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Tax versus Trade

Posted By Joanne Nova On September 3, 2010 @ 3:28 am In Global Warming | Comments Disabled

I feel like I keep stating the obvious.  A carbon tax is bad because it’s unnecessary and nobody wastes money better than big government, but a carbon trading scheme is worse. The latter is a fake market that feeds corruption and creates it’s own vested industry of financial brokers who profit no matter what the price and no matter who buys or sells (they just need a government mandated scheme that forces businesses to buy and sell), and no matter whether anything useful happens to the environment. Once the financial houses are set (and they are already well advanced) how could this policy ever be unwound?

Carbon Tax = bad

Carbon Trade = sew raw steaks to your shirt and swim with sharks

So everyone has a handy pocket list as a reference:

  1. Carbon trading is NOT a free market. (In a free market, no one would pay for an atmospheric nullity they can’t use. A carbon trading market is one where the government compels some parties to buy, so it is not free.)
  2. It feeds the financial sharks. (Think “ENRON” x 100).
  3. Its a magnet for corruption. (It’s easy to cheat in a fake market selling hard-to-verify nothings.)
  4. Its permanent. (How do you ask a two trillion dollar industry to shut up and die once it’s protected by phalanxes of lobbyists and easy-cash to donate to “worthy causes”?)

The trading scheme needs brokers, auditors, assessors, marketers, lawyers, insurers and accountants, not to mention speculators, derivative traders, ratings agencies, specialist software, and a fleet of sales reps. A carbon tax needs none of these, just application at a few crucial points of sale of oil, coal etc like the current petrol tax.

Both the trading scheme and a tax would need technicians (to get that aerial fertilizer stuffed in a hole underground) and an entirely new source of global industrial and domestic energy. Once all these people are trained, employed, committed, and have their superannuation at risk, we have the Golden Gravy Express Train from Hell. Fifty million people to yell, scream and wail should the train slow down. It’s a massive industrial dead-end, all based on computer models that assumed things that have been shown to be wrong.

So “Why don’t we take insurance? What’s the harm?”

The harm? Every dollar we spend on a fake problem is a dollar we can’t spend on a real one. Worse, it’s a dollar that might be giving power and strength to frauds and parasites. Honest conscientious souls won’t screw the rules to their advantage, but unscrupulous overlords will be happy to push the envelope and  use their extra power to crush a few more peasants. In a third world country, who will protect those victims?

Markets and currencies are powerful tools which have transformed civilization. But any tool can be used like a weapon.

Please go forth and spread that message, and let’s start with Bob Brown, Leader of the Australian Greens, whose understanding of economics appears not to extend to realizing that a price and a tax are two different things. Watch how he melds the two concepts into one vague “price” (such is the dismal state of debate in Australia):

…you do need a carbon price, whether it comes through a trading scheme or a tax on polluters. You do need a carbon price if you’re going to be able to bring down the pollution of the atmosphere

[7.30 report yesterday]

Mr Brown puhlease: a price is set by markets. Government do the taxing thing, and they are not the same.

Step aside for a moment and admire the irony of the Greens, great believers in community based action that they are, effectively arguing that all the volunteer work planting trees or going solar can never amount to anything. Only money makes for real action.

Now the alternative here was to go with Tony Abbott who said there’ll never, ever be a carbon price.

In other words we’ll never ever get real action on climate change.

It’s no coincidence that the only people who argue for a free market solution are those who profit from it, or those who don’t know what a free market is.

The only good thing about the new Greens alliance with The Labor Party is that they were bought off cheaply. The ALP didn’t have to promise much more than a stacked committee. The Greens couldn’t ask much because they couldn’t convince anyone they’d ever vote for the conservatives. Bob Brown, bless his soul, doesn’t know how to negotiate.

*PS: Lest anyone think I have something against bank workers and managers, let’s be clear — they’re just doing their jobs. Indeed, even most banking executives are only taking up opportunities we give them on a solid platinum platter. If we offer them another 10% of everything we earn so they can have even more power and control over us, who could blame them for saying “Yes Please”?

For a serious analysis the Centre for Independent Studies published a monograph Exploring a Carbon Tax in late 2007.

Even James Hansen recognises the dark side of Carbon Trading.

In my testimony I noted that a “Cap” raises the price of energy, just as does a simple honest carbon tax on oil, gas and coal at the first sale at the mine or port of entry. “Cap” is a pseudonym, disguising the fact that it is a tax, assuming that the public is a bunch of dummies, who will never catch on. With all its hooks and eyes, Cap&Trade will allow a lot of funny business. At least we would get a few Wall Street millionaires back in business, via speculation and gaming the Cap&Trade system (funded by John Q. Public, of course).”


From comments it’s clear that I didn’t make it crystal clear — An ETS is an artificial market that draws money out of the real economy and diverts a whole class of people from doing other useful productive work. There is no money “produced” by this money-go-round to return to the public. It’s just a very complicated incentive scheme that favours some citizens over others, (see “patronage”) and creates a class of people who will fight to keep the gravy flowing.

I am a big fan of free markets, but only where there is a real good or service to be traded. A 2 trillion dollar market based on government certificates is the most expensive Create-a-parasite-scheme the world has ever seen.

If there was a problem with carbon, an ETS would not be the way to solve it.

Posts I’ve done on powerful force given to those who can create a currency:

Six words to expose the scam

Subprime carbon is coming

Climate money: Bigger money moves in

Carbon credits: another corrupt currency?

Other posts I’ve done on carbon markets and corruption

The carbon casino caught with its pants down (again)

Corruption for dinner anyone: The Carbon Market Scandal (HFC -23)

Carbon market chaos strikes again

Posts on the banker enthusiasm for carbon trading

Deutsche Bank “really” want us to trade Carbon

Bankers, lawyers, investors disappointed: shucks

Please send a message to newspaper editors, The Greens and the three Independents -( The Banker Shark might make an eye catching image). We need to lift the level of debate in this country. People need to know that Carbon Trading is a hidden tax, a fake market, prone to corruption and that it’s no coincidence that Bankers really want us to Trade Carbon but aren’t pushing for a tax even half heartedly.

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