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  • The Left Still Does Not Understand Where Wealth Comes From

    The dispute over MIT professor John Reilly’s cap and trade cost study has exposed, again, how the left has no idea how wealth gets created.

    The MIT study estimates that the government revenue from a carbon cap and trade policy would amount to $366 billion per year, or roughly $3,128 per American household. As Reilly readily admitted in a an email to the Weekly Standard, the government revenue raised through cap and trade (which any economist and even Tom Friedman will tell you is just a tax) will be ultimately be paid by American consumers in higher energy costs. Add $800 in dead weight loss and Reilly’s MIT study clearly shows cap and trade will cost the average American family $3,900 per year.

    This is a very inconvenient truth for advocates of cap and trade like the Center for American Progress.  So this is how they attempt to spin it:

    For example: Exxon Mobil became the largest corporation in the world by raking in $442.9 billion in revenue in 2008, “costing” the average American household $3,785.

    Is the existence of Exxon Mobil a $3,800 tax on American families? No, because most of its revenues are redistributed in the economy — as oil rig employment, petroleum products (which fuel transportation and trade), and of course, multimillion-dollar salaries for its top executives and massive profits for its shareholders.

    Follow the logic there? The Center for American Progress equates the $442.9 billion in revenue the Exxon Mobil created in 2008 with the “revenue” that a cap and trade program would generate. They simply cannot grasp the fact that cap and trade does not create any new wealth!!! The only “revenue” it generates, must come by taxing existing wealth creating entities like Exxon Mobil who, by the way, already paid pre-cap and trade taxes totaling $116.2 billion in 2008.

    This is not the first time the Center for American Progress has conflated tax revenues and wealth creation. Last year during the Lieberman-Warner cap and trade debate, CAP produced a study purporting to show that “an economy-wide cap-and-trade program would generate at least $50 billion per year” in “profits” for the American people. Yes, they actually called tax revenues “profits”.As we wrote at the time:

    “The esteemed scholars at CAP are for too modest. If carbon capping is such a surefire way to create “profits” for the government to then invest, then why stop at Lieberman-Warner’s modest 18% carbon emission reduction by 2020? Why not double it to a 36% carbon emission reduction and double the government revenue?”

    Reviewing the leftist documentary The End of Poverty, George Mason University economics professor Tyler Cowen recently wrote:

    A few months ago I went back and tried to read some Ayn Rand. As Adam Wolfson has suggested recently in these pages, it wasn’t easy. I was put off by her lack of intellectual generosity. I read her claim that “collectivist savages” are too “concrete-bound” to realize that wealth must be produced. I read her polemic against the fools who focus on redistributing wealth rather than creating it. I read the claim that Western intellectuals are betraying the very heritage of their tradition because they refuse to think and to use their minds. I read that the very foundations of civilization are under threat. That’s pretty bracing stuff.

    I can only report that The End of Poverty, narrated throughout by Martin Sheen, puts Ayn Rand back on the map as an accurate and indeed insightful cultural commentator.

    We can now say the same for the Center for American Progress

    Posted in Energy [slideshow_deploy]

    10 Responses to The Left Still Does Not Understand Where Wealth Comes From

    1. Robert, San Antonio says:

      In the infamous words of Ross Perrot, "Do you hear that sound?" It's the sound of everything that was great about this country leaving. Thanks to all of you whom voted for all the idiots stealing our money…

    2. MAS1916 - Denver, CO says:

      Very interesting that this organization believes that the government should look at its own revenues as "profits" for the people.

      The simple fact is and always will be: government doesn't receive any revenue that it does NOT extort or confiscate from its people.

      The Cap and Trade reasoning also does not address the fact that the "profits" for the people will be paid by those same people. Like the massive inflation we can expect to see in 2010 as a direct result of the Obama spending plan, Cap and Trade will levy yet another heavy tax on middle class America.

      The unbelievable arrogance of the Obama administration to say that there will be a middle class tax cut defies description.


    3. Liz, Indiana says:

      I read conflicting info on cap and trade just last week — that the advocates were giving one figure on cost and opponents were citing another MUCH higher figure. I'm just trying to make sense of it all, so I can form an informed decision. I'm trying to make sense of all this economic info currently making a mess of things, such as derivatives, IMF, subprime loans (well, I used to work in new homes, so THAT one I understood already), etc. etc. I know many people already know this stuff, but I was lagging and didn't like feeling ill-informed. Then I got hold of The 21st Century Economy – A Beginner's Guide. I finally feel like I understand what's going on in the economic world (and the world economy, as far as that goes.) It's easy to understand — and the glossary provides all the terms we need to understand the economy. TARP talk, here I come.

