Here is a clear, balanced, mainstream (Nobel Laureate) economist's take on what we need to do about climate change. I find some of Krugman's arguments compelling and refreshing. Some of his other recommendations seem contaminated with calculations of what seems politically feasible, which may be dangerous -- as Bill McKibben points out, physics does not negotiate.
http://www.nytimes.com/2010/04/11/magazine/11Economy-t.html?ref=magazine
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Kruger claims that "What we need are market incentives for reducing greenhouse-gas emissions-along with some direct controls over coal use-and cap and trade is a reasonable way to create those incentives." With the exception of coal burning, Kruger asserts that direct control of greenhouse-gas emissions would not work because our economy and society is too complex; almost every household emits greenhouse gases for instance, and a large percentage of the population drives cars.
Kruger is guilty of misleading the reader by comparing two distinct and discrete aspects of the economy in order to supplement his argument. Cap and trade does not apply to households and car drivers, it applies to businesses and industries that typically produce a large amount of greenhouse gas emissions. Yet he dismisses direct control over such practices with the reasoning that I mentioned in the first paragraph.
Why not exert direct control over those same industries that would continue to pollute under cap and trade? Based upon Kruger's analysis, I don't have a reason to object.
His name is Krugman, BTW.
Bretticus has a point -- we could tax carbon directly rather than creating a market in carbon production credits, and there is no difficulty in targeting such a tax on emitters of a certain size. There are advantages and disadvantages of this alternative. It's not obvious to me that Krugman's reason for rejecting a direct carbon tax is the consideration you mention about households and cars, however. I'll have to read it again.
Critics of cap and trade say there are loopholes, perverse incentives, and a good probability that the effect would not actually reduce carbon production.
Considering what Krugman had said about the climate modelers' predictions of global warming in 2100, it should be evident that the time we need to stabilize our environment is running out very quickly. What I found regrettably frustrating about Krugman's article was that he seemed to argue that drastically cutting emissions (say, at least by 50%) would not be doable in our current economy. While economically that may be true, the environment doesn't care about what happens to our economy. It may be unreasonable to say this but big industry had its chance - it's time to stop acquiescing to their demands. This is a situation in which the government should have the right to take over industries and completely regulate them in order to save our planet from economic collapse. Perhaps slowly weaning ourselves off from fossil fuels is no longer an option because we have taken too long to start the process.
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