Market Manipulation is Not Market Choice

Florida Congressman Carlos Curbelo plans to introduce a carbon tax bill to reduce carbon emissions, create incentives for clean energy, and use the proceeds to replace the gasoline tax. Although he refers to his legislation as market choice, it is just another example of market manipulation and energy suppression…

All of the carbon tax proposals that have been pushed in recent years are promoted as a cost-effective means to mitigate catastrophic damage from human caused climate change by reducing carbon dioxide emissions. The alleged damages are a collection of environmental hobgoblins–rapidly rising temperatures, rising sea levels, and increased hurricanes, tornados, and droughts.

It has been 30 years since climate change—aka global warming—became the number one environmental apocalypse. Over this three decades the asserted climate damages have been unsupported by empirical evidence. Temperatures have only risen a few tenths of a degree. Hurricanes have not gotten stronger, tornados have been declining, and sea level rise has not been accelerating. None the less, advocates continue to market an artifact of computer models and ignore what is taking place in the real world.

The problems with a carbon tax are much greater than just the lack of empirical evidence. To begin with, the so-called damage function that would be mitigated by the tax lacks precision because the estimate of climate sensitivity—how much temperatures increase from doubling of CO2—vary by a factor of 3. In addition, concern about atmospheric concentrations is global while the proposed Market Choice act only applies to the US. Dr. Ben Zycher of the American Enterprise Institute did an analysis of a carbon tax that was larger than the one being proposed by Rep. Curbelo–$30 versus $23. He concluded that the carbon tax effect in 2100 would be twenty-five one-thousandths of a degree. On a chart, that would be less that the width of a line drawn with a number 2 pencil and given the inherent uncertainties of models is essentially zero.

A carbon tax may be intellectually elegant to many economists and very appealing to free spending members of Congress because it is like an ATM machine without limits—small changes in the tax generate large sums of money.

Advocates of a carbon tax attempt to portray it as being simple. Has anyone known of a tax that was truly simple? In the case of a carbon tax, building political support would require provisions that benefit supporters—environmental groups, rent seeking corporations, affected populations like the poor and politically powerful users of energy, and groups dependent on government largesse. There is virtually zero probability of a carbon tax being a simple straight forward $X per ton of carbon emitted. Instead, a coalition of Baptists—those whose support is based on moral fervor and Bootleggers whose support is driven by profit and rent seeking.

Finally, Rep Curbelo’s proposal is predicated on shifting US energy use from fossil fuels to “clean energy” which continue to exist in the market place only because of subsidies and government mandates. Our economy needs energy to grow and prosper but that energy needs to be abundant and affordable. Rep. Curbelo wants to make it scarce and expensive. The example of Germany proves that point. Germany’s emissions reduction crusade has produced the highest electricity price in Europe, a prices three times greater than the average US electricity price.


Founder and president of Solutions Consulting which focuses on public policy issues, strategic planning, and strategic communications.

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