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FUCK THE POLICE
09-27-2009, 06:45 PM
http://krugman.blogs.nytimes.com/2009/09/27/the-textbook-economics-of-cap-and-trade/

The textbook economics of cap-and-trade

I realized, after the last post (http://krugman.blogs.nytimes.com/2009/09/25/pigou-glenn-beck-and-the-false-case-against-cap-and-trade/), that it might be useful to write down just what the Econ 101 version of cap and trade looks like; as it happens, this also helps explain the intellectual sins of Glenn Beck and Martin Feldstein.
So here we go. Bear in mind that something like what follows can be found in just about every intro textbook.
Think of the benefits to the private sector from pollution. Yes, benefits — in the sense that it’s cheaper to pollute than not to, or that it’s easier to produce goods if you don’t worry about whatever emissions result as a byproduct. So we can think of drawing a curve representing the private marginal benefit of emissions, as in this figure:

http://www.princeton.edu/%7Epkrugman/capandtrade.png
In the absence of government action, the private sector will increase emissions up to the point where there is no further marginal benefit. That is, emissions will rise to whatever level is implied by profit-maximization, paying no attention to the effects on the environment.
A cap-and-trade system puts a limit on overall emissions, so that emitters have to pay a price for emitting. This price will, as shown in the figure above, equal the marginal benefit of the last unit of emissions allowed.
Now, the cost to the economy of this limit is the benefit the private sector would have gotten by emitting more than is allowed under the cap. It’s shown in the figure as the red triangle labeled “deadweight loss”. CBO puts these losses (http://www.cbo.gov/ftpdocs/105xx/doc10573/09-17-Greenhouse-Gas.pdf) under Waxman-Markey at 0.2-0.7 percent of GDP in 2020, 1.1 to 3.4 percent in 2050. These costs have to be set against the environmental benefits.
In addition to this overall economic cost, there’s a distributional effect. The creation of cap and trade means that emission permits command a market price, and the value of these permits — the blue rectangle — goes to someone. Under Waxman-Markey, some of it (a growing fraction over time) would be captured by the government through auctions, and used to cut or avoid increases in other taxes — in effect, recycled to consumers. The rest would be passed on to industry — but because the biggest recipients would be regulated utilities, much of this would also be passed on to consumers.
OK, now let’s send in Beck and Feldstein.
Beck got his number from someone who learned about a guesstimate of what the auction value of permits might be (way higher than current estimates, by the way), divided by the number of households, and proclaimed this the cost of the bill. In effect, he looked at a guess about the size of the blue rectangle, which does not represent an economic cost, and called that the cost to the economy.
In a way, though, what Martin Feldstein did was worse. He took the CBO’s estimate of “compliance costs”, which was $1600 per household in an early report (it’s now down to $900, but who’s counting?), and implied that this was the economic cost of the legislation. But “compliance costs” are basically the sum of the blue rectangle and the red triangle; the true economic costs are just the triangle, and are much smaller.
Another way to say this is that under the Feldstein method, any time you try to correct an externality, which necessarily means changing relative prices, all of the negative effects of the price change will be counted as a cost — but none of the positive effects will be counted as a benefit.
Bad stuff. And what you should bear in mind is that all I’m doing here is conventional neoclassical economics, quite literally basic textbook material. What does it say when the people who claim to believe in this stuff throw it out the window as soon as it leads to policy conclusions they don’t like?

FUCK THE POLICE
09-27-2009, 06:47 PM
This is the probably I have with right wing economics. When they talk about the impact of government action, all they do is a cost analysis, never a cost-benefit analysis. If someone run a company like this they'd be thrown out before their first day was over.

Cancel 2018. 3
09-27-2009, 07:24 PM
lol.....krugman again.....

belme1201
09-27-2009, 10:00 PM
lol.....krugman again.....

Which portion of the Nobel Prize winning Krugman's piece do you dispute? If you can.

cawacko
09-27-2009, 11:31 PM
Here's a little piece on Krugman and Cap and Trade. If you go to site you can click on several links in the article. I'm trying to read this after having celebrated Sunday Funday. In my current state it made me laugh. Will read again tomorrow to see if it has the same effect.

