Soon, we will likely see the worst case scenario come to pass in the name of “preventing climate change”, and that is to have a command-driven regulatory agency dish out quotas and make peripheral tweaks to existing regulations in order to look like they’re doing something productive. It is unlikely that climate legislation will pass the Senate in this Congress or the next…and that is a tragedy.

I place the blame squarely on Republicans; centrist and conservative alike. I tend to think that Democrats gave a lot on this issue…and I grant them that even though their preference for centralized solutions to environmental problems are oftentimes wrong on the merits.

To be sure, cap and trade was not my most preferred solution, which is a carbon tax…which was never even close to the table due to the Republicans’ successful campaign against the word “tax”. A carbon consumption tax would have been the most efficient, least intrusive way in which to deal with whatever specter of environmental degradation exists (even if it’s not climate change, per se, and just happens to be smog). But, cap and trade was a very large step in the direction of markets anyway — and the ACES bill passed the house! I have previously voiced my concern about the (lack of) possible impact that the ACES bill will have, but my problem was not with the premise.

Let’s quickly review two simple definitions of how governments interact with markets:

  • Policies that get the government involved in differentiating, selecting, and amplifying business plans.
  • Policies that shape the fitness environment, while leaving business plan differentiation to entrepreneurs, and selection and amplification to market mechanisms.

Now, hold constant that this government will act in a way consistent with the fact that they believe that climate change is a serious issue. The most optimal solution is for the government to put a price on carbon (shape the fitness environment) and let businesses and individuals figure out how they will adapt to the new evolutionary landscape. Wait…that’s exactly what ACES did. Sure, there were a giveaways, and it questionable whether the bill would “do anything” to prevent global warming — but those are mostly semantics. The point is, it is consistent with my preferred role for the government.

However, since pricing carbon is not in the cards for this or the next Congress…and given that our government is looking to act against climate change…and given that there are a myriad of very, very inefficient regulations already on the books that fit into the first category of government action, we are all but destined for sub-optimal policy (like regulation by the EPA).

And I blame you, Republicans.

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