Destructive Government Activity Just Keeps Advancing

There are two fundamental political narratives out there.  In one narrative, hard working people create wealth by engaging in economic activity.  Ultimately everyone benefits from the economic activity, although some benefit more than others, and only a few become extremely rich.  The main role of the government in the economic sphere is to create conditions to incentivize the economic activity so that wealth can be created.  In the other narrative, wealth somehow pre-exists as a fact of nature.  Maybe it comes from the tooth fairy.  Because the wealth pre-exists, there is no need for government to create a good environment for economic activity; rather, its role is to pass the wealth around equitably, so that everyone can lead comfortable and stress-free lives.  But somehow a nefarious class of billionaires, or maybe it's the "hoarders and speculators," has seized most of the wealth for itself.  

Of course the government policies implied by Narrative I and Narrative II are diametrically opposite.  For a recent extreme case of the implementation of Narrative II-style policies, we can look to Venezuela.  For almost two decades since the late 90s, the government has engaged in vast and expanding redistributions, accompanied by punishment of the entrepreneurial class.  Nearly 20 years in, the Central Bank reported that the economy shrunk by 7% last year (almost certainly far underestimated), and annual inflation is in the multiple hundreds of percents.  What is the cause of this ongoing disaster?  According to Venezuelan President Maduro (in his State of the Union speech in January), destructive government policy has nothing to do with it; instead, it's the wealthy speculators:

Addressing the causes of the economic emergency afflicting the country, Maduro derided the Venezuelan private sector for having carried out “an investment strike” of national industry and refusing to cooperate with the government. He blamed private companies for participating in speculative pricing, causing mass devaluation to the country’s national currency. 

Fortunately, nobody in the U.S. would be that dumb.  Just kidding!  The rhetoric of Bernie Sanders is more or less indistinguishable from Maduro's in the diagnosis of the causes of economic malaise, and in proposed cures.  Here is Sanders on his website:

The reality is that for the past 40 years, Wall Street and the billionaire class has rigged the rules to redistribute wealth and income to the wealthiest and most powerful people of this country.  This campaign is sending a message to the billionaire class: “you can’t have it all.”

And yes, in Sanders world, all that wealth was just pre-existing natural bounty that was stolen by these greedy people.  So, as noted here a few days ago, since 2012 average gasoline prices in this country have declined from around $4 per gallon to well under $2.  That is attributable largely, if not entirely, to the revolution in oil and and gas extraction known as "fracking."  Somehow, that revolution happened so fast that President Obama and his regulatory minions were unable to stop it.  But Sanders?  Asked at Sunday's Democratic debate in Flint, Michigan whether he "supports fracking," Sanders answered bluntly, "No, I do not support fracking."  Don't worry, when President Sanders bans fracking and the price of gas goes back to $4 (and then on to $5 and $6), it will be the fault of the "billionaire class," or perhaps of the "hoarders and speculators." (Does poor Bernie even realize that traditional oil companies like Exxon and Chevron -- and their investors and executives -- would be making a lot more money right now if fracking had not happened?)

And in case you think that a President Hillary would be significantly different in her fundamental views, she answered the same question at the same Sunday debate.  The answer (reported in today's Wall Street Journal) was longer and weasely-er, but basically says that she would ban fracking to the maximum extent she could get away with:

“You know, I don’t support it [fracking] when any locality or any state is against it, number one. I don’t support it when the release of methane or contamination of water is present. I don’t support it—number three—unless we can require that anybody who fracks has to tell us exactly what chemicals they are using.  So by the time we get through all of my conditions, I do not think there will be many places in America where fracking will continue to take place. And I think that’s the best approach, because right now, there are places where fracking is going on that are not sufficiently regulated.”

In Hillary's case, I think you can be sure that she realizes full well that the banning of fracking would enrich the incumbent interests in oil and gas.  That's the donor class!

Meanwhile, redistributionist Narrative II-style policies have brought us places like Philadelphia, Detroit, Baltimore, Cleveland, St. Louis and Chicago.  In New York, we don't have the vast vacant zones any more (after 20 years of Republican mayors), but we do have the massive public housing projects that make it such that the wealthiest county in the country (Manhattan) has a poverty rate far above the norm.  

