The Social Cost of Carbon – Another Example of Data Manipulation

Michael Schaus
Posted: Jun 13, 2013 12:01 AM

The numbers never add up. At least not when you get them from the government. We live in an age where the normal metrics by which we judge economic performance, social progress, and business productivity no longer adequately represent our reality. Some of this discrepancy is a result of an economy that has been managerially manipulated beyond recognition. But another aspect of this disposition between reality and metric measurement is due to the government’s uncanny knack for number manipulation.

Within the legalese of an obscure and non-controversial rule lies a small change to an abstract accounting measure that promises to have profound consequences. President Barack Obama approved an increase in the so-called “social cost of carbon” calculation to $38 a metric ton. (I wonder if the “social cost of carbon” takes into account the countless number of jobs produced, wealth generated, philanthropy projects, and overall prosperity that cheap energy creates.) This number is used by government bureaucrats to weigh the cost and benefit of proposed projects, regulations and environmental laws; all without the hassle of actually understanding economics. In other words, this number (arrived at by a “scientific” method that calculates the cost of global warming to local governments) will be utilized to sell environmentally friendly legislation.

According to Bloomberg news, “With the change, government actions that lead to cuts in emissions -- anything from new mileage standards to clean-energy loans -- will appear more valuable in its cost-benefit analyses.” Can I translate? This gives the government “economic” reasons to oppose job creating initiatives like the Keystone XL pipeline while promoting green energy initiatives like Solyndra.

Cool. . . We no longer have to worry about how much a new hybrid will cost. When you fork over the ten or fifteen thousand dollar premium to drive a Chevy volt, just remember: The government says it’s an economic benefit. I guess when you can’t win an argument on merit, it’s time to change the rules. . .

Bloomberg went on to explain the impact of the rule change:

For example, the administration’s vehicle fuel-efficiency standards would cost industry $350 billion over the next 40 years, while benefits in energy security, less congestion and lower pollution totaled $278 billion, according to a regulatory analysis using the prior carbon cost estimates cited in a paper by administration economists. It’s only by including the $177 billion in benefits from less carbon dioxide that the rules provide a net benefit to the country.

Can you wrap your brain around that? A rule that admittedly increases the monetary and fiscal burden on manufacturers, consumers and dealers will be estimated to be an economic benefit to the economy under this new rule. Only in Washington can an initiative that is more expensive save us money. But wait. . . There’s more:

According to the EPA, Keystone is expected to contribute 935 million metric tons of carbon-dioxide emissions over 50 years. Of course, this is assuming that the oil being shipped in the yet-to-be-approved pipeline would simply sit untapped under the earth’s crust if the project is nixed. In all fairness, the State Department has disputed the EPA claim, noting that the pipeline will not lead to any addition oil sand production, and that’s a great point. This oil will be transported somewhere and used by someone regardless of the administration’s ultimate approval or denial. However, under the calculations outlined in the new “social cost of carbon” rules, the Keystone XL will place a burden of roughly $37 billion on America.

Thirty-seven billion dollars. . . Despite the fact that tens of thousands of jobs will be created, communities will become enriched with additional tax revenue, and energy will become more affordable as our energy infrastructure becomes more efficient. The calculations kind of make one wonder how much Burlington Northern Santa Fe railways (owned by Warren Buffet) cost us each year shipping oil that would otherwise utilize the pipeline.

The number is nothing more than a crass attempt to economically justify initiatives friendly to the environmental wing of the Democrat coalition while simultaneously demonizing efficient traditional energy.

But this is by no means an isolated or specific instance of arbitrary (dare I say “propagandistic”) government evaluation. The examples are countless where government has decided to change the way by which we calculate metrics in a way that (coincidently) makes its statist policies appear more economically beneficial.

For example, the CPI (official government inflation index) does not reflect energy or food prices. The index responsible for determining the level of inflation in our economy – through a representative analysis of how much consumer prices are rising – ignores two of the largest factors in consumer spending. Our unemployment level fails to calculate the number of individuals who have retreated from the unemployment rolls after unsuccessfully searching for jobs. The administration recently adopted new calculations for GDP – and they just coincidently make the last few years look a little better. Even the baseline budgeting process in the congressional budget office is rigged to favor tax increases while ignoring economic cycles. (A whole paper could - and has - been written on the idiocy of base-line budgeting.)

Government has been busy rigging the game for several decades. Through legislation, rulemaking, and monetary policy, government has manipulated our economic system to favor “progressive” ideas and initiatives. Little by little more of our economy has been consumed by government’s lust for regulatory power. And, rather than measure this increase in government involvement by the results that are evident in the real world, they change the data set used to determine success.

As government manipulates data, to push an agenda, we move further down the path of newspeak. We live in a world where the metrics by which we gauge our economic and societal progress is either obsolete or manipulated beyond recognition. The change in the so-called “social cost of carbon” is no different than our revised Gross Domestic Product, unemployment rate, or any other number of statistical data points. Statists have a tendency to alter data in an effort to justify their agenda.

The worst part isn’t their audacity or arrogance. It is that they too often get away with it.