Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
All proposals to change behavior by use of economic inducements can be traced back to an unexamined axiom - the existence of the rational consumer.

Take the example of the cap and trade proposals. One can rephrase them as so: "We will make it more expensive to continue along the present course, as a result the world will find a technological way to compensate for the new restrictions."

Taxes and quotas can provide an incentive to work on innovation, but they can't guarantee innovation. The "free market" allocates resources, it doesn't invent things.

We are currently faced with two problems with no present technological solutions. First, is any way to control carbon emissions that is not related to decreased consumption. This can be through improvements in efficiency or actual cuts in demand. A tax scheme could work in China, for example, where new coal-fired power plants are not using the best available technology. It can't do anything for plants that are already technologically advanced.

The second problem has to do with the pervasiveness of globalization. Things are now routinely shipped around the world that used to be produced locally (or not found in the local market at all). I just bought some Australian lamb in the supermarket. We have sheep right here in NY State. Why aren't they for sale?

The globalization has also led (indirectly) to exurban sprawl. Transport infrastructure needed to ship goods by truck over large distances allows housing to be built along these routes without the builders having to incorporate the costs of access into their housing prices. As a consequence there are more cars on the road and they travel further. There are no viable alternatives to this at present - carbon tax or no.

To install mass transit or change commuting and shopping behavior will take more than a new tax. Once again raising the cost provides an incentive, not a solution.

A tax has great appeal to politicians. It is easy to pass, it is easy to collect, it is indirect so no one is to blame and it requires no changes in infrastructure. The fact that it won't achieve the aims claimed is for future generations to deal with. Mr. Dingell won't be around to see the consequences of his symbolic actions. (I'm assuming that he will live a normal lifespan and he is already 81 - I'm not wishing him dead.)

Until a new wave of leaders emerges that is willing to break some eggs to make the omelet, nothing substantive will happen. If Katrina hasn't been a wake up call, I don't know what it will take.

Policies not Politics
---- Daily Landscape

by rdf (robert.feinman@gmail.com) on Thu Sep 27th, 2007 at 09:33:10 AM EST

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