[This exploration into the theory of regulation was inspired by the role of the mixed economy in the rise and fall of Enron. The analysis applies to many current issues, such as the negative environmental effects of the supply/demand for used batteries, the lead story in today’s New York Times.]
Political economists have long recognized the challenge of getting regulation right in a mixed economy.
“A scheme of state interference for the attainment of some social or economic benefit,” stated Hubert Smith back in 1887, “will in general succeed or fail according as it is able or unable to cause a change in the nature, habits, and disposition of those whom it affects.”
A century later, regulatory economist Sanford Ikeda reached a like conclusion:
… Continue ReadingInterventionism is really a process of entrepreneurial adjustments in both the private and public sectors, where these adjustments tend to be both unanticipated and undesirable (from the viewpoint of the interveners) owing to radical ignorance, complexity, and dispersed information.
“[T]he impact that emissions reduction efforts in the U.S. will have on global emissions totals–and by extension, global climate–is quickly diminishing.”
The just-released numbers for last year’s carbon dioxide emissions (not including land-use changes) show why forcing large cuts in carbon dioxide (CO2) emissions is not very high on the priority list of the U.S. powers-that-be (including voters).
In 2010, the total global CO2 emissions were the highest on record, ~9.1 PgC (33,400 million metric tons). The U.S. contribution was ~1.50PgC, about 16% of the global total—percentage-wise the lowest on record (since 1959) and falling rapidly.
Unilateral U.S. CO2 mitigation strategies, in other words, are doomed to increasing irrelevance–and even unintended consequences should carbon rationing at home result in industrial transfers to less regulated areas.…
Continue Reading“Human beings create more than they destroy.”
– Julian Simon, The Ultimate Resource 2 (Princeton, N.Y.: Princeton University Press, 1996), p. 580.
“People have since antiquity worried about running out of natural resources–flint, game animals, what-have-you. Yet, amazingly, all the historical evidence shows that raw materials–all of them–have become less scarce rather than more…. And there is no reason why this trend should not continue forever.”
– Julian Simon, “The State of Humanity: Steadily Improving,” Cato Policy Report, September/October 1995.
There is only one thing that is going up more than government subsidies for uneconomic wind and solar power: oil, gas, and coal reserves and resources in the United States, according to a new study released yesterday by the Institute for Energy Research (IER) assessing total North American inventory.…
Continue Reading