Is Government Action Worse than Global Warming?

Why policy nihilism may be the only rational response to climate change

Will government solutions to global warming be worse than global warming itself? Remember that man-made global warming is a negative externality that occurs when burning fossil fuels release carbon dioxide into the atmosphere. Economists define negative externality as a spillover from an economic transaction that harms parties not directly involved in the transaction. In this case, the carbon dioxide released into the atmosphere is thought to be boosting temperatures, raising sea levels, and having other effects on the climate that people must involuntarily pay to adapt to (more air conditioning, switching crops, and so forth). Thus, goes the argument, the price of fossil fuels does not reflect the full cost of consuming them. 

Ideally, once the full costs of man-made global warming are calculated, consumers, businesses, governments, and international agencies can adopt policies to take such costs into account. The two policy options generally discussed in this light are cap-and-trade carbon markets and carbon taxes. The idea behind carbon markets is that governments ration how much carbon dioxide and other greenhouse gases may be emitted by setting an overall limit on emissions. Emitters are then required to have a government-issued permit for each ton of carbon dioxide they release into the air. The total amount of permits cannot exceed the cap. Emitters that need to increase their emission allowance must buy permits from those who emit less, creating a market for carbon dioxide emissions permits. The goal of such a rationing scheme is to create a market that sets a price on the negative externalities imposed by burning fossil fuels.

Similarly, imposing a tax on emissions aims to correct the negative climate externalities produced by burning fossil fuels. A carbon tax is a Pigouvian tax (after the economist Arthur Pigou) levied on a market activity to take into account the negative externalities of that activity. In Pigou's formulation, negative externalities occur when the social cost of a market activity exceeds the private cost of the activity, which is another way of saying that the activities of some people are imposing uncompensated harms on other people. The result is that markets over-supply a good—in this case, the energy produced from fossil fuels. The goal is to set a tax equal to the cost of the negative externality, thus nudging markets to produce efficient amounts of a good.

The laudable goal of both carbon markets and carbon taxes is basically the same: make polluters pay for the costs they involuntarily impose on others. So all that remains is to calculate the costs and let policy makers impose either the appropriate markets or taxes. The problem is that in the real world things are never as simple as economic theory would have it. Estimates of the potential damage caused by global warming range widely, depending on estimates of how the climate is likely to react to extra carbon dioxide, future economic growth, and, most crucially, the discount rate. 

That term refers to the fact that most people prefer to have a dollar today than a dollar a year from now. This means that current dollars are worth more than future dollars; that people discount the value of future dollars. In other words, a person might be willing to forego a dollar now, but only in exchange for more than a dollar next year. From this insight, economists have developed the concept of discount rates. Let's say someone is willing to forgo a dollar today in exchange for $1.10 next year. The discount rate would be 10 percent. So here's the question that bedevils those trying to calculate the future damages caused by climate change: How much is a dollar in 2100 worth in terms of dollars foregone today? Let's just say that experts have a wide range of opinions on what the proper discount rate should be.

What about the damage we can expect from man-made global warming versus the costs of taking action? According to one calculation performed by Yale economist William Nordhaus, the optimum path toward cooling the climate using a carbon tax would cost $2.2 trillion and reduce climate change damage globally by $5.2 trillion over the next century. His calculation implies a globally harmonized carbon tax that rises in constant dollars from about $35 per ton in 2010, to $90 per ton in 2050, eventually reaching $200 per ton in 2100. In his recent comprehensive review of the literature on economic impacts of future climate change for the Copenhagen Consensus Center, Dutch economist Richard Tol calculated that the optimal policy would be imposing the equivalent of a $0.50 per ton carbon dioxide tax rising at 5 percent per year for the next 90 years. This policy would yield $3 in benefits for every $2 spent. "Available estimates suggest that the welfare loss induced by climate change in the year 2100 is in the same order as losing a few percent of income," notes Tol. "That is, a century worth of climate change is about as bad as losing one or two years of economic growth."

On the other hand, there are a few studies that suggest the benefits of early steep reductions in carbon emissions will far outweigh the costs. A 2006 study by British economist Nicholas Stern found that spending 1 percent of GDP annually to achieve massive early reductions in carbon dioxide emissions is justified. Stern has now upped his estimate to 2 percent per year. Many economists, however, argue that Stern used an unrealistically low discount rate of 0.1 percent to achieve his results. A 0.1 percent discount rate implies that someone would forego $100 today in order to obtain $100.10 a year from now.

Looking at recent reports by the Pew Charitable Trusts and the activist group the Natural Resources Defense Council, U.S. GDP in 2100 is projected to be between 0.6 and 3.6 percent lower than it would otherwise have been. Assuming the $14 trillion U.S. economy grows at 2.5 percent per year, GDP in 2100 would be $130 trillion. If climate change damages push GDP 3.6 percent below what it would otherwise have been that means that GDP in 2100 would be about $125 trillion, or $5 trillion lower. That's not nothing, but the loss is more than double ($12 trillion) what would occur if U.S. economic growth were depressed from 2.5 to 2.4 percent per year between now and 2100.

Clearly, econometric models tell us that implementing smart policies could avoid some damage from climate change. But whether or not the benefits outweigh the costs depends entirely on the policies being optimally adopted. But will governments and international agencies be able to sustain smart policies over the next century? The tribulations of the European Union's cap-and-trade scheme and the current political jockeying over the 1,468-page Waxman-Markey climate change bill in the U.S. Congress are not promising. On the international level, rapidly developing countries like China, India, and Brazil are refusing to accept limits on their greenhouse gas emissions.

Along similar lines, numerous econometric models project that while climate change will have relatively minor effects on developed countries it will significantly harm poor countries. One proposed policy soluton is to have rich countries that emit a disproportionate share compensate poor countries. While this idea might seem appealing to some, one must also consider the sorry 50-year record of wealth transfers in the form of foreign development aid. As development economist William Easterly has argued, most of the $2.3 trillion in aid that rich countries have poured into developing countries over the past half century has been wasted. Is there any reason to think that trillions in climate change aid would be any more effectively managed?

Man-made global warming may simply be a negative externality for which the transaction costs are too high. In other words, any benefits achieved from trying to mitigate global warming will most likely be swamped by the costs of distributing the corporate welfare used to buy the political acquiescence of various industries. As much as one might hope to implement good public policy to deal with the problem, policy nihilism might be the only rational response to global warming.

Ronald Bailey is Reason magazine's science correspondent. His book Liberation Biology: The Scientific and Moral Case for the Biotech Revolution is now available from Prometheus Books.

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  • ||

    Even without reading it I can say categorically: YES

  • Nipplemancer||

    imagine all the CO2 that would be sequestered if we dumped congress down a deep mineshaft and sealed it.

