Sleazy political behavior does not necessarily require a bag of money being handed to a politician in a deserted parking garage. Sometimes it is blatantly visible. A good example is the European version of “cap-and-trade” climate legislation. While the legislation produced lots of criminal activity, it also enabled big European companies to game the system, pocketing lots of unearned money thanks to their lobbying power. The House-passed version of the “cap-and-trade” bill in America makes many of the same mistakes, with favors to various campaign contributors and special interests. The Wall Street Journal editorial excerpted below is a good indication of the type of nonsense that will happen in the United States if the bill is approved by the Senate:
Democrats are promising to apply themselves to the task of imposing legislative curbs on carbon. So it’s a good time to see how a prototype cap-and-trade scheme, the European Union’s Emission Trading System, is faring. …Last week, spot trading on the ETS ground to a complete halt for three days after a scandal erupted over players gaming the system. In this case, the government of Hungary admitted to reselling “certified emission reduction” credits that companies had already relinquished, or “spent.” …This is just the latest in a string of embarrassments that have plagued the system almost from the beginning. European authorities admitted last year that in certain countries, 90% of the trading volume was taken up by value-added tax fraud. Sandbag, a British advocacy group, reported in February that metals firms ArcelorMittal, Salzgitter, U.S. Steel, and Corus were just a few of the companies that had been granted more emission permits than they needed. In ArcelorMittal’s case, according to Sandbag, those spare permits amounted to €202 million in asset value in 2008. Last year, Corus announced it was closing a steel plant in Britain and laying off 1,700 workers, for which the company reaped a windfall in carbon allowances. …the ETS is a cautionary tale in how quickly environmental policy engineering degrades into rent-seeking for the fortunate few.
If governments really want to limit carbon emissions, then be honest and just impose a flat-rate carbon tax. The best that cap-and-trade can hope for in terms of carbon emission reduction is to equal a carbon tax, and that’s only if the cap is set perfectly and there’s no gaming/rent-seeking in the initial disposition of emission credits.
At a 4% growth rate, the current per capita income of, say, Bangladesh will grow to $75,700 in 100 years. This will make the average Bangladeshi richer than today’s average American; and most likely live much longer lived than today’s American too.
Meanwhile, the average American will be 7-19 times richer than today (assuming 2-3% annual growth) and also live twice as long as today. BTW, this is all real wealth increase, not just monetary inflation.
So do we really need to feel sorry for the fact that they will have to live in a world that is 2C warmer? And also assume flat out that in the next 100 years no mitigating solution to cool the planet will be found?
I have rarely seen such predictive hubris; and such a regressive transfer of wealth from today’s short lived “have nots” to the much longer lived “have plenty” 100 years from now.
[...] either by Lew, Citigroup, Shelby, or his former aides. This is just the way Washington works, and the beneficiaries are the insiders who know how to milk the system. The only way to actually reduce both legal and illegal corruption [...]
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