I’ve just started reading a new article by economists at the World Bank and the Peterson Insititute. The gist of the paper is that greenhouse gas emission targets will have little effect on “carbon leakage”, the apparently‐​largely‐​theoretical phenomenon whereby carbon‐​intensive industries move to less regulated jurisdictions in response to stringent emissions regulations in their original home. So we can strike that off our list of worries.


The authors do reach the conclusion, though, that output of energy‐​intensive products will decline in response to emissions caps and the political temptation for “carbon tariffs” will be strong (see here why that is a bad idea). Basing the carbon tariffs on the carbon content of imports–as opposed to, say, the carbon content of domestic production displaced– will lead to significant falls in developing country exports. Music to protectionists’ ears, perhaps, but not exactly a recipe for international cooperation or global prosperity.


I’m still digesting the substance of the paper, but I was struck by what I think is a pretty large oversight/​mischaracterization in the second paragraph. The authors refer to the “internationally‐​minded” Sen. John Kerry (true in the serves‐​on‐​the‐​foreign‐​relations‐​committee‐​and‐​speaks‐​French sense, I guess) and the “free‐​trade oriented” Senator Lindsey Graham (R, SC).


Huh? A cursory glance at Senator Graham’s record indicates that in no serious sense could he be deemed “free‐​trade oriented.” Senator Graham has voted to lower trade barriers less than half (43 percent) of the time and has taken only 20 percent of opportunities to cut subsidies. That puts him in the “interventionist/​internationalist” camp. Maybe the authors didn’t know about the Center for Trade Policy Studies’ “Free Trade, Free Markets: Rating Congress” tool, but surely Senator Graham’s co‐​sponsorship of the notorious Schumer‐​Graham legislation, among other transgressions, should have tipped them off.