How does the free market control pollution of the environment by industry?
Nitpick: I think you mean NOx and not SO2. Generally speaking, autos emit NOx. Electric power plants emit about 70% of the SO2 emissions. Cite.
I already described that. The government decides how much pollution in total will be allowed in a given region. it issues pollution credits equal to that amount, and sets up an auction whereby companies have to bid against each other for the pollution credits. This is already being done in some areas.
Here’s a description of the EPA program.
Here’s a link to the RECLAIM program, a similar market-based program in Los Angeles: RECLAIM.
Don’t you think this might provide a fertile ground for fraud in which front companies are formed to apply for credits, which are sold to large polluters, with the proceeds funding payments to corrupt officials and politicians?
I would agree that questions of social policy/foreign policy don’t seem particularly germane to the topic.
Where does the ProgressIve Market Party (PIMP) 
stand on antitrust laws?
Hi, Sam. I don’t agree with your premises w/regards to the free market, but there is no viable political movement that has an alternative to offer that I like better, so that’s not a deal-breaker. The fact that you start off acknowledging that there are areas in which the government perhaps ought to offer services if, let’s say, there’s an observable need and market forces haven’t met that need properly, is reassuring.
From a civil and personal liberties point of view, it’s nice to think the government would be committed to keeping itself from intruding unduly into my life, but what about other forces and organizations?
Is this party not to operate at the state and local level? Is it only to concern itself with federal-tier elections and positions? Frankly, the possible intrusion into my life and on my rights by state and local governments is one of the things I’ve come to count on the federal government for protection from. (Does that sentence parse?) I could be persuaded that this is not best dealt with as a concern of the federal government, but in that case I’d like to know that the same political party is at work on the state level to make sure that the state government does not stick its nose into my private affairs. And if they want to punt and allow local and county and town and regional governments address such matters as they see fit, then, once again, I would want to see this shiny new political party in operation at those levels and, once again, acting to secure my rights against any parties seeking to restrict them.
And if you’re going to be operating on a county, city, and otherwise local level, how do I get involved as a participant? Does your party have any kind of commitment to involve people who wish to be a part of local government, and/or a position that opposes the myriad ways in which local politics is so often locked up by a local power structure of some sort?
I see the planks of your party platform and it strikes me that the bulk of your attention is on the free market, and on cutting out government interference where it has been detrimental. Your emphasis there makes me want to see some specific proposals and positions in any given election year, and then to watch and see how your party’s elected politicans act and vote while in office.
But you may consider me a potentially courtable “swing voter” who would certainly listen to your candidates and give them full consideration.
It sounds pretty good to me (although I admit that someone willing to take a stand on progressive social issues, like gay rights and civil liberties would get my vote first). I do have one concern, although it may only be in how it’s presented:
The problem here is that simply paying people for the right to damage their health and well-being via pollution seems rather cold, don’t you think? Especially when we’re talking about children, or people for whom moving isn’t a feasible option. I agree that it’s better than nothing, but it would be a hard sell, when opposed to someone who would lower emissions outright.
I don’t think you ever directly adressed how to handle a person that commutes into a hight pollution area from outside. Some people commute significant distances, from far outside where pollution is a large concern, but contribute to the city’s pollution once they get there. It’s unfair to assume that everyone in the boondocks is contributing to the city’s pollution and tax them accordingly, but it’s also unfair to let long-distance commuters get away with it. Is there a solution?
It’s probably not fair to ask about nuts and bolts, but I do wonder about some issues of enforcement. What happens if a company goes over its alloted credit? What happens if it finishes under its credit? Does it roll over to the next year?
I don’t know, but this would be no different than the myriad ways that companies try to avoid regulations today. In practice, I don’t think this particular issue is worth worrying about. It’s pretty hard to create a ‘front company’ that requires lots of pollution credits, without actual factories and things to show for it.
And in fact, once the market is mature, I would think that a new startup company would have to buy the pollution credits they need for the next year. So fraud isn’t possible. They’re certainly free to buy more than they need - it’s an open market, after all. That’s the whole point. The only way they can buy them is to negotiate with someone who has them already. And that someone will then have to cut their own emissions or buy the credits back before the end of the year.
