Daniel Drezner collects all this for us, mostly.
Martin Feldstein‘s WaPo op-ed:
Americans should ask themselves whether this annual tax of $1,600-plus per family is justified by the very small resulting decline in global CO2. Since the U.S. share of global CO2 production is now less than 25 percent (and is projected to decline as China and other developing nations grow), a 15 percent fall in U.S. CO2 output would lower global CO2 output by less than 4 percent. Its impact on global warming would be virtually unnoticeable. The U.S. should wait until there is a global agreement on CO2 that includes China and India before committing to costly reductions in the United States.
David Roberts at Grist:
Conservative think tanks like the Heritage Foundation tell us that climate legislation will raise consumer prices by an average of a kabajillion dollars per defenseless elderly lady, but those claims assume zero elasticity of demand; their projections are based on the (bizarre) notion that when prices rise on a class of products and services, consumers will just … wince and pay, no matter how high the price goes.
It’s not just the conservatoids, either. It’s the nature of the econometric modeling beast. Most economic analyses are run based on current technology, current products and services. At best prices of alternatives decline along a gentle curve.
But think about it: why would that be true? If U.S. history shows anything, it’s that when the market is challenged it is capable of extraordinary innovation. That’s why the costs of regulation always end up being lower than economists predict—entrepreneurs develop new products and services and make them cost-effective. This kind of innovation can’t be predicted, so perhaps it’s legitimate the economists don’t incorporate it into models, but as a result their models are horrible predictors, as history has shown again and again.
Feldstein’s contribution is the hypothesis that it would be better to forestall any domestic US action until such time as an all-encompassing global agreement can be reached. Whether you think this is right or wrong, this is clearly a proposition about international relations and the domestic politics of China and India rather than a proposition about economic analysis of the Waxman-Markey bill. And it’s not a proposition that anyone actually working in the field of climate policy or diplomatic relations with China seems to agree with.
Henry Farrell at Crooked Timber:
Matt is clearly unaware of Feldstein’s distinguished record as a theorist of international relations (this may not be as distinguished as his research record on the relationship between Social Security and savings, but you can only do what you can do). Feldstein is particularly famous (well, famous is one way of putting it), for his suggestion in a 1997 Foreign Affairs article that the introduction of the euro might lead to a civil war that would tear Europe apart.
[…]The carpers and the hurlers on the ditch might complain that Jean-Yves Reb hasn’t reached for his rifle in the intervening ten years, and doesn’t look like he’s going to anytime in the foreseeable future. But that would be to miss the point that Feldstein’s contribution spurred much spirited discussion among international relations scholars, and specialists on the European Union (most of it not very complimentary to Professor Feldstein, but again, you can only do what you can do).
Ronald Bailey in Reason
I don’t exactly work on climate policy or on diplomatic relations with China. I did, however, stay at a Holiday In Express last night write a book on global regulatory coordination that is kind of relevant to the question. I agree with the bloggers above that the U.S. is not going to be undercutting its bargaining position by passing something like Waxman-Markey.
That said, let’s be honest — it’s not really going to be strengthening it all that much either. Any kind of comprehensive climate policy will require China and India to take measures that will hobble their growth trajectories in the short run. So the adjustment costs are enormous for them. What could convince them to engage in genuine policy coordination?
International relations theory suggests two mechanisms to ensure cooperation: the logic of appropriateness (i.e., the power of norms) and the logic of consequences i.e., the power of sanctions). Certainly, the normative pressure to “do something” about global warming has been on the increase. The problem is that Chindia can deploy a counternorm of fairness. They can and will argue that because the economies belonging to the Organization for Economic Cooperation and Development were historically responsible for the bulk of carbon dioxide emissions, they should be responsible for shouldering the burden of ameliorating the problem. With competing norms at play, it is unlikely that a logic of appropriateness will work on its own.
The logic of consequences involves the creation of material rewards and punishments to encourage more compliance. From everything I’ve read, however, the utility of trade sanctions or border taxes is very problematic from either a legal or a welfare perspective. Simply put, most CO2-emitting activity in these countries is for domestic consumption rather than export.
EARLIER: Tax, Cap and Roll
UPDATE: Ezra Klein on the bigger issue of economists, riffing on Matt Y’s post:
It’s worth saying two things on this. The first is that it appears to be a special privilege of economists. You don’t see sociologists being asked to write op-eds on the Federal Reserve, or biologists being given a forum to talk about health-care policy.
The second is that it’s not just about commentary. Take the Obama administration. Brian Deese, the guy quarterbacking the auto restructuring, is a 31-year-old members of the economics team. Peter Orszag is probably the most powerful voice on health-care policy. Larry Summers, by most accounts, has a hand in literally everything. Economists, in other words, are the prime movers on not only the economy, but health care, climate change, housing policy and much else.
I don’t think this is that difficult to understand. Economists essentially have a monopoly on the methodology of public decision making. The cost-benefit analysis is the beginning and end of many policy questions, and it’s highly economic in nature. You assume certain parameters — growth rates and such — tot up costs and benefits, choose a discount rate, and determine how much current people should be willing to pay or invest to achieve certain future goal. Future goal can be nearly anything: completed highway project, x number of jobs created, y percentage of the population insured, z billions of dollars in climate change costs averted.
Policymakers want to know what the benefits of any particular project are worth. Economists can give them a simple, easy to understand answer. They can occupy an op-ed slot and write things like, “Such-and-such project is a bad investment. It will deliver far less in benefits than it will cost in spending. Here are the numbers to prove it.” That’s very difficult to argue with.
I agree that it is impossible to think intelligently about policy without some minimum of economic literacy. But the economist has no competence whatsoever to tell us, say, the appropriate discount rate to apply to future costs and benefits, to take one important example. I’ve heard philosophical arguments to the effect that the discount rate for future welfare should be zero and that the discount rate should approach infinity as we consider the welfare of furture beings with whom there is no possibility of reciprocity. The funny thing is that I think people get the implications of discount rates wrong, and that both zero and infinity point to more or less maximizing growth. A zero discount rate plus a basic grasp of the relationship between technology and growth plus a reasonable projection of the current trend of technological progress implies an obligation to maximize economic growth rates with no concern whatsoever to avoid the incidence of future externalities of current activity. This is an economic argument, but it is also something rather more. Likewise, an infinite discount rate implies that we should do the best we can for our children and grandchildren, and leave it to our grandchildren to worry about their grandchildren. If we’re doing something now that might hurt people none of us will coexist with 100 years, then so what?