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Pouring time, money and research into something we're not sure will succeed, like ethanol, could be at the expense of something much better that could have been developed with those resources, like an effective solar cell or some sort of technology no one has even thought of.
Besides, government is never ahead of the curve when it comes to new technology - they're always scrambling to try to catch up and regulate after the fact. Do we really want to rely on them for innovation in any field?
Since when did anyone actually prove that C02 is any more of a "pollutant" than O2 or H20? Heck, even years and years after we had our big save O3 round of regulations scientists are questioning if anything humans did before or after is having much of an affect on O3 levels.
You note that libertarians usually endorse one of three approaches to dealing with climate change. There is another option not mentioned: resiliency and adaptation, as noted in this 1997 quote from Fred at a CEI conference:
"Should we be considering a prevention strategy or should we be considering an adaptation strategy? In the face of change, should we try freeze the world and make nothing change? Or should we be trying to adapt to a world where there will be risks in the future but we are not exactly sure what those risks are likely to be? Should we try to prevent the one possible risk of global warming? Or should we try to become smarter and wealthier so that we can adapt ourselves to whatever risks occur, whether it be warming or cooling, or drier or hotter, or maybe an asteroid or a disease, or many other risks that the world will certainly face in the 21st Century? As we learn more, we can gradually reduce the uncertainties associated with those. And we'll be able to know more. And do we have to act today or do we have to act in December in Kyoto? There are risks in both directions."