Carbon tax-cut....

at least Friedman's gone green rather can cheering on a war in iraq...

Moore’s Law and the Law of More

But while all of that is hugely important, we must not fool ourselves, as we have done for so many years: Price matters. Without a fixed, long-term, durable price on carbon, none of the Obama clean-tech initiatives will achieve the scale needed to have an impact on climate change or make America the leader it must be in the next great industrial revolution: E.T., or energy technology. At this stage, I’d settle for any carbon price mechanism — cap and trade, fee-bates, carbon tax and/or gasoline tax — as long as it real and provides consumers and investors a long-term incentive to shift to clean cars, appliances and buildings.

Bob Lutz, a vice chairman at General Motors, offers a useful example of why price matters. When Congress demands that Detroit make smaller, lighter, better mileage vehicles, but then refuses to put a higher price on carbon — like with a gasoline tax — so more consumers will want to buy these smaller cars, said Lutz, it is the equivalent of ordering all American shirtmakers to make only size smalls while never asking the American people to go on a diet. You’re not going to sell a lot of size smalls.

Have no doubt: From right-wing tea parties to coal states to manufacturers, there is going to be a no-holds-barred campaign to kill any carbon price signal, including cap and trade. A vast army of lobbyists is already working against it. Only President Obama can blunt this. Only he has the platform for framing and elevating the issue properly and taking it to the American people with the passion and clarity needed to move the country. It will take more than one speech.

Here’s one way to start: “My fellow Americans, I want to speak to you about a new economic law. You’ve heard of Moore’s Law in information technology. I’d like to speak to you about the ‘Law of More’ in energy technology. Americans, Indians, Chinese, Africans, we all want more — more comfort in our homes, more mobility in our lives, more technologies with which to innovate. But there is only one way all 6.3 billion of us can have more and not make this an unlivable planet, and that is by living our lives and running our businesses in more sustainable ways and properly accounting for it.

“Right now we’re paying a huge price — a tax — for everyone trying to achieve more in an unsustainable way. But the ‘More Tax’ is not imposed by the U.S. government. It is a tax imposed by the market and will continue rising indefinitely as more and more people want more and more stuff. It will steadily drive up gasoline prices, home heating prices and factory electricity prices. But because this ‘More Tax’ is set by the market and not the government, many opponents contend that there’s nothing to be done: ‘Oh, $4.50 a gallon gasoline — that’s just the market at work. We can’t do anything about that.’ And then all that tax money out of your pocket goes to enrich oil companies and petro-dictators.

“My proposal is that today we fix a durable price on carbon-based fossil fuels, but set it to begin only in 2011, after we’re out of this recession. Every home builder, air-conditioning manufacturer, gasoline refiner, carmaker will know that it’s coming and will, I believe, immediately look for ways to profit from and invest in more energy efficient systems. Yes, the cost of gasoline or kilowatt hours will rise in the short term. But in the long term, your actual bills and expenses will go down because your car, appliances and factory will become steadily more productive and give you more power for less energy. “I call it the ‘Carbon Tax Cut.’ You won’t receive the dividend in the first week or month, but you will get it soon, and it will be a permanent tax cut, a gift that will keep on giving.

“So those are our choices, folks — an escalating ‘More Tax’ forever, premised on immediate gratification and short-term thinking, or a ‘Carbon Tax Cut’ forever, which is exactly what you’ll get from establishing a carbon price signal that shapes the market in favor of American interests and not those of our adversaries and competitors. If you’re with me, write your member of Congress and senator today.”

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