Waxman-Markey

Our best thinkers are thinking us into a pit of despair. (Please see Cap and Trade debate for additional The Princess Bride references.) So I must make a simple point. If you don't understand the argument of an economist it is because the argument is nonsensical. Remember that. It will spare you feelings of inadequacy, disorientation, and remorse.

David Baumann of the American Institute for Economic Research is a prime example. In his recent commentary available at www.aier.org/research/commentaries/1608-cap-and-trade-will-cost-consumers he estimates the costs of cap and trade. Let me translate his comments. If companies are charged for producing CO2, the cost of producing CO2 will be more. (That's why we pay him the big bucks.) Towards the end of the commentary, he also throws in a quick jab about renewable sources of energy being free so if they are that, there shouldn't be a need for legislation like cap and trade, conveniently forgetting the definition of a public good (www.econlib.org/library/ENC/PublicGoods.html).

Why did he write this? Because conservatives are clamoring since the House effectively passed a bill in support of cap and trade (www.nytimes.com/2009/06/27/us/politics/27climate.html). Apparently, "if you don't make your voice heard, you will be paying higher energy bills in the near future" (http://thevirtuousrepublic.com/?p=3835). And if you don't, you will anyway because oil just hit $73 a barrel (again). "(T)he main reason that Congress might choose (cap and trade) ... over a carbon tax is ... it does not impose costs on consumers", argue the best and brightest (http://gregmankiw.blogspot.com/2007/04/case-against-cap-and-trade.html). But it does and we are aware. So economist present us with a false choice, to choose higher energy prices now or higher energy prices without the incentive to decrease emissions. For those without fore thought, the choice is ceteris paribus.

Fortunately, the current administration has fore thought. Because the cap and trade system has something that economists supposedly love, trade, there are winners and losers in such a market. Poor americans who consume much less energy because their house is under thousands and thousands of square feet, and they only have one of them, and they don't fly to Buenos Aries but instead go for hikes in the Appalachian Mountains on weekends will be paid for their conservation. Businesses that produce reusable energy or consume less than average amounts will get paid for doing so and will grow. (Yay, business growth!) Who woulda thunk? So be sure to call your representative in support of cap and trade if you like money ...