Today we discuss economic predictions: he who makes the best predictions has the best model. The predictions I make are based this tweet:
126 economists wrote that the Inflation Reduction Act would lower costs for families, set the stage for strong economic growth, and tackle the climate crisis.
Send it to my desk. pic.twitter.com/nZpIpBFgj7
— Joe Biden (@JoeBiden) August 2, 2022
We have been told that the 126 leading economists—didn’t we meet top scientists yesterday?—who signed this letter include “seven Nobel Prize winners.” It’s not clear what this “Nobel Prize” is, but given the track record of leading economists, it’s not likely to be a mark of distinction.
The letter begins:
We write to strongly urge you and your colleagues in Congress to swiftly pass the Inflation Reduction Act of 2022. This historic legislation makes crucial investments in energy, health care, and in shoring up the nation’s tax system. These investments will fight inflation and lower costs for American families while setting the stage for strong, stable, and broadly-shared long-term economic growth.
The letter is a series of predictions of the good things this Act would bring. Here, then, are the things I instead think would happen.
The Inflation Reduction Act of 2022 is a bill which will likely to increase inflation, and will lead to a weak, volatile economy which will benefit only a narrow group. Plus, your taxes will increase.
“Investments” means taking your money and giving it to rich people. Whenever the government “fights” anything, the thing fought against is either gay or does not need “fighting” against. The real thing to fight against is government itself. But it’s unlikely we’ll see politicians punching themselves in the face.
The letter continues:
This legislation represents the single biggest step to date in tackling the climate crisis. It makes key investments to incentivize the transition to cleaner energy sources and greater efficiency. It also invests in the current energy distribution system to make it more resilient, lowers energy costs for families, and helps protect U.S. family budgets against future shocks.
There is no “climate crisis”, so there are only two possibilities. The Noble Prize winners and other signers are (a) willing to lie, or (b) ignorant. I mean “ignorant” in the neutral sense, such as I, Yours Truly, am ignorant of the type of ink used in Peruvian stamps. Both lying and ignorance are surely true, but in what proportion we are uncertain. Academics are prone to accept without question the work of academics in other fields, so ignorance likely holds for a majority of the signers.
“To incentive” means to create regulations which add layers of bureaucracy, which increases costs to suppliers and you. But it also is meant to punish smaller companies, i.e. those who cannot donate as much as large companies who can afford the lobbyists to write the new regulations. The Act will also lead to fewer innovations in energy.
Your energy costs will rise a significant amount, and we will be blighted by more inefficient and ugly solar and wind power plants, which are on the whole silly, but which are lucrative for those selling them to government.
The letter continues:
This legislation will quickly and noticeably bring down health care costs for families. It allows Medicare to negotiate lower prices with pharmaceutical companies, reduces Medicare out-of-pocket costs for drugs, and reduces insurance costs for 13 million Americans by building on provisions in the Affordable Care Act.
Translation: your healthcare costs will increase. Large pharmaceuticals will broker exclusive deals with government, enriching stockholders, of which nearly all Congresscreatures are.
Insurance costs will also increase, because “insurance” does not mean “insurance”—which is a bet you make you hope you don’t win—and instead means mandatory healthcare, which has to be paid for by somebody. You.
The letter continues:
These investments would be more than fully paid for. The revenue raised to finance them would come exclusively from wealthy individuals and corporations. Further, the revenue stems from enhanced tax enforcement and closing some of the most distortionary loopholes in the tax code.
The new deficient spending (“investments”) will increase the deficit. Taxes will rise, and the greatest share will be paid by you, not the rich, who will win exceptions for various reasons. These will not be called loop holes, but direct legislative gifts, such as paying the rich to build more windmills.
The letter ends:
This proposal addresses some of the country’s biggest challenges at a significant scale. And because it is deficit-reducing, it does so while putting downward pressure on inflation. We strongly recommend Congress act decisively to build a stronger economy by passing the Inflation Reduction Act as soon as possible.
The proposal addresses none of the country’s biggest challenges. It is deficit-increasing, and will put upward pressure on inflation.
Congress, if it signs, will build a weaker economy, more dependent on government and Experts than ever.
Well, we have two sets of predictions based on the same Act. If it is passed, we will see who is right and who wrong. Whoever is wrong must abandon their model (and theory).
— The Hill (@thehill) August 4, 2022
Buy my new book and learn to argue against the regime: Everything You Believe Is Wrong.