So you think the health-care debate is complicated? Wait until you try to understand carbon credits. The only thing I took away from economics professor Nance Folbre’s post on The New York Times‘s Green Inc. blog is that while I suppose I’ll have to hunker down and come to grips with the Waxman-Markey bill’s “cap-and-trade” scheme someday, I’m not particularly looking forward to it. Even Folbre’s still baffled:
The remedies being proposed are devilishly complicated. The sale of permits is designed to increase the price of carbon and discourage its consumption. Under Waxman-Markey, it’s hard to figure out exactly who will benefit from the sale of the allocated permits.
The specific impact of increases in the price of carbon is difficult to predict. It will depend heavily on investments in green energy technologies that could provide cheap and effective alternatives. But the size of these investments depends, among other factors, on anticipated increases in the price of carbon.
But I can’t get Matt Taibbi’s haunting overview of the Goldman-Sachs government stranglehold (“The Great American Bubble Machine”) out of my mind. Here’s what he had to say about “cap-and-trade” speculation:
The feature of this plan that has special appeal to speculators is that the “cap” on carbon will be continually lowered by the government, which means that carbon credits will become more and more scarce with each passing year. Which means that this is a brand new commodities market where the main commodity to be traded is guaranteed to rise in price over time. The volume of this new market will be upwards of a trillion dollars annually; for comparison’s sake, the annual combined revenues of all electricity suppliers in the U.S. total $320 billion.
Goldman wants this bill. The plan is (1) to get in on the ground floor of paradigmshifting legislation, (2) make sure that they’re the profitmaking slice of that paradigm and (3) make sure the slice is a big slice. Goldman started pushing hard for capandtrade long ago, but things really ramped up last year when the firm spent $3.5 million to lobby climate issues.