Executive Order on Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis, Released 1/20/2021

Joe Biden has, thus far, signed 20+ executive orders; one of which, targeted the shutdown of the Keystone XL Pipeline project: Protecting Public Health and The Environment and Restoring Science to Tackle The Climate Crisis. This will eliminate thousands of jobs. Some in the news are claiming, however, that these are temporary jobs and that workers can simply be reassigned to clean energy jobs. Transportation Secretary Buttigieg has publicly stated that these workers can be transferred over to other equally good paying jobs.

This is a sad day because the White House is simply applying old fashioned classical economics without using wise discernment and good judgement. I say this because I started teaching economics in 1993, and in 1994 I wrote a paper supporting NAFTA (North American Free Trade Agreement). I used to teach these theories in Economics 101. My paper on NAFTA supported the textbook idea that if trade with Mexico caused layoffs, then US workers must see this as an opportunity to go back to school, retrain in another field, and return with more marketable skills

I sent this paper out for review to a former professor of mine in the university. While sitting in his office, ready to hear his praise of such a great paper, he said, “Richard, you don’t live in the real world. I know we teach this, but we really don’t mean it. The world just doesn’t work that way”. Needless to say, I was CRUSHED. My world was thrown into a whirlwind of chaos. I spent the next 10 years teaching economics, but struggling with this issue.

One of the key tenets of classical economics is the belief that inflation is hard to manage because wages are “sticky down”. Folks do not like pay cuts. However, David Ricardo says, layoffs are necessary, but once laid off, then workers can renegotiate a lower wage, and get rehired. Thus, inflation is managed and full employment is restored. Now that I have grown up a bit, I can look back at these theories and see that they are just “childish”.

In Keynesian economics, inflation is hard to manage because labor unions do not like pay cuts – high wage costs make high prices. In the Reagan era, you just bust up the unions. For the workers laid off from the Keystone XL Pipeline, the salt in the wound is that the unions were solidly behind Joe Biden. Furthermore, the Biden administration refers to these oil jobs as “temporary”. In classical terms, the phrase is “frictional unemployment” – which means employees who are in transition from one job to the another (i.e. McDonalds to Taco Bell), and the volume of full employment is not affected. I know these guys, and they do not feel this way about it.

One more thing, the way the Biden administration is approaching this problem is a bit chilling. They purposefully want to move workers from one industry to another. This is not a free market. This is a “command economy”, like in communism. The left criticized Donald Trump with comments like “follow the science”. Well, saying that this executive action is inline with the free market is not consistent with economic science.

Below is an excerpt from Biden’s executive order addressing the Keystone XL Pipeline. It says right there that although the administration is destroying oil jobs, they are also creating clean energy jobs in return. How can a man who is 70+ years old be so childish?

Sec. 6.  Revoking the March 2019 Permit for the Keystone XL Pipeline.  (a)  On March 29, 2019, the President granted to TransCanada Keystone Pipeline, L.P. a Presidential permit (the “Permit”) to construct, connect, operate, and maintain pipeline facilities at the international border of the United States and Canada (the “Keystone XL pipeline”), subject to express conditions and potential revocation in the President’s sole discretion.  The Permit is hereby revoked in accordance with Article 1(1) of the Permit. 

(b)  In 2015, following an exhaustive review, the Department of State and the President determined that approving the proposed Keystone XL pipeline would not serve the U.S. national interest.  That analysis, in addition to concluding that the significance of the proposed pipeline for our energy security and economy is limited, stressed that the United States must prioritize the development of a clean energy economy, which will in turn create good jobs.  The analysis further concluded that approval of the proposed pipeline would undermine U.S. climate leadership by undercutting the credibility and influence of the United States in urging other countries to take ambitious climate action.

(c)  Climate change has had a growing effect on the U.S. economy, with climate-related costs increasing over the last 4 years.  Extreme weather events and other climate-related effects have harmed the health, safety, and security of the American people and have increased the urgency for combatting climate change and accelerating the transition toward a clean energy economy.  The world must be put on a sustainable climate pathway to protect Americans and the domestic economy from harmful climate impacts, and to create well-paying union jobs as part of the climate solution. 

(d)  The Keystone XL pipeline disserves the U.S. national interest.  The United States and the world face a climate crisis.  That crisis must be met with action on a scale and at a speed commensurate with the need to avoid setting the world on a dangerous, potentially catastrophic, climate trajectory.  At home, we will combat the crisis with an ambitious plan to build back better, designed to both reduce harmful emissions and create good clean-energy jobs.  Our domestic efforts must go hand in hand with U.S. diplomatic engagement.  Because most greenhouse gas emissions originate beyond our borders, such engagement is more necessary and urgent than ever.  The United States must be in a position to exercise vigorous climate leadership in order to achieve a significant increase in global climate action and put the world on a sustainable climate pathway.  Leaving the Keystone XL pipeline permit in place would not be consistent with my Administration’s economic and climate imperatives.”

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