Markets in Everything
Paul Krugman's post rebutting the liberals who have turned on cap-and-trade because it would create a "market" for carbon and this "market" could be used for "profit" and "speculation" by members of "Wall Street" is probably the most important blog post you'll read today.
I'd just add that there's a reason that we all know the word "subprime" now. There are markets in a lot of things. Potatoes. Corporate debt. Gold. But it was the market in one particular thing that went horribly awry. That was where innovations meant to disperse risk instead hid and concentrated it, and ratings agencies meant to reward caution and prudence instead began slapping their seal of approval on tranches of a product that they didn't fully understand. But the reason all that was able to happen was that in the great sweep of history, there really had been innovations that helped to disperse and price risk, and there really had been agencies that helped market players better understand the products and options they were being offered, and people were extremely confident because there had been so many successes in these areas so many times before. Markets can work!
And not only can markets work, but it's good if markets work! They make things more efficient. In this case, it could make it more profitable for a company that can increase the efficiencies in its production process to do so quickly. It could make the rise in dirty energy prices more stable. It could increase the returns to developing low-carbon products able to displace current market competitors. And if a few firms get rich helping all that happen, well, they'll have earned it.
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