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Sunday, April 5, 2009

Back Honest Capitalism: Back Cap-and-Trade

The only blogging candidate in the South Dakota governor's race, Brookings Mayor Scott Munsterman, warns that a cap-and-trade carbon emissions program could raise our electric bills 41%.

Rather than tax* the problem (coal, natural gas, etc.), which happens to be the most affordable option for consumers today, why not focus more on developing alternative energy technologies to the point where they become economically competitive? Wind, hydroelectric, clean coal, cellulosic ethanol, nuclear, or even garbage can all be practical forms of energy if done correctly [Scott Munsterman, "Cap-and-Trade?" Let's Wake Up South Dakota, 2009.04.04].

Why not? Because that's what we did in the 1980s. We let the "affordable option for consumers," cheap oil, lull us back into gas-guzzlers and unsusainable economic practices. We forgot about the oil crises of the 1970s and let ethanol, solar, and other alternatives sit on the shelf for another generation.

Munsterman wants to wait for the invisible hand to solve everything. That's an excuse for giving this generation a free pass and leaving it to the next generation to pay the bills.

If we are real capitalists, we should accept the full costs of our polluting and unsustainable practices. The only reason coal and oil are the "most affordable" options is that their producers aren't paying for the externalities:

Just as A.I.G. sold insurance derivatives at prices that did not reflect the real costs and the real risks of massive defaults (for which we the taxpayers ended up paying the difference), oil companies, coal companies and electric utilities today are selling energy products at prices that do not reflect the real costs to the environment and real risks of disruptive climate change (so future taxpayers will end up paying the difference) [Thomas Friedman, "The Price Is Not Right," New York Times, 2009.04.01].

Indeed, let the market rule, and rule fairly. Cap-and-trade will restore that fairness.

By the way, we've done cap-and-trade before, in the Clean Air Act of 1990. That law from the somewhat more civil Bush Administration "reduced the sulfur emissions that cause acid rain, and it met the goals at a much lower cost than industry or government predicted."

*Munsterman appears to mix up carbon taxes and cap-and-trade. See the debate between those two programs here.


  1. We need to develop alternative energy resources not because of the fallacy of global warming but because not too far down the road, we will run out of oil, natural gas and coal.

    Now if we are going to severely tax current energy resources then we need to make sure that those monies go toward renewable energy research and not to fund wasteful government spending.

  2. Cap and trade is simply a way to raise taxes by promoting the scare tactics of global warming and thus redistribute wealth. The ironic thing IMO is that it will hurt most those least able to afford it, i.e. those that Obama espouses to care so much for. Obama even stated it would dramatically raise energy costs. Just because he happens to think that income needs to be redistributed doesn't mean it's true, just because he talks up global warming doesn't make it so, and even though he claims to care so much for energy onservation he keeps his office toasty warm.

    Yes, we should be looking for alternative sources of energy, but there is at the same time not ONE thing wrong with using the energy sources we now have available and need, i.e. oil and nuclear.

    Obama's whole goal is income redistribution by whatever means he can come up with, and he's going full steam ahead, cap and trade being one of his top ideas. At least enough people in Congress so far have been stepping up and saying just how much this would hurt, not help, the economy and people of this country.

  3. Cory says,"That's an excuse for giving this generation a free pass and leaving it to the next generation to pay the bills."

    Isn't that what the might O is doing with his reckless spending???

  4. Nah, not in the least. Cap and trade is a way to privatize the costs of utility companies nearly sole reliance on dirty fossil fuels. For example, if Exxon, Chevron, BP, et. al., were forced to PAY for our military protection, occupation, and adventures in the Middle East to protect those company's interest - then those company's would lead the way to commercialize renewable fuels. Right now it's merely easier to just socialize those company costs to the taxpayer. Corporations never do anything in the public interest (that would be unlawful) - rather corporations only do things for profit, and it is more profitable to force the gullible taxpayers to pay the costs of using dirty fossil fuels.

  5. Anon 11:50: I didn't say don't use oil and nuclear. I said (and Thomas Friedman says, and cap-and-trade says) pay the full honest price for the damage those energy sources do, and use the money (as the earlier Anon says) to invest in cleaner, more sustainable sources of energy. That will make the oil and coal last longer and ease the transition.

    [Off-topic: Anon 11:53: You took the bait! Good fish! I welcome your proposal for an alternative budget that doesn't completely crash the economy. President Obama's budget is about investing, just like my mortgage. I didn't have the money to buy this house, but I got a loan, just as you probably did, and made an investment that I myself and my improved economic activity will pay off. Invest now, pay your own debts and avert bigger future costs.]

    Cap-and-trade is honest capitalism, and it works better than you expect.

  6. Hi Cory, couldn't agree more about cap and trade, but my comment is unrelated to this post.

    Don't know if you've heard from people about the new blog format, where you have to click on a link to read a whole article, but I'm not a huge fan of that--it prevents me from reading some articles that I otherwise would. I think at least the few newest articles should appear in their entirety. Just one person's opinion--I know it seems lazy not to click the link, but it just creates one more step to get to the information that you're taking your valuable time to write about. I hope you'll consider going back to having at least the newest full articles viewable in full without extra clicking around. Thanks and keep up the good work!

  7. Cory, I'll have to second the last reader's comment about posting the entire article. I hate having to click to read more than the first line. I wouldn't have mentioned this if it hadn't already been brought up.

    My daughter and-son-in law live in Madison so your Blog is one of the SD blogs I always read.


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