« Welcome to ECON 255 | Main | Here are the Stavins Papers »

01/10/2017

Comments

Chantal Iosso

As these papers seem to make clear, the sentiments of economists towards environmental issues, and markets, are not what is commonly dispersed. Evidently, although economists believe in the potential of a perfect market and the “invisible hand” to reach an optimal solution, when it comes to environmental issues, a perfect system is nonexistent and thus cannot be counted upon to correct itself.
What most resonated with me was the description in the Krugman article of climate regulations to be a “complete political nonstarter”, even though many groups of people and a lot of science support its necessity. I agree that part of the reason that environment-protecting laws have failed to gain ground is not because they are impossible, or not feasible, but rather because the issue has been politicized to such a great extent in the United States. In most other countries (France for example), climate change due to human activity is widely excepted, yet in the US a huge portion of people don’t believe it exists, that it is human caused, or that it is problematic. This politization of the issue has resulted in increasingly biased information. Not all this information is untrue; some of it is just incomplete.
For example, as the Krugman article suggests, when climate change deniers invoke economics ideas of the invisible hand and the ability of the market to reach an efficient solution, they aren’t exactly incorrect. The truth is just more nuanced (that the invisible hand only works in a perfect system devoid of market failure). Another example would be that Ted Cruz said, in a way to disprove global warming, that over the last 17 years global temperatures have not shown a rising trend. This is true, but when an appropriate range of time is used, rather than 17 years which was hand-picked to start with one of the warmest years on record, a clear warming trend appears. Because of the politization, increased information does not equal increased consensus; rather it makes us stauncher in our predetermined beliefs.

Tommy Concklin

The Krugman article astounded me with the overall acceptance of the Redefining Progress statement on climate change as well as the slight shrugging off of the importance of GDP. While all the articles had convincing arguments and points, this one stood out the most, in my opinion. Receiving support from thousands of economists is mind-blowing, as many economists seem to disagree over little nuances or issues within seemingly every paper. The incredible support given to these 5 economists demonstrates the importance of the growth of this sector and its ultimate importance to the entire field of economics as a whole.
In terms of the meat of the article, Krugman states that GDP, while important in many metrics, is not the perfect measure of economic well being. For example, increased pollution taxes may decrease overall GDP, (while helping out with other forms of taxation) yet can still cause a drastic societal benefit that is completely ignored by an output based metric like GDP. I feel as if sometimes economists can become somewhat GDP-centric, and will therefore ignore some of the externalities surrounding the attempt to maximize output. The acknowledgment of the imperfections of GDP is extremely valid and represents many of the problems that face our society dominated by many growth and output based metrics.

Phillip Harmon

The readings for this class period have challenged my thoughts about market failure. I have always understood that markets are imperfect, but this is the first time I have seriously considered why this matters. It is very apparent to me that in many cases there will be numerous externalities which simply are not taken into consideration when making market decisions. In cases where the production of a good comes with negative environmental externalities, how can the analysis of social costs and benefits be brought to the table? Is this a case where consumers have imperfect information about the goods they are consuming inflating their desire to consume? If not, how do we hold producers accountable for the difference between their perceived costs and social costs for production? Finally, could it be possible to ever fully account for the social costs and benefits of any decision? While it might directly result from a decision, the presence of an externality will frequently not become apparent until after the decision has been made. Must we then take externalities into account retroactively by changing decisions as necessary? What if the externality does not lend itself well to measurement and quantification? I understand that models are intended to only loosely describe reality, but I am genuinely interested in how these failures in markets are addressed.