  • ||

    "imagine all the CO2 that would be sequestered...."

    Toss in some plastics and cover with a mile of rock. In 1million years we can harvest the oil, if we don't intentionally forget where we buried those dinosaurs.

  • Tomcat1066||

    To err is human. To really fuck shit up, you need government intervention.

  • hammeredHead||

    I am more worried about an ice age especially with some scientists contemplating crazy strategies such as adding reflecting particles in the atmosphere to combat a nonexistent problem.

  • Tman||

    if we dumped congress down a deep mineshaft and sealed it.

    Wait, we can do this? How soon can we get this mineshaft ready?

  • Warty||

    Make sure there are no gaps!

  • ||

    The idea that a government cure could be worse than the climate change disease is a concept that teh vast majority of environmentalists cannot grasp. "We have to do something! Anything! Now!" is their mantra.

  • Imperialist||

    I am more worried about an ice age especially with some scientists contemplating crazy strategies such as adding reflecting particles in the atmosphere to combat a nonexistent problem.

    Nuclear Winter is the solution to AGW. It's just a matter of prioritizing targets.

  • Kevin||

    Any of these proposed schemes will disproportionately affect the poor, because what they are trying to do is purposefully lower the standard of living for everyone. That's why China and India aren't on board. They've just figured out how to raise their standard of living. Why would they want to fuck that up on purpose?

    In America, we are so successful, some of us have time to sit around and think of ways to make ourselves less successful.

  • Neu Mejican||

    Is global warming worse than what governments are likely to do about it?

    Yes.

  • Nipplemancer||

    Yucca Mountain was supposed to be used for nuclear waste, since they're not gonna use it for it's intended purpose....

  • ||

    "Is global warming worse than what governments are likely to do about it?"

    "Yes."

    How do you know, NM?

  • Ben Kalafut||

    I'm always wary of Bailey, ever since he confessed that his choosing of a position on a scientific question, his maintenance of a contrarian position on AGW long past the date when such things lapsed into denialism, wasn't based on the state of the science but rather because if the scientific mainstream were correct it'd mean tough policy choices for humanity. You just don't do that. We scientists consider that dishonesty and everyone else should too.

    For a while Bailey seemed to have made the micron-sized jump from "it's not happening" to "it's happening but let's act like it's not". I still think he's working backwards from a pre-determined conclusion--the reasoning by which he arrives here at inactionism is patently hand-wavy--but must say that his move away from pretending Lomborg is the only one doing cost-benefit analysis is yet another step towards honesty.

    Maybe in another five years he'll be a good objective science and science policy journalist. This piece represents an improvement.

  • Warty||

    We scientists

    We scientists are a pompous lot, ho ho! I say, all this derision has awakened my animal appetites, as it were. Jeeves, fetch me another native boy to sodomize, and tarry not, or I shall have you flogged again!

  • Rich||

    How much is a dollar in 2100 worth in terms of dollars foregone today?

    That's easy: just take the value of a 2050 dollar and then account for 50 years of variable inflation.

    What if policy implementers were to tighten up their confidence by swearing on the lives of their own progeny? Probably too "local" for the global thinkers.

    And, Warty, nice Dr. Strangelove reference.

  • Ben Kalafut||

    It be nice to see the think-tanks cover the "Green Tax _Shift_" promoted by many if not most supporters of the carbon tax, as well as alternate permit schemes (property-right-like permit per mass/year instead of ration-like permit per unit mass), in their analysis. And I'd guess that Bailey would prefer both of these to the ration-like cap-and-trade and the non-revenue-neutral carbon tax discussed by most of those cost/benefit works cited.

  • Warty||

    I just meant that we need to seal up the mineshaft really tight, Rich. We don't want the stench of Congressional corpses disturbing our bacchanalian idyll on the surface.

  • Lester Hunt||

    Thank God someone is asking the right question: Is the cure worse than the disease?

  • Sam Grove||

    ...caused by man-made global warming...

    So have they found the CO2 warming signature predicted by AGW theory?

    Skeptical minds want to know.

  • Warty||

    The right question is this: which is the greater threat, global warming, or a zombie-shark alliance?

  • ||

    Economists define negative externality as a spillover from an economic transaction that harms parties not directly involved in the transaction. In this case, the carbon dioxide released into the atmosphere is thought to be boosting temperatures, raising sea levels, and having other effects on the climate that people must involuntarily pay to adapt to (more air conditioning, switching crops, and so forth).

    Economists define positive externality as a spillover from an economic transaction that benefits parties not directly involved in the transaction. In this case, the carbon dioxide released into the atmosphere is thought to be boosting temperatures, raising sea levels, and having other effects on the climate that people involuntarily benefit from (less heating oil, longer growing seasons, increase of natural fertilizers, access to new mining opportunities and so forth).

    I'm just saying that these need to be in the equation as well.

  • ||

    There will never be a zombie/shark alliance, dipshit. Take your disingenuous questions over to Tony's website, OK?

  • Warty||

    YOU DIDN'T LISTEN, EPI! YOU DIDN'T LISTEN!!!

  • Anonymous||

    tl;dr

    Yes. Next question.

  • ||

    "There will never be a zombie/shark alliance..."

    Prejudices greater than these have been overcome before, for the sake of uniting against a greater evil.

    I, for one, welcome my shark brethren to join us zombies in creating a world full of brains-for-the-eating.

  • ||

    The only open-minded zombie is one that has had its head ripped open by another zombie.

  • ||

    Is global warming worse than what governments are likely to do about it?

    This question assumes something not in evidence, namely, that we can affect the climate.

    Now, I'm sure with determined enough geo-engineering, we could probably get the needle to twitch, for a little while. But lets not assume that the social engineering schemes being trotted out either can, or are really intended to, affect the climate.

  • ||

    Gaping heads wounds happen. Its just part of the job.

  • ||

    Everyone knows that all zombies are anti-shark bigots. Stop pissing down my back and telling me it's raining.

  • Warty||

    The only open-minded zombie is one that has had its head ripped open by another zombie.

    What about Bub? Or Big Daddy?

  • ||

    Hey. Wait a second. I agree that a shark-zombie alliance is impossible, but. . .what about shark zombies? Not an alliance, but sharks that are, in fact, zombies? Slow moving, of course. Fast-moving zombies are fictional.

  • ||

    There are no shark zombies. Just like sharks don't get cancer, they are unable to be zombified. Jeez, I thought you were smarter than this, ProL.

  • ||

    You fool! You naïve fool!

    Whatever you do, don't swim with your brain exposed.

  • Jerry||


    Fast-moving zombies are fictional.


    Tell that to the bike courier I ran over on my way to work.

