Oops, missed again.
Why do those at the Breakthrough Institute insist that everyone else besides them who cares about the environment is wrong, wrong, wrong? Their latest, called “The Creative Destruction of Climate Economics,” is a swipe at those misguided souls who think putting a price on carbon emissions would help combat climate change.
Breakthrough, according to its website, aims “to modernize liberal-progressive-green politics” and to accelerate the transition to an “ecologically vibrant” future. It “broke through” into well-funded fame in 2003 with its attack on environmentalists for failing to emphasize the economic concerns of ordinary Americans, such as jobs -- thereby alienating the major environmental groups, who had been talking about jobs and the environment for years.
What’s wrong with pricing carbon emissions? This particular breakthrough rests on a mistaken reading of an academic paper in the American Economic Review, the most prestigious outlet for mainstream economics. That paper develops a simplified, abstract model of an economy that generates carbon emissions. Unlike some climate economics models, it assumes that public policy can affect the pace of innovation. Its conclusion, in the authors’ own words, seems quite balanced:
A simple but important implication of our analysis is that optimal environmental regulation should always use both an input tax (“carbon tax”) to control current emissions, and research subsidies or profit taxes to influence the direction of research.
Compared to exclusive reliance on carbon taxes, they continue, “optimal policy relies less on a carbon tax and instead involves direct encouragement to the development of clean technologies.”
