Max B. Sawicky wrote:
>
> > > If government gives away emissions permits, then clearly
> > > corporations do not benefit as a group, since one firm's
> > > sale is another's purchase. If the government sells them,
> > > corporations are net losers in the aggregate.
For every tradable pollution permit policy in which the government sells
the permits there is an "equivalent" pollution tax policy that yields
the exact same outcomes: same overall reduction in pollution, same
individual reductions for each polluter, same overall cost of reduction
to polluters as a whole, same individual cost of reduction to each
polluter, same gain in government revenue (from permits sales in one
case, from taxes paid in the other). EXCEPT...
One must assume that the permit market is competitive and functions
perfectly smoothly finding its theoretical equilibrium infintely
quickly, etc. etc. -- the usual convenient and unrealistic assumptions,
where no such assumptions are necessary for the pollution tax to be
efficient.
The above means there is always a pollution tax policy that is equal to
or superior to any permit policy on purely technical grounds.
When the government gives away permits to polluting corporations they
implicitly award legal ownership of the environment to polluters rather
than pollution victims. They make a summary judgement entirely in favor
of polluters regarding the last remaining common property resource (and
therefore still disputed property) on the planet. When the government
gives away pollution permits to corporations it is like the government
giving away not only the right of way land to the railroads in the 19th
century, but all of the land within a thousand miles of either side of
the track they lay. Except in this case we don't even get a railroad
track!
Pollution permit give-away programs have NO technical or efficiency
advantages over pollution taxes, may be technically inferior (due to
realistic probabilities of market failure), and are the worst imaginable
policy on equity grounds.
When governments do not collect pollution taxes (or sell permits), but
instead give permits away for free to polluters -- model citizens that
they have proven to be -- and therefore collect other taxes from other
people to finance government programs, just who do you think they
collect those taxes from? Last I heard the common working stiff not only
held a job but paid more than his/er share in taxes as well!
