Krugman explains environmental economics

Bill Hannahan said:

Lou, the way to tell if a lifestyle is sustainable is to imagine a world in which every person in this and future generations lives the identical lifestyle.

So, how many children were produced by the people in your example over the course of their lifetime? If it is one per person or less [each person contributes half the DNA to two children] the example is sustainable. Two people living in a Tee Pee producing 3 children is not a sustainable lifestyle.

Paul said; “Politically speaking, doling out licenses to industry isn’t entirely bad, because it offers a way to partly compensate some of the groups whose interests would suffer if a serious climate-change policy were adopted.”

If your neighbor is caught with an illegal tap into your gas line, the gas company should give them a lower rate to minimize the “trauma” of having to pay a gas bill in the future.

“In particular, you can’t put a price on something unless you can measure it accurately, and that can be both difficult and expensive. So sometimes it’s better simply to lay down some basic rules about what people can and cannot do.”

The first sentence does not support the second sentence. “basic rules” that are not well founded may do more harm than good. A reasonable compromise would be to charge a dumping fee near the low end of the cost estimate. As our knowledge improves the uncertainty in the cost will shrink.

“Consider auto emissions, for example. Could we or should we charge each car owner a fee proportional to the emissions from his or her tailpipe? Surely not. You would have to install expensive monitoring equipment on every car, and you would also have to worry about fraud. It’s almost certainly better to do what we actually do, which is impose emissions standards on all cars.”

Regulating emissions is better than doing nothing, but there is no evidence that it is better than leveling the playing field. For example, recycling atmospheric carbon in cars with no emission standards may be better than burning fossil fuel in highly regulated cars.

Paul does not distinguish between fossil carbon and non fossil carbon. It would be very easy to collect a waste dumping fee on fossil carbon when it comes out of the ground and then let that cost be passed on to the end user.

RogerBrown said:

Lou Grinzo writes:

"To be sure, Krugman says that we need to use a market-based solution, which I think is undeniably true"

I am not sure what you mean by a market based solution, but I personally see serious problems with captital markets which, in my view, must inevitably be growth based.

Here is an analogy for our economic system. A group of people live in a house which they are constantly expanding in size, and at the same time they are increasing the luxuriousness of its appointments. This expansion of size and luxury is a competition. Whoever adds the most value to the house gains the largest right to consume economic output such as clothes, food, medical care, toys, expensive recreational activities, etc. both now and in the future. If the rate at which you are adding value to the house falls too far below the average you will either be thrown out into the street or restricted to living in a tiny poorly furnished room with restricted access to medical care, luxury items, recreational amenities, etc. No end to this competitive increase in the size and luxury of the common dwelling is ever anticipated.

Solutions which maintain the competitive accumulation paradigm treat symtoms, not causes. If we are destroying tropical forests in the process of making beautiful furniture for our homes we can try to add the future cost of deforestation to the price of the furniture. If we are emitting GHGs in the process of heating and lighting our homes we can try to add the future costs of climate change to the price of fuel. And so forth. However, if we refuse to abandon the goal of continously increasing the size and luxury of our homes then such market based actions are merely delaying tactics.

The the rational alternative to the competitive accumulation as the basis of domestic economy is obvious. If the house is a comfortable place to live, then there is no need to expand it any further. Instead its occupants should concentrate on keeping the house in good working order with a minimum expenditure of resources. They should share the work of maintenance and share the benefits of having a comfortable place to live. If maintenance work does not occupy all of their spare time then they should seek psychic income in other activities than the accumulation of material wealth. If they want to introduce an element of competition into such activities because competition is the spice of life then let them do so. The end.

I realize, of course that the practical details of implementing such a cooperative plan on a society wide level are not trivial. Perhaps the often repeated claim that human nature won't allow such cooperation is correct, although my impression is that this assertion is largely a mindless repetition of dogma rather than the result detailed logical reasoning.

I will not attempt to describe in detail my thoughts about how cooperation can largely (but not entirely) superseed competition for a large portion of our economic efforts, because I do not think that any real audience exists for such speculations. I will mention that I think that it is possible that money and two of its traditional functions could be preserved in such a system. The two functions than can be preserved are:

1. A practical utility for facilitating economic exchanges.

2. An information system to aid the intelligent direction of economic effort.

The function of money that cannot be preserved that of a store of value. The only real store of value is the economic community and the resource base which supports it. The atomized pursuit of security through the accumulation of financial markers by individual economic actors is antithetical to any attempt of preserve the true sources wealth.