I have yet to see anybody discuss particular aspect of Cap and Trade. This aspect spells the end of the Free Market.
A little background first.
If you are familiar with tobacco allotments that may be all you need to know. If you haven’t heard of tobacco allotments let me explain a bit. When the government decided to cap the amount of tobacco grown they began an allotment system much like cap and trade. Each farmer that was already growing tobacco would receive an “allotment” to continue growing a proportional ratio of tobacco. These allotments were and are actively sold from one farmer to another. They can also be rented. The price for an allotment can be quite high. Because of the limited nature of the allotments oftentimes the owner of an allotment isn’t and never has been a tobacco farmer, they are instead an investor or speculator.
If you suddenly got a whim to be a tobacco farmer you cannot just get an allotment from the government. You have to find somebody willing to sell or rent their allotment. If nobody is willing to sell or rent their allotment then you cannot become a tobacco farmer. As you might imagine, big tobacco has long since locked up as many allotments as possible. The rest are treated like gold and literally passed down from generation to generation.
Big business pretty well dominates tobacco. Once they get their hands on an allotment it never goes back onto the market. The only way they trade allotments are in large blocks that no small business man could afford. The tobacco allotments system was ostensibly to help the little guy but increasingly there are no little guys in tobacco.
For practical purposes we don’t have any new tobacco farmers. The little guy, the startup, is shutout.
Next we look at the IP Address space. Originally the IP address space was designed for a network that comprised the military, a few R&D businesses and universities. When the internet went public it was quickly discovered that the number of available IP addresses were not remotely sufficient to serve the needs of the entire world. In a massive lack of foresight (as government is best at), huge numbers of the “allotments” for IP space were given to a few large enterprises. Microsoft, IBM, DEC, MIT, AT&T, GE all own or control huge swaths of IP space they will never use. Anybody who has ever tried to get a few IP addresses to use for their new internet business probably found out pretty quickly there are several forms to fill out and then you cross your fingers and hope you are blessed by IANA or now ARIN.
It was much worse before private enterprise invented ways to effectively reuse the same IP’s for multiple sites and eliminated the need for non-servers to have public IP’s. If these activities hadn’t occurred, the IP space would have long since been fully utilized. It would be difficult, expensive and perhaps impossible to start a new internet business or even a website using a top level domain like yourname.com. Without that ingenuity IP addresses would be like tobacco allotments, if you weren’t lucky enough to be born with one you would be locked out.
By setting limits on carbon emissions government will be creating a whole new allotments system. In addition, because they are setting the total allotments at a level lower than current usage, there will be extreme shortages of the allotments. The businesses that are currently set to receive the lion’s share of the allotments may literally divest themselves of productive divisions in order to focus on their new core business, the renting out of their carbon allotments. If you wish to start a business, you will have to find somebody willing to sell or rent you a carbon allotment. If you cannot find somebody to sell or rent the allotment, you will not be allowed to start or expand your business.
I must admit, I fall into the same group as every other person on the planet, I haven’t read the entire bill either. We might assume initially there will be a limited set of businesses affected by the allotments. Maybe it won’t apply to a ranching business for example, so you can raise cows without an allotment. Of course there have been suggestions by the EPA of a cow tax but perhaps not yet. Maybe it won’t apply to babysitters, yet.
In the end allotments will be held by big business in much the same way must tobacco allotments are held by the big players.
Most economists, including the leftist economists, agree that small businesses are the source of almost all new jobs and growth in the economy. Cap and Trade will hamstring existing small businesses trying to grow and prevent the creation of new small businesses. It won’t matter if you have the better idea, higher quality product or faster service. Your big competitor may have excess carbon allotments because you have taken away his market share. He will be able to out-compete you by denying those excess allotments to you or by charging exorbitant rent for them.
Cap and Trade is the end of the Free Market.
