The Center released its current Oregon forecast saying it is the “most optimistic we’ve ever issued for Oregon. We expect Oregon’s economic output, GDP, to grow at phenomenal rates. We expect total wages and salaries to exceed pre-recession levels within the forecast horizon, two years. Dr. Bill Watkins of CLU Center for Economic Research & Forecasting also urged the Oregon legislation not to pass a low carbon fuel standards measure.
From the CLUC website and Dr. Bill Watkins:
We expect job growth to pick up. We expect unemployment to fall. We expect home prices to increase. We expect foreclosures to fall. Still, it’s a disappointing forecast. This far after a recession, Oregon and the United States economies should be doing better, much better, than they are.
Part of Oregon’s slow recovery was unavoidable. This recession was always going to be deep and extended. That’s what happens after big wealth declines. This recession was always going to hit Oregon hard. The collapse of the housing bubble meant that Oregon’s building materials sector would be hard hit. It also meant that the California money that drove much of Oregon’s real estate demand would dry up.
That said, this recovery has been hurt by policy. At the national level, we saw bailouts that reinforced the too big to fail concept, bad regulation, resistance to developing oil and gas reserves, and efforts to slow down Schumpeter’s creative destruction process.
Oregon has made some mistakes too. Propositions 66 and 67 did the state no good. Then there was the tax fiasco with Facebook and the advertising fiasco with BMW USA. No matter how these ended up, they sent a message to any company considering a move to Oregon, and it wasn’t a good message.
Oregon is again considering regulation that will cost Oregonians jobs. Senate Bill 488, which sets low carbon fuel standards, will be economically costly with no measurable environmental impact.
Oregon’s economy is already very carbon efficient, with total carbon emissions about the same as they were in the mid 1990s. Reducing Oregon’s carbon emissions is therefore very expensive, far more expensive than the cost of emissions reductions in a carbon-inefficient country like China. The potential reductions in Oregon’s carbon emissions are also insignificant. If all of Oregon’s carbon emissions were completely eliminated, the world’s carbon emissions would still be higher in less than two months, because of the growth in China’s emissions.
Think about that. If Oregon were to go to the expense of eliminating all carbon missions, and absorb the human costs of the resulting economic crisis, in only a few weeks the world would have higher carbon emissions.
The problem here is the concept of “think globally, act locally.” Carbon dioxide is not a local pollutant. No matter where emitted, the atmospheric distribution of carbon quickly becomes uniform.
Furthermore, environmental quality is a luxury good; people who don’t know where their next meal is coming from don’t worry about air quality. The Chinese, with a per-capita income of about a 10th of the United States per-capita income cannot be expected to pay the cost carbon emission reductions.
If we make the reasonable assumption that we would like to get the most for our money, max carbon emission reductions per dollar spent, the solution is rather obvious:
Oregonians could have far more impact on atmospheric carbon levels at a much lower cost if they were to figure out what SB488 will cost, tax themselves half of that, and use the money to send Oregonian firms to China to clean up Chinese power plants.
Doing that would improve Oregon’s economic forecast.
So would just forgetting SB488.