Environment & Energy
Related: About this forumYay, We're Saved. UChicago Economists Discover "Externalities", Invoke Friedman On Climate
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Two current economics professors elaborated on Friedmans view and applied it to the 21st Century problem of human-induced climate change. Whats happening when we turn on the lights, when the power is derived from a coal plant, or when we drive our car, is that carbon dioxide is emitted into the air, and thats sprinkling around damages in Bangladesh, London, Houston, said Michael Greenstone, the Milton Friedman Professor of Economics at the University of Chicago and the director of the Energy Policy Institute of Chicago.
And those costs are real, and theyre not being reflected in the costs of that electricity or the tank of gas. Emitting carbon dioxide into the atmosphere does allow you to produce electricity more cheaply, but theres a whole other set of people who are being punished or penalized. Its a poor idea of economics.
Greenstone and Steve Cicala, an assistant professor in the Harris School of Public Policy, argued that the market for energy operates without accounting for its full costs without compensating people throughout the world who experience damages caused by the emission of greenhouse gases during the production of energy.
Ed. - Yeah, no shit Perfesser . . .
Cicala defined an externality as an effect on a third party caused by the mutually beneficial exchange that occurs in a free market. For example, theres a benefit to the power company when it produces electricity and sells it to the consumer, and theres a benefit to the consumer when electricity is available for purchase. But when a third party not participating in that exchange suffers costs without compensation, the market has produced a negative externality.
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http://www.forbes.com/sites/jeffmcmahon/2014/10/12/what-would-milton-friedman-do-about-climate-change-tax-carbon/
jwirr
(39,215 posts)Chicago Boys games. Of course they are right but the place on value on the right thing to do and not do. They leave the third party hanging.