The Corner

Obama’s Pyatiletka

Over at Reason, Ron Bailey dissects Obama’s latest exercise in central planning:

The central planners in communist governments were notorious for issuing massively detailed top-down five-year plans to manage every facet of their economies.

Speaking at Georgetown University on Tuesday, President Barack Obama outlined his “new national climate action plan,” which amounts to a federal top-down five-year plan—although he has only four years to implement it. Obama’s plan ambitiously seeks to control nearly every aspect of how Americans produce and consume energy. The goal is to cut the emissions of greenhouse gases and thus stop boosting the temperature of the earth. The actual result will be to infect the economy with the same sort of sclerosis seen in other centrally planned nations.

 Let’s take a look at four aspects of the Obama five-year plan: rationing carbon, boosting renewable energy and energy efficiency, subsidizing climate resilience, and negotiating international limits on emissions…

It’s worth taking the time to click on the link to Bailey’s piece and doing just that. It does not make pretty reading, and is yet another reminder that Obama is a president whose ideas on the economy seem mainly stuck in the command-and-control conventional wisdom of four, five or more decades ago.

The president also needs to get out a bit more.


In his Georgetown speech, President Obama declared, “Countries like China and Germany are going all out in the race for clean energy.” The president did not note that German electricity prices have soared as the country subsidized the installation of solar and wind power. German households in 2012 paid an average of 35 cents per kilowatt-hour, compared the U.S. average of 12 cents per kilowatt-hour. If Americans were paying for power at German rates, our households’ monthly power bills (at 940 kilowatt-hours) would average $330 instead of $110, or an additional $2,640 per year for household electricity.  The president also neglected to mention that China’s much-lauded and much-subsidized solar panel industry is going through a bit of a financial rough patch.

Or he could have taken a closer look at Britain, the poster-child for climate change fundamentalism, where energy bills have soared and continuous supply may not be able to be taken for granted for much longer.

Even the Economist, back on the fundamentalist reservation (“current environmental policies will not keep the rise in global temperatures to below 2°C—the maximum that most climate scientists think safe”) again after a brief, um, pause in which it permitted some sensible moments of reflection to creep onto its pages, describes Obama’s proposed approach as being somewhat akin to Soviet central planning, while excusing the President on the grounds that the wicked Congress had given the poor fellow no choice (democracy is so retrograde).

That’s being too kind. The Economist would prefer Obama to bring in a carbon tax. If such a tax was revenue-neutral, I can see some sort of argument for its introduction, largely on the grounds of my general preference for indirect over direct taxation, but the fact that that option is not possible for now is no justification for Obama to launch a program that is likely to have little overall impact on the global climate (even if we accept fundamentalist math) but will almost certainly hit America’s economy hard.  Something is not always better than nothing.  And quite often it’s a good bit worse. 

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