Why stock markets are evil
Ethon came back on the overnight from Basingstoke UK where he is working with the Editors to improve Climate Feedback. On his way out the door he noticed that Kevin Vranes was busily at work reviving the argument that all markets are useless because they can be manipulated. This was news to our new liverterian friends, but of course he is only talking about carbon markets, which are, of course, evil because they represent an attempt to reign in the unbridled vigor of free markets.
As Eli understands this argument it goes markets can be manipulated therefore markets are evil and we don't need markets. What it should be is that markets can be manipulated therefore we need regulated markets and regulators who can and will impose drastic penalties on the manipulators.
Michael Milken-bond manipulator
It should be expected that initially there will be attempts at manipulation of carbon markets until the regulators choke them off. That is the nature of the beast.
Kevin Vranes' argument is but another example of the but we can't do anything about it strand of denialism. You can take the lad out of Prometheus, but you can't take Prometheus out of the lad.
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It's all in vain. The Chinese! The Chinese!
It's all in vrane. The Hyenas! The Hyenas!
When it vranes it pours.
Personally, I think that Vranes' latest offering is a bit boring, a bit of a dud. But his "overselling our certainty about knowing the future" jab against Gore is still making the rounds of right-wing blogs.
It's now up at Front Page.
Eli, of course the ultimate logic of a market-based approach is that the legislators who establish the framework, the regulators and the regulations are themselves seen to be markets open for control by the highest bidder(s). Wall Street is enthusiastic about markets precisely because they are prone to manipulation. This tendency can be countervailed and a reasonable market mechanism could be instituted, but the Bush/DLC ideology presently acsendant in your neck of the woods will tend to see the best market mechanism as the one that serves Wall Street best (with suitable window dressing, of course). I admit that being an electricity rate-payer in California may have given me a bad attitude about all of this.
I should add that one can certainly design a crappy, ineffective carbon tax. It's just that it's hard to do so in a way that particularly benefits Wall Street.
I understand carbon trading in Germany has given a big windfall profit to pre-existing emitters (eg electricity generators). To expand or become a competitor, you need to buy emission credits, so the cost of them is part of the cost of new output. The market supportable price for existing production tends to reflect to cost of a competitor establishing or expanding to replace you, so the price goes up despite the existing producers' costs not increasing at all.
A carbon tax is much more fair - the consumer still has to pay the cost, but the money goes to the government, not as a bonus to companies which were emitting before the scheme was introduced.
Certainly true, but putting on my other paw, the current large emitters such as the electrical generating companies need money to shift away from carbon generation or to sequesterization/ / /of course, that is the hope.
But a carbon tax will advantage non-carbon energy sources over carbon and divert new investment to the former. It seems to me that it's simply a matter of setting the tax at a level that will faciliate such an outcome. Ideally, at least some of the proceeds of the tax would go to R+D for alternative energy sources (something that's not possible under a trading scheme as such). There's also California's recent approach of simply banning new coal (including out-of-state sources).
Eli - you had to go to Basingstoke - bad luck.
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