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Cap and trade schemes are bad for the economy and for the environment
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With concern over global warming disappearing in a hurry, proponents of a cap and trade scheme are desperately churning out arguments in hopes of convincing Americans that carbon dioxide restrictions are necessary.
In a June 12th editorial, PG&E Chairman and CEO Peter Darbee and Environmental Defense Fund President Fred Krupp jumped on the bandwagon and tried to shill a carbon cap to Sacramento Bee readers. While they did everything they could to make a carbon tax look like a plus for consumers, they presented nothing but cleverly reworded arguments that environmentalists have made for years.
Like all climate alarmists do, Darbee and Krupp argued that the scientific aspect of the debate is settled: “With study after study showing that the climate is changing alarmingly fast – faster than anyone predicted – we can no longer duck the need to act.”
One wonders how the climate is changing “alarmingly fast” when the earth’s surface temperature hasn’t moved in well over ten years, and recent research indicates that it won’t continue moving again until the middle of next decade. In fact, as time goes on it seems that the IPCC’s predictions of runaway warming don’t agree with reality. Many qualified skeptical scientists—yes, they do exist—have argued that “the computer models forecasting rapid temperature change abjectly fail to explain recent climate behavior.”
Indeed, there is plenty of data available in the peer-reviewed literature to support this assertion. In a 2007 paper published in the International Journal of Climatology, University of Rochester physicist David Douglass and his fellow researchers explained that if the earth’s climate continues to behave as it currently does “then future projections of temperature change, as depicted in the present suite of climate models, are likely too high.”
Seemingly unaware of the contrary scientific evidence, Darbee and Krupp go on to suggest that “[f]ar from handicapping [economic] growth, a well-designed strategy on climate change will do much to help invigorate it.” They claim this invigoration will be generated by all the investments companies are currently holding back because “the rules for carbon emissions remain in limbo.”
This is a curious argument for two reasons. First, it says nothing about the merits of a cap and trade system. While it’s true that businesses may invest more once they know the rules of the new carbon tax, their growth will be severely limited by having to comply with it. That doesn’t mean the tax is responsible for generating any new investment.
Second, the economic evidence definitively proves that carbon restrictions come at intolerable costs. This was the conclusion of economists who testified before the Senate in the fall of 2007 when an earlier carbon cap bill was making its way through Congress. They concluded that the proposal would cost the United States between $4 and 6 trillion over forty years and $1 trillion annually by 2050.
If the goal is to stimulate economic growth the federal government should announce immediately that all plans to limit carbon emissions are permanently off the table. Unquestionably, this scenario will provide for a better economic climate.
Nonetheless, few people would disagree that protecting the environment is a worthy cause. Given that consensus, what’s the answer to the age old problem of environmental protection?
Capitalism.
The reality is that a clean environment is a luxury enjoyed by wealthy societies. History is very clear that capitalist economies are the ones best at creating wealth, compared to the alternatives. As the Cato Institute’s Jerry Taylor points out: “America -- like much of the Third World today -- had no environmental movement to speak of until living standards rose sufficiently so that we could turn our attention from simply providing for food, shelter, and a reasonable education to higher ‘quality of life’ issues. The richer you are, the more likely you are to be an environmentalist. And people wouldn't be rich without capitalism.”
America should ditch any effort to regulate carbon emissions. The science is unsupportive of such schemes and their economic effects are disastrous. Like everything else valuable in this world, a clean environment is the product of human ingenuity and free individuals cooperating for their own benefit.