  • ||

    Very well: Fast-moving zombies are fictional except for Jerry.

  • Tony||

    The problem is that in the real world things are never as simple as economic theory would have it.



    That's rich coming from a libertarian.

  • ||

    Tony, are you a fast zombie or a slow zombie?

  • Xeones||

    There is no shambling corpse slower than Tony.

  • 24AheadDotCom||

    I think JimGillespie gave the best overview of the libertarian position on global warming.

  • Tony||

    Ron continues to prefer studies that underestimate the impact of climate change and overestimate the cost of mitigating it. Through all the numbers you get one consistent belief: polluting industries shouldn't have to pay for the damage they do to the environment. But they especially shouldn't have to pay because the damage is so great it would be really expensive. In the end it's just as much corporate welfare as anything else.

  • ||

    So that settles it: Tony is a slow shark zombie.

  • ||

    It is apparent that the confusing science of "global warming" is being used, or rather harnessed, in an effort to advance a social engineering agenda. An agenda whose outcome is compatible with the conveniently manipulated science of "man-made" global warming. The cogs and gears of these two machines mesh at intended points so as to accomplish a desired result. In the years since the global warming hypothesis was announced, there have been many observed global variations and fluctuations in temperatures. Many of meteorological behaviors have been downward trends. In some instances these cooling trends have been attributed to global warming, but, in more and more occurrences of these temperature changes, the new term is climate change.
    Now, we have language being bandied about to hoping to affect change in the behavior of a millenia old weather machine we clearly have a scarce comprehension of. This is akin to being concerned about a stream's filling in a lake where we wonder if we can cause the water to somehow run back up hill so we will not have move from the edge of the lake.
    Following this confusing conversation we eventually enter the arena of public policy. This realm of social engineers and likeminded policy makers is the recipient of the confusing global warming/climate change science. In this community a collection of over educated individuals see society in general as perpetrators of crimes against nature in a peculiar psychology which borders on religion. More troublesome (and I would submit dishonest) is the idea that atonement for this offense must be in the form of some monetary penalty. Typically a penalty in the form of taxation and related revenues to government coffers. The icons of this religion, Priuses, windmills and solar panels are held up as holy grails, or relics, of sorts. Objection or resistance to these holy objects is viewed as the obtuse or blasphemous even depending upon one's political standing. One notable hypocrisy is the wind generator project in Massachusetts' Nantucket Sound.
    Until the global warming movement eschews the label of a movement and the quasi religious fervor bordering on cult behavior, it cannot be allowed to further influence public policy, especially in the context of spending and taxation. People must resist the temptation to follow the hysterical admonitions of this minority of global disaster or destruction. People must as well demand that this faction represent the science of their cause responsibly and not as the priests of the dark ages who were the only literate people able to read and interpret the bible as the word of God. These people need to be compelled to produce solutions and not allowed to decide what others should do. These global warming zealots have many ideas how the public and commercial enterprises can change, but, these same people themselves offer no real solutions in the form of affordable technology or practices which are of practical use to the public. Until these same people are denied access to the money which fuels their persistent proselytizing, we are going to be continually subjected to the actions of the policy makers who are beholden to them.

  • Douglas Gray||

    A new storm and a new red spot on Jupiter has resulted in climate change. The temperatures are expected to change by as much as 10 Fahrenheit degrees at different places. At least close to the new spot and to the equator, nothing less than global warming is expected there. The climate of Neptune - is changing. In Geophysical Research Letters, vol. 34 (2007) it says that the trends on Neptune reveal suggestive correlations of brightness of Neptune with the temperature trends on Earth.

    Global warming was detected on Triton, Neptune's largest Moon.. Between 1989 and 1998, the temperature jumped by 5 percent on the absolute (Kelvin) scale. The same relative increase would raise the Earth's temperature by 22 degrees Fahrenheit in 9 years.

    On Saturn the temperatures in the S. Polar region suddenly jumped by 3-5 Kelvin degrees.

    There is global warming on Pluto. Pluto's atmospheric pressure has tripled in 14 years, and the associated increase of temperature is estimated to be around 3.5 Fahrenheit degrees, despite the motion of Pluto away from the Suns.

    Between 1975 and 2000, Mars warmed up by 0.65 Celsius degrees, much faster than Earth.

    It is a mistake for environmentalists to concentrate on global climate change, as their are too many variables besides the man-made ones. They would be better off concentrating on specific problems such as over fishing and degradation of coral reefs. Even there, government intervention has yet to prove effective.

  • ||

    So you've come around to the truth. At last.

    That's slow-moving, landshark zombie, of course.

  • ||

    (knocks on ProL's door)

    "CANDYGRAM"

  • ||

    Exactly.

  • ||

    Ron continues to prefer studies that underestimate the impact of climate change and overestimate the cost of mitigating it.

    To my knowledge, the studies by Nordhaus, Tol, and the like are all based on IPCC determinations. What did you think they are using?

    Through all the numbers you get one consistent belief: polluting industries shouldn't have to pay for the damage they do to the environment. But they especially shouldn't have to pay because the damage is so great it would be really expensive.

    No. They -- which, of course, means we the consumers of said production -- shouldn't have to pay because the positive externalities of the increased wealth for humanity outweigh the negative externalities of damage to the environment.

  • Chad||

    Ron, here is something you (and indeed, just about everyone) misses:

    What happens if we overshoot the correct carbon tax, or equivalently, under-shoot the optimal number of permits?

    That's pretty simple in economic terms: We would incur a dead-weight loss relative to the optimal scenario. However, we would also bring in extra tax revenue (assuming the permits were auctioned, as they should be). This offsets the need for other taxes, all of which have substantial deadweight losses themselves.

    We should not set the carbon tax (or C&T) at the point where polluters are paying exactly the burden they put on society. We should be targeting the point where the deadweight loss from overly-high carbon taxes equals that of other forms of tax that it would be replacing (income, sales, etc) on a per dollar of revenue basis. Since these forms of tax have deadweights on the order of 20% (ie, they cost society ~$1.20 for every dollar they bring in), there is a lot of room to over-shoot the carbon tax and still be bringing revenue into the government at a cheaper rate than other taxes do.

    In any case, the proper response to this problem is the tax or C&T (which are economically identical), set at our best-guess estimate plus a little. That number is not zero and not even close, which is the status quo. All honest libertarians should be calling for a carbon tax immediately.

  • Anonymous||

    What's funny is seeing how support for such legislation tracks really well the statism in the arguer.

  • Tony||

    MikeP,

    The actual costs of 'climate change nihilism' are impossible to predict, and very likely to be much, much more than anyone can calculate now. The expected impacts of doing nothing are nonlinear and far beyond what humans have experienced in modern times, and indeed millenia. It's just flat false that first-world countries will not feel major negative effects.

