The Tragedy of the Uncommons

The vote by the House of Representatives on Friday to pass the American Clean Energy and Security Act may be a death blow to the liberaltarian movement. Or the chance for it to really take off. How can both be true?

The Republican attack machine went into overdrive to oppose the bill. By calling it cap and tax or a national energy tax they did everything possible to throw the word tax into the debate. Republican rhetoric is still the same as it was thirty years ago. For the most part, in watching the debate online and elsewhere, I was surprised with how easily the Republican were able to tap into the Tea Party anger. With each political battle, the possibility that the Tea Party movement could actually be an independent check on both parties fades. It is becoming increasingly apparent that they are the foot soldiers of the Republican Party and take their marching orders from Rush Limbaugh.

For a while, I wasn't sure if the Tea Parties represented the Ron Paul wing of the Republican Party that was liberated to speak out when Bush handed over the White House to Obama. If they really worried about the expansion of government power they should have spoken out about seven years earlier. At first, I could sympathize with the silencing impact that partisan peer pressure can have when your party occupies the White House. I'm not so sympathetic anymore. I don't doubt that there are some libertarians in the Tea Party movement that were opposed to Bush and continue to hold an independent streak. But I think they have been overwhelmed by the larger movement of Faux News followers that repeat whatever talking point is thrown at them. This is not a way for the Republican Party to reform itself. It is a strategy for the Republican Party to keep its base conservative white working class base angry at Democrats for the economic mess created by Bush.

I would add that the liberal blogosphere seems to have no problem in maintaining their independent streak in the face of Obama in the White House. I don't know if this is a product of personality; conservatives are more willing to defer to authority. The result, for me, is that I am even more encouraged to be a libertarian Democrat because I can see that even in power, the Democratic Party will continue to have a diverse group of competing factions. The GOP does not tolerate dissent, even out of power. There is no appealing faction in the Republican Party I could ally with.

The reason the rise of the Republican Tea Party movement could be a death blow to the "libertarian" movement is explained by Brink Lindsey's earlier concerns about the negative associations of the Tea Party movement:

Conservatism today has degenerated into a species of especially unattractive populism, pandering to the pro-torture-and-wiretapping, anti-gay-and-Mexican prejudices of a dwindling, increasingly sectarian, increasingly regional “base.” . . . I worry that good free-market ideas are going to get tainted by association with an increasingly brutish identity politics for angry white guys and the women who love them.

Consider the contrast. The House passed a bill to begin to reduce greenhouse gas emissions. They were opposed by a conservative movement that continues to deny the science behind global warming. The House's bill creates a free market solution to reducing emissions, much like how the first President Bush responded to the problem of sulfur dioxide and acid rain. Opponents claimed that this was either fascism, socialism, or communism, or maybe all three. The Congressional Budget Office, the same institution that the Republicans are using for their claims that Kennedy's health care bill will bankrupt the nation, estimated a rather low cost per household once the bill is implemented by 2020. So the conservatives had to cook up their own numbers with almost no basis in reality.

From a left libertarian perspective, this is generally a good bill. I have concerns that in the early years, too many emission allowances are just given away for free. But over time this is phased out and the system moves to over 70% of the allowances being auctioned off and used to fund tax credits. It's about as close to a citizen's dividend bill as I could ask for in today's political climate. I do not sympathize with the conservatives ranting about how this will ruin America.

Down the road, I do have serious concerns about health care and what some Democrats are proposing. I continue to oppose an individual mandate and a Massachusetts model that allows for some board to decide if something qualifies as insurance or not. But I think that conservatives marginalized themselves during this fight over the energy bill with the level of discourse, or the lack thereof, they brought to the debate. And unlike the energy bill, the Republicans in the Senate are not needed for health care reform because it can be pushed through under reconciliation. In the one major area where Democrats could have benefited from a constructive dialogue, the Republicans turned a cold shoulder. Which makes it less likely they'll want to work with Republicans on health care. Thanks a lot GOP.

Libertarians suffer when good free market policies are associated with the Republican Party and its Tea Party following. My hope is that the continued demagougery of the right will scare away more rational libertarians. I don't have much in the way of evidence for this, but it's my hope.

I have to disagree with you a bit with here because most libertarians(across the left-right libertarian, minarchist-anarchist spectrum) are against the Waxman-Markey bill as far as I can ascertain. The fact that repubs may have demagogued on this bill doesn't change that fact. So, in essence, you would have to say that libertarian opposition itself(regardless of the Repubs) to Waxman-Markey is the death knell of libertarianism, or the libertarian movement. I would heartily disagree with that proposition, for a number of varied reasons.

