Tag Archives: regulation

The Rise and Fall of Cap-and-Trade

Markets can fail.  But market mechanisms are often the best way for governments to address such failures.  This has been demonstrated in areas from air pollution to traffic congestion to spectrum allocation to cigarette consumption.    Markets for emission allowances – in which those firms that can cheaply cut pollution trade with those that cannot – achieve desired environmental goals at relatively low economic costs.   As of a decade ago, that long-standing economic proposition had become widely recognized and put into action. Yet the political tide on both sides of the Atlantic has been against “cap and trade” over the last five years.

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Barack Obama’s Biggest Economic Mistake Has Been…

In the current issue of Foreign Policy, the editors of the FP Survey ask “top experts” for pithy solutions to the world’s economic problems, “twitter style.”  Some of the answers:

THE BIGGEST THREAT TO THE GLOBAL ECONOMY IS …
Anti-market bias. -Bryan Caplan •  Procrastination. -Peter Diamond •  Short-term thinking. -Esther Dyson •  A euro meltdown. -Dean Baker  •  Tax-cut fanatics. -Jeffrey Frankel •  The bond market. -Andy Sumner •

MY OUT-OF-THE-BOX SUGGESTION TO REVIVE THE GLOBAL ECONOMY IS
Wipe out debts. -Daron Acemoglu •  Require candidates for national office to pass ninth-grade tests on arithmetic, history, and geography. -Jeffrey Frankel •  Double down on science. -Tyler Cowen •  A government lottery where winners have mortgages, student loans, or other debt paid off. -Mark Thoma •  We don’t need “out-of-the-box” solutions; we need “head-out-of-the-sand” ones. -Adam Hersh •  Pray. -David Smick

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The Easy Question in Financial Regulation

Many questions in the field of financial regulation are hard to answer:    Would the separation of commercial banking and investment banking help prevent crises?   To what extent should individual consumers be protected against foolishly borrowing too much?  Should Credit Default Swaps be regulated out of existence?    What should regulators do about patterns of high executive compensation that is evidently not a reward for performance?  I have views on these questions, just as other observers do.  But in these cases I see the arguments on both sides.

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Recent Republican Presidents Aren’t Conservatives; They Are Illiberals

Floyd Norris notes in the New York Times (Feb. 9, 2008, p.B3),“George W. Bush is in line to be the first president since World II to preside over an economy in which federal government employment rose more rapidly than employment in the private sector.”    It is another bit of confirmation of the truth behind a comment that “Joe S.” posted in response to my blog entry of February 6 (“Reagan and Stalin”): “What, pray tell, does the Republican Party have to do with conservatism?”  

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