Sunday, January 27, 2008

A Thought on the Carbon Tax

Let’s say that the entire world, with the exception of the United States, stops eating chocolate; what would then happen to the price of chocolate in the United States? It would naturally fall, and then come up slightly. A decrease in demand causes an increase of supply, which lowers prices; prices stay low, and demand increases, causing a slight rise in prices (though rarly reaching what it was before.) This is the most basic of basic economics.

In the same sense, what will happen if the United States puts a ‘carbon tax’ into place, or even bans fossil fuels all-together?

The fervent environmentalist, or the silver-tongued politician, would hail this as a small triumph to achieve there eventually goal of environmental utopia and harmony. And in a certain sense they are correct, there would likely be less carbon based pollution within the United States.

Unfortunately, the reality of economics doesn’t bend so easily.

By increasing prices within the U.S., it makes it cheaper for everybody else. Counties with extremely fast rates of growth, like China or India, will gladly buy up what we don’t. Instead of India investing in cleaner nuclear power, it will instead use bargain basket fossil fuels

And contrary to popular belief, freer countries are actually less pollutant then ones that don’t protect its citizen’s rights. In China, there is no protection if your property is violated, nobody to complain to, no real legal system to work in; in countries where lives are disposable and property unprotected; there is nothing to stop pollution.

In America, excess pollution is stopped by the protection of property rights, and natural market forces.*

Ironically, a carbon tax is likely to increase the amount of carbon in the atmosphere.

Though this fact is not likely to deter the environmentalists; anybody with basic reasoning skills could realize the impracticality of any kind of carbon tax.

That’s because what is being proposed now in the name of protecting the environment is not unique to this generation. The same controls were proposed in the 1930’s and 40’s, when socialism was all the rage; it was in a large part implemented during World War II (though there was some validity to this); during the Korean and then Vietnam wars; The “gas crisis” of the 1970’s; in the U.K., global cooling (in large part promoted by the Thatcher government) helped create controls; Then global warming and now climate change perform the same task. Every generation has different justifications for what is essentially the same thing.

This is because modern environmentalism is not pure; it is an expression of a failed political movement and a dying philosophy. When the ‘practical’, or even the ‘moral’, justifications for political control fell away, environmentalism was one of the few surviving ideologies that could support those creeds.

And it was glad to pick up the cause.

Any ‘climate change’ legislation essentially boils down to one thing; artificially raising the cost of fossil fuels. The legislation could complicate this process, but that’s about it.

And just like chocolate, any economist (or reasonable person) can predict what will happen if a part of the world stops consuming a valuable commodity.

This demonstrates how even the most simple of concepts (like supply and demand) can be buried under the weight of bad ideas and clumsy rationalism.

- Ryan

* There is strong evidence to suggest that when a country first begins to industrialize it produces most of its pollution, and when it reaches a certain point, the pollution begins to decline.

And it’s not hard to see why, priorities change with abundance; if my family is dying of hunger, I don’t worry about the plight of the buffalo or protecting national parks.

When a society can ‘afford’ to be clean, it naturally becomes cleaner. This is well demonstrated in the American society. We have more trees, cleaner rivers and lakes, and cleaner air then we’ve had in more then a hundred years. There is even a decrease in the use of carbon (or rather, how clean it is) over the past ten years.

Contrary to the popular myth, free markets are actually better for the environment then there statist alternatives. Russia and China produce an absurd amount of toxins, even those countries that signed the Kyoto protocol have been getting worse (in the countries that signed, carbon use has increased 4 percent.)

Yet again, freedom has proven itself superior.

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