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Trading in the black

…As in carbon. George Will writes about the bill Sen. Joe Lieberman is pushing to create a market for greenhouse gas emissions:

“Cap-and-trade” comes cloaked in reassuring rhetoric about the government merely creating a market, but government actually would create a scarcity so that government could sell what it had made scarce. The Wall Street Journal underestimates cap-and-trade’s perniciousness when it says the scheme would create a new right — “allowances” to produce carbon dioxide — and would put a price on the right. Actually, because freedom is the silence of the law, that right has always existed in the absence of prohibitions. With cap-and-trade, government would create a right for itself — an extraordinarily lucrative right to ration Americans’ exercise of their traditional rights.

Businesses with unused emission allowances could sell their surpluses to businesses that exceed their allowances. The more expensive and constraining the allowances, the more money government would gain.

If carbon emissions are the planetary menace that the political class suddenly says they are, why not a straightforward tax on fossil fuels based on each fuels carbon content? This would have none of the enormous administrative costs of the baroque cap-and-trade regime. And a carbon tax would avoid the uncertainties inseparable from cap-and-trades government allocation of emission permits sector by sector, industry by industry. So a carbon tax would be a clear and candid incentive to adopt energy-saving and carbon-minimizing technologies. That is the problem.

A carbon tax would be too clear and candid for political comfort. It would clearly be what cap-and-trade deviously is, a tax, but one with a known cost. Therefore, taxpayers would demand a commensurate reduction of other taxes. Cap-and-trade — government auctioning permits for businesses to continue to do business — is a huge tax hidden in a bureaucratic labyrinth of opaque permit transactions.

The proper price of permits for carbon emissions should reflect the future warming costs of current emissions. That is bound to be a guess based on computer models built on guesses. Lieberman guesses that the market value of all permits would be “about $7 trillion by 2050.” Will that staggering sum pay for a $7 trillion reduction of other taxes? Not exactly.

It would go to a Climate Change Credit Corporation, which Lieberman calls “a private-public entity” that, operating outside the budget process, would invest “in many things.” This would be industrial policy, a.k.a. socialism, on a grand scale — government picking winners and losers, all of whom will have powerful incentives to invest in lobbyists to influence governments thousands of new wealth-allocating decisions.

This is socialism on a monster scale. As Will correctly notes, cap-and-trade is a tax. Do you think for a moment that industry will just absorb the estimated $7 trillion cost of carbon permits? Of course not. It will be passed on to consumers, as are all taxes on business.

Worse, it puts in the government’s hands the power to financially bless or curse through the Climate Change Credit Corporation. Again, Will correctly observes that this opens a whole new market for the lobbyists on K Street, who even now must be setting up meetings with potential new clients.

It’s a boondoggle that does nothing to address the real issue — if you believe that man is really responsible for global warming. And the planet-sized irony is that cap-and-trade was a concept developed by one of the favorite targets of the angry left: Enron.

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