Picking Winners And Losers

One of the most common–and persuasive– arguments posed by so-called “conservatives” against government regulation is that government should not be “picking winners and losers,” that the market should make those determinations.

So what about the enormous subsidies government provides to fossil fuel interests–subsidies that those same “conservatives” defend?

Paul Krugman had a recent column in which he discussed both the subsidies and the discredited economic theories offered to justify them.The column was prompted by the arrogant response of Stephen Mnuchin to Greta Thunberg’s speech at Davos. Thunberg  had called for an end to investments in fossil fuels; Mnuchin suggested that she go “study economics” before making what he implied were uninformed and childish recommendations.

(Krugman also noted that Mnuchin “doubled down” on his claim that Trump’s 2017 tax cut will pay for itself — despite the fact that, just a few days before, his own department had confirmed that the budget deficit in 2019 was 75 percent higher than it was in 2016.)

Krugman explained why “Mnuchin was talking nonsense and that Thunberg almost certainly has it right.” He began with basic economics:

One can only surmise that Mnuchin slept through his undergraduate economics classes. Otherwise he would know that every, and I mean every, major Econ 101 textbook argues for government regulation or taxation of activities that pollute the environment, because otherwise neither producers nor consumers have an incentive to take the damage inflicted by this pollution into account.

But what about those subsidies?

The International Monetary Fund makes regular estimates of worldwide subsidies to fossil fuels — subsidies that partly take the form of tax breaks and outright cash grants, but mainly involve not holding the industry accountable for the indirect costs it imposes. In 2017 it put these subsidies at $5.2 trillion; yes, that’s trillion with a “T.” For the U.S., the subsidies amounted to $649 billion, which is about $3 million for every worker employed in the extraction of coal, oil and gas. Without these subsidies, it’s hard to imagine that anyone would still be investing in fossil fuels.

Krugman points out that, while Thunberg may be young, her views come “much closer to the consensus of the economics profession than those of the guy clinging to the zombie idea that tax cuts pay for themselves.” And he then concludes:

But could the economics consensus be wrong? Yes, but probably because it isn’t hard enough on fossil fuels.

On one side, a number of experts argue that standard models underestimate the risks of climate change, both because they don’t account for its disruptive effects and because they don’t put enough weight on the possibility of total catastrophe.

On the other side, estimates of the cost of reducing emissions tend to understate the role of innovation. Even modest incentives for expanded use of renewable energy led to a spectacular fall in prices over the past decade.

I still often find people — both right-wingers and climate activists — asserting that sharply reducing emissions would require a big decline in G.D.P. Everything we know, however, says that this is wrong, that we can decarbonize while continuing to achieve robust growth.

Given all this, however, why are people like Mnuchin and his boss Trump so adamantly pro-fossil fuel and anti-environmentalist?

Part of the answer, I believe, is that conservatives don’t want to admit that government action is ever justified. Once you concede that the government can do good by protecting the environment, people might start thinking that it can guarantee affordable health care, too.

Given the scale of subsidies we give to fossil fuels, the industry as a whole should be regarded as a gigantic grift. It makes money by ripping off everyone else, to some extent through direct taxpayer subsidies, to a greater extent by shunting the true costs of its operations off onto innocent bystanders.

And let’s be clear: Many of those “costs” take the form of sickness and death, because that’s what local air pollution causes. Other costs take the form of “natural” disasters like the burning of Australia, which increasingly bear the signature of climate change.

In a sane world we’d be trying to shut this grift down. But the grifters — which overwhelmingly means corporations and investors, since little of that $3-million-per-worker subsidy trickles down to the workers themselves — have bought themselves a lot of political influence.

And so people like Mnuchin claim not to see anything wrong with industries whose profits depend almost entirely on hurting people. Maybe he should take a course in economics — and another one in ethics.

Krugman’s being silly. No one in this administration can even spell ethics.