plus.google.com/112908212571325157694

After reading these articles it is interesting to see the misconceptions about economists views on the environment. I think what stood out to me the most was Krugman's three I's and Stavin's conclusion in that there has been an ineffective method of communication from the economic sphere to any disciplinary boundaries outside the field. Regarding the three I's, I feel that there has been a massive failure in communicating necessary information in addressing these three issues. For example, in terms of interests, Krugman states that it is difficult to get people to join the environmental band wagon when it means that coal jobs will gradually decrease. Sure that may be true, but there has been much talk about gradually relocating those jobs to renewable energy sectors. Also, there seems to be a disconnect between what is called a "social cost" of pollution and the actual detrimental health effects of pollution on humans. Last semester we discussed research that was done where they looked at the exposure to particulate matter released from truck exhaust and the effect it had on childhood development and health in the Bronx area. The results of the research showed that they could accurately predict what a child's SAT scores will be in high school, along with a number of other surprising predictions relating to childhood development and health, all of which were less than ideal as exposure increased. I feel that if this was communicated more clearly and in mass, then that would combat the issue with the three I's. I feel that there would be more demand for sustainable practices if people truly understood the adverse effects of pollution and other social costs. As of right now, it seems that all of our decisions and policies regarding environmental sustainability are focused more on the short term rather than the long term. In the end, I think if comes down to effectively communicating sufficient information regarding what economists truly think about issues and I feel as if that is an area with much room for improvement.

Jack Miller

Courtney Freudenthal

Krugman's article was a bit surprising to me in that it demonstrated the massive magnitude of the fundamental agreement among economists over the existence of the global climate change problem. I have previously taken a Geology class on climate change taught by Professor Greer in which we discussed the (almost) complete agreement among climate scientists over the existence of this problem, as well as the agreement that humans have played a large role in causing climate change. I tried to find the original scholarly article that published the original figure, but I could only find articles that reference the widely reported number of 97% agreement among scientists (http://climate.nasa.gov/scientific-consensus/). After reading Krugman's piece it seems clear that a huge group of economists also accept the existence of the climate change problem. Given this unanimity it would seem like we should have the political capital to make major stride in green policy, but that's where the nitty gritty details of disagreement over economic solutions seem to muddy this image.

I find it interesting that there is this need to dispel "myths" or stereotypes about economists and how economists think about issues like global warming. Before taking any environmental classes that referenced economists with green plans, I did also have the preconceived notion that economist would likely think that we should just let the market fix all our problems. It seems so wrong now to have thought that way after reading Stavins article. Once we accept that some of the assumptions our models work off of are not really present in cases like global climate change then it seems like we can pivot the conversation toward active policies that have sometimes been seen as antithetical to economics.

I am left with the concern that the way in which we initially learn economics leads many (some) to think that all the basic models we were taught in 101 or 102 hold in the real world. The idea that Adam Smith's "Invisible Hand" is widely remembered but rarely understood seems to show that our society has been misinformed. Our prejudice seems to limit us from seriously considering potential solutions that could help ameliorate problems like global warming.

Michael Robinson

As someone who has taken only one economics course and who doesn't read The Economist or the Wall Street Journal, I was surprised to learn that such a large group of economists recognize the failure of free markets when it comes to the environment. After reading Krugman's piece, in which he states that he would be "hard pressed to think of a single economist not actually employed by an anti-environmental lobbying operation who believes that the United States should protect the environment less", I find it baffling that so little is done to correct market failures in terms of legislation. Politicians claim to care so much about economic issues and efficiency, yet they fail to listen to the consensus of economists that believe the free market doesn't get the job done when it comes to the environment. Free market ideologues cling to Adam Smith's "Invisible Hand" even when it clearly doesn't account for the social costs that go unpaid by producers of natural resources. One often hears that protecting the environment and improving the economy is a zero-sum game. In other words, its one or the other. However, I find Frank's argument in his NYT article very compelling. The fact that the Invisible Hand breaks down in some markets is a good thing. Since the government needs to collect taxes for some public goods, it may as well tax forms of consumption that produce negative externalities. This reduces wastes and allows the government to reduce taxes on consumption that is efficient and has less negative externalities. This approach is promising because it seems to address everyone's concerns. Those inclined to protect the environment should be happy. Those who begrudgingly understand taxes to be a necessary evil should be happier since a pollution tax would both raise revenue and correct a market failure while reducing taxes like income tax. In my view, the only reason to oppose such a tax is because of a dogmatic insistence on "free market solutions" even when the free market is demonstrably inefficient in some cases.

