On the first half of today’s installment of The Diane Rehm Show, Jerry Taylor, a senior fellow at the Cato Institute got off a good line in the midst of a discussion concerning federal regulation of emission standards.

Concerning the performance of the American car manufacturers in comparison to that of foreign automakers, and the moral hazard involved in the various bailouts, Taylor said, “Capitalism without the threat of bankruptcy is like Christianity without the threat of hell. It doesn’t work very well.”

Other guests included Mary Nichols (Chairman of the California Air Resources Board), Phyllis Cuttino (director the Pew Environment Group’s U.S. Global Warming Campaign), and David Shepardson (Washington Bureau Chief for The Detroit News). The discussion focused in large part on the attempts by California to regulate emissions within its own borders more strictly than allowed by the federal EPA.

Arguments that California is “too large” of a state and has too big of an economy to enjoy certain rights doesn’t strike me as very convincing. That’s simply a consequentialist argument: that the nationwide effects of allowing California to do this will be bad, and therefore we shouldn’t recognize the state’s right to handle its own regulation. If it really is an issue of federalism and state’s rights, the issue shouldn’t in the first place be whether or not recognition of a right will presumably have a negative economic impact. There are a lot of assumptions wrapped up in that argument.

No state is an economic island unto itself. The mere fact that the national economy is largely integrated doesn’t by itself mean that states do not have the right to make decisions about how to regulate things within their own borders. Just what is the line between acceptable and unacceptable national economic impact? Adverse feelings to this particular action on the part of California isn’t sufficient to draw lines too hastily. How might this apply to other industries and commodities?

Indeed, we can discuss whether CO2 emissions ought to be regulated at the federal level under the commerce clause, but I don’t think the size of a state should determine what rights it does or does not have. Maybe the consequentialist line of reasoning is inherently wrapped up in the commerce clause (I’m certainly no constitutional expert). But the clause has been stretched so much (e.g. it applies to a farmer consuming what he grows on his own farm) that a little pullback seems warranted, and without the creation of a(n) (inter)national carbon market (a remarkably bad idea) the clause doesn’t seem to me to be directly relevant to emissions.


  • Tom Human

    What’s funny is that I agree with the conclusion (capitalism without bankruptcy fails) but not the argument (Christianity without Hell comes out a lot better and an awful lot of really decent Christians won’t believe that a loving God can really have an eternal torture chamber).

    Still, it’s a great line!

  • Tracy

    CA citizens are primary the driver to recommend higher environmental standards for the state. Just like women mentioned on the board, CA has non profit organizaitons as well as county, city officials driving the higher standards. I think CA should thrive on meeting stricter standards then the rest of the country. The state has the resources but what I don’t like to see is the State gov spending tons of money on environmental issues that could should be used for health care or other needs. I say let its communities provide stricter standards. I also see Federal organization like the EPA are going to change their outlook as President Obama elects new officials for the EPA.

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  • Ron

    I heard that line “Capitalism without bankruptcy is like Christianity without Hell” today, 12-24-11, on BBC World Service program “In the Bakance”, from Pippa Malgren saying she was quoting Carl Bass. It may be that Jerry Taylor originated it.