Tuesday, March 17, 2009

 

Tom Pyle vs. Carbon Tax

Tom Pyle, president of IER (and note: my boss there), has a good op ed on NRO today. I liked it because he acknowledged the pros of a carbon tax (versus cap-and-trade), but still says:
Economists rarely agree on the past, and never on the future. But in the present debate over carbon taxes, a strange consensus is starting to form around the idea that a national tax on carbon is better than installing an economy-wide cap on it.

Maybe so. But being "better" than cap-and-trade doesn't make a carbon tax a worthwhile public investment. Black bears are less dangerous than grizzly bears; neither should be let loose in the subway. Just as we shouldn't let the perfect be the enemy of the good, we shouldn't let the horrendous serve as a justification for the horrible.



Comments:
What a great quote. I think I'll use that some time I hear the ever present apologies for the Bush administration and the Republican Congress.
 
You were doing so well, Bob, until you started to talk about the environment again.

Does the quote you gave really count as a fair acknowledgement of the pros of a carbon tax? And is it really insightful to say that "less than horrible isn't good"?

The "pro" of a carbon tax is that it does something to make environmental costs show up in balance sheets. Deny the existence of an evironmental harm if you wish. Deny that the tax rate is capable of approximating this cost if you wish. But please, acknowledge this benefit somehow.

I'm aware that Pyle is talking about the supposed benefits of a carbon tax compared to C/T, but that benefit counts against it being "horrendous" or "horrible", not just against it being better or worse compared to a C/T.

Now, Pyle does make important points about the problems of unilateral disarmament in an armed world. I raise this point myself quite often. But it's only an argument *against* carbon restriction if you already accept that there are no significant environmental costs to human CO2 emissions, which would make the whole debate moot anyway. Otherwise, it just proves the need to get the rest of the planet on board.

A final point: Bob is fond of bringing up how a) the measures won't be a perfect Coasean bargain, and b) government is dangerous. However, he shows virtually no appreciation whatsoever to how

a) the existing court system doesn't recognize damages to others via the environment; they are either suppressed by fiat or canceled by national sovereignty;

and

b) lack of well-defined property rights in the use of consumable resources is *also* very dangerous, and with equally libertarian justifications.
 
Join the No Pigou Club:

http://nopigouclub.blogspot.com/

There's also a Facebook group:

http://www.facebook.com/group.php?gid=2216061746
 
Silas,
Why should Bob state that carbon taxes "make environmental costs show up in balance sheets." Where are the positive externalities in the balances? Why do you not acknowledge the positive exteralities?

How should courts recognize the benefits to others via the environment?

I don't understand you argument about the lack of well defined property rights to consumable resources? Are you arguing that we shouldn't have property rights to water, oil, land, works of art, air, etc?
 
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