In Praise of Markets

Markets are by far the most powerful, rational, and generous mechanisms for solving economic problems and indeed most other politically relevant problems. If "generous" seems surprising, I will add this. If you believe that markets have to be regulated because they are often cruel, you might also notice that it is a lot less painful for everyone when you get to regulate a surplus rather than a deficit.

For one case in point, see immigration. Few issues have been as stubbornly resistant to political reform as this one. A large wave of immigrants from Mexico created a great deal of anxiety in the U.S., but it also split the parties against themselves. Many Democrats saw Mexican immigrants as a plus, since they tend to vote Democratic when they get to vote. Unions did not see a continuous supply of cheap labor as so wonderful a thing. Many Republicans saw that wave of immigration as a threat to national unity and a sign that the laws were being ignored. Business interests did see a continuous supply of cheap labor as a wonderful thing.

The market was too powerful to resist. In Mexico there was a large supply of labor chasing jobs and in the US there was a large demand for labor. The spice must flow. It did.

Now, however, the currents seem to have shifted, as Via Meadia points out.

There's a WRM piece in the Wall Street Journal out today about the likely impact of the latest big wave of immigrants to reach the United States. The main takeaway: immigration in this country is not what you think. Immigrants from Asia have now replaced immigrants from the Spanish speaking world as the largest source of new immigrants, and the Asians tend to be well educated, well skilled, and when they get here they do very well.

That is a case of population flow that reminds us of how uncertain projections and trends can be. A large wave of legal, English-speaking, skilled and educated immigrants may have a down side. They are going to be competing with someone. It is hard to argue that it is bad for the United States. At any rate, a relatively relaxed immigration policy, whether de jure or de facto, is more generous and humane than the alternative.

For another case in point from Via Meadia, consider the carbon emissions projections for the United States.

Much to the surprise (and, one suspects, the chagrin) of the deranged doomsaying wing of the environmental movement, new forecasts of US CO2 emission are out and they point to an even steeper drop than the last set of predictions.

No cap and trade, no huge new taxes on oil, no draconian driver restrictions, no air conditioning bans, no rationing — and the US is on track to cut its CO2 emissions 17 percent below the 2005 levels by 2020 — and to keep cutting our emissions levels beyond that…

So, to summarize, the United States of America basically blew the global greens off completely, trampling all over their carbon tax and cap and trade agendas, and earning wails and shrieks of hatred at the Rio+20 Summit — while making huge strides toward reducing CO2 emission levels.

It's almost as if there is no connection between the green policy agenda and environmental progress.

Mead points out that this owes a lot to environmental regulations. Fuel efficiency standards are a big part of the equation. All of the real work, however, has been done by private enterprises doing what they do best.

The lesson here is regulation is most effective when it cooperates with market forces as much as possible and least so when it attempts to massively redirect or resist those forces. The global green agenda was at least in part motivated by the dream of replacing market forces with something more humane. This just doesn't work.

And if the United States can achieve this while blowing off the panicky greens and their tiresome Malthusian agendas, so can China and India. That is a very good thing, because those countries have zero repeat zero interest in adopting any green measures that slow their growth.

The truth is that if CO2 emissions are going to come down, it's going to happen the American way rather than the Greenpeace way. Instead of flinging muck and howling curses at the most successful carbon cutting large economy in the world, maybe a few more greens here and there will start thinking about how to spread the magic around.

The only way out of our environmental challenges is through. Wealthy countries can afford to care about the environment. Poor countries and developing countries will not care, whether we want them to or not.

Comments

[Donald Pay]

Nothing surprising here. You seem to want to continue fossil fuel socialism through socializing the costs of fossil fuels By the way, cap and trade is a market based approach, and a carbon tax is a way to incorporate externalities into the cost of fossil fuels. You oppose both of these anti-socialist measures.

[duggersd]

A couple of points. I do not believe most Americans and specifically Republicans object to Mexicans providing cheap labor because it is cheap labor. I believe it has more to do with people here (mostly Mexican) illegally and competing for jobs unfairly.
You point out the CO2 emissions have dropped in part due to regulations on fuel economy (CAFE standards). Much of the increase in fuel efficiency is due to lighter cars in which passengers are less likely to survive or at the minimum become injured due to accidents. So at what cost do we get those cuts in CO2 emissions? I know certain people haters do not see this as a problem.

[Stan Gibilisco]

Maybe we can think of the carbon tax as a sort of "sin tax." You know, tax stuff we do that's bad for us. We do it with booze, tobacco, and in some enlightened places with soda pop and trans fats.

Here's the rub: What happens if we completely stop producing carbon, stop drinking booze, stop smoking, stop guzzling fizzy sugar water and demised lipids ... no more tax revenue from those sources!

In a perverse sort of way, then, the government is motivated to make people generate more carbon byproducts (hyperventilate, everyone!), get drunk more, smoke more, drink more soda pop, eat more American Fries ... so as to get more tax dollars from us.

Seeing this problem, some exceedingly enlightened pundits have proposed a universal driving mileage tax. It would apply even to electric vehicles and hybrids, to make up from falling revenues from gasoline taxes.

In that way, dear readers, I might really think about getting that Doddge Ram instead of the rinky-dink electromobile next time I need good wheels. If I gotta pay however they slice it, I might as well drive something that'll get me where I want to go in style.

Oops. The Ram won't fit in my garage. A Jeep Wrangler, then. With a rag top and a roll bar.

So regulate away, you masters of humanity, regulate away, tax away, and we the people will react accordingly ...

[larry kurtz]

Since the Fourth World sees 'poor' differently than those pretending to live in so-called civilized society, greed in the US will die just as the earth haters become obsolete.

Ken and Barnes' elderly insular worlds are doomed by their own hands: being wasteful is just another feature of the entitlement associated with red state failure.

Go ahead, men: and thank you for paying my taxes for me.

[larry kurtz]

btw: Sioux Falls represents the chemical toilet in Agenda 21: thx Barnes.

[duggersd]

Stan, about that "mileage" tax..... I have thought about that too. Cars that sip gasoline or use no gasoline still provide wear and tear on the roads. Roads are something for the common good and I believe it is in the best interest of all citizens for roads to be maintained, even if not all citizens drive. I have wondered about the feasibility of converting from a tax on gasoline/diesel to paying a tax based upon miles driven/weight of vehicle. One of the reasons I like the gas tax is the fact that it goes more or less to the roads and the people who use the roads the most pay for them. That is much like the park sticker I get for the state parks. But since we now have vehicles who are essentially using the roads for free, it might make sense to have another way to collect this "use" tax.

[Donald Pay]

Stan, the carbon tax is meant to capture externalized costs, thus to offset the subsidies we all provide to high carbon fuels. Because production and use of fossil fuels causes damage to human health and the environment that are difficult to incorporate in the product price, a carbon tax generates revenue to pay for the mitigation of the externalized costs which are now either not mitigated, or mitigated at the expense of the general taxpayer. The result of a carbon tax would be to price fossil fuels more on the real costs of the product, although it might not capture all the externalized costs.

In the 1990s South Dakota imposed a tax on solid waste volume to generate revenue to encourage recycling and provide seed money for recycling projects and other solid waste management options designed to reduce landfill costs. Some legislators thought it odd that I would support a tax that would shrink over time if recycling was successful. But that was exactly the point. You want a tax that disappears when it is no longer needed.

[larry kurtz]

BC just raised its carbon and gasoline taxes:

http://www.theglobeandmail.com/report-on-business/bc-to-raise-carbon-tax-price-of-gasoline-july-1/article4374532/?cmpid=rss1