Talking with the taxman about carbon

MI0001719482 Those of you paying attention will have noticed several approving references here recently to Cafe Hayek, run by one Don Boudreaux (an American libertarian economist, author, professor...). For economics or law, I like it. For GW, it is regrettable; for example, he's keen on George Will.

Aanyway, just recently he ventured into why he oppose[s] a Pigouvian tax on carbon emissions, and the results are unconvincing. Which is a shame, because I would have been interested in a coherent argument. Instead, we're treated to an unconvincing analogy (calling for such a tax strikes me as being akin, say, to homeowners whose homes have been routinely vandalized calling on the vandals to vandalize also the factories that produce the spray paint, sledge hammers, and crow bars used by vandals), and an argument that essentially says "you can't trust a govt, therefore all tax is bad" (I'm not totally opposed to him making such and argument, but then I can't see why you'd restrict it to Pigouvian taxes; it would apply to all tax; but if his argument is all-tax-is-bad then he should say that, clearly). There is one bit that can be argued to make some sense (What good reason is there to believe that the same agency – the state – that has routinely distorted energy, and other, markets... will reliably implement and enforce such an optimal tax?) And indeed, it is rare to hear a discussion of carbon taxes that doesn't rapidly veer off into "of course my favourite cause will not have to pay these taxes". But meh; that's just pols talking so isn't a strong argument against any particular tax.

I commented. Naturally, I was too unimportant to be worth replying to (or, more optimistically, my arguments were irrefutable and so he made no attempt to defend his indefensible post). But Timmy also commented - and DB has approvingly quoted Timmy in the past - and this time DB did feel obliged to reply. But to me his reply is just mush.

[Update: DB has another go, but I think he is just repeating himself; there's nothing new there. Notice, if you do visit, that the quote is somewhat misleading; they are trying to adduce the respected Coase to their side, but actually he has nothing to say on GW; the connection to GW is instead by the far less respectable Bailey.]

[Later update: and, sigh, also puffing nonsense like How the Debate on Climate Change Is Cooling Down, by Marian L. Tupy; as usual you're better off reading RC. And he's still going; and more.]

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"What good reason is there to believe that the same agency – the state – that has routinely distorted energy, and other, markets… will reliably implement and enforce such an optimal tax?"

Because Exxon is so much more reliably your friend than the state?

[In a sense, yes. Exxon reliably provides you the chance to purchase fossil fuels. That is it's "job". Govt's "job" is to provide reliable and efficient rule-of-law; that it doesn't -W]

Don does have a point although I tend to thin[k] it's not a strong one. Essentially, allowing the perfect to be the enemy of the good.

[If he does, he expresses it poorly. I tried to guess at what he meant, above; it appears to be "there should be no taxes". Would that be his "perfect"? And no govt, since he clearly believes that no govt can be trusted. If that his "perfect", then I would say that his argument is uninteresting (I don't believe taht no-tax-no-govt libertarianism is interesting. If his argument is smaller-tax-smaller-govt, then instead of uninteresting it becomes irrelevant). If not, what is the "perfect" he is aiming for? -W]

By Tim Worstall (not verified) on 27 Sep 2017 #permalink

Govt’s “job” is to provide reliable and efficient rule-of-law; that it doesn’t -W

I really think you need to spend some time in Libya, Sudan, or some other country without an effective government. You might even develop an appreciation for the remarkable job modern governments do of providing reliable and efficient rule of law.

I also think you might be a bit confused about Exxon's "job." I think that it's actually to make money for its officers and stockholders - providing fossil fuels, spreading carcinogenic chemicals, and funding public disinformation campaigns are just side effects.

[I agree that formally, the "job" of any company is to make money. However, if you say just that, you've missed a great deal. So within the ecosystem of the economy I think it does make sense to say that it is Exxon's "job" or "function" or whatever. As for govt, yes I agree entirely: looking at various states such as Libya or Russia, you can see how badly govt can perform, and how much of an effect that can have. Indeed, most of Africa's problems, which we try to solve in various ways, are really just consequences of poor govt. And yet you shouldn't be complacent about the USA: it would be an unwise person who described your govt as either reliable or efficient -W]

@#3. Ouch yes, but so far, well designed institutions have survived a villainous idiot at the top.

[It is more than just one idiot. You've had gridlock for some time now, for example. And gerrymandering is rife. You have the Jones act. But I agree that compared to, say, Libya or Syria it is a paradise; don't think I'm trying to suggest that everyone-is-as-bad -W]

IDK. The fact that T got elected and has managed to stay in office this long, in spite of blatant law-breaking, may signal some issues with "reliable and efficient rule of law".

> the same agency – the state – that has routinely
> distorted energy, and other, markets

Guilty, guilty, guilty

"The coal fleet has large stockpiles of coal that help to ensure grid resilience and reliability. We look forward to working with FERC and grid operators to quickly adopt long overdue market reforms that value the coal fleet."

https://www.washingtonpost.com/news/energy-environment/wp/2017/09/29/ri…

By Hank Roberts (not verified) on 01 Oct 2017 #permalink

Reuters:
Britain's first solar power farm to operate without a government subsidy is due to open in eastern England on Tuesday, as a sharp fall in costs has made renewable energy much more economical. Britain needs to invest in new energy capacity to replace aging coal and nuclear plants that are due to close in the 2020s. But it is also trying to reduce subsidies on renewable power generation... The 10 megawatt (MW) solar farm, in Clayhill, Bedfordshire, can generate enough electricity to power around 2,500 homes and also has a 6 MW battery storage facility on site.

[Indeed; see-also https://www.solarpowerportal.co.uk/blogs/inside_clay_hill_the_uks_first… -W]

By Hank Roberts (not verified) on 01 Oct 2017 #permalink