Republicans have for a long time focused on the “lower taxes” mantra. While recent events suggest that this mantra was probably not a sticky value, the idea of lowering taxes as a key objective is wrong and incredibly poor thinking–it’s not even good business thinking. These thoughts apply to all political parties.
The real challenge is to lower my total costs, not just lowering one part of my cost burden while jacking up other costs that’s just cost-shifting which invariably is a zero-sum game.
A recent article in the Washington Post highlights this issue. The article describes how CA will demand that all new homes have solar power installed. The payback for doing so is over the life of the home, more or less, potentially sooner. This seems like an outrageous cost burden to impose. But let’s think of the alternatives.
If we believe that we can fully identify costs, including the costs of building new power plants and the cost of pollution or even the cost of servicing the national debt, then let’s focus on lowering “total” costs.
For the solar home law, they are shifting costs to the homeowner with the anticipation of lowering or zero-summing costs away from large utilities/higher taxes. That does not really help on a net basis–the costs may be the same. Of course, if solar homes lower overall costs over the calculation horizon, then its a win and a good model. We could also speculate that the law imposes regulations on homes with the trade-off of not imposing regulations on future power generation or other utilities. While you may think that all regulations are bad, a subject of another blog, this regulation is a cost-shifting regulation with potential, we presume, of lowering overall costs.
It’s possible that cost-shifting stimulates innovation in the area where the costs are borne. We have seen, however, that when costs are imposed on companies, many companies just lobby to have them removed and play tax schemes vs innovating around them. That’s not good and we should demand more from the companies we purchase from.
If we imagine that there is widespread popular support for addressing global warming, etc. through solar power generation then shifting costs to the “people” may force the people to “demand” innovation in companies. This allows the public to have an end-run around companies not being well managed, lacking morals and civil responsibility. By shifting costs to the homeowners, the CA government may also be getting around various federal and state officials’ lack of action on this particular topic.
We face the “lower taxes” hoax all the time. Lawmakers have shown that they are not really interested in lowering total costs–which should be the real focus. In fact, they do not seem to be interesting in lowering taxes either except for a few donors. Lowering taxes (or taxes in one category) while increasing costs elsewhere is disingenuous. I do not care whether I pay one person or another for a certain level of benefit, comfort or moral objective given the two are roughly equivalent. And in some cases, forcing costs onto one party or another is not morally or tactically helpful. Sometimes it could be, sometimes it is not.