nicholas george

The Krugman article demonstrates that economists widely agree on the importance of environmental protection--even at the expense of market consumption. However, political bureaucracy and trigger words like "taxes" prevent effective policy based on empirical evidence from being implemented, despite these policies resulting in cleaner air and causing cause little to no monetary consequences (in terms of GDP). If ignorance, interests and ideology are such powerful tools in preventing sound economic policy, then perhaps the policy suggestions that these 2,500 economist agree upon fail to capture the true tastes and preferences of the population; in other words, the population may be less rational than economists give them credit for. Perhaps the lack of rationality springs from being uniformed, or perhaps it is arises from being misinformed. Either way, something is amiss; if the tax level is the same before and after the pollution tax (through reduced income tax), then there is no rational reason for rejecting the pollution tax--a tax that seems to correct a huge market failure.

Jalen Twine

I found the articles to be interesting in that they answered questions about many of the misconceptions pertaining to economists and their attitudes towards the environment. In the Krugman article, he talks about how economists are thought to be people “who think that anything that increases gross domestic product is good and anything else is worthless”, although policies that favor the environment do the opposite in many cases. Despite this, 2,500 economists signed the Economists’ Statement on Climate Change. I thought this article illustrated a lot of what we talked about in class on Tuesday about not being able to place the proper value on things affected by Climate Change like water and oxygen. Krugman effectively showed why this factors into the opinions of economists due to their understanding of natural and environmental resources. They understand that “the private costs of an activity fail to reflect its true social costs”. So with this knowledge the rest of the article becomes less surprising in terms of the policies that these 2,500 economists favor. It makes sense that economists would go against the actions and policies of what people of a similar background but without this knowledge and understanding would prefer. Realistically, the environmental policy suggestions proposed in this article would have little to know effect on the overall spending due to a potential reduction in other taxes like income taxes. I agree with Nicholas George in that the majority of people might be less rational than economists give them credit for being in respect to preventing sound economic policy due to ignorance, interests, and ideology.

Sam Ross

These articles seem to dispel the common misconception that economic efficiency and environmental wellness are incompatible. In fact, as noted in the Krugman article, more than 2,500 economists would tend to disagree with such a statement. These economists recognize that a free-market cannot serve as a solution for our nation's environmental issues due to their tendency to yield negative externalities; when individuals and businesses are not obligated to pay the true monetary and social costs associated with their pollution, they will seldom do so and thus a laissez-faire market proves ineffective. As such, most economists argue for market regulations that "provide a financial incentive to pollute less [while leaving] the details up to the private sector" (Krugman). Even if these incentives were to slightly lower the GDP, the benefit associated with the protection of natural and environmental resources arguably trumps a decline in market consumption. I found the economist's stance on environmental protection/regulation to be refreshing. In the environmental studies department, I am constantly exposed to negative sentiments regarding the US economy and its dependence on nonrenewable energy. Many students fatalistically (and falsely) perceive this dependence on fossil fuels to be inherent to our energy market. This is only true should our market fail to undergo reform. The dependency on fossil fuels may easily wane should the government grow more informed on the negative externalities associated with coal/oil and thus draft carbon incentives or taxes for the private sector.