  1. My wife and I yesterday held for the first time our first great-grandchild, a healthy, beautiful girl. Grifters Trump and Mnuchin, you’re willful ignorant acts and inactions were in my thoughts all the time I gazed upon her innocence. I thought and condemned people like Rex Tillerson, smart enough to tell the world “he’s a moron” all the while profiting from subsidies “we the people” provide. Tuesday night the Grifter-in-Chief will gloat and lie while our innocent Bella sleeps, unaware of the perils ahead.

  2. Think about it. If we just give a million dollars to each worker in the fossil fuel industry we can shut the whole thing down and still have $200 million to spend on health care.

  3. Two points. Frist, the $649 billion is nearly what we spend on defense each year. Second, half of it, about $300 billion involves direct subsidies (tax cuts, such as depreciation allowances) and the other half represents the social costs Krugman mentioned – the costs of cleaning up the environment and the health effects of breathing polluted air (and drinking the water in Flint, MI).

  4. The oil companies own the U.S. government so what do we expect? Subsidies have nothing to do with economics, they are the spoils of war waged successfully by the oil industry.

  5. I suspect that when considering subsidies to the fossil fuel industry, nobody ever looks at the amount money we spend on highway infrastructure to the exclusion of almost all other modes of transportation. In Europe, I can vacation and travel without a car and most people do, because they realized killing the passenger railroads was a bad idea. In Europe a huge percentage of freight travels on rails vs highways too.

    Most major cites in Europe are not chopped up and gutted because they did not run Interstate highway through the middle of the cities. Cities like Athens are removing limited access highways that run through the urban core because they realized it was a mistake in so many ways.

    So when you think of the direct subsidies to the fossil fuel industry, also take time to consider the indirect subsidies that we are over-spending on the US.

  6. Peggy and others, stop making sense! What is wrong with you people?

    Krugman writes, “In a sane world we’d be trying to shut this grift down.”

    Exactly, Paul.

    I believe Bernie Sanders has been yelling about this for years but was chopped off at the knees by the DNC and Hillary Clinton in 2016. And, here comes the DNC and Hillary again in 2020…

    Sanity left the house a long time ago. We justified slavery and slaughtering Native American Indians in this country. We stole their land and their spirit. The Oligarchs of the day replaced it with capitalism — I mean, why wouldn’t they since it ensures that those with the capital own the means of production, so they went from slavery to screwing the working class for decades until the working class had enough. FDR came in and saved capitalism by introducing the New Deal…the socialists and the unions had other ideas.

    The Oligarchs like the Koch brother’s daddy didn’t like FDR’s New Deal and popularity with the people. Once they set presidential term limits, the Oligarchs started working hard to overturn the New Deal. The Koch’s have been the most active, and all the political billions they spend each year go toward their anti-government, unfettered capitalist goals.

    Just an FYI: Koch Energy is a privately-held company, and much of what this company provides hurts the environment. If they keep winning, you can easily predict where this is going.

    Watch for social security and disability cuts. Watch for a slashing in Medicare and Medicaid with the promises of lowering taxes on the working class who continue voting against their self-interest because the Oligarchs own the press, radio, TV, and films. Just like the 2017 Trump Tax Cuts, any future tax giveaways will go toward the Oligarchy.

    It’s the upward redistribution of wealth and income or looting of the social safety nets and public coffers. And both political parties are working toward this aim. They are both captured institutions by the Oligarchy.

    Albert Einstein told us this in the 40s and 50s when he called both capitalism and communism, “Evil.”

  7. This little section of the blog is right out of the Koch brothers/Libertarian playbook: “..conservatives don’t want to admit that government action is ever justified. Once you concede that the government can do good by protecting the environment, people might start thinking that it can guarantee affordable health care, too.”

    These people do NOT want to spend a DIME on anything that takes away from profits. Almost the entire billionaire class adheres to this mantra as they erect more monuments to the stockholders demands for economic growth no matter the price. This is what Marx warned the world about un-regulated capitalism in mid-19th century. Many people still believe that wealth = intelligence. The truth is: Not altogether right. When an entire ruling segment of the population cannot see past the quarterly report, that society is doomed.

