An article on the benefits of using economic prizes instead of subsidies as incentives for alternative fuel research appeared in Monday's edition of National Review Online, an extremely right-wing publication.
Besides the fact that this is a good idea that economists have been increasingly talking about over the past few years, there are a couple additional take-away points:
- There are many people on the right who are sincerely interested in environmental progress and who are thinking seriously about the best ways to move forward.
- Being able to converse relatively proficiently about economics and market principles, not just acknowledgment of the problems, is the best way to create a bipartisan consensus on policy. People on the right will listen to these and often agree.
Comments
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David Roberts Posted 3:38 am
25 Sep 2007
In a working market, the market itself would reward innovation. When prizes (or subsidies) are required to spur innovation, it's a sign that the market is broken.
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John McGrath Posted 3:41 am
25 Sep 2007
Uh, really? So you mean, they won't spend weeks and months nitpicking about insignificant issues when an economically-conversant expert unequivocally states that climate change is a huge and growing danger to the global economy?
I don't think we're watching the same conservatives at work. Call me when they stop screeching about discount rates.
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sunflower Posted 3:56 am
25 Sep 2007
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mkayser Posted 4:04 am
25 Sep 2007
It's true there is much incentive already, but because technology spreads throughout society (not just through selling your products but also publication and word of mouth), there are positive externalities to innovation. So it can make sense to subsidize R&D.
At least that is the argument of these folks. Seems reasonable.
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Jason D Scorse Posted 4:48 pm
25 Sep 2007
I have never claimed that prizes alone are sufficient or that the current small prizes are sufficient- neither is true- but the concept is much better than subsidies- I think that's non-controversial
As for conservatives not listening to market-based solutions that's not true- it is classical economists who created the entire theoretical framework for market failure and the ways to address it- and look at people like Gregory Mankiw who is calling for a carbon tax, or conservative economists at places like CATO or Heritage foundation that have been ripping agricultural and energy subsidies for many years.
In order to engage the right, you need a comprehensive argument and a solid understanding of economics is absolutely crucial to discussing intelligently virtually all policies discussed here at Grist- i.e. cap and trade (which comes from Ronald Coase's work, who by the way is a serious libertarian conservative economist) or taxes (which comes from Pigou, another classical economist). Is economics the whole answer? No, but it is a necessary condition, just not sufficient.
I teach environmental economics and blog at http://www.voicesofreason.info.
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