Allergies Don’t Make For Good Policy

Professor Adler evidently sneezes whenever he thinks of big government as he disses the Paris climate change agreement. Because of compromise after compromise, it wasn’t the greatest deal in the world, but I don’t think Professor Adler quite understands the side-points of such an agreement:

Instead of trying to find ways to shoehorn greenhouse gas policies into the Clean Air Act, through initiatives like the Obama Administration’s Clean Power Plan, policymakers should be focused on spurring the technological innovation that will be necessary to provide low-carbon energy around the globe. Once this is achieved, there will be plenty of time for international agreements and other measures to spur technology transfer and deployment. Focusing on treaties and mandates first, however, is putting the cart before the horse.

Policymakers should seek to increase the rewards for climate friendly innovation, incentivize reductions in carbon intensity, and remove barriers to technological adoption and deployment.  This can be done through a combination of technology inducement prizes and a revenue-neutral carbon tax (such as a cap-and-dividend plan), combined with efforts to reduce regulatory and NIMBY barriers to the development and deployment of low-carbon energy sources. In short, give people more reasons to develop and adopt low-carbon technologies, and remove the barriers to their doing so.

My bottom line is that one need not embrace centralized regulatory measures, bureaucratic international agreements, or massive public works projects to address climate change. Big government is not the best way to be Green. But ignoring serious problems, such as climate change, should not be an option either. [The Volokh Conspiracy]

First of all, rewards for climate change innovation can come from agreements in this category. It establishes that there is a problem to be solved on an international level, and by doing so, signals the innovators to get to work, if only because the agreement will begin to manipulate the market to stop producing the green house gases. It may be anathema to a good libertarian to engage in market manipulations, and there’s plenty of reasons to feel queasy, but the market is not sensitive to subtle signals, especially when they are masked by hidden-agenda rhetoric and ideological/theological assertions. Libertarians may not like it, but the market is not the panacea they like to envision it to be. Sometimes it needs help.

Second, because climate change is not a sock-you-in-the-face phenomenon, a lot of people remain doubters, including both those who innovate and those who would reward the innovators – like the current Administration. An agreement in the league of the Paris Accords, as weak as it was relative to what might have been achieved, still signals not only to innovators, but to non-signatories to the agreement that a large number of nations agree there is a problem needing a solution, and if some non-signatory engages in activities contrary to the agreement, the transgressor, even though they are not a party to the agreement, may still face consequences. This fleet-in-port effect is an important, if difficult to measure, result of having such an agreement.

Third, such an agreement provides forums and even mechanisms for international market efforts as well. Climate change may be caused by those countries which emit large amounts of CO2 and methane, but everyone in all nations suffers for it, some more than others. Just as an example, if we want to embrace the use of carbon taxes as a way to lead industry away from practices which emit the problematic gases and develop replacement technologies, we also need to ensure that industry has no way to escape the taxes. Think of the squalling in the United States about overseas profits and how that money is never brought home by American corporations. The reason they don’t bring it home is because their accountants tell them that it’s more efficient to leave and invest that money overseas. But what would happen if they couldn’t use those countries to sock that cash away because the taxes were the same as ours?

That’s right, then they’d have deploy the cash with less of a concern for taxation. By the same logic, if it doesn’t matter where industry goes as they’ll still face comparable carbon taxes, then we don’t have to worry about inefficiency in those efforts caused by companies seeking taxation efficiencies[0], regardless of consequences to the environment, because those efficiencies, by and large[1], won’t exist.

Seeing such agreements as the Paris Accords as being inevitably in competition with innovators is a key intellectual mistake. Each part of the mechanism has a place to play in order to efficiently find and implements methods for reducing and even eliminating our climate change gases footprint.


0 For the anti-capitalist, seeking efficiencies should be translated as cheating.

1 Certainly, some areas will better administer such taxation schemes better than others, but that’s a truism of human endeavours. Having the legal foundation in place is the beginning of ironing out such unequal efforts, thus reducing the incentives for companies to go looking for ways around a tax.

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About Hue White

Former BBS operator; software engineer; cat lackey.

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