Background for Berkeley Political Economy Group Major Advisory Committee and Stakeholders' Meeting
The Ascent of Central Bankers

Ryan Avent on Tyler Cowen on Ryan Avent on Paul **Robert** Samuelson on Obama's Cap-and-Trade

Ryan Avent writes:

The Bellows » Am I Misleading?: [Robert Samuelson is] not saying [the Weitzman (1974) "Prices and Quantities" point] that we might accidentally set the cap too low and blow up the economy. He’s saying that consumers and producers won’t respond to price increases, that politicians will steadily and heedlessly lower the cap (or raise the tax) regardless of economic conditions, and that the real evil of the plan is that it increases the cost of dirty fuels. And there is seemingly no recognition that a carbon tax would, in fact, make energy more expensive, that it would “suppress” emissions, and so forth.

And if we’re willing to acknowledge that there are uncertainties about the location of the social optimum, elasticities, pace of technological development, and so on, then I think we should also be willing to acknowledge that the likelihood of a real-life political body setting a cap too low or a tax rate too high is quite low, and that furthermore, the likelihood that such an eventuality would be rapidly addressed through tax rate or cap adjustments is quite high. If we’re going to have reality, let’s have all of it.

But in Samuelson’s world, environmentalists are scheming, omnipotent economy destroyers, and cap and trade is nothing like a carbon tax. That’s just not so. In all the ways that matter to Samuelson, the two plans are identical. Neither will be particularly scrutable to voters, both offer considerable opportunities for industry giveaways, both will make energy more expensive, and both can be adjusted if we find that we’ve set a dial incorrectly.

As Mark Thoma says, it’s Samuelson who’s being misleading. Either that, or utterly confused.

It doesn't have to be either/or, Ryan. It can be both/and. Probably is.

Why oh why can't we have a better press corps?