"Create jobs" sells, "Increase efficiency" doesn't

At Terra Rosa:

In a new nationwide TV ad premiering [March 17], three surprising voices join the climate chorus:

* Robert Lane, CEO of John Deere,
* Alexander M. “Sandy” Cutler, CEO of Eaton Corp., and
* Frank Knapp, president of the 5,000-member South Carolina Small Business Chamber of Commerce

These leaders urge Congress to adopt a market-based cap & trade policy. They’ve put their business credibility to work for this message: cap & trade will drive the investments necessary to create American jobs and stop climate change.

Actually, there will be no major long-term impact on the number of jobs in the U.S. My prediction is that the unemployment rate, the labor force participation rate and the employment population ratio will not be significantly affected by significant climate policy. Why? The (CO2 intensive) job losses that climate policy opponents trumpet will be offset by the (CO2 not-so-intensive) job gains that climate policy proponents trumpet (remember the "giant sucking sound" that was to be NAFTA?).

The more interesting issue raised by the commercial is why the business community is advocating cap-and-trade specifically. The answer might be that they feel that climate policy is becoming more inevitable (three presidential candidates have it on their agenda) and cap-and-trade will negatively impact profits less than a carbon tax or command-and-control regulation.

Comments

[Charles Young]

No surprise why the business community favours cap-and-trade. They're after the quasi-rents.

[Jim Tarrant]

Cap and trade will probably prove to be a useful market-based mechanism for some sectors of the economy. However, it is very different from a carbon tax. The latter, precisely because it is broad-based, can have an innovation-inducing and a conservation/efficiency-inducing impact across all society and the economy. What's needed is a mobilization of the public. The "Potemkin Village" voluntary approach of the Bush Administration is as sick a joke as his whole administration has been.