The EU will have to find another way to Confiscate Private Sector Wealth because the ETS is Kaput

Posted by PITHOCRATES - April 20th, 2013

Week in Review

The Emissions Trading Scheme (ETS) was the European Union’s (EU’s) way of combating global warming.  By making carbon emitters pay for their carbon emissions.  But Europe is mired in recession.  And the Eurozone is suffering a sovereign debt crisis.  Which hasn’t helped to pull Europe out of recession.  And it appears that the economic reality in Europe is dooming the ETS (see If Carbon Markets Can’t Work in Europe, Can They Work Anywhere? by Bryan Walsh posted 4/17/2013 on Time).

But the ETS—and carbon trading more generally—is not doing well, and its problems are taking some of the green shine off of Europe. Since its launch the ETS has struggled, with the price of carbon falling as the 2008 recession and overly generous carbon allowances undercut the market. In the ETS business are given free allowances to emit carbon—too many free allowances mean they don’t need to reduce their carbon emissions much, which erodes the demand for additional carbon allowances on the market and causes the price to drop. Prices fell from 25 euros a ton in 2008 to just 5 euros a ton in February. There was a way to fix this—take 900 million tons of carbon allowances off the market now and reintroduce them in five years time, when policymakers hoped the economy would be stronger and demand would be greater. As anyone who’s taken Econ 101 would know, artificially reducing the supply of carbon allowances in such a drastic way—something called “backloading”— should force the price back up.

But on April 16, the European Parliament surprised observers by voting down the backloading plan. In turn, the European carbon market collapsed, with the price of a carbon allowance falling by more than 40% over the day. “We have reached the stage where the EU ETS has ceased to be an effective environmental policy,” Anthony Hobley, the head of climate change practice at the London law firm Norton Rose, told the New York Times. The ETS is a mess.

Backloading failed because even in very green Europe, economic concerns seemed to trump environmental ones. European Parliamentary members worried that any action that would cause the price of carbon to rise would add to European industry’s already high energy costs.

This should make China happy.  For there was no way no how they were going to pay for the carbon emissions from their airplanes entering European airspace.  In fact they warned they would cancel their Airbus orders and give them to Boeing if the Europeans tried to force them to help bail out the Eurozone in their sovereign debt crisis.  For this was what the ETS would ultimately do.  Transfer great amounts of wealth from the private sector to the public sector.  Which would have gone a long way in helping the Eurozone to continue to spend money they don’t have.

The ETS was nothing but a new tax on business.  Cloaked in the guise of making the world a better—and greener—place.  But the EU is suffering economically.  A large part of the sovereign debt crisis is due to having less economic activity to tax.  So the EU needs to improve the economy.  So they can generate more tax revenue from the current tax rates.  But increasing taxes on the carbon emitters will not help businesses.  It will only increase the cost of business.  Increasing their prices.  Making them less competitive in the market place.  Reducing their sales.  And killing jobs.  Which will generate even less tax revenue from the current tax rates.

The problem in the EU is not global warming.  Or insufficient tax revenue.  They have a spending problem.  This is what caused their deficits.  That gave them their soaring debt.  Just like every other nation that ever suffered a debt crisis.  Including the U.S.  Trying to fix a spending problem with more taxes just doesn’t work.  Only a cut in spending can fix a spending problem.  It’s not like the old chicken and egg question.  Excessive and unsustainable spending always comes before a debt crisis.  Always.

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Budget Debates and the EU Emissions Trading System, Lying to Spend More

Posted by PITHOCRATES - July 3rd, 2011

Time to Scare the Old People

And the budget debate to raise the debt limit goes on.  The Republicans are trying to be responsible.  The Democrats are taking the opposing position.  And if the Democrats can’t get their way (more and more spending), they’ll cut programs that will kill grandma (see Debt-Limit Delay Would Jeopardize Social Security Payments by Richard Wolf, USA TODAY, posted 7/3/2011 on ABC News).

It shows that in August, the government could not afford to meet 44% of its obligations. Since the $134 billion deficit for that month couldn’t be covered with more borrowing, programs would have to be cut.

