summary
  • Climate risks go beyond any one country or election.
  • The election may put an end to a wave of deregulation.
  • China’s fixed income markets are attracting foreign investors.

Editor’s Note: This is the third in a series of pieces that will examine key economic issues surrounding the 2020 U.S. election.

The adage “That government is best which governs least,” is taken from Henry David Thoreau’s “Civil Disobedience.” This has long been the credo of conservative economic thinkers, who view government interventions in markets with disdain. Regulation changes incentives and equilibria, and often not for the better. But others counter that intelligent regulation can improve individual and collective outcomes.

When the consequences of problems and the remedies offered by regulation are surrounded by uncertainty, designing intelligent controls becomes very challenging. When complying with those controls is costly, the contention surrounding them is especially intense.

Environmental regulation, therefore, represents a perfect storm. (Pun intended.) Natural conditions change gradually, and are difficult to project very far into the future. Steps to address environmental concerns involve costly sacrifices by firms and individuals. And because no one county, state or country owns the world’s atmosphere, governments must put their self-interests aside and collaborate with one another.

These are the challenges that surround proposals to address climate change. The differences of opinion on this front between the two presidential candidates could not be starker, and the stakes surrounding the issue couldn’t be higher.