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Illustration by Krieg Barrie

Cap-and-trade charade

If something really is wrong, don't try to fine-tune its cost

Issue: "Ready or not, here we go," March 28, 2009

If the Obama administration is really as serious as it says it is about imposing "cap-and-trade" policies on industries that threaten to pollute our air with sticky, inky carbon, then why not go all the way and use the same new-fangled strategies to restrain a whole host of negative influences in modern society? I've got some specific suggestions.

But first, a primer on "cap-and-trade" may be in order. The simplest part of the concept-the "cap" part-starts with the assumption that if government makes it more expensive to engage in bad behavior, some of that bad behavior will probably disappear. Ronald Reagan used to say, "If you want less of something, tax it."

The "trade" part is a little more complex. It suggests that everyone has a right to pollute a little bit. And if you are a really honorable citizen, and discover that you're not polluting yet up to the legal limit, you can sell some of your excess right to pollute to someone who's over the limit. The less he pollutes, the fewer rights he has to buy from you. The less you pollute, the more rights you have to sell to him. For both of you, there's an incentive to engage in less pollution-and it seems like a dream come true for anyone who believes in a free market economy.

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Except. Except for the fact that this gargantuan middleman by the name of Uncle Sam has shown up to run the whole program. After all, somebody's got to have the wisdom to set the limits in the first place. Somebody's got to say who's over and who's under. Somebody's got to say who has a right to sell and who has a right to buy. And for all those services (and many, many more), Uncle Sam will insist on taking his commission. What Richard Lindzen of MIT calls "a bureaucrat's dream" quickly becomes yet another government nightmare. If you like the efficient way Washington handles Social Security, Medicare, and the farm program, you'll love cap-and-trade.

Did we mention that if you don't manage to "trade," you do have to pay your pollution fine for exceeding the "cap"? And that either way, your costs of doing business have gone up? And that overall, costs are expected even by the Obama administration to go up so much that they are proposing a $400-a-year tax credit for low-income individuals so that the impact of cap-and-trade won't be too severe?

But back to my point. If the basic theory of cap-and-trade is so good, why not apply it to a host of other social problems?

Let's start with the widespread issue of speeding on the nation's highways. Using the same cap-and-trade approach, let's settle on appropriate limits for different locales, and then let those who want to drive regularly at 85 miles an hour buy permits to do so from those who are willing to dawdle along at 45.

Does your parking meter say "EXPIRED"? Never mind. City Hall (for a fee) will match you with some kind soul who left 15 minutes on her meter.

Got some books that are overdue at the library? It's part of the librarian's service these days to link you to a fastidious reader who turned in his books a few days early.

And don't worry that April 15 is just around the corner. If you end up needing six weeks more to file your taxes, the IRS-for a modest commission-will put you in touch with one of those careful people who filed way back in January.

Maybe you are principal of a school with too many graduates whose SAT scores barely register. No problem. Check in with the Department of Education for a few passes offered by some geniuses who are willing to put their GPAs up for sale.

But let's face it. Cap-and-trade just doesn't pass the smell test. The prophet Isaiah hinted at this when he warned: "Woe to those . . . who acquit the guilty for a bribe, and deprive the innocent of his right." The federal government has way more than enough already on its plate without taking on the assignment of building such a monstrous system.

So far, the Obama administration's talk about cap-and-trade is bigger than its action. There's discussion in the White House now about delaying cap-and-trade until 2012.

Let's pray for such a delay. Maybe a chillier-than-typical winter has thrown enough cold water on the idea to suggest that global warming may not be as serious a threat as Al Gore has claimed. Or maybe even Mr. Obama's big government isn't big enough to include proposals for mitigating parking fines and overdue notices at the library.


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