Which way should climate policy go?

By Joe Sibilia, CEO, CSRwire

Economist Paul Krugman captured the essence of supporting cap & trade vs. carbon tax in the New York Times Sunday Magazine earlier this month.  He laid out a good introduction to environmental economics while giving prominence to ‘negative externalities’, which has taken a backseat in the conversation of late.  He reintroduced the concept of the Pigovian tax, which imposes a fee on those who generate negative externalities as a contrast to his support of cap & trade.  Essentially, he argues that taxing polluters doesn’t provide the same incentives than creating a ‘system of tradable emissions permits’, a.k.a. cap & trade.

Of course, his argument presupposes that ‘climate change’ does exist and something can be done (although he ends the article with an ominous tone).  We’ll leave that debate for others to pursue.  However, On the surface the argument makes sense – we must create a ‘system that gives everyone a self-interested reason to produce fewer emissions’.  A market will be created for emissions. There will be buyers and sellers, futures markets, tradable instruments, consultants, market makers, tracking mechanisms; entrepreneurs will come up with ideas that limit emissions creating an entire new set of industries and expanding existing ones.  With my entrepreneur hat on a baldhead, this would inspire me to create a new product or service.

On the other hand, there are those that suggest we should just ‘tax the polluters’.  But all those funds would go into the government’s hands – and all that money would be spent on ‘armaments’ and ‘waste’.

Leaving it up to the selfish nature of the market will only create another way for the capitalists to exploit and develop fraudulent ways of making money, the ‘tax the polluters’ explain.  But, relying on the legislature to figure out how to ‘measure’ the pollution and convert that into a ‘tax’, while deciding where the tax money goes could go on for a long, long time.

I have asked some of my friends how they feel and I’ve received some comments running the gamut of support for cap & trade and support for taxing…what do you think?

About Joe Sibilia

As a visionary of the socially responsible business movement, Joe Sibilia is founder and CEO of Meadowbrook Lane Capital (MBLC), described by the Wall Street Journal as a “socially responsible investment bank” specializing in turning values into valuation.

He is also the CEO of CSRwire.com, the social responsibility newswire service that distributes and archives corporate social responsibility/sustainability news to journalists, analysts, investors, activists, academics, public relations and investor relations professionals worldwide.

Joe also founded the Gasoline Alley Foundation, a 501(c) 3 corporation that has incubated forty-three small businesses since 1985 and teaches inner city and/or underprivileged persons to be successful entrepreneurs using socially responsible/sustainable business practices while revitalizing inner city neighborhoods.

Through MLBC, Joe has worked with a number of Socially Responsible Companies and has been widely recognized for his work in attempting to take Ben & Jerry’s Homemade Ice Cream private, while creating a private stock exchange for CSR companies.  MBLC successfully preserved many of the founders’ social initiatives, and advancing the connection between good corporate citizenship and increased share value.

His long range plan for CSRwire is to establish a “platform for innovative revenue sharing applications advancing the ‘Movement’ towards a more economically just and environmentally sustainable society and away from single bottom line capitalism.”

READERS: What’s your Talkback to the question:Which way should climate policy go? Let us know, and we’ll respond.