And of course, what's going on now in New York is an expansion to the commitment to subsidized housing for low income people -- otherwise known as the creation of permanent poverty traps.  The Wall Street Journal in its Greater New York section reports on the political back-and-forth over Mayor de Blasio's plan to re-zone a big low income neighborhood in Brooklyn in a way that would increase allowable density while also increasing requirements for "affordable" units.  This being New York, the controversy is over how deeply-discounted we are going to require the "affordable" units to be.  The de Blasio administration "has offered" to require developers to provide units that are "affordable" to families making "about $31,000 for a family of three."  But of course "housing advocates" want even greater subsidies and deeper discounts for families of even lower incomes.  We are determined to double down on the New York City Housing Authority crisis! 

What is it again that we're talking about on the Republican side?  Trade wars with Mexico and China?

Progressive Policies Increase Income Inequality

If you take just a little time to understand how income inequality is measured, and how government redistribution programs work, it will be immediately obvious to you that increasing the redistribution programs will cause measured income inequality to increase, not decrease.  The biggest reason is that means-tested in-kind redistributions (think public housing, food stamps, Medicaid, Obamacare subsidies) present a tremendous incentive to reduce or stop work in order to qualify, and then are not counted as income to the recipient.  Another reason is that lots more than you might think of the redistributions (Social Security is by far the biggest example) go to people who are not poor.  And don't forget the destructive effects of the minimum wage (kids in multi-earner middle class families get a raise while poor blacks are rendered unemployable).

Last July I wrote an article for the City Journal pointing out this obvious fact (title: "What Causes Income Inequality? Progressive Policies Do.")  I followed that up with a post on August 3 on this blog ("Do Progressive Policies Cause Income Inequality?")  Those articles got some play at the time, but the small eclat quickly faded.  Certainly, my analysis did not cause any notable progressives (think President Obama, Hillary Clinton, Bernie Sanders, Bill de Blasio) to rethink their advocacy of more subsidized medical care, more subsidized housing, more subsidized nutrition programs, a higher minimum wage, and the like, even as they rail against income inequality.

This weekend the Wall Street Journal has published a long op-ed by Lawrence Lindsey covering the same subject and making many of the same points.  Title: "How Progressives Drive Income Inequality."    Most notable in Lindsey's article is his collection of data on how the explosion of handout spending under Obama has been accompanied by substantially increasing income inequality.  Here are Lindsey's data on increases in handouts, first since 1968, and then in the seven Obama years:

In 1968, government transfer payments totaled $53 billion or roughly 7% of personal income. By 2014, these had climbed to $2.5 trillion—about 17% of personal income. . . .  Transfer payments under Mr. Obama increased by $560 billion. By contrast private-sector wages and salaries grew by $1.1 trillion. So for every $2 in extra wages, about $1 was paid out in extra transfer payments—lowering the relative reward to work. Forty-five million people received food stamps in mid-2015, an increase of 46% since the end of 2008. Similarly, 71.6 million individuals were enrolled in Medicaid and the Children’s Health Insurance Program, an increase of 13.3 million since October 2013.

So those vast increases in government handout programs should have resulted in at least some notable decrease in income inequality, right?  Of course, it's the opposite -- as anybody who pays any attention to this issue would already have known.  Lindsey discusses the government's three measures of income inequality: the Gini index, the mean log deviation of income, and the Theil index.  What has happened to those during the vast increase in redistributions since 1968?

Despite the redistribution of a sixth of all income [by 2014], inequality measured by all three of the Census Bureau’s indexes is far higher today than in 1968.

And how does Obama's record on income inequality compare to that of his predecessor, GW Bush?

The mean log deviation increased 37% more under Mr. Obama than under President George W. Bush, although when this statistic was released, Mr. Obama had only six years as president compared with Mr. Bush’s eight. The Gini index rose more than three times as much under Mr. Obama than under Mr. Bush. The Theil index increased sharply during the Obama administration, while it fell slightly under Bush 43.

