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July 01, 2009

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http://en.wikipedia.org/wiki/Externality

The price in dollars does not reflect the actual cost of the product.

it's the same idea underlying regulation of pollution.

It's the same idea underlying regulation of other kinds of pollution.

There, fixed it for ya. :)

Absolutely. Which is why exempting farms and the worst polluters is a rather horrible idea.

"Putting a price on carbon would make the development of cleaner energy technologies more profitable"

Huh, thats a reach. It would make them more necessary, but more profitable assumes the technology exists, can be commoditized and people would buy it rather than pay the cost of emissions. Otherwise its just a tax.

Lots of assumptions underlying the seemingly obvious statement.

Seb: I agree. It could have been a better bill.

Not that you disagree, but the GOP wasn't exactly providing a counteroffer with those exemptions eliminated. So I'll take what we can get out of the party that is the lesser of two evils at this juncture.

I'm not sure why you believe that the GOP provides a good excuse for an awful Democratic bill passed by Democrats. Democrats passed a really bad bill that has pretty much as the only thing going for it that it might kinda be an opening for something better decades in the future if farm and coal interests suddenly lose power. Considering the history of farm subsidies from both parties, I'm incredibly skeptical.

A better way of looking at it is that the number of Congressman willing to think seriously about climate change and our response to it is very far below a majority.

Market innovation in carbon restrictions is a great second order benefit of actual carbon restrictions. When you exempt the hard cases, market innovation isn't likely to help much because you've removed the incentives from those who are most polluting. This is a problem because super-nifty technology for those who aren't a big problem doesn't help nearly as much as even small improvements in coal and farming.

It also kills off the best advantage of cap and trade vs. a carbon tax. One of the theoretically interesting ideas about cap and trade is that it removes the need for a government pseudo-expert to figure out where the technology can help the most. The market provides incentives for those who can make big technological gains to do so and those who can't buy up the vouchers. But here we have the worst of both worlds. We still have the government psuedo-expert exempting people, and he is doing it based on political reasons, not even a scientific analysis of where it could help the most.

Marty,

Yes. It might be clearer to say that pricing carbon improves the incentives for this kind of product development.

Meanwhile, of course, it also internalizes the costs of these emissions, giving the companies an incentive to find ways to reduce them by changing production methods and so on.

The idea of cap-and-trade is to encourage those companies that can do this cheaply to do so, increasing overall economic efficiency, when one counts all costs, not only those directly borne by the emitters and realtively easily quantified.

I'm not sure why you believe that the GOP provides a good excuse for an awful Democratic bill passed by Democrats.

Not an excuse at all! I agree with you about the shortcomings!

But, Seb, we have two parties in this country. If one party is dedicated to doing absolutely nothing, and the other party is able to pass a bill by slim margins that ends up doing some good, but not enough, and I'm given the choice of which outcome I would prefer?

Clearly the latter. No excuse at all, mind you. I'm 100% in favor of primary challenges to Dems that fought even THIS flawed bill. We need a real progressive party in this country. But the GOP is making it harder to fight for actual, productive ideas because they are totally unrealistic.

I guess I don't understand why you thought "but the GOP wasn't exactly providing a counteroffer with those exemptions eliminated" was a good response to me noting that exempting farms and the worst polluters hurts the policy.

Maybe I don't understand my place in the discussion well enough. If I provide a policy critique, does the fact that I used to be a Republican mean that the policy critique is trivialized and comments about Republicans not being helpful are someone drawn in? I wasn't defending Republicans. I wasn't helping Republicans. I wasn't even mentioning Republicans. In fact I didn't even care about Republicans in the comment. If Jesurgislac or Hilzoy had said "Which is why exempting farms and the worst polluters is a rather horrible idea." (and I can imagine that either of them might) would it have prompted the same response?

I guess I don't understand the social contours of the discussion very well.

Seb: My point is that even THIS flawed bill had a hard time passing because of disciplined GOP opposition and "moderate" Dem wavering. The point is, in America right now, where the media is dedicated to "balance" on issues of science such as global warming, and with a GOP willing to demagogue even a flawed bill, this (sadly enough) is a good outcome. If we want better, we'll need a GOP that grows up and/or a media that is willing to actually call the debate honestly (if not with equal amounts of he and she said).

So, we need to address those underlying causes, as well as hold the fire to the feet of the craven Dems. I was merely making that argument, about structural issues.

Note that I prefaced my statement with "Not that you disagree" which was meant to be a clear signal that you are not the GOP, don't speak for them, and do not disagree with the point I was making.

I think carbon dioxide really does have to be considered analogous to polution, not a straightforward instance of it. After all, we do want SOME CO2 in the atmosphere, we're just arguing about how much. That makes it rather different from something like mercury, where the ideal emission is clearly zero. It's closer to something like water, where we mandate things like surge ponds for runoff, but don't pretend H2O is a 'polutant'.

The undesirablity of CO2 emissions is highly contingent on the behavior of other nations, solar output, questionable models, and contentious issues such as what the optimal global climate really is. It's not at all as simple as, "CO2 is bad, let's emit less of it!"

I guess I don't understand why you thought "but the GOP wasn't exactly providing a counteroffer with those exemptions eliminated" was a good response to me noting that exempting farms and the worst polluters hurts the policy.

