Monday, July 06, 2009

Cap and tax continued

The US Republicans have defined cap and trade as 'cap economic growth and trade jobs to China.' If we look at the EU's experience with its attempts to reduce greenhouse gas emissions, we'll see the Republicans have a good point.

European governments have imposed a garden variety of GHG reduction measures since the early 1990's.

Nevertheless, GHGs went up in Europe by 5% between 1991 and 2005.

What did go down in that same period, though, were manufacturing jobs.

Norway, Sweden and the UK, for example, saw manufacturing jobs fall by 5.6%, 18.5% and 20% respectively.

The cap and trade system started in Europe in 2005. The additional tax on manufacturers will likely reinforce the effects of the previous tax increases.

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