Video: Newt on incentives versus punitive fines

posted at 10:10 am on November 4, 2008 by Ed Morrissey
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Newt Gingrich uses Barack Obama’s comments on coal and skyrocketing electricity costs to make the point that incentives work far better than punitive measures in pushing new technology. Calling cap-and-trade “tax-and-destroy”, Gingrich analogizes the current issue of energy production to the advent of the intercontinental railroad:

Ample energy at a reasonable price is essential to any modern economy. Perhaps this is so basic it has been forgotten, but without reliable energy at a reasonable price, businesses cannot plan for growth. They have to know that the lights will come on when they flip the switch, that the phones will work, and that the machines will produce. Otherwise, they run the risk of paying people to sit around in the dark, not producing anything. Any business running on tight margins already will simply choose to remain at their current level rather than risk losing the entire business over an expansion that either costs too much to power or may not have the power available at any price to maintain production.

No technology has ever sprang to life through the use of punitive fines. Most developments come through private-sector investment, but even those that came through government action didn’t result from heavier regulation. The came from incentives and subsidies to groups that invented and refined critical technology just ahead of the curve — which kept America at the forefront of technological development.

The best example of this comes from the global-warming movement. While Europe developed their Kyoto mandates on emissions through penalties (and trading systems to move penalties around), the US developed better technology through innovation and investment without the burden of penalties. The result? European emissions increased, and US emissions decreased. Kimberly Strassel noted:

Under the vaunted Kyoto, from 2000 to 2004, Europe managed to increase its emissions by 2.3 percentage points over 1995 to 2000. Only two countries are on track to meet targets. There’s rampant cheating, and endless stories of how select players are self-enriching off the government “market” in C02 credits. Meanwhile, in the U.S., under the president’s oh-so-unserious plan, U.S. emissions from 2000 to 2004 were eight percentage points lower than in the prior period.

And so which plan would Barack Obama adopt if elected President? The failed European model, rather than the Lincoln way.

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