I think the problem here is that we're starting from different frames of what is possible. If you begin by assuming that anti-climate change Democrats from the coast completely control Congress, then it makes sense to say "this is a horrible bill and Democrats are entirely responsible for not producing something better." But, if you believe that Congress is structured so that effective action is impossible without either (1) support from coal/farm Democrats and (2) support from Republicans, then you'll probably conclude that (a) this was the best bill that could pass Congress and (2) the reasons a better bill is not possible are (a) Republicans are an awful party, (b) farm/coal state Democrats are awful, and (c) the institutional structure of Congress is awful. No one is complaining that GOP farm/coal state Reps refuse to vote for any climate change; the issue is the votes of the non farm/coal state Republicans.

What Turbo said.

"The undesirablity of CO2 emissions is highly contingent on the behavior of other nations, solar output, questionable models, and contentious issues such as what the optimal global climate really is. It's not at all as simple as, "CO2 is bad, let's emit less of it!""

Brett: The undesirability of CO2 emissions is contingent on the fact we've put WAY too much CO2 in the air, and haven't even tried to slow down. Even if we cut CO2 emissions drastically, we'd still warm the climate for years, because of lagtime on the changes, and because we'd still be at a much higher level tha nwe used to be. Barring some kind of magic method of quickly reducing the CO2 concentrations in the atmosphere.

As for "ideal" climate, overall, something near what we've had for the lifetime of civilization would be the best, since that's how we've structure our major investments, such as cities, farms, roads, etc. If we hit an ice melt tipping point, and sea level rises several meters, then all the coastal cities we've built are suddenly in very bad locations, i.e. underwater or nearly so. Which is a major fraction of where the world's population resides.

Publius: "It's actually worse than cost-free. There are huge costs -- it's just that they're borne by the public at large rather than by emitters."

It's actually worse than that. The public at large is generally happy with the current state because they're NOT paying for it. In fact, the best political argument against regulation of CO2 emissions is that it will cost the public more for energy.

Yet, you are entirely correct in the other aspect, there are huge costs. I like to think they are being deferred to our children and grandchildren.

My kids occasionally complain about the benefits that senior citiizens receive that they don't expect to receive when they reach that age. I always say the biggest rip off by our generation against theirs is the price of gas. We get it cheap and they will have to pay the rest of the cost plus interest in the future in the form of environmental damages.

Maybe I don't understand my place in the discussion well enough.

Sebastian's criticism of the social dynamic at work here is absolutely correct. When this occurs in the context of romantic relationships, we call it "baggage", and for my money it is one of the most harmful substances in the known universe.

The problem is that it's hard to correct, because at its core what it really is is conditioning--that is, we get in the habit of classifying people in different mental buckets--whether we realize it or not--and a response to the exact same stimuli from someone in one bucket can be radically different than from someone in a different one where we don't have past associations and ingrained habitual responses to automate things.

For what it's worth, my other half and I fight with this demon all the time. We have a lot of dysfunctional interactions in the past, and as a result certain behaviors or words become land mines and acquire a significance that unfairly colors future interactions.

All of which is a lot of words to say that Sebastian is correct and that "well the GOP didn't foo" is a tu quoque response that only makes sense in the context of responding to a right-wing partisan criticism.

Back in the early 1980's, when I was an undergraduate, some version of what we now call "cap and trade" was advocated by economists who wanted to put a price on the pollution externality. It was the "market" solution, rather than having an inefficient, one-size-fits-all government mandated solution to each pollution problem.

It is ironic indeed that the Republicans do not realized that cap-and-trade is a success for conservatives. They should be its biggest advocates. Unless they want to be shills for polluters . . .

"It is ironic indeed that the Republicans do not realized that cap-and-trade is a success for conservatives. They should be its biggest advocates. Unless they want to be shills for polluters . . . "

Yes, they want to be shills for polluters.

In addition, it's become a tribal mark to deny global warming if you want to be a member of the wingnut clan.

Brett, what you are saying about CO2 is true of most pollutants. Typically, a substance becomes harmful at some concentration in the relevant medium and worse after that. As Paracelsus said, the dose is the poison. That's precisely why price mechanisms are a good idea.

Like jdog, I recall when market instruments for dealing with environmental problems were considered right-wing. They still are in much of the world.

The undesirablity of CO2 emissions is highly contingent on the behavior of other nations, solar output, questionable models, and contentious issues such as what the optimal global climate really is. It's not at all as simple as, "CO2 is bad, let's emit less of it!"

This is not, in fact, true. Assuming we haven't passed a tipping point yet, if we shut off all man-made CO2 emissions tomorrow, atmospheric CO2 would decline back to pre-industrial levels, and climate change would stop and eventually reverse, back to a pre-industrial climate (which we had, loosely speaking, up to about 1950 or later). This would be ideal, because the pre-industrial climate is what civilisation is set up to work with. It's not as though we would run out of CO2 and all the plants would starve.

Bernard,

Yes, I agree , much clearer.

The problem is about equilibria and attractors. If we are still within the reach of the same attractor as in the pre-industrial age, then stopping emission of surplus CO2 will return us to that equilibrium (although it could take a very long time). If we have moved beyond the point of equal attraction, then there will be an accelerated move towards another equilibrium the attractor of which might be beyond our power to leave. We don't know for sure where in relation to the tipping point we are and how the new equilibrium will look like (and how long it will take to reach it).
But (and unfortunately) all those that refused to act now because of ignorance, indifference, short-sighted greed etc. will not be around when the digestive final product will really come into contact with the blades rotating at high frequency.
„L' avenir les inquilne peu: après eux le déluge.“

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