Krugman: Cap-and-Trade Might Stimulate Economy

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Friday, May 01, 2009 at 12:48 pm

The objections to cap-and-trade legislation have been almost entirely economic: an emissions reduction program, the argument goes, would raise energy costs and cripple industry, while also increasing people’s electricity bills. But today Paul Krugman makes the case for cap-and-trade as an economic boon that could stimulate flagging business investment.

His reasoning is quite simple, though it’s been strangely absent from the climate debate. Cap-and-trade won’t take effect until at least 2012, meaning that higher electricity costs won’t kick in for several years. But business investment will, since industries will begin the transition to cleaner means of production in anticipation of the legislation’s onset:

Right now, the biggest problem facing our economy is plunging business investment. Businesses see no reason to invest, since they’re awash in excess capacity, thanks to the housing bust and weak consumer demand.

But suppose that Congress were to mandate gradually tightening emission limits, starting two or three years from now. This would have no immediate effect on prices. It would, however, create major incentives for new investment — investment in low-emission power plants, in energy-efficient factories and more.

As a result, cap-and-trade could help pull us out of the recession in the short term, while its moderate negative economic impact wouldn’t take effect until we’re in a better position to cope with it. It’s a compelling argument — but given conservatives’ strong distaste for Krugman, don’t expect it to have too profound an effect on the debate over climate change legislation.

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Comments

16 Comments

werewatching
Comment posted May 1, 2009 @ 10:28 am

Only a fool would think cap and trade is good for anything.Same people who steal taxes for green tech,when investers and the market could do it cheaper and more efficiently.I dont hate Obama but this is not Chicago.Why people do not see government is the problem is beyond my wildest thought.The poor will wait another 50 years for the help thats been on the way for 100 years.The 2 most liberal states are the poorest,the math is not that hard.


werewatching
Comment posted May 1, 2009 @ 11:09 am

cap and trade will stimulate GE,and destroy everyone else…Hey wait Oshama is in bed with GE so he can control the media…O shit…we are fucked.


Brook
Comment posted May 1, 2009 @ 11:26 am

Is it me or was Krugman a lot smarter as a Bush basher? This was the guy that went on Fox and said we weren't paying high taxes in this country, failing to realize residents of NY pay MORE than most EU countries. My father once told me government would figure out how to make us pay for the air we breathe someday. Dad, you were right. I'm just glad he's not alive now to see what has happened to his country.

Liberals are hopeless. Cap and trade HASN'T WORKED in the EU, after 2 attempts. It's been a mess. This doesn't phase the Krugman's of the world. Blissful ignorance is a warm, fuzzy place to reside.

Let's add the iceing on the cake — that only 32% of Americans now believe in man-made global warming. This means they're going to shove a massive tax on us, based on a theory we don't believe in. Furthermore, Al Gore is blatantly lying about diminishing ice caps. The latest report is clear — ice is expanding in the Antarctic and has been since the 70's. Again, Krugman pushes ahead and damn the torpedos. One can only wish for Spring 2010 after another bitter cold winter. Who is going to listen to any of these blowhards then?


Aaron Wiener
Comment posted May 1, 2009 @ 11:45 am

Thanks for the comment, werewatching, but I'm not sure where you're getting your information about the poorest states. Looking at the personal per capita income by state, we see that the wealthiest 12 states and districts (DC, CT, NJ, MA, MD, NY, NH, MN, CO, CA, IL, VA) all voted for Barack Obama last November, while the four poorest (MS, AR, WV, UT) all voted for John McCain. Based on 2005 data:

http://en.wikipedia.org/wiki/States_of_the_Unit…

Similar rankings based on slightly different data yield comparable results.

Please let me know where you got your information, and which 2 states you're referring to.


