In almost every interview, with free market economists, there is always a tendency to admit that the actions taken by the government, whether federal or state, are wrong because they often lack the understanding that over-regulation can lead to an economic decline across entire industries. However, most of them accept the notion, that it is within the role of government to correct any deficiencies in a market economy. Most Americans see environmental protection as an essential government role, often citing the preamble to the Constitution, “to promote the general welfare.”
I believe that economic growth is vital to achieving environmental prosperity; that if government embraced a capitalistic mindset rather than an ethos of command-and-control, we could achieve our intended results. Nevertheless, in order to achieve prosperity, we have to go through the government rather than around it, especially when dealing with the environment.
But this approach is a problem in and of itself. Most Maryland residents know that since the Bay Restoration Fund was signed into law in 2004, those funds that were supposed to be spent on the restoration of the Chesapeake Bay were raided by the previous administration. If this most recent election cycle was any indication of voter frustration, with fees and regulations, then Maryland environmentalists (the largest on the East Coast being the Chesapeake Bay Foundation) are in trouble.
Of course, residents want a healthy and long-lasting Chesapeake Bay, but not at the expense of economic opportunity. If we continue to over-regulate businesses while stifling growth and development, then forms of natural monopolies occur in the marketplace i.e. Baltimore Gas and Electric. The regulations and costs for licensing in the State of Maryland, keeps competition from entering the marketplace, and doesn’t allow innovators to find cost cutting solutions. That is an “externality” that is often difficult to overcome.
What is my point?
David Montgomery hits the nail on the head when discussing a Cap and Trade policy. I agree with his statement, “that ‘cap and trade’ is a general approach toward [environmental] regulation.”
The idea that the government should sell off every parcel of land that it owns, so property owners can reap the capital it produces, is not something that is feasible. Not only would it take years to accomplish but as long as we live in a representative democracy (which to be clear, I fully support) voters will take their demands of environmental protection to the ballot box.
Therefore, if we concede that environmental protection is within the scope of governmental regulation, then we must go about it ever so delicately. We must do so with an adequate price system that needs to be set by the government (based off of unbiased scientific research), and then they should vacate. It is hard for businesses to raise and budget money for innovation if there is no market for it. In this case, the government sets the market and then allows the private sector to figure out the best and cheapest way to reduce carbon outputs.
“In the past six years, we have been on a downward trajectory, nationally. We have replaced the notion of market-based emission trading or other incentives with pure command and control technology-based regulation. It’s happening in both energy and environmental areas. In the 1970’s we understood how the market could accomplish things better. In terms of the use of the executive authority of the President [Barack Obama] right now, we are swinging in the exact opposite direction toward more and more use of regulation. We are simply giving up using market-based policies to figure out how much it’s worth doing.” – David Montgomery
Kirk French Jr. is a member of the Republican Central Committee of Talbot County, Maryland. His views and opinions are not shared by any party member or individual unless stated otherwise.
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