As noted in the earlier post Traction much of the economic mumbo-jumbo we hear is fruitless wanking since it isn't grounded in reality.

I agree with every word of this:

A lot of this talk has an air of socialistic hubris about it. If this line of thinking were correct and the primary impediment to the production of technological miracles was a lack of government leverage, then state-owned enterprises would have been a smashing success. In reality, outside of a relatively narrow range of utility-type activities, they’ve been flops. If the negative externalities associated with carbon emissions were correctly priced, I’m quite sure that would lead people in various places to develop lower emissions cars. But is just sort of pointing at GM’s engineers and telling them “make low-emissions cars!” really going to lead to the intended result?

But the intended result is meaningless. Lower emission cars are of no more value to society than glow-in-the-dark fish. They're a curiosity, perhaps a market opportunity of modest size, but they make no sense. Slightly lowering auto emissions - and it is slight at best - accomplishes nothing so far as climate change is concerned.

This is basic economic literacy.

Perhaps, but it is scientific illiteracy. It does no good to do good economic analysis of fantasy scenarios that blink reality. While pundits and politicians waste their time on non-issues like this real problems multiply. It is only when things go horribly wrong that they rise from their stupors and focus on the carnage.