The Stern Review Report on the Economics of Climate Change has made a bit of a splash lately. Jason Kottke points to the recent New Yorker article:

At the launch presentation of his report, Stern pointed out that global warming is a textbook case of an “externality,” in which the prices people pay for gasoline, electric power, and other energy products don’t reflect their true costs, among them the impact of greenhouse gases. “Our emissions affect the lives of others,” he explained. “When people do not pay for the consequences of their actions, we have market failure. This is the greatest market failure the world has seen.”

Well, no, it’s not a “market failure”. The lack of consequences for unethical actions is a failure to enforce law and property rights, i.e. failure to govern. I have no objections to the science of climate change, as far as I understand it. If only our common grasp of political economics were as robust! And while we’re talking about the “textbook case” of an externality–read up on why externalities are not a case of market failure [pdf]. See also the fallacy public goods [pdf]. End soapbox.

Bonus material: Here’s the BBC article and summary of the Stern Report. And of course, the Wall Street Journal has a couple responses. Have a great day.