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We All Pay for New EPA Mandates

July 08, 2011 J

We’re not sure exactly what they teach in journalism schools these days, but it’s obvious that economics — even elementary economics — isn’t required course work. Examples of economic illiteracy abound in the media, but today’s Washington Post story about a deluge of new power plant regulations coming from the Obama administration’s Environmental Protection Agency features a classic example of not really understanding how the world works.

The story indicates that new federal mandates on coal-fired power plants in 28 states could “cost the utility industry about $2.4 billion in pollution-control upgrades over several years,” but they will cost “industry” nothing, nada, zilch, since power-providers will simply pass those additional costs onto customers in the form of higher heating and lighting and air conditioning bills. These additional costs will fall hardest on poor and working class people, who devote a higher percentage of their incomes to covering essentials, and they’ll pile yet another burden on an already bogged-down economy, since businesses also will see their utility bills rise, requiring a hike in prices in order to maintain profitability.

Negative ripple effects from the new EPA regulations will be felt throughout the fragile U.S. economy, further slowing recovery, all so the Obama White House can tell the environmental anxiety industry that it’s tough on coal. The cost of regulation isn’t shouldered by businesses, contrary to what the Post implies, but by consumers. Every dollar diverted for a higher utility bill is a dollar not out “stimulating” the larger economy. Yet even many “elite” journalists can’t connect these dots.

And this is only one of many examples of economic illiteracy one can find in news coverage on a daily basis, which leaves less-alert or astute readers equally ill-equipped to connect the dots between regulatory causes and market effects.

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