Start at midway and make sure you don’t miss:

Running the Numbers
An American Self-Portrait

I actually kind of agree with Cochrane on bubbles, we have no way to identify them in real time in a way that would help policymakers. That was the whole point of my Rorty and the EMH post back around April.

I don’t really know about the SEC. There is certainly no ideological objection to stopping fraud, indeed I imagine that many Republicans feel that is all they should do. And many of the Enron-type scandals were actually occurring under Clinton (although the story broke in 2001 I believe.) But there may be some truth to what you say.

I think that very smart people tend to be a bit arrogant and snarky, Chicago school included. I do believe the liberal bloggers I read (Thoma excepted) are a bit snarkier than the libertarians I read. But it’s a small sample, and I suppose one always sees more flaws in those one disagrees with.

Thanks Canada Guy, I agree. Of the items they mentioned, overfishing is probably the worst problem. That’s where more property rights could help.

Unfortunately, the carbon problem isn’t going away soon.

http://selfdestructivebastards.blogspot.com/2009/10/our-oceans-are-dying.html

Anyway – to stay relevant to the post – I can understand why you are critical of Krugman. He criticizes others for snark, but dishes out more than his share. It’s hypocritical. But, reading Cochrane’s response (linked above), I have the general sense that Cochrane is guilty of exactly the same things he’s accusing Krugman of doing. Indeed, in that very same article. Consider the following gross mischaracterizations:

“Krugman at bottom is arguing that the government should massively intervene in financial markets, and take charge of the allocation of capital.”

No, Krugman is mostly arguing that we should fix market failures and execute targeted government investments, not “take charge of the allocation of capital”. Cochrane engages in the political act of labeling Krugman a Marxist.

“Crying “bubble” is empty unless you have an operational procedure for identifying bubbles, distinguishing them from rationally low risk premiums, and not crying wolf too many years in a row.”

Is Cochrane arguing that bubbles are not real, or are not recognizable, or are not real because they are not recognizable? Many would argue he’s wrong on all accounts (as the Austrians here can attest). Many many people identified the bubble, and were shouted down precisely by those who argued that markets can’t be completely wrong (including Alan Greenspan). BUT, even if he were right that it’s currently impossible to recognize a bubble, isn’t that an argument for figuring out how to do this (which Krugman is advocating)? Or does Cochrane believe that bubbles don’t exist at all?

“Remember, the SEC couldn’t even find Bernie Madoff when he was handed to them on a silver platter.”

The SEC was deliberately handicapped by the Bush administration through appointees, direct management, funding, and legal obstacles. The SEC’s capture was absolute largely because of the anti-interventionist ideology that Cochrane is defending. Cochrane’s argument amounts to someone starving a dog, and then arguing the dog wasn’t worth feeding because he was so weak.

“he likes the huge “fiscal stimulus” provided by multi-trillion dollar deficits.”

First, the stimulus only drove a modest amount of deficit spending, and second I don’t think Krugman ever said he “likes” multi-trillion dollar deficits.

Anyway, there are plenty of examples… and lots more from Krugman too. You can (justly) get mad at Krugman for his sloppiness and snark, but you have to recognize that for the last 25 years people like Cochrane have dealt more than their fair share of snark and outright disdain for lesser mortals. Much of what you are seeing from Krugman is childish glee that the tables are finally turned.

And now that Cochrane is on the losing end of popular opinion, he has decided to take the high road – except that he’s having difficulty making the adjustment.

And I don’t claim to be guiltless either…

“What can innocence hope for, When such as sit her judges are corrupted!”

– Phillip Massinger

Statsguy, You are right about the politics of the carbon tax. I wasn’t thinking clearly when I wrote that response. I meant that we should both reduce carbon and pursue geoengineering. Unfortunately the cap and trade bill is likely to be pretty bad. I hope I am wrong.

What’s your view on nuclear? I go back and forth, but it seems to have worked pretty well for France. I know France has a comparative advantage in large infrastructure projects, but you’d think others would be able to copy their success. I’m surprised the French model doesn’t get more attention. We are clearly moving toward plug in hybrids, and French electicity has been mostly carbon neutral for decades. It’s really the only successful model out there.

Thanks Tim. I think these are “feel good” ideas. We all know that big corporate farming is not a pretty sight, but it doesn’t seem that local food initiatives solve the carbon problem

That would be Adam Smith wouldn’t it? By means of walls and glasshouses a perfectly acceptable Bourdeaux could be grown in Scotland?

More recently the UK government did one on tomatoes. Those grown in Spain had fewer emissions than those hothoused in the UK. In fact, they’ve done several such including the lovely finding that fully 50% of food related emissions come from driving the stuff home from the supermarket (but don’t quote me on that number, from memory).

In the “well, they would say that” stakes we’ve also got the New Zealand sheep farmers with a report that lamb from New Zealand has lower emissions to get to the plate in London that Welsh lamb does. They also appear to be right.

That’s what we should do, but we won’t do it. I attended an event with Markey speaking a few months ago and posed the carbon tax question (as well as asking whether he favored a carbon offset tariff). He favored both, but answered that it was politically infeasible to expect a tax – I think his choice words were “political suicide” to tax gasoline (because it’s so visible).

Cap-And-Trade has too many political advantages – first, politicians can blame the market for prices. Second, the initial grants of carbon permits grandfathers polluters, constituting a massive subsidy to pay off polluters for cutting back on their harmful externalities. The success of the sulfur permit program (and popularity among polluters) has already carved the path, and environmental activitists have already resigned themselves that the carbon permits are the price to pay get any action at all out of Congress.

And Markey (who has 20 years experience and now chairs the relevant committee) is neither incompetent nor corrupt nor excessively ideological. He’s just a realist.

http://rogerpielkejr.blogspot.com/2009/10/brad-is-brad-delong.html

‘Brad DeLong emailed me with a verbatim version of comments entered on my post about his attack-by-proxy on me by someone named “brad”. I had assumed that “brad” was not Professor Brad DeLong because “brad”’s comments were so sophmoric and inane, but apparently they are one and the same person.’

I really like to see more investigation of carbon removal, as it would be far superior to geoengineering that simply blocks sunlight.

mark, I agree my other stuff is more interesting. Sometimes I think a humorous diversion would be fun, but I won’t make this a habit (BTW, be sure to skip my next post.)

thruth, Those are good points. BTW, I see the main advantage of geoengineering as that it cuts off that long tail. It takes off the table the risk of more that 2 or 3 degrees of heating. The world would never allow that, we’d adopt either the sulfates or sea spray approach long before we flooded our coastal cities.

I’m still more in favor of a carbon tax than they are, but these disaster scenarios don’t scare me at all. For better or worse humans now have the power to control the earth’s temperature. We just don’t realize it yet.

Thorfinn, Thanks, I also recall that study.

Thruth#2, Good point.

Statsguy, Now I think we are on the same page. I’d like us to pursue a carbon tax and a backup geoengineering program. And I think we will do both. I don’t think we will be successful enough in reducing carbon, but I think we will have some effect. Against a do-nothing rise of say 5 degrees in 2100, perhaps carbon reduction will reduce temps by 1 or 2, and geoengineering by 1 or 2, leaving a net rise of 2 degrees. That’s the sort of scenario that I see as more likely. I’d probably favor a higher carbon tax than we are likely to do (or higher than the cap and trade equivilent) so I am by no means totally opposed to the environmental position.

On the final equity issue, I see your point, but we are much richer than China and India, and the plausible amounts that we’d spend on possible technological fixes would be relatively small potatoes for the US. There is only so much money that can be usefully spend on some of these far out ideas.