The August issue of the prestigious American Economic Review carries an article estimating the social costs of air pollution from various industries. (The gated link to the published article is here, while a draft of the article is available here for free.) Naturally, pundits such as Paul Krugman jumped on the results as proof of how "scientific" is the case for more government intervention. Yet as we'll see, the new paper by Muller et al. does no such thing. As usual, Krugman & Co. focus exclusively on theoretical market failures, and ignore the government failures staring us in the face on a daily basis.