    My opinion is that economists should not be the experts you go to on this subject. Nordhaus in particular has a long history of monetizing the planet and concluding it's not worth saving. Economists don't exactly have a stellar reputation of late for predicting things.

  • ||

    Tony,

    Got a cite for your far beyond scientific consensus position?

  • Anonymous||

    Economists don't exactly have a stellar reputation of late for predicting things.

    joe was much more challenging, in that his intellectual dishonesty had a clear threshhold over which he had no response but silence or fuming rage. This guy, he's begging us to turn phrases around to show that the converse argument, which he's supposedly supporting, is even more ridiculous than the ridiculous strawmen he's arguing against.

    And yet, I still can't tell whether it's serious.

  • ||

    The actual costs of 'climate change nihilism' are impossible to predict,

    Exactly right, so far.

    and very likely to be much, much more than anyone can calculate now.

    And yet, within the very same sentence, Tony does what he just proclaimed to be impossible.

    You may discount the rest of his comment accordingly.

  • Tony||

    R C Dean,

    I didn't make a single prediction, I said that the consequences of doing nothing are very likely to be catastrophic beyond anything any human alive in the last 1000 years is familiar with.

    A year ago mainstream economists held as an article of faith that a housing bubble was impossible. All I'm asking is that we put a little more trust in scientists on this question of science and a little less on economists.

  • ||

    My opinion is that economists should not be the experts you go to on this subject.

    My opinion is that scientists who base their work on scenarios where the environmentally conscious world a century hence is a third less wealthy than the high-growth world, but who don't recognize in the slightest the awesome opportunity cost represented by that statement, have little standing to dictate government policy for generations to come.

    All I'm asking is that we put a little more trust in scientists on this question of science and a little less on economists.

    Then why don't you believe the scientists? They wrote it all down for you in the IPCC AR4...

    I didn't make a single prediction, I said that the consequences of doing nothing are very likely to be catastrophic beyond anything any human alive in the last 1000 years is familiar with.

    ...and they wrote nothing at all that looks anything like this.

  • ||

    Tony, "[a] year ago" anyone who thought "that a housing bubble was impossible", wa in a coma.

    Many economists were warning of a housing bubble for years, just as they warned about the earlier stock market bubble and the yet earlier tech bubble.

    I'm astonished at what a short memory you have. Or perhaps you're just very young.

  • B S Kalafut||

    So have they found the CO2 warming signature predicted by AGW theory?

    Skeptical minds want to know.


    Skeptical minds already know, because skeptics look this sort of thing up in the IPCC report or Google Scholar rather than asking the question on Reason Hit and Run and expecting everyone else to do it for them.

  • ||

    I didn't make a single prediction, I said that the consequences of doing nothing are very likely to be catastrophic beyond anything any human alive in the last 1000 years is familiar with.



    Whoa, worse than Black Death. See, it's bullshit like that that makes you so ignorable.

    Well except for entertainment purposes that is.

  • Craig||

    ...suboptimal government policy.

    Isn't that redundant?

    What if global warming is a net benefit to the economy, though? Do we still levy fines or taxes on those who contribute to it (carbon emitting polluters), to help alleviate costs to those who suffer from it (people with coastal property that ends up underwater, literally and figuratively)? Doesn't that let those who benefit from global warming (farmers who find their fields more productive, or property owners on the new seashore) become free riders?

    And if global warming is occurring, how do we calculate how much of the increase is caused by polluters, vs. how much is caused by solar variation?

  • Jim||

    I like Chad's idea that we could displace other taxes with carbon taxation; that in principle we could create incentives to reduce carbon usage and still leave net taxation drag on society unaffected (and presumably not impact global economic growth). That said, experience suggests that the end result would just be more money available for the governments of the world to waste and precious little would get back to the taxpayers. Any ideas on how we could actually get politicians to agree to 'no net tax increase' would be appreciated....

  • Momentary Georgist||

    Dividends equally shared with each individual in the jurisdiction. That's how to keep it from being a tax to engorge government.

  • ||

    I said that the consequences of doing nothing are very likely to be catastrophic beyond anything any human alive in the last 1000 years is familiar with.

    I read this again, and I am dumbfounded. Are you trolling? Or are you really serious?

    Take China, which has been the victim of truly mind-boggling loss of life from earthquake and flood over the past centuries. Both of these sources of destruction are fantastically reduced by (a) wealthier people who can build houses that don't fall on them and (b) more industrialized people who can leave the lowland farms to machined agriculture and get better jobs in cities outside of flood plains.

    Cheap fuels are the basis for those improvements. Denying the poor that path to wealth is coercing them to continue to suffer the ills of past millennia that others in the world have left behind.

  • jester||

    Diamonds. Everybody likes diamonds. Let's take all the excess carbon and turn it into diamonds.

  • ||

    Tony does it again, while denying what he is doing:

    I didn't make a single prediction, I said that the consequences of doing nothing are very likely to be catastrophic beyond anything any human alive in the last 1000 years is familiar with.

    Tony, do you honestly not understand that saying "the consequences of doing X are very likely to be Y" is, in fact, a prediction?

  • ||

    You keep using that word. I don't think it means what you think it means. There is no consensus whatsoever on any catastrophic consequences to whatever warming there is or may be in the future. In fact, what consensus there is appears to be very narrow and limited to the recent past. No hard science on the future, no hard science on the scale of human contributions, no hard science on what, if anything, we can do to counter any form of climatic change.

    If we get good, hard evidence or even a strong indication that cataclysm will result from a certain activity, okay, we can talk about emergency measures, provided that those measures are directly related to the problem at hand. Like if an asteroid is heading towards the Earth. However, in the case of the AGW scare, I find it hard to believe that (1) we're going to see anything truly devastating and (2) that we wouldn't be better served by trying to adapt to whatever changes may come than in trying to take dramatic steps to control nature, which is likely a fool's errand.

    This is not to say that I wouldn't mind some weather control. It's entirely too hot in Tampa right now.

  • ||

    Will government action be worse than global warming? I guess the answer is it depends.

    If government action is like the boon doggle cap and trade currently being looked at, then maybe. If government action is a net zero carbon tax, then almost certainly not.

    What's actually going to happen? I think because of the shrillness on the right, and the refusal to really debate and make policy, that a bill will like the current one will probably pass with the addition of enough pork.

    But maybe that's easier then trying to explain to brain dead consituents the finer points of a net zero tax.

