What do Chairman Deng Xiaoping and Governor Gina Raimondo have in common?
“I don’t care if the cat is black or white, so long as it catches mice.” With this quote, Xiaoping was viewed as a great pragmatist and reformer. But he was following the most planned and most austere economic program in history. A program, designed by the founding father of communist China, that led to the starvation of tens of millions of his own people. Xiaoping was willing to consider any approach, his black or white cats, that would energize the Chinese economy. Xiaoping was providing cover for some free market reforms.
Governor Raimondo’s “cat” is the proposed 17 cent per gallon gas tax. Her support of the transportation and climate initiative (TCI) would be on top of Rhode Island’s existing gas tax, one of New England’s highest, which is currently 35 cents per gallon. This tax already ratchets up with inflation. Raimondo is pushing this regressive tax at a time Rhode Island was just ranked as 2019’s worst state for business. At a time when the country is experiencing an economic renaissance, Raimondo is fixated on climate action. “We need to save the planet,” she told WPRI channel 12.
As a venture capitalist and a Harvard graduate in economics, Raimondo certainly knows that increasing the price of a product reduces demand. She also knows that this reduction depends on the price elasticity of the product. In other words, some products are less sensitive to price changes because they are a necessity. Most automobiles will not run without gasoline, so the increase in the cost of gasoline, a necessity for many Rhode Islanders to get to work, will not impact the wealthy in their day-to-day activities, but the average Rhode Island family will need to come up with a couple hundred dollars a year more for gasoline. Because budgets are already stretched thin, this means making difficult choices or running up credit card bills.
Xiaoping needed to leverage free markets to feed his country. Raimondo seeks to shape the energy market for her own grandiose climate agenda. In both cases, there is a recognition that free markets are an efficient way to incentivize people to meet society’s needs. And, in both cases, there is an embedded belief that governments need to dictate how the people behave. It is understandable that the governor is concerned about carbon emissions. However, her approach will not significantly solve the carbon problem. Emissions are projected to decrease by 20% over a ten year period without this new tax. The impact of TCI may be only a rounding error in this decline.
So what is the real game? The governor continues to burnish her national image as a climate warrior. The new gas tax will generate money that she will “scoop” into general revenues or utilize for pet environmental projects where she will undoubtedly have political allies. And, those most hurt by this effort will become more dependent on government assistance, more reliant on public transportation, and more desperate for politicians promising government solutions. The real common denominator between Xiaoping and Raimondo is ambition and the quest for power.
Clay Johnson, of Carolina, is the Chairman of The Gaspee Project, a conservative political organization in Rhode Island.