Wow.  The monthly deficit is $134 billion?  Ronald Reagan was mortgaging our kids’ future with his irresponsible deficit spending.  Remember how big his deficits were?  Approximately $200 billion.  Annually.  While the current deficit stands at $134 billion.  Monthly.

Back then with a Republican in the White House it was a spending problem.  Today with a Democrat in the White House it’s a revenue problem.  Reagan’s economic programs led to an economic explosion.  To which the Democrats point to those deficits and say, “Yeah, but at what cost?”  The same Democrats who have no problem with a deficit that is almost ten times greater than Reagan’s.  With no economic results to show for it.  And they want to borrow even more?  Unbelievable.  They make Ronald Reagan look like a penny-pinching tightwad by comparison.

If Social Security, Medicare, Medicaid, unemployment benefits, payments to defense contractors and interest payments on Treasury bonds were exempt, that would be all the government could afford for the month. No money for troops or veterans. No tax refunds. No food stamps or welfare. No federal salaries or benefits.

Democrat politics 101.  Threaten to cut spending on the things that will scare people the most.  Police.  Fire fighters.  Soldiers.  Teachers.  And anything to do with old people.  Like Social Security and Medicare.  Because seniors make up the largest and most active political group in American politics.  Democrats are counting on their help.  To bitch and moan to Republicans.  And they’re filling their heads with horror stories about Republicans.  That they are not only going to cut off their Social Security checks.  But they’ll be coming by at night to their homes so they can kill them while they sleep.  Because they’re just that mean.

Interestingly, with a $3.5 trillion dollar annual budget (approximately) and a $1 trillion dollar annual deficit (remember they hated Reagan for his $200 billion annual deficits), that means that the government collects about $2.5 trillion dollars annually.  That’s just over $200 billion per month.  Cash.  Coming from us and going into the U.S. Treasury.  So if they don’t send out the Social Security checks, what, then, will they be spending that $200+ billion each month on?  I mean, $200+ billion will cover Social Security.  And then some.

The Bipartisan Policy Center studied Treasury Department receipts and spending for August 2009 and 2010 and found that the government likely would not have enough revenue to make the full $23 billion payment to Social Security recipients due Aug. 3…

The first major interest payment to creditors would be due Aug. 15 — $29 billion, more than the $22 billion due to arrive in revenue.

So the million dollar question is who are they going to pay?  Themselves?  Their pension plans?  Their health care plan?  Political cronies?  Ethanol subsidies?  The UN?  The World Bank?  Exactly who is going to get that $200+ billion if it’s not going to be our seniors and our debt holders?  Together that’s only $52 billion.  Leaving about $148 billion left over.  That’s still a lot of money.  If they don’t pay the seniors and the debt holders, they better itemize who they do pay.  Because this sounds more like political posturing than responsible governing.

Saving (and Owning) Greece

And speaking of responsible governing, that’s something we can’t do.  Speak about responsible governing.  Here.  Or in Europe (see Euro zone warns Greeks on sovereignty and privatization by Jan Strupczewski and Erik Kirschbaum posted 7/3/2011 on Reuters).

Euro zone finance ministers have approved a 12 billion euro ($17.4 billion) installment of Greece’s bailout, but signaled that the nation must expect significant losses of sovereignty and jobs.

The price to save Greece from themselves?  Just a loss of jobs.  And a loss of sovereignty.  The Euro zone finance ministers are making it clear.  If you can’t be responsible we’ll be responsible for you.  Other than the loss of sovereignty thing, it would be nice to see something like this happen in America.  Have someone step in and be responsible.  Because Washington sure isn’t.

Germany hopes this will eventually total around 30 billion Euros, with banks voluntarily buying new Greek bonds when old ones they hold mature, meaning Athens would not have to produce cash to repay its creditors immediately…

Those discussions continue, with the involvement of the private sector in the next package a must for several euro zone countries as voters grow increasingly opposed to shouldering the burden of bailing out Greece on their own.