Rainsford Reel

The first thing that I want to mention is that I share the initial surprise that Krugman has with the idea that 2500 economists can agree on an issue. In the field of economics there is so often vast disagreement in the same topic.
That aside the first part of Krugman's article that really caught my attention was when he began discussing what is to be done and proffers the idea of pollution taxes. In my Business Law class, at the end of the semester we discussed how the EPA uses a permit system in which companies pay for permits, and the EPA designates how much they are 'allowed' to pollute. This type of system somewhat establishes a market for the environmental resources, but as we know it is hard to measure externalities accurately. Furthermore a classmate brought up the idea of companies buying the permits then subsequently selling their permits to other companies to profit.
To me the idea of a tax on pollution seems as though it would be more effective to disincentivize pollution from large corporations. I also agree with the sentiment of "so what" that Krugman shows in regard to a reduction in GDP. So long as the GDP doesn't change in a catastrophic manner, which I wouldn't anticipate if the system Krugman suggests is put into place, aren't we all better off with an improved environment? Aren't we all better off in both the long run and short run?

Sal Diaz

First and foremost I must say that I am delighted to read from the Krugman article that there is such a large group of economists (at least 2,500) ready and willing to take on climate change. I honestly had never considered the implications of the economist demographics, but I am glad to see that this is an issue many have agreed upon.

One element of these readings I was not as happy about was that they all seemed to focus almost entirely on taxation and caps and trade systems as a means of combating pollution. They accurately and appropriately brought up these solutions to make carbon dioxide and sulfur emissions more accurately reflect not only their production cost, but also their social cost. However, I think there is a major omission in these pieces. None of them discuss incentives to come up with methods that produce less pollution in the first place. Take the second economic myth for example. It discusses the merits of requiring electric companies to hold permits in order to produce electricity. Stavins explains how this results in lower suffer dioxide emissions, but he does not address what may be the greater problem of creating newer and less detrimental ways of producing electricity. To his credit, he may be implying that the buyers will find the same about of energy from different, and possibly cleaner, sources, yet there is no discussion of the topic. I would have expected at least some sort of tangential reference to incentivizing innovation in energy production. Maybe I am expecting too much out of a piece that is simply seeking to explain the basic relationship of economics with environmentalism, but I still see this as an omission.

Abby Beasley

Economists seem to be self-aware of their position in relation to the environment – working under the constraints of the environment and the considerations of the effects of causation and correlation between the environment and the economy. Specifically, economists often work within a scarce state of nature considering the worst outcomes. They are also aware that they are associated with lacking knowledge of the environment and seen as sitting back and allowing for the invisible hand to work its magic. More than anything, these articles aimed to clarify that they are indeed aware of their responsibility to consider the market of the environment. They failed to provide suggestions as to how production and output might be maintained or even increased while reducing the output of pollution, perhaps avoiding Pigouvian taxes. The beginning of Krugman’s piece is a bit self-righteous. However, he takes the appropriate measures in entering himself as an expert witness in the Redefining Progress case which aids his argument that pollution taxes may not reduce GDP at all. Again, his piece is very much an acknowledgement rather than productive as it lacks suggestions.

Parker Kellam

As someone who has only taken one Econ course, a few years ago I might add, I had very mixed understanding of the articles. Some, like the Stavins paper, made much more sense than others. I was surprised to hear about so much overlap between economics and the environment, but after reading the explantations, especially of the Stavins piece, I can see why. By Stavins account, it seems that many economists care for the environment, but do recognize that their normal way of solving problems will not always be the case when it comes to the environment. I think what made it all click for me a little better was his comment, "Environmental economists are interested in pollution and other externalities, where some consequences of producing or consuming a good or service are external to the market, that is, not considered by producers or consumers. With a negative externality, such as
environmental pollution, the total social cost of production may thus exceed the value to consumers. If the market is left to itself, too many pollution-generating products get produced." In this case, I see how associated market values may helpful, but I also agree with him that other times, the standard economic approaches cannot be applied, but that seems to leave many other doors open. All of that said, it seems amazing to me that 2500 economists could agree on a platform that aimed to better the environment through a named set of solutions as Krugman highlighted.

