Saturday, April 23, 2011

Why I am against a Carbon Tax

//For the sake of argument, we will assume that CO2 and other GHGs are bad This will be a rebutal to what vanillaman posted earlier. Firstly, the small point: 1) at no point did I make any reference or allusion to unions. I support the unions' right to exist. I believe that unions are a way that workers can get what they want, them not always having highly desired skills the same way, say, a programmer might. While a highly skilled programmer threatening to go to a competitor might be a strong argument, a waiter doing the same might not have the same power. That said, I don't stand for forced participation, or laws saying that a union must be respected, or any other laws protecting unions from consequences of their actions (like not being able to give raises not negotiated for by unions, or not being able to hire outside the union). 2)Sweden is a poor example. Sweden has a hodgepodge of different regulations. I can use Sweden to prove my point too: Sweden has one of the most open capitalist policies anywhere, they have embraced globalization, and they have one of the lowest inflation rates. Thus proving that an open-capitalist economy, provided it stays that way, is able to support much more than a socialist economy (we do have marketing boards). On top of that, Sweden's growth is mediocre compared to the other countries in Scandinavia, and especially when compared to other countries. 3) citing someone from the federal reserve scares me. The Federal Reserve (hereafter referenced as the FED) is responsible for just about all the recessions and depressions since it was founded. Here is a good video explaining how, in rap battle format. Essentially, the FED sets bond interest rates low, which encourages lending (because more money can be made by lending it out than keeping it in bonds). The problem is that much of this lending should never have happened because the client's business model never made sense (whether it simply didn't, or didn't fit the role or time it was in. See the junk bonds; they have a use, but it was not all over the market.). Now that the small points have been dealt with, I will move on to the larger points, going from easiest to hardest. The last point made was about how regulations were what kept Canada's economy from going the way of that of the US. Firstly, the United States mandated that banks not turn down loans for virtually anybody. This was born out of the thought that everyone had the right to own a home. Because there was this regulation (see, I told you there was regulation) banks had to lend out to people who could never afford to pay back the mortgage. Now more than a few banks saw this as a highly profitable sector, provided it didn't implode. Perhaps it was some greedy people who did much of the spearheading, but it was also the FED (another instance of government fiddling with the economy) that allowed the housing boom in the first place. When it crashed, it was not an all too unforeseeable event. Also, if regulations are the way to go, and should be indiscriminately adopted (as is hinted in the article), then Greece should be the leading player after the economy, along with the other STUPID and PIIGS (and the other acronyms) countries. But wait; those countries are either still on those lists, or are swirling around the toilet bowl, waiting until they get sucked down it. On to the next point. vanillaman suggests that it is better to do it now than when our society is addicted to oil. While the thought is nice, and the logic seems all pristine, it is wrong. The basic logic of his claim is that we should leave a margin. First, society is addicted to oil. I recently saw a bumper sticker on a truck that read, "If you have it, a truck brought it". How true. To prove it, look at whatever you buy. Then see if all the materials came from within your neighborhood, or at least within biking distance. My point exactly. I will now argue that a margin is not necessary, because one is already present. Firstly, oil isn't running out, environmentalists are getting in the way. My evidence: the Bituminous Sands, Shale Gas. All are nearing the point where their technologies reach the point where it is almost completely safe to extract. (And if we removed the, oh yes, regulations that protect companies from people suing them for property damage, companies would have accountability for their actions.) Shale gas will soon be safe within acceptable limits (like the rate at which planes, in good maintenance, crash due to factors other than the pilot. That is to say about never). This will, on top of the remaining oil-fields being pumped, get us through at least 40 years (especially with the world population reaching the top of the S-curve population growth, where growth slows down). Then we can start pumping through the currently untapped but proven oil reserves, for another 10 to 30 years. By that time, we will have confirmed at least some of the unproven oil fields, guesstimated at being 40 to 50 years of oil. This adds up to a 90 to 120 year margin, all on the assumption that we find no other fields not included in the unproven category. I personally feel that this is an acceptable margin to perfect the existing bacteria that synthesize oil out of CO2, as well as all the other horribly less efficient technologies, like solar power and other fuel cells, as well as a good form of alternate, renewable fuel. One of the problems with a carbon tax is that it will raise the price of goods and services. Because of this, companies will take their setups to other places, where there isn't a tax. The foreign countries will also have a competitive edge since they don't have a tax. So the proposed solution would be to add a tax on to the products as they come in. Problem: how would you find that out? Would you just go, "A cabbage head cost X cents in carbon, so we'll charge X cents per cabbage head"? Or would you go, "You imported this from a country that is less efficient than us in carbon output. Therefore we will assume that your cabbage head used more carbon, and tax it more"? How on Earth would you find that out? Also, If you were to take either course of action you would negate the stated benefit, namely that it would incentivise "Green" production. So there is no satisfactory solution to imports, and every developed country is far from self sufficient 100% of the time. Another problem with the proposed solution is associating the cost of the carbon inside the product with the tax credit that is given. Will the tax credits be given according to taxes paid? So if a person pays $100 in taxes, they might only get $1, but if someone pays $100,000 in taxes, they will get $1,000. Or will it be a flat distribution, so everyone gets X dollars? In the current form, the plan is little more than a dream, because it has no idea how it will do any of its components. As if that weren't enough, the system is ready to be exploited. After all, aren't some products worse than others? If someone buys a Hummer, and someone else buys a hybrid, why should they both still have to pay some of the tax? Why not tax the Hummer into oblivion, and then use that money for the good of society? Isn't that the whole reason for the carbon tax, a way of paying off the social price of the carbon emissions? The possibility for this to be exploited by special interests who would normally not be competitive enough to survive is huge. After all, who wouldn't want their product to be subsidized to a point where the competition has no way of competing? Or even have their product mandated to be bought, even when one buys from the competitor? Oh, wait. It's called ethanol. Who doubts that ethanol will get special treatment because it is a "Green" product. I hope that, by demonstrating that the stated premise for the carbon tax was flawed, and by explaining how the whole plan is unrefined and the key mechanics left up to the imagination, I have offered at least reasonable doubt that a carbon tax is not a good solution. As further proof, let me introduce the futility of it: Canada's GHG output was about 734 Mt; China's was 6,100,000,000 Mt. China is opening a new coal-fired power plant every week until 2018. Canada emits 0.00000244666% of the world's GHGs.

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