‘Green’ Policies Don’t Make Economic Sense Even on Their Own Terms

When confronting the typical proponents of ‘green’ government policies, the free-market economist must make a strategic decision: Since most of these recommended (and often, actually implemented) State measures make no sense even on their own terms, one course of action is to stipulate the alleged goals and simply point out that the policies do not achieve them.
However, the danger with such concessions ‘for the sake of argument’ is that the interventionists can then say, ‘So you agree with us that the free market, left to its own devices, will drive humanity over a cliff, and now we’re all just quibbling over the details.’ That’s why it’s also important to stress that the underlying fearmongering is baseless, too.
In the present blog post, I’ll move through the spectrum of possible responses. First, Ross McKitrick – who wrote a graduate-level textbook on the economic analysis of environmental policy – has a new study for the Canadian Fraser Institute, critiquing Canadian ‘green’ regulations that make no sense on their own terms.
Specifically, McKitrick shows that if we stipulate for the sake of argument that (say) Canadians are emitting too much carbon dioxide, then the proper policy response would directly target CO2 emissions. So even if you thought this were a worthy objective, it would still be ludicrous (McKitrick argues) to ban 100W incandescent light bulbs – especially in Canada, where most of the electricity is generated through hydro and nuclear.

This post was published at Mises Canada on June 1st, 2015.