ECON2505 Env Econ, SP2016TuesD227
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1. According to Atkinson and Hackler, what do neoclassical economists view as the most effective policy in addressing the challenges of climate change?
Neoclassical economists believe that companies that produce GHG (Greenhouse gasses) are not paying for and/or taking responsibility for their impact on the environment, so they view this as “a conventional pollution market failure”. They believe that “GHG are a negative externality
amenable to a market solution”, so the solution is to give a price to GHG, so that producers and/or consumers of GHG must pay a suitable cost.
3. According to Atkinson and Hackler, what are two or three arguments made by neo-Keynesian economics? What policy does neo-Keynesian economics see as most effective in addressing the challenges of climate change? Describe
The main argument that neo-Keynesian economists make is that they believe that “economic growth is a result of business investment, government spending, and consumer spending because of the demand
for goods and services it produces”, meaning that the more government and business investments there are, the more consumer demand will grow. Unlike Neoclassical economics, which focus on maximizing efficiency, neo-Keynesian economics prefers policies that benefit social welfare (clean environment, small businesses, etc.) over strict market efficiency, so neo-Keynesians strive to distribute economic growth fairly instead of enhancing productivity or innovation directly. A policy that neo-Keynesians would see as effective in addressing climate change would be to provide subsidies towards clean energy production in hopes of influencing investment into better energy sources that do not produce GHG, and also to strictly regulate GHG production in the form of direct oversight and carbon caps.
1. According to Atkinson and Hackler, what do neoclassical economists view as the most effective policy in addressing the challenges of climate change?
First of all, they believe that economic growth is achieved by maximizing allocative efficiency, One is that the economy is built upon the interaction of firms and consumers in markets determined by price signals. Indeed, allocative efficiency revolves around the responsiveness of economic agents to price signals. Consequently, neoclassical economists emphasize āprice mechanismsā like interest rates, currency values, inflation, and other monetary factors that determine the value of capital and labor more. Also, they point out that supply normally meets demand is another neoclassical principle. In this paradigm, the economy is simply a large market of goods and services that is generally in equilibrium and usually best left to itself. Their final relevant principle of neoclassical economics is that individuals act in response to incentives to rationally maximize their own self-interest, and that the collective pursuit of individual self-interest will also maximize public interest.
5. The authors discuss their theory of āInnovation Economics.ā What reasons do authors cite as to why Innovation Economics offers a more effective framework for addressing the economic realities of the 21st century.
The author cites three factors to prove that innovation economics offers a more effective framework for addressing the economic realities of the 21st century. He point out that, First, each doctrine focuses in an almost Newtonian way on adjusting the demand or supply of capital and labor to keep the economy in equilibrium and to secure economic growth, which undervalues the importance of innovation. Second, each concentrates on macroeconomic factors, particularly prices, rather than on the institutional- and technological-change factors that drive growth, albeit in different ways in different countries and times.4 Finally he said that, none of the prevailing doctrinesā principles focus on the complex process of technological innovation and the messy and complicated world of firms, industries, and national innovation systems as these institutions relate to economic growth.
1. According to Atkinson and Hackler, neoclassical economists see a carbon tax or a cap-and-trade program as the best policy response to the problems presented by climate change. Neoclassical economists believe that resources are allocated most efficiently and result in the greatest overall benefit to society when the market is left to its own devices and allowed to find a ‘natural’ balance between consumers and producing firms. Simply put, their solution to climate change is to set a price on carbon emissions that reflects the externalities of pollution, and allow the market to sort out the rest.
2. As stated by Atkinson and Hackler, neoclassical economics assumes that “individuals act in response to incentives to rationally maximize their own self-interest.” (Atkinson & Hackler, 5) Neoclassical economics also assumes that when all individuals seek to maximize their own benefit, public benefit is also maximized, regardless of the selfish intentions of individual consumers and producers. Those subscribing to the principles and beliefs of neoclassical economics believe that an individual pursuing only his own benefit will unintentionally act in pursuit of the public good as well. I think these assumptions sound fairly realistic, because generally speaking I think people do not act to intentionally hurt other people, and even if they are not specifically acting to help others out, by seeking the best quality of life for themselves and their family they will unintentionally be pursuing a better quality of life for all (or most) of society.
