James Kwak claims his interest in curing global warming by reducing deficits is better than Mankiw's interest in curing global warming by reducing deficits. Stop, they are both wrong. Deficit spending and global warming are unrelated by six degrees of freedom. What is related to global warming is less co2 emissions.
They both suffer the same fallacy, namely their step two is un Coasian:
Step one, apply a penalty for emitting. Step to, insert my special interests in federal government to spend the penalty money the way I see fit.
Step two has nothing to do with global warming. The proper step two is to spend the global warming penalties one those who deserve credit for keeping their emissions way below average. Do that, and the trade is complete, in the Coasian sense. Government is a big player in global emissions, mainly because of ideas like Mankiw's and Kwak's make government involvement risky. Better leave the arbitration to a public nuisance class action lawsuit, the judge can handle it.
Also neither believes in the law of supply and demand. Mankiw says the law can be supressed so he and his friends can determine the destination of emission fees. Kwak says the law does not exist anyway, so it is perfectly OK for he and his friends to determine the destination of emission fees. I have news for both economists, the Law is the Law, a well accepted law in economics, unlikely to be ignored or repressed.
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