The Economist: State Capitalism: The Visible Hand (Penguin Specials)


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A premise of his research was that the environment is a public good , shared by all and yet not paid for in any adequate or appropriate way.

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And we are all harmed by its degradation though the value of that damage is not captured in standard market exchange. A noteworthy example is his Dynamic Integrated Climate-Economy Model , which provides a consistent framework for using knowledge borne from economics, ecology and the earth sciences. The model allowed for a deeper understanding of how certain policy changes affect long-term economic and environmental outcomes.

This is how he realized that schemes that rely on markets with some guidance from governments — such as by instituting carbon taxes — would work best to tackle the problem. And thus he was able to show, with great clarity, that the most cost effective way to reduce greenhouse gas emissions is by lifting the price of fossil fuels with a carbon tax.

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This in turn would provide the appropriate incentives for consumers and businesses to use less of those fuels. He found that the people who would lose the most were the poor and those living in tropical regions. Fundamentally, Nordhaus recognized that solutions to the great challenge of climate change can most efficiently and effectively come from the market, one of the most powerful systems on earth. While he understood markets needed to take the lead, at the same time, they needed assistance from informed government policy.

Carbon pricing, Nordhaus found, is one powerful tool for bringing those solutions to the fore. That is, Nordhaus has showed how capitalism is capable of rising to the challenge of climate change, just as it has to other problems in the marketplace, such as monopolies , ozone depletion and the dangers of cigarette smoking.

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The Economist: State Capitalism: The Visible Hand (Penguin Specials) The Economist: State Capitalism: The Visible Hand (Penguin Specials)
The Economist: State Capitalism: The Visible Hand (Penguin Specials) The Economist: State Capitalism: The Visible Hand (Penguin Specials)
The Economist: State Capitalism: The Visible Hand (Penguin Specials) The Economist: State Capitalism: The Visible Hand (Penguin Specials)
The Economist: State Capitalism: The Visible Hand (Penguin Specials) The Economist: State Capitalism: The Visible Hand (Penguin Specials)
The Economist: State Capitalism: The Visible Hand (Penguin Specials) The Economist: State Capitalism: The Visible Hand (Penguin Specials)
The Economist: State Capitalism: The Visible Hand (Penguin Specials) The Economist: State Capitalism: The Visible Hand (Penguin Specials)

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