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The Power of Incentives to Drive Innovation

By Matthew Yglesias on July 31, 2009 at 2:28 pm

"The Power of Incentives to Drive Innovation"

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Aftermath of the Tunguska Event (wikimedia)

Aftermath of the Tunguska Event (wikimedia)

Environmentalists tend to think that conventional economic models overstate the difficulty of adjusting to a low-carbon economy. Given a clear and consistent economic incentive to find low-carbon solution through a well-designed cap-and-trade system, we believe that human ingenuity will find ways of getting the job done at reasonable cost. And I think that the currently existing climate debate illustrates that point. The evidence is clear and overwhelming that humanity needs to reduce its level of CO2 emissions. But special interests don’t want to do that, and opportunistic politicians want to do what the special interests want. Consequently, a huge market niche has opened up for “creative rationalizations for doing nothing.”

Take, for example, Jonah Goldberg who thinks that because asteroid strikes could be a serious problem we should do nothing about global warming. Personally, I’m sympathetic to the view that public policy should be more concerned than it currently is about asteroid strikes. But this is also a total non-sequitur. Failing to pass the Waxman-Markey bill or negotiate a good deal at Copenhagen doesn’t put us any closer to safeguarding ourselves against asteroids. Nor would enhanced monitoring of potential collisions require us to build new coal-fired power points. The two issues simply have nothing to do with each other.

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