Friday, June 22, 2012

Yes, carbon taxes can work in theory

I've argued a million times that some enviros shot and are shooting themselves in the foot by opposing cap-and-trade so they can get their-way-or-the-highway alternative of the carbon tax.  I'm not enjoying the highway very much.

To balance this criticism, I should say the liberal economics blog NoahOpinion is wrong to say "Carbon taxes won't work".   Had he said "carbon taxes are unlikely to be politically achievable in the short to moderate term at levels that are sufficient to change behavior, and other approaches deserve prioritization of political capital," then he'd have a worse title but better argument.  His problem though is that he mushes a political argument into what purports to be an economic analysis.

Noah briefly tries to unmush the politics but doesn't do it.  He mentions the political difficulty and then says that's not an argument that economists should use.  He says the solution is technology development, standard Breakthrough Institute stuff (thankfully minus their prioritization of nuclear uber alles).

So.  Even if you think we really can't get 90% GHG reductions with current technology, a debatable but unimportant argument given the decades that we're talking about, then anything that incentivizes a move away from carbon will assist new technological development.  Therefore a theoretical carbon tax, especially a substantial carbon tax, will provide some of that incentive that he wants.

As for his other points, coordination is difficult, but Europe is moving, Australia has a carbon tax, and other countries are making efforts.  Carbon tariffs on imports seem like an important solution to the coordination problem, although I'm not clear to what extent that raises World Trade Organization issues.  Noah says the pointy-headed intellectuals might not want tariffs, but that hardly matters politically.

His argument that carbon taxes can be revoked and therefore have little effect is another political argument.  If you assume the political strength exists to get them started, my guess is that worsening climate impacts over time will only reinforce that resolve.  Finally his argument that a small reduction does almost nothing is a misstatement of his previous argument about temporary reductions.  If he wants to make a scientific argument instead, go to it then.

It all comes down to politics.  I'm happy to support a carbon tax, but will also support cap-and-trade that seems to get a lot farther politically.  It passed the full House of Representatives in 2010 and versions have passed Senate committees.  If Noah's ideal technological support legislation had reached similar levels before being stopped, then I'm sure he'd call that substantial support, not something that "went nowhere fast".

Of course, cap-and-trade and carbon taxes will go nowhere on the national level barring a natural disaster for at least a few years.  Support for technology is fine, but it shouldn't be viewed as the only possibility on an indefinite basis.

UPDATE:  I should have mentioned that I generally like the other posts at Noah's blog, but of course I have to complain about the one where I don't like the free ice cream.


cce said...

A carbon tax is part of AEI's deficit reduction plan, so it's at least conceivable that conservatives could support it. However, I predict that if Obama's were to embrace elements of their plan in a second term, we'd come to find out they they are against a carbon tax and were always against a carbon tax a'la Heritage's individual mandate.

Anonymous said...
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chek said...

For the purposes of C.E.'s 'argument' (or more accurately 'stance') I'll assume that anyone who likely takes the inexorable science into account is merely promoting reality's wel known 'liberal' bias.

dbostrom said...
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J Bowers said...

CE, Pinochet's dead. Well, I'm guessing he'd be left wing in your eyes.

a_ray_in_dilbert_space said...

Wow! Another information free post by CE!

Quick, call Reuters!

More and more, I am thinking that if a solution is to arise, it will be technological rather than political or economic. Politics in this country is irreparably broken. The economy is exploitative and unsustainable.

In principle, either a carbon tax or cap and trade could work. In reality the stupid half of the population won't let them, because then they'd have to admit that sometimes the invisible hand needs a hand.

Brian said...

I've deleted CE's comment that the others are mentioning. Obscenity directed at fellow commenters. It gets trashed.

David B. Benson said...

British Columbia has some form of carbon tax.

Anonymous said...

I've deleted CE's comment that the others are mentioning. Obscenity directed at fellow commenters. It gets trashed

Yes Brian because you have two standards. When the obscenity is directed at me you leave it be. I actually used the EXACT same phrasing that was left on your other thread.

I'll leave you to your echo chamber and your two sets of rules.

Celery Eater

Brian said...

Well, CE's right. I didn't see that obscenity buried deep in another comment thread, in an otherwise substantive comment.

To summarize CE's comment that I deleted, he used an obscenity directed at fellow commenters, very similar to but not exactly like one directed at him. There was no substantive component of his comment.

Now would people please move the verbal knifeplay up a tiny notch in quality.

Anonymous said...

Funny how you commented after that one, yeah right whatever Brian.

There is no content here just abuse, lies, a complete lack of integrity, respect, and a herd mentality.

I'm out, which will make y'all very happy.

I need more honest grounds and people that have some integrity and honesty even when they diagree.

Should rename to Rabett Hole as that is what this place is now.

Celery Eater

Steve Bloom said...

Then it's WUWT for you, CE. They have and/or lack, as appropriate, all of the qualities you mention. Just ask them!

Anonymous said...

Actually, Australia isn't bringing in a carbon tax. It's an emissions trading scheme (see here for an explanation) and with a fixed floor price of $15, rising four percent per year until 2018 when the market sets the price without constraints. Also, with Korea, South Africa, Mexico and Italy recently announcing plans to introduce emmissions trading or carbon taxation schemes, there are now 34 countries with carbon pricing systems.


EliRabett said...

CE you made your point, it was accepted, move on. A sore winner is much worse than a sore loser.