Mr. Obama Waves His Magic Wand


...and who benefits?


This article is based on an idea by the German page Econostorica.

Originally, these throughts were inspired by a Wall-Street Journal article on Obamas spending plans. If the original WSJ article has moved, download a local copy. Of particular interest is the planned $100 billion government revenue stemming from emission certificates. So Mr. Obama waves his magic wand and instead of leaving a trail of stars, he leaves a trail of federal money. Who benefits?

The starting point: the government sells CO2 certificates to large manufacturers and companies who buy the right to release CO2 into the atmosphere. The revenue is used to support the poor. This is good.
Manufacturers buy the certificates, and their cost of production increases as a consequence. This is bad The poor go on a buying spree and are happy. This is good.
Increased production costs raise the price of the products as the added certificate costs have to be passed on to the buyers of the products. This is bad. The poor vote for Mr. O because they enjoy getting largesse from the federal treasury. This sounds good. BUT...
After the elections, much, much later...
The manufacturer's customers are in turn companies that manufacture or sell goods for consumption. They have to pass on the increased costs to the consumer through increased prices. This is bad. ...this is money that they won't have in the long run.
The consumers, the poor who in the majority voted for Mr. Obama, have to pay the higher price. Collectively, they pay precisely the sum that was granted as federal relief after they elected Mr. Obama. But with a delay. This is bad So the poor don't have any more than before, but they now have elected Mr. Obama. Is this good?
And who benefits? Only Mr. Obama - he is now elected president. Everybody else does not have any more buying power than they had before.

Ludwig Erhard (German Minister of Economy 1957-1963 and Chancellor 1963-1966) said on occasion of his speech at the inauguration of the Hannover Technical Fair 4/26/1953:

We arrive ... at the grotesque observation that the over-taxed citizen appears as a supplicant before the same government and tries to retrieve on credit what - by justice and moral standards - should be his property as the earnings from his labor.


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