Wednesday, February 11, 2009

Carbonution? Evolarbon? Darwinian Carbonation?

In honor of the 200th anniversary of Charles Darwin's birth (I figured arguing about global warming and carbon markets wasn't controversial enough, so I'm bringing in evolution, and if this doesn't stir up my readers, maybe I'll talk about something even more controversial like stem cell research or mustaches), I have decided to utilize some of the facets of his theory to explain why an established carbon market will be good for our economy. If you are not into evolution, feel free to intelligently design an alternate argument for a carbon market.

Only the strong will survive...

One of the main arguments of opponents of a regulated carbon market is in regards to the job loss that will occur due to either companies not being able to bear the burden of the additional cost or the flight of jobs to countries where carbon restrictions are less restrictive. It is a typical fear argument, similar to the one your mom would use when you were a kid, "Don't cross your eyes or they'll stay that way!" Sure, it was effective, but factual, not really. Yes, the carbon market is going to have some losers. It is the Darwinian forces of economics at work, additional costs will cause organizations to either adapt or die off. But does this mean that society (that's you and me) should continue to bear these externality costs so that a small amount of individuals should remain gainfully employed. It is always funny to me that most people scrutinize the government when it props up corporations with their hard earned money (just ask the financial institutions on the U.S.), but then ignore the other corporation induced costs that are difficult to quantify. One of the benefits of the carbon market is that some of these "other corporation induced costs" will now have a monetary amount attached to them so that you and I no longer have to bear those costs.

Life will find a way...

In addition to some corporations dying off, entire new industries and organizations will come to life. That is, most (actually it will more than likely be all and then some) of the jobs that are destroyed by the price of carbon will be replaced by new positions in the "green" economy or in organizations that are able to adapt to the new industry dynamics. Regulations and the inevitable expansion of the carbon markets into developing countries will prevent too many jobs from fleeing to countries with unregulated carbon. Further, as long as the cost of carbon does not exceed the cost to transport goods from outside of the U.S. (which will more than likely have a carbon price built into it), it will be cheaper for manufacturers to remain where they are. In fact, the majority of those corporations that would have moved their facilities to outside the U.S. due to a carbon price probably have already done so due to NAFTA, the China price, etc.

Ability to adapt to change...

From the establishment of trade to the continuous evolution of technology to the incorporation of labor rights, the U.S. economy has always adapted and moved forward. It is the structure of an economic market that matters, not the players within that market. As long as the market functions, there will always be jobs. Capitalism = Darwinian Evolution.

2 comments:

Tim Magner said...

It's about time we put a price on carbon. Level the playing field and watch innovation and capitalism flourish!

Greg said...

If you're going to go there, you may as well go all the way (the "there" being mustaches).

http://movember.org/

Coming your way in a scant 8 months...