So Paul Krugman revealed yesterday that he’s a fan of cap & trade on carbon emissions because not only will it help the environment, it will actually boost the economy.
Forget all the fear-mongering about cap & trade slowing the economy, says the Nobel Laureate, just the incentive to invest and innovate will be a boon to growth.
Over the years, Krugman has repeatedly shown that he’s a big fan of this idea: Want to get growth? Break something or tax something so that people will have to invest to fix it.
Earlier this year, he said that it’ll be good for the economy when people’s cars break down, cause then they’ll have to buy new ones.
Theoretically, you could extend this logic to tornadoes (they’ll create rebuilding jobs) or even terrorist attacks, like 9/11.
Oh wait: Krugman did say that 9/11 had positive effects on the economy: “First, the driving force behind the economic slowdown has been a plunge in business investment. Now, all of a sudden, we need some new office buildings. As I’ve already indicated, the destruction isn’t big compared with the economy, but rebuilding will generate at least some increase in business spending.”
There are lots of problems with this reasoning. For one, as Thomas Sowell has pointed out, if rebuilding after destruction were the roots to prosperity, then Beirut would be the wealthiest place in the world. Second, it assumes that businesses and individuals who don’t spend or invest are being irrational. But just maybe they have a reason for not spending. In his mind, the game is always to convince everyone to spend again, no matter what. That should be the point of policy.
And finally, does Paul Krugman think we’re lacking in serious problems right now? No, seriously, he thinks we need cap & trade as a way of getting businesses to invest in something, so he must think that there just aren’t many problems or broken things in the economy that need addressing, so we need to create something artificially.
This is a pretty mindblowing attitude if you think about it. Look around. You can see plenty of things that are broken down, dysfunctional, things that were built for another era, etc. There’s just no shortage of serious problems that we need to get around to fixing. And fixing fast.
Look, if you want to debate the best way to reduce carbon emissions, endorsing cap & trade is fine. But to pretend as though it’ll also be an economic boon, because businesses will have their profits clipped some more and will be forced to spend money, then that’s silliness.