Amanda Meador

Even though Krugman's article underscores the little-known fact that economists see the value in the environment, it should not be as surprising as it is. Economists are trained to evaluate all factors when looking at private and social costs. Were economists to overlook other private or social costs, their work would be found invalid. Why should environmental and resource costs be treated differently? Today, almost unique to the United States, climate change is debated even though a great majority of climate scientists admit –as stated in reports of the Intergovernmental Panel on Climate Change—that “Human influence on the climate system is clear, and recent anthropogenic emissions of greenhouse gases are the highest in history. Recent climate changes have had widespread impacts on human and natural systems.” (IPCC, 2014: Climate Change 2014: Synthesis Report. Contribution of Working Groups I, II and III to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change [Core Writing Team, R.K. Pachauri and L.A. Meyer (eds.)]. IPCC, Geneva, Switzerland, 151 pp.)
I think both articles are considered ‘shocking’ since the topic involves climate change rather than economists admitting social costs.

What was surprising to me was the fact that Krugman repeatedly prioritized the natural world and the resources that it provides over economic growth and growing the GDP. I have read articles in the past of economists admitting that they consider environmental costs negative but not to the extent that regulations and actions should be taken to reverse the affects if there are any negative effects on the economy. This point of view was refreshing.

Cole Wilbur

I found these papers to be very interesting and somewhat surprising. On the surface level most people in today’s society have a perception that economists resent environmental laws and legislation. They have the idea that environmental legislation is synonymous with increased taxes and more regulation on the market (which economists like Krugman think should be ‘free’ instead). Thus, it was surprising to uncover Krugman and many other economists’ true feelings of angst toward the environment and how our political system is treating it. They seem to have a personal belief in creating ways to protect it from ourselves. I found his argument compelling as he backed his ideas with economical ideals that in the past have been used to argue the opposite side. He showed how raising taxes in one area (such as a pollution tax) could in turn lower taxes in another area and thus avoid a diminishing GDP. The ideas in the Stavins readings provided me with a similar understanding. Many of society’s perceptions on what the ‘experts’ think seem to be misunderstood. The Stavins article concludes by acknowledging this and chalking it up as a lack of communication from the economists to the public. It is stated in the final remarks that, “academic economists focus their greatest energies on communicating to their peers within their own discipline. Greater effort can certainly be given by economists to improving communication across disciplinary boundaries”. While this may be true, I find it to be a weak excuse in the grand scheme of things. If they want to effect change and have a voice in matters then they need to ensure their academic papers have versions that the vast majority of people can understand. I think that economics and environmental issues go hand and hand and society seem to miss the idea that they can be dealt with in a positive way for both the GDP and our environment. Though, one must tread carefully when implementing regulation, because I do think it can and does quickly get out of hand.

Kinsey_Grant

Just as in countless other disciplines, economics is often focused on the problem of good intentions paired with ignorance, interests and ideology. Krugman’s account of pollution tax in place if income or employment taxes is an interesting one that highlights the importance tempering good intentions with both personal and market failures. Of particular interest to me is information imperfections. I contend that in oil markets especially, those who have the most information are those who can benefit the most from the market's movements. Could there be negative externalities that are more than pollution, but rather inequality of market knowledge?

This past summer, I had the unique opportunity to intern at Bloomberg News as a writer for the oil team. From the first day, the writers imbibed in me the importance of knowing just how the crude oil makes its way from the ground to the pump. I was covering markets, but knowing what made the oil valuable – or not valuable – was paramount to understanding why people traded it.

Toward the end of my time at Bloomberg, I had gained enough insight to write a story about a strange exchange traded fund called UWTI. The fund was wild – up and down each day and boasting three-times the exposure of trading regular WTI futures. In late November, the ETF was delisted and many experts cited its unpredictability. While I was at Bloomberg, I learned that the very unpredictability that drew some daring investors was tamed only by traders. Oil traders – those who made their lives of trading futures – were the only investors with requisite knowledge to benefit from trading UWTI. The imperfect information – and the interests of oil traders – made the fund flawed. This drives me to wonder if market failures are at play in the oil futures market, just as they are in other environmental sectors. Does oil in the ground start as a market nearing failure and move all the way to an ETF traded with triple leverage in a city far from any oil wells or refineries? Perhaps UWTI’s delisting is a sign that the market cannot solve its problems. Those who harbor the most information are armed with it when they hit the trading floor, and maybe even before the crude product becomes gasoline, naphtha or diesel fuel.

