Newsweek - National News, World News, Health, Technology, Entertainment and more... - Newsweek.com

The Gaggle

RSS
SPONSORED BY

Author

Katie Connolly


Ben Adler


Jonathan Alter

Eleanor Clift

Eve Conant

Howard Fineman

Sarah Kliff

Andrew Romano

Daniel Stone




Links

Featured Postings

A GOP Plan for Deficit Reduction

9:00 AM, February 9, 2010 | Comments (5)
I've been hard on congressional Republicans recently for pandering to voters' ignorance by offering politically appealing but irresponsible slogans instead of a credible conservative vision of how to meet America's challenges, even those they harp on...

The Press Evinces Soft Bigotry Against Republicans─By Not Expecting Them to Govern

1:05 PM, February 1, 2010 | Comments (21)

Conservatives React to State of the Union With Sneers and Jeers

11:50 PM, January 27, 2010 | Comments (18)

Archives

See All from September
Previous
September 2009
Next
Sun Mon Tue Wed Thu Fri Sat
  12345
6789101112
13141516171819
20212223242526
27282930   
       
Full Post
Posted Wednesday, September 30, 2009 7:18 AM

Climate Legislation Could Actually Spur Economic Growth

Daniel Stone
If you’ve paid attention to the debate over cap-and-trade legislation, which has already begun its run through the Senate this week, you can easily spot the partisan arguments. Democrats and the liberal environmental groups that follow closely behind claim that in order to adequately mitigate climate change, we need to change how we think and what we do, starting with monitoring and taxing carbon emissions. Republicans, on the other side, see any departure from the current energy policy as an economic stop sign—an unnecessary burden that will reduce the incomes of the lower and middle classes.

Over at Worldchanging magazine, executive editor Alex Steffen has some number crunching that seems to bunk some of the structure of the current debate. Critics of any form of climate bill argue that carbon-monitoring legislation would stunt economic activity. But could climate action, he asks, actually accelerate the growth of the economy? Through some nifty economic reasoning, the answer is yes.

To counter the argument that the energy economy would grind to a halt if the president were to sign a climate bill, Steffen points to an economic principle called Harberger’s Triangle, named after an economist of the same name. In terms that the noneconomists among us can understand, Harberger accounts for the economic growth that is surrendered when the government imposes limits that weren’t there before, like in the case of carbon legislation. But this surrendered growth is not a loss. Instead, it’s actually a transfer of economic activity from the emitters to those who monitor the system and grant the permits to emit. The only real loss is what Harberger’s theory calls dead weight, which accounts for the inefficiencies in the system. And if we’re really in pursuit of economic efficiency, the inefficiencies should be abandoned anyway.

Yes, it’s a convoluted and immensely theoretical argument. But here’s what you need to know: the loss that many critics suspect would come from such a bill appears objectively minimal. The nonpartisan Congressional Budget Office characterized the economic loss of the House climate bill as being between 0.2 and 0.7 percent of GDP in 2020.

As percentages go, that’s a pretty small one, but still not insignificant. With U.S. annual GDP at nearly $14 trillion, even 0.2 percent can turn into a pretty big number. A much bigger number, though, is the economic value of ecosystems. Natural resources like clean air or the geography of land provide a value that's not calculated by any industry, but are the foundation on which the economy was built. A European Commission (directed by the meeting of the G8 in 2007) calculated the value of the ecosystem's natural processes to be between $2 trillion and $5 trillion dollars each year. It's a wide range due to many unknown variables. But the value is so significant because of humans’ inability to replace environmental structures, like water and agriculture systems, once they’ve been damaged by the effects of too much carbon in the atmosphere.

They’re all numbers worth chewing on. What’s indisputable, however, is that under either cap and trade, a carbon tax, or any other way to reduce emissions, the system provides fertile ground for new industries (like renewable energy) to crop up and maintain, if not surpass, current economic activity. Such a system would also offer an incentive for companies to do things better—to run cleaner, more efficiently and ideally, cheaper. Broad economic growth and efficiency is essentially that: the same if not more output, all with less input.
Advertisement
You must be a registered user to comment.  Click here to register.  Already a user?  Click here to login.

Member Comments

Posted By: MJ000777 (October 2, 2009 at 3:17 AM)

dprockstar said: "I am a conservative who has never voted for a Democrat for President."  

-That is doubtful, but I will give rockstar the benefit of my doubt.

dprockstar said: "Currently, we are fighting for no accountability which is the exact argument against liberalism.   I welcome a response but question your motives first.  The fact is Al Gore has no financial motives for a cleaner planet."

-LOL, Al Gore has no financial motives for his Green Scheme......please tell me you are kidding rockstar.

"It's the Economy Stupid"

~ Clinton/Gore Campaign 1992

Report Abuse
Posted By: Still Free in the USA (October 1, 2009 at 4:52 PM)

President Obama demeans the office of the presidency by traveling to Denmark and everything else he does.  The greatest asset a president of the United States has is his credibility and his time.  I really don’t care if he and Michelle want to spend time with Oprah in Denmark.  Quite frankly, leave the job as President and go back to Illinois.  The decision by the president and his staff to sell the Olympic committee on Chicago is a mistake.

1. It is not the best use of the president's time. At a moment when we are wrestling with generational policy challenges on the economy, two wars and health care, why is the president being needlessly distracted?

2. President Obama is not the right person to be the lead lobbyist pitching the Olympics for Chicago. There are alternatives that have been used by presidents in the past with great success. A delegation should be a sent as a "presidential delegation" but be led by the first lady, accompanied by the others the president selects, such as the Mayor of Chicago, cabinet secretaries, business leaders, etc.

3. The timing could not be more wrong. The president has huge challenges at home and abroad that need his immediate attention and even a day's distraction is too much.

4. The public and the press are already mocking Mr. Obama's last minute decision to go to Denmark, calling it a move that reduces him to a pitchman. Is it worth the risk to the prestige of his high office to be rebuffed and stand by as another city is chosen? I don't think so.

5. The president's trip to Denmark will not advance any of his most immediate policy goals and objectives.

Report Abuse
Posted By: toolkien (October 1, 2009 at 4:46 PM)

Broken window falacy anyone?

Sure the current economy MAY grow as good, viable assets are FORCIBLY replaced with green assets. Where does the existing EQUITY of what has been previously produced go once it is OUTLAWED?

Gee, if you burn down my house I have to pay for another one and that creates jobs so that must be a Good thing? I guess we should praise Hitler for tearing a new one in the heart of Europe, it really got the US economy going replacing all that was destroyed. Instead of bombing into rubble just outlaw it and make people replace perfectly good assets.

Articles such as this must assume people are not overly bright. Don't flush existing equity down the toilet because connected people use the government to outlaw who you are and what you own for their own benefit and put the environmental stamp of approval on it. It is just another manifestation of government thuggery simply because it can and it has people to reward for support.

Report Abuse
Show All Comments (31) »