The Davos climate agenda makes the poor take the hit to cure the pollution of the rich

See Send Harris to Davos and Kerry to the Border.

"Your editorial correctly argues against the Davos climate agenda. Its favored policy, costly substitution, makes the poor take the hit to cure the pollution of the rich.

Costly substitution replaces fossil-fuel technologies with more expensive, greener ones. In the Inflation Reduction Act, 77.6% of the relevant new spending involved large-scale subsidies for such substitution, compared with 1.7% spent on innovation. The American Rescue Plan Act had no innovation spending. The subsidies don’t create jobs, on net, for the same reason a public typewriter program replacing computers wouldn’t. Both programs make more people produce less, whereas growth comes from fewer people producing more.

A different strategy would involve lowering, rather than raising, energy prices through innovation. Since the poor spend about 8.7% of their income on energy, compared with 2.9% for the rich, the poor are hurt relatively more from price hikes stemming from costly substitution but gain more from price cuts enabled by innovation. Regressive emission controls are particularly troublesome given that from 1990 to 2015 the richest 10% of people in the world accounted for 52% of carbon emissions, and the poorest 50% only for 7%. A less regressive emissions-control policy seems warranted.

Em. Prof. Tomas J. Philipson

University of Chicago"