By KEVIN CROSWHITE | Jan. 22, 2015
In the past, climate change has been a wedge issue between conservatives and liberals, but that tide appears to be turning. On Jan. 21, the U.S. Senate voted 98-1 for an amendment that says climate change is real, not a hoax. Fifteen Republican senators voted for an amendment stating that humans play a role in climate change, and five GOP senators even voted for an amendment stating that human activity significantly contributes to climate change.
This demonstrates growing agreement that climate change is an issue. But as conservatives, do we need an answer to climate change, and if so what does that answer look like?
Climate change has become a bipartisan issue -- and one that we as conservatives can’t afford to ignore. A recent ORC International poll found that 83% of Americans believe the climate is changing. Citizens for Responsible Energy Solutions found that even 51% of Republicans believe that climate change is happening or will happen in their lifetimes.
Tom Jensen, director of Public Policy Polling, articulated that in a polling memo last year, “Voters won’t elect climate denier in 2016, GOP stance hurts with independents.” Most Americans are clear on this: They want action on climate change.
While there is broad support for action, there is great disagreement on how to act. Citizens for Responsible Energy Solutions found that 79% of Americans agree with the following statement: “You don’t save the environment by wrapping it in red tape, but through encouraging innovation in new technologies that will reduce harmful pollutants like carbon.”
That sentiment seems to convey support for the exact opposite strategy being pursued by President Barack Obama and the U.S. Environmental Protection Agency. Yet, polling from the Wall Street Journal demonstrates that more than two-thirds of Americans support the president’s climate strategy. This is because Americans have yet to hear a better solution, a conservative solution.
As conservatives, we want action on climate, but, for various good reasons, we don’t like the EPA’s regulatory approach. Where does that leave us? Well, it leaves us at the drawing board.
Market solutions are the preferable way forward on climate change because climate change is an economic problem with environmental consequences, not the other way around. It’s an economic problem because climate change is a textbook example of a market failure.
Professor Mark Pennington describes a market failure as an instance when private-sector actors impose costs on other actors without paying appropriate compensation. Climate change fits that definition perfectly; carbon emitters are contributing to climate change, which is then imposing costs on Americans and our economy. But is there a case for correcting this market failure, and how would we correct it?
When asked if there is a case for government to do something about pollution, Milton Friedman responded with the following:
“Yes, there’s a case for the government to do something. There’s always a case for the government to do something about it. Because there’s always a case for the government to some extent when what two people do affects a third party. There’s no case for the government whatsoever to mandate air bags, because air bags protect the people inside the car. That’s my business. If I want to protect myself, I should do it at my expense. But there is a case for the government protecting third parties, protecting people who have not voluntarily agreed to enter."
So we’ve determined that there is a case for correcting this market failure. We just need a solution. As conservatives, we want price signals, not market manipulation, to determine energy sources. We want to ensure no growth of government because government is already too big. We want to ensure international competitiveness for American business because the United States is one of many nations contributing to climate change. These principles bring us to a pro-growth, limited government solution to climate change.
American ingenuity can thrive the most when free enterprise is allowed to flourish. First, repeal all energy subsidies. That means getting rid of billions of dollars in subsidies for fossil fuels and renewable energy alike.
The next step is to correct the market failure. Going back to Friedman, he argues, “The way to do it is to impose a tax on the cost of the pollutants emitted by a car and make an incentive for car manufacturers and for consumers to keep down the amount of pollution.” By putting a price on carbon at the cost that it has on our economy, it removes the hidden cost and consequently eliminates the market failure.
From there, we want to swap taxes. By swapping taxes, we can create a more efficient and pro-growth tax scheme and correct climate change’s market failure at the same time. Doesn’t it make more sense to tax things we want less of than to tax things we want more of? This is what drove Art Laffer, economic advisor to President Ronald Reagan, to support this plan.
We price carbon at the cost it is imposing on our economy and use those revenues to offset taxes on productivity or profits. Laffer argues that you don’t even need to believe in climate change to support this plan, but that you prefer to tax things we may or may not want less of than things we definitely want more of.
There is one more step to allowing true price signals to compete, and that is a border adjustment. To protect American business from unfair competition with nations that do not correct the climate change market failure, we impose a border adjustment. We impose a tariff on goods imported into the U.S. at the price of carbon used to produce the good and remove the price on carbon on exports. This levels the playing field for American exports and foreign importers.
A conservative solution to climate change can mitigate the risks of climate change and be pro-growth at the same time. By utilizing conservative principles of property rights and free enterprise, we find a solution that all conservatives can support.
While some conservatives may fear large challenges, I believe that is where conservatism can prove to be effective and cogent.
Kevin Croswhite of Waukesha is the Wisconsin state director for RepublicEn. This column expresses his personal opinion.