First and foremost is that if you go by the current scientific consensus vis a vis an abatement in warming, then the cap standards would have to be far, far,far more stringent than allowed by W-M. No one is willing to go there, evidenced by the fact this bill is likely DOA in the senate even under the relatively modest W-M caps. Thusly, as an effective collective action model(that is, actually intending to address the actual collective "problem"), W-M is a non-starter.

Comparing cap-n-trade of sulfur dioxide to cap-n-trade of carbon dioxide is comparing apples and oranges. Unlike sulfur dioxide, carbon dioxide is a universal by-product of a myriad of natural and anthropogenic processes(unlike sulfur dioxide, carbon dioxide is actually necessary chemical in the regulation of earth temperature; to call it a "pollutant" is a bit of a misnomer). And rather than comparing an apple to an orange, in this case, comparing W-M to sulfur-dioxide cap-n-trade under the 1990 clean air act, the better comparison would be oranges to oranges, namely W-M to Kyoto, which has been pretty much universally panned as a failure.

Given the proposed trade tarrifs in W-M, if it were passed, what we would functionally see from W-M as a collective action model would ultimately result in an order of magnitude strengthening of the WTO as a global collective action model. The US is not going to engage in a trade war with the asian economies who are buying our debt instruments; it would be suicide. Rather you would see the WTO assume much greater power in coordinating these disputes. You are just further "corporatizing" global trade and creating a public choice wet dream for transnational corporations.

The "libertarian solution" first and foremost should start with ending the US military security subsidization of oil prices. Secondly, how about a significant downsizing of the world's largest polluter, namely the pentagon. Thirdly, end all US farm subsidies, especially corn subsidies and boondoggle of corn ethanol. Fourthly, how about not bailing out car companies who failed, in part, because they made huge bets promoting gas guzzlers in the 90s when oil was cheap.

I'm not a believer in "peak oil" per se, but I am a believer in "peak cheap oil," so I would contend that true market prices for fossil fuels will lead to viable renewable energy alternatives in the next 10-20 years. The nanotechnological revolution, IMO, absolutely depends on renewable energy. I do not want the next technological singularity to be captured by government as the last one was(the industrial revolution).

The other aspect of your post, however, I agree with...namely the Dems are more ideologically diverse than the Repubs. I didn't agree with Kling's "Stagnant One Party Thesis." Kling's thesis failed the "California test." It should also be pretty evident that Obama can't roll over a Dem majority in congress like Bush rolled over a Repub majority.

I could've sworn the term was originally "liberaltarian" (referring to the idea of an alliance with mainstream liberals) when I first read his post. Spellcheck gone wild?

My focus was on the ability of libertarians to influence liberals and produce compromise policies. I think the recent energy bill is an example of what a "liberaltarian" bill would look like. While the libertarian movement itself was opposed to it, it seems like the more market friendly approach that libertarians should want to influence liberals into passing.

I agree that Cap and Trade, being a broad and direct approach to the problem of CO2 accumulation, is better than micromanagement of indirect contributors to the problem (e.g. fuel efficiency standards). However, I don't think that this improvement is due to libertarian influence in the Democratic Party, and think that the "trade" part of the policy should NOT be lauded as a "free market solution".

First, this lighter form of regulation is due to broad changes in our political culture that have developed over the past 30 years -- and probably got their main push from Regan's political success (and possibly from an academic consensus and the development of new tools for enforcing broad regulations).

Second, there is nothing "free" about the invention of a market that has no reason to exist. As far as I can tell, Economists generally prefer a direct emissions tax over a cap and trade system, and we only have the CnT system due to general economic ignorance among the populace (such that Republicans can score points by calling it "cap and tax", simply pointing out that it would increase costs in the same general manner that a tax would). CnT also seems to get some support due to the fact that it is easily corruptable, allowing massive handouts to special interest groups. The main effect of the market in emission credit will be to cause uncertainty in the price of carbon emissions. A market doesn't do anything productive if the government has already placed a hard limit on the supply of a good.

Which gets to another big "anti-market" aspect of the Cap and Trade system relative to a carbon tax: there is no way for the public to make tradeoffs between different goods. We are not free to decide, in aggregate, that the ability to emit carbon dioxide is valuable or not. No matter how valuable these credits are, we will not be able to produce more carbon dioxide. Conversely, if a technological breakthru allows us to produce clean electricity for the same cost as coal electricity, then the price of the credits will plummet and we will produce the same amount of CO2 as before. The only change is that the rentseekers and speculators will extract less wealth from the rest of us.

