Green flip: How ideology can trump material interests

Trump's climate legislation is an example of how narratives can outweigh commercial forces

- DANI RODRIK

Among the disasters of US President Donald Trump's One Big Beautiful Bill, one is particularly stinging for political economists. The bill radically phases out the clean-energy subsidies introduced during President Joe Biden's administration three years ago. These subsidies were considered by many as immune to a change of presidents, since they created new jobs and profit opportunities for firms in traditionally Republican-voting 'red' states. As allergic as the Trump-controlled Republican Party is to green policies, conventional wisdom went, it would not dare take away these benefits. But then it did.

Where did conventional wisdom go wrong? Scholars who study how political decisions are made tend to focus on economic costs and benefits. They reason that legislation that creates material gains for organized well-connected groups at the expense of diffuse losses to the rest of society are more likely to be passed. Many elements of Trump's bill are indeed well explained by this perspective: in particular, it engineers a dramatic transfer of income to the wealthy at the expense of the poor.