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By Robert B. Reich

(Oh Yeah? Comments by Charles H. Sulka)

The concept of the ‘carbon tax’ as described in this article by Robert Reich deserves close scrutiny. Reich is a wise, serious, thoughtful, experienced political actor who has the peoples’ best interest at heart (in everything by him that I have read.) However, Reich could be grasping at straws here.

If there is one thing Reich is not (yet), it is a revolutionary. Reich, ever the pragmatist, has been looking for solutions to America’s problems coming from within the current political system. From his recent writings, it would seem that he may have finally given up on the idea of reform coming from a resurrected Democratic Party. Apparently Reich has come to realize that the Democratic Party is finished, and that if change is to come from within America’s current political system, a working relationship with Republicans will have to be forged. Reich is naive if he thinks productive change will ever come from the party of the obstructionists.

Reich is looking to compromise with the Republicans. This would be a pragmatic thing to do if reform were to come from within the existing political system. While no doubt some Republicans might see the error of their ways, and support the coming revolution, they will have to renounce virtually everything they have ever believed in. A quick look at the work and words of those who are behind this proposal is not reassuring.

Reich’s commitment to social justice is not feigned. Hopefully, Reich can be counted on to support the Second American Revolution, when it comes, so long as it is true to the cause. It is necessary that the Revolution recruit pragmatists and experienced political actors like Reich. Success of the reform movement depends on it.

Looking at the proposed carbon tax …

The carbon tax proposal is based on deception, plain and simple. Moreover, it is based on a false premise. The false premise is the private ownership of natural resources, public utilities, and common goods (infrastructure). This idea has no place in Scriptural economics. Natural resources and public utilities are part of the ‘commons’ and belong to all the people. This proposal will only promote the neocon doctrine that private ownership of utilities and resources is a good thing, by making it seem less offensive, philosophically, than it actually is.

The carbon tax concept is an attempt to redefine the image of the fossil fuel industry as being somehow more sustainable, more responsible, more environmentally-friendly than it really is. But it is all a lie. The coal-fired power plants would still be belching soot into the air … only now electricity would cost more. In reality the carbon tax is a clever way to derail responsible regulation of the industry with a sham ‘market-based’ solution to the problem of environmental degradation. As we say here in fly-over country, it is a bit like putting lipstick on a pig.

The proposal places the burden for the surtax on the consumers. In the final analysis, the consumer always pays all costs — including taxes, fees, etc. — of all resources, including energy. In fact, the owners of utilities are guaranteed a profit by the very regulatory agencies that Republicans find so onerous. What is noteworthy here is that there is no talk of increasing taxes on corporate profits or shareholder dividends from the companies that have acquired public utilities and natural resources through privatization (a key, and thoroughly evil, core principle of neoliberal economics.)

The tax as proposed would distribute the revenues equally to all Americans. Reich naively suggests this can be changed when working out the details … hinting that the poor could, in the end, receive bigger allotments than the rich. (Like hell they will. What nonsense.) Moreover, to say that the proposed tax serves to promote economic equality because the poor need the money more than the rich is an embarrassing example of self-serving rationalization. It really is beneath Reich to suggest such a thing. [He needs to fire the person who drafted this piece for him.]
It isn’t hard to see how this might progress. The cost of electricity would go up because of the surtax. The rich would partially offset the higher prices for electricity with profits from their investments in utilities (so higher electricity prices impact the rich less than the poor — both in absolute and relative terms — an important point, and one which is in direct opposition to the premise that the carbon tax would reduce inequality.) Finally, the profit margins would be raised by further deregulation by the Trump administration, fully in keeping with Republican politics. Another ‘austerity’ measure is foisted off on the people: the poor suffer, and the rich get richer. Notice how the fundamental concept — that natural resources belong to all the people as part of the commons — is never addressed.

