So, if you’re like us DINKs you’ve probably heard a lot about global warming. You might also have noticed a lot of the screwy weather and super hot summers we’ve been having over the past few years. So, you’re probably familiar with the main idea behind the global warming debate, which is the idea that pollution is putting a lot of junk in the atmosphere, thus causing the earth to heat up.
Well, there has been a lot of discussion about potential solutions to this issue. But, the best idea I’ve heard is a carbon auction. Now the idea of a carbon auction sounds a bit dull. Right, so companies would bid for the right to pollute, thus reducing atmospheric emissions (…yawn…scratch…change the channel).
But, here is where it gets interesting, instead of sending the auction proceeds to the government, the money would be sent to you in the form of a dividend check (clicky). This is a terrific solution to the problems of global warming.
Here’s some background before I explain why this solution is awesome. Pollution is a economic problem. Its only caused by a few people and organizations, but its cost is carried by everyone. Right, so because your local power company or fuel refiner is dumping a ton of carbon into the air, the summers get hotter and you need to crank your air conditioning. In economic terms this is called an externality – in plain english you’re getting the muddy stick because of someone else’s transaction.
The carbon action with dividends – also called a public trust allocation – is good for a number of reasons. First, it addresses a root cause of global warming (atmospheric emissions). The auction places a dollar cost on polluting, thus creating incentives to reduce emissions. Second, the government will get their cut of the auction revenues. Third, and most important, the average joe will get a check for bearing the costs of pollution. In some cities like L.A. and Washington DC, the air quality is so cruddy that sometimes its not safe for senior citizens to be outside. Also, the summers are getting hotter in the US, thus increasing everyone’s energy costs.
Public trust allocations are not only effective solutions, they are also economically just. You should be compensated for bearing the cost of someone else’s pollution.