A tax would behave much more like an ideal free market where the price of a good tends towards the cost of its production.

A tax would be more direct & obvious. Yet a carbon tax is political suicide compared to CnT, which does the same thing but has more opportunity for corruption. Wonderful...

The root point of any environmental policy is -- or at least should be -- that pollution imposes cost on a 3rd party. So the ideal policy amounts to having the polluter compensate that 3rd party to an extent that'd discourage it. I think the direct route is shunned because people tend to associate the concept with the gasoline tax, & I agree that the consumer level is the wrong place to put that.

@kaligula: in principle I agree with your solution, obviously, and think eventually we won't have a choice but to adapt. I mention the above as my "least-bad", so if people insist on transitional policy then that's where I'd draw the line.

If you read my other comments in this thread, my point is that a so-called "market liberal" solution tied to bad incentives and political objectives can end up being an unmitigated disaster, serving to primarily reinforce unsustainable behavior that ends very badly(read: e.g., current economic meltdown)...

First, this lighter form of regulation is due to broad changes in our political culture that have developed over the past 30 years -- and probably got their main push from Regan's political success (and possibly from an academic consensus and the development of new tools for enforcing broad regulations).

The revival of "market liberalism," which politically began under Carter (deregulating the Airlines, appointment of Paul Volcker to the Fed, etc), but which emerged as an academic consensus of sorts in the late 70s as a consequence as stagflation and the failure of 50/60's keynesian/managerial economics. The rise of the Chicago School...Markets in everything...

You have to be careful because "market liberalism" is not the same thing as libertarianism, as events of this decade have made painfully clear. Bad incentives, moral hazard, and public choice can end up resulting in "markets in everything" giving "the free market" a bad name. Exhibit A: Fannie Mae, a bit player in the home mortgage market until the failure of the S&L's in the late 80s. Fannie Mae was the "market liberal" solution to the goal of increased home ownership starting in the 90s. Worked well until the "guns and butter" economy of Bush that that relied on a housing bubble to prop up the economy. Quite a number of Banks and Wall Street Firms became obscenely wealthy by stripping down and repackaging these mortgage securities(but it carried an implicit guarantee risk because these securities essentially had a buy back clause if they failed within an initial period of time). The implicit guarantee risk is what lead to the almost overnight evolution of the massive credit default swap market in the early 2000s, which was an attempt for firms to indemnify against the risk of institutional failure in the event these securities stopped performing. These securities could perform as long as long as you had a bubble in housing prices. When that bubble popped, the whole house of cards collapsed. And, in the end, of course, "free market capitalism" got the blame, when it really was a failure of a "not so laissez faire" market liberal framework in conjunction with a politically motivated monetary policy.

I don't think that the support for cap and trade over more direct regulation by the EPA is due to a libertarian influence in the Democratic Party. It's just part of the natural moderation of the party since the 1980s. But I do want to point out that this is a situation where the Democratic Party does seem to be moving in a more market friendly direction.

And it's a move that, so far, has been strongly opposed by the libertarian movement on the whole.

I disagree that this market has no reason to exist. While the carbon tax has a good argument behind it, I don't think you can say that there should be a tradeoff to decide if the ability to emit CO2 is valuable or not. There's a level of CO2 that is not sustainable. Period. I view this more from the tragedy of the commons perspective. Collectively, we have to find a sustainable level for use of the commons.

I don't entirely view this as a special interest giveaway because you have to find some way to transition to the almost 75%+ auctioned system that will eventually be created. There's a big handout in the in between, but you could argue you're just respecting current users of the commons. If we shifted to an auctioned system for use of a commons by grazing livestock, we might agree that in the first few years the current owners of livestock already using the commons would get a certain number of credits. And over time we phase to an entirely auctioned system.

There's a level of CO2 that is not sustainable. Period. I view this more from the tragedy of the commons perspective. Collectively, we have to find a sustainable level for use of the commons.

It doesn't really matter if there is some "level of CO2 is not sustainable". First, we'll never know what it is, at best we can estimate the risk that a given CO2 level is not sustainable. Second, most physical systems do not exist in all-or-none states: we do not live in a world that is either "sustainable or not", we live in a world where the environment is more or less tolerable and we have more or fewer resources at our disposal. Third, these ideas of sustainability stretch out over the course of centuries -- a period that far exceeds our ability to make plans.

