Republican supports new tax

There's a man-bites-dog headline for you. Today's Tom Friedman NYT column features an interview with SC GOP Sen. Lindsey Graham who apparently supports a carbon tax. This tax would create incentives for energy conservation and pollution abatement, as well as making us less dependent on foreign oil. Helps with global warming too, if you still believe that. More jobs, cleaner air, and a thumb in the eye to petroleum-supported autocracies (Russia, Venezuela, Iran) who have not been playing nice in world affairs -- what's not to like? One also could use the proceeds of such a tax to reduce the federal budget deficit, or make it budget-neutral by making off-setting tax cuts. In economic terms this would be far superior to the cap-and-trade bill passed by the House last year. Stay tuned, this could get interesting.

Interesting perspective on climate models

Over the last 100 years global temperatures have definitely been on the rise. So have greenhouse gas emissions. Theories have been developed linking the two. With greenhouse gas emissions on a steady upward trajectory as a larger part of the world joins the industrial age, soundfront lots on the coast might one day be oceanfront.

But climate models come in all kinds of different flavors and WSJ gave an interesting peak into their inner workings yesterday. The warming trend has flattened over the last 10 years, but the consensus among most climate scientists is that this is a mere blip before warming resumes. The models disagree on the role of such factors as changing ocean currents and cloud cover.

Why am I blogging about a discipline where I admittedly have zero technical expertise? One reason -- the parallel to economic models. Most macro models of the US economy use data that goes back 50-60 years; models for other countries go back much less because of data limitations. Models estimated over sustained periods of rising housing prices have difficulty predicting drops in those prices. Faulty models of housing were fed into models for financial markets and you know the rest of that story. It would be helpful to have a more open discussion about the uncertainty about climate forecasts in the coming months.

Handing out carbon-emissions permits

This piece about the consequences of giving away carbon-emissions permits just arrived from the Carey School of Business at Arizona State. It cites the research of Kerry Smith, who spent a good portion of his career here at NC State in the economics graduate program. Under the cap-and-trade bill passed by the House this summer, 85% of the permits would be given away. Proponents of this approach argue that this will save consumers money. Don't bet on it, says Professor Smith.