Trade-off: The Statocrats’ Revealed Preference
One would think that if “climate change” (after “global warming,” the preceding hole in the ozone layer, and the population bomb of the 1960s) represented a major challenge for mankind in the minds of the reigning angelic statocrats, and if time were of the essence, petty considerations of domestic protectionism would play an infinitesimally small role in policy decisions. But apparently not. The Financial Times notes (“The Problem with Biden’s EV Subsidy: Hardly Any Cars Will Qualify,” August 23, 2022):
The law signed by President Joe Biden last week immediately requires that any EV sold in the US must be assembled in North America to qualify for the credit. The requirements grow stricter in 2024, when eligible EVs must have battery components not made or assembled “by a foreign entity of concern”, which includes China, the dominant battery producer.
In 2025 those batteries must exclude “critical minerals” extracted, processed or recycled from the same foreign countries. An increasing share would need to be from North America or selected trade partners.
The basic economics is simple: If foreign competition were not restricted, the supply of EVs would be higher for any amount of subsidization by the US government. (Even if the federal government subsidized each North-American-made EV by a very large amount, say $100,000, foreign competition would at worst leave supply unchanged.) So, if we believe the official line, carbon emissions would be reduced, and mankind would live.