Policy

Robert Samuelson: "We should not be stampeded into far-reaching changes that have little to do with today's crisis"

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The Washington Post's resident op-ed economist argues today that President Obama's big-think plans constitute the opposite of what we traditionally consider "economic progress"; i.e., the productivity of getting more output for less money.

Consider global warming. The centerpiece of Obama's agenda is a "cap-and-trade" program. This would be, in effect, a tax on fossil fuels (oil, coal, natural gas). The idea is to raise their prices so that households and businesses use less or switch to costlier "alternative" energy sources such as solar. In general, we would spend more on energy and get less of it.

Don't you know the growth rate's going down, down, down, down, DOWN!

The story for health care is similar, though the cause is different. We spend more and more for it (now 21 percent of personal consumption, says Brookings economist Gary Burtless) and get, it seems, less and less gain in improved health. This is largely the result of costly new technologies and the unintended consequence of open-ended insurance reimbursement that encourages unneeded tests, procedures and visits to doctors. Expanding health insurance might aggravate the problem. Many of today's uninsured get health care for free or don't need much because they're young (40 percent are between 18 and 34).

Together, health care and energy constitute about a quarter of the U.S. economy. If their costs increase, they will crowd out other spending. The president's policies might, as he says, create high-paying "green" or medical jobs. But if so, they will destroy old jobs elsewhere. Think about it. If you spend more for gasoline or electricity—or for health insurance premiums—then you spend less on other things, from meals out to home repair. Jobs in those sectors suffer.

The prospect is that energy and health costs may rise without creating much gain in material benefits. That's not economic "progress."

Whole thing here. And read Samuelson's great "Lessons From the Great Inflation" article in Reason's January issue.

More on the magic elixir of Obama's "green jobs" from Senior Editor Jacob Sullum here, here, here, and here; and from Science Correspondent Ronald Bailey here, here, and here.