Which brings me to another advantage of this program - if environmentalists or philanthropists want to help the environment, they now have a concrete way to do so - take donations to buy up pollution credits and retire them. Taking them out of the market drives up the price of the remaining credits, making it more expensive to pollute, and forcing companies to cut emissions.
You’re right - I did a poor job of phrasing it. Think of it this way - the poor are already living in polluted areas, much more so than the rich. This way, they get compensated, and the rich get taxed for dumping pollution on them.
But the important thing is that everyone is paying for what the damage they cause, or being compensated for the damaged caused to them. This allows them to make accurate choices. Now part of the decision of staying in the inner city involves the compensation for the externalities imposed. That’s a good thing. It might drive up real estate prices, and give those areas extra money for reclamation and neighborhood improvement and schools.
That’s a subject for the next thread I’ll start, on doing urban planning correctly.
We’re free to handle it any way we want. I believe the EPA system today requires that every company have credits offsetting all their pollution at the end of the regulatory year, or face fines. Whether we allow them to average their credits out over a couple of years is our decision, but it makes sense - sometimes pollution control equipment takes a long time to install. So why not let a company average it out? Let’s say they need 100 credits this year, but they think they’ll only need 50 next year? Rather than forcing them to putchase all 100 now, we could decide that they can apply for an extension and they’ll simply have to show a total of 150 next year, assuming they only use up 50 credits of pollution in the second year. In fact, this immediate cost savings in not having to pay for the credits this year allows them to invest the capital instead into pollution control equipment.
In any event, such regulatory matters can be adjusted as need be.
You’ll have to give examples.
Sure, it can operate at state and local levels. Perhaps especially at those levels, because it’s often at the state and municipal levels that the most egregious examples of government overreach and failed planning occur. Let’s talk about that in the other thread.
Let’s figure it out. I’ve been talking general principles so far. How to actually implement it, I don’t know. And I’m not that familiar with U.S. local politics. But certainly, the general concept that govenrment should be rational, respond to market forces, and act as a force for social justice rather than the administrator of social justice works at all levels.
But equally fixing failures of the market where they have been detrimental. As I said, a true advocate of market forces is not necessarily a friend of the rich and powerful - they’ve learned to use government to their advantage. Most accurately, I’m a friend of rationality. Of making decisions with the best information, transmitted to those who need to know it the best way that we can, so that they can make decisions responsibly.
Show me that a real market failure exists, and the party will support changes that get the market functioning again. There are plenty of areas where this happens today. The key requirement is that we don’t use anti-trust law as a weapon against stuff we just don’t like. We have to see evidence of a real breakdown of the market.
I’m interested in hearing more about the mechanics of the auction. I don’t really know enough economics to phrase my questions well, but:
A) How do you ensure that the auction on pollution credits is strategy-free (that is, that everyone bids what they’re willing to pay without concern for e.g. making other peoples’ pollution tax go up)?
B) How do private citizens’ pollution credits shake out? Does the company auction fix the price of a credit for that year, so that I can just multiply the number of credits I need (for my car, whatever) by that price to get the amount I owe?
I do think that the timing is wrong for this sort of party, at least in the US. Right now, it seems like everyone cares only about social issues.
if the EPA or some such organization is to handle what happens to these credits, shouldn’t we change how the leaders of the EPA are anointed? i mean, i’m all for having oversight, but if the system stays like it is now and has the polluters themselves picking who heads the EPA, aren’t we asking for trouble?
also, i’d think we’d need some fail-safe mechanism(s) to ensure credits are handled fairly, especially if people can buy them like stock in nature. hm…that’s an interesting way to look at it. if you like nature, but credits…or become a stockholder in the earth.
kinda like giving them their just desserts in a way. if corporations are “headed” by stockholders and have to answer them, then fight fire with fire.
