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Krugman on cap and trade

by on June 22, 2009

You’ve probabaly seen this but in case not. Seems to me ok.

A while back I wrote about anti-green economics — the insistence, by opponents of policies to reduce greenhouse gas emissions, that the economic cost of cap-and-trade would be immense and unsupportable. I cited Robert Samuelson, who ridiculed the Environmental Defense Fund for suggesting that major action on greenhouse gases would only cost a dime a day per person.

Now comes the Congressional Budget Office, which estimates the cost to households of Waxman-Markey in 2020 at $22 billion — which, given a projected population of 335 million, comes to 18 cents a day. Hah! EDH was being over-optimistic. Seriously, EDF was essentially right: the costs of cap-and-trade are very, very low.

The point is that we need to be clear about who are the realists and who are the fantasists here. The realists are actually the climate activists, who understand that if you give people in a market economy the right incentives they will make big changes in their energy use and environmental impact. The fantasists are the burn-baby-burn crowd who hate the idea of using government for good, and therefore insist that doing the right thing is economically impossible.

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