Alliance for Climate Protection Ignores Economics

Check out this commercial by Al Gore’s foundation that completely ignores economics:

To review the video, the planet is hot, the economy is cold.  If we put them together, then we can cool the planet and heat the economy.  If only things were that simple. 

The commercial claims that capping emissions will spur new jobs and new investments in clean energy.  That is akin to taking a bucket of water out of the deep end of the pool and putting it back into the shallow end.  A law that encourages investment to move from one sector of the economy to another–especially when rational self-interested market actors didn’t do it on their own–cannot possibly cause growth.  Laws that generate a new scarce resource for businesses (in this case carbon emissions) cannot have positive effects on an economy.  

Imagine if government passed a law that forced each food producer to spread a useless and harmless liquid on every piece of food the producer made–this isn’t a perfect comparison since green house gasses may have not-so-harmless effects.  Now imagine that the new liquid is sold only by the government for a high price.  According to the same line of reasoning as Al Gore’s foundation’s commercial, that would spur economic growth and create jobs.  That is blatantly false.  The obvious result to a policy that creates an additional scarce resource is fewer jobs and higher prices for American consumers.  

This crude attempt at propaganda must either have been created by producers completely ignorant of economics or the producers assumed that the American public is completely ignorant of economics.  

At 20 seconds into the video when the giant hand of government planning places a cap on pollution, it physically places bottle caps on the stacks of coins that the piggy bank economy has been making.  Shockingly, the video does get some things right.  Capping carbon emissions will limit economic growth.  The money will be re-invested into “green jobs” but only at the expense of more economic growth and prosperity for millions of people.  Under the proposed cap and trade bill, government will tax carbon either through an auction system or a pollution credit cap and trade program.  Either one will make producing goods in the United States more expensive, just like the law that forces food producers to spread harmless liquids over their food.  That will eliminate jobs and drive companies overseas where the tax burden is lower.  

This commercial is dangerous because it simplifies the economy and the environment too much.  Politicians and citizens should seriously consider the consequences of their actions and of legislation that will influence the actions of others. 

If Americans really want to reduce carbon emissions, then they should advocate free market solutions to the problems.  When property is privately held, the owners have an incentive to maintain it and keep it free from pollution.  Private property rights and our court system could likely deal with many pollution problems if they were allowed to do so.  For more information on private solutions to pollution, check out this Independent Review article by David Theroux, “Property Rights vs. Environmental Ruin.”