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Friday, May 1, 2009

The bottom line for Captain Trade

The economic commentator with the biggest soapbox, Nobel prize winner Paul Krugman, devoted his NY Times column Thursday to the economics of cap-and-trade as a way of reducing CO2 emissions.

Krugman is a firm believer of aggressive government intervention to reverse global warming. At the same time, he writes
Yes, limiting emissions would have its costs. As a card-carrying economist, I cringe when “green economy” enthusiasts insist that protecting the environment would be all gain, no pain.
The Krugman column is a Rorschach test — people read into it what they want into it. On the left, political bloggers like Daily Kos praise Krugman for supporting cap-and-trade. (A few on the left, like the commenters at Washington Monthly, think that Krugman is a free market kook).

On the right, EconLog (by an economist and part-time Krugman fan) praises Krugman for his admission of the costs, but not for his vilification of cap-and-trade opponents. (More critical is Roger Pielke of the U. Colorado).

It is hard to make policy without considering both the pros and cons of a given policy proposal. Right now, we don’t know what the actual costs and benefits of cap-and-trade will be, and there’s really no way of knowing until we try it.

So it’s great that Krugman has given both sides, even if the partisans are only selectively quoting what they want to hear.

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