Rasmussen: 42% Say Climate Change Bill Will Hurt The Economy

Our congress at work.

(via southpol)

I hate to say it, but if the legislation was done correctly, it should have a negative impact on the economy, at least in the short run. Imagine if we were a big manufacturing center, but we dumped all of our industrial waste on Canada for free. Things would be great for us, but at a considerable expense to Canada. Now suppose that Canada suddenly started charging us for the use of their land. There would be a considerable expense imposed on our economy. However, it would provide motivation to reduce our industrial waste. We’ve long recognized the need to enforce property rights for land usage. Actually, we’ve recognized the need to enforce property rights for things like the air as well for a while, we’ve just largely ignored the responsibility. The fact that it should have an economic cost doesn’t mean that it shouldn’t be done. People who dump crap in our air should pay, just as if they dumped crap on our land.

Jeff Miller has just about convinced me that there’s no real chance of our government doing cap and trade correctly (ie, in a manner that doesn’t magically benefit some gross polluters because they happen to be politically favored). Instead, he favors a punitive tax. This is too bad, because I’d rather have some mechanism, like a token that could be leased or sold, to divide air pollution rights among people. Yes, there are a lot of details I don’t have, like how to distribute the token pool, what the cap would be, and whether the amount of pollution allowed per token would decay over time (that last one is squashed’s idea, and it’s certainly worth thinking about). Some of these variables are dependent upon what the environmental limits/impacts actually are. On the plus side, cap and trade would be more analogous to how land property rights work (the cap was determined by geological forces, vastly simplifying the problem). The tax is more like a fine levied when someone violates such rights. From a lot of the commentary on this legislation, it looks like Jeff was right. For the record, I don’t think they’d get the tax right either (I’m sure they’d give offsetting tax breaks to the politically favored groups). There are fewer variables, though. Similar to the cap level for cap and trade, it’s difficult to know exactly how much cost should be incurred. The cost/benefit analysis is not exactly clear. There are a lot of different ways to screw up.