Perry was talking to employees at a coal-fired power plant in West Virginia
Economists pushed back on Perry's statement Friday
Energy Secretary Rick Perry confused the relationship between the fundamental forces in an economy while extolling the Trump administration’s embrace of the coal industry, economists said.
“Here’s a little economics lesson: supply and demand. You put the supply out there and the demand will follow,” he said Thursday, according to Standard & Poor’s Taylor Kuykendall.
The former Texas governor made the comment while speaking with employees at a coal-fired power plant in Maidsville, West Virginia. A message left by CNN with Perry’s office Friday was not returned.
But economists pushed back on Perry’s statement Friday.
“It’s an old assertion named Say’s Law and it’s wrong. It’s that simple,” said Doug Holtz-Eakin, president of the American Action Forum, a center-right think tank. “Supply does not automatically create its own demand.”
“There are two separate entities that have their own determinants and then they interact to deliver prices,” he added.
The late French economist Jean-Baptiste Say argued that supplying beyond demand never occurred because demand would always match the supply. But Holtz-Eakin, a former Congressional Budget Office director, said that is a misunderstanding of basic economics.
“Maybe not everyone takes economics. And I know for a fact not everyone passes it,” he said.
Adele Morris, policy director for Climate and Energy Economics at the Brookings Institution, said Perry’s words “really don’t make any sense.”
“What he seems to be suggesting was that if suppliers supplied more, then people would demand more,” she said. “Well, suppliers don’t control demand, they control supply.”
There is no debate among economists about the law of supply and demand, said Morris, a former senior economist at the Joint Economic Committee of the US Congress.
“There is debate about the disconnect about what the administration is telling coal workers and their communities and the truths about the markets, so they’re weaving a story and telling people in coal reliant areas that they have the power to revive the coal industry,” she said.
President Donald Trump and his administration have regularly heralded a boom in coal jobs, despite experts saying otherwise.
A Columbia University study estimates the coal industry lost roughly 60,000 jobs since the end of 2011 and hundreds of thousands since the 1920s, as larger proportions of the world’s energy production are coming from other, cleaner sources like solar and natural gas.
Democratic Rep. Ted Lieu hit Perry over his remarks on Twitter.
“Dear Rick Perry: If you put lots of 35mm film out there, will demand follow? NO. That’s not how capitalism works. Stop lying to coal workers,” the California lawmaker tweeted.