First “Common Good Capitalism” is an Oxymoron
Donald J. Boudreaux explains this newly minted term and that it really means imposing choices in the marketplace. His AIER article is What’s Called “Common Good Capitalism” Would Work Against the Common Good. Excerpts in italics with my bolds.
The foundation upon which the case for so-called “common good capitalism” rests is rickety at best. As I explained in my previous column, the empirical claims used to justify this ill-defined version of capitalism range from questionable to downright false, while much of the economic reasoning deployed by “common good capitalists” is a nest of confusion. These flaws alone are enough to fully discredit the case for “common good capitalism.”
Yet “common good capitalism” is marred by an even deeper problem: it rejects the liberalism from which true capitalism springs, the absence of which makes impossible the operation of a dynamic market order that maximizes the prospects of individuals to achieve as many as possible of their goals.
“Common good capitalists” have in mind an economic system profoundly different from that which is championed today by liberal scholars. What each “common good capitalist” wants is an economic system engineered to serve his or her preferred set of concrete ends. Gone would be the liberal freedom of individuals to choose and pursue their own ends. Under “common good capitalism,” everyone would be conscripted to produce and consume in ways meant to promote only the ends favored by “common good capitalists.”
Note the irony. The economic system that, say, Oren Cass claims to advocate as a means of promoting the common good is, in reality, a means of promoting only the good as conceived by Oren Cass (which, for him, consists largely of an economy with more manufacturing jobs and a smaller financial sector). The hubris here is undeniable. “Common good capitalists” not only presume to have divined which concrete ends are best to guide the actions of hundreds of millions of individuals, nearly all of whom are strangers to them, but also are so confident in their divinations that they advocate pursuing these with the use of force.
The liberal doesn’t object to attempts to persuade others to adopt different and, hopefully, better ends. By all peaceful means, do your best to persuade me to embrace, as the lodestar for my choice of concrete ends, Catholic Social Teaching, economic nationalism, Marxism, veganism, or whatever other teaching or -ism you believe best defines the common good. But do not presume that your sincere embrace of a specific system of concrete values provides sufficient warrant for you to compel me and others to behave as if we share your particular values.
To the extent that the state intrudes into market processes in order to redirect
these toward the achievement of particular ends, it replaces market
competition and cooperation with command-economy dirigisme.
Income earners are not allowed to use the fruits of their creativity and efforts as they choose. Instead, consumption ‘decisions’ will be directed by government officials. The result will be a reallocation of resources achieved through the use, mostly, of tariffs and subsidies. And by so redirecting consumption expenditures, the pattern of production will obviously also be changed from what would prevail in a free market. (In fact, the specific goal of most “common good capitalists” seems to be the achievement of a particular manner of production — for example, more factory jobs — than would arise with markets left free.)
The capitalist economy, by its very nature, is not and cannot be
a tool for achieving particular concrete outcomes.
The capitalist economy, instead, is the name that we give to that ongoing, ever-evolving, organic order of production and exchange that arises spontaneously whenever individuals are free to pursue diverse peaceful ends of their own choosing and to do so in whatever peaceful ways they think best. That the results serve the common good is clear, if by “common good” we mean the highest possible chance of as many individuals as possible to achieve as many as possible of their own individually chosen goals. But let the state attempt to constrain and contort economic activity in the pursuit of a particular set of “common” concrete ends that everyone is compelled to serve, and capitalism disappears. It is replaced by what is more accurately called “[fill in the blank]’s-particular-notion-of-the-good statism,” with the blank filled by the name of whichever “common good capitalist” happens currently to be in power.
A Case In Point: Murphy’s Law Applies to Electric Cars and Trucks
Forcing Consumers to Purchase Electric Vehicles: A New Low for the Biden Administration by Jonathan Lesser at Real Clear Energy. Excerpts in italics with my bolds.
If electric vehicles are so wonderful,
why are consumers and businesses being forced to buy them?
The US Environmental Protection Agency’s (EPA) new emissions standards for vehicles, released earlier this month, require manufacturers to increase overall fuel efficiency by over 25% by 2026, effectively mandating that EV’s make up two thirds of car sales. The EPA claims this will provide a total of over $1 trillion in benefits by 2055, reduce crude oil imports by 20 billion barrels, and reduce CO2 emissions by 10 billion tons.
What’s not to like? Just about everything.
Ruinous Economic Impacts
Let’s start with the economic impacts, which will be ruinous. First, the price of EVs will increase; that’s basic economics. The new rules will require that about two-thirds of the vehicles manufacturers sell are EVs. Given that most consumers do not purchase EVs, the best way to do that is to raise prices on internal combustion (ICE) vehicles until they are more costly than EVs. (Today, the reverse is true, with the average EV costing around $65,000, while the average ICE vehicle costs around $48,000.) Increasing provides an umbrella under which EV prices can be raised, too. So, if a consumer or business wants to purchase a new vehicle, they effectively will be forced to buy a more costly EV.
Battery Demand Over the Top
Second, increasing the demand for EVs will increase the demand for the materials to manufacture batteries, which are the single largest cost of an EV. Prices for rare earths, for example, have increased between 60% and 400% since 2020. Prices for lithium, the basic ingredient in most EV batteries, have increased by about 400%. Moreover, the US continues to prevent development of new mines to supply those materials. Instead, China has a stranglehold on them, and lax environmental rules to boot.
Electric Power Mostly Carbon
Then there is the electricity needed to charge those EVs, along with the charging stations in homes, apartment buildings, and on highways. Claims that this electricity will actually reduce emissions are based on huge predicted increases in wind and solar energy development. Yet, the US Energy Information Administration projects that, by 2050, wind and solar will provide only about 40% of electricity supplies. Consequently, much of the electricity needed to charge those millions of EVs will be provided by natural gas and even coal.
So, while the EPA may limit tailpipe emissions,
it will transfer many of those emissions to power plants.
Inflated Electricity Bills
Electricity costs will also increase, negating the anticipated savings from “refuelling” those EVs. That’s why the federal government has provided subsidies for wind and solar energy development for 45 years and why so many states implemented green energy mandates: developers of wind and solar could not, and still cannot, compete on price alone, despite proponents’ claims.
No Measurable Impact on Climate
But let’s suppose those hurdles magically are overcome. The environmental justification for the EPA rule is nonetheless absurd. The claimed reductions in CO2 emissions will have no measurable impact on world climate. Reducing CO2 emissions by 10 billion tons between 2027 and 2055 sounds like a lot. But world CO2 emissions were 34 billion metric tons in 2021 alone. So, over 28 years, the EPA’s proposed rule will reduce CO2 emissions by the equivalent of about four months of world CO2 emissions. And world emissions continue to increase because developing nations, especially China and India, have no intentions to restrict their economies.
Why Impose EVs?
The basic economic impacts, along with the negligible climate benefits, raise a simple question: why is the Biden Administration pursuing this EV windmill-tilting exercise? By effectively forcing consumers and businesses to purchase vehicles they do not want, the Administration will impose yet more damage on American’s standard of living, reducing mobility and raise costs.
That can’t possibly be their goal, right?
via Science Matters
May 2, 2023 at 12:44PM