Harvard social and political scientist Theda Skocpol offers a detailed post-mortem on the 2009-10 U.S. national effort to pass climate change legislation in “Naming the Problem: What It Will Take to Counter Extremism and Engage Americans in the Fight Against Global Warming” (pdf).
From her conclusion on a cap and dividend policy (p.125-127):
Politically speaking, the cap and dividend route has a number of advantages. Instead of building political support by bargaining with industrial interests about how many permits they may get cheaply or for free, the cap and dividend approach makes it possible to speak with average citizens about what they might gain as well as pay during the transitional period of increasing prices for energy from carbon sources.
Cap and dividend is simple to spell out (the Collins-Cantwell bill was 39 pages, compared to over a thousand pages for cap and trade) and it is also relatively transparent. Citizens could understand and trust this policy. Like Social Security, taxes or proceeds from auctions are collected for a separate trust fund – and the revenues are used to pay for broadly valued benefits for each citizen and every family. No opaque, messy, corrupt insider deals.
The dividend payments also deliver a relatively greater economic pay-off to the least-well off individuals and families, precisely the people who, as energy prices rise, would have to spend more of their incomes as home heating, electricity, and gasoline. Popularly rooted organizations like labor unions, churches, and old people’s associations might rally behind such an approach, because it is economically just in its impact. …
All of the examples listed here are instances of what political scientists call “positive feedback loops” from a policy breakthrough. The most powerful kind of reformist policymaking uses an initial law to create material benefits and normative claims that, in turn, reinforce and enlarge the supportive political coalition behind the new measure. A classic example is Social Security, which in addition to furthering the economic wellbeing of older Americans, also enhanced their capacities and willingness to be active citizens – who in turn have lobbied and voted to sustain Social Security over the decades.
Cap and dividend has the clear potential to launch such reinforcing feedback loops as well, attracting voter support and enhancing the leverage of the businesses and reform organizations that have an interest in completing America’s transition to a green economy. Cap and dividend is a deal with the angels, not the devils.
Grist’s Dave Roberts responds:
I certainly wouldn’t oppose a long-term push for cap-and-dividend under the banner of a New Social Security. Pressing the moral case is important. So is pushing the bounds of the possible. But I fear that Skocpol’s vision of cap-and-dividend sparking a shift in national politics is forlorn.
[Update: Forgot to mention, the last time I wrote about advocates for a cap-and-dividend type shareholder trust, it was Bill O’Reilly and Lou Dobbs. Strange bedfellows.]