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Paul Krugman: Invest, Divest and Prosper

  • Posted by SHFT on July 1, 2013 in Politics
  • Even though it was competing with big stories like voting rights, gay marriage, and Paula Deen, it's a little surprising how little attention the mainstream media has given to President Obama's climate action plan, unveiled last week. Unlike last time around, Obama's plan doesn't revolve around legislation that has no hope of passing the congressoinal gauntlet. By using the powers of the Environmental Protection Agency to impose limits on carbon emissions from power plants, the strategy bypasses the House of Representatives altogether. That means it can work, and that makes anti-environmentalists nervous.

    In a weekend New York Times op-ed, renowned economist Paul Krugman outlines GOP frustration with Obama's plan:

    Republicans realize [that Obama's plan bypasses Congress], and they’re stamping their feet in frustration. All they can do, it seems, is fulminate (and perhaps scare the administration into backing down). Interestingly, however, right now they don’t seem eager to attack climate science, maybe because that would make them sound unreasonable (which they are). Instead, they’re going for the economic angle, denouncing the Obama administration for waging a “war on coal” that will destroy jobs.

    Indeed, Krugman argues, the White House climate strategy is partly a war on coal, in the sense that reducing the use of coal is a necessary part of reducing carbon emissions. "But making war on coal won’t destroy jobs," he writes. "In fact, serious new regulation of greenhouse emissions could be just what our economy needs."

    While it is true that regulating greenhouse gas emissions will likely increase electricity prices in affected areas, it won't cost jobs. Here is why:

    It’s always important to remember that what ails the U.S. economy right now isn’t lack of productive capacity, but lack of demand. The housing bust, the overhang of household debt and ill-timed cuts in public spending have created a situation in which nobody wants to spend; and because your spending is my income and my spending is your income, this leads to a depressed economy over all.

    So if electric utilities, in order to meet the new rules, choose to close old, dirty power plants and invest in cleaner technology (probably natural gas), that's an increase in spending, which is what the economy needs. 

    It's a compelling argument, and one that needs to be made. There is no innate contradiction between sound environmental policies and economic growth, as Obama mentioned in his speech.

    Read the piece here.

    (via NYT)

    Photo: John Giles / PA (via Guardian)





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