The Stimulus Package Won't Destroy America

The Stimulus Package Won't Destroy America

But there is something coming that will. Jonathan Adler over at Volokh Conspiracy points to the news accounts that EPA is probably going to go ahead and regulate carbon dioxide as a pollutant under the Clean Air Act. (For example, this February 19, 2009 International Herald Tribune article.) He points out the likely consequences:

Regulating greenhouse gases under the Clean Air Act will create a regulatory train-wreck. It will impose substantial costs, and yet fail to meet the President's ambitious emission reduction targets (80% by 2050). For this reason, many believe that the prospect of loosing the Clean Air Act on carbon dioxide (combined with the unleashing of the Endangered Species Act as a consequence of the polar bear listing) will encourage Congress to enact climate legislation. That's when the real fun will begin. If, as the President has suggested, Congress puts forward a cap-and-trade proposal, it will unleash a feeding frenzy of rent-seeking, as every conceivable industry and interest group seeks to protect its own or gain competitive advantage. This is one reason why I would prefer a revenue-neutral carbon tax, combined with policies to accelerate technological innovation and adoption -- but I'm not holding my breath.

There is simply no strong argument for adopting any sort of regulation right now based on the current science. What is driving this is environmentalism as hair shirt--a bunch of comfortable and sometimes obscenely rich yuppies who feel terribly guilty, and are intent on doing something to alleviate their guilt. The polar ice pack is back to 1979 coverage (although not thickness). This is completely unnecessary.

Adler is right: if the choice was a straightforward carbon tax, vs. cap-and-trade, it is obvious which is the better choice. As I mentioned a couple of years ago, the European attempt at cap-and-trade, their "emissions trading system" failed to reduce carbon emissions.

Why? Because cap-and-trade locks into place the advantage of those who are already in position, burning coal, petroleum, or whatever. It will be like the tobacco allotment system, whereby some "tobacco farmers" who have never grown tobacco in their lives--but inherited the rights to grow it from a grandparent--sell those rights to people that actually grow it. Companies that have been producing carbon dioxide in vast quantities for decades will be allowed to sell the rights to continue burning coal to companies that have never received any benefit from it. You can see why Democrats are so partial to this scheme; it's perfect for their preferred strategy of using government to redistribute wealth upwards, and maintain the status quo.

There's also the gross dishonesty of the whole matter. The only way in which carbon dioxide can be accurately called a "pollutant" is by the same standard that oxygen or water vapor can be called a pollutant. Yes, in high enough concentrations, it would be a bad idea. A 90% oxygen atmosphere at current pressures would be a serious problem. So would a 95% water vapor atmosphere at current pressures.

Whether it is done through a carbon tax, or cap-and-trade, to actually make the difference the environmental extremists want will mean a dramatic slowing of the economy. The long-term negative effects of the porkulus bill will be utterly lost in the destruction of the U.S. economy. If this doesn't cause a change in control of Congress in 2010--or if the Republicans get up there, and get bought off with little girls and boys again--I can guarantee you that this is the sort of monkeywrenching of the economy that will bring the masses to armed revolution.

Revolutions are not caused by poor people; they are usually too hungry and listless to do anything that energetic. A slow decline in living standards usually doesn't drive the middle class to revolution; each individual cut is so small, that it doesn't provoke enough rage to risk everything. But sudden sharp jolts in living standards or expectations can make middle class people say, "It's now. Or we may be too poor in five years to make a real difference."