Krugman's claim is that coal-fired electric power plants do so much environmental damage that they literally destroy wealth. Citing a recent paper in American Economic Review, Krugman writes:
For it turns out that there are a number of industries inflicting environmental damage that’s worth more than the sum of the wages they pay and the profits they earn — which means, in, that they destroy value rather than creating it. High on the list, by the way, is coal-fired electricity generation, which the Mitt Romney-that-was used to stand up to.While Krugman in this column and in a recent blog post is quick to say he is not advocating shutting down power plants, given his rhetoric and, frankly, the conclusions he is drawing, the logical response is to shut off about half of the nation's electricity grid. That's right, almost half.
To allow them to churn out electricity for another second would, in Krugman's words, "make us poorer and sicker." So, why doesn't Krugman openly say that ALL coal-fired plants should be shut down immediately? Good question. After all, if the NET RESULT of these operations is to make us "poorer and sicker," then immediate relief would make us wealthier and healthier, right?
Last month, Krugman declared on this subject:
It’s important to be clear about what this means. It does not necessarily say that we should end the use of coal-generated electricity. What it says, instead, is that consumers are paying much too low a price for coal-generated electricity, because the price they pay does not take account of the very large external costs associated with generation. If consumers did have to pay the full cost, they would use much less electricity from coal — maybe none, but that would depend on the alternatives.That, however, makes no sense. If coal is dangerous, then even forcing more environmental regulations upon it would not make it a whit healthier and it would drain our pocketbooks and, hey, what possible damage could destroying half of our capability to produce electricity cause, anyway?
What Krugman assumes is that there is little or no wealth created by coal-fired electricity, only damage. Furthermore, he assumes either that Americans would get along just fine with blackouts and brownouts, or that we could put windmills all over the place, which also is another green fantasy.
The more I read Krugman, the more I realize that his view of the "ideal" society is a Third World country. After all, electricity in many Third World places is very scarce and expensive. Moreover, since Krugman also believes that printing money creates a "free lunch" (to use his own words from The Return of Depression Economics), he definitely would be comfortable with the "free lunches" that Third World governments create daily with their printing presses.
Having only given the AER paper a quick read, I cannot comment on it. However, it seems to me from the first reading that the authors assume that electricity really is not very important in the lives of Americans, and since they live in states where only a tiny percentage of electricity is produced via coal, shutting down the power elsewhere wouldn't affect the authors very much.