Dick Hertz
Comment posted May 1, 2009 @ 1:09 pm

Liberals are hopeful, not hopeless. Conservatives are hopeless, gutless, and nutless it seems right now. The party of No! simply wants nothing more than to sit on its big fat rump and throw a tantrum instead of digging in to do the hard work that needs to be done to save this country. You all simply won't admit that you had your shot repeatedly with Reagan, Bush I, and Bush II, and back to Nixon only to find your political and social philosophy doesn't work and is as fraudulent as communism and fascism. Global warming is real even if only a third of the people are smart enough to accept the scientific consensus. It doesn't matter that the oil companies' study proved the public researchers' point in 1995.
Stupid people will be sucked in by TV commercials and propaganda every time, and if it wasn't the whole world at stake it would be okay for you all to starve at home in your Snuggli with a shamwow soaking up your drool, watching Fox Propaganda news. What happens when California and Mexico are droughted into dustbowls? When the grain bowl of America becomes a dustbowl as well? When the fruits and vegetables of Idaho, Oregon, Washington are no longer growable, and the groundwater of Florida is infiltrated with the rising Atlantic? You can eat your beliefs then, I guess, or you can educate yourself and get off your cheetoh rump and push for a green future that is carbon neutral and most of all profitable.
Getting in on the ground floor has rewards where staying home from the prom and crying how life is unfair has little to recommend it.


Brook
Comment posted May 1, 2009 @ 1:36 pm

LOL, Dick makes my point for me. Given the scientific facts about growing Antarctic ice, we've got a greater danger of falling sea levels — but don't let a scientific fact get in the way of your Al Gore inspired dreams.

Hey, Dick, if we we are on the verge of a major cooling phase, as I believe, are you going to come out here and tell us we better start burning trees, driving SUV's, and building carbon energy plants — you know to keep from freezing? Because I think a lot of people might think that idea SOUNDS CRAZY!


greg
Comment posted May 1, 2009 @ 4:40 pm

Im an Economist .Your Liberal jargon means nothing to me .California,and New York ,are the 2 biggest whack job states,and they are bankrupt.Oshama will do for us the same he did for Chicago—Nothing.Anyone who thinks the government can run any industry better than a free market is a fool.Any one who thinks that they are getting a tax break is a fool.This 12 dollars a week =maybe 500-800 a year.Energy under cap and trade will cost you 1000 a year extra.The cost of living will go up.I bet your property tax goes up.Who do you think will pay for this 10 Trillion dollar budget.YOU AND ME.A 20 year old kid right now owes the government 121,000 dollars.YOU HAVE BEEN SHAMED.You better not get sick under universal health care either.Trust me .We are so fucked with this SOCIAL ENGENEERING PROJECT.Did you not look into Obama,Who he Worships,What he reads.This country is heading for CIVLE WAR.Capitalism vs. Socialism.Are you blind or retarded.Can you not see the Media Has blindsided America.


werewatching
Comment posted May 1, 2009 @ 5:28 pm

Only a fool would think cap and trade is good for anything.Same people who steal taxes for green tech,when investers and the market could do it cheaper and more efficiently.I dont hate Obama but this is not Chicago.Why people do not see government is the problem is beyond my wildest thought.The poor will wait another 50 years for the help thats been on the way for 100 years.The 2 most liberal states are the poorest,the math is not that hard.


werewatching
Comment posted May 1, 2009 @ 6:09 pm

cap and trade will stimulate GE,and destroy everyone else…Hey wait Oshama is in bed with GE so he can control the media…O shit…we are fucked.


Brook
Comment posted May 1, 2009 @ 6:26 pm

Is it me or was Krugman a lot smarter as a Bush basher? This was the guy that went on Fox and said we weren't paying high taxes in this country, failing to realize residents of NY pay MORE than most EU countries. My father once told me government would figure out how to make us pay for the air we breathe someday. Dad, you were right. I'm just glad he's not alive now to see what has happened to his country.

Liberals are hopeless. Cap and trade HASN'T WORKED in the EU, after 2 attempts. It's been a mess. This doesn't phase the Krugman's of the world. Blissful ignorance is a warm, fuzzy place to reside.

