March 25, 2009

Selling Freedom

Didn't America used to auction away freedom?

from Master Resource

Permits Permits, Who Gets the Permits

As I explain in an article in today’s American web-journal, the lack of thought that Obama’s team has put into how they would implement cap-and-trade is becoming abundantly clear.

Team Obama has been saying that they can fix the problems with cap-and-trade (which, by the way, make it more and more like a carbon tax), if they just auction all the permits. But that’s easy to say, and sounds quite nice in theory, until you realize that it means:

a) A highly visible uptick in consumer costs as permit prices are passed on in immediate price hikes for energy, goods, and services, leading to screaming from consumers and their advocacy groups;

b) Screaming from sectors that can’t possibly afford to compete against other regions with lesser carbon controls;

c) More screaming from legislators in the states that will be disproportionately slammed by the need to buy permits, including the coal states, and the states that still have significant industrialization;

d) And a hissing sound: the sucking sound of America’s remaining industrial sector to countries with lesser carbon control regimes.

If Team Obama hasn’t thought through even this first issue, the allocation of carbon permits well enough to see obvious pitfalls, it’s clear that they can’t have even begun thinking through the kind of mischief that will ensue when they create new carbon-backed securities, aka emission allowances....

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