Buffett's Charlie Munger Says Cap And Trade Is "Monstrously Stupid" (CLIP)


Charlie Munger couldn’t be much more blunt about his feelings towards cap and trade.

Berkshire Hathaway’s (BRK) No. 2 says in an interview with CNBC that it’d be “almost demented” to do cap and trade, because it’d be a “huge shock to the economy,” and it “wouldn’t do much,” since China emits the vast majority of CO2.

Munger seems to forget that the cap and trade system doesn’t kick in until 2012, as written in the discussion draft of the energy bill, so it wouldn’t exactly be a shock.

Saying it “won’t do much” is also pretty stupid. The program is designed to reduce the CO2 emissions of the world’s second largest emitter–the U.S.–so we feel comfortable saying it will do something.

Sure, China will have more emissions, but so what? The you believe that CO2 reduction is a worthy goal, then something needs to be done. Plus, would China be more or less likely to join a global cap and trade program if the U.S. isn’t enacting its own legislation?

Munger, though, if the past is any indication, doesn’t really care to limit emissions at all. Here’s his take on global warming from a 2007 investor meeting: “So what we are really talking about with global warming is dislocation.  Dislocations could cause agony though.  The sea level rising would be resolved with enough time and enough capital.  I don’t think it’s an utter calamity for mankind though. You’d have to be a pot-smoking journalism student to think that.

It’s black and white, for a change of pace, and technical reasons too complex to explain right now.

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