Okay, sounds perfectly reasonable. I think, though, that you’re going to need to provide some criteria for what counts as a real market failure - and not just for this purpose, but more generally. Environmental issues are extremely obvious, but what about borderline cases? What counts as a market failure, and what doesn’t?
For example, take health issues. Maintaining my health has positive externalities. That is, my not being sick benefits you inasmuch as you won’t catch the disease I have. However, I can’t charge you for not infecting you with my bugs, so I’m apt to underinvest in killing them (from a societal point of view). This is one of the reasons we have quasi-universal immunization programs for various diseases. If individuals were footing the bill, I’d guess we’d have rather lower rates of polio vaccinations, for example, though obviously it would still be fairly high, but quite likely there would be a higher prevalence of the disease than there is now. Would that count as a market failure?
BTW, Sam – since you’re interested in starting a new third party, what’s your take on proportional representation for Canada? (An issue I can’t recall you addressing on this Board before, but I might have missed it.)
Sounds like the party I’ve been advocating for a long time.
Although I humbly submit that a simple carbon tax can capture nearly all of the externalities involved with driving and would yield a far less convoluted system. Carbon is, by far, the main pollutant that cars produce and other pollutants are produced in the same rough proportions relative to carbon. Similarly, road wear and tear also correlates fairly decently to carbon. Cars with lower MPG use more carbon per mile sure, but they’re also likely to be heavier which wears down a road faster. The only other externality I could see that would be worthwhile taxing is congestion but this would probably be trialed on a city-by-city basis rather than at the federal level.
I think your drastically underestimating the cost of regulation. Registration, testing and setting rates is going to be horrendously expensive rather than just taxing oil.
The other problem is that the pricing of externalities is currently a horrendously inexact science and wide open for abuse. If research comes out tomorrow that a concentration of NOx above 100ppm causes an average of an 11 point IQ drop (std dev 5.4) in children aged between 6 an 11 when exposed to it for more than 6 hours a day for over 3 years… how do you convert this into pricing information? Because it’s so inexact, there is plenty of scope for corporations to influence it. If a company has just come out with an extremely low NOx engine, then it might want to up play this research an pressure the government to drastically increase the NOx externality pricing. The only real way I can see to avoid this is to be very careful about what one should call an externality and try and use simple, gross metrics over fine detailed ones with lots of variables. It wont capture the market as well in a perfect situation, but it probably captures the market better in the real world.
Not every damn thread about Canada is about proportional representation.
Sam: Do you believe the government has a role to play when it can be shown that ordinary people will act in an irrational manner? Take gambling for example. For a certain proportion of the population, gambling can be simple entertainment and a rational use of thier time and money but for others, gambling is decidedly non rational behaviour and leads to sub-optimal utility for their money. However, no or very little externality is produced. The harm is mainly internally directed. Do you believe that the government should act to intervene?
What about snake oil sales men touting miracle drugs? Nigerian scammers? The state lottery? Is it simply a case of cavet emptor?
in sam’s defense, i think this is completely irrational itself. doing this would call for seeing every possible angle humanly possible, which is impossible. forgive me if i’m twisting your words, but are you asking, in a way, why people would do this if they have the current system?
also, do you count those 1-800 gambling hotlines as “government help”? what about gamblers’ anonymous? (yes, they’re both probably privately run and funded, but they’re well advertised amongst populations that have casinos)
Speaking for me, absolutely not. The job of government is to make sure that everyone has the opportunity to prosper, not to make sure that everyone does prosper. If someone wants to gamble, that’s fine. They have to live with the consequence of having less money when they lose.
For a market based party, I would suspect that caveat emptor would replace e pluribus unum on the money. Except in the case of out and out fraud or of someone criminally misrepresenting their product, what role should the government have? None.
From what I’m getting out of Sam’s system, I disagree.
Therefore, the government could require that any non-obvious “costs” (which could include adverse side-effects as well as potential flaws in the product) be availiable and conspicuous. I’d also say there’s a place for the FDA in the PMP, if only to ensure truth in medical advertising.
A perfect market only works if everyone has access to all pertinent information, therefore the PMP would make damn sure such information is availiable.