  • Chad||

    Jim | September 8, 2009, 6:04pm | #
    I like Chad's idea that we could displace other taxes with carbon taxation; that in principle we could create incentives to reduce carbon usage and still leave net taxation drag on society unaffected (and presumably not impact global economic growth). That said, experience suggests that the end result would just be more money available for the governments of the world to waste and precious little would get back to the taxpayers. Any ideas on how we could actually get politicians to agree to 'no net tax increase' would be appreciated....


    I am glad we can agree that carbon taxes are far preferable to income, capital gains, or sales taxes. Too bad so many libertarians are caught up in an all-or-nothing fantasy world of "all taxes are bad" and fail to take this huge opportunity to implement a tax that is, even in the worst case, far better than what we are currently using.

    Kroneborge | September 8, 2009, 6:21pm | #
    Will government action be worse than global warming? I guess the answer is it depends.

    If government action is like the boon doggle cap and trade currently being looked at, then maybe. If government action is a net zero carbon tax, then almost certainly not.


    I agree - a net zero carbon tax would be the perfect policy....if the budget were balanced. It isn't. Deal with it.

  • ||

    I am glad we can agree that carbon taxes are far preferable to income, capital gains, or sales taxes.

    This is not at all obvious. If you tax carbon while lowering taxes on labor or capital, you raise the price of carbon relative to labor and capital. Given that so very many uses of carbon fuels free up labor and capital to do higher valued work, it isn't clear that taxing carbon doesn't produce a greater deadweight burden on the economy.

    There is a reason that modern economies move away from resource taxes and toward, if you will, "human" taxes. The latter cost the economy less.

    Just to take another example, would you say that reducing income and capital taxes by half and obtaining that revenue by applying the equivalent total tax on water would make the economy no worse off?

  • ||

    Actually, I think the same thing would probably apply to water, although less so because the hydro cycle is replensihable.

    You would get the same benefits because it would encourge people to use oil (or water) more efficently, thus freeing up even more resources for other uses.

    If it was not possible to use those resources more effiently, then people would be exactly the same off.

  • nobody special||

    Claim: Other planets are warming

    Skeptics' Assertion

    Studies show that Mars, Neptune, Jupiter, Triton and Pluto are all warming: NASA shows that the Martian South Pole's ice cap has been shrinking for three summers in a row,[47] a new storm and a new red storm on Jupiter strongly suggests temperature change,[48] a new study suggested that the brightening of Neptune correlates with the Earth's temperature,[49] and MIT research found that Pluto is experiencing global warming (as evidenced by a three-fold increase in the planet's atmospheric pressure during the last 14 years)[50] and that Neptune's moon, Triton, is also experiencing warming that is causing part of its surface of frozen nitrogen to turn into gas.[51] Fred Thompson in 2007 said these trends have "led some people, not necessarily scientists, to wonder if Mars and Jupiter, non-signatories to the Kyoto Treaty, are actually inhabited by alien SUV-driving industrialists who run their air-conditioning at 60 degrees and refuse to recycle."[52] Global warming skeptics say this interplanetary warming strongly points towards the sun or some other cosmic force being the cause of the recent global warming on Earth.



    Rebuttal

    There are several major flaws in the skeptic's assertion. First, only 6 planets or moons out of the over hundred bodies in the solar system to have experienced observed warming; notably, Uranus is cooling.[53] Additionally, solar activity is not increasing, confirmed by direct satellite measurements that find no rising trend since 1978[9], sunspot numbers which have leveled out since 1950,[10] the Max Planck Institute reconstruction that shows irradience has been steady since 1960 [11], and solar radio flux or flare activity which shows no rising trend over the past 30 years.[12]. Moreover, climate change on the other planets is fairly understood: Mars' climate is primarily driven by dust and albedo, not solar variations, and there is little empirical evidence that Mars is warming;[54], Neptune's orbit is 164 years so current brightening is a seasonal response,[55] Triton's warming is due to the moon approaching an extreme southern summer, and Jupiter's storms are fueled by the planet's own internal heat.[56]


    Taken from:
    http://www.sourcewatch.org/index.php?title=Climate_change_skeptics/common_claims_and_rebuttal

  • ||

    If it was not possible to use those resources more effiently, then people would be exactly the same off.

    Actually, if there are no efficiencies to be found in using the resource, then people are better off after the net-zero tax than before.

    The extent to which a tax on something produces a deadweight loss is determined by how elastic the demand for that thing is. The more elastic the demand, the greater the loss to the economy due to the tax.

    So the more possible it is to use a taxed good more efficiently, the less efficient the tax is on the economy.

  • Neu Mejican||

    There is a reason that modern economies move away from resource taxes and toward, if you will, "human" taxes. The latter cost the economy less.

    So you support taxing income over taking material throughput?

    Just spit balling here, but wouldn't you except more unskilled labor to be needed in the carbon taxing economy? Would these additional jobs add or reduce value if we assume that those without the skills to participate in the economy because they were replaced by a carbon-using machine could now participate? Would their productivity be a loss or a gain to the economy? Assuming the same amount of work gets done, is a team of guys reducing and loading a pile of rubble more or less beneficial to the economy than the one guy and his BIG MACHINE doing the same work. Wouldn't the economy benefit more from the spending of the lower waged work team than from the expensive machine operator's spending (since they would spend a greater percentage of their income)?

    Serious question.

  • ||

    Assuming the same amount of work gets done, is a team of guys reducing and loading a pile of rubble more or less beneficial to the economy than the one guy and his BIG MACHINE doing the same work.

    It is far less beneficial. The one guy and his big machine free those workers from their lower valued task, allowing them to do something else that is higher valued.

    Not only are there more workers available to do other, likely more valuable work, the consumer has more money in his pocket to spend on other things if he can buy from the cheaper one guy and his machine.

    Thinking that more people doing work is better than fewer people doing the same amount of work is a profound example of the make-work bias that economists have had to fight for centuries.

  • Tman||

    Assuming the same amount of work gets done, is a team of guys reducing and loading a pile of rubble more or less beneficial to the economy than the one guy and his BIG MACHINE doing the same work.


    That reminds me of the Milton Friedman story from that great WSJournal piece a few months ago-

    ""At one of our dinners, Milton recalled traveling to an Asian country in the 1960s and visiting a worksite where a new canal was being built. He was shocked to see that, instead of modern tractors and earth movers, the workers had shovels. He asked why there were so few machines. The government bureaucrat explained: 'You don't understand. This is a jobs program.' To which Milton replied: 'Oh, I thought you were trying to build a canal. If it's jobs you want, then you should give these workers spoons, not shovels.'"

  • Little Sentient Lander||

    Moreover, climate change on the other planets is fairly understood: Mars' climate is primarily driven by dust and albedo, not solar variations, and there is little empirical evidence that Mars is warming

    Good to know that if the sun burned out there would be little change in the climate since the sun's influence on it is marginal. Makes me curious how my solar panels actually function if we are too far away for the light from the sun to matter.

