Alan Krupnick:
A striking feature of President Trump’s recent energy speech for me is that there is not a word to be found about the environment and health protections. The regulations President Trump wants to rollback are there for that reason. ...
via www.rff.org
The guiding principle for the current administration seems to be to abandon benefit-cost analysis in favor of macroeconomics (i.e., monthly job reports from the BLS) and there is no short-term macroeconomic benefit from environmental regulations. In the long run, however, there are macroeconomic implications. Imagine that the production of goods and services, Q, in the U.S. is governed by an aggregate production function: Q = f(L,K,N) where L is labor, K is physical capital and N is natural capital (i.e., resources). Labor productivity, measured by Q/L, is one of the major indicators of long-term economic growth potential. Labor productivity rises with increases in the physical and natural capital stocks. The quantity of the labor resource depends on worker health, H, which depends on environmental quality. A decrease in environmental quality reduces L which reduces Q (e.g., air pollution makes people sick, sick people take sick days off from work, less work gets done). The health of the labor resource also depends on the access and use of health care. So, sick people could go to the doctor and get well quicker and starting working again.
What? The current administration also wants to cut health care? Well then, nevermind.
