• Choose a category
• All
• Classic-Fiction

By Root 489 0

on existing fossil fuels and use it to give a sizable subsidy to low-carbon energy (e.g., wind and solar power or carbon capture and storage at existing coal plants). Since the existing fossil fuel—based energy system is so large and the new low-carbon energy sector is so small, even a very small tax on fossil fuel could pay for a quite generous subsidy today, enough to encourage the entry of new low-carbon energy sources to the market. By maintaining suitable subsidies over time, the size of the low-carbon sector would grow. The fossil fuel tax would rise gradually over time, and the subsidy paid to low-carbon energy producers would decline gradually over time, in a manner that maintains an overall net incentive (equal to the sum of the tax and the subsidy) to keep moving toward a low-carbon energy system.

Consumers would never experience a sudden jolt in energy prices, while low-carbon energy producers would receive a predictable and generous subsidy to support the long-term transition to the new system. The system would be self-financing, since the revenues from fossil fuel taxes would cover the subsidies provided to the alternatives. Over the course of several decades, technological learning cycles (for example, of electric vehicles and solar power) would reduce the costs of low-carbon energy systems compared with today’s fossil fuel—based technologies. It’s also possible that the market prices of coal and oil might become so high because of rising scarcity that low-carbon renewable energy systems such as wind and solar power would become the market-based low-cost alternatives even without public subsidies to help get them started.

Ending Military Waste

The biggest single item in the budget is the military, which claims at least 5 percent of GDP, around one-fourth of total federal outlays, and the preponderance of U.S. foreign policy attention. The magnitude of these outlays is enormous and their rationale is highly questionable. Military spending will be around $738 billion in fiscal year 2012, not including another $250 billion or so for homeland security, intelligence gathering, veterans’ benefits, and other military-related outlays. The total budget directly or indirectly attributable to the military is thus a staggering $1 trillion or so per year.

Around $150 billion per year relates directly to the Iraq and Afghanistan wars, both of dubious if any value to American security. Another large part relates to the maintenance of thousands of nuclear warheads without any obvious purpose, since a tiny fraction of this number would ensure the deterrence of any attack. A staggering $200 billion involves missile defense, other procurement programs, and research and development.23 In many cases, the generals themselves have declared that they do not need the proposed weapons systems, but powerful lobbies and supportive members of Congress keep the systems in place.

Ending the wars in Iraq and Afghanistan, closing many of the hundreds of military bases around the world established since World War II, and canceling some of the high-cost and dubious weapons systems would allow massive savings of $300 billion or more from the bloated Pentagon budget. Of course, that is picking a fight with America’s leading industry and perhaps still most powerful lobby (in close competition with oil, coal, banking, and health care). The military contractors have the advantage of employing workers in virtually every congressional district in the country. Jobs rather than defense has for decades been the watchword of the military-industrial complex, a network so powerful that even the end of the Cold War barely dented the military budget as a share of national income.

Our Ultimate Economic Goals

It is easy to lose sight of the ultimate purpose of economic policy: the life satisfaction of the population. That ultimate goal should be unassailable for a country founded precisely to defend the inalienable right to the pursuit of happiness. Yet not only do we miss myriad opportunities to promote happiness through our collective undertakings,