Of the various factors contributing to these results, Lindsey doesn't get much into the one that I think is the biggest, namely the fact that the value of the handouts is not counted as income to the recipients.  (The big handout increases during Obama's tenure have been in Obamacare/Medicaid and food stamps.)  But he does spend some time on the strong disincentives to work caused by the increasing handouts, as well as on the inability of tax increases on high earners to have much if any effect on income inequality.  He points to research from the Hamilton Project and the Urban Institute showing that phase out of government handouts can have an effect equivalent to a marginal tax rate of 50 to 80% for a low income family considering having a second earner get a job.  And he points to a recent study from Brookings that concluded that enacting Bernie Sanders's proposal to increase the top federal marginal income tax rate from 39.6% to 50% would only lower the Gini coefficient by 0.003.

I would think that this issue would be a huge negative for a Clinton or a Sanders in the election; but so far it has been getting next to no attention.  And then, of course, you have the staunch refusal of their core supporters to accept any evidence from the real world.  For example, we have this from a commenter on Lindsey's piece named Skye Priestley:

Mr. Lindsey’s ideas, while somewhat intriguing, are clearly driven by the same inflated mythology that the owners of capital spread so incessantly through every media outlet they can get their grubby hands on: capitalism is the holy calf, and we should all cower lest it be besmirched. I propose an alternate explanation for the fact that income inequality has increased despite the policies of recent liberal administrations designed to combat it. Our nation is increasingly divided by class, and therefore increasingly vulnerable to the concentrating effects of inherited wealth and influence. It is not that redistributionist policies are not effective, but rather that cultural changes have made wealth concentration easy faster than policy changes have made it hard.

It's just that we haven't done enough income redistribution yet!  We have to double down!  Mr. Priestley seems completely unaware that the principal government redistribution programs do not subtract income from high earners, nor do they add income to low earners, as these things are measured.  I would ask Mr. Priestley to consider the main Bernie Sanders proposals of free health care for all and free college for all.  How exactly are these going to decrease income inequality?  But don't worry, Mr. Priestley will not do this exercise. 

Getting Out And Looking Around In Philadelphia

I frequently note here that a key feature of the official New York mentality is the refusal to get out in the City and look around to observe the consequences of the progressive policies that are so universally accepted.  Those who the progressive policies are supposed to help instead find themselves sapped of their spirit and trapped in a life of government-supported poverty.  In Manhattan, housing projects that are warehouses for the permanent poor exist right adjacent to some of the most expensive apartments in the country; yet somehow progressives can't or won't see them.

At least here in New York the long-term post-war decline got turned around during 20 years of Republican mayors (1994-2013), and we have almost entirely put behind us the days of rampant arson and endless vacant lots.  Today, they are even building new private market-rate apartments in the South Bronx!  But the same cannot be said for many of the "basket case" cities that have lived with fifty or even eighty years of continuous progressive government and expanding handouts.  Such cities include paragons of flyover country, like Detroit, Cleveland and St. Louis; but no self-respecting New Yorker would ever go to one of those places to observe it.  Then there are some cities that seem at first blush to have their act together, particularly if you just go to the downtown tourist districts; but if you then look around even a little you find that some third or even half of the city is crumbling and/or vacant.  Fairly speaking, these cities are also basket cases.  Chicago and Philadelphia come to mind.

One of my sisters lives in Philadelphia.  Her neighborhood is a part of Center City just off the main drag and between City Hall and Independence Hall.  The area couldn't be more charming.  There are many historic houses (hers was built in 1834), and plenty of chic stores, cafes, and art galleries.  But to get there you take the Amtrak train through North Philadelphia.  You will go through a vast swath of that district, far larger than Center City, that looks like Dresden after the blitz.  Endless abandoned homes and factories, remaining homes crumbling and looking like they're about to fall down, and enormous formerly-inhabited vacant districts.

And then there's West Philadelphia.  I can't say that I've ever been there.  But an enterprising blogger at a site called theburningplatform.com (I can't find his name) uses his forum to write one post after another about the disastrous state of a stretch of about a 30 blocks from 69th Street to 39th Street in West Philadelphia.  He says that he has written "dozens" of articles on this subject.  Here and here are a couple of recent ones.

