02.28
You will be hearing more and more about so called “cap and trade” in the near future as Obama moves toward getting that passed. It’s already in his budget proposal from the other day. So, it’s a good idea to look at just what it is and why conservatives oppose it. I mean besides the obvious reason, that at this point there should be a knee-jerk reaction of opposition to every Obama inspired idea. Every time he opens his mouth the nation collectively holds it’s breath to see what sector he’s gonna target for destruction next. But I digress. What is cap and trade?
Cap and trade is a system dreamed up by tree huggers to help the environment by reducing green house gasses. Specifically, good ol’ carbon dioxide(CO2), to the chagrin of plants everywhere. The way it works is like so:
- Companies that emit “pollutants” like CO2 are given a pollutant output limit that they are not allowed to exceed. This is the “cap”.
- If they go over the cap, they either pay a fine, or buy pollution “credits” from other companies that are under their limit.
- This supposedly sets up a total pollution output limit based on how many credits are available.
Now, leaving behind the question of how it’s possible for a naturally ocurring gas like carbon dioxide to be a pollutant, why is this a idea bad? Doesn’t it help the environment to pollute less? Well, sure. But the devil is always in the details. Firstly, how do we know that we need less pollutants. It’s pretty apparent at this point that there is no consensus on the whole global warming issue. Japan recently made headlines by saying that they are re-thinking the whole “man made” part of global warming. There are definitely enough dissenting scientific voices to hold off on something so radical as this. From my view, it’s becoming more and more obvious that the whole global warming movement is a big money scam on the part of an elite group of environmentalists. That makes anything targeted at global warming reduction suspect. Cap and trade itself was born by the Environmental Defense Fund.
And that leads me to the next point. The money factor. The real heart of cap and trade has nothing to do with environmentalism. It’s got everything to do with tax dollars. It’s a total money grab by politicians. Think about it. If there is some pre-set cap that you will have to pay penalties on if you exceed; do you think for one minuite that the “cap” will be sensible? Think again. It will be absurdly low. And anytime budgets get a little tight in Washington, they will just lower the cap and have an instant tax increase, without changing a single IRS rule. And, as I said, the cap will be so low that every company will have to buy credits. Every one. And where will this extra money to buy credits come from? You guessed it. YOU! Remember the first rule of taxation. Companies don’t pay taxes. Individuals do. We pay all of them in the end, as they trickle down.
What’s worse about all this, is that higher energy prices directly hurt the poor first. As these companies have to spend millions more each year to buy credits, they will pass those costs on to the consumer. The ones who will hurt most will be the ones least able to afford it. This is not all just some conservative cynicism. We’ve seen the massive problems with cap and trade in Europe as a result of Kyoto protocols:
Even these cost projections may underestimate the true costs, because they assume no unpleasant surprises. But the world has already witnessed many unpleasant surprises with Europe’s ongoing efforts to impose a cap and trade program under the Kyoto Protocol, the international climate treaty to reduce greenhouse gas emissions.
In fact, European efforts have racked up significant costs while failing to reduce emissions. Nearly every European country participating has higher emissions today than when the treaty was first signed in 1997. Further, despite ongoing criticism of the United States from Kyoto parties for failing to ratify the treaty, emissions in many of these nations are actually rising faster than in the United States.
And this is the heart of the argument from an economist perspective. The end game here is to force a reduction in output. And the only way to reduce output in any substantial way is to make less product. This means less energy supply and thus higher prices. Every time government gets involved in a certain sector of the market, that market ends up reducing output. And it’s done in the name of helping the consumer. What a crock. The only sector they seem to be increasing output in these days is banking. Credit is in more than adequate supply. And they’re gladly handing out more every day.