Let's add the iceing on the cake — that only 32% of Americans now believe in man-made global warming. This means they're going to shove a massive tax on us, based on a theory we don't believe in. Furthermore, Al Gore is blatantly lying about diminishing ice caps. The latest report is clear — ice is expanding in the Antarctic and has been since the 70's. Again, Krugman pushes ahead and damn the torpedos. One can only wish for Spring 2010 after another bitter cold winter. Who is going to listen to any of these blowhards then?


Aaron Wiener
Comment posted May 1, 2009 @ 6:45 pm

Thanks for the comment, werewatching, but I'm not sure where you're getting your information about the poorest states. Looking at the personal per capita income by state, we see that the wealthiest 12 states and districts (DC, CT, NJ, MA, MD, NY, NH, MN, CO, CA, IL, VA) all voted for Barack Obama last November, while the four poorest (MS, AR, WV, UT) all voted for John McCain. Based on 2005 data:

http://en.wikipedia.org/wiki/States_of_the_Unit…

Similar rankings based on slightly different data yield comparable results.

Please let me know where you got your information, and which 2 states you're referring to.


Swami_Binkinanda
Comment posted May 1, 2009 @ 8:09 pm

Liberals are hopeful, not hopeless. Conservatives are hopeless, gutless, and nutless it seems right now. The party of No! simply wants nothing more than to sit on its big fat rump and throw a tantrum instead of digging in to do the hard work that needs to be done to save this country. You all simply won't admit that you had your shot repeatedly with Reagan, Bush I, and Bush II, and back to Nixon only to find your political and social philosophy doesn't work and is as fraudulent as communism and fascism. Global warming is real even if only a third of the people are smart enough to accept the scientific consensus. It doesn't matter that the oil companies' study proved the public researchers' point in 1995.
Stupid people will be sucked in by TV commercials and propaganda every time, and if it wasn't the whole world at stake it would be okay for you all to starve at home in your Snuggli with a shamwow soaking up your drool, watching Fox Propaganda news. What happens when California and Mexico are droughted into dustbowls? When the grain bowl of America becomes a dustbowl as well? When the fruits and vegetables of Idaho, Oregon, Washington are no longer growable, and the groundwater of Florida is infiltrated with the rising Atlantic? You can eat your beliefs then, I guess, or you can educate yourself and get off your cheetoh rump and push for a green future that is carbon neutral and most of all profitable.
Getting in on the ground floor has rewards where staying home from the prom and crying how life is unfair has little to recommend it.


Brook
Comment posted May 1, 2009 @ 8:36 pm

LOL, Dick makes my point for me. Given the scientific facts about growing Antarctic ice, we've got a greater danger of falling sea levels — but don't let a scientific fact get in the way of your Al Gore inspired dreams.

Hey, Dick, if we we are on the verge of a major cooling phase, as I believe, are you going to come out here and tell us we better start burning trees, driving SUV's, and building carbon energy plants — you know to keep from freezing? Because I think a lot of people might think that idea SOUNDS CRAZY!


greg
Comment posted May 1, 2009 @ 11:40 pm

Im an Economist .Your Liberal jargon means nothing to me .California,and New York ,are the 2 biggest whack job states,and they are bankrupt.Oshama will do for us the same he did for Chicago—Nothing.Anyone who thinks the government can run any industry better than a free market is a fool.Any one who thinks that they are getting a tax break is a fool.This 12 dollars a week =maybe 500-800 a year.Energy under cap and trade will cost you 1000 a year extra.The cost of living will go up.I bet your property tax goes up.Who do you think will pay for this 10 Trillion dollar budget.YOU AND ME.A 20 year old kid right now owes the government 121,000 dollars.YOU HAVE BEEN SHAMED.You better not get sick under universal health care either.Trust me .We are so fucked with this SOCIAL ENGENEERING PROJECT.Did you not look into Obama,Who he Worships,What he reads.This country is heading for CIVLE WAR.Capitalism vs. Socialism.Are you blind or retarded.Can you not see the Media Has blindsided America.


mbt shoes
Comment posted May 10, 2010 @ 12:38 am

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