  • ||

    Although it's true that a net zero carbon tax would increase the amount of labor supplied (because it would increase the returns for labor) , that doesn't necessarily follow that all of the increase would be low wage jobs. Just as likely, many of the jobs would be involved in making energy more efficient etc.

    When I use the word labor here, I mean people working, not manual labor.

    Also, it's important to remember, that whenever we consume NON-renewable resources, we are not generating income, we are burning through natural capital. IE, it's just like spending an inheritance, not like making money at a job.

    Thus the times are good until you use up all the natural capital.

    This is a pretty common misconception, people counting as income what should be counted as a reduction in capital (and then we give you a tax break for it on top of it). It's like a race to see who can use of all of the finite resources first. Just stupid.

  • Chad||

    Kroneborge | September 8, 2009, 10:15pm | #

    This is a pretty common misconception, people counting as income what should be counted as a reduction in capital (and then we give you a tax break for it on top of it). It's like a race to see who can use of all of the finite resources first. Just stupid.


    This a key point. Unfortunately, we usually use GDP as our measure of the health of the economy. Yet the GDP counts the depletion of our natural capital as a positive, as well as cleaning up a lot of related messes and broken windows. Much of the "harm" to GDP that would result from a switch to renewable and cleaner energy would not make us worse off, yet would lower this artifical number.

  • Sam Grove||

    "So have they found the CO2 warming signature predicted by AGW theory?"

    Skeptical minds want to know.

    Skeptical minds already know, because skeptics look this sort of thing up in the IPCC report or Google Scholar rather than asking the question on Reason Hit and Run and expecting everyone else to do it for them.


    Actually, I expect that if the signature ever does appear, I won't have to google it as it seems likely to be all over the media and blogs.

    Am I right?

    The silence is interesting.

  • Sam Grove||

    Also, it's important to remember, that whenever we consume NON-renewable resources, we are not generating income, we are burning through natural capital. IE, it's just like spending an inheritance, not like making money at a job.

    That's right, these non-renewables should NEVER be consumed because then they would be gone forever.

    So when do we use them?

  • ||

    Although it's true that a net zero carbon tax would increase the amount of labor supplied (because it would increase the returns for labor), ...

    The issue is not that it would increase the amount of labor supplied. The issue is that it would decrease the value of labor supplied. Rather than run a tuk tuk on gasoline, you'll have to pull someone out of the shoe factory to pull a rickshaw.

    that doesn't necessarily follow that all of the increase would be low wage jobs. Just as likely, many of the jobs would be involved in making energy more efficient etc.

    But this is simply the broken window fallacy. You cannot say that the jobs provided by one artificial incentive are any better than the jobs provided by another artificial incentive or, indeed, no artificial incentive at all.

  • Chad||

    Sam Grove | September 8, 2009, 11:50pm | #

    Actually, I expect that if the signature ever does appear, I won't have to google it as it seems likely to be all over the media and blogs.

    Am I right?

    The silence is interesting.


    It's all over the scientific literature. The "silence" is direct manifestation of your own ignorance and ability to read anything written beyond a level intended for sixth graders. The media can spew whatever crap it wants, regardless of fact. Haven't you figured this out yet?

    What is hard to understand?

    1: We emit CO2 in the atmosphere
    2: Our CO2 is building up in the atmosphere
    3: CO2 will cause warming, under every level of theory devised
    4: It is warming
    5: Other potential causes of warming have been ruled out

    What, pray tell, is this mysterious "signature" you are looking for?

  • Sam Grove||

    Nothing mysterious about it. The upper tropospheric warming which is supposed to prove that warming is due to increased CO2. So far such warming has not been detected.

    So far, this signature has not appeared.

    1 obviously
    2 don't know about "OUR" CO2, but certainly CO2 levels have increased.
    3 There is a diminishing effect as CO2 increases.
    4 HAS been warming, up until about yen years ago.
    5 Not true.

  • ||

    Tony: "Ron continues to prefer studies that underestimate the impact of climate change and overestimate the cost of mitigating it."

    I agree. We should only use studies that estimate the global mean temperature can be controlled by man like a thermostat and will cost us only pixie dust and unicorn farts.

  • Chad||

    Sam Grove | September 9, 2009, 1:01am | #
    Nothing mysterious about it. The upper tropospheric warming which is supposed to prove that warming is due to increased CO2. So far such warming has not been detected.

    So far, this signature has not appeared.

    1 obviously
    2 don't know about "OUR" CO2, but certainly CO2 levels have increased.


    Long ago proven by isotope analysis. Please cure your ignorance.

    3 There is a diminishing effect as CO2 increases.

    Accounted for in all models. Warming is still predicted. Next?

    4 HAS been warming, up until about yen years ago.

    Still confused by the difference between "weather" and "climate", eh? Please re-enter third grade and get back to us when you pass science class.

    5 Not true.

    While you cannot proven there aren't any unicorns (or "hidden" causes of global warming), every alternative cause of global warming that we HAVE looked at has been ruled out as a cause for much of the observed warming.

  • Chad||

    Btw, here is a chart of global average temperatures with the yearly and five-year averages overlaid.

    http://news.mongabay.com/2009/0127-temperature.html

    Anyone who can look at this, cherry-pick a baseline, and conclude that temperatures are going DOWN is so absolutely dishonest that there is no room to discuss anything with them.
    Facts cannot persuade them.

  • Gilbert Martin||

    There was an interesting editorial in the Wall Street Journal yesterday about how traditional oil and gas energy companies are getting fined by the federal government for killing birds but the govt is giving a pass to the alternative engergy companies that own windmills even though they are responsible for killing far more birds than the traditional energy companies are.

  • Anonymous||

    Chad,

    If you are able to convince us that AGW exists, then our obvious conclusion is for the government to fix it.

    Keep on with the good fight!

  • ||

    Along similar lines, numerous econometric models project that while climate change will have relatively minor effects on developed countries it will significantly harm poor countries.

    Here's an idea: if developed countries won't feel the sting, why not focus on getting poor countries developed?

  • ||

    Anyone who believes in "climate change" or "global warming" has been well and thoroughly brainwashed and is incapable of rational thought.

  • ||

    Why does Reason keep responding to anthropogenic global warming arguments as if they were legitimate?

  • ||

    "But this is simply the broken window fallacy. You cannot say that the jobs provided by one artificial incentive are any better than the jobs provided by another artificial incentive or, indeed, no artificial incentive at all."

