Milton Friedman, Nobel Laureate -- and arguably the most influential economist of the 20th century -- died Nov. 16, 2006, at age 94. Now that he is gone, is the "green movement" challenging his economics? If so, what does that mean to you and me?
You may never have heard of Milton Friedman, but you definitely have felt his impact. Put simply, his free trade economics call for corporations to make money by pulling down barriers to trade. His ultimate philosophy: Make as much money as you can.
The green movement, though, is challenging that notion by incorporating the idea of social responsibility on the part of individuals and corporations. This new variable is an apparent direct challenge to Friedman's economics, which have brought tremendous economic success to our country. So how do we blend these two seemingly opposite forces? Carbon trading can play a critical and perhaps earth-changing role.
Let's start with this basic premise: Humans pollute and so do corporations. The green movement would call that our "carbon footprint" -- a measure of how much we pollute. Thus, when we reduce our carbon footprint (pollute less), by definition, we will harm our environment less. This concept is called "carbon neutrality" -- our impact on the environment, in terms of emissions, will be zero.
Do some smart things to reduce your carbon footprint and, when you cannot reduce any further, go out on the open market and buy "carbon offsets" to make up the difference. You can buy carbon offsets from companies around the world that have adopted efficient means of production or are in industries that inherently don't pollute much.
Think of it as a dividing line -- those above the line pollute more than those below the line. Those above buy offsets from those below. In any event, if you attain carbon neutrality or, better yet, can actually reduce your carbon footprint, you or your company can claim the illustrious distinction of being "green."
The practical means of trading carbon come in the form of worldwide markets that enable carbon credit trading. While these markets are in their infancy, you or your company could go out on the open market and buy carbon credits to offset a portion of your carbon footprint. On the other side of the equation, one could also sell carbon credits. It takes two to tango in any marketplace.