On a related note, I very much enjoyed David Leonhardt’s column on the use of market mechanism vs. command-and-control regulation. Given how the market is structured under the American Power Act, however, it’s not obvious to me that his endorsement of carbon pricing in the abstract is salient to the very different question of whether or not we should pass this particular bill. Over a decade ago, Jodie Allen wrote a fun piece for Slate explaining the theory of the second best. It’s a good idea to keep in mind. Command-and-control really is bad in the abstract. In practice, in certain very limited circumstances, it might prove more effective than politicized pseudo-markets that rest on massive subsidies. (One is reminded of the botched privatization of British Rail.)

For more insight into how carbon credits would work in the non-abstract world, I recommend reading “Can Carbon Credits Slow Global Warming?,” written by Anya Kamenetz in 2008.