      P.S. Still against cap and trade…

    4. Jake Martinez, Albuq says:

      This article overwhelmingly supports my recent blog, which painted a disturbing picture of what may be in store for our nation’s educational system under our newly appointed Education Secretary-You Decide:


      “Food For Thought”

      “God Bless & Keep Our USA Safe”

      Semper Fi!

    5. Charles, Atlanta says:

      Liz, Indiana writes:

      "I read conflicting info on cap and trade just last week — … I’m just trying to make sense of it all, so I can form an informed decision."

      Later in the same post Liz writes:

      "P.S. Still against cap and trade…"

      Looks like your decision was already made.

      Did you become "informed" while typing out your comment?

    6. Joseph Kellard says:

      For all this person’s reasons given why it "isn't easy" to read Ayn Rand is exactly why I think it is refreshingly easy to read her. She wasn't a bit afraid to make these "bracing" statements, and we in the West who want a better world from the savages who want to destroy it, such as the environmentalists at home and the Islamic terrorists abroad, are better for it today. Miss Rand gives the thinkers of America and her other admirers worldwide greater intellectual ammunition and, most importantly, moral courage to fight for individual rights, proper, limited government and the rule of law—in other words, capitalism.

    7. Harry Binswanger says:

      Excellent piece on the conflation of wealth-creation with wealth-confiscation.

      I only wish you'd mentioned the other 500 lb. gorilla in the room: global warming is a total myth. It isn't happening, and there never was any reason to believe it. Future ages will look back at this 25-year "save the planet" insanity as . . . well, as insanity.

    8. Uncle B says:

      Obfuscating the issue doesn't change the fact. The "American Dream" is a nonsensical piece of advertising propaganda, and is not sustainable in this world any longer! The era of "Cheap Oil" is over! The age of the disposables is over, the environment simply will no support this kind of nonsense, not for the Uber-Rich, dividend collectors, not for the greedy little Corvette and daily beef consumers! This is no a case of pointing fingers and blaming! This is a case of massive de-industrialization of a nation because much cheaper labor and newer, better, more mechanized, more computer driven, and consequently more productive factories were found off-shore! We are about to see our car industry fold, due to Asian competition, not because the rich got too rich, or the poor were paid too much! Because – we are to goddamn stupid to compete, and can't make a better car for less! Point in case: Kia , from Korea, sells a brand-new, ten year guaranteed durable car for under $10,000.00 U.S., on the pave here in the U.S. while GM flounders, mired in tradition, constipated by government, lost in hegemony, and at the wrong end of its business curve. Too inbred and inter-industrialized to shit or get off the block, they shuffle, knee-deep in clown-shit as the corporate ship sinks around them, covering their own asses and bonuses and golden parachutes on G d knows what crooked kick-back schemes, hidden partnerships and corporate thievery and produce yet another "New and Improved" 620 hp, 231 Mph, 7 Mile per gallon, unattainable Corvette sports-car, and a new Camero of similar proportions! The rest of America, dashed into deep poverty they cannot understand, sit back in their easy chairs, sucking back even more alcohol, to numb their nerves and go into shock! America you were caught with your pants down, bills unpaid, and over extended, you robbed folks internationally and at home with Bushite financing, and will now suffer the consequences, a long hard republican depression, no matter who is in power, and you will pay the piper for the song you called up! Blame who you will, in any terms you wish, your system, "unbridled capitalism" does not work forever, and must be changed, and you are beyond broke, beholden to the commie Chinese and the Arab kingdoms and sinking fast just paying the interest, never mind your ridiculous foreign oil appetite! Change these things and your flag will fly, don't and all of America will soon look like downtown Detroit City – Third World at best and comparable to Johannesburg!

    9. John Seiffer www.Bet says:

      Of course the cost is ultimately borne by consumers – they drive the economy and that's what causes the problems caused by carbon in the atmosphere. Currently there are existing problems but the cost of cleaning up or even slowing down those problems is not paid by anyone. When we all pay an equitable share (according to how much we consume) there will be incentives to #1 not consume so much or #2 figure out (and pay for) ways to produce and consume without so much carbon going into the atmosphere.

      Similar things happened when sulfur was capped a decade or so ago.

    10. Bryan Ryan in Costa says:

      yes we do

      it comes from the owners of the Federal Reserve and its stays with them and their vassals

      rationalized by the PR mills and think elite tanks


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