The Hopelessness Of Common Sense
It seems that nothing can stop a stupid idea that gets up a good head of steam. We’ve seen the truth of this much of late in the marketplace.
Home ownership is for everyone, one idea ran. The sub-prime fallout is the result. Derivatives are a substitute for regulation. That bit of idiocy has cost trillions to date and still counting. And oh, yes, we have to go into Iraq because they may have weapons of mass destruction, no proof that this is the case is required.
It is therefore not so strange, perhaps, that cap-and-trade has become the accepted, the sure to be implemented way chosen by our masters in Washington to check global warming and other environment angst. Not only has this been peddled as the market-based solution to pollution (and who can doubt that the market is the solution to virtually everything) but a newly added twist to charge companies who buy these right to pollute credits could generate a heap of much needed cash for a government deeply in the red.
So what’s wrong with cap-and trade? Well, for one thing, it won’t work to reduce emissions. Let me repeat that. This approach will not, and I repeat, will not, and in case you haven’t followed me up to now, it will not reduce reduce polluting emissions. The idea that more efficient companies will become even more efficient pollution reducers in order to generate salable emissions credits for those who wish to continue polluting is plain dumb.
No company that meets its own emission limits does so exactly. It is impossible to do do exactly. But under this program any reduction by a company under its own cap that would have been achieved anyway now becomes a salable credit.
Think of a highway with a 60 mile an hour speed limit that is closely enforced. Would it improve overall safety if motorists diving at 55 were allowed to sell a 5 mile an hour speeding credit to motorists who want to exceed the speed limit legally by that amount?
Cap-and-trade doesn’t help the environment. It hurts the environment. Tell a 10 year old that selling the right to pollute helps the environment and the kid will think you’re crazy. But this same kid would have told you that lending money to people who would never be able to pay it back was crazy, too. And you wouldn’t have listened to the kid then either.
Forgive them, Mother Gaia. They have just outgrown their 10 year old smarts…
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2 Responses to “The Hopelessness Of Common Sense”
“Think of a highway with a 60 mile an hour speed limit that is closely enforced. Would it improve overall safety if motorists diving at 55 were allowed to sell a 5 mile an hour speeding credit to motorists who want to exceed the speed limit legally by that amount?”
Yes, at least if we assume, as we'd have to to make your analogy valid, that a lower average speed correlates with overall safety.
I admit that I'm not an expert on the subject, but I don't follow your logic so I respectfully ask you to help me understand this. If there is an economic incentive to reduce carbon emissions (either because you can gain by selling your emissions rights or because you lose less by having to buy less emissions rights), how would that not result in lower overall emissions?
Even in your example of the speed limit, I still don't see how you can argue that such a policy would not decrease average speed. The difference, of course, is that average speed is not what's most important. What's most important to overall safety is the how many people are traveling at excessively high speeds. As far as carbon emissions go, however, it is the average (or overall) emissions that are important.
To be clear, I actually would prefer to see a revenue neutral gas tax coupled with a tax credit to disincentive the use of carbon-based fuels. I am a free market supporter, but the concept of externalities is as well understood as any economy principle, but is often ignored by those who argue that government has no role in regulating the market. But, even though I would prefer a different strategy, but I do believe that cap-and-trade would also reduce emissions, so I'm interested in understanding your argument.
Another solid post. C&T has its faults, but the point is, if the C's (Caps) are managed, and you actually use some discipline (another thing in as short supply as Common Sense) you can achieve some benefits without the even-worse option of government allocation. For an example of how NOT to do it, look to Europe. Too many exceptions, too many special interests have gutted the C&T design there. That's where the discipline comes in. And even though it's hard to hear over the yelling, the economic dislocation is minimized in a market-based approach.