Cap and Trade

First of all, note the new name. I thought the other one seemed a little too pretentious. And pretentious sounding material is enough for me.

Anyway, here's a letter to the editor I wrote about a month ago and was never published.

According to Investors.com¹, not only did Dow Chemical support the Cap and Trade bill that passed in the house last week, but they also founded USCAP, a coalition of environmentalist organizations and corporations. Why would a company with such a bad track record with progressives be so in favor of environmental regulation? Surprisingly, the answer is that the regulation hurts polluters. The key is that – as any economist worth his weight in salt will tell you – it doesn't hurt polluters uniformly. Cap and trade is designed to hurt inefficient polluters more than others – inefficiency here meaning how much output you can produce per unit of pollutant. Dow supports the bill because they realize that the uneven blows of cap and trade will land in their favor. So any progressive that is eager to create new tools of manipulation must realize that there will be a greedy, polluting corporation that is just as eager to come along for the coercive ride.

I find the view that I take in this letter especially interesting since it bears a striking resemblance to something out of Regulatory Capture Theory, a topic which I've been researching lately (and which I may make a future copy-and-past post on in the future); yet I hadn't even heard of the theory until a week after writing this.

1http://www.investors.com/NewsAndAnalysis/Article.aspx?id=479598