Basically his observation is that, in this area, nobody repairs a building, and nobody starts a business.  And the unionized city workforce rarely touches any of the publicly-owned infrastructure, with the result that broken water mains and moon-crater-sized potholes are endemic.

I’ve now been navigating the crumbling ghetto of West Philly for the last ten years. I can without equivocation state I have not seen one new private business open its doors on Chestnut Street, in Mantua, or any other area I travel in West Philly during the entirety of those ten years. The existing businesses – nail and hair salons, fast food joints, bars, liquor stores, porn video outlets, smoke shops, car washes, more bars, and hysterically tax return offices (earned income tax credits) – haven’t invested a dime in keeping up their appearances. . . .  It appears there is an existential shortage of paint, hammers, garbage bags, wedding rings, and employed upstanding men taking responsibility for the children they father in West Philly. There is plenty of yellow crime scene tape, as West Philly accounts for a significant portion of Philadelphia’s 280 annual murders (up 13% in 2015). Houses originally well built in the 1950s and with some upkeep would still be fine homes, are in disrepair, with collapsing porches, dilapidated gutters and roofs, crumbling sidewalks, boarded up windows, and satellite dishes on every one.    

But can't the government fix things by spending some taxpayer money on "affordable housing"?  Our blogger reports on a new development built in the Mantua area since 2009 with federal "stimulus" funds:

And then there is the ongoing saga of the Section 8 gated estate called Mantua Square, a $28 million, 101 townhouse, 8 store front testimonial to Keynesian idiocy that sits in the middle of an Obama Keystone Zone. . . .  Mantua Square was one of Obama’s shovel ready projects funded by his $800 billion porkulus package in 2009. Every dime came from taxpayers. It was touted as a game changer for Mantua. We were told businesses would open in the 8 pre-built retail spaces and other businesses would follow. A glorious revitalization would materialize due to brilliant government apparatchiks spending your money. It is now 5 years later and not one storefront is occupied by a single business. Not one black entrepreneur has used their Philadelphia public school education to create a viable business and the jobs that would follow.

Could it be that people maintained in a lifetime of semi-comfortable poverty by government handouts just don't fix up buildings or start businesses?  What is the alternative explanation?

After sixty and more years of this, West Philadelphia sinks ever deeper into disrepair and despair.  Is it perhaps time to try something different?  Our blogger gives a figure of 98% of voters in this area who voted for Obama in 2012.  Could it really be that high?  Here's a write-up from philly.com from immediately after the 2012 election that appears to support this statistic.  Excerpt:

Take North Philadelphia's 28th Ward, third division, bounded by York, 24th, and 28th Streets and Susquehanna Avenue. . . .  In the entire 28th Ward, Romney received only 34 votes to Obama's 5,920.   

That's about in line with the 98% figure.  The philly.com reporters take a series of wards and divisions and try to track down the handful of people reported to be registered as Republicans.  One after another, when the people are found, they claim there must be some mistake.  We don't have any Republicans around here!

Here in New York, many of our formerly bad neighborhood are in the midst of a rejuvenation.  But is the rejuvenation the result of new efforts by the existing population, or does it stem from new residents moving in?  I'd like to think that at least some of it can be credited to the existing population; but I can't find much evidence of that.  If anyone could point me to some such evidence, I will appreciate it. 

New York Progressive Geniuses Express Their Views On Energy Policy

On my "About" page, I have this to say about the New York progressive's view of appropriate energy policy: [U]sage of energy is a human right, but all actual known methods of producing energy are environmentally unacceptable.  That mentality was on full display in an article in yesterday's New York Times by Lisa Foderaro, headlined "Concerns Over Pipeline Project at Indian Point."     

