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 ...

Cap-and-Trade Debate

Environmentalist: All right: where is the poison? The battle of wits has begun. It ends when you decide and we both drink, and find out who is right and who is dead.


Economist: But it's so simple. All I have to do is divine from what I know of you: are you the sort of man who would put the poison into his own goblet or his enemy's? Now, a clever man would put the poison into his own goblet, because he would know that only a great fool would reach for what he was given. I am not a great fool, so I can clearly not choose the wine in front of you. But you must have known I was not a great fool, you would have counted on it, so I can clearly not choose the wine in front of me.


Environmentalist: Truly, you have a dazzling intellect! You've made your decision, then?


Economist: Not remotely! Because Iocaine comes from Australia, as everyone knows, and Australia is entirely peopled by criminals, and criminals are used to having people not trust them as you are not trusted by me, so I can clearly not choose the wine in front of you.


Environmentalist: You're just stalling now.


Economist: You'd like to think that wouldn't you! You've bested my giant which means you are exceptionally strong and you might be relying on your strength to save you, in which case you put the poison into your own goblet. But you've also bested my Spaniard, which means you have studied and in studying you learned that man is mortal in which case you put the poison as far from yourself as possible ... But, ah my! What in the world can that be?


Environmentalist: What, where?


Economist: Oh, ha ha. I could have sworn I saw something. No mater, ha ha ha. Let's drink! Me from my glass, you from yours.


(They drink.)


Environmentalist: You guess wrong. What's so funny?


Economist: You only think I guessed wrong! Ha ha ha. I switched glasses while your back was turned! You've fallen victim to one of the classic blunders!!! The first is never to get involved in a land war in Asia! The second, and only slightly less well known, is never go in against a Sicilian when death is on the line!!! Ha ha ha Ha ha, Aaackk!


(He dies from the poison in his cup. Both cups were poisoned)