But more deeply, it doesn't really matter because "sustainability" is not the be all and end all of human action. In fact, it doesn't even rate as a primary value in my book -- it is only a strategy that is fairly far removed from my ultimate desires.

We may find ourselves in situations where we can make a trade-off between sustainability and some other abstract value, such as progress. There is no reason that we always have to choose sustainability.

If we shifted to an auctioned system for use of a commons by grazing livestock, we might agree that in the first few years the current owners of livestock already using the commons would get a certain number of credits. And over time we phase to an entirely auctioned system.

Based on my understanding, the credits are not going to the users of the commons. First, who is a user? One big group of users is the consumers who ultimate will have higher prices for the goods they buy. As far as I know, the credit system totally ignores them -- there are some provisions to give credits to regulated utility companies with the requirement that prices are kept down -- but that just negates the core of the system, which can only work if it increases the cost of carbon-emitting activities. The credit give-away works at the expense of consumers, who would be better off with per capita distribution of the credit values.
Over the short run, a lot of the cost of transition will be felt by the producers who will need to redeploy their resources. It makes sense that they might be given some support during a brief transition period, but they are given an excessive share and all of their share goes to the owners of companies, rather than going to the workers at those companies.
So these valuable rights are being given to a very specific subset of the Americans who use these commons...it just happens to be that same subset that has the money to lobby and financially support politicians.

I would argue that the companies that do most of the polluting can be viewed as the primary users of the commons, given that they are the primary actors dumping CO2 and other greenhouse gases into the atmosphere.

The consumers who have to pay higher prices are the end users of the commodities, but I wouldn't view them as the primary users of the commons any more than I'd view the baron eating beef from the cattle as the primary user of the village commons.

No entity, no user, will be given more credits than what they would actually need. There's no windfall allowed in the bill. You can argue that they are still getting a handout since they are getting the free credits, but it's a transitional system, not a permanent one. The program starts to phase in from 2012 to 2030. By 2030, 70% or more of the credits are auctioned off with revenue going to tax credits for everyone.

ok, my bad if i got the semantics a bit mixed up, but your post did sort of seamlessly shift from the death of "liberaltarianism" to the death of "libertarianism." But my overall point still applies: libertarians(across the spectrum) opposed both the "Stimulus" and "W-M." The fact that "conservatives/Repubs," however hypocritically, came down the same on both accounts is an ancillary point in my view.

I posted previously a couple of times that "liberaltarianism" suffered a significant blow when progressives/partsian dems vis a vis "the stimulus" directly attacked libertarianism itself rather than the hypocrisy of conservatives suddenly expropriating libertarian arguments(which we knew they were going to do in the aftermath of the 2008 elections). Hypocrisy of the political right and left does not discredit the libertarian movement. The simple fact is parties out of power find libertarianism attractive to some extent or other, but when in power, suddenly do not.

From a libertarian perspective(left or otherwise), I don't think W-M is a good bill at all. As a "collective action model" it doesn't really address the "collective problem," if you are going to use the current climate science consensus as the basis for defining the problem to be the need for dramatic reduction in anthropogenic CO2 emissions. The only collective action it's going to end up providing(other than strengthening the WTO) is a public choice boondoggle for the subsidy of politically connected technologies like "clean coal," "nuclear power," and biofuels (via the "Green Bank"). The goal of renewable energy is to make to make it cheaper than coal/fossil fuels without subsidies. So how about the US government with it's left hand stop subsidizing the price of oil/gas vis a vis the US military and with it's right hand not embark on a scheme to subsidize things like coal(personally, i've about had it up to here with these ubiquitous "yes we can...yes we can" clean coal ads).

I think you have a good thought with regards to the stimulus. But part of the reason why I shift from the death of liberaltarianism to the death of libertarianism is my concern that libertarianism will become closely associated with the Republican Party again. Another libertarian-conservative alliance under an umbrella that includes xenophobes and homophobes will require that libertarians again sacrifice their concerns about social freedoms and a responsible foreign policy. That's strike one, if not strike two. The added concern is that the negative association of libertarians with the conservative movement will free market ideas that could have a change of being accepted by the Democrats. That's especially concerning if we approach a Democratic majority in government for some time to come. If Republicans are locked out of power, the only hope for libertarians is to make some of our policies appealing to Democrats. Or at least one faction of the party.

So the death of liberaltarians is the death of libertarians having any impact on public policy. Or at least could be.

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