The legendary conservative economist Milton Friedman was asked on the Phil Donahue Show in 1979, “What would you do about pollution?” Dr. Friedman’s answer was simple: tax it.
Dr. Friedman went on to say that the way to reduce pollution was not to issue regulations, but rather “to impose a tax on the amount of pollutants emitted by a car” so as to “make it in the self-interest of the car manufacturers and of the consumers to keep down pollution.”
Dr. Friedman, a champion of small government conservatism, explained that government must step in to hold people accountable when something they’re doing affects third parties who have not voluntarily entered into a transaction. Otherwise, polluters get to hide the true costs of their products by dumping some of the negative effects of their production into the air that we all breathe. Those costs are real and they show up in asthma attacks in emergency rooms, for example, and in the negative effects of climate change. Economists like Dr. Friedman would tell us to “internalize” these “negative externalities” so that a transparent marketplace can rightly judge the true cost of those products. This internalization gives rise to innovation, of course, because a cleaner competitor’s product looks much better when all the contenders’ costs are fully attached to all of their products.
We showed that clip of Dr. Friedman’s appearance on Phil Donahue’s show at a packed event at BYU in October. Of the 120 students and faculty in attendance, half identified as Republicans and half identified as Democrats. Ninety-one percent of those present said that climate change was real and human caused, and they were there to explore the question, “Can free enterprise solve climate change?”
The answer we came to was clear: yes, free enterprise can solve climate change, if we would but tax carbon dioxide. For conservatives like the two of us, it would be essential to pair any new carbon tax with a dollar-for-dollar cut in existing taxes or a dividend of all of the carbon tax revenue back to the citizenry. In this way, there would be no growth of government.
We’d also insist on applying the tax to imports, and we’d vigorously defend our right to impose that tax against challenges from China or other trading partners in the World Trade Organization. If successful in fending off that challenge (and we think we would be), the whole world would then join us in a truer “costing” of energy. In a transparent and accountable energy marketplace, the cleaner, challenger fuels would no longer need subsidies to beat the incumbent, dirty fuels. There would be a level playing field, and entrepreneurs would deliver innovative solutions to willing customers in a marketplace with 7 billion potential customers worldwide. Jobs and wealth would be created in clean energy.
For people of faith, the economics principle is secondary to the underlying moral principle. We are not to do on our property something that harms someone else’s person or property. Accountability brings blessings, and the lack of accountability brings havoc. Climate change is the havoc that results from the lack of accountability for emissions.
As we discussed at BYU that day, a company that burns fossil fuels to make electricity should not be allowed to get away with socializing its soot. It should pay for the health damages its soot is causing, and it should pay for the climate damages its CO2 is causing. In fact, we should all be held accountable for our emissions, and the damages caused by those emissions should be paid as we go. Just as cities charge waste haulers for the space they use up in city dumps, we should pay for the CO2 space we use up in the atmosphere.
There’s a wonderful, God-designed balance to the creation. Humankind has the capacity to upset that balance and to wreak havoc. We also have the capacity to be wise stewards of the creation. In the past, we just didn’t know the impact we were having. Now that we know, we have a choice: we can insist on our prerogative to pollute or we can rise to our calling to tend what’s left of the garden.
Of course, we must pursue this calling with due regard to maintaining a viable economy. We believe that this can be done by choosing a solution better than the regulatory answer promulgated by the Obama administration in the form of the Clean Power Plan and better than the unsuccessful cap-and-trade legislation that preceded it. If we seize this moment, we can show that free enterprise can, indeed, solve climate change. If we dither, the political pendulum may swing, and we may be subjected to a regulatory solution or to something as complex as cap-and-trade.
Nick Huey is a co-founder of the Climate Campaign, a student-led movement between Utes and Cougars to depoliticize the science of climate change.
Bob Inglis, a Republican, represented South Carolina’s 4th District in the U.S. Congress from 1993-1999 and from 2005-2011. He now directs republicEn.org, a community of conservatives committed to action on climate change.