Hidden costs of environmentalism


Green movement partially responsible for sluggish American worker wages since the 1970s
Craig S. Marxen and Carl P. Close point out that all is not as it seems when it comes to the environmental movement.

One reason for this public opinion sea-change is that the costs of environmental regulation have largely remained hidden from view. In fact, decades of “green” regs have significantly dampened the growth of the American worker’s real wages. To see why, it is helpful to review some economic history.

Economists have noted a slowdown in the growth of output in the U.S. economy from the early 1970s to the mid 1990s. After 1973, when the cool-off began, the annual increase in real GDP fell from 3.6 percent per year to 2.8 percent. In human terms, this meant that millions of Americans had to delay the purchase of a new home or car, buy cheaper quality clothing, and save less of their incomes than they would have had the economy remained vibrant. For those at the margins of our economy, slower growth meant a precarious existence between the Scylla of a dead-end job and the Charybdis of the welfare state.

According to the 2005 Economic Report of the President, the growth of real output declined because annual labor-productivity growth slowed from 2.5 percent (prior to 1973) to 1.5 percent (from 1973 to 1995). Consequently, real weekly earnings -- what workers took home in inflation-adjusted dollars -- actually decreased during much of the latter period.

Mind you, this is just the direct cost in wages and production. Increased costs of businesses are passed along to the consumer in higher prices. It is very close to an economic axiom, increase the regulation and the result will be higher prices.

The important question is if the tradeoff is worth it.

— NeoWayland

Posted: Wed - December 14, 2005 at 05:27 AM  Tag


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