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Two Steps Back: The Yellow-Vest Response to Bad Planning

By       Message Domp Filanowski       (Page 1 of 11 pages)     Permalink    (# of views)   32 comments

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We're Destroying Ourselves out of Blind Faith and Excessive Pride

The Yellow-Vest movement that began in France on November 17, 2018, has spread to other nearby countries and escalated to a 'state of insurrection' last week, according to Jeanne d'Hauteserre, the mayor of Paris' 8th district, who continued, "I've never seen anything like it." Now, for the fourth weekend in a row, the looting and rioting of dissidents have been accompanied by the burning of cars and barricades, the vandalizing of shops and restaurants, and attacks on the police. Most of the protesters do not participate in violence, but the message is clear. Enough is enough, and the eco-taxes must go. French President Emmanuel Macron is set to address the issue this afternoon (Monday, 12/10/2018) at 2:00 PM EST (1900 GMT), and it appears as if he is reconsidering his original, hard-lined approach.

A response to rising gas prices and eco-taxes, the social unrest is a valuable lesson in planning with inadequate foresight. Before I go any further, I'd like to say that I'm not blaming the Yellow-Vest protesters for taking a stance against bad planning. Also, I am a proponent of good, carefully thought-out planning, so long as it isn't stagnant. No amount of foresight can predict every variable, and failed policies must be called out and changed. The same goes for laissez-faire governance when it doesn't pan out. Though when it comes to matters like climate change, laissez-faire policies should not even be a consideration. If we truly want to protect the environment, we must contemplate the potential social impact of (and reaction to) such protections.

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Unfortunately, the Yellow-Vest movement is a short-term loss for conservation and a mild victory for climate change deniers like President Trump, having the optics of saving America from a similar fate of insurrection. And to be frank, he very well may have prevented a similar rebellion (assuming different leadership would have followed the EU model). However, I do object to Donald Trump's claim that climate change is a hoax, among other things. The movement is also a loss for globalization. Italian Yellow-Vests like Alberto Nardozzi are expressing their indignation with the European Union. I have mixed feelings about this development because, while I do support environmental protections, I am not a fan of their current deployment. Nor am I a fan of the current fast-and-loose method of globalization, which has already demonstrated some of its negative social consequences. As many of the Yellow-Vest protesters have expressed, the brunt of concessions to protect the environment should be felt at the top and not by the lower rungs of society.

SUPPRESSION-OF-THE-BAD Should Never Precede or Overpower PROMOTION-OF-THE-GOOD

Any policy that is perceived as being harmful to the financial wellbeing of the working class will result in a backlash. The current backlash in Europe will likely lead to an overall setback for environmental protection. Shortcuts often lead to dead-ends and, worse yet, hazards [1]. In regards to social engineering and economic planning, SUPPRESSION-OF-THE-BAD (taxation and restrictive regulations) should never precede or overpower PROMOTION-OF-THE-GOOD (economic stimulation created by subsidizing industry). In other words, WE SHOULD NOT IMPLEMENT ECO-TAXES UNTIL WE HAVE A BOOMING ECONOMY FROM SUBSIDIZING GREEN TECHNOLOGY. And if the stockpile of green technology is not great enough to COMPLETELY SUPPLEMENT OUR DEPENDENCY TO FOSSIL FUELS, then the quick-fix of eco-taxes are NO BETTER CONCEIVED THAN DONALD TRUMP'S TARIFFS. Additionally, flat, regressive eco-taxes have a greater negative impact on society than poorly implemented protectionism. The public must be weaned from its dependence on oil. If we try to go cold-turkey, withdrawal will likely have us relapsing. Government subsidies and taxation are the maintenance therapy that is needed to beat our addiction to oil, but the sequencing is crucial. And when the taxes are finally imposed, it may even be wise to match every dollar taxed with a dollar (maybe several) spent on subsidies.

