Archive for the ‘cap and trade’ Category

Bob Murphy on climate change at Antiwar Radio; a puppet for the "King Coal" hand that feeds him?

October 2nd, 2009 11 comments

The following is an email message that I sent to Scott Horton, host of Antiwar Radio, regarding his September 18 interview with Bob Murphy. The exchange regarding Bob`s thoughts on the cap and trade bill monstrosity appears at 24:14 to 29:47. (Minor edits and link added.)

Scott, I listened with interest to your interview with Bob Murphy
whom I generally like, but feel compelled to point out that Bob was
not being fully honest with you – on an important point – when he
discussed his role in studying and commenting on cap and trade and
energy policy as an economist at the “Institute for Energy Research”.
This group is a part of a lobbying front for big coal and the
utilities that rely on coal – not “big oil”, such as Exxon, which has
specifically stopped funding IER because of its anti-climate change
message and which now expressly supports carbon taxes!

More on IER and Murphy`s involvement with it here:

In other words, the legitimate criticisms that Murphy can make of cap
and trade (note that Exxon, Jim Hansen and most economists prefer rebated carbon
taxes) – such as existing bills are a way for government to give
favors to insiders – have to be balanced by an awareness that, for the
past few decades, government policy has been heavily skewed in favor
of investors in and consumers of fossil fuels. Murphy talks on this
topic only because he is paid to by the lobbying group that is getting
the shortest end of the stick – big coal.  If only he were honestly
even-handed, instead of in the pay of lobbyists, we might make some
progress in addressing a range of real problems in the energy sector.



Categories: Bob Murphy, cap and trade, Coal, IER, Scott Horton Tags:

Comment to Bob Murphy on whether "Cap and Trade" is a "market solution"

June 5th, 2008 1 comment

I copy below comments I made on June 11 (Tokyo time) on Bob Murphy‘s June 4 blog post, Cap and Trade Is Not a “Market Solution”, that have apparently been held up for moderator approval (perhaps because my three links triggered the blog’s spam defenses?):

Bob, I thank you for posting your piece from IER, which has stimulated a relatively even-tempered and productive discussion.

But allow me to express a little disappointment.  Even as I agree fully with the gist of your post (the largely self-evident and unsurprising point that politicians prefer, as an alternative the more honest, open and politically less-palatable approach of direct Pigouvian taxes of the type supported by a wide range of mainstream economists, to address the concerns of scientists, economists, business leaders and others about man’s contribution to ongoing climate change by dressing up such taxes as a “market approach” involving a cap and trade program), I think that:

(1) you unfairly conclude that, since it will be government that will be implicitly pricing carbon emissions, such pricing “won’t reflect genuine economic scarcity” at all, when Austrian approaches do not deny that lack of property rights will result in economic actors ignoring external costs, but simply indicate the government pricing of resources can only imperfectly reflect economic factors;

(2) you’ve gone to a bit of unjustified rhetorical excess with your statements that:

“[t]his is no more a “market price” than if the government decided to sell people permits giving them permission to sneeze”:  rather, it’s more like the government trying to price grazing rights, resources extraction rights or other user fees on “public lands”– yes, such prices are not market prices (and are perhaps more likely to be underpriced rather than overpriced), but that does not mean that they do not represent or at all reflect valuable resources.

“Cap and trade is not a market-based solution” – while not a true market solution, a cap and trade approach is clearly one that makes use of markets.

– “Cap and trade … can therefore be justly viewed as a tax, stealthy or otherwise, on energy – the lifeblood of our economy” – this not only overbroad, as it would only tax certain types of energy, and overdramatic, it completely ignores the point that certain activities (a wide array not limited to combustion of fossil fuels, including release of other GHGs) are perceived as adversely affecting (now and in the continuing future) many within the country as a result of externalities involving an open-access and unowned and unmanaged commons, which is precisely what expressly motivates (actually or allegedly) so many – including many in your profession – to support Pigouvian approaches;

(3)  surprisingly, you failed to take the opportunity to add to the discussion by informing your readers of Austrian concerns, including the following:

– the calculation problem;

– whether, as you note it posting here, there is any reasonable basis to “trust governments around the world to implement the scheme ‘properly'” (by exploring problems with rent-seeking and bureaucratic incentives);

– whether it is desirable for the government to presume that it should act as the owner of the atmosphere in creating emissions rights (as opposed to citizens generally or long-standing/homesteading users of fossil fuels), and the related ethical issue of creating rights to emit that cut off those who may be harmed from any direct remedy (such as a share of the proceeds of the sale of rights); and

– the underlying institutional problem of lack of clear or enforceable property rights (for which past interferences by government have some responsibility); and

– whether growing concerns (and private responses) regarding the shared global issue (affecting nations with different circumstances and legal systems than ours) of increasing GHG emissions might be addressed less expensively and more rapidly by voluntary actions and national and international litigation rather than by coordinated action by various governments and implemented by individual nations.

None of these points is easily addressed, but they would help to provide a Austrian framework that may be useful to your readers. 

(4)  Finally, it is disappointing that you completely failed to take on any of your mainstream colleagues (such as those in Gregg Mankiw’sPigou Club” who support either carbon taxes or cap and trade approaches. 

I understand that you’ve got a paper in the works addressing Nordhaus, but he’s hardly the only one writing specifically on climate change; I hope you will also be looking at Marty Weitzman at Harvard, Richard Tol and a few others noted here and here: