07/10/2008 05:12 am ET | Updated May 25, 2011

Sane Climate Policy Will Save the Economy

This Ezra Klein post echoes what has rather rapidly become conventional wisdom among progressives on climate legislation, and it makes me want to tear my hair out.

The idea is that climate legislation will inevitably hurt people financially in the short-term, in order to secure environmental benefits in the distant future, so the only way to get it through is with a bunch of obscurantist double-talk to bore or distract people in the hopes that you can sneak something through before anyone notices.

If you accept that, as Ezra does, then you will be highly, highly pessimistic about the chances of getting decent legislation passed, as Ezra is.

But here's the thing. Listening? OK. [clears throat]

It ... is ... not ... true!

(Times like this I miss the blink tag.)

Believing and acting as if it is true considerably raises the chances that you will design legislation that makes it true, so it's really important -- the most important thing in the climate world right now -- that people stop thinking like this.

This is properly the subject of a very long post that I don't have time to write right now. For now I'll just point out that even the pessimistic economic models shaping debate in D.C. show a very small hit to the economy from a cap-and-trade system. And those models make a number of absurd theoretical assumptions that are woefully disconnected from reality. So-called "bottom-up" studies -- the ones that look at what actually happens in the world -- consistently find that a push to renewables and efficiency generates economic growth and jobs. (Distributional effects are another matter, but this is about the general case.)

And this becomes more and more true as energy costs rise. Oil, natural gas, and coal are all going up and are almost certain to continue rising in the mid- to long-term, no matter the short-term volatility. As those prices rise we're shoveling money out of our country into the pockets of oil regimes and paying to blow up our own mountains. Every dollar that shifts from fossil spending to R&E spending generates comparatively more jobs, keeps comparatively more money in the economy, and has comparatively more positive multiplier effects. Every dollar that is saved by end-use efficiency moves investment from an extraordinarily low labor intensity sector (fossil fuels) to a higher one (virtually anything else, but particularly renewables).

It is long past time to stop acceding to the absurd notion that money spent to avoid high fuel prices is just sunk inflationary cost. It's not. It is investment in other things, and those other things will generate economic activity and jobs.

The economy is headed for serious, serious trouble. Reducing our carbon intensity will reduce both energy demand and energy prices and spur a wave of productive investment. Sane climate policy is not a burden to bear or castor oil to choke down -- it's going to save our f*cking hides.