Wednesday, July 1, 2009

So...You Have Finished Saving the Economy Then?

Via I have learned about this video:

For those that are unable to watch the video, here is my personally typed up transcript, with emphasis added and but one grammatical note inserted in brackets:

The problem is, can you really get the American people to say this is important and force their representatives to do the right thing? That requires mobilizing a citizenry. That requires them understanding what is at stake. And climate-change is a great example, you know, when I was asked about the issue of coal. You know, under my plan, of a cap-and-trade system, electricity rates would necessarily skyrocket. Even regardless of what I say whether coal is good or bad. Because I'm capping greenhouse gases, coal-powered plants, you know, natural name...whatever the plant's worth, whatever the industry was, they would have to retrofit their operations. That will cost money [and] they will pass that money onto consumers.

This is an strange assertion coming from a guy who has stated a few months ago that the he would be trying his best to save the American economy; now he is alright with explicitly stating that he has knowingly drafted a plan that will harm the economy? Astonishing.

But the President may not have been up on his Henry Hazlitt, for he only noted the direct impact. The absolute impact, so to speak, is enough to bring America into its second depression, and that is not speaking hyperbolically. Many have been pointing out as of late that this cap-and-trade legislation is the new Smoot-Hawley tariff.

The Smoot-Hawley tariff is one of the primary factors that started the Great Depression. (A tariff is a tax that is imposed on foreigners for importing their goods into a certain geographical area.) This particular tariff was so outrageously high that is prevented almost entirely, if not entirely, foreigners from importing anything, so in retaliation the trading countries imposed a high tariff of their own which effectively prevented American businesses from exporting goods and thus isolated America trade-wise. As a result, businesses suffered by losing their export sales, consumers suffered by having to buy inferior products or by losing some products entirely, and prices went up. (While this tariff may have been vital in starting the Great Depression, it was not what made it decade-long. For an examination of the economic policies that made the Great Depression great, please refer to the book New Deal or Raw Deal?)

The currently discussed cap-and-trade legislation would be more harmful than Smoot-Hawley in that it would affect the entirety of the American economy. Obama has stated that electricity rates would skyrocket, but does he acknowledge that every aspect of the American economy depends on energy in some way? Not only would electricity rates skyrocket, but all prices would skyrocket as well, thereby crippling the economy and preventing it from recovering until the legislation is repealed.

This is a good time of all times to contact your elected officials.

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