The taxpayers in the Euro zone are a lot like American taxpayers.  They, too, don’t want to pay for irresponsible government spending.  Especially the irresponsible spending of other governments.  That’s why the austerity cuts are so important.  Without them Greece will never become solvent.  And they need that to get private investors to buy their bonds.  For the private sector will never buy bonds from an insolvent country.  And if they don’t that’s more for the non-Greek taxpayers.  Which just may not be politically doable.  Especially with other countries (Spain, Portugal, Ireland, etc.) in financial trouble.  To save them and the Euro they may have to find another source of revenue.  Other than their own taxpayers.

Emissions Trading System – Europeans Taxing non-Europeans

And they have.  Instead of being responsible, they’ll just tax non-Europeans to help with these European nations with budget problems (see U.S. Airlines Challenge European Emissions Rule by James Kanter posted 7/3/2011 on The New York Times).

Starting Jan. 1, the Union intends to expand its Emissions Trading System to cover emissions from most flights that touch down at, or take off from, European airports. That means airlines will have to buy some of their carbon permits from traders and E.U. governments…

But the plan has generated fierce opposition from airlines, many of them non-European. They say that Europe has no right to charge for emissions on some routes that are mostly outside European airspace.

What was that about loss of sovereignty?  Boy, these Europeans look like they want to rule the world. 

Let me see if I understand this.  The Americans flying into the European Union (EU) have to pay a tax to the EU even though the Americans don’t vote in the EU.  Pay a tax.  But have no representation in the government collecting the tax.  Humph.  Oh, by the way, Happy 4th of July.  The celebration of America’s independence from the British Empire due to their policies of taxing them without allowing them a voice in Parliament.

Carbon trading.   Big Government’s greatest scam.  Charging for engine exhaust.  Something that has no value.  And is produced by others.  Yet the European Union has taken title to it.  And placed an arbitrary value on it.  Now anyone flying into or out of European airspace has to pay an additional fee to cover the cost of their emissions.  Even if their emissions only emitted in European airspace for a tiny fraction of their flight.  All in the name of fighting global warming. 

The airlines also are expected to attack the cost of the system and the lack of guarantees that revenues will be used for climate protection.

Seeking to defuse the dispute, E.U. officials have emphasized that they will exempt incoming flights if other countries take “serious measures” to reduce emissions that would be considered equivalent by the Union. E.U. officials also have begun discussions with national governments on introducing rules requiring them to use the revenues from permits to tackle climate change…

What is clear is that by charging airlines for their carbon emissions, the European Union would do more than protect the climate. The system could be a source of revenue for countries, like Britain, with busy airports and ballooning budget deficits.

Looks like it’s more about the money than global warming.  So countries with irresponsible government spending can continue to spend irresponsibly.  That’s the thing with governments.  They always increase spending.  So it’s never a good idea to give them more money to spend.  Even if it’s for a noble purpose.  Because if they get this today, they’re just going to ask for more tomorrow.

Airlines complain that some of the money they will spend on carbon permits will end up subsidizing debt-laden governments.

“Countries like Britain have reserved the right to use the money how they see fit,” said Nancy Young, a vice president at the Air Transport Association of America. “Helping Europeans out of their fiscal hole is not the aviation industry’s job.”

So the smart thing would be to stop flying into the EU.  Hmmm.  I believe Norway is not a member state of the EU.  Perhaps they should think about expanding Oslo International Airport.  It can be the gateway to Europe.  The hub for all international flights to and from the EU.  Then the EU states can fly the last leg of these international flights.  And pay their silly and extralegal emissions tax to their hearts content.

Global warming is a crock.  It’s just way to raise revenue.  For cash-strapped countries who like to spend irresponsibly.  But that money will not go to fight global warming.  It’ll go into the general fund.  To help cover those budget shortfalls.  Just like all those lotto proceeds were going to go to the public schools in America.  And didn’t.

Buying Votes with Free Stuff

The U.S. has to raise their debt limit or it will be the end of the world.  The European Union needs their Emission Trading Scheme or it will be the end of the world.  Literally.  Or so they say.  But we know they just want the money.  To pay for their orgy of government spending.  Just like the Americans and their battle to raise the debt limit.  But there is a better way to solve their problems. 

