The Ethics of Government Regulation

Readers who care about the environment have contacted me with questions such as “should I support the natural gas line coming to Robeson County,” or “is it a bad idea for more coal workers to be employed?”

These are great questions and most people answer them solely based on their political ideology. I teach ethics to college students so we’ll employ some ethical thinking to address these questions.

Example A: Let’s say I spend time and money to invent a new product to help get the juice out of coconuts and very few people buy that product. My company failed, but most Americans would say that I took my shot, and it didn’t work out. The fact that I could not voluntarily get other people to buy my product is my problem in our somewhat free market economy.

Example B: Let’s say that the government starts a program for eliminating mosquitos and they offer a tremendous tax break on mosquito-killing equipment that costs over $25,000. Then, a few years later, they reverse course and issue a regulation that mandates mosquitos only be killed in small batches, effectively banning your machine. Suddenly, the $25,000 piece of equipment that you bought with a tax incentive is worthless. Most people would say that this development isn’t fair. An implicit agreement has been breached.

With those examples in mind, let’s consider what happened to coal workers across our country:

  • Fairly recent administrative actions breached an implicit agreement costing thousands of jobs.
  • Through massive taxpayer-funded subsidies, the federal government has given a cumulative $4.9 billion as of May 2015 to Tesla, whose client base is far wealthier than the average American and owned by billionaire Elon Musk.
  • Consequently, massive amounts of money shifted from the poor to the rich.

Government used its coercive power to play favorites to the detriment to the poor.

Coal workers aren’t the only ones to suffer. These regulations and artificially propped up alternative energy companies have created a new term, “energy poverty.” California has tilted the playing field to favor the wealthy more than any other state. Lt. Gov. Gavin Newsom recently observed that, as a consequence, more than 1 million households in California spend more than 10 percent of their income on energy.

He admitted that there is a regressive nature to energy regulations. Studies published by the National Bureau of Economic Research also found that the tax burden of climate regulations hurt the poorest households three times more than the richest households.

The costs and those who pay them are clear if we choose to look at them. The benefits, though, are much less clear. President Obama’s EPA Administrator Gina McCarthy testified in a House hearing that the effect of the coercive climate regulations would ideally reduce the global temperature by 1/100th of a degree in the long term. Her estimate didn’t include the tremendous reduction in American carbon dioxide emissions thanks to the recent growth in fracking, which has propelled the U.S. to the lead in carbon dioxide reduction. Solar energy currently provides 0.9 percent of our energy; wind, 5.6 percent. Natural gas is up to 34 percent, a 14 percentage point increase in 10 years. In the U.S., all of these trends are headed in the right direction for our planet.

The ethical considerations seem clear — it only makes sense to take the kind of actions that have devastated coal country if that’s the only way to prevent a horrific disaster. However, it’s clear that we’ve been able to pursue alternatives that have arguably accomplished more carbon dioxide reduction.

So my answer to the initial questions would be that it is a bad idea to force the coal industry out of business. The market has already started to supplant it — and create thousands of net new jobs in the process — through natural gas and given current trends, wind and solar aren’t too far behind. What we shouldn’t do is accelerate the job destruction to funnel money to the wealthy. Let the market do its work and support families across the income spectrum in the process.

Eric Dent is Endowed Chair Professor of Ethics at Florida Gulf Coast University.


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