    I'm saying that since all taxes provide incentives, or disencentives, and since we must have some taxes (although how much can be debatable) then it's better to tax the use of things like finite resourcess, or things with exteranlites (carbon) then to tax labor.

    I'm not suggesting we don't use natural resources, or even the finite ones, but I do think we should use them as wisely as possible. Also we should be thinking about what happens when they run out (or get so rare that their prices shoot through the roof).

  • ||

    There is much comment above on what "scientists" believe. As a worker in the vineyard I can state confidently that there the purported scientific "consensus" is pure BS. There is widespread skepticism, beginning from the "scientific" position that reliable data is preferable to models, and the most reliable data says that the earth stopped warming some years ago, and that the most cited models have been uniformly wrong in their predictions.

    On the other hand, there are other important currents in the scientific community: greed and fear. Many scientists, and particularly many who claim to be "climatologists", are lavishly supported, and will continue to be lavishly supported so long as they recite the mantra of AGW. It's asking a bit much for them to decline the cash in the name of objective science. At the same time, those who are in the best position to question AGW are scientists who are funded by government as well, and have good reason to fear for that funding. How many scientists in the National Laboratories run by DOE are likely to raise legitimate questions so long as a "true believer" like Steve Chu sits on top of the organization and controls their funding?

  • ||

    Stop Climate Change, Save Humankind

    On the Climate Change threat, I've got a great idea for America...let's sit this one out.

    After 60 years of leaking blood and treasure to first free, and then protect and feed the civilized world, we can have a rest.

    Six billion humans
    300 million Americans

    Time for everyone else to pitch in and save humankind.

    China, who we saved from being a slave state of Imperial Japan, use your stolen microprocessor technology and vast engine of production to manufacture enough photo voltaic panels to replace all of the world's coal fired power plants.

    Western Europe, who we liberated from the Nazis and protected from the Soviets, use your keen engineering brilliance and money saved from not having to defend yourself to develop electric vehicles and transports with batteries that are suitable for the continental challenges of North America, Australia and Russo-China and not just for putt-putting around your little medieval storybook countries.

    India, who can't control your population growth; you need to use your stable of engineers to develop alternatives to petrochemical fertilizers and pesticides so that we can continue to grow food for six billion on arable land that is only suitable to sustain two billion.

    Africa, who we never had a hand in colonizing, but spent billions feeding and medicating, use your uranium reserves to fuel thousands of small coastal reactors that will extract hydrogen from seawater to power an unlimited number of fuel cells.

    Russia, who we helped financially to defeat the Nazis, your job is to provide security in the middle east after they panic upon discovering that their oil reserves are now worthless.

    American environmental activists; since we will stop producing greenhouse gases and stop mining coal, you can take a two decade vacation from filing injunctions and lawsuits and allow us to build high speed rail corridors roughly paralleling our interstate highway system.

    South America...........I guess you can just continue to provide diversity in our cuisine and stoop labor for "jobs that Americans just won't do".

    As for the United States, our job will be to use the UN as a bully pulpit to castigate the rest of the world for not doing enough or not doing it fast enough.

  • ||

    lol, sounds good

  • Tony||

    The rest of the world, China perhaps above all, is acting faster on climate change than the U.S.

  • Neu Mejican||

    MikeP,

    Thanks for the response.
    if he can buy from the cheaper one guy and his machine.

    This is not what was posited. The question was based on the idea that the company hired the gang of workers because the shift in taxes from labor to carbon had made the one guy and his machine more expensive. We are assuming that the company uses the least expensive solution.

    Let's say a year of moving the rubble costs 100,000 dollar when the one guy and his machine moves it and 95,000 when the gang of men moves it.

    I don't follow a couple of your assumptions.

    1)Unskilled workers used to move rubble are freed up to do skilled work that they don't have the skills to do? Since they don't have the skills, they won't be doing those jobs, someone else will. Why don't the unskilled workers free up the skilled workers to the same extent that the machine does?

    2) More people doing the same amount of work for the same cost in a finite labor pool means lower unemployment. Explain again how this is a bad thing? Are not these now employed low skilled workers going to put a larger percentage of the wages back into the economy than the one guy running the machine would. Wouldn't that mean more consumption?

    I realize it is silly to do a "all things being equal" thought experiment when talking about the economy, but since so much of economics is based on this kind of thinking, I am interested in the logic.

  • ||

    I'm saying that since all taxes provide incentives, or disencentives, and since we must have some taxes (although how much can be debatable) then it's better to tax the use of things like finite resourcess, or things with exteranlites (carbon) then to tax labor.

    Taxing externalities may be desirable for Pigouvian reasons, but taxing finite resources simply because they are finite is not economically defensible. In a free market, the fact that it is finite is already priced in.

    As for taxing resources versus taxing labor, taxes on resources are simply less (economically) efficient.

    Look at it this way. Labor that uses resources adds value to those resources. If it didn't, it or its supporting capital couldn't afford the resources. And if alternative resources admitted greater leverage in the adding of labor's value, then it or its supporting capital would already be using those alternatives.

    So taxing resources rather than taxing labor hampers the ability for labor to add value. Taxing the output of labor with an income tax or consumption tax rather than taxing the inputs for labor with a resource tax means that labor can maximize the value that it adds to the economy.

    There may be other reasons to prefer carbon taxes to labor taxes, but the two simply are not interchangeable.

  • Neu Mejican||

    How many scientists in the National Laboratories run by DOE are likely to raise legitimate questions so long as a "true believer" like Steve Chu sits on top of the organization and controls their funding?

    All of the ambitious ones. The ones who want Chu's job, the ones that want the prestige of proving everyone else wrong, the honest and diligent ones that just go where the data takes them, and on and on. Another way to describe them would be the majority of serious scientists.

  • Neu Mejican||

    Along similar lines, numerous econometric models project that while climate change will have relatively minor effects on developed countries it will significantly harm poor countries.

    Here's an idea: if developed countries won't feel the sting, why not focus on getting poor countries developed?


    Good idea. Let's make sure they use the latest carbon neutral technologies as they build their modern infrastructures.

    Of course, the reason (for the most part) these countries will be harder hit is not because of their level of development, but their geographic locations.

  • ||

    It is such a shame that so many people believe in man made global warming. 186 billion tons of CO2 enter our atmosphere every year. Man contributes only 6 billion tons (3%). All the rest is natural. If we could eliminate all man made CO2 the difference would hardly be noticed. Also man made CO2 is only 0.2% of all green house gasses that occupy our atmosphere. Get real, 0.2% is causing climate change??? Someone needs to start reading and researchibng and stop just accepting the rantings of those with agendas.

  • ||

    JB is right.