    We saw a “fine” example of our coming destruction this past week in the Senate. Most of those Republican Senators are owned by big oil. Why else would they support a criminal, a grifter and an outright pile of scum like Trump and his caddy, Mnuchin?

  8. Wayne, congratulations. We are 20 some years ahead of your curve but I have spent them studying the biggest threat my grandchildren face which is anthropogenic global warming. When I started worrying Greta hadn’t been born yet but she caught up quick.

    Anthropogenic is an unusual word that means “caused by human actions” but the more important implication of it is “can be limited (only) by human actions”. While the details of how that works are scientific in nature and understood by only a fraction of humans the only ways we have to limit the economic tsunami threatening our grandchildren because of it are by changing the resources we use to obtain energy.

    One intellectual rub is that most people think very wrongly about what energy even is because of what our senses tell us – the senses that evolved to only alert us of threats and opportunities in our place and time and at our scale which is an absolutely miniscule portion of what is. Using science to see what’s outside of that reach we learned a very long time ago that the only ingredients of the universe are matter which creates the illusion of being substantial, energy which sometimes is part of matter and sometimes is not, and spacetime which we swear is two things not one. Of those the only one that there can ever be more or less of is spacetime.

    Energy is earth’s only unlimited resource (as least as long as the sun shines). Sunshine (no surprise to anyone ever) warms the earth but if something else didn’t cool the earth the endless supply of it would have us at the same temperature as the sun. Energy comes from the sun but also goes out from the warm earth through the atmosphere into space. The long term whole surface temperature of where we live, about 60F, is the result of the energy balance that’s here between coming and going. That number hasn’t changed appreciably as long as humans have been civilized but we are choosing to change it now which changes the distribution of weather on earth and the volume of sea water.

    How are we changing it? By bringing up fossil fuel that has been buried since long before any humans were here, burning it in order to release the energy it contains, using the energy in machinery to supplement our muscles (that use the energy from food) or heating things, and dumping the left over waste into the atmosphere where it only appears to our meager senses to disappear. That more and more dense virtual fog above our heads limits how effectively earth cools and the 60F is getting warmer and warmer and will until a few decades after we stop fossil fuel waste dumping which will take us a few decades to even do.

    You know the proverbial frogs enjoying the warming pot at least for the moment? That’s us but we could instead choose to stop heating it if we were, you know, smart. We have the technology and know how. We will have to anyway in the near future as our fuel supply runs low.

    Now boiled frogs is an exaggeration, we can’t make it that hot but we can obsolete a lot of essential civilization infrastructure by inviting in more energetic weather, higher sea levels and changing where on earth different microclimates exist (think drought, floods, wildfires, invasive pests, mud/land/snow slides, cyclonic storms, riparian retreat).

    Fossil fuel companies are like pokey teenagers saying I’ll be ready in just a minute. I just want to enjoy these profits for a while longer. They and the politicians and voter minds that they buy have held us up for several decades while the pot has gotten warmer. We are worse than late in leaving and there are effects that we just have no means to avoid anymore and that list grows every year.

    Do your granddaughter a big favor and raise hell for her until she, like Greta, can for herself. She can’t afford the consequences of your energy waste but the only way you can limit it is by changing the corporations that you consume from and the only way to change them is by changing politicians.

    Vote blue no matter who.

  9. The idea of picking winners and losers by government trickles down all the way to cities and counties. As an example here in central Indiana we have taxes collected: A hotel-Motel Tax, Food and Beverage Tax, Car Rental Tax. These taxes are handed over to the Capital Improvement Board which in turn builds, and maintains Professional Sports Stadiums.

    Small businesses do not receive tax dollars to build or maintain their buildings.

