Matthew Kahn provides a nice piece on the advantage of decentralized policy. The diversity of strategies and allowing trial and error to identify what works, as opposed to faith that concentrated smarts will arrive at the “right” answer, even assuming there is a single right answer for all.
Here is Newsweek’s recent piece on the challenge of adapting to climate change. While I read it quickly, I didn’t see a single mention of capitalism’s role in helping us to cope with this emerging threat. This article seeks to make government the star of the show and wants to know why government doesn’t have a plan to save us. You don’t have to be Hayek or Milton Friedman or even Anthony Weiner to find this a pinch funny. In my book Climatopolis , I offer an alternative vision of how we will adapt in the face of this real threat. Capitalism and individual choice and market participation are the keys to my "adaptation vision".
Government can play a constructive role in helping us to adapt but it will only play this role due to competition and "voting with your feet". As I discuss in my book, city quality of life is the key to long run urban growth. A city whose quality of life declines will lose its footloose skilled and guys like the Zuck and the Google guys are the key to long run growth. Mayors who see that their tax base is leaving their domain (because quality of life is suffering due to climate change) will have strong incentives to be pro-active even if they are not Berkeley graduates. In this sense, city competition will nudge politicians to address climate change. Note that this vision stands in contrast to Newsweek’s vision of a "Marshall Plan" to adapt. Different cities will pursue different strategies and through a trial and error learning process — good ideas will be stumbled upon and will diffuse widely.
I discuss all of these points at length in my book. You should take a look at it!
Newsweek’s Long Piece on Climate Change Adaptation
Matthew E. Kahn
Wed, 08 Jun 2011 01:58:00 GMT