Clear-headed readers help me out please: Did I misunderstand the news story I heard on the radio driving to work? It sounded like the Democratic president proposed a cap-and-trade system for carbon emissions, and the Republican congressional leadership said it was a bad idea. I'm confused.
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William Stepp - 3/4/2009
Dan Schmutter's objections to cap-and-trade are on target. The caps imply potentially Draconian command and control of production and output by the State.
Such a system has the form of a free market but not the substance. Libertarians shouldn't be snookered into accepting it.
Ultimately technology and the market, not crookeaucrats and the State, will solve the problem, if it has a solution.
Dan Schmutter - 3/4/2009
Cap and trade still represents arbitrary limitations on productivity. One might argue that in a Pigouvian sense all they are doing in forcing producers to internalize the cost of pollution, except for two things:
1) The caps are completely arbitrary. So there's no reason to believe the cap has the effect of internalizing anything resembling the true cost of pollution.
2) To the extent Cap and Trade "feels" more like a free market solution, it may very well draw fewer objections than outright prohibitions, even if the cap and trade law is actually more onerous in the aggregate.
Theoretically one could imagine that the government could actually get away with more draconian restrictions in the aggregate merely because it is couched as a cap and trade system rather than outright prohibitions.
Aeon J. Skoble - 3/4/2009
But I thought that cap-and-trade was THE preferred market-oriented approach. The person doing the radio story noted that it'll be costly in one direction, but that'll be largely offset by the tax reduction for those making less than 250K. The cynical explnanation is that this is just like everything else: politics before principles. Broad executive power is good when our guy is the executive, but then the other team's guy is the executive, it's time to rediscover the limited executive. International military adventurism is good when it's our guy doing the intervening, but when it's the other team's guy doing it, it's time to reread Washington's farewell address. Is this one of those? Free-market solutions are good when we propose them to the other team, but if the other team proposes them, they won't work, they're too costly, we need a transitional phase, etc. This is why I generall despise politicians.
Ross Levatter - 3/4/2009
I'm guessing the Republicans in Congress are not opposed to cap-and-trade per market-like mechanism; I suspect they'd be equally opposed to command-and-control regulations. Instead, they are correctly pointing out this is horrendously costly, and the cost will be borne by consumers, who'll see dramatic increases in home energy costs before 2012 if this goes through. I, myself, would be happy for people to realize the true cost of "saving the earth". Perhaps they'll then realize at the margin the earth doesn't need to be saved quite so much. But the Republicans are (I think) opposing this to appear the consumers' friend.
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