• Meghan McCain passes the GOP “purity test” but is seriously confused about economics and market-based environmental policy:

    [I support] market-based energy reforms by opposing cap-and-trade legislation.

    Yes and no. I believe in climate change and support market-based energy reforms. I also support cap-and-trade legislation, in theory. But I oppose, as my father says, Obama’s “cap and tax” plan. The Obama administration has used this to tax people instead of encouraging the exploration of new technology. As it is, this philosophy has turned into something that could adversely affect our economy.

    So put me down for half a “no.”

    As I wrote elsewhere, this demonstrates a complete failure to understand that the way market-based instruments reduce pollution is by making pollution expensive. I half-expect lefties to live in a la-la-land where we get to taste the honey without the sting of the bee (check out this video that manages to talk about cap-and-trade for 6 minutes without mentioning that the price of fossil fuels will go up) , but the right wing is supposed to understand how markets work and right now it’s lost.

  • NCAA 2010 March Madness schedule. Go Zags!
  • Rethinking macro policy, by Olivier Blanchard and colleagues at the IMF. One interesting paragraph reminded me of the Bauman-Lucas Hypothesis (that advances in macroeconomics produce complexities that offset those advances, or—in lay terms—that macroeconomics is pointless :):

    It may even be that success in responding to standard demand and supply shocks, and in moderating fluctuations, was in part responsible for the larger effects of the financial shocks in this crisis. The Great Moderation led too many (including policymakers and regulators) to understate macroeconomic risk, ignore, in particular, tail risks, and take positions (and relax rules)—from leverage to foreign currency exposure, which turned out to be much riskier after the fact.

  • Lakeside mansion up for auction at $15 million
  • Scientists urge new approaches to agriculture in the face of climate change. UW’s David Battisti.