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Yeah, I know, the deficit of economic stimulation outlined above adds to the growing 'mountain' of national debt ($21.8 trillion and counting). I agree that wasteful government spending is similar to individuals living beyond their means, purchasing extravagant luxury items like sports cars. Proper economic stimulation, however, is how society invests in itself. Similarly, individuals invest in themselves with things like post-secondary education, often accruing debt in the process. Assuming there are enough employment opportunities to keep up with demand because society had the foresight to invest in itself, the debt that is accumulated from earning a college degree or a vocational certificate is likely to pay for itself with the increased earning potential of careers that require higher education. Likewise, social investment generates revenue that simultaneously empowers the masses, people who are then able to earn their advancement, while relative income, inflation, and taxation redistribute actual wealth (spending power) in a downward fashion. If such economic stimulation is enacted, retirees and other people on a fixed income should not be forgotten and therefore need to be given cost-of-living adjustmentS (emphasis, not a typo) that actually keep up with the cost of living.

Here's the other thing about the debt. The US dollar tends to depreciate over time, which is known as inflation. To account for inflation, the national debt is often compared to the GDP (Gross Domestic Product), which is expressed as the debt-to-GDP ratio. If a high debt-to-GDP ratio was inherently problematic, then one would assume that the highest debt-to-GDP ratio in US history would be accompanied by economic hardship, and the lowest debt-to-GDP ratio would be accompanied by economic prosperity. However, the opposite is true. The US has had a 'mountain of debt' ever since the Revolutionary War, but there was one point in America's history when there was no national debt whatsoever. In the 1830s, Andrew Jackson implemented economic policies that completely eliminated the national debt, but these same policies also significantly contributed to the Panic of 1837 (one of the worst economic crises in US history, which extended well into the 1840s).

On the other hand, the greatest debt-to-GDP ratio in US history coincided with the economic prosperity of the postwar period following WWII. In addition to the war effort (WWII), the New Deal, Fair Deal, and postwar defense spending, all amounted to the greatest economic stimulus in recorded history, which happens to have coincided with the most prosperous society in recorded history. Both world wars increased the national debt tenfold, but to give some perspective, government spending before WWI was relatively low. A high national debt is not inherently good, nor is it inherently bad. Correlation does not imply causation, and it is not my intention to suggest that a relatively high national debt will intrinsically create a flourishing society. Nor do I approve of the war economy [with the exception of the war on climate change]. What I am saying is that we shouldn't fear a number just because it's big and unrelatable without having some context for comparison.

The Cost of Earning a Bachelor's Degree is Greater than the National-Debt-Per-Capita

Yes, $21.8 trillion (or 21.8 million-million) is an astronomical figure in relation to my personal savings, but that number represents over 329 million people and an ever-depreciating currency [2]. Hypothetically speaking, if the national debt were to be evenly divided amongst Americans, each and every one of us would owe less than $67,000 [3]. This debt-per-person figure is slightly higher than the median household income in 2017 ($61,372), and it's actually lower than the real median income ($77,713) [4]. The average total cost of earning a bachelor's degree at a four-year public institution [5] is greater than the national-debt-per-person as well, as is the debt accrued in home ownership (several times over). Forbes periodically measures the debt in relationship to current taxpayers, which raises the figure to over $190,000-per-taxpayer in 2017 [6]. This figure is still comparable to home ownership, making it much less alarming than trying to grapple with the dreaded T-word (trillion). There was a time when Roman numerals were used in lieu of Arabic numerals because the number zero was feared and regarded as dangerous magic. It would be deplorable if history were to repeat the hindrance created by such superstition. Fear of amassing debt should not be used to deter self-investment (individual or societal).

Just like the mountain of debt, protectionist trade barriers seem to defy conventional wisdom. It has been postulated that protectionism prolonged the Great Depression, and it was the open trade policies of the GATT agreement (predecessor of the WTO), which allowed for economic growth and prosperity in the postwar era. However, this notion has come under scrutiny in recent years, as the oft cited statistics on pre-GATT tariffs appear to be grossly inaccurate, thus exaggerating the postwar agreement's effect on economic growth (see NBER Working Paper No. 21782, THE GATT'S STARTING POINT: TARIFF LEVELS CIRCA 1947). Free-trade agreements also lead to trade advantages that benefit some countries while others are left behind. This is essentially modern-day mercantilism.

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YELLOW is a FUNDAMENTAL COMPONENT of GREEN

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