The Rich Get "Greener" and the Poor Get Poorer

Aug 01, 2024

Adherents of Climate Change Catastrophism demand the world’s population drastically change their lifestyle to combat what they believe will bring the death of the planet and humanity and that’s in that order. Much of the demand of these lifestyle changes comes from middle class and wealthy “thinking class1” / “laptop class2” elites in the developed world. These ideas often inflict harm on poor and working class people in both these developed countries and in the developing countries.

In other words, this push for drastic changes in energy consumption and lifestyle to combat climate crisis reflect a form of “luxury belief,” a term coined by author

Rob Henderson

as “ideas and opinions that confer status on the upper class at very little cost, while often inflicting costs on the lower classes.”

The individuals and policymakers advocating for these changes are frequently from wealthier, developed nations where at best the economic and social infrastructure can more readily absorb the costs associated with such transitions and at worst the additional wealth, stable often democratic governments and rule of law help shield the population from disaster. More often than not these people who push these views are employed in a fiat career - typically Academia, the Non-Profit Industrial Complex, the Corporate Press , or a government bureaucracy. These luxury beliefs, while morally and ethically compelling from their perspective, do not account for the practical realities faced by the working class, the poor, and people in developing countries.

Among the changes for the so-called energy transition to address or fix the so-called climate crisis is a transition away from fossil fuel use in heating, cooling, transportation to all-electric heating, cooling, and transportation. The transition to all-electric proponents say, will move society away from using fossil fuels, which they’ve identified as one of the unique threats to the planet (the other is often Capitalism) without having any awareness of the sheer difficulty of eliminating fossil fuels or their massive benefits in cost and energy density. (See

Alex Epstein

‘s work)

But these drastic requires significant upfront investment in infrastructure, appliances, and vehicles. Challenges aside to items such as “upgrading” the electric grid to accompany unreliable weather-dependent electrical energy sources or manufacturing battery electric motor vehicles with a range and (unsubsidized) cost comparable to ICE motor vehicles, these costs can be prohibitive for working-class and poor families who already struggle with daily expenses against inflating currencies. There are also the issues of increased energy prices and energy unreliability which disproportionately impacts those with fewer financial resources both in developed and developing nations.

The advocacy for these radical changes often comes from affluent individuals or groups who can afford to absorb the increased costs of green technologies and have the luxury of prioritizing what are virtue marketed as long-term environmental goals, but are really indulgences, over immediate economic needs. For these individuals, supporting a “green transition” is a way to signal their virtue and “concern” for the planet, without facing the severe economic consequences that others might endure. This disconnection between the holders of these beliefs and the realities faced by the less affluent highlights the Luxury Belief aspect, where the costs and inconveniences of adopting these beliefs are not felt by those who advocate for them.

Government subsidies are often proposed to offset some of these costs the working and lower classes are expected to suffer via devalued fiat money, yet they often fail to cover all expenses, leaving these families further financially burdened.

Subsidies from governments also lead to another issue: runaway inflation and even more government debt. For those indoctrinated in Statism and Keynesian “economics,” this might seem palatable.

But it’s not.

How such subsidies are “funded?”

Via Legal plunder as the great Frédéric Bastiat put it in The Law.

There are two primary ways: theft via taxes and theft via the Central Bank’s money printer.

There’s plenty to be said about the issue of taxation, and many supporters of this radical energy agenda insist on focusing the taxation efforts on the rich with the idea of redistributing that money to the poor. While that’s insidious for its own reasons, even worse is the hidden taxation via the money printing of the central bank.

Central Banks create money primarily through a process known as "fiat money creation." This process involves lending by financial institutions (think your local bank) backed by the Central Bank such as the US Federal Reserve or the European Central Bank. When one of these financial institutions issues a new loan to a borrower, it creates new money by crediting the borrower's account with a deposit. This deposit is not drawn from existing money; instead, it is created "ex nihilo" (out of nothing).

In the book The Fiat Standard: The Debt Slavery Alternative to Human Civilization, Saifedean Ammous explains that the creation of money through lending is analogous to mining in commodity-based systems like gold or Bitcoin mining. However, unlike gold or Bitcoin3, where the supply is constrained by physical realities or consensus algorithms, fiat money creation can be expanded relatively easily by increasing lending.

The implications of this the fiat money system are significant. This ease of money creation, often to benefit the fiat elites closest to the money printer at the expense of everyone else can lead to inflation if the money supply grows faster than the economy's ability to produce goods and services. Moreover, Central Banks' ability to act as lenders of last resort creates a moral hazard, as it encourages financial institutions to take on more risk, knowing they can be bailed out if necessary. This dynamic can lead to economic cycles of booms and busts as pointed out by Austrian (real) Economics, as periods of excessive credit expansion are often followed by contractions when the unsustainable growth leads to financial crises.

Another moral hazard resulting from fiat money printing via Central Banks is the Cantillon Effect the formal name for the saying “the rich get richer while the poor get poorer.” The Cantillon Effect was named for Richard Cantillon who was an 18th-century Irish-French economist and banker whose insights into economic theory, particularly his notion of intrinsic value and the entrepreneur's role, significantly influenced later economists like Adam Smith. It describes the uneven changes in the money supply and how they can disproportionately benefit certain groups over others, depending on their proximity to the new money being printed by the Central Banks.

As an excellent article on River explains:

When new money is added to the economy, it will naturally raise the price of goods and assets. However, not all prices will rise by the same amount or at the same time. The Cantillon Effect asserts that the first recipient of the new supply of money has an arbitrage opportunity of being able to spend money before prices have increased
This is partially due to the fact that new fiat money is created at almost zero cost and given to specific parties, usually banks. These banks have an opportunity to spend this money on goods and assets whose price has not yet reflected the increase in money supply. Banks can thus buy goods at a discounted rate.

Printing more money to fund subsidies and green infrastructure will lead to more inflation. Those who receive the new money first—such as “green” contractors, corporations, and wealthier individuals (usually the primary recipients of turf conversions, Pig Iron Power, EV rebates, heat pump rebates, etc) —benefit by spending it before prices rise. By the time the increased money supply filters through the economy to the working and middle classes, prices for goods and services have already increased, reducing the purchasing power of their wages impacting the working class and poor the most.

As defined by Christopher Lasch in The Revolt of the Elites

The thinking classes are fatally removed from the physical side of life… Their only relation to productive labor is that of consumers. They have no experience of making anything substantial or enduring. They live in a world of abstractions and images, a simulated world that consists of computerized models of reality – “hyperreality,” as it’s been called – as distinguished from the palatable, immediate, physical reality inhabited by ordinary men and women. Their belief in “social construction of reality” – the central dogma of postmodernist thought – reflects the experience of living in an artificial environment from which everything that resists human control (unavoidably, everything familiar and reassuring as well) has been rigorously excluded. Control has become their obsession. In their drive to insulate themselves against risk and contingency – against the unpredictable hazards that afflict human life – the thinking classes have seceded not just from the common world around them but from reality itself.

“Laptop class” was coined by Dr. Jay Bhattacharya.