EVER THE ENRON CONSULTANT Now here's a connection that never occurred to me. NRO's Chris Horner argues that Paul Krugman's pimping for cap-and-trade is more than just knee-jerk Democrat loyalty. It's continuing to carry water for Krugman's old benefactor, Enron.
Oh, having been reading with amusement the escalating tantrums by the windmill rentseekers and Natural Resources Defense Council over opposition to their silly claims, I would be remiss if I didn't join the fun and note that I'm speaking about former Enron consultant Paul Krugman. Remiss, except that this claim is actually true, unlike most of what AWEA and NRDC belched forth in recent days in outrage over the facts coming out about Spain's experience, to which our president referred us as a model. Incidentally, since NRDC worked with Enron to bring Kyoto about, it would also seem that Krugman's ties with the group are even more direct and go way back.
...Paul, the Enron retainer has expired. You can stop pushing Kenny Boy's cap-and-trade scheme, already.

http://www.poorandstupid.com/chronicle.asp

FUCK THE POLICE
09-28-2009, 12:04 AM
Luskin stalks Krugman. Now he resorts to conspiracy arguments. He is really losing his grip on reality, like all right-wingers.

Hermes Thoth
09-28-2009, 06:57 AM
We understand. You're trying to modify behavior.

But it has the side effect of discouraging growth. That's the actual goal. To destroy america.

FUCK THE POLICE
09-28-2009, 08:34 AM
We understand. You're trying to modify behavior.

But it has the side effect of discouraging growth. That's the actual goal. To destroy america.

Discouraging growth in carbon emissions, at a cost of roughly the size of the red triangle.

Hermes Thoth
09-28-2009, 09:26 AM
Discouraging growth in carbon emissions, at a cost of roughly the size of the red triangle.

what are you babbling about now?

FUCK THE POLICE
09-28-2009, 10:18 AM
what are you babbling about now?

I'm sorry, I would assume that people that commented on this thread would read the posts and have a general understanding of what's going on. I see you're above that though.

Hermes Thoth
09-28-2009, 10:23 AM
I'm sorry, I would assume that people that commented on this thread would read the posts and have a general understanding of what's going on. I see you're above that though.

Oh yeah. And unemployement would only get to 8% with the stimulus.

FUCK THE POLICE
09-28-2009, 10:29 AM
Oh yeah. And unemployement would only get to 8% with the stimulus.

You're changing subjects at random.

Hermes Thoth
09-28-2009, 10:30 AM
You're changing subjects at random.

No Im not. Im saying your little red triangle of loss is most likely innacurate, like the unemployement projection. Reading is fundamental.

FUCK THE POLICE
09-28-2009, 10:41 AM
No Im not. Im saying your little red triangle of loss is most likely innacurate, like the unemployement projection. Reading is fundamental.

From the statements, I can ascertain that you clearly don't have any idea what you're talking about.

Hermes Thoth
09-28-2009, 10:43 AM
From the statements, I can ascertain that you clearly don't have any idea what you're talking about.

No loss is acceptable, especially considering that man made global warming is a lie.

FUCK THE POLICE
09-28-2009, 10:45 AM
No loss is acceptable, especially considering that man made global warming is a lie.

You consider the far, far greater loss from protectionism to be worth your benefits, which are objectively non-existant.

Hermes Thoth
09-28-2009, 10:47 AM
You consider the far, far greater loss from protectionism to be worth your benefits, which are objectively non-existant.

Protectionism would benefit the country long term. We may have a period of depression, until our industries gear up to both employe our people and produce our needed goods. Or if there is retaliation and nobody wants our goods, we can all learn to farm the land again, and take care of our needs directly.

FUCK THE POLICE
09-28-2009, 04:21 PM
Protectionism would benefit the country long term.

It would hurt the country over any period of time. Once the economy has adjusted to the vast shock of massively increased prices and lack of natural resources we will be able to cope better, but we will never be what we could have been.

Hermes Thoth
09-28-2009, 04:33 PM
It would hurt the country over any period of time. Once the economy has adjusted to the vast shock of massively increased prices and lack of natural resources we will be able to cope better, but we will never be what we could have been.

Im not talking complete autarky. Im talking about at least SOME priority given to the lives of NON-CEO or NON-BANKER or NON-POLITICIAN individuals.

Cancel 2018. 3
09-28-2009, 05:51 PM
Which portion of the Nobel Prize winning Krugman's piece do you dispute? If you can.

so that always makes him right.....:rolleyes:

so anyone who has ever won a nobel prize always gets to be right and no one can disagree with them....you're as bad as watermark

Cancel 2018. 3
09-28-2009, 05:57 PM
tell me....do you and watermark support James Tobin's theories? he won a nobel prize....

belme1201
09-28-2009, 09:06 PM
tell me....do you and watermark support James Tobin's theories? he won a nobel prize....

Tobin is on this thread where?
Is that your counter to the first post?
In post after post on one of your cut and paste threads you complain about non reply replies. You did the very thing you consistently complain about.
I would support a Tobin Tax, you?