James Willey

Krugman's paper brought highlighted incentive and interests. First and foremost, this is an excellent angle for an economist to take to convey their sentiments because even readers (myself included) with little serious training in economics can understand and relate. The underlying idea is that shifting costs and rewards may perplex current incentives and major interest groups, but that doesn’t mean a there is not incentive and that certain environmental antagonizing circles can’t be successful. Krugman gives his economic blessings for a shrunken GDP where consumption of non-market goods replaces some marketed consumption. Leisure time comes to mind – I live at the beach and love nothing more than fishing, big boats, and burning lots of gas in those boats. If you tax gas, you certainly might deter me from wanting to pursue these interests. In fact, you might even convince me to set a goal to be able fish out of something a little more sensible than a speed boat with 900 horsepower strapped to the back, which means I might get to spend more time on the water than I would have even without additional taxes, and maybe, just maybe even pay more attention to beautiful coastal estuaries in the Mid-Atlantic. Seems like a win-win to me. Krugman brings up coal mining communities when talking about interests. As a geologist who has studied climate change, I couldn’t agree more that curbing America’s greenhouse gas issue is inextricably linked to curbing the number of coal mining jobs. But, Americans are still going to want to turn their lights on, and that’s going to require huge revamps of infrastructure to support energy production from in-exhaustible sources such as wind. Who better to do that work that masses of hard working and skilled laborers ready for a new job? The common theme here is Americans working towards providing their own plush luxury, and doing so in a more progressive market approved by 2,500 economists.
- James Willey

Justin Pedersen

After reading the assigned articles, I essentially believe that these readings collectively convey two overarching messages. First, as asserted throughout both the Krugman and Stavins papers, various biases that depict economists as profit-driven social scientists prove to be inaccurate. While Krugman successfully dispels the common conception that economists don’t care about the environment, I felt as if Fullerton and Stavins’s explanations of their presented myths were somewhat incomplete, in particular “Myth 3.” As Stavins explains, when non-market solutions are considered for issues concerning environmental and natural resources, economists do not simply weigh the “use-value” of the common resource (i.e. the monetary value that is directly derived from the utilization of the concerned resource). Rather, Stavins concretely claims that economists also take into account the “non-use value” of such environmental common resources, such as the intrinsic value of nature and wilderness. While Stavins lauds economists for such valuation that transcends the immediate industrial benefits of natural and environmental resources, I find it confusing how he fails to explain the manner by which economists measure the “non-use value” of natural and environmental resources. Do economists measure society’s willingness to pay for these resources, and if so, how would they come up with such a measure? Furthermore, I feel as if a thorough measure of “non-use value” would consistently undervalue these resources, and thus Stavins should refrain from excessively praising his fellow economists. I find this topic of assigning monetary worth to intrinsic values interesting and hope to expand upon it more in class.

In addition to addressing common myths associated with economists, I believe these articles synthetically address methods of mitigating the negative externality pollutions that accompanies economic development and progressive globalization. As presented under “Myth 2” in the Stavins paper, an emissions permit system could be implemented to reduce global pollution, thereby creating a new market subject to difficulties and failure. For reasons such as localized pollution and difficulties associated with employing such a system, I find the carbon tax more feasible and interesting. As Krugman presents, by imposing a carbon tax, other taxes, such as income taxes and social security, can be reduced, a concept which I have never entertained. The purpose of a carbon tax is not to provide revenue to support the provision of governmental services; its purpose is to alleviate an externality, thus more completely considering social welfare and the complete costs of industrialization. I hope that we can discuss in class the ramifications of imposing such a tax on different social classes (e.g. would it benefit or harm the lower class if a carbon tax was implemented while income tax was lowered?).

