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WSJ: Who Pays for Cap and Trade? -- II

March 13, 2009

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We don't mind an intellectual fight, and in a nearby letter, two economists at Resources for the Future take aim at our Monday editorial on how the costs of cap and trade will be distributed across regions and income groups. Dallas Burtraw and Richard Sweeney call it "a bait-and-switch argument." Mr. Sweeney added on his blog that "The Wall Street Journal is an idiot."

That's how the global-warming clerisy debates these days, but we'll try to take their argument seriously. They claim that by citing state-level CO2 production data, rather than CO2 consumption data, we exaggerated regional differences. This is distortion disguised as verisimilitude.

It's true that discrepancies in per capita emissions--73 tons in West Virginia versus 12 tons in Rhode Island, for instance--reflect the fact that carbon-heavy power plants and industries are based in some states and not others. It's also true that electricity crosses state lines, and that--as cap and trade raises prices--a consumer in California who buys a car built in Michigan, say, will bear some of its carbon costs.

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