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  • Top-down Regulation Dressed in Cap-and-Trade Clothing

    That’s what David Schoenbrod and Richard B. Stewart call Waxman-Markey in their Wall Street Journal op-ed today:

    As a candidate for president in April 2008, Barack Obama told Fox News that “a cap-and-trade system is a smarter way of controlling pollution” than “top-down” regulation. He was right. With cap and trade the market decides where and how to cut emissions. With top-down regulation, as Mr. Obama explained, regulators dictate “every single rule that a company has to abide by, which creates a lot of bureaucracy and red tape and often-times is less efficient.”But the House bill would, if passed by the Senate this autumn, fail the environment and fail the test of economic efficiency.

    The top-down directives come in three forms. First, electric utilities, auto makers and states get free allowances on the condition that they comply with regulations requiring coal sequestration, alternative energy sources, energy conservation, advanced auto technology and more. Second, many other provisions of the 1,428 page bill mandate outright regulation on subjects ranging from how electricity is generated to off-road vehicles and household lighting. Third, still other provisions provide subsidies for government-chosen technology “winners” such as alternate energy sources, plug-in vehicles and weatherization of old buildings.”

    Free allowances do not lower the costs of Waxman-Markey; they just shift them around. Although the government awarded handouts to businesses, the carbon dioxide reduction targets are still there, and the way they will be met is by raising the price of energy and thereby inflicting more economic pain. Prices have to go up enough to force people to use less energy, and so if anyone is bought off with free allowances, the costs for everyone else are that much higher.

    When there is money on the table with big government programs, lobbying by special interests is inevitable. Politics governed by special interests typically makes things worse for the consumer, and cap and trade is no exception. Approximately 2,340 energy lobbyists worked on the cap-and-trade bill to lower costs for their clients–i.e., utilities and other industries. That leaves consumers to bear the entire cost of the price increases required to meet CO2 targets; meanwhile, industry gets a free windfall.

    More times than not, government regulations reduce economic efficiency so it shouldn’t be a surprise massively complex carbon dioxide regulations will do the same.

    Posted in Energy [slideshow_deploy]

    2 Responses to Top-down Regulation Dressed in Cap-and-Trade Clothing

    1. Barbara York - Erie, says:

      I am disenchanted with the current administration. When I listen as Obama, Pelosi, Reid and other members of this administration continue to break promises previously made to the American People in order to get Obama elected, I cringe. Where is truth, honesty, and loyalty to the citizens of the United States in this administration? Then they have the audacity of talking down to us as if we are a bunch of brainless imbeciles without a clue as to our own needs. This administration seems to believe only THEY know what is good for US.

      Just a few Bills & Changes the Obama administration wants to push down our throats: Healthcare, Cap & Trade, Decrease in Social Security benefits for the next 2 years (no cost of living increase, BUT an increase in Medicare Part B which means less income for our senior citizens), then there is the 'stimulus package' worth so many trillions of dollars it makes my head spin – what gives with all that?

      The Obama administration does not seem to understand the benefits and need for Capitalism in the USA; let alone have an understanding of what a budget is.

    2. Pingback: » Financial News Update - 08/25/09 NoisyRoom.net: Where liberty dwells, there is my country…

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