Deep Stupid


Today’s winner is Sen. Claire McCaskill, D-MO.  McCaskill is one of the most active Twitterers on Capitol Hill, and today she tweeted:

I hope we can fix cap and trade so it doesn’t unfairly punish businesses and families in coal dependent states like Missouri.

Cap-and-trade is the system for reducing air pollution, contained in the energy bill the House passed on Friday.  Roughly speaking, you cap the total amount of pollution that can be emitted, divide that number by the number of polluters, and sell (or, in the House legislation, mostly give away) permits for equal shares of that pollution to each polluter.  They can then buy and sell permits amongst themselves — the “trade” part.

The more pollution you emit, the more permits you need to buy from other polluters, and therefore the more it costs you.

One of the beauties of a cap-and-trade system, then, is that those who pollute the most have to pay the most.  That’s how it should be.  It’s how a functioning free market would allocate costs.  Pollution is a cost of production, just like buying coal and building power plants.  In a functioning market, producers of goods pay their own costs of production and have to pass those costs on to the people who buy their goods; therefore, there is an incentive to reduce costs.  But, of course, we don’t have a functioning free market where pollution is concerned.  The producers do not pay their own production costs, and the people who buy their goods don’t have to pay fair market value for them.  They externalize their costs onto the rest of us.  In other words, we’re all subsidizing them, and have been for decades.

The whole point of a cap-and-trade system is to eliminate that problem; to make people pay their own way when they pollute.  This is a feature, not a bug, Senator McCaskill, so it does not need you to “fix” it.

Up to now, energy costs in coal-dependent Missouri have been artificially low because all the rest of us have been subsidizing the cost of producing the electricity you use. We’ve all been paying for a product we don’t receive.  There’s nothing “unfair” about stopping that, Senator, and it does not “punish” businesses and families in your state.

So stop with the self-pity.  You’ve chosen to build electric plants that have high production costs.  You’ve counted on being able to shift that cost onto the rest of us, rather than paying it yourselves.

Sorry, but we’re closing our wallets.  It’s your electricity.  You pay for it.

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