Let’s say you are an average household with an income around $100,000/yr who has an increase in electricity rates from $300 to $500 due to Joe Biden’s new national energy policy known as the Green New Deal. That’s $200 more per month for this initial economic/energy “transition” moment.
That extra $200/month equates to $2,400 per year.
That $2,400 per year is static economic activity. Meaning nothing additional was created, and nothing additional was generated. The captured $2,400 is simply an increase in the price of a preexisting expense.
Take that expense and expand it to your community of 100 friends and family households. The $2,400 now becomes $240,000 in cost that doesn’t generate anything. $240,000 is removed from the community economy. $240,000 is no longer available for purchasing other goods or services within this community of 100 households.
The economic purchasing power of the 100-household community is reduced by $240,000 per year.
Take that expense and expand it to your county of 10,000 households. Now you are reducing the county economic activity by $24 million. In this county of 10,000 households, $24 million in economic transactions have been wiped out. Meals at restaurants, purchases of goods and services, or any other spending of the $24 million within the county of 10,000 households (approximately 25,000 residents) has been lost.
Now expand that expense to a larger county, quantified as a mid-size county, of 50,000 households. The mid-sized county has lost $120 million in household economic activity, simply to sustain the status quo on electricity rates. Nothing extra has been generated. $120 million is lost. The activity within the county of 50,000 households shrinks by $120 million.
Expand that expense to a large county of 100,000 households, and the lost economic activity is $240 million.
Expand that expense to a small state of 1 million households (2.5 million residents), and the lost economic activity is $2.4 billion.
Expand that expense to a state with 5 million households (approximately 12 million residents) and the economic cost is $12 billion in lost economic activity unrelated to the expense of maintaining the status-quo on electricity use. This state loses $12 billion in purchases of goods and services, just to retain current energy use.
These examples only touch on household expenses. The community, county and state business expenses for offices, supermarkets, stores, etc. are in addition to the households quoted.
Meanwhile the Gross Domestic Product (GDP) of the community, county and state, remains static because the GDP is calculated on the total value of goods and services generated in dollar terms. The appearance of a static GDP is artificial. In real Main Street terms, $12 billion in economic activity is lost, but the price or increased value of electricity hides the drop created by the absence of goods and services purchased.
Fewer goods and services are purchased and consumed. However, statistically the inflated price of electricity gives the illusion of a status quo economy.
Now expand that perspective to a national level and you can see our current economic condition.