Guest essay by Eric Worrall
According to Time Magazine, forcing everyone to switch from CFC refrigerants to more climate friendly refrigerants is a job creation opportunity.
Here’s the One Climate Change Deal the Trump Administration Might Back
February 6, 2018
The Trump Administration has hesitated to throw out a key deal reached in 2016 to phase out a pollutant found in air conditioners that is a factor in climate change, in part because American companies think it could be a huge business opportunity for them.
An Administration official declined to say Monday whether Trump would send the Kigali amendment to the Senate for ratification.
“The president wants to make sure that any international environment agreement does not harm U.S. workers,” said George David Banks, White House international energy and environment advisor, at an event at the Hudson Institute on Monday. “If the president does decide to support Kigali … it will largely be because he wants to create U.S. jobs.”
“We want to be the global leaders like we alway have been in this industry,” says Stephen Yurek, CEO of the Air-Conditioning, Heating and Refrigeration Institute. “Will they pick our products and technology or will they pick those developed by the other countries that have ratified the amendment?”
Banks says the Trump Administration still has questions.
“We understand that there is broad industry support,” said Banks. “But first we need to know the economic impact.”
I’m frequently shocked at the total ignorance of economics displayed by today’s journalists.
If Kigali amendment compliant air conditioners are such a big international export opportunity, why does US manufacture of Kigali compliant air conditioners for export have to be subsidised by forcing everyone in the USA switch to the new standard? Why can’t air conditioner manufacturers fund this “opportunity” using their own capital?
The silliest part of the Time article is the claim that this forced switch is a job creation opportunity. Long ago, famous economist Frédéric Bastiat invented the parable of the broken window to explain what is wrong with the belief that imposing costs stimulates economic activity.
Have you ever witnessed the anger of the good shopkeeper, James Goodfellow, when his careless son has happened to break a pane of glass? If you have been present at such a scene, you will most assuredly bear witness to the fact that every one of the spectators, were there even thirty of them, by common consent apparently, offered the unfortunate owner this invariable consolation – “It is an ill wind that blows nobody good. Everybody must live, and what would become of the glaziers if panes of glass were never broken?”
Now, this form of condolence contains an entire theory, which it will be well to show up in this simple case, seeing that it is precisely the same as that which, unhappily, regulates the greater part of our economical institutions.
Suppose it cost six francs to repair the damage, and you say that the accident brings six francs to the glazier’s trade – that it encourages that trade to the amount of six francs – I grant it; I have not a word to say against it; you reason justly. The glazier comes, performs his task, receives his six francs, rubs his hands, and, in his heart, blesses the careless child. All this is that which is seen.
But if, on the other hand, you come to the conclusion, as is too often the case, that it is a good thing to break windows, that it causes money to circulate, and that the encouragement of industry in general will be the result of it, you will oblige me to call out, “Stop there! Your theory is confined to that which is seen; it takes no account of that which is not seen.”
It is not seen that as our shopkeeper has spent six francs upon one thing, he cannot spend them upon another. It is not seen that if he had not had a window to replace, he would, perhaps, have replaced his old shoes, or added another book to his library. In short, he would have employed his six francs in some way, which this accident has prevented.
A forced switch from a perfectly adequate existing standard to a new standard which at best delivers the same facility is not a job opportunity, it is a pointless government imposed cost – the kind of pointless bureaucratic cost President Trump pledged to eliminate.
Every job created in the air conditioner industry by imposing the Kigali Amendment would be matched by jobs lost in other industries, businesses which would be forced to reduce other expenditures to comply with this useless new standard.
Worse, countries which don’t bother to enforce the new standards or whose implementation of the new standard is delayed (USA of course agreed to be an early adopter of this expensive new standard) will obtain an economic advantage over US companies forced to pay for a product upgrade they neither need or want.
Lets hope President Trump does the sensible thing and tosses out this useless climate standard. US manufacturers who want to produce air conditioning units which comply with the Kigali amendment for export should be free to do so – but it is utterly unreasonable to expect everyone else in America to pay for their export venture, through forced purchases of an upgrade which delivers no value to the purchaser, the cost of which would ultimately be passed on to ordinary Americans.