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| Yes | 45% | 40 votes | Total: 88 votes | |
| No | 55% | 48 votes |
Yes
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Add to FavoritesFor an answer to this question one needs look no further than the basic principles of economics. Economics teaches us that in all situations "people respond to incentives." Whether they be positive incentives (things like RECs) or negative incentives (things like taxing carbon) people will respond to an activity or item becoming more or less expensive.
There is a school of thought in America that teaches the free market is the best tool for working out all problems. Leave things up to the invisible hand, the argument goes, and things will work out. This is true to an extent. In terms of purely finances, this is true. Left to itself, the free market will always find the most cost effect solution.
The problem lies with what economists call "externalities," those factors that cannot be reflected in simply dollar amount. Consider, for instance, a factory. This factory makes cars. It does so by using the cheapest machinery available, which, while efficient in terms of finances and power, creates large amounts of pollution. The pollution is an externality to the cost of the car. The price of the car will only reflect the cost of materials and labor, but it requires more than just materials and labor to make the car. It requires materials, labor, and damage to the surrounding environment.
Anyone who has visited China recently has seen this particular externality in action, China's air is almost unbreathable some days. This is because China emphasizes the most cost effect solution in order to stimulate growth. The most cost effective solution, as I have said, does not account for externalities like pollution. Therefore, if the market itself cannot account for these factors, it is the role of the government to do so.
By assigning a dollar value to a pound of CO2 emissions, we can show how much our society values keeping that CO2 out of our air. Perhaps it is not something we value greatly, so a cent for every pound is reasonable. Perhaps something like Sulphur Monoxide (poisonous gas) is something we'd prefer to be without, we tax that at 5 cents per pound. By doing this, we allow the power of the market to be brought to bear against pollution by making pollution a force that the market can now deal with.
A carbon "tax" as it is called is nothing more than assigning a value to an externality so the free market can do what it does best: find the most efficient solution.
Learn more about this author, Bryan Jennings.
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No
Although touted as a market-based solution to the problem of global warming, the cap and trade solution is not only ineffective, but excessively and unnecessarily burdensome for all levels of consumers and industry.
Although instituted to supposedly reduce greenhouse gas emissions and consequently reduce global warming, the indirect and unintended consequences of such a system are potentially disastrous. First, the cap and trade system will place on producers in almost any industry an additional financial burden. As domestic industries continue to compete internationally, these increased costs will immediately be passed on consumers. This will hit energy consumers particularly hard.
As most of our energy currently is produced from coal (a target for environmental regulation), the costs of energy will increase substantially (some estimates as high as 75%). While this increase seems negligible and and an easy price to pay for wealthy individuals, in will undoubtedly be nothing more than a tax on working and lower class families who spend a much higher percentage of their income on basic needs.
The nature of the allowances provided in the cap and trade system are also alarming. The government will be given complete oversight of the program, allowing well connected regulators to assign allowances to industries and polluters. This provides a further incentive for "dirty" industries to increase political contributions and lobbying in order to gain the maximum allowances possible, reducing the amount of "carbon credits" they would have to buy.
This unfortunate and unintended problem has manifested itself in the European cap and trade system, whose results have been abysmal at best. Some simple research can provide examples of the absolute failure of the European system thus far (although it has been extremely successful at raising prices).
The effect of such a system on the actual reduction of pollution is also notably poor. Even by favorable estimates, the long term reductions caused by such a system are hardly significant. This problem is amplified by the fact that many other industrial economies, such as India, China, and Brazil, have routinely denied the need to burden their economies with such restrictions. Without international cooperation, the goal of reducing greenhouse gases is unrealistic.
While the motivation behind cap and trade might be noble enough, the system is destined for failure. Hopefully, through education and careful analysis, our politicians can stand resolutely against such a harmful policy. Despite popular belief, the science behind "climate change" is hardly conclusive, and the lifestyle of Americans already struggling with our current crisis should not be compromised to fulfill an environmental fantasy.
Learn more about this author, Luke Holoubek.
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