Paul Krugman’s Affordable Truth Sees Climate Bill Helping Revive the Economy Paul Krugman’s Affordable Truth Sees Climate Bill Helping Revive the Economy Andy Stevenson Finance Advisor, New York Blog | About Posted December 7, 2009 in Living Sustainably , Moving Beyond Oil , Solving Global Warming , The Media and the Environment , U.S. Law and Policy

Paul Krugman, as usual is right. Read this op-ed,  which I see as right also.


Today’s op-ed column by Paul Krugman, “An Affordable Truth” supports a view that a cap and trade bill designed to dramatically cut our greenhouse gas emissions is  “affordable, essential”, and can help our economy recover faster.

The article describes how financial incentives under climate legislation will work to meet our environmental goals. Under a cap and trade program, businesses will be given a free market signal that tells them they will “be able to increase their profits if they can burn less carbon.” A market based approach to addressing climate change which Mr. Krugman argues should be welcomed by “conservatives that claim that the magic of the markets can deal with any problem”.

Mr. Krugman also reviews the cost projections of the House-passed cap and trade bill and finds that “emissions limits would slow the economy’s annual growth over the next 40 years by around one-twentieth of a percentage point — from 2.37 percent to 2.32 percent”.  Hardly the doom and gloom projections you hear from conservatives and an amount that likely overstates the actual costs given our history with other cap and trade programs.

Further, “cap and trade” is expected to create the jobs and investment opportunities needed to help our economy recover sooner.  Indeed, Mr. Krugman argues that now is an especially good time to start a project like this as “the prospect of climate-change legislation could spur more investment spending” which “is exactly what the economy needs”.

To support this, Mr. Krugman describes how the opportunity under cap and trade to retrofit buildings, when construction costs are low, can help put people back to work and make existing buildings more valuable as demand for more energy efficient buildings increases over time.

These incentive based investments are not just limited to the building sector. Mr. Krugman could have included how cleaner cars, more efficient motors, carbon trapping power plants, and cutting edge wind and solar power technologies, all incentivized under the climate bill, can help re-power the country as well. Efforts that not only make good business sense as they improve the energy productivity of our manufacturing base, but also make good energy security sense as they help drive down our dependence on foreign oil.

Lastly, Mr. Krugman concludes that he is feeling optimistic about the climate talks beginning in Copenhagen this week. That President Obama’s attendance is sending a strong signal that he expects “real progress” on this issue and that we all need to be part of the solution. A solution that “would save the planet at a price we can easily afford.”


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