Chris Shelby

Frank and Krugman's articles show how Economists agree that our society needs to limit greenhouse gas emissions in order to preserve the environment and maintain a high standard of living. Krugman points out that tax revenue from pollution taxes can help reduce other taxes that most people pay and potentially increase the GDP. While Frank's article also mentions that pollution taxes could grow the economy, he never mentions the implementation process and politicization of such taxes. How can such a tax ever be passed in today's political climate? In a perfect world, marketing lower taxes in other areas and showing that this tax could grow the economy, along with providing solutions to the "three I's", will solve this issue. Conservatives have long protected coal miners and the energy industry, but they can change their approach while still securing funding for the Republican Party. If the government implemented a program to retrain miners to adopt another trade, while also encouraging energy companies to continue to research and implement renewable forms of energy, it would mean progress for the party while still protecting its interests. However, such a bill would be impossible to pass in today's political climate, which is why conservative officials and citizens need to change their ideology and realize that the free market is not always right. A change in ideology does not seem probable, since scientific facts are often rejected in favor of long-held beliefs. I just wonder when the time will come where a majority of politicians will understand and admit that policies need to be implemented to help slow climate change.

Monette Carli

The readings for Thursday’s class presented a very clear argument about why government intervention may be necessary in the market of natural resources. With such an important problem on our hands, it is shocking to me that the government has not taken more action. Krugman’s argument about why the environmental tax is a “political nonstarter” stood out to me the most. Specifically, I felt that Krugman’s point about ignorance may be the most relevant. I developed this viewpoint after reflecting on an experience I had in a previous class here at W&L. In a global politics course I took last year, I wrote my final paper on climate change and presented it to the class. I spoke about the implications of global warming and specifically, the effect of rising sea levels on populated coastal areas. Predictions have been made that people living in these areas will be displaced and forced to move inland, leading to issues with high population density and overcrowding. After presenting this idea, most of my classmates were completely shocked. I was only slightly surprised by this reaction because when I initially started my research, I realized that I didn’t know a whole lot about climate change either. This experience supports the validity of Krugman's discussion about ignorance and it taught me that even though significant research has been done on climate change and natural resource scarcity, many people are still very unaware of the possible future implications. If large portions of the population do not understand how our current use of natural resources will affect the environment in the future, it would be very hard to convince those people that a tax or other government intervention is necessary.

AJ Witherell

I found these article to be very beneficial in dispelling misunderstandings/stereotypes that I had about economists as a whole, which apparently lots of others had as well. In addition, I was extremely surprised that 2,500 economists agreed to sign the same petition regarding policies surrounding carbon emissions.
The most interesting discussion, in my opinion, was that of the failures, or inaccuracies of the "invisible hand." As I have been taught, the theory of the "invisible hand" referred to the idea that a market will reach it's greatest societal benefit, even though producers and consumers act primarily in their own interest. To this point, I had not considered the effects of taxes, but the New York Times article brought to light the externalities in certain markets that lead to inaccuracies. And in most cases, the most effective response in situations like these is to establish taxes to raise funds and diminish production/consumption.
On another note, I also noticed the fact that none of the articles discussed no ways to decrease pollution by way of production efficiency. Rather, they all addressed "penalties" for producing pollutants into the atmosphere. I think that more emphasis should be placed on ways to be more "green" in the production process, which in turn, will be more effective across the board.

Paul Callahan

I thought the articles to be very insightful into the mindset of economists in regard to the environment. Krugman's article proved to be the most shocking to me as it showed the general agreement on the need for environmental action among economists which I was previously unaware of. A question that developed in my mind while reading the articles is how do we quantify/measure/price clean air or water in order to create a tax against pollution? Essentially, how can you reliably price water or air in order to properly create a fair pollution tax? This seems to be the main problem for the government in addition to the "Three Is" that Krugman touched on and the fear that a tax would decrease GDP.