  10. Of course, the market should determine winners and losers……..WITHIN THE RULES.

    Mnuchin reminds me of those faux sports-nut jerks who assert that near the end of a game the rules of the game–any game–should be discarded. “Let them play,” they whine. What they mean by Let them play is: I want the bully to win, and I want the finesse dudes, the skinny-necked, pretty dudes to lose, which is what you get when rules are dispensed with.

    For far too many capitalists, the game–capitalism–is the purest device they know that will determine who the most brutal bully is. Why do they even care? It’s because in their insentient soul they believe that bullies are saints, if not gods, which leaves them in a kind of religious quandary detecting just who the saints are.

    Unthrottled, undirected capitalism is the only Geiger counter they know of with the ability to sort the sainted bully from those whose bully-purity are tainted by the slightest dosimetry of effeteness. One drop of effeteness or sensitivity or gentleness makes you one of “those”.

  11. Wayne, I feel you brother!
    Pete, excellent response to Wayne.

    Winners and losers? That’s just another misdirection play. The fossil fuel industry is so entrenched throughout the fabric of this country, of course these staunch supporters will always be there. The spigots are always on for those supporters. Also, those spigots from the general public to the fossil fuel industry are always on, why? If the fossil fuel industry was the end-all be-all, why do they need corporate welfare? The GOP can roil against social programs for the average citizen, but, they are “all in” for the corporate social safety net. It seems a little backwards, when these corporations are receiving bailouts and public monies to not only provide golden parachutes to their CEOs, CFOs and COOs but to buy back stock that was out in the public.

    You could not do a better job of explaining grift and graft than the tremendous tax cut provided by the current majority in government. I pay my taxes because it’s my obligation as a good citizen, they, and by the I mean the corporations, are not good citizens! They are not good citizens because most of the time they pay no taxes, or pay very little in taxes. Even more so now with their “tremendous” tax cut. So, now you have a conundrum, you have good citizens they are excoriated for being good citizens, and bad citizens praised for being bad citizens. Good citizens are not allowed to get a hand up, but bad citizens are allowed to get a hand out! Good citizens have to give till it hurts even to the point of losing their portion of the American dream, the bad citizens get the American dream handed to them on a silver platter without having to suffer pain or play on an even field.

    It’s a shame that these politicians will tell you straight out, that what’s happening is a travesty, but they have an obligation to, (who knows who) to let the travesty continue unabated, and the reasoning behind it is, (there is no reasoning) it’s just cuz! Willful ignorance, willful blindness, cognitive stupidity, lemmingly moronic, and intellectually stunted, what could be the cause? You see a lot of this in warmer climates, the southern states, an area where freshwater stagnates and salt water grows tons of algae because of pollutants. So, I have a theory, LOL!

    A virus that infects human brains and makes us more stupid has been discovered, according to scientists in the US.

    The algae virus, never before observed in healthy people, was found to affect cognitive functions including visual processing and spatial awareness.

    “Many physiological differences between person A and person B are encoded in the set of genes each inherits from parents, yet some of these differences are fuelled by the various microorganisms we harbour and the way they interact with our genes.”

    Of the 90 participants in the study, 40 tested positive for the algae virus. Those who tested positive performed worse on tests designed to measure the speed and accuracy of visual processing. They also achieved lower scores in tasks designed to measure attention. (This was published in the National Academy of Sciences)

    So, stupidity is definitely inherited, and that is why, there seems to be so much stupidity in these conservative bastions. (It’s the water stupid)!

    The dumber the dummy or the stupider the stupid, the easier the manipulation. When the flimflam con artists noted this grifters paradise, they settled in to proliferate their piles of manure that were gobbled up by the dufus population against not only their best interests, but also those of their heirs! There is a reason why those apples don’t fall far from the tree, or the chips stay right at the base of that block, again, it’s the water, LOL! Hey, this could explain the unexplainable?!?!? Either way, you might as well say that we are on a bridge to nowhere, and the road is running out. Mankind just committed suicide, it’s just taken much longer to die than anticipated.

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