Tuesday, 2 October 2007

Explaining 'cap-and-trade': "Welcome to the era of eco-enslavement"

IT'S SAID THAT THE government's cap-and-trade scheme is a market-based system.

What nonsense.

As you'll see when you understand the nature of the cap-and-trade system, it's a way to deliver socialism under the guise of the market.
The essential point of the cap-and-trade system is not that 'emissions' are tradeable, but that the level of industry production is capped by government, and wealth is redistributed. Let me use a couple of analogies to explain how the cap-and-trade system works to "redistribute" wealth and throw a red blanket over business. (It will also help explain where your money will be going when the cap-and-trade nonsense starts kicking in, and what happens when politicians promise to "cap emissions by fifty percent by 2050.")

LET'S SAY THAT YOUR school or university were to determine that in marking assignments or exams that there are only so many marks to go around -- this is the "cap" part of the whole deal. We need to use the mechanism of the market, the argument would go, to lower the emissions of high marks -- to "trade" marks in order to efficiently redistribute the right to emit high grades.

Under a cap-and-trade system for students, those who have earned high marks and who want to have them awarded would have to buy the "right" to high marks from those who haven't earned them. They'd have to pay for the sin of studying hard and being successful. In other words, the school or university would determine who has the "right" to high marks in the first instance, and money would then change hands in order to purchase these "rights," passing from the hands of those who are using their brains to their fullest capacity to those who barely bother to turn their brains on in the morning, all in return for these "rights. From each according to their ability, to each according to their need, you see.

OR LET'S SAY THAT the cap-and-trade system were used at the Rugby World Cup. Let's suppose that the IRB took time out from changing the rules to make the breakdown even more confusing and from stopping Tonga wearing green hair and decided instead to put a "cap" on the number of tries teams are allowed to score so that teams like England who score their points more "efficiently" (ie., in a manner divisible by three) were rewarded rather than reviled.

Teams who produce their points by scoring tries would need to pay those who can't score tries for the right to have their points awarded. Let's say for example that the "cap" on tries per game is set at four tries. In order for the All Blacks to have their twelve tries against Romania awarded, they'll need to buy that "right" on the open market from teams who can't score tries. Scotland, for example. Or Ireland. Money will change hands, passing from those who have the ability to score tries (and who need these "try credits") to those who haven't that ability but have their "try credits" to trade.

Instead of heading home as losers, sooks like Brian O'Driscoll (left)whose teams have trouble crossing the try line would instead become major players on the world cup "try credit" market. Rugby played as a method of distributing alms.

YOU CAN SEE WHY the socialists love the cap-and-trade system. This gives governments complete control over what Lenin called the commanding heights of production, giving them the power to limit producers that they haven't had since Brezhnev was a lad. Not only that, it gives them the power to force producers to redistribute profits from those who've earned them to those who can't. From each according to their production ability; to each according to their need for cash.

And it does this all to the loud applause of the world's markets! Using the market to introduce world socialism. What could be more ingenious?

I HOPE YOU'VE FOUND these analogies useful in seeing the nature of the cap-and trade system. But there's more. We're now in a position to see where all your money is going.

We've already been told that when the cap-and-trade system kicks in that the price of fuel and power (and everything that uses fuel and power) is going to rise dramatically. That money isn't going to government to lower other taxes. Oh no. It's being paid by the productive to those who are unproductive. On the "international carbon market" these are called "carbon credits" -- as Brendan O'Neill argues, these are "rights" bought by producers with money that is delivered to those who "keep brown people in a state of bondage."

"Welcome," as he says, "to the era of eco-enslavement."


  1. Well said Peter. And business is generally appluading this nonsense. Disgusting.

    I suspect you meant to say "It's being paid by the productive to those who are unproductive."


  2. Sorry to be obtuse but could you give us an analogy using a household as opposed to a business?

    Also I think I read somewhere that in Europe businesses had to estimate their energy consumption. Some over-estimated meaning they then had credits to trade. Suddenly they were much wealthier businesses - on paper.
    So surely the incentive is to over-estimate or, if your credit level is to be set on existing usage, over use prior to that exercise.
    I am almost reluctant to post this comment I know so very little about this stuff (but am now being forced to pay some attention - as if there aren't enough things to do in a day - bloody govts.)

  3. Oops, thanks Julian.

    Lindsay, the easiest analogy with households would be to equate a household with the crowd in the stands watching the rugby. Go to see Scotland v NZ, for example, and you'll have to pay extra to see Scotland not scoring tries.


    And you're exactly right about the incentive to over-estimate.

    And about bloody govts.

  4. PC - I beg to differ. Your rugby analogy assumes that no production is possible without carbon emission, and concomitantly that there is an absolute limitation on what can be produced.

    A bit closer to the reality might be to suggest that the number of points avaiable to a team via field goal would be capped. This would have the effect of forcing teams like South Africa who rely more heavily on field goals, and often array their backline with enough depth to allow field goal options from set plays to rethink and gear themselves more towards scoring tries.

    They might not necessarily eliminate field goals from their playing-style, they would simply weight try-scoring more heavily.


  5. I'm certainly no believe in AGW, but I find it difficult to appreciate the relevance of your analogies. With the premise that "CO2 == bad", its hard to reconcile them against "tries" or "marks", where more is definitely better. Not that I can really put forward what a better analogy might be.

    And I don't think its "rich" having their efforts redistributed to the "poor" - its more the unfortunate to the fortunate - green industries aren't necessarily poor ones, just as rich industries aren't necessarily polluting. I don't see telecom or microsoft having to buy many carbon credits.

  6. It's a pretty sly way of banning new start competitors from entering a market. The established outfits (who have been lobbying the govt or have cronyship relationships with the govt) have all the carbon allocations. The start-up has NONE. It has to buy the indulgences or lobby govt for some. Huge waste of time and money. Here, at last, is the perfect way to preserve the status quo and shut out the creative dstruction function of the entrepeneur.

    Some years ago Von Mises pointed out the reasons that socialism ultimately fails. One reason was that central planners are not omniscient. Another, missed by most people at the time, was that central planners are not entrepeneurs. Their very nature prevents them from being capable of commanding and operating businesses soundly. It makes them unsuited to the task of assessing risk or allocating resources properly. Other than in the most subservient or junior operational roles they are not suited to manage anything.

    Von Mises showed that one of the important errors these guys suffer from is that of treating economies and businesses as though they can be static and frozen at an ideal equilibrium. Note that this is one of the errors this carbon trade scheme contains at its black heart.

    Mark this. It will fail to achieve its stated aims but it will succeed in diverting resources to inefective and non-productive uses. people will be impoverished and will suffer. If you are tight on money now, just wait. You are in for a rough life.



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