producers backing away from producing oil and natural gas here.;

    So then we must have boots on the ground to protect our right to get oil from other places.

    I live in one of the top three poorest counties in all of California. For eyars about the only opportunity people saw for their maturing offspring if they weren’t college bound was for these young adults  to become service people and go off to fight in some distant land.

    Now due to Trump, our oil and natural gas fields are flourishing. Even the iron mines in MN are open again, along with steel mills there.

    In war time, service people are paid a pittance. If you contrast the average grunts pay with that of mercenary organizer, Eric Prince, you will see a sharp disparity.

    But the same person, if working on a drilling rig, can be making 100K a year. Far more than what he or she would have garnered slinging a gun and riding around on the Iraqi Highway Of Death  on a Hummer.

     

    • #37
  8. James Gawron Inactive
    James Gawron
    @JamesGawron

    CarolJoy, Above Top Secret (View Comment):

    Now due to Trump, our oil and natural gas fields are flourishing. Even the iron mines in MN are open again, along with steel mills there.

    In war time, service people are paid a pittance. If you contrast the average grunts pay with that of mercenary organizer, Eric Prince, you will see a sharp disparity.

    Carol,

    So Trump voters aren’t just bitter, clinging to their Bibles and guns. Trump voters know who hurt them and who helped them. For some people, this is a hard lesson to learn. All that glitters isn’t gold. Politics that sounds sweet warm and cuddly can be an elaborate trap.

    Regards,

    Jim

    • #38
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