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Smith: I should point out that we have that experiment going on today. Europe—500 million people—experiences gasoline taxes in England of $8 a gallon. We experiment with $2.50, $3 a gallon. Yet one doesn’t find these new technologies rushing out of Europe. How high does—
Kiesling: Actually, that’s incorrect. All of the new diesel engines—
Smith: Oh, no. Diesel has nothing to do with the economics. Diesel has to do with the low tax of diesel and the fact that the air pollution laws don’t ban diesel in Europe. It’s not the energy taxes. It’s regulatory policy.
Bailey: So, Fred, are you saying that human
beings are not clever enough to come up with low-carbon
Smith: I’m saying that technocratic social engineering projects aren’t the best way to free the creative energies of mankind.
Bailey: Unfortunately, Fred, you haven’t shown a path for evolution to this. I’m sorry. I realize that you believe that somehow the invisible hand will take care of a commons problem always, but commons problems are solved by creating property.
Bailey: And the government helps create property, defends property. It’s an institution.
It’s not a great institution. Right now all the big emitters are coming to Washington and begging for free permits so they can get tons of money, basically, and extract it from our pockets—which is another reason I don’t like cap-and-trade systems. They want the government to create an asset for them worth hundreds of billions of dollars.
Welch: I have to impose my liberty here. The panel will be in the back alley after this, but the rest of us have to go to lunch now, which is next door.