Capping Prosperity, Trading Away Freedom

Lurking behind the health reform chatter lays a perplexing piece of regulation nicknamed Cap and Trade. This legislation would decrease our carbon emissions 3% from 2005 levels by 2012, 20% by 2020 and a whopping 83% by 2050. A carbon exchange would enforce this all encompassing redefinition of society by exacting massive re-distributions of wealth. Businesses serving their community with marketable products would be deprived of resources in favor of new, politically correct industries permanently affixed to a government incubator.

Our economy currently undergoes the consequences of shifting scarce resources away from residential real estate and into other sectors. The painful transition is known in common parlance as a recession. The market corrects its resource allocation from that which previously satisfied customer's needs profitably, but no longer does so, and into those sectors ready to prosper our future.

Economics studies how man overcomes scarcity to best satisfy our unlimited desires. We all make decisions affording us the best opportunities for success. People change jobs or start new businesses daily. The market guides this resource reallocation via price signals. Firms that fail to efficiently satisfy customers succumb to new firms with new ideas. Schumpeter termed it Creative Destruction.

To the extent individuals behave rationally these changes enrich society through innovations, enhanced efficiency or better productivity. The much-maligned profit motive redirects economic actors to satisfy the market's new needs. Only when price signals get distorted, or some unforeseen shift occurs, do these adjustments aggregate into macro-economic pain.

Large scale resource reallocations (recessions) ensue when the whole economy suffers a shock such as when oil spikes due to currency devaluations; when credit or monetary inflation devolves into mal-investment such as the subprime mess; or in the aftermath of war. We transition from swords to ploughshares and spears into pruning hooks.

Cap and Trade forebodes the largest government intrusion in American history. This legislation would disrupt the existing economic paradigm for virtually everyone using energy. Currently, carbon emitting fuel sources generate 86% of US power. Only 1.1% derives from less dependable sources such as solar or wind, which are intermittent depending on the vagaries of weather.

Government bureaucrats would assume unfathomable control over our lives via energy restrictions. They will then redistribute taxes confiscated from energy usage via a carbon exchange. The rationing will not be determined by who best satisfies society's needs; instead, the decidedly uneconomic criterion of the congressional district of your factory or whose lobbyists pay the most cunning bribes will drive resource allocation. As atmospheric physicist Fred Singer jokes, this bill should be named the "Lobbyists Full Employment Act." It has already attracted thousands of registered lobbyists to Washington.

The Heritage Foundation predicts this would have the same detrimental effect as an energy crisis, which has been a recurring instigator of economic trouble. The price of gas would increase 74% in real terms, natural gas would increase 55% and your electric bill would soar 90%. Past energy crises have been primarily driven by a weak dollar. This one would likely be exacerbated by a dollar crisis to boot. Nominal prices would soar.

Currently profitable business models would crash. Whole industries would collapse. Unemployment would explode. Our government apparently wants to test the hypothesis that America remains an unsinkable ship. The economy is resilient, but that doesn't justify deliberately steering into policy ice-bergs.

Recessions entail economic transformations. The market is a natural symphony. Why would our government deliberately orchestrate economic cacophony by mandating its citizenry play warped instruments and sing off key? If green energy were economically viable, the incentive of profits would reveal its potential. Instead a conductor imbibing on green fantasies purposes dissonance for purely political ends.

To even consider this bizarre legislation, global warming zealots must answer four questions:

Does global warming even exist? The same crowd now clamoring for urgent action previously warned of an impending Ice Age thirty years ago. The coming apocalyptic freeze was blamed on the same industrial pollution that now supposedly warms us. Research shows that the Earth has cooled since reaching peak temperatures in 1998. The recurring headlines of record cold temperatures would be humorous if the stakes weren't so devastating.

Is global warming manmade? This presumption bespeaks arrogance of galactic proportions. Burning coal now has more influence than the sun? Even if CO2 is the catalyst, man accounts for only 3% of CO2 including our exhalation. Most stems directly from natural phenomena environmentalists supposedly cherish. After all, plants "breathe" carbon-dioxide making the world greener. The climate ended a roller-coaster ride throughout the 20th Century up 0.6 degrees Fahrenheit. CO2 increased 20% following a steady trajectory. Do the math.

Is global warming a problem? It might be bad for coastal areas, but huge amounts of wonderful soil in frozen climates would become available for agriculture. As Earth's population swells, gaining new farmland would be providential. Melting ice caps may not increase sea levels for the same reason that ice melting in your cup doesn't cause a spill. But what of ice on land melting into the sea? Would this be offset by increased oceanic evaporation into warmer atmospheres that retain more moisture than heavier cold air? Pure conjecture programmed into computer models suggests Florida could lose significant swaths of coastal property. However, ocean levels have fluctuated over millennia. It was no fun for Atlantis, but geography adjusts.

Can America help? Our ecology is far cleaner than the rising new industrial powers, none of whom feel compelled to stymie their own growth with this emotionally-driven nonsense. The BRIC nations have publicly stated they will not comply. Totalitarian states have never cared for their environment like private stewards tend their own land. Crippling our economy with drastically higher energy costs will not benefit the global environment. It will merely transfer economic leadership to states that treat nature far worse.

There is certainly no consensus and a rational analysis points to "no" on each. Despite mounting evidence Global Warming is an enormous fraud; it has become a substitute religion surreptitiously worshipping the created over the Creator. Although recent headlines suggest Al Gore worships Mammon, not Gaia, anyway.

Before proceeding, we had better understand the economic consequences. The entire global warming hysteria has more to do with global governance and undermining capitalism than the environment. It was a purposeful tribute that Earth Day gets celebrated on Vladimir Lenin's birthday. Considering the environmental devastation inflicted in Soviet Russia, this tribute doesn't reflect Lenin's ecological record.

Let's not copy his economic record either.