Tuesday, April 24, 2007
Another angle on Daniel's post: I don't buy that economic populism, conventionally understood, is very popular. If you don't believe me, you can just ask President Pat Buchanan, President Harkin, and President Gephardt.
I do think that economic anxiety is very high. But the set of people who take seriously the proposition that it would be fixed if we could just put a 40% tariff on all Korean televisions is just about less than epsilon, and getting smaller every day. Because global capitalism is such a dynamic thing, it is getting more and more difficult to build a personal franchise strong enough to guarantee economic security through all the turbulence in the world at large. Therefore, even the temporarily affluent feel the anxiety because most of whatever it is they have can go away a lot quicker than it used to.
Viewed in this light, the carbon tax is a two-way loser. For the old-school truck-driving populists, the carbon tax is bad because it hurts their consumption. But for the New Economy bobos, the carbon tax hurts their production. For them, (and for the economy in general) energy is largely a capital good. Like anyother capital good, its cost can (and will) be substituted or passed on to the consumer. But before then, it will also increase the anxiety of those whose ability to make a living is put in jeopardy.