Timshel
09-28-2009, 10:44 PM
There are several problems with Krugman's analysis. But I will just stick with the simple one. It assumes the blue bar, the rents collected by the government, will be spent just as efficiently as if they were in private hands. But they will be spent on war, occasional enforcement of trade barriers, locking up drug offenders, and the proverbial $600 hammer. And if you think this hidden tax will offset other taxes, i.e., the government will tax less in other areas due to this new revenue source, then you are a complete sucker.

Cancel 2018. 3
09-28-2009, 10:51 PM
Tobin is on this thread where?
Is that your counter to the first post?
In post after post on one of your cut and paste threads you complain about non reply replies. You did the very thing you consistently complain about.
I would support a Tobin Tax, you?

he is a nobel prize winner....you and watermark have this fetish for nobel prize winners as this making them somehow right and better than anyone else....

so it was in fact a direct reply to you....and i don't cut and paste, you are a liar and your post is nothing but babble

Topspin
09-29-2009, 05:09 AM
Wait Krugman pimped for Enron.
Every fanny pack wearing liberal who leans on Krugman is hereby powned.

tinfoil
09-29-2009, 07:51 AM
Tobin is on this thread where?
Is that your counter to the first post?
In post after post on one of your cut and paste threads you complain about non reply replies. You did the very thing you consistently complain about.
I would support a Tobin Tax, you?


LOL dumbass, he used the example to show how your use of the fallacy of appealing to authority is flawed

tinfoil
09-29-2009, 07:53 AM
There are several problems with Krugman's analysis. But I will just stick with the simple one. It assumes the blue bar, the rents collected by the government, will be spent just as efficiently as if they were in private hands. But they will be spent on war, occasional enforcement of trade barriers, locking up drug offenders, and the proverbial $600 hammer. And if you think this hidden tax will offset other taxes, i.e., the government will tax less in other areas due to this new revenue source, then you are a complete sucker.

THIS!
And they are complete suckers

Timshel
09-29-2009, 11:38 AM
I was hoping someone would comment on the problem of the inefficiency of government spending. But since there is no comment...

These criticisms are somewhat out of the scope of Krugman's apparent intent. His intent seems to be bashing Beck and trying to associate all critics of cap and trade with Beck, which is the same thing he did on health care reform.

The second obvious problem, nAHZi touched on it and Krugman has acknowledged in other articles, is the cost of the cap itself. If the cap effectively reduces emissions it must increase the costs of production or retard growth. In order to meet growing demands while maintaining/reducing emissions cleaner and more costly production methods have to be used. If those cannot be implemented then growth must be restricted.

Another problem, glossed over, is that no one knows what the permit price is going to be. It's a moving target now and will be in the future. There is no guarantee that the price will not drastically change with each new administration. This creates instability and indecision for a going concern and the markets.

Timshel
09-29-2009, 11:53 AM
Actually, Krugman does address the cost of the cap. That's the deadweight loss.

FUCK THE POLICE
09-29-2009, 02:52 PM
There are several problems with Krugman's analysis. But I will just stick with the simple one. It assumes the blue bar, the rents collected by the government, will be spent just as efficiently as if they were in private hands. But they will be spent on war, occasional enforcement of trade barriers, locking up drug offenders, and the proverbial $600 hammer. And if you think this hidden tax will offset other taxes, i.e., the government will tax less in other areas due to this new revenue source, then you are a complete sucker.

Tard.

Cancel5
09-29-2009, 03:07 PM
so that always makes him right.....:rolleyes:

so anyone who has ever won a nobel prize always gets to be right and no one can disagree with them....you're as bad as watermark
No, he asks you to show him where Krugman is wrong and I don't think you can, or don't want to?

Hermes Thoth
09-29-2009, 03:40 PM
No, he asks you to show him where Krugman is wrong and I don't think you can, or don't want to?

It was done multiple times in this thread. Do you like multiples?

FUCK THE POLICE
09-29-2009, 03:41 PM
Well, RS, if you get to arbitrarily assign what part of the government the money goes to anywhere you want, I do too. And I say it reduces the debt, which reduces future taxes/increases future spending. PWNT.

Hermes Thoth
09-29-2009, 03:45 PM
Well, RS, if you get to arbitrarily assign what part of the government the money goes to anywhere you want, I do too. And I say it reduces the debt, which reduces future taxes/increases future spending. PWNT.

We have to look at history. Paying down debt has been a statistically less favorable act for politicians than using tax money to grow government programs.