Sometimes, however, people may think they are acting in their own self-interest, when in fact their actions hurt them and others around them. A simple example of this is the tragedy of the commons, wherein all individuals seek to maximize their own gains, and in the process deplete the resources that they need faster than they can be replenished, resulting in huge individual and societal losses. In such a scenario, individuals are pursuing their own self-interests and they clearly do not end up maximizing the interest of the public.
Because there are exceptions to the neoclassical assumption that individuals acting in their own self-interest unintentionally benefit all of society, this assumption is not realistic. Most people do not have the ability to foresee all the consequences of their actions, and this is why policy makers and experts are crucial in ensuring that the collective actions of individual consumers and producers do not harm society as a whole. At least liberal neoclassicalists are more willing to accept that policy intervention is necessary in some cases. I would argue that climate change is one of those cases, and that intervention beyond simply setting a price on carbon emissions is needed to adequately address such a complex issue.
2. What assumptions does neoclassical economics make about human behavior? Are these assumptions realistic? Explain
” individuals act in response to
incentives to rationally maximize their own self-interest”. According to the neoclassical viewpoints in human behavior, I find this to be somewhat true. Well, through observation by the infamous economist Adam Smith we have been basing this principle as a standard way of doing business. In the field of economics fulling your priorities first will also lead you to fulfill the priorities of others including that of the public eye. Now are these assumptions realistic? Yes, I believe they are. According to the field of economics and knowing how it works you will come to understand how selfish you have to be to be on top. From what I understand By fulling the needs, the self interest of your self, you will be led to fulfill the needs of others. Take it like the theory of self actualization. the pinnacle of excellence when you reach that state you sacrifice your motivations to help others, well in this case in a managers or CEO perspective his/her company.
6. Describe the policy advocated by the IETA and why they believe this policy to be effective.
Instead of taxing the hell out of carbon emission industries and or the use of carbon fuels the IETA propose a new system of cap and trade to overall regulate the use of carbon emission. In a simple nut shell they wish to create a system where industries pay for the fuels they burn. Similar to the current system with the acid raid act in accordance to the burning of sulfur in the US These policy makers wish to implemented it towards carbon fuels trading. Therefore can monitor the output that nations burn hazardous fuels and further reducing hazardous chemicals destroying our planet. it will be effective than lets say enforcing a policy to raise gas prices. within the article it states that Global warming is a very serious issue that needs to be dealt with ASAP. raising or taxing industries will only raise the prices of the use of alternative energies, and to implement its policies would take years if not decades. the cap and trade approach is a more user friendly way of achieving the former objective.
According to Atkinson and Hackler, what do neoclassical economists view as the most effective policy in addressing the challenges of climate change?
According to Atkinson & hackler in general, conservative neoclassical view markets as
less prone to failures, a compelling case for limited government intervention. Liberal
neoclassical, however, consider market failures to be more common, but still generally
limited.
According to Atkinson and Hackler, what are two or three arguments made by neo-Keynesian economics? What policy does neo-Keynesian economics see as most effective in addressing the challenges of climate change?
Two arguments made by neo- Keynesian economics are, ” economic growth is a result of business investment, government spending,and consumer spending because of the demand for goods and services it produces.” In a neo-Keynesianās view, policies, such as costly regulations, that might negatively impact the supply-side have little effect on overall economic growth. For this reason, they are more willing to support direct government regulation of economic activity.
1. According to Atkinson and Hackler, what do neoclassical economists view as the most effective policy in addressing the challenges of climate change?
According to the article of Atkinson and Hackler, in order for economic growth we need to address the climate change, we should maximize efficiency. Regulations, taxes, market power, or other ādistortionsā will not maximize efficiency instead hurt economic growth Neoclassical economists argue. Climate change is the supply is equal to the demand across the economic market. This means that the market tries to equilibrate the amount of goods or services produced by someone equal to the same as the buyers. The market prices will be competitive and the production of goods and services will maintain in minimum to meet the demands not creating any surplus of any sort helping the environment greatly.
