The Economics of Welfare: ETS and CT - Essay Example

This is also optimum regard to the overt reality that resources which emanate from nature has always been economically considered as scarce. Despite scarcity, its level has become critical because of uncontrolled gas inputs. Garnaut in 2008 reiterated the call in Australia for the need for a global policy to mitigate climate change caused by greenhouse gas. It was espoused through the Emissions Trading Scheme and Carbon Taxes. Practically, the Emissions Trading Scheme and Carbon Taxes are the two well-thought-of policy approaches in Australia designed to control and mitigate activities that subsequently evolved damaging gases to the environment.

However, much as the ultimate objectives of the two models are similar, virtually, business entities like a major Australian Corporation would opt for ETS. This is more direct control over emission levels of dangerous greenhouse gases. It is because while market flexibility is allowed (Garnaut 2008), trading which is the essence of every economy is basically left alone to settle at any level driving efficiency in the market. It would also be best remembered here that the once globally known economist Allan Greenspan commented in early 2008 that in trade, an efficient market is a flexibility driven (Greenspan 2008).

On the other hand, w. In the final analysis, it is only the business or corporate entity that benefits from emission taxes, while consumers may dwindle in number because of limiting prices brought about by the ad-on. Some countries though, choose to implement a policy on emission taxes and succeeded in maintaining some highly industrialized areas fit for normal living. But, it can be read online that the burden of taxes to many nationalities have sunk to the inevitable level where consumer's purchasing powers have so deteriorated to such an extent that the scale of poverty sharply increased even in highly industrialized countries.

So, in their particular stead supply of the necessities in life may become abundant but the demand for it is close to nil because people do not have the purchasing abilities. Carbon taxation then could not simply support the economics of welfare in this manner.Conventionally, it is becoming a global trend to allow more market flexibility, and let the natural law of supply and demand rule about an efficient market. Despite the ease in implementation of a simple carbon tax (Garnaut 2008), the conglomerate of business and trade tycoons that hugely influence Australian economy are more inclined to ETS just like in the US and in Japan because as Greenspan (2008) said: "much of the financial system's risk-valuation models failed, not because they were too complex but because they were too simple to capture the full array of governing variables that drive global economic reality".