“Market-based?” Hardly.

The Wall Street Journal has a good piece today discussing the rift between economists and politicians over whether global warming policy should involve a straight tax on carbon use–called a Pigovian tax, after this guy–or a cap-and-trade system. The best policy, as argued by guys like Jim Manzi and Bjorn Lomborg, is probably neither, but if it comes down to it, a tax is probably more effective and more honest. As the article points out, one of the big selling points for cap-and-trade is that, well, it’s not a tax.

Many academics, even conservatives, favor a tax on carbon emissions. Many lawmakers, including some liberals, fear a political backlash against new fees. They lean toward a cap-and-trade system, which would set a limit on carbon-dioxide emissions and require companies to obtain permits to release carbon dioxide into the air.

Cap-and-trade is an easier sell, politically, because politicians can somewhat plausibly claim not to be raising taxes. Except that, functionally, a cap-and-trade system would have the same effect as a tax increase:

There may not be much practical difference between the two approaches. Caps would likely function much like a tax, levying new costs on business that would ultimately be passed on to consumers.

“The concern about taxes is understandable because people think you’re going to raise their electricity bill by putting a tax on coal,” says Kenneth Green, a resident scholar at the conservative American Enterprise Institute who advocates a carbon tax. “But with cap and trade you’re still going to raise the cost of their electricity.”

In other words, cap-and-trade is a back-door tax, a sneaky way of hiking energy prices that politicians can weakly argue is "market-based"… because hey, everyone loves the market, right?