Why Gillard’s tax is mad

We didn’t get the desktop computer revolution by taxing typewriters

With all the noise from the earnest arguments over the carbon dioxide tax — rather like the debate about the number on angels on a pinhead — it seems increasingly difficult to stand back and see just why Julia Gillard’s tax is so bad.

Steven Hayward, a fellow at the American Enterprise Institute and blogger at powerlineblog.com is very concerned that:

the monomania for near-term suppression of greenhouse gas emissions through cap and trade or carbon taxes or similar means is the single largest environmental policy mistake of the last generation.

Haward makes a complex argument very simple. It is a point that has been explained by leading Australian commentators like Terry McCrann, Henry Ergas, and Andrew Bolt tirelessly, and also so often by Bjorn Lomborg. It is a point so obvious, that the continuing squabbles and false discussions in the media over minutiae is very disturbing and very frustrating.

The way to reduce carbon emissions is not to make carbon-based energy more expensive, but rather make low- and non-carbon energy cheaper at a large scale, so the whole world can adopt it, not just rich nations. This is a massive innovation problem, but you can’t promote energy innovation by economically ruinous taxes and regulation.

We didn’t get the railroad by making horse-drawn wagons more expensive; we didn’t get the automobile by taxing the railroads; we didn’t get the desktop computer revolution by taxing typewriters, slide-rules, and file cabinets.

It is time to stop ending the charade that we can enact shell game policies like cap and trade that will do nothing to actually solve the problem, but only increase the price of energy and slow down our already strangled economy. I support sensible efforts for government to promote energy technology breakthroughs, but am against subsidizing uncompetitive technologies.

The international diplomacy of climate change is the most implausible and unpromising initiative since the disarmament talks of the 1930s, and for many of the same reasons; the Kyoto Protocol and its progeny are the climate diplomacy equivalent of the Kellogg-Briand Pact of 1928 that promised to end war (a treaty that is still on the books, by the way), and finally, future historians are going to look back on this whole period as the climate policy equivalent of wage and price controls to fight inflation in the 1970s.

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