What’s the problem?  Governments are spending more money than they have.  Solution?  Stop it!  Stop spending more money than you have!  You do this and you can balance your budgets.  You’ll be able to placate those pesky responsible Republicans.  Taxpayers are happy because they can keep more of their earnings.  And the rest of the world won’t be pissed at you for shaking them down to pay for your fiscal woes.  Everyone wins.  So why not do it?  Because if tax and spend liberals don’t spend they can’t buy votes.  By giving away lots of free stuff (tuition assistance, retirement assistance, health care assistance, etc.).  And, really now, why else would you vote for a liberal if it wasn’t for the free stuff? 

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Save the Economy or Save the Planet, it’s One or the Other

Posted by PITHOCRATES - June 5th, 2011

Pushing back against the EPA’s Assault against Business

With the economy in the toilet where it will probably remain for a long time to come, a lot of people have given up on environmentalism.  They take a look around them and see that things look pretty good.  Environmental-wise.  In fact, it’s a regular paradise compared to all the environmentalists’ alarmist predictions from a decade or two ago.  Which look rather silly today.  Children in the UK will no longer know what snow is.  The overwhelming stench of dead fish decaying on America’s beaches (killed by warming ocean temperatures).  Flooded coastal areas due to melting of Arctic ice.  None of it happened as predicted.  We got all worked up over nothing.  That’s why environmentalism is more of a young person’s game.  Because after you lived through 20-30 years of failed predictions, you tend to grow a little skeptical.  Especially during times of high unemployment.

That’s why a lot of people don’t give a rat’s rear end about global warming now.  They want a job.  And the way they see it, all this environmentalist nonsense is killing the job market.  And the Republican-controlled House they’re starting to push back on the job killer itself.  The EPA (see Soaring emissions posted 6/2/2011 on The Economist).

The Republicans’ chief concern is the EPA’s authority, as affirmed by the Supreme Court in 2007, to regulate emissions of greenhouse gases. But more broadly they worry that the EPA is constantly tightening restrictions on pollution, at ever higher cost to business but with diminishing returns in terms of public health. They point to a slew of new rules about industrial boilers, cooling water at power plants, the disposal of coal ash, and emissions of mercury, ozone and other chemicals from smokestacks, which cumulatively, they say, will have a crippling effect on power generation and other industries. “Even God,” says Joe Barton, a Republican congressman, “couldn’t meet some of the ozone standards.”

…The Republican leadership in the House has accused the administration of plotting to raise the price of energy through onerous regulation, in an effort to promote otherwise uncompetitive green technologies. It wants the EPA to give more weight to the impact on the economy and jobs when drawing up future rules.

The Obama administration has.  And is.  Trying to raise the price of ‘cheap’ energy to promote their green energy initiatives.  It’s on record they want gasoline to cost as much in the U.S. as it does in Europe (as in $8/gallon).  To make more costly and shorter-range electric cars easier to sell.  And they want to do the same with cheap fossil fuel-produced electricity.  To make more costly and less reliable wind and solar generated electricity easier to sell.

EPA officials appear baffled by this barrage of hostility… The agency, they say, already conducts cost-benefit analyses of all important regulations, in addition to submitting them for expert review and public comment. Every dollar spent on pollution controls mandated by the Clean Air Act, including the ozone restrictions that Mr Barton is complaining about, will bring $30 in benefits to public health, the EPA reckons.

Expert review and comment?  By who?  It certainly isn’t the businesses affected by their regulations.  Who know exactly the costs their regulations will add.  No, they can’t be the experts.  Not when they are protesting the onerous costs these regulations are adding.

And the $30 in benefits for every dollar spent on pollution controls is a specious argument.  No one can know this.  It’s made up math based on fallacious assumptions and unrealistic projections.  Much like the math they used some 2-3 decades ago when they made all those alarmist global warming predictions that never came true.

Saving the Trees but Killing the Planet

We were saving the trees going to a paperless world thanks to the Internet.  Little did we know that we were killing the planet by saving those trees (see Could the Net be killing the planet one web search at a time? by Alex Roslin, for Post Media News, posted 6/3/2011 on The Vancouver Sun).