6. Describe the policy advocated by the IETA and why they believe this policy to be effective.
The IETA propose that a new system be put in place that will cap and trade to regulate the use of carbon emission. The taxes that are placed for industries that emit any sort of carbon arenāt really helping since they are finding ways around it. The system would charge per use of the fuels each industries they decide to burn, if they burn more fuels they will have to pay more. At the long run industries will feel hurt for all the money being used in paying for burning fuels than for actually burning fuels. With this system being incorporated they could monitor the burning of fuels from each industry and put a limit to avoid hurting anymore the environment. These system will help fight in a more efficient way global warming since itās the biggest environment problem we have in our hands today.
The Urban Sustainability Index aims to provide a measure of performance of cities in emerging markets with a standardized set of categories of Sustainability. It will address the need for a system that is compatible globally and that can be maintained over time. It is to contain basic information about a city’s performance in a consistent and comparable way.
It has five main categories of environmental sustainability.
-level of basic needs met for the citizenry
-efficient use of resources
-environmental cleanliness
-built environment
-commitment to future Sustainability
The researchers for the Urban Sustainability Index identified five common themes in the emerging markets of China.
-industrial restructuring linked to land renewal
-“green” urban planning
-transparent standards and charges
-large scale integrated recycling systems
-cross departmental coordination
All of these themes can be implemented, especially in emerging markets, because there are less established bureaucracies and developments. It becomes more difficult when the cities have a long history in existence. Even so, industrial restructuring linked to land renewal can be achieved as it has in the Brooklyn Navy Yard. Otherwise, it would require moving industry further away from the economic center of the city which may not prove to be feasible when comparing cost of relocation, cost of transportation of goods and operating costs.
“Green” urban planning can become an immediate policy change in cities, enforced from any given point in time into the future. In New York City, there are several agencies that enforce these types of efforts along with building codes.
As for the three other themes, of transparent charges, integrated large-scale recycling and cross departmental coordination, would require a long term commitment from the city officials to maintain those efforts in effect through the change of city administrators.
The Urban Sustainability Index purpose is to assess the performance of cities based on five important sustainability categories which are: Basic needs, Resource efficiency, Environmental cleanliness, Built environment, and Commitment to future sustainability. Basic needs help identify the water supply access, housing space, health care availability, and education levels. Resource efficiency is the way a city uses power and water consumption, and the effectiveness of their recycling system. Environmental cleanliness is the ability to limit the use of harmful pollutants. Built environment determines the density of the urban space and what factors is used to help communities becoming more efficient and livable. Commitment to future sustainability is the amount of environmental professionals in the city and how much fund is allocated to environmental protection by the government.
The following three components of the index is very achievable to me: built environment, commitment to future sustainability, and basic needs. In NYC as we all know is rapidly growing faster than before and it is highly denser than what it is already. I have noticed around the city that the department of transportation is doing a great job providing a significant increase in bike lanes for the public which contributes to public green space. Green jobs help with employment and at the same time help the environment and with more help from the government with fund to employ environmental professionals with sure are future. Basic improvements to our educational system will be able to education our children who will be the future leaders of our country.
1. According to Atkinson and Hackler, what do neoclassical economists view as the most effective policy in addressing the challenges of climate change?
Pricing Carbon dioxide emissions either through tax or trading regime. This should allow markets work out a solution. Increasing the price of high carbon energy should incentive or motivate to create innovation in ways to lower the use of energy.
5. The authors discuss their theory of āInnovation Economics.ā What reasons do authors cite as to why Innovation Economics offers a more effective framework for addressing the economic realities of the 21st century.
Because innovation economics focus in adaptation and efficiency to create an understanding of how technology and innovation are so important to maximize the output by minimizing the resources needed creating policies to have clean air and technologies to reduce energy cost like solar panels.