Citizen Obie Climate Econ 101
I left the following comment at http://citizenobie.wordpress.com/2010/04/12/climate-econ-101/
I have read that article by Krugman. Unfortunately one key phrase “Free markets are “efficient” — which, in economics-speak as opposed to plain English, means that nobody can be made better off without making someone else worse off. ” is such a clanger that I hope it is a misprint.
As I have heard no retractions to this statement, I believe now that he really meant to say that.
I dont care how mant PhD’s the guy has, that statement indicates he has a warped view of economics and I would not heed his article.
A student of Econ101 will be able to tell you that the whole essence of a free market is that people trade because they are BOTH BETTER OFF.
The situation where one side loses, is the result of interference in the free market (which by definition is then NOT free).
An example would be Clinton’s pressure on banks such as Fanny Mae to loan at rates and security outside their best judgement, or Obama’s law requiring everyone to buy health care and dictating to the care suppliers the rate and amount of coverage they must supply.
This leads to his comments “This reaction — this extreme pessimism about the economy’s ability to live with cap and trade — is very much at odds with typical conservative rhetoric. After all, modern conservatives express a deep, almost mystical confidence in the effectiveness of market incentives — Ronald Reagan liked to talk about the “magic of the marketplace.” They believe that the capitalist system can deal with all kinds of limitations, that technology, say, can easily overcome any constraints on growth posed by limited reserves of oil or other natural resources”
This shows that the guy is a socialist, bordering on communism.
Cap and trade and transfers of wealth as proposed by the IPCC will effectively close the free market down. This is why economists, and not only of the conservative kind are alarmed at the certain effects of the IPCC’s intentions.
And so they should be.
Simply examine every country which has had the free market closed down.
A good example is PR of China.
The free market was basically abolished in 1952 and they experienced horrific starvation etc until about 1978 when the free market was embraced once again. And look at the place now! Making even the USA look silly and PRC is not even half finished yet.
So I disagree completely with Krugman, I believe the disaster we face will be from the IPCC policies.
If therefore if in order to save the world, we require such policies, there must be absolutely no doubt that the “anthropogenic CO2 causes Global warming” is correct, else millions will die in vain.
Sorry if this conflicts with your views but to me as an economist it is very very plain and obvious.