How About Cap and Trade for Illegal Activities?

Executive Summary

  • Cap and Trade Madness
  • Do Murder Credits Make Sense?

Introduction

There has been a lot of talks recently about “cap and trade.” This is a scheme whereby instead of having a straight-forward regulation that simply sets limits on pollution and punishes those that violate those regulations, Wall Street is extremely enthusiastic about setting up yet another casino where they will control a marketplace of “pollution credits” and the taxpayer will lose.

Cap and Trade Madness

The idea is that this will somehow be more “efficient” than simply regulating pollution. This is a strange thing to think and only works if the person pitching or listening to this message has no experience with regulation or even with the legal system. Society setting limitations or restrictions on certain types of behavior that cause negative externalities (that is bad things happen to society, while good things happen to the perpetrator) is quite straightforward and well tested.

A standard is set, and those that violate the standard are punished. All that is needed is a publishing of the standard, and then an enforcement mechanism. This works pretty well for say….limiting crime. One wonders why this is so inapplicable to pollution. The reason why the proponents of cap and trade think it isn’t is that cap and trade are more efficient. How, and why this is the case is not demonstrated. However, if cap and trade work for the negative externality of pollution, why not for other things?

Do Murder Credits Make Sense?

For instance, Wall Street could also trade the credits of various illegal activities such as murder or grand larceny. Say for instance that you wanted to murder someone, but feared to go to jail? Well, you could buy murder credits, which is purchase the credits from other people who don’t plan on murdering anyone, and then when you have enough gone and commit your murder. Seems pretty efficient, because the person you bought the credits from was not going to use them, and secondly, you have saved the government the time and effort from having to prosecute you.

Finally, and most importantly, Wall Street made their cut from the transaction. Seems like a great deal for everyone….except of course the person who got murdered….and their family. This essentially would be a scam to maximize revenues to the state and Wall Street, while increasing the murder rate. And this is what will happen with cap and trade for pollution credits.

Conclusion

Those that buy and sell credits will maximize their pollution. However, we don’t want pollution maximized as a society. Now Wall Street will that that this is not true, that the credits can be managed in a win-win situation that will be better for everyone. Sure it will. However, when was the last time that Wall Street was right? About anything? Do we really want the greediest and sleaziest people on the planet setting or manipulating our pollution standards? So the people that brought us the mortgage-backed security meltdown are here to improve the environment now? If you believe that, I have part of a bridge in Brooklyn to sell you.

Wall Street’s special privilege is the ability to shake down Main Street and taxpayers. The old logic was that Wall Street was necessary for raising capital, however, only $1 out of every $113 dollars actually goes to company capital. The rest is frittered away on fees, gains to executives and gains by speculators (mostly the wealthy). Now normal businesses will have to pay a cut to Wall Street so that they can “manage” the market for pollution credits.