Tax Carbon in the Name of Growth

Think of this as Volume 17, Number 7 of A-Clue.com, the online newsletter I've written since 1997. Enjoy.

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The following is going to annoy my liberal friends, but hear me out.

The decisive turn in a generation's political thesis, which is a collection of myths and values driving power, the point at which you go from winning elections to winning them for a generation, comes when business moves to your side.

You don't need all of business. You only need the rising tide of business to be on your side, that element of business driving economic growth.

Without significant business support, your side of the political world is always swimming upstream. That's because the business of America is business, even its political business is business, and anyone who questions that doesn't know America. (This Rising Tide is a restaurant in Scarborough, Maine. We hear good things about the lobster.)

Thus the present rising abundance within the American economy is a big challenge to the President and his party. The opportunity exists to capture that rising tide, once and for all, to achieve political dominance for the rest of my life and most of yours.

The way to do that is with a carbon tax. By addressing the climate crisis with a carbon tax, you actually do two things other than just address the climate crisis. You offer a solution to our continuing deficit problem, and you put yourself decisively on the side of future abundance, namely renewable energy. (The picture illustrates an explanation of the carbon tax from Rice University, my alma mater. Some wise old birds roost there.)

One of the great lies of American history, something nearly all liberals believe deep in their hearts, is that business is inherently conservative. It's not. Today's Republican Party is conservative, and today's Republican Party captured the early technologists, along with Hollywood, to become the dominant political philosophy from 1968 to 2008.

But the consumer manufacturers that dominated the previous generation were Democrats – most of the “best and brightest” around Kennedy came from a consumer manufacturing background. (Speaking of Rice, here is Kennedy at Rice Stadium pushing for the Apollo Program.) They wanted programs that increased demand – the Great Depression represented a shortfall in demand, one that only World War II could fully address.

For two generations before that, the Republicans were the liberal party, the Democrats the conservatives.

Business lined up behind the Progressive movement of John Sherman, William McKinley and Theodore Roosevelt because manufacturers – the rising tide – wanted stable input prices, which regulated monopolies and industries centrally-controlled by bankers like J.P. Morgan gave them. It was Republicans who fought the Rockefeller oil monopoly, even though Rockefeller himself had been a liberal donor to the Republican cause. They did it in the name of stable input prices, without which mass manufacturers like Henry Ford could not grow.

Business interests also supported Republicans in the previous generation's crisis, because manufacturers wanted protective tariffs, which the South opposed.

Southerners who don't want to admit that the war was about slavery have long gravitated to this theory of the war, and it's true in its way, that it was about the tariff. But that was politics. The economic struggle between North and South was between man and machine. It's no accident, as I've said before, that the John Henry character, the steel-driving man who died beating a machine, one of the great “heroes” of 19^th century America, is always described as a black man. That was the essential economic struggle of the age, and it was one that no man, willing or unwilling, slave or free, could win. The machine age, the rising tide, was the liberal side of the 19^th century political argument.

The turning point in our recent political history probably occurred in late 2007, when then-Senator Barack Obama spoke at a “Google Town Hall” . It was a friendly get-together, a love-fest, and the Senator was even fed one of the key answers by an admiring Google CEO Eric Schmidt. (The picture is from the Koch-funded Heartland Institute, and the article behind it is very whiny.)

Asked a complex question about databases, Obama said that “a bubble sort would not be the way to go,” a little bit of jargon that endeared him to the room. And if you look again at the history of that campaign, the Obama political machine was a networked computer, a giant database, a Google big enough so that a bubble sort really wasn't the way to go in organizing it.

The alliance between Barack Obama and new tech, symbolized by Google, has extended into other areas of technology. Look at 3D printing or “making,” look at robotics, look at cloud computing, look at renewable energy, and you're going to find a lot of executives who are supporters of this President and (increasingly) his party. Democrats win in Silicon Valley, and wherever these business interests dominate the political landscape. They may say they're moving over social issues, the interests of the “Creative Class,” but they're going to demand, increasingly, policies that are friendly to their business interests. And it makes sense to give them these policies.

Where is the political danger? Can this be overthrown? In the near term, it can be.

That's because the near-term abundance currently driving the U.S. economy forward and our trade deficit downward comes from Republican interests.l It's oil, and natural gas, obtained through fracking, that is the first stage of our coming prosperity. It's the fat part of the rocket now coming off the launching pad.

The Republican Party is owned, lock, stock and barrel, by the petroleum industry. That industry's switch from the Democratic era of Lyndon Johnson to the Republican Era of George Bush is the big political story of the late 20^th century. The failures of the last decade were the oil industry's failures. But fracking is replenishing oil's political coffers, the Citizens United decision allows that money to be spent, and as we saw last year it is being spent. That is the current danger. Call Karl Rove “Turdblossom” all you want, but he's the primary conduit for oil industry money in politics, and money still matters.

The President needs a countervailing business force to stand against this financial tide. That's technology. That's renewable energy. And the best thing he can do for renewable energy today is to fight for a carbon tax, as a way to reduce the deficit.

With a carbon tax, the rise of renewables is assured. The cost of solar energy is already falling below the cost of other forms of grid energy. Biofuels need the kind of boost that only a carbon tax can deliver. Wall Street has been working on carbon market programs for some years, and while they may appear to be objecting strongly to a tax geared toward growing that market they can work with it – they can make money with it.

Fighting for a carbon tax, simultaneously reducing the deficit and our carbon footprint can, along with natural gas exports, continue to fuel economic growth while renewables scale up to meet our needs, and those of the world, slowing global warming and even, in time, reversing it.

A carbon tax is an obvious political move. It will be seen as liberal, it will be portrayed as being anti-business, but it's really aimed at securing a new political future, a future in which business stands with liberals, as it did before the Nixon era, and where the dominance of liberal politics becomes assumed.