06 January, 2008

Obamanomics

Obama knows his economics:

SEN. OBAMA: I do disagree with one thing, though, that Bill said, and that is that on a carbon tax the cost will be passed onto consumers and that won't happen with a cap-and-trade. Under a cap-and-trade there will be a cost. Plants are going to have to retrofit their equipment, and that's going to cost money, and they will pass it onto consumers. We have an obligation to use some of the money that we generate to shield low-income and fixed-income individuals from high electricity prices, but we're also going to have to ask the American people to change how they use energy. Everybody's going to have to change their light bulbs. Everybody's going to have to insulate their homes. And that will be a sacrifice, but it's a sacrifice that we can meet. Over the long term it will generate jobs and businesses and can drive our economy for many decades.
This in rebuttal to Bill Richardson, whose stature just sinks lower and lower. Mankiw reports :
In case you are curious, Hillary Clinton is the next speaker on this question, but she does not weigh in on the particular issue of carbon taxes vs cap-and-trade. Instead, she offers some typical vacuous blather about requiring utility companies to help us all become more energy efficient. I think of this as "magic-wand economics." Like your fairy godmother, the President can wave a magic wand and make your problems disappear.
He's right. Presidential candidates rarely speak in terms of trade-offs. We should become more energy efficient--but what about the costs to economic activity? We should work harder to broker a peace deal in such and such a region--but from what other region will we have to redirect resources? We should provide universal health care for all--but what about the costs to those who are healthy? Yet all decisions involve trade-offs. Notice that Obama seems to recognize this. Ultimately, choosing who to vote for should involve choosing which trade-offs you want to see a President make.

1 comment:

Cassady said...

I whole-heartedly agree. Obama is one of the few, if not the only, current candidate who speaks realistically of the challenges he knows the incoming president will have no choice but to take up. He's picking his battles, and he's doing a damn good job defending those choices, in my opinion.

I love the term "vacuous blather." It's the "why" that we've talked about over the past few weeks that all too many candidates are skirting in their discussions. It's hard to have a legitimate platform without a reason.