The Truth About Trade-Offs
Contrary to what passes for leadership among elected officials, making informed decisions about these trade-offs is exactly what we elect them to do.
Moments after President Donald Trump announced the United States will withdraw from the Paris agreement to mitigate the effects of global climate change through non-binding, voluntary standards set by each country, critics denounced his decision as “indefensible.” The president promised that he is someone “who cares deeply about the environment” in the White House’s Rose Garden but he offered a defense of his decision as consistent with his pledge to put “Americans first.” “I was elected to represent the people of Pittsburgh, not Paris,” he explained. The mayor of Pittsburgh quickly responded with a reminder that Trump didn’t win more votes in Allegheny county where Pittsburgh is located, and pledged, along with most big city mayors, large corporations, and several state governors that he remains committed to the Paris agreement. Their thinking, along with many large investors, is that they can facilitate increased economic growth and suppress emissions of greenhouse gases, a laudable pursuit, but certainly not a guarantee.
Perhaps the president based his decision on “strictly politics” or perhaps he weighed assessments on the impact of climate change against economic studies on the impact of regulations imposed to meet the standards established under the Paris agreement. The latter is a more defensible course, and the rejoinder that a thriving economy is possible, perhaps even more likely, under increased regulation of greenhouse gas emissions has merit, but those who make that argument misunderstand politics during the Trump era. They’re also avoiding a difficult conversation.
Beneath the personal insults and the scandals surrounding the 2016 presidential election, it was really an election just like any other with the same question for voters: what are our priorities? And that is a discussion of trade-offs. Opportunity cost, the potential gain sacrificed by choosing one alternative over another, is a key law of economics but it seems the first rule of politics is to ignore the laws of economics. Contrary to what passes for leadership among elected officials, making informed decisions about these trade-offs is exactly what we elect them to do. Sustained economic growth of at least 3% a year by 2024 or a 28% reduction in carbon emissions by 2025? It’s a legitimate trade. Lawmakers making policy for upwards of 300 million people have a responsibility to carefully consider the consequences of their decision. The president, who campaigned on revitalizing heavy manufacturing, has chosen economic growth over voluntary standards, jobs over regulations, and/or economics over science. Regardless of how one feels about this trade-off, it is a legitimate choice that is his to make.
The lack of debate about climate policy trade-offs resembles that of another fraught issue consuming the nation’s attention. When Democrats controlled the presidency and Congress, they argued that the most effective approach to reducing the cost of health care was to insure more people. Simply put, more people in the insurance market would mean more people paying premiums to cover the costs of those who consume the most health care, the aged and the infirm. As Nancy Pelosi once argued, the Affordable Care Act (ACA) would ultimately save people money if we cover more people. Health economists and budget experts even argued it would reduce the overall cost of health care spending, saving the government billions if not trillions in the coming years. Alas, it hasn’t worked. The health insurance exchanges, along with a tax penalty for failing to purchase a qualified health plan, failed to encourage enough healthy customers to join the market and premiums have been rapidly increasing while options have dwindled. The impending retirement of those born between 1950 and 1969 threatens to send health care costs skyward. At the core of this debate is an unspoken truth: we can have more coverage or less cost, but probably not both. Democrats tried to achieve both through the ACA, and Republicans insist that lowering the cost of purchasing health insurance will encourage younger, healthier people to pay into the system, but that approach is just as reliant on unforeseen results as the Democrats’.
Where are the leaders who supposedly ‘tell it like it is’ to explain why, for example, President Trump’s budget calls for a 10% increase in defense spending next year offset by a nearly identical reduction in promised spending for other programs? This is a statement of the president’s priorities just as President Obama’s budgets were a statement of his and President Bush’s a statement of his, but “we have to cut back on domestic spending to pay for our military needs” is the answer it seems no one is willing to give. In the longer term, Congress will have to gradually raise the eligibility ages for Social Security and Medicare and reduce benefits for the top 5% of retirees if they want to avoid trillion dollar deficits that will never recede or higher taxes on everyone. Lawmakers, ever the gluttons, want to have their cake and eat it too. The laws of mathematics dictate otherwise.
This isn’t just a political problem, but a life lesson; life is about trade-offs. Even the decision to do nothing is a decision to avoid doing something. Adults make these trade-offs and accept the consequences. Politicians avoid talk of trade-offs, but then they say things like “elections have consequences” and “elections should be a choice.” Yes, a choice about priorities, which is a debate over trade-offs and the consequences of their decisions. Jobs or the climate? Coverage or cost? Defense spending or general welfare? Everything is about trade-offs, and it’s time to start acting like it.
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