Gernot Wagner on The Futility of Going Green and the Economics of What Really Matters (Podcast)

TH: Is there really one agreed-upon definition of what cap and trade is? NASA's James Hansen has his "cap and dividend," for example. Is there one thing that politicians can point to and say, that's what cap and trade is?

Wagner: "Cap and dividend" is very cute word play, but fundamentally it is the exact same idea. I'm completely agnostic to who gets the money in the end. As long as you have the overall system in place, you achieve your emissions reductions. Of course you may want to care quite a bit about who gets the money because that will allow you to either pass it or not. So cap and dividend is basically the idea of giving the receipts of sale of the allowances back to consumers. That sounds about as good as anything.

TH: You close the book with your own take on an often-invoked parable about starfish on the beach. Could you paint this picture for us?

Wagner: This is a story that I came up with when I was speaking to my wife about how to write the final chapter. She's a doctor. She's an obstetrician/gynecologist, so her day essentially consists of helping individual patients, right? Five on a given day, maybe 15 or so.

The analogy to the famous starfish story is that she is tossing starfish into the sea one by one. Every one she touches, every patient she touches, that person's life changes dramatically. But really it's a handful of starfish that she is helping every single day.

If you look at this problem from a global perspective instead, to save a lot of starfish you need to raise the sea level (which is ironically the opposite of what we want to do, in this case). Statistically speaking, you'll be helping a lot more starfish or people than you do by throwing individual starfish back into the sea. It's also a lot less satisfying. You don't touch individual patients. You don't see individuals. But at the end of the day it's a lot more effective.

And while I was writing the book, my wife graduated from her residency in obstetrics and gynecology and right now is doing a master's in public health. She's looking at exactly these kinds of questions: how do you save more than one person at a time? What are the policy interventions that you need to put in place to help lots of people?

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