June 26, 2009 at 5:12 am 2 comments

| Gabriel |

The House is scheduled to vote today on the Waxman-Markey CO2 cap and trade bill. The interesting thing about this bill is that its watered down to ensure passage meaning that even if it works exactly as intended, it will have only trivial direct impacts on climate change. Some supporters of the bill acknowledge that it will have minimal direct effects, but it will have much greater indirect effects because it will show global leadership such that the BRIC countries will sign on for CO2 limits of their own. That is, we can view the bill as a big bet on the macro institutionalist world polity theory associated with John Meyer’s group at Stanford.

I think this is a very interesting bet because cap and trade is a hard case for macro institutionalism. The typical case examined by macro institutionalism involves countries signing onto vague but pleasant sounding treaties which they don’t necessarily plan to enforce (i.e. “decoupling”). The classic example is that North Korea signs any human rights treaty you put in front of it and several countries that practice genital mutilation have signed and ratified the UN women’s rights treaty.

On the other hand there are limits to the decoupling, especially in countries with rule of law. (This is why the US has not ratified the women’s rights treaty, because we know that unlike Saudi Arabia our courts would actually enforce it and unlike Canada or European countries we don’t want them to). The classic example of this is that Japan signed the indigenous rights treaty, thinking of it as cheap grace on the grounds that they had no indigenous minorities who might demand rights, only to discover later that the Ainu were able to effectively use it to form an identity and make enforceable claims on the state.

So in order for Waxman-Markey to have an appreciable effect on climate change, it would not only have to motivate other countries to pass similar legislation but for them to do so effectively rather than just symbolically. The thing is that, unlike protecting the rights of imaginary indigenous minorities, serious CO2 reduction is really expensive. This is why you see a certain amount of decoupling both in Waxman-Markey and in earlier European Union cap and trade regulation. In both cases incumbent emitters have been essentially grandfathered in with grants of permits so as to buy them off from mobilizing to oppose the legislation. Given that China’s social contract amounts to “the CCP provides jobs and increasing prosperity, the people don’t challenge its legitimacy” and the CCP is willing to do things like currency manipulation to keep this going, I find it very difficult to believe that they will stop building coal plants and replace them with wind mills because America and the EU showed that this was the legitimate practice for a nation-state.

My prediction is that the institutionalist model for climate change legislation will succeed in the sense that many countries will pass it, in part inspired by America’s example (which in turn was inspired by the EU’s example). However institutionalism also predicts that it will largely fail in the sense that such legislation will (like the American and EU laws) be substantially decoupled from actual practice, containing substantial carve-outs and exemptions. In other words, if you need real estate in Bangladesh, you’re better off leasing rather than buying.

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  • 1. Peter  |  June 26, 2009 at 7:30 pm

    we can view the bill as a big bet on the macro institutionalist world polity theory associated with John Meyer’s group at Stanford

    Wow, I would not have thought this way, but it’s interesting – there does seem to be lots of problems associated with translating contemporaneous policy action into empirical illustration of a theoretical school of thought. Could you say a bit more, please?

    As far as results, I think your point – that there will be some action associated with changes in the de jure institutional environment, but lots of gaps between that and the facts on the ground – is a pretty good bet. But isn’t this always the case for almost all (big) legislation?

  • 2. gabrielrossman  |  June 27, 2009 at 7:07 am

    what i meant by it being a big bet on the theory is that it if one of the best arguments for a law is “it will set a good example which others may imitate” then this is basically following the logic of Meyer, Boli, Thomas, and Ramirez AJS 1997. i don’t mean to imply that policymakers are deliberately imitating that piece (if they were they would have gotten to the part about decoupling).

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