One aspect of economics is the study of how people make choices under scarcity. Scarcity means that resources are limited. The productive capacity of the United States
economy
is limited. Sufficient resources are not available to satisfy all of society’s “wants.”
The concept of scarcity leads directly to the idea of opportunity cost. Opportunity cost is the choice between one investment or another, between one supply choice or another. When the Biden administration chooses to allocate capital to climate change, that capital becomes unavailable for other progressive dreams.
The concepts of scarcity and opportunity cost are clearly illustrated by the supply bottlenecks created by the rush to build a green energy economy. The U.S. economy is capacity constrained. It is operating above potential. Demand exceeds supply. Inflation well above the
Federal Reserve’s
2% goal is the clear result of too much demand and too little supply.
President
Joe Biden
promises to make the U.S. the “world’s clean energy superpower.” Biden promises that, with his policies, the U.S. will by 2050 have a 100% clean energy economy with net-zero emissions. He also promises to achieve a 50%-52% reduction from 2005 levels in economywide net greenhouse gas pollution in 2030 — that is just seven years away. Biden’s promises are laughably audacious.
BIDEN THROWS TAXPAYER DOLLARS DOWN THE CLIMATE CHANGE RATHOLE
The economy is supply constrained. Labor is scarce. Wage inflation is
too high and embedded
. The supply chain for semiconductors for electric vehicles remains too tight. Electric vehicle manufacturers are unable to secure an adequate supply of specialized semiconductors.
Green energy infrastructure projects are also experiencing severe supply constraints both in terms of raw materials cost inflation and also mounting problems in securing the permits necessary to construct wind and solar farms. Biden is reallocating land, labor, and capital from different segments of the economy to his green energy pipe dream.
Green energy zealots are already becoming anxious that Biden’s promises won’t be kept. To achieve the goals, renewable energy deployment must increase by 400% from current levels. The rate of building new interstate transmission lines must double. Yet the typical approval process for new interstate transmission lines is over 10 years. In almost all 50 states, local governments are saying “no” to both wind farms and solar farms. Many people living in rural areas where space is available for renewables don’t want their environments to be sacrificed so urban progressives can feel environmentally altruistic.
The green energy goals of the Biden administration are especially illusory in the context of the commitment of both China and India to build more coal-fired plants. Any progress the U.S. makes on reducing greenhouse gas emissions will be overwhelmed by the rise in emissions from Asia.
In short, Biden’s green energy agenda is incompatible with both the needs of the nation and basic common sense.
CLICK HERE TO READ MORE FROM RESTORING AMERICA
James Rogan is a former U.S. foreign service officer who later worked in finance and law for 30 years. He writes
a daily note
on finance and the economy, politics, sociology, and criminal justice.