But that aside, this simplistic hypothetical graph of yours is meaningless in many ways. it's completely disconnected from known reality. It has an internal logic on it's own, but it's still science fiction.

FUCK THE POLICE
09-29-2009, 03:50 PM
We have to look at history. Paying down debt has been a statistically less favorable act for politicians than using tax money to grow government programs.


You mean the anti-government fanatics get their cake and eat it too just by referencing some vague government conspiracy? No way!

FUCK THE POLICE
09-29-2009, 03:51 PM
But that aside, this simplistic hypothetical graph of yours is meaningless in many ways. it's completely disconnected from known reality. It has an internal logic on it's own, but it's still science fiction.

Yes. Everyone knows that their are right-triangles in reality that don't conform to the science (?) fiction of the Pythagorean theorom, as well.

Hermes Thoth
09-29-2009, 03:52 PM
You mean the anti-government fanatics get their cake and eat it too just by referencing some vague government conspiracy? No way!

The government is real, dude. It's a conspiracy to control us and take our money for their own power. That's what governments do, fudgepacker.

Hermes Thoth
09-29-2009, 03:56 PM
Yes. Everyone knows that their are right-triangles in reality that don't conform to the science (?) fiction of the Pythagorean theorom, as well.

Your metaphor is not apt.


Economic predictions are wildly less accurate that geometry.

Additionally. Our people cannot withstand a "loss triangle" of any size, especially when the justification for the self inflicted wound, man made global warming, is a lie.

Timshel
09-29-2009, 04:11 PM
Well, RS, if you get to arbitrarily assign what part of the government the money goes to anywhere you want, I do too. And I say it reduces the debt, which reduces future taxes/increases future spending. PWNT.

I did not arbitrarily assign it anywhere, but gave several examples. Government spending is usually inefficient and often counterproductive.

tinfoil
09-29-2009, 05:13 PM
watertard needs to learn some economics

TuTu Monroe
09-29-2009, 06:09 PM
watertard needs to learn some economics

Well, he did take a class for one week, so that obviously makes him an expert.

Cancel 2018. 3
09-29-2009, 06:30 PM
No, he asks you to show him where Krugman is wrong and I don't think you can, or don't want to?


It was done multiple times in this thread. Do you like multiples?

exactly

further....she stated "nobel prize" winning....as if the nobel prize lends some uber status that i should just respect which i did address

FUCK THE POLICE
09-29-2009, 08:49 PM
I did not arbitrarily assign it anywhere, but gave several examples. Government spending is usually inefficient and often counterproductive.

That's just an assumption you operate under.

And the profits don't go to the government anyway. Most of them go to regulated utilities, which means direct rate decreases for middle class families.

FUCK THE POLICE
09-29-2009, 08:50 PM
Your metaphor is not apt.


Economic predictions are wildly less accurate that geometry.

Additionally. Our people cannot withstand a "loss triangle" of any size, especially when the justification for the self inflicted wound, man made global warming, is a lie.

Do you have any idea what the loss triangle for protectionism is?

FUCK THE POLICE
09-29-2009, 08:56 PM
Im not talking complete autarky. Im talking about at least SOME priority given to the lives of NON-CEO or NON-BANKER or NON-POLITICIAN individuals.

You are not giving them any priority with protectionism. You are dumping them down the same hole everyone else goes down.

Topspin
09-30-2009, 04:55 AM
Well, RS, if you get to arbitrarily assign what part of the government the money goes to anywhere you want, I do too. And I say it reduces the debt, which reduces future taxes/increases future spending. PWNT.

you powned yourself on that want watergerber.:pke:

Hermes Thoth
09-30-2009, 06:09 AM
Do you have any idea what the loss triangle for protectionism is?

WIth protectionism we gain the incaculable value of self sufficiency, and production capacity in all fields.

Hermes Thoth
09-30-2009, 06:11 AM
Globalization is an attempt to destroy america by making us dependant on foreign powers, who do not have the best interests of americans at heart.

FUCK THE POLICE
09-30-2009, 06:59 PM
WIth protectionism we gain the incaculable value of self sufficiency, and production capacity in all fields.

Incalculable. Sort of like 1/0.

Hermes Thoth
10-01-2009, 06:58 AM
Incalculable. Sort of like 1/0.

Wrong.

Minister of Truth
10-05-2009, 07:45 PM
Wrong.

1/3

belme1201
10-06-2009, 07:41 AM
No, he asks you to show him where Krugman is wrong and I don't think you can, or don't want to?

Thank you.
I'm sure he stands by the depth of his analytical reply:
"lol....krugman again"