Posted tagged ‘Cap and Trade’

Let Cap and Trade Die

November 18, 2009

Tyler Prochazka

Former Vice President Al Gore tells us that the world is on the brink of disaster. Global warming, he says, will destroy the planet. According to him, there is no room for debate. The government must save us. Despite these claims of catastrophe, be cautious of global warming hysteria and calls to take “drastic action.”

In the 1970s, scientists seemed to overwhelmingly agree that a devastating ice age was imminent. It would last for “10,000 years” they said. Famine and nuclear wars would result from this global cool down. Obviously, this didn’t exactly pan out. [1]

Since that time, it has been global warming that will doom us all.

Fool me once, shame on you.

According to the U.N. World Meteorological Organization, there has been no global temperature increase in over a decade. [1]

Moreover, a group of over 30 thousand scientists signed a petition that said greenhouse gasses have no negative effect on the environment. It went on to say that extra carbon dioxide actually helps the environment. [2]

To solve this non-crisis of global warming Congress is proposing a cap-and-trade system where the government sets a limit on the amount of pollutants a business can emit.

The current cap-and-trade bill being considered would cause severe damage to the economy. The Heritage foundation found that millions of jobs would be permanently lost and incomes would contract sharply. [3] It would likely amount to the largest tax increase in American history, costing the average American about $1,000 more a year directly. [4] It would hit people in poverty the most who would have to devote more of their income to energy instead of food and shelter.

Even with the destructive distortions to the economy, cap-and-trade would not have any noticeable effect on carbon dioxide levels. EPA administrator Lisa Jackson even admits this saying, “U.S. action alone will not impact world CO2 levels.” [5]

The real solution, if global warming is a problem, is to allow for the economy to grow so that people can innovate and create adaptations to natural disasters. Some scientists that believe in global warming say that adapting to the new environment will be far cheaper and far more effective than something like cap-and-trade. [6] Stifling the economy only undercuts the effort to innovate and create these adaptations, which would save us from any potential global warming crisis.

Furthermore, the encroachments on freedom perpetrated by this bill should not be even on the table. It seems as if every supposed crisis is just another way for politicians to defy the constitution and defy individual liberty. It should not be up to a bureaucrat how much energy I use.

Global warming likely won’t destroy the world, but the hysteria surrounding it just might.



Why does government prefer rationing?

July 27, 2009

It’s a straightforward observation: when government is presented with a problem, there is a strong tendency to use some form of rationing as a major part of the solution. We see this in health care, water supplies, electricity, and many other aspects of government regulated or government-run operations. It’s is a reasonable to unexpected emergencies, like World War II shortages or hurricane interruptions, But it is an unreasonable response to chronic problems. So why is it the preferred tool? I think it is because it does not require long term planning, it enhances government authority, and it perpetuates an illusion of fairness.

It should not take too many examples to establish the existence of the rationing preference. My state of California has chronic problems with water shortages. There are a number of ways to increase the supply of water. New dams could be built in the mountains to hold spring runoff for the dry summers, and the Pacific Ocean has the potential for desalinated water. In recent years those solutions have been consistently rejected in favor of water rationing. The price charged for water escalates rapidly to discourage use, but an official promised that people would not be allowed to “buy their way out” of rationing. The government will put flow restriction devices on customers who do not obey dictates.

California took the same approach to electricity shortages, with a system of brown outs to ration supplies. Shortage were easily foreseeable.

Government health care systems around the world depend uniformly on rationing to limit demand. The most popular method is to build long queues for treatment. That discourages people from seeking care, gets rid of some that die while waiting, let’s people live in pain as an alternative to providing service, or encourages them to seek care outside of the government system.

The proposed cap-and-trade system is a mechanism for rationing energy. There is fairly uniform opinion of experts that a straight tax on energy would do a much better job of reducing consumption, assuming one really wants to do that, but a tax is rejected in favor of rationing.

In each case, there is an option to provide all of what is needed on a scale of increased cost. The free market does this naturally. It is only when government intervenes that it doesn’t happen. For example, people who can afford it could sign up for desalinated water to keep their gardens alive in droughts. This could be privately financed so it would cost the taxpayers nothing. It would have the general benefit of increasing the demand for desalinization technology, which ultimately drives the cost of technology down.

In the case of cap-and-trade, the reason for a rationing system is rather transparently related to a quest for government power. Government gets to decide who will get the coupons and at what price. This has the general feature of supporting the theory that government makes better decisions than the free market, so those who have faith in government get to propagate their faith. In particular, it allows politicians to reward their friends and punish their enemies. The coupons will go to buying off key votes to get the legislation passed, to damaging business in states that don’t come along peacefully, and rewarding influential donors who will benefit from the market for rationing coupons.

Politicians are elected for short terms, so the pressure is for them to make a quick fix rather than a long term solution. Environmentalists oppose dams and desalinization, preferring instead a quasi-religious austerity to please the gods of nature. Any politician who goes for a practical long term solution will face the ire of this new brand of fundamentalism. Most voters would probably prefer water to the moral purity of drought asceticism, but so long as water generally comes out of the tap, they are unwilling to ponder the long consequences of avoiding new supplies. In the short term, the politician gains the fanatical support of eco-fundamentalists and loses little general support.

