I find it particularly disheartening, the way the Obama administration simply falls into the status quo mode of government in the US: government by special interest.

Whether you impose tariffs to raise revenue, combat global warming, protest foreign labor policies, or save the endangered moonbat, the economic consequences are identical (less trade, less efficiency, more deadweight loss, etc.). Granted, cap and traders claim that raising prices & reducing global output are good ideas (because this new tax internalizes an externality), but let's not pretend that this tax won't reduce global trade & global output. Indeed, reducing global trade & global output is kinda the point (less trade, less output = less carbon). The only economic question is whether or not we can set the tariff exactly equal to the externality, thereby shifting global production to another point on the efficient frontier. Am I the only one who suspects that politics & foreign retaliation will force tariffs above the externality? Dean Baker should comment on the history of US efforts to combat "dumping" - I think most economists agree that anti-dumping tariffs bear little or no relationship to the actual harm caused by dumping; typically, they reflect different groups political strength more than anything else.

Big Oil’s Answer to Carbon Law May Be Fuel Imports

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=avLVPogS6lh0

Chris you evidently missed the point of Dean's essay.

This problem could be alleviated by taxing carbon dioxide at the end-user level. Unfortunately, making cap and trade politically palatable seems to require hiding the cost from the end users and pretending that it will all be paid for by "Big Oil profits", or free money. So instead of placing the cost where it will have a direct impact on consumption, which is the whole point, we now have this needless complexity.

LAUNCH DRYICE TO THE MOON. Sequester CO2 for the long term, SAFELY.

Actually, international trade law does come into play here. Look up the Shrimp/Turtle and Tuna/Dolphin cases at the WTO.

Int. Trade Law often conflicts with domestic efforts to preserve the environment and even product safety. Alternatively, domestic leaders often use the environment and consumer safety to violate international trade law.

This is a complex issue, and I am not sure I agree with Obama's handling of it. TL is right on; taxing at the consumer level would effectively eliminate the international trade issues, but it would also be politically difficult.

Oh, what a morass...

While I'm not clear about the nature of Dean's objection (semantics?), I think that the NYT's article is spot on... not just about the impact of 'cap and trade' particularly, but the impact of all environmental and labor related costs. If manufacturers have no assurances that complying with the laws will not cost them their businesses (through competitors importing and selling in their markets while manufacturing in no or low environmental or labor cost locals), then they themselves will be forced to move... creating more job and income loss in the 'capped and traded' nation.

These policies do not operate in a vacuum, and tariffs must be imposed on imports from countries that don't comply with like statues, and the costs that they inherently bear.

'Cap and trade' is tied at the hip to commercial trade policies. Whether it's related to what's known as 'free trade' is possibly a distinction without a difference.

i like

nice

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