An Old Macroeconomics Adage Has Serious Implications to Our Energy Policy

I’m helping my daughter with her macroeconomics this semester, and really enjoying the moment for so many reasons.  I love spending the time with her, and the whole process of reviewing basic economics has been quite valuable to me as an observer of the energy industry.

We  just came across this quote from mid-20th Century economist Arthur Okun, in the chapter on supply-side fiscal policy:

High tax rates are followed by attempts of ingenious men to beat them as surely as snow is followed by little boys on sleds. 

A bit of gentle humor and a nice image there, to be sure.  This does point to a serious issue, though, i.e., that it’s extremely difficult to force powerful people (whether or not they’re ingenious) to conform to the regulations put in place by government to give up some of their goodies in the favor of the public good.

Taxation is, of course, one example.  But from my position in the energy space, I’m more familiar with the attempts on the part of the fossil fuel industry to maintain its monopolistic stranglehold as the world’s energy supplier.  As I like to simplify: if you think the people who got obscenely rich with oil in the 20th Century are going to politely hand over their position in the 21st, simply because of the health and safety concerns of Earth’s people, you are quite mistaken.  The little boys in Mr. Okun’s quote would sooner run upstairs and study Latin.

If there is, in fact, to be a migration from fossil fuels, it will come only when enough people understand the issues here, and demand that it happen.  For what it’s worth, that’s what gets me out of bed every morning.