It is perhaps the most revealing ‘crony capitalism’ memo in American history–at least that is in the public domain. (I ask others to submit nominations for this (dis)honor to see if this memo does not take the prize.)
It was written from Kyoto, Japan in the afterglow of the Kyoto Protocol agreement by Enron lobbyist John Palmisano. The global green planners were euphoric that, somehow, the world had embarked on an irreversible course of climate control (and thus industrial and land-use control). Palmisano’s memo reflects that as well as the specific benefits for first-mover ‘green’ Enron.
Parenthetically, I was lucky to have received this memo back at Enron to share it with posterity. Palmisano had me in the “To” list but but purposefully did not email it to me (we were foes on ‘green’ energy issues).…
Continue Reading[This exploration into the theory of regulation was inspired by the role of the mixed economy in the rise and fall of Enron. The analysis applies to many current issues, such as the negative environmental effects of the supply/demand for used batteries, the lead story in today’s New York Times.]
Political economists have long recognized the challenge of getting regulation right in a mixed economy.
“A scheme of state interference for the attainment of some social or economic benefit,” stated Hubert Smith back in 1887, “will in general succeed or fail according as it is able or unable to cause a change in the nature, habits, and disposition of those whom it affects.”
A century later, regulatory economist Sanford Ikeda reached a like conclusion:
… Continue ReadingInterventionism is really a process of entrepreneurial adjustments in both the private and public sectors, where these adjustments tend to be both unanticipated and undesirable (from the viewpoint of the interveners) owing to radical ignorance, complexity, and dispersed information.
“[T]he impact that emissions reduction efforts in the U.S. will have on global emissions totals–and by extension, global climate–is quickly diminishing.”
The just-released numbers for last year’s carbon dioxide emissions (not including land-use changes) show why forcing large cuts in carbon dioxide (CO2) emissions is not very high on the priority list of the U.S. powers-that-be (including voters).
In 2010, the total global CO2 emissions were the highest on record, ~9.1 PgC (33,400 million metric tons). The U.S. contribution was ~1.50PgC, about 16% of the global total—percentage-wise the lowest on record (since 1959) and falling rapidly.
Unilateral U.S. CO2 mitigation strategies, in other words, are doomed to increasing irrelevance–and even unintended consequences should carbon rationing at home result in industrial transfers to less regulated areas.…
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