In the last three sections I discussed whether global warming/climate change is a real problem. I believe I have made a good case to say that it isn’t a problem. For the rest of this discussion, however, we will assume that I am totally wrong and that man-made carbon dioxide emissions pose a serious environmental problem. The next question then is what should be done to solve this problem?
As individuals, we each have our own choice to make. We can elect to “go green”, to drive a Prius, or do as much or as little as we want in our private lives to reduce carbon emissions. The debate here, as a citizen of the United States, is what role the United States government should have in this effort.
Before we discuss what the United States government can do, we should discuss if it the role of the United States government to do anything. Just because there is a problem, it doesn’t therefore follow that it is the role of the United States government to solve the problem. I believe strongly in limited government and capitalism. I will discuss much more on my view of the role of government in future blogs. One might conclude then that I believe that this is not the role of the United States government to do anything. In this instance, though, I side with the liberals. If this is a real problem, the United States does have a role in its solution.
Economics has the concept of externalities. An externality is a cost born by someone who does not get the benefit. For example, a factory makes money from a heavily polluting plant. The people who live around the plant don’t get the benefit, the money, from the plant. They do though pay a cost when they breathe polluted air. Their health suffers, their enjoyment of life suffers, and very possibly their property values also suffer.
I believe that government has the responsibility to try to reduce externalities. This does not mean that government has to eliminate them. It may not be possible to reduce the pollution from this factory to zero, or even if it is scientifically possible, the costs might be so prohibitive that it would force the factory out of business. The key word here is reasonable. The government has the responsibility to ask reasonably so external costs are not burdensome to others and that the cost of ameliorating the externality is not unreasonably burdensome to the business.
For example, in the instance of our polluting company, the company can spend $10,000 for filters that will remove 98% of the pollutants or it can spend $1,000,000 for filters that would remove 99% of the filters. Unless one can clearly show that the ill effects of the 1% difference are substantial, it would be reasonable for government to regulate that the company must remove 98% of the pollutants.
What should the government do if there is no reasonable compromise solution? For example, what if the pollutant is so toxic that even the smallest amount causes a severe health risk? In this case the government should not allow any pollution, even if it does put the factory out of business. Philosophically, I would say that eliminating the pollution is a cost of doing business. If you can’t pay this cost, you shouldn’t be in business. This is no different than paying the cost for labor or the cost for supplies.
Society prospers when total benefits exceed total costs. A beauty of capitalism is that it aligns this benefit to society with the benefit to the business. The needs of society and the needs of business are in line as long as externalities are minimized so those getting the benefit pay the cost.
If carbon dioxide truly is a pollutant causing severe environmental harm, it is therefore the proper role of government to regulate it.
In the next section, I will explore the options government has and what the effects of these options would be both to the economy and to affecting global warming/climate change.