It seems that a company called Spectra Energy is in the process of expanding and enlarging a pipeline that carries natural gas across the Hudson River about 25 miles north of the New York City line.  That would mean that the pipeline hits the eastern shore of the Hudson right at the site of the Indian Point nuclear power plant -- a facility that itself provides about 25% of the electricity for New York City.  Needless to say, the combination of a greatly increased flow of "fracked" gas from parts west, together with the very existence of a nuclear plant in close proximity to the City (25 miles from the City line makes it about 40 miles from the main business district) has thrown the New York environmental activist community into a tizzy.

[A] construction project — the planned expansion of a natural gas pipeline across Indian Point property — is . . . putting the power plant in a harsh glare. Elected officials, residents and environmental activists have criticized the project, saying that a rupture of the pipeline could unleash a nuclear catastrophe.    

Of course the companies that own the power plant and the pipeline have attempted to allay concerns, such as by moving the pipeline several hundred feet farther from the power plant than the previous version.  But how far do you think those things are going with the activists?

Environmental activists from New York City and Westchester County are not mollified by those precautions. . . .  In recent months, activists have turned up the intensity of their protests against the pipeline expansion. Members of faith organizations and environmental groups held a vigil on Saturday outside the house in Mount Kisco, N.Y., that [Governor] Cuomo shares with his girlfriend, Sandra Lee. . . .  Activists have also held rallies and engaged in acts of civil disobedience. In November, nine people joined hands and blocked a road near a site where some of Spectra Energy’s construction equipment and vehicles were stored in Montrose, a hamlet in the town of Cortlandt, not far from Indian Point.    

So let's have a review of what sources of energy might be available, and which of those are acceptable to the environmental activist community.  First, here is information from the U.S. Energy Information Agency on New York energy consumption by type of fuel in 2013.  In round numbers, hydrocarbons of various sorts accounted for about 75% (natural gas, about 39%; oil and gasoline, about 34%; and coal, about 2%); nuclear was about 13%; hydro (largely Niagara Falls) about 7%; "biomass," about 3.5%; and all other "renewables," about 1.5%.

Hydrocarbons (coal, oil, natural gas)?  No way!  It's not just that the activists are protesting this one pipeline for passing too close to a nuclear plant.  Of course they are against all hydrocarbons always and everywhere because of Global Warming.  It's an endless war of attrition.  Foderero interviews one Patrick Robbins of something called the "Sane Energy Project":

Patrick Robbins, co-director of Sane Energy Project, . . .  contends that continued resistance to the pipeline project, despite the fact that it has the needed approvals, was not fruitless. Indeed, he and others are focused on the larger war against fossil fuels, more than any one battle.  “Every day you stop construction, it hurts their timetable,” he said, referring to Spectra Energy. “And it sends a message to other companies, investors and political officials that the landscape has changed on building these pipelines, and that it’s not going to be an easy fight for them.”

Well, that knocks out about three-quarters of current energy supplies.  Surely, then, nuclear must be OK?  Of course not!  Indeed, the article points out that the activists have gotten Governor Cuomo on board with a demand to deny new licenses to the Indian Point plants and force their closure:

Mr. Cuomo has been vociferous in his demand that federal regulators not relicense Indian Point. (The reactors’ licenses expired in 2013 and 2015, and the Nuclear Regulatory Commission is now considering their renewal.)

We've now declared 88% of our current supply to be unacceptable.  How about the biggest remaining piece, which is hydro (at about 7% of current supply)?  Forget it!  It's not covered in this article, but you should be aware that the New York Times has been in the forefront of the campaign to remove dams from rivers all over the northeast, so that they can return to their "wild" and "natural" state.  Here is an editorial from 2009 celebrating the removal of dams in Maine as a tremendous victory for the environment.  Doesn't that same logic apply to Niagara Falls?

We're down to biomass, wind and solar.  But isn't biomass just another form of burning carbon, except with lots more impurities (and thus real pollution) than refined hydrocarbons?  Besides, I wonder how many of the environmental activists are prepared to reduce their personal energy consumption by 95 to 98%.  None of them, I would wager.

