I was going to write a long paragraph about how much better it would be if prices for carbon emissions dropped when emissions dropped, because of a weak economy or improved technology, etc, but you believe in markets finding the right price more than I do, so I’m going to skip it.

Not only does the cap-and-trade scheme provide better incentives to innovate, but the market price provides better information about the current effect of the scheme. Suppose a carbon tax was implemented, the economy grew and pollution remained about the same. Would this mean that the tax was too low to control emissions or simply that the growth of the economy was offsetting improved efficiency? What if the economy contracted, as it is currently? Would this mean that the tax was too high, or was the downturn just one of the normal bust phases of capitalism? There’d be no way to tell. Under cap and trade, if the economy started to contract, while prices grew, it would show the cap was too low, since unmet demand for activities generating emissions was limiting the economy. On the other hand, if prices fell at the same time as the economy, it would demonstrate that the cause of the recession was not the pricing of emissions, but some other effect.

If you believed in global warming and had a libertarian philosophy, I have a hard time imagining what system you’d prefer to a cap-and-trade scheme in which the market sets the cost of emissions. If there’s another system that you think can better cover the costs of a negative externality, I’d be interested to hear it. Till then, I can’t help but think that, since you don’t believe global warming is a problem, you’d prefer a regular sales tax to a system designed to significantly change consumption patterns.

The problem is, we’re also wired to love our friends and family and immediate acquaintances like we would ourselves, and to hell iwth everyone else. Dunbar’s number in action, and it plays merry hell with any attempt at specifically guide a large nation-state in any but the most vague and general ways. Yet, people still insist on trying to implement a top-down government strategy like their caveman hind-brains tell them they should despite all the evidence that it just doesn’t scale-up that well.

Seriously, that is exactly what these people believe. Truly, we have lunatics running the country.

…imagine someone wanted to build a dirigible and fly around the world, then they reason, “Hmmm.. Hydrogen is lighter than air, water is two parts hydrogen to one part oxygen, water is much cheeper than Helium, therefor I should be able to fill my dirigible with water and fly around the world!”

And then the thing just sits there like a beached whale on the tarmac, so this someone blames the ground-crews. “It’s all their fault, we just need some fresh blood in the ground-crew sector then we’ll really see some results.” When what he should have done was go to the manufacturer and say, “I want a dirigible that can fly around the world, I’ll leave you to muddle-out the details.”