Abstract

This paper considers prevailing environmental policy in the United States with the emphasis on liberty, markets, utilizing information, entrepreneurial discovery, and the economic analysis of political decisions. The general discussion is illustrated by the concern over global warming and policies for addressing this concern. The political incentives to confront environmental problems directly with mandates, restrictions, and subsidies ignore the power of liberty and market incentives to solve problems by fostering an impressive network of information transfer, increasing innovation, and expanding prosperity. Indeed, most environmental policies systematically suppress liberty, censor the communication of information, and retard innovation and prosperity, with the result that they provide less environmental quality at greater cost than is possible. While such flawed policies might be justified in cases where pollution problems pose clear, serious, and immediate threats, we argue this is not true of global warming, and the most effective response to concerns over carbon emissions may be limiting the discretionary power of government to take direct action and rely on the indirect effects of liberty and market incentives to move us beyond the petroleum age more quickly and efficiently than will result from the direct action of government.