Krugman correcting a flaw in an Obama speech about the energy bill. It’s very unfortunate that the president didn’t get this right, since externalities are the whole point behind cap and trade legislation. If he isn’t able to articulate this point consistently and correctly, he won’t (and shouldn’t) be able to convince anyone. Moreover, any bill that comes out of this process that isn’t based on people understanding (and admitting to understanding) externalities will likely be hopelessly flawed.

I got The Age of Turbulence for Christmas. Very interesting so far, especially to read with hindsight given recent history. This passage is fascinating: “…According to objectivist precepts, taxation was immoral because it allowed for government appropriation of private property by force. Yet if taxation was wrong, how could you reliably finance the essential functions of government, including the protection of individuals’ rights through police power? The Randian answer, that those who rationally saw the need for government would contribute voluntarily, was inadequate.