We Lack Any Serious Debate About Economic Policy

One of the many deleterious things about the Trump insurgency has been that it has wiped out of the public debate nearly all serious discussion about basic economic policy.  I'm talking here about the very most fundamental question:  Which is better for improved economic performance and success for a country -- low government spending and low taxes, or high government spending and high taxes?  This simple question defines a fundamental divide between two different approaches to government's role.  The high spending/high taxes side is exemplified by Official Manhattan Contrarian Worst Economics Writer Paul Krugman, and by the two candidates running for President on the Democratic side.  (Here is a recent Krugman column belittling the idea that private economic activity drives economic growth.)  I'm in the other camp.  Obviously, both can't be right; and if one is right, the other is wrong.

I've long thought that if this debate could just be fairly engaged, it would be an easy victory for the side of low government spending and low taxes.  Just compare Argentina and Venezuela to Singapore and Switzerland!  Or, ask why the United States and Canada got rich while Latin America did not.  Or, why high rates of post-war economic growth in Europe got gradually choked off to near zero as government spending rose toward 50% of the economy.  

But today, the side that should be advocating for low spending and low taxes has instead been hijacked into advocacy of an economic program of trade protectionism and immigration restriction.  At least as to protectionism, that could easily be as counterproductive as raising spending and taxes, at least within limits.  Immigration restriction is more debatable -- such restriction would very likely lessen economic growth, but may have positive effects for workers in the lower half of the income distribution, which is not an insignificant point.   But meanwhile, we're completely losing track of by far the most important point, which is that by allowing government spending and taxes to continue to grow, we are placing a huge dead weight on our economic performance and making all Americans poorer.

Perhaps you have been reading Krugman or others of his ilk, and think he might be right that more government spending and higher taxes are a good thing for an economy.  If so, I have created the first Manhattan Contrarian Economic Policy Quiz, which I urge you to take.  There is only one question.  Here it is:

The government has decided to build a new bridge across the Mississippi River.  It solicits bids.  Three contractors submit bids.  The bids are: (1) $1 billion; (2) $1.1 billion; and (3) $1.2 billion.  Which of the following is the correct approach for dealing with these bids?

A. Accept the bid for $1 billion.  It is the low bid.  The government and the taxpayers will save money.  Everybody in the country (other than the people who build the bridge) will be best off by acceptance of the low bid.

B. Accept the bid for $1.2 billion.  It is the high bid.  The economy will be improved because an extra $200 million will be "injected" into the economy.  As the recipients spend the money, the extra $200 million will be distributed around the economy, either because this high bidding company is paying workers more, or hiring more workers, or maybe making more profit.  Under standard GDP accounting principles, the extra $200 million will be recorded dollar-for-dollar as an increase in GDP.  The economy will be bigger!

C. Go back to the high bidder and point out that, while a $1.2 billion bid is good, it would be even better if the bid could be doubled to $2.4 billion.  That way they can pay all the workers twice as much, or reduce their necessary work hours, or some combination of the two.  GDP will be increased by a full $1.4 billion over where it would be if you accept the low bid.

D.  Why stop at $2.4 billion?  Insist on paying at least $10 billion for the bridge.   On second thought, make that $20 billion.  There will be plenty of money to pass around to the contractor and the unions for the laborers, who will then gratefully contribute generously to your re-election campaign.  All of the additional spending will be dutifully recorded by the government accountants as a dollar-for-dollar increase in GDP.  Now you will really notice the jolt!

And now you understand the basics of government "stimulus" spending and Krugmanomics.  You might think that with the enormous thumb-on-the-scale stemming from counting government spending at one hundred cents in GDP, it would be possible for the government to completely mask and hide the obvious detriment to economic performance from wasteful spending.  Venezuela actually accomplished that feat for many years, until its economy more recently started to collapse, even as measured by the government's numbers.  But blowout spending and its companion, over-regulation, take their inevitable toll.  So in the United States, President Obama on entering office immediate raised government spending from about $3 trillion per year to about $4 trillion (aka, "the stimulus"); and from there it has never really gone back down meaningfully.  The result: CNS reports here that the U.S. just had a record 10 straight years without achieving 3% economic growth in any year.  OK, other things have played a role -- ridiculous and pointless over-regulation of the financial sector (Dodd-Frank); the EPA's war on the electric power industry and intentional efforts to drive up the price of electricity; Obamacare; exploding handouts for things like food stamps and SSI; etc.  But again, none of this is getting any attention in the current campaign.