Ironically, despite the web’s green promise, this explosion of data has turned the Internet into one of the planet’s fastest-growing sources of carbon emissions. The Internet now consumes two to three per cent of the world’s electricity…

The bulk of all this energy is gobbled up by a fast-growing network of huge “server farms” or data centres that form the backbone of the Internet. They are hush-hush facilities, some the size of five Wal-Marts, packed from floor to ceiling with tens of thousands of computers…

All those computers have a voracious appetite for energy, especially for cooling equipment to prevent overheating.

This means that every time you do an Internet search you’re releasing polluting carbon into the atmosphere.  Because the majority of our cheap and reliable electricity is produced with cheap and reliable fossil fuels.  And some of these server farms are fossil fuel beasts with voracious appetites.

Apple’s mega-facility is part of a cluster of gigantic new data centres coming on line in North Carolina that are powered largely by cheap and highly polluting coal power. Google has a 44,000-square-metre data centre in the state that eventually will consume an estimated 60 to 100 MW. Facebook has a 28,000-square-metre facility under construction there that will eat up 40 MW.

Greenpeace calls the three facilities “North Carolina’s dirty data triangle.” Coal, it says, is the most polluting of all fossil fuels and the world’s single largest source of greenhouse gas emissions.

“The technologies of the 21st century are still largely powered by the dirty coal power of the past,” the environmental group said in a report card on the IT sector in April, titled How Dirty is Your Power?

There is a reason why we use so much coal.  And it’s not because we hate the planet.

North Carolina offers industrial customers one of the lowest electricity rates in the U.S. — 5.8 cents per kilowatt hour, versus the U.S. average of 6.7 cents.

It just so happens that the state’s electricity is also some of the dirtiest in the country. Nearly two-thirds of the state’s electricity comes from coal.

And here is the tradeoff between global warming and jobs.  Coal is dirty but cheap.  Which keeps electricity costs down.  Which attracts business.  Like in North Carolina.  Other locations lost these new jobs because their environmental policies made energy more expensive in those locations.

The real solution, [Bill St. Arnaud, an engineer and green IT consultant in Ottawa] said, is for governments to impose measures like carbon taxes and emissions caps that make dirty energy less attractive financially.

“The planet is warming up, and it’s going to get very bad. We need a price on carbon. It’s the only way to get people to move off coal because coal is currently so cheap,” he said.

The environmentalist want to raise the cost of electricity.  So cheap coal-generated electricity isn’t so cheap.  So business have no less costly solution.  Thus guaranteeing their costs will rise.  Making them look elsewhere to cut costs.  As in not hiring people.  Or laying them off.  All the while passing these higher costs onto the consumer.  Increasing their utility costs.  As well as the goods they purchase.  Leaving them with less disposable income.  Thus reducing economic activity.  With them buying less business will sell less.  Which means they won’t expand.  Instead, they’ll probably cut their production.  And lay off people.

However you look at it, increasing the cost of energy ends badly for the consumer.  And that’s exactly what the EPA wants to do.  And the Obama administration.  So they can implement their green initiatives.  And, of course, adding a tax on carbon, the most abundant byproduct of energy production, provides a lot of revenue for an overextended federal government.  Which is, I’m sure, just a coincidence.  And by coincidence I mean it’s the driving force behind all green initiatives.  Increasing tax revenue.

The EU wants to Emission Tax the World’s Airlines

But this is not an American phenomenon.  It’s even bigger in the European Union.  And they’re looking to export their regulations to other nations (see Airlines, EU in escalating trade row over emissions by David Fogarty and Pete Harrison posted 6/5/2011 on Reuters).

Global airlines attacked the European Union on Sunday over its plan to force them into the bloc’s emissions trading scheme, as the EU vowed to stand firm against threats of retaliation…

The EU will require all airlines flying to Europe to be included in the Emissions Trading Scheme (ETS) from January 1 next year. The system forces polluters to buy permits for each tone of carbon dioxide they emit above a certain cap.

You want to fly to the EU?  Well, that’s fine, but there’ll be an additional tax.  You see, we’re trying to save the planet.  And our treasury.  As these EU bailouts are getting expensive.  And don’t appear to be ending any time soon.