Ignoring the long term is likely to lead to crisis, and politicians may suffer from that. California electricity shortages brought on by the political logic of rationing was eventually swamped by the reaction of the general voters, so a little something was done to eliminate brownouts in the short term. It has to get to the point where the peasants are lighting their torches and marching towards the castle where government lives.

When government manages to stamp out all alternatives to the government system, people tend to be more accepting of rationing as a necessary part of life. They think it is the way things have to be, rather than a consequence of particular policies. The logic is that droughts are a result of the forces of nature, not a consequence of government failing to keep supplies at a pace with population. Similarly, long queues in a health care system are accepted as a natural consequence of working system, not an unnatural consequence of a failed system.

Rationing also perpetuates an illusion of fairness. We don’t want the rich getting more water or better health care, do we? The answer is that in fact we should want the rich to get the better things, so long as they pay for it voluntarily. We should want it as a simple matter of free choice, a fundamental right to spend money as one wishes. However, the invisible hand works to the general advantage as well. The rich get to pay a premium price for the latest technology, be it laser eye surgery or water desalinization or whatever, with the result that it drives the cost of that technology down for everyday use. If in some cases it does not, then we benefit from discovering that fact without a government funded research project.

Politicians are largely not sophisticated enough to recognize the benefits of free markets, or if they do recognize it they find it easier to sell government-imposed fairness to the voters.

Understanding the reasons behind government rationing brings the realization that is not an accidental outcome. It is inherent in government control of markets.

My Proposal to the Teaparty Movement: A "Salt March"

July 14, 2009

The original Salt March was the nonviolent movement of Gandhi and his followers across India to protest a salt tax. It drew attention to the Indian Independence movement from media across the globe.

Currently, the teaparty movement has been relatively small and overly ignored. It is primarily a conservative protest against the government economic expansion earlier this year. The July 4th teaparties were primarily uniting opposition against potential tyranny that has been proposed by Congress.

If significant political unrest occurs, it will become possible for this Teaparty movement to organize a nonviolent “Salt March”. Such a march would begin at multiple urban areas across the nation and then proceed as these groups march to the capital. Of course, as these groups get closer to the capital, they’d merge. Such a march would attract significant media attention that the Teaparty movement badly needs and will climax in a Washington with a crowd possibly larger than that of the Civil Rights March on Washington in the 1960s.

However, nothing has really happened to create significant unrest in a while. Cap and Trade hasn’t passed yet, and Universal Healthcare hasn’t passed either. Still, several events may cause such unrest:

  • The banning of handguns

While the Obama Administration has shown no sign of actually banning firearms, such an act, or even such a proposal will allow for the organization of a Salt March.

  • Cap and Trade

If Cap and Trade increases prices enough, then as with the original Boston Teaparty and the orginal Salt March, individuals would be more willing to protest. Seeing as how nuclear energy is currently the only major alternative to fossil fuels, Cap and Trade will certainly have a massive effect on energy prices and will possibly cause prices to increase to a level that people are willing to protest against.

  • Universal Healthcare

While this may just get passed and be ignoredby the apathetic majority, it may cause significant backlash. Many Americans are rather afraid of National Healthcare, and it could be that such a thing could unite the conservative-libertarian movement enough for a Salt March to be possible.

There are probably other events that could make a Salt March an event with an impressive attendence, but this is clear: people will not get off of their butts unless they realize that they are sitting on a thorn.

Cap and Trade Bill Passes the House

June 27, 2009

Though it was only by 7 votes, the cap and trade scheme has finally been approved.

Let’s look at the facts. Cap and Trade has not significantly reduced Carbon emissions in any country that it has been enacted in. It has never created more jobs than it has lost, and it has never amounted to more than a tax on a harmless gas. All the taxes assessed by Cap and Trade will inevitably be passes onto the consumer. Gas prices will skyrocket again, and the cost of virtually everything will increase.

Despite this fact, Barack Obama believes that this bill will actually create jobs. Says Obama, “This is a jobs bill”. According to CNN, Obama believes that this bill will actually create “millions of new jobs” [1]. Perhaps Obama needs a quick economics lesson: When the cost of everything increases and wages remain the same, aggregate demand is less, because consumers cannot afford to buy as much as before.

What Obama thinks though is that this bill will cause some sort of quick change to a cleaner United States, because as the costs of “dirty” products increase, the public is more likely to buy less “dirty” products. However, it is not that simple.

Those “dirty” products include gasoline, oil, natural gas, and coal. These products are currently the main contributors to the power grid in the United States. There is no true “green” alternative source of energy. Biofuels and biodiesels are not profitable without massive amounts of subsidies. Solar energyand Wind energy combined constitute less than half of 1 percent of energy production and are impractical to expand to even 5 percent. Hydroelectricity can not expand much more either, as there can only be so many dams on a river while maintaining high energy efficiency.

So, ultimately, this Cap and Trade Program is a massive energy tax. As energy costs increase for all americans in the face of a recession, how is the little guy that Obama was going to protect going to make his next house payment?

This bill has not yet passed the Senate, so there is still hope for the American economy.