Do Progressives Understand That There Is Some Inconsistency Between The Goals Of Saving The Planet And Fixing Income Inequality?

The two big progressive goals of the moment, as we all know, are "saving the planet" (otherwise known as restricting the emission of CO2 into the atmosphere) and fixing income inequality.  Certainly these are the top two policy priorities of our President, and we all also know that he is really, really smart.  (See yesterday's post.)  But are any progressives, including our President, smart enough to realize that there is a fundamental inconsistency between these two goals?

On Wednesday, MIT put out a press release to publicize a new study by one of its professors, energy economist Christopher Knittel, titled "Will We Ever Stop Using Fossil Fuels?"  As is evident from the press release, Knittel (as well as MIT institutionally) is a serious believer in impending global apocalypse caused by the human sin of using cheap carbon-based energy.  (E.g., "Such scenarios [of using all available fossil fuels] imply difficult-to-imagine change in the planet and dramatic threats to human well-being in many parts of the world.")  Obviously, believes Knittel, human use of fossil fuels must be dramatically reduced or stopped.  But how to get from here to there?

To Knittel, there is only one possible answer: carbon taxes.  And not small in amount.

The problem according to Knittel, is that even though renewables are getting cheaper as technology improves, fossil fuels are getting even cheaper even faster.  (You may or may not view this as a problem, but then you are not a brilliant MIT professor like Knittel.)

At least two technological advances have helped lower fossil fuel prices and expanded reserves: hydraulic fracturing, or fracking, which has unlocked abundant natural gas supplies, and the production of oil from tar sands. . . .  So whereas some energy analysts once thought the apparently limited amount of oil reserves would make the price of oil unfeasibly high at some point, that dynamic seems less likely now.

And thus carbon taxes are "necessary":

Still, the immediate problem of accumulating carbon emissions means some form of carbon tax is necessary, Knittel says — especially given what we now know about declining fossil fuel costs.   

So exactly how much in the way of carbon taxes will be "necessary" to force the shift to renewables and avoid the apocalypse?  Knittel provides some examples of helpful information:

Alternately, look at it this way: Currently battery costs for an electric vehicle are about $325 per kilowatt-hour (KwH). At that cost, Knittel, Greenstone, and Covert calculate, the price of oil would need to exceed $350 per barrel to make an electric vehicle cheaper to operate. But in 2015, the average price of oil was about $49 per barrel.

Whoa!  The current oil price per barrel is about $33.  I guess that means that Prof. Knittel, et al., are telling us that we "need" an oil tax of around, say, $317 per barrel.  That sure makes President Obama's recent suggestion of a per barrel oil tax of $10 look rather paltry!  And I guess if $33 per barrel oil at the well translates into about $1.70 per gallon gasoline at the pump, we'd then be talking about gasoline at around $17 per gallon.  And, undoubtedly, we would also "need" something roughly equivalent to be done to the price of electricity.  Hey, it's to "save the planet."

Now, if you were trying to think of a really, really regressive tax to punish poor and low income people while high income people basically skate, could you actually come up with an example more extreme than this one?  (OK, the lottery may be even worse.  But not by much!)  Andrew Follett at The Daily Caller yesterday, discussing the MIT study, points to this NBER study from 2009, and summarizes its conclusions as follows:

[A] carbon tax would double the tax burden of the poorest households, making it effectively impossible to have both a carbon tax and a living wage. A tax on all man-made greenhouse gas emissions would make the tax burden of the poorest households three times greater than the richest households, according to the study.

But don't worry, when we multiply the price of gasoline and electricity by 10, we'll blame the increase on the evil oil companies.  Income inequality?  That's just a line to stir up jealously and resentment.  We'll pretend to fix that with something guaranteed to have no effect for at least the next 20 years, like expanded pre-K education, while imposing the super-regressive multi-trillion-dollar carbon tax today.  To a really, really smart progressive, it all seems to make perfect sense.