Airlines say the scheme will increase costs and comes at a time when fears are growing about a faltering global economy, which could slash industry profit expectations…

“The last thing that we want to see is a trade war,” said Giovanni Bisignani, director-general of the International Air Transport Association. The EU had to heed a “growing chorus of countries strongly opposing an illegal extraterritorial scheme.”

“We have to absolutely avoid this because the risk of retaliation for Europe that is in survival mode would be the kiss of death,” he told Reuters on the sidelines of IATA’s annual meeting in Singapore.

The younger people today may not know what a trade war is.  It’s when one country raises the price of doing business in your country to every other country trying to do business in your country.  This is to protect the higher-priced domestic industries.  By removing lower-priced consumer alternatives.  When countries retaliate by doing the same you get a trade war.  And it is the consumer who suffers.  Because everything they buy becomes more expensive.  Oh, and it was a trade war that caused the Great Depression.

Under the scheme, the aviation sector will receive 213 million carbon permits, called EU Allowances (EUAs) in 2012 and then 209 million from 2013 to 2020, representing the cap. As many as 82 percent of them will be given free to airlines, meaning most of the rest will have to be bought from the market.

With six months before the sector joins the ETS, opposition is growing.

A China Southern executive has said the China Air Transport Association is preparing to sue the EU over the issue, a Chinese media report said.

“The opposition is broad,” said Andrew Herdman, Director-General of the Association of Asia Pacific Airlines, which represents 15 airlines such as Cathay, Japan Airlines and Singapore Airlines…

China says Europe should adjust the ETS to reflect the differences between rich and poor countries, while Vijay Mallya, chairman of India’s Kingfisher Airlines, said he could not accept it.

The EU may know what’s best for the planet.  And their bank.  But the world doesn’t appear that it will sit back and transfer sovereignty and money to them without a protest.  Or a fight.  Perhaps even a trade war.  Which would be a bad thing as much of the world tries to pull itself out of the worst recession since the Great Depression.  And it would be a terrible shame for history to repeat itself on that score.  For one Great Depression was quite enough.

Carbon Taxes and Carbon Trading kills Jobs and crashes Economies

Green energy initiatives are just a cover for massive tax increases.  For desperate nations who can’t control their spending.  That’s why nations everywhere are fighting against carbon taxes and trading.  They see the cost to business.  And the jobs they will kill.  It’s not that they want to kill the planet.  They just don’t want to subsidize another nation’s financial problems.  Or see their own economies crash.  Which it will under a carbon taxing/trading scheme.

Environmental policies and economic activity are a trade off. You advance one by reducing the other.   Which makes advancing environmental policies during recessionary times difficult.  Because it’s one thing to save the planet when you have a job.  But another when you don’t.  At such a time, yes, you care about the planet.  But you care more about your family.  You think to yourself that the planet can take care of itself.  It survived ice ages.  Cataclysmic meteorite collisions.  Huge volcanic explosions.  Droughts.  Fires.  Hurricanes.  Tornadoes.  Earthquakes.  Plagues.  And if it can survive all that, you think it’ll be able to survive your having a job so you can support your family.

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LESSONS LEARNED # 50: “What do the great entrepreneurs have in common with politicians? Not a whole hell of a lot.” -Old Pithy

Posted by PITHOCRATES - January 27th, 2011

Cigarettes may be Bad for You, but they’re Good for Government

Government services cost money.  A lot of money.  And there are only a few ways government can get money.  They can tax their citizens.  Borrow money.  Or print money (if they’re the federal government).  When the government provides only the bare essentials for its populace, they can usually pay for those services with the taxes they collect.  This is the best way to pay for things.  It has the least adverse affect on our money.  And our credit rating.  But you have to be careful not to dampen economic activity.  Because taxes are a function of that activity.  And that activity can be a function of taxes.  There is a general inverse relationship between the two.  High taxes often gets you low economic activity.  Low taxes tend to give you high activity.  Other things being equal, of course.

But government spending tends to grow.  For various reasons.  And sometimes when it does, the spending is greater than the amount collected in taxes.  Especially during recessionary times.  So, to cover the deficit between revenue and spending they borrow money.  Or print it.  Lots of governments do this.  You can see record debt levels and record deficit spending throughout the world.  Greece was in the news recently.  Argentina suffered some bad times a few decades ago.  And now the United States is reeling a bit from their crushing deficits and debt.  And there are more.  Few nations are immune from this problem.

