Discouraging whispers.

Jim [Manzi] has actually made two different points, both of which I agree with:

1) The political economy of the US will not allow a Pigovian tax on carbon.

2) Even if you could herd all the political cats into the carbon tax paddock, pricing carbon as a textbook externality is so difficult as to be futile. . .

Jim’s convinced me that there is no workable price instrument at our disposal, leaving us with cap-and-trade as the only remaining option. Just because it’s the other option presented doesn’t make it right, but nor does the fact that politicians like cap and trade make it the worst idea in the world. A cap and trade program with all the necessary bells and whistles (an initial auction, a liquid market, tradability, bankability, etc.) would be a simpler and more transparent way to reduce aggregate US CO2 emissions if that’s what we decide to do.

The precedent for a tradable permit system, of course, is the successful SO2 allowance trading program implemented in the 1990 Clean Air Act amendments.

SO2 is a local problem. CO2 is a global problem. Even if CO2 emissions reductions comparable to past SO2 reductions were achieved it would not affect climate change unless the whole world was in the trade system. That's not going to happen since for most of the world it would be worse than climate change.

That's not the only defect in the analogy though. CO2 is a very much more difficult issue than SO2. It isn't amenable to scrubbing in the same way. And there's lots, lots more of it. Worse, it isn't solely a point-source issue. Even plowing a field causes emissions from soil. And that leaves aside the fact that CO2 is not the only GHG, and that GHGs are not the only cause of climate change.

I remain unconvinced that it’s possible to mitigate climate change with any tools at our disposal, and I don’t think we’ll bring the next generation of energy sources to market by making fossil fuels more expensive in relative terms. Such an approach is especially fragile in an inflationary and increasingly zero-sum world economy, so I tend to agree with Indur Goklany and Tom Schelling that the best way to solve the problem of climate change is by applying the brainpower that only a wealthier developing world can deliver. The political consensus, however, is for getting a head start on direct mitigation, and emissions trading might be the least-bad way to do so.

The post is titled A Qualified Defense of Cap and Trade. The argument seems to be that since politicians are determined to legislate, then let them do so in the least harmful way, given that anything they do will be harmful.

Why defend them? Is it just career management or something of that sort: maintaining a place at the table even though no good will come of it? Why aren't more of our pundits, intellectuals and honest brokers in all walks making an effort to do right things? If politicians are not informed that their ideas are nonsensical and that they will be blamed when it all crashes down, then they won't have the information they need.

Loosely speaking, this is the sort of thing that got us into Iraq. Politicians felt that they had to support war, even though they doubted its propriety, since the information they had, and that the public had, indicated that it was the politic thing to do. Many of them now wish they had not done so, and public support has melted away too.

Perhaps I'm too impatient. Perhaps this is how politicians are informed that they are dunderheads. You leave it between the lines and allow them to save face rather than telling it straight and plain. There do seem to be more posts and articles that point out the futility of emissions reductions schemes that depend on artificial constraints rather than improved and affordable energy systems. The solutions must be global, must be as useful to poor people as rich people, or they will do more harm than good.