GOPideas... ideas done right

The debate over carbon regulation/climate change is centered around the existence and extent of two fundamental tradeoffs. The first is whether carbon restrictions will create or destroy jobs and the second is whether restrictions on carbon will cause an increase in the price of good and services that rely upon carbon-based fuels. This post proposes an idea to settle the rancorous debate between the parties: agree that if electricity prices rise above a specified percentage in five years, all restrictions on carbon-based fuels are eliminated.

The essence of any debate on climate change is that "experts" in science and economics attempt to predict what will occur in the future --- and then convince policymakers that policy should be made prospectively. In other words: alter the lives of your citizens today, in order to forestall the negative consequences predicted tomorrow. Such policymaking is inherently unpredictable because of the multitude of economic, social and political factors --- and the variability of those factors --- that must be included in any prediction. From a democratic perspective, the issue is that politicians making decisions today are unlikely to suffer the wrath of the voters if their prospective policymaking turns out to be flawed. This occurs for two main reasons: voters have short memories ---  and if they remember, the politician is able to obfuscate the previous position to mollify voters using intervening actions. For example, see Barney Frank discuss how he was really never for giving houses to uncreditworthy borrowers, until he is presented with a direct quote that states that he was, really, really was for doing exactly that.

Especially in areas such as climate change in which exogenous effects of our policy will reverberate around the globe and, in turn, affect Americans, policymakers should base their decisions on the effects of the policy. Thus, instead of passing climate change legislation and hoping it works, include a provision in the bill that ensures that if the assumptions on which the policy is based are proven false, the policy fails, period. Specifically, two schools of though regarding energy prices exist: the first is that new legislation will spur innovation and conservation, allowing electricity prices to remain near their current levels. The second is that new legislation will create artificial scarcity and marketplace uncertainty, thus driving energy prices significantly hire, thus crippling American manufacturing and placing a significant burden on American consumers. The bottom line is that no one knows who will be proven right and to what degree. But let's be clear --- the country's future prosperity is being wagered on the outcome.

Policymakers can always change legislation in the future, but undoubtedly some constituents will benefit from the legislation --- and those benefits will change votes. However, the goal of policymakers should be to do what is best for the country, therefore a trigger provision should be put into the bill that states that if energy (specifically electricity costs) rise above a certain percentage --- for argument's sake, double --- within the next 5 years, the carbon restrictions in the bill become void. This will leave all the incentives for alternative fuel, but, most importantly, ensure that those arguing that carbon restrictions will not significantly impact prices will see their policy ended if they are wrong.

Granted, some problems could arise: gaming the system, a poorly constructed test to measure energy bills, a prolonged recession artificially dampening energy prices --- but those issues can be adjudicated before the bill is passed. The important point is that the principle remains: if prices go up, restrictions are eliminated, so that prices can come down and the feedback loop of poor policy is swift and just.