Great points! I agree with several of your points, but of course we disagree on the overall policy. In fact, you’ve inspired me to make the next edition of “From the Editor’s Desk” about climate change and the energy bill, and I will make an effort to respond to your criticisms. Thank you for such a thoughtful response. I look forward to hearing your thoughts on future posts.

Best regards,
Anthony

Hennessey’s implied counterarguement that “taxing carbon necessarily implies a net decrease of jobs, is incorrect.” is accuarte if one changes the word “necessarily” to “more than likely”. Taxing carbon necessarily incurs deadweight losses. Moreover, cap and trade is a highly inefficient form of carbon taxation (see Nordhaus DIME papers)and this particular initiative almost certainly flunks a cost-benefit test.

It is always possible that government would find something to invest in that the private market might have missed, something that would not crowd out private investiment and yield an increased rate of return AND that they would actually invest in it – however I don’t see what in public choice theory or empirical experience that would indicate this is likely. Far more likely is an “investment” in response to interest group projects or local pork for votes.

I know that many “command and control” believers imagine a world in which “if they were in charge”…but such is not reality. The reality is that the market is far more likely to invest for greater ROI than governments.