Common Tragedies

Thoughts on Environmental Economics

The Wall Street Journal is an idiot

Posted by Rich Sweeney on March 10, 2009

Yesterday I wrote about an egregious mistake made by the WSJ editorial page. While the error, confusing the carbon footprint of production with the carbon footprint of consumption, is substantial, it is a fairly nuanced subject. I talked with Evan and others about it and most people just assumed that some intern grabbed a chart of the WRI web page without really thinking about it. While the data were misleading, I didn’t really think the deception was intentional.

Which is why Dallas and I wrote a simple letter to the editor, explaining the nature of the mistake. Here’s what we sent:

In the Journal’s March 9 editorial “Who Pays for Cap and Trade?” the editors offer readers a bait-and-switch argument to assert that carbon cap-and-trade regimes would take from “working class” America and give to “affluent” citizens.

The editorial correctly notes that the cost of the cap would be borne mainly by consumers, not producers. It then includes a chart showing a large disparity in per capita emissions between states. But it fails to point out that the data relates to economic production, not consumption. This is a big mistake. Every household in Wyoming would have to pilot a private jet to reach carbon consumption of 154.4 tons. The truth is that while there is some variation in the carbon intensity of consumption across states, it is orders of magnitude smaller than what the editorial claims – thus severely overstating the degree to which cap and trade will burden some states and benefit others.

–Dallas Burtraw and Richard Sweeney, Resources for the Future, Washington, DC

Our communications department was also in contact with the editorial desk.

Then an hour ago we were informed that the Journal would not be running our letter. Apparently the editors either disagreed with our comment or simply did not think the mistake was important enough to alert the readers. I’m not sure which is worse.

This isn’t quite George Will wrong, but its prettyfrigginbad. Please disseminate.

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11 Responses to “The Wall Street Journal is an idiot”

  1. Captain Jack said

    Er…surely you’re aware that the Wall Street Journal editorial page has a long history of abusing statistics to support lots of otherwise unsupportable editorial stances? The WSJ’s news reporting is quite good, but no one is going to drop to the floor upon learning that their editorials are penned by hacks.

  2. [...] Warren Buffet in calling cap-and-trade a scam, in The Guardian. And Common Tragedies fears the WSJ edit page is muddying the waters on the cap-and-trade debate with some misleading stats on carbon production and [...]

  3. Max Epstein said

    Rich, you raise an important point, and the WSJ definitely should have run your letter and responded if they felt they had a good response. Nevertheless, I do think its important to recognize some of the pretty significant distributional consequences. The marginal fuel for electricity (which sets the clearing price for power each hour and ultimately dictates retail prices for consumers) in NE-ISO, NY-ISO, and CAISO tends to be natural gas, while for PJM, ERCOT, and SPP its gas and coal, and for MISO its generally just coal. And looking at the nonorganized markets, in NW marginal fuel tends to be hydro or gas, while in the SW its gas, and in the SE gas or coal.

    http://ferc.gov/market-oversight/mkt-electric/overview.asp

    And while WSJ’s using production numbers for “consumer harm” is way off, carbon intensity of production does have its own very significant issues for the affected states. Production CO2 intensity, and not consumption intensity, will drive issues like lost state tax revenue and displaced workers. The industrial factories in Ohio may not sell all their widgets to Ohioans, but they sure do employ a lot of them.

  4. [...] The WSJ refused to run it. [...]

  5. James Slater said

    Well, you got what you wished for. The WSJ did in fact publish your letter to the editor, and pointed out what is strikingly obvious to all but the truly self-deluded: whether quoted state carbon data relates to production or consumption is immaterial to the argument at hand. The disproportionate impact of cap and trade on the people and economies of “middle America” is irrefutable.

    Congratulations on making a first-class ass out of yourself.

  6. [...] out in a letter to the paper. Told initially the letter wouldnt run, the RFF gang got a wee bit upset: The WSJ is an [...]

  7. Evan Herrnstadt said

    James,

    I hope you get a chance to check out Rich’s quick post regarding this today. First, he notes that his paper with Dallas Burtraw and Margaret Walls indeed finds that there are geographic distributional effects of most carbon policies. However, certain revenue disbursement schemes can blunt these impacts. In addition, as Rich pointed out, the magnitude that the WSJ’s sloppy work claims is of a totally different magnitude than his work would suggest. And orders of magnitude can determine whether a problem can be feasibly addressed by policy.

  8. [...] Subtlety being the soul of blogging, he headlined the post: “The Wall Street Journal is an idiot.” [...]

  9. Mike Powell said

    “Wall Street Journal is an Idiot” Obviously, I hope you do not believe this in the literal sense of the Greek root politically ignorant.
    While the Wall Street Journal may [or may not] have erred in their rough calculations of carbon tax estimates. The fundamental fact is that an additional carbon tax will be imposed on all users of energy at all socioeconomic levels.
    Frankly, I have a hard time believing you have accurately modeled the multidimensional effects on all economic segments and geographies of the the US much less on a Global level of the new carbon tax. The vast majority of Redistributive tax schemes are regressive [specifically VAT schemes such as the Carbon tax]. These schemes also tend to suppress long term economic growth which may be the true political motivation of this carbon tax irregardless of the science.

    As to the need of a carbon tax: In the worst case scenario , assuming that there is a direct causal relationship of carbon emissions to global warming,on geological time scales it is negligible. Average global mean temperatures in recent geological history of life [ Meozoic period- approx 200 million yrs ago] was 12 degrees higher than today with higher biodiversity and biomass than today. On geologic timescales the human race will have much harder time adapting to the continuous inevitable slowing of the rotation of the earth and eventual red giant phase of the sun.
    As a researcher for 30 yrs. I have seen many “scientific” cults, from Global cooling in the 1970′s to Global warming now still not able to be justified by rigorous science and empirical evidence.

    So until the facts evidence themselves in the next 100 yrs or so, the political and economic machinations are irrelevant except for the human misery they will inflict on the poorest of the world. The carbon energy tax by increasing prices of all products will obviously lower standards of living for the subsistence earners, the poorest of the poor in the developing world.

  10. Mathias said

    WRI’s response to the misuse of their dataset:

    “This is where the Journal starts cherry-picking the data. While many factors can explain a state’s relatively high or low per-capita emissions, one of the most significant ones is electricity exports between states. In particular, Wyoming, North Dakota and West Virginia are huge electricity producers that export at least 60% of their electricity to neighboring states. On the other side, New Jersey, California, and Florida are huge importers: 41%, 38% and 20% respectively. But emissions are “charged” in the states where the fuel is consumed, which means states that produce more electricity than they use have disproportionately high emissions—especially in per-capita terms.

    In other words, the chart in many ways reflects production rather than consumption. And as the Journal points out, production costs would “inevitably be passed on to all consumers.” Owing to inter-state trade (especially for electricity), that means that all states—rich and poor—will share the burden of a cap on carbon.”

    http://www.wri.org/stories/2009/03/coasts-v-middle-america-wsj-gets-it-wrong

  11. This is the real problem: what’s wrong with every person in Wyoming someday being able to afford to fly her own personal jet?

    The elitists continue to ask ordinary people to give up the things they themselves desire. I believe Al Gore uses a private jet, although unlike John Travolta (who owns several) does not pilot.

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