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Barack Obama Gets It Right On Cap And Trade

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by Yves Smith and Felix Salmon
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Oct 09 2007 12:00am EDT

Barack Obama Gets it Right on Cap-and-Trade

It's great news that the centerpiece of Barack Obama's energy plan is a 100% auction cap-and-trade mechanism. Ryan Avent and Peter Dorman have some niggles, which are on point, but the big picture – that a cap-and-trade system should be based on auctioning permits rather than allocating them – is the main thing, and I look forward to the presidential candidates from both parties following Obama's lead on this one.

It would be interesting to see what Mark Gimein thinks. Gimein, guest-blogging at Time.com, describes a carbon tax as "one bad way to fight global warming that both Democrats and Republicans love". I'm not at all sure that a carbon tax is loved by either side of the aisle, and I'm not sure that it's a bad way to fight global warming, either. But if you ask someone like Greg Mankiw, he'll tell you that the differences between a carbon tax and a 100% auction cap-and-trade system are really pretty small. So if the former is a bad idea, does that make the latter a bad idea as well?

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