As this progresses, governments begin looking for additional tax revenue.  Such as sin taxes.  Cigarettes may be bad for your health.  But they’re still legal.  Why?  Taxes.  Few things do we tax so heavily.  And they’re one of the few things that we can heavily tax.  Because they’re addictive.  Cigarettes are a windfall for the government coffers.  But it doesn’t stop with taxes.  The government even sued Big  Tobacco.  To help pay for the medical costs the government incurs treating people (via Medicare and Medicaid) with smoking related diseases.

Which came First?  The Politician or the Entrepreneur?

Cigarettes may be bad for you.  But this country owes a lot to tobacco.  Back before it was bad for us (well, at least before we knew it was bad for us.  Then again, it wasn’t really all that bad for us back then.  For few were living long enough for it to become a health problem.  But I digress) it was a pretty big cash crop.  Even used for money because it was so valuable.  So an industry grew.  And that industry became a very lucrative one.  With deep pockets.  Producing an addictive product.  A veritable gold mine for a high-spending government.

Now, the government didn’t do a thing to make a single cigarette.  But it profited handsomely off of cigarettes.  It’s sort of like that chicken and egg riddle.  Which came first?  Well, speaking about business and government, it’s not much of a riddle.  Business came first.  For without business, there would be no government.  Because someone has to create wealth first before they could tax it away.  Or sue it away.

You see, that’s the difference between entrepreneurs and politicians.  Government needs entrepreneurs.  But entrepreneurs don’t need government.  Because entrepreneurs create things.  While government takes from people that create things.

Dirty, Sexy Energy is Destroying the Planet

Entrepreneurs have invented some pretty impressive things.  James Watt gave us a pretty efficient steam engine.  Henry Ford gave us a pretty affordable car.  Watt helped to launch the Industrial Revolution.  Ford just took it to new heights.  With his mass production.

The steam engine was the big first motor of the world.  It pulled us forward.  In steam locomotives.  And coal-fired power plants.  It was a giant leap forward for mankind.  Then came the internal combustion engine.  More compact.  And more powerful.  The first diesel-electric locomotive outclassed the state of the art steam locomotive in every way.  This little power plant was smaller.  More powerful.  And cleaner.  (Steam locomotives belched huge plumes of smoke and ash wherever they went.)

It may have been cleaner.  But it was still dirty.  For both the steam engine and the internal combustion engine produced carbon dioxide.  And the environmentalists were saying that this carbon dioxide was warming the world.  They called it global warming.  And it was bad.  Mostly theory.  But the theory pointed to nothing less than apocalypse.  Someone had to do something.  To save the planet.  And, guess what?  Someone was ready.  And willing.

Just give me something to Tax, Entrepreneur

A high-spending government just embraced these environmentalists with wet, slobbering kisses.  Because they knew what to do.  Not about cleaner energy sources.  But about taxing the dirty ones.  And they needed more taxes.  For their high spending.  So the environmentalists and government were rather simpatico.  To say the least.

Their idea?  Carbon taxes.  And carbon trading (i.e., Cap and Trade).  Let’s face it, modern civilization is addicted to energy.  We can’t do without it.  So we’ll never stop using it.  Sort of like cigarettes.  So they would tax carbon.  Or make polluters buy permits to pollute.  Either way they make big money.  All in the name of saving the planet.

Sure, it all sounds nice.  In a touchy feely way.  But taxing energy will kill economic activity.  With the cost of doing business going up, there will be less business.  The carbon taxes/polluting permits may not even offset the loss of tax revenue resulting from this decline in economic activity.  But when times are desperate, they often will try desperate measures.  And when you have deficits and debt at record levels, these are desperate times.  So they’ll try to push carbon taxes.  And pollution permits.  Not to save the planet.  But for the revenue.  And they will thank God for the entrepreneur who was able to make something that people wanted.  That they couldn’t do without.  Because without the entrepreneur, there would be nothing to tax.

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