This sounds a lot like the Trump administration’s other flim-flam, the so-called ‘public-private partnerships’ to rebuild America’s crumbling infrastructure. The Republicans are delirious about the plan and the Democrats are too dim-witted to figure out what is going on (they have more important things to be concerned with, such as who gets to use which bathroom.) How clever to turn all the highways and bridges — which were paid for by the taxpayers and are also part of the commons … into toll roads and toll bridges to be sold to investors. In this way Americans can pay through the nose — forever — for the use of their own roads and bridges. Best of all — and this is why the Republicans are salivating — the public goods can be paid for with junk bonds or low-interest loans from the Federal Reserve. For Republicans under Trump, things are looking good. For honest working people, not so much.

This carbon tax concept is really brilliant (from the Republicans’ standpoint.) In essence, what is happening here is the poor would be getting their own money (paid in the form of increased electric bills) returned to them (in the form of a remittance from the carbon tax.) As usual, the economists and politicians can be expected to bamboozle the public with hifalutin nonsense. In one more example of government doublespeak, the people will be told that this is environmentally progressive, a ‘market-based’ solution to environmental degradation, air pollution, and global warming.

There is also a more devious and sinister aspect to this proposal. This could be a distraction aimed at derailing the growing movement for a universal basic income and other redistributive programs which would allow all Americans to share the nation’s economic growth. Presently productivity gains inure exclusively to the benefit of the rich; sadly, in this sense, progress actually hurts working men and women in America. The carbon tax could also be promoted as a way of stimulating the economy by claiming that the poor would spend their newfound wealth, resulting in economic growth. This would only be a ruse, as there would be no actual increase in income, so it wouldn’t really work to stimulate the consumer economy. But it would fool some of the people (and all of America’s politicians) for a while at least. By the time the people realized they had been duped, economists will have come up with another trick. Economists are like magicians. There seems to be no end to the tricks they have up their sleeves. (Too bad none of them actually work to fix the broken economy.)

As shown, the dividends the people receive would equal the increases paid in higher electric bills. Surely economists recognize that this carbon tax proposal is a ruse — a circular transaction with no real benefit to anyone. It would benefit economists and politicians, though, since it would produce (the illusion of) a boost to GDP. It makes economists and politicians look good when GDP goes up, as we have all been brainwashed into believing that economic growth is good, and that GDP is a meaningful indicator of the health of the economy.

Let us give the Republicans who are behind this proposal the benefit of the doubt. Maybe they had good intentions. After all, their carbon tax proposal is not as evil as many of their other schemes, such as privatizing Social Security or eliminating Medicare. The carbon tax could actually be beneficial in one sense, in that it would increase public awareness of the danger of climate change and global warming from anthropogenic (man-made) causes. The Republicans are the party of ‘alternative facts’ and climate change is one more thing Republicans deny, like the fact that tobacco smoke is harmful to people’s health or that women can get pregnant from being raped (a fact denied by at least one prominent Republican.)

In the final analysis, it looks like the ‘carbon tax’ is just another ruse by lying politicians, based on neoliberal economists’ nonsense. The program would inure to the benefit of the investor class — the economic parasites who do no productive work but live in luxury on the backs of the nation’s workers.

Like I say, the carbon tax concept deserves close scrutiny. Something is fishy with the Republicans’ proposal. It just doesn’t pass the smell test.

(chs 02-14-2017 21:53 -0500)



A Good Idea, Even if It’s From Republicans

By Robert Reich


Thursday, February 9, 2017

A group of former Republican officials (including James A. Baker, Henry Paulson, George P. Shultz, Marty Feldstein and Greg Mankiw) is proposing a carbon tax starting the tax at $40 per ton, that would gradually increase.

The proceeds of the tax would be distributed to every American.

The average family of four would receive $2,000 annually in dividends. As the tax rises, so would their dividends. Since everyone would receive the same amount of revenue from the tax regardless of their income level, the dividend would make a bigger difference for poorer families than for wealthier ones.

It’s a win-win: Less carbon in the atmosphere, and more equal distribution of income.

That it’s being proposed by Republicans doesn’t make the idea any less worthy.

I’m aware that some on the left would rather use revenues from such a tax to invest in clean energy and other social causes rather than return the revenues directly to the public. That detail can be worked out.

The idea is getting a hearing in the White House. And in these dreadful times, that’s good news indeed.