Archive for the 'July' Category

‘Cap and Trade’

July 2, 2009

Cap and Trade is nothing more than the injection of artificial scarcity into a market by the central state. It is an act of economic central planning with no basis other than the whim of the state.

How does the state determine the appropriate level at which to “cap” carbon emissions? Or anything else for that matter? The very short answer is that they cannot know. They cannot know any more than they can know the appropriate level at which to price milk.

Fundamentally, Cap and Trade is a consumption tax. However, it is a consumption tax that is virtually unavoidable by the consumer. It does not change behavior. It merely injects artificial scarcity into the market, thereby creating a host of perverse and unpredictable consequences.

Some consequences, however, are easy to predict:

Since this consumption tax is aimed directly at businesses, which do not pay tax directly, we can safely know that the overall increase in prices of goods and services that utilize carbon-based energy as a raw material will be passed on to the end consumer of said goods and services.

Since the state, and it’s professional politician ruling class, cannot possibly know the correct amount of artifical scarcity in which to inject, we can safely know that the arbitrary amount chosen will be the wrong amount.

Since the state is a proven mis-allocator of resources, we can safely know that the “revenue raised” (ie- the private capital confiscated) through this tax will be wasted.

Since the state grows in scope and power perpetually due to its very nature, we can safely say that the “revenue raised” through this tax will be used to expand the state apparatus and its associated bureaucracies.

Finally, since we know that freedom is a zero-sum game, we can understand the further enabling, financing and resulting growth the of the state to come at the expense of individual liberties.

In observing only the predictable consequences of this measure and ignoring, for the sake of argument, the universe of unforeseeable consequences, we may then understand Cap and Trade and the issue of “climate change”, regardless of its truth or merits, to be nothing more than a Trojan horse for increasing economic central planning, redistribution of privately created capital and the further empowerment of the state.