UMass Econ in the News

James Boyce

In his op-ed, “Letter From Flint, Michigan,” James Boyce, economics professor, explains how Flint transformed from the American dream into a disposable city.  He places the blame not just on General Motors, but also a series of, what he calls, monumental public policy failures:  massive foreign borrowing, the failure to grow Medicare into a nationwide single-payer health care system and the “white flight” to the suburbs. 

What can we learn from Flint’s failures?  According to Boyce, that the public good should never be sacrificed for our own “private goodies.”  And, “When we elevate consumption above citizenship, we imperil not only our democracy, but in the end our economy, too. ” (Truthout, 8/31/10)

James Boyce, UMass Amherst Economist

Any policy that limits supply of fossil fuels must raise their price. An inexorable economic logic binds price to scarcity, regardless of whether scarcity arises from OPEC-engineered production limits, climate policies to cap carbon emissions, or other initiatives that keep fossil fuels in the ground.

The key question is who gets the money? As governments move to cap carbon emissions, attention is turning to this hundred-billion-dollar question. In video interviews on The Real News Network, UMass Amherst economist James K. Boyce outlines three possibilities: 

1.  Windfall profits to corporations: a “cap-and-giveaway” policy.
2.  Revenues to government: a “cap-and-spend” policy.
3.  Dividends to the people:  a “cap-and-dividend” policy.

In Washington, the introduction of the Cantwell-Collins bill in the Senate in December has put this issue squarely on the political agenda. The bill proposes to auction 100% of carbon permits, return 75% of the revenue to the public in equal dividends per person, and devote the remaining 25% to investments in clean energy and assistance to communities adversely impacted by the transition away from a fossil-fueled economy. Boyce discusses the stakes, not only for family incomes but also the possible fate of climate legislation in the United States.

Professor James K. Boyce

Baseline Scenario — New Deal for U.S. Climate Policy?
This guest post was submitted by James K. Boyce, an economist at the University of Massachusetts, Amherst. He has been a proponent of a “cap-and-dividend” policy to curb global warming while protecting the incomes of American families.

Last Friday, Senators Maria Cantwell (D-WA) and Susan Collins (R-ME) unveiled the CLEAR (Carbon Limits and Energy for America’s Renewal) Act, which could break the impasse in the debate over U.S. policy on climate change (McClatchy coverage is here.)

CLEAR has won a favorable reception from a broad swath of the political spectrum, ranging from ExxonMobil to Friends of the Earth. The scroll of supportive statements on Cantwell’s website includes praise from the AARP, the American Enterprise Institute, former U.S. Labor Secretary Robert Reich, Alaska’s Republican Senator Lisa Murkowski, and MoveOn.org.

CLEAR is a “100-75-25-0” policy:

* 100% of the permits to bring fossil carbon into the U.S. economy will be auctioned from day one – there are no permit giveaways.
* 75% of the auction revenue is returned directly to the public as equal per person dividends.
* 25% of the auction revenue is devoted to investments in energy efficiency, clean energy, adaptation to climate change, and assistance for sectors hurt by the transition from the fossil-fueled economy.
* Zero offsets are allowed: polluters cannot avoid curbing use of fossil fuels by paying someone else to ostensibly clean up after them.

The Cantwell-Collins bill also strictly limits the buying and selling of permits to prevent carbon market speculation and profiteering.

In all these respects, the 39-page CLEAR Act differs markedly from the Waxman-Markey (ACES) bill that passed the House in June, whose cap-and-trade provisions (Title III) alone run to 410 pages. Waxman-Markey initially gives away 85% of the permits. Dividends to the public eventually would grow to about half of the permit value pie, but not until the 2030s. The House bill’s offset provisions would turn the emissions cap into a sieve, and have stoked worries about creating a “subprime carbon market” (see and Annie Leonard’s animated primer). We need to cap carbon, but we do not need to cap-and-trade or, especially, cap-and-give-away. Instead, we should cap-and-dividend.

The New York Times reported on the on the legislative sausage-making that went into Waxman-Markey. The redolent process, lubricated by special favors to special interests, has stalled since June with legislative arteriosclerosis; its backers now hope that passage can be cleared by implanting stents to boost nuclear power and transform America into “the Saudi Arabia of clean coal.”

The road to a Senate-led compromise is open: CLEAR could replace Title III of the House bill, while keeping the other titles that set forth non-price policies to promote energy efficiency and clean energy. The resulting comprehensive climate policy could have a real chance of becoming the law of the land – and the air – in the year ahead.

By James Boyce