Thursday, August 2, 2007

Not Quite Newton

Dr. Mankiw:
Economists recognize that a cap-and-trade system is equivalent to a tax on carbon emissions with the tax revenue rebated to existing carbon emitters, such as energy companies. That is,

Cap-and-trade = Carbon tax + Corporate welfare.

I would personally love some sort of household cap-and-trade because since April 20th, my vehicular carbon emissions consist of one bus ride, zero taxis, and zero private cars. I have walked everywhere else. My electric bill is low. I'd probably make a mint.

However, I do acknowledge that a carbon tax is a much superior economic option.

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