Alana Babington

Like several others mentioned, the three I’s caught my eye. Never before have I heard of the big I’s, as referred to in Krugman’s article. I believe he makes a valid argument that ignorance, interests, and ideology act as roadblocks for the well-defended Great Green Tax Shift. I took the three I’s to mean that the economy as a whole consists of diverse pieces, each with differing opinions on how to handle problems. However, I was pleasantly surprised by the sheer number of economists in agreement with regards to environmental issues due to the fact that this is typically not the case with economists. I would argue that the agreement stems from the growing importance of environmental studies within the realm of economics.

With regards to the Great Green Tax Shift, I thought Frank’s piece about the breaking down of the invisible hand lends itself well to the advocation of the tax mentioned in Krugman’s article. Although I knew the outline of Adam Smith’s Invisible hand and I do agree with both Kahn and Frank in that the aspect of the invisible hand has pros and cons, my prior thoughts were not exactly challenged, but more so enhanced by Frank’s examples of why exactly the break down of the invisible hand is beneficial when it comes to natural resources. In sum, I look forward to diving into the discussion of social costs and benefits with respect to pollution and global warming, but also hearing differing opinions as to why some economists agree with the invisible hand and why some absolutely do not.

Will Edmonds

I think Stavin’s conclusion that “in the environmental domain, perfectly functioning markets are the exception, rather than the rule” hits home the general sentiment of these authors is stating that markets that do not account for all related externalities are destined to fail. Free markets break down in the event of externalities, and require adjustment in order to reach market equilibrium – the environment is no exception. Krugman’s policy recommendation is one that not only addresses the disequilibrium resulting from environmental externalities, but in a way that could potentially leave GDP and the burden on the American taxpayer unchanged.

The only thing that worries me about the proposal is the impact on the lower class. I envision the suggested environmental tax to reflect cost per unit of carbon footprint. As the current income tax reflects a percentage of income, and because that percentage varies across different wealth brackets, would an environmental tax have the same structure? Off the top of my head, I have a hard time deducing a way that the environmental tax would do this, and therefore, I worry that such a tax might put a disproportionally high absolute tax amount on lower income individuals than on the rich.

Assuming a fair tax structure is developed for all income brackets, the general idea behind an environmental tax replacing some percentage of tax from income and social security is sound. Even more exciting is the strong level of support from economists in determining an efficient way of valuing environmental use. These articles are testaments to the inaccuracies surrounding economists being money-hungry anti-environmentalists. As soon as politicians and laymen alike can join economists in recognizing the importance of adjusting markets for environmental externalities, the sooner the discussion around saving the world can move from the obsession of a select few, to a legitimate component of our capitalist market system.

Elise George

Paul Krugman's article left me questioning my beliefs about economists, taxes, and the environment. My understanding has always been that sustainability and economic growth are trade- offs, and promoting both simultaneously is practically impossible. However, Krugman, along with Stavins elaborating in greater depth about this topic, explains that economists advocate environmental protection. The most compelling argument I've taken from his article, is that society's mindset is the barrier between economic prosperity and sustainability. Krugman's Three I's illustrated this concept that people have formed such a pessimistic view towards taxes. Taxes, themselves, aren't the problem, it is the allocation of taxes. Robert Frank agrees with this idea as well in his article. He also believes that taxing consumption would create more efficiencies. I do have a question concerning Frank's explanation on this. All I've ever learned is how taxes create inefficiencies in economics, so if this is true, why do we only learn about the negatives of taxes?
Additionally, Krugman focuses on this big issue that society values economic growth over environmental health, but I disagree with this. I would like to talk about this in class, as it seems to me that environmental awareness is being promoted more than ever. I don't understand how economists' support of the environment, as well as the benefits of taxing environmental issues versus others, such as
Social Security, is not as well known.

The comments to this entry are closed.