Did your local, state, or Federal government just help you to cut down on the amount of pollution your factory or generating plant creates? Great! Now you can actually sell the lack of pollution to someone else, so they can pollute more!

 As a prominent New York utility recently demonstrated, it's fun to make millions of dollars of state and local governments' gullibility and foolish Federal free-market laws. They took huge sums of taxpayer dollars to upgrade their facilities and cut down on pollution, so the State of New York could improve air quality and eliminate acid rain. Then, under a Federal statute enacted under the recent Republican presidents, they sold their "under-pollution" (the difference between their actual pollution and the law's requirements) to other companies. The canny thing is that they did this under different names, so they could not be easily identified. The result is that New York has about the same level of pollution and acid rain.

Here is the rationale for the law:

 

The free market is all powerful, all knowing, and all important. Nothing is more important than preserving it. All bow before the free market.

 There will be less pollution if we give companies an incentive to clean up their air. Let us give them an incentive for cleaning up their emissions: they can sell the difference between their new low emissions and the legal standards to other companies. That lets some companies pollute more, but it rewards those who pollute less.

Here is why this is a dumb law:

 

1. It was not needed, because we could have simply spent a little more money on investigators and prosecutors to prevent companies from overpolluting. This would have been more than repaid in the revenue from fines.

 

2. It theoretically brings all companies up to the limit, because those who pollute less will sell the difference to those who pollute more. Therefore, there is no net savings from companies who want to be "good citizens" or who simply have cleaner operations for other reasons (e.g. Chrysler's new processes generate far fewer airborne volatile organic compounds; one paint process uses powder rather than liquid).
3. It hurts the power of local and state governments to reduce pollution by helping individual companies to reduce their emissions. The case of New York illustrates this: New York cuts local emissions, the utility sells their emission credits to another company, the air from the other company moves right back into New York.

Adam Smith himself said that the free market was not a solution for everything. The United States government has proven that pollution is one of those areas where the free market does not help.

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