    First, what evidence do you have the CO2 causes global warming? It has never done so in the past. CO2 levels today are 380 parts per million (ppm). In the past levels have been as high as 7,000 ppm and the planet survived. Increases in CO2 levels follow increases in temperature, indicating that it is a result of warming, not a cause.

    Second, if we tax or trade in carbon dioxide, who will set the levels and control the revenue? Obama wants energy prices to "skyrocket", climbing by 80%. Government estimates are that a family of 4 will pay $1,800 more for electricity, natural gas and gasoline, but they ignore the inflation the program cause. Businesses do not pay tax; they raise prices as costs rise. In the midst of a severe recession, it is especially unwise to reduce the consumers' disposable income while raising the prices of goods and services.

    Finally, how much of the atmospheric CO2 is man made? Every year, 168 billion metric tons (BMT) of CO2 are added to the atmosphere. 100 BMT are released by the oceans. 30 BMT are exhaled by respirating animals; another 30 BMT, from decaying biomass. Forrest fires add 1 BMT, as do industrial processes including smelting, baking, wine making and distilling. Fossil fuels contribute only 6 BMT, or 3.57%. Recent CO2 levels have been rising at 1.8 ppm. I we banned fossil fuels today, CO2 levels would still rise at 1.7357 ppm.

    On a planetary scale, Humans are, as Stephen W. Hawking says, "pond scum."

  • Neu Mejican||

    JB,

    Do we worry about something that is 3% of the economy? I mean if you added a 3% tax the difference would hardly be noticed.

    In a complex system that kind of change can make a big difference.

  • Neu Mejican||

    the rantings of those with agendas

    And who/where are those agenda-less sages we should be listening to?

  • ||

    I'd gladly swap the current tax code of the United States for one that made consumption, which resulted in the emission of carbon, the sole taxable event. Lemme know when the global warning alarmists are willing to, via Constitutional Amendment, rid the country of all FICA, income, capital gains, and other taxes, and replace them solely with a consumption (resulting in carbon emissions) tax. Until then, it can be reasonably believed that such people have greater fear of a loss of state power in controlling human beings than they have a fear of civilization being destroyed or greatly harmed via human beings emitting carbon into the atmosphere.

  • ||

    1)Unskilled workers used to move rubble are freed up to do skilled work that they don't have the skills to do?

    The work they are freed up to do is not necessarily skilled work: it is simply work that is higher valued. Even if it is not higher valued, they are freed up to do other work -- work that they could not do were they bound to their job.

    2) More people doing the same amount of work for the same cost in a finite labor pool means lower unemployment. Explain again how this is a bad thing?

    This question carries an implicit presumption that work is rare. It is not. Providing jobs is completely natural for an economy, as evidenced by the fact that unemployment is generally in the single digits and that freer markets have lower unemployment.

    Are not these now employed low skilled workers going to put a larger percentage of the wages back into the economy than the one guy running the machine would. Wouldn't that mean more consumption?

    But if those workers displaced by the machine do other jobs, then there is more consumption and more production. That is, there is more economic product at lower cost.

  • ||

    "Look at it this way. Labor that uses resources adds value to those resources. If it didn't, it or its supporting capital couldn't afford the resources. And if alternative resources admitted greater leverage in the adding of labor's value, then it or its supporting capital would already be using those alternatives."

    Yes labor adds value, that's why we should tax labor less, and tax the using of those resources more.

    Thus you encourge people to supply the labor that makes those resources valuable, AND you encourge them to do so in the most efficient manner possible.

    Sounds likea win/win to me.

  • ||

    Yes labor adds value, that's why we should tax labor less, and tax the using of those resources more.

    You miss the point. Labor is not valuable to the extent that it is laborious. Labor is valuable to the extent that it adds value to inputs to produce higher valued outputs -- i.e., how productive it is. Tax the inputs, and you reduce the outputs by more than the tax.

    Another way to look at it is to realize that firms maximize the efficiencies of turning inputs into outputs. If a tax biases their choice of inputs, it drives them into less efficient outcomes.

    Alternatively, since we know that the deadweight cost of a tax on something is based on the elasticity of demand for it, taxing inputs that are more substitutable than outputs costs the economy more in deadweight loss.

    Sounds likea win/win to me.

    "The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design." - Friedrich von Hayek

  • Ratdog||

    "Why does Reason keep responding to anthropogenic global warming arguments as if they were legitimate?"

    Religious zealotry.

    Little Alvin Goron may have flunked out of divinity school, but he made up for it by founding his own new and successful religion, the Church of Anthropogenic Global Warming, now called the Church of Climate Change (best to cover all the bases since it's all just bull-crap).

    Organic life requires carbon. CO2 is the benefactor that redistributes carbon around the Earth allowing life to thrive around the globe.

    If the welfare of living organisms was really what the church leaders had in mind they would make a saint of CO2, unfortunately, doing so would contradict the official church doctrine supporting Climate Orientated Misanthropogenic Hoaxing as a means to bring about "wealth redistribution" through punishing production in developed western nations.

  • Neu Mejican||

    MikeP,

    Thanks for the response.

    So, if I understand correctly, it sounds like the incentive to replace workers with technology will exist no matter what because it will increase labor efficiency. So, then, a tax on carbon simply shifts the response to that incentive. Currently, technological answers that are carbon intensive are cheapest because the negative externalizations of that response are not priced in. The positive externalizations will, on balance, be the same for the low-carbon response, but they currently lose on price because they don't get the "cheap but dirty" discount that the carbon intensive responses get.

    Or am I missing something?

    So if we spin this out more...one of the higher value jobs that more skilled workers do is to create machines that make labor more efficient. The carbon tax will shift the incentives that go into choosing one solution over the other, but would not get rid of the incentive to innovate and make labor more efficient.

    A labor tax increases the incentive to find technologies that make labor more efficient above baseline, but as long as the externalizations of the carbon intense responses are not priced in, the solutions will always default to the "cheap but dirty" solution (and the increased labor costs intensifies the incentive to choose the cheapest solution). But those cheap but dirty solutions have real world negative consequences, so a carbon tax seems to solve an actual problem that the labor tax doesn't.

    No? Am I missing something?

  • ||

    "Another way to look at it is to realize that firms maximize the efficiencies of turning inputs into outputs. If a tax biases their choice of inputs, it drives them into less efficient outcomes."

    Taxes are going to bias their selection no matter what. Either through a tax on labor, or a tax on something else. I'm aruging that the tax on something else (carbon with it's problem of exteranlities, and finite amounts) has some benefits, and not as many costs as a tax on labor.

    With the added incentive for labor, and the disencentives for carbon, maybe that will encourge someone to work a bit harder and come up with a more efficient solution.

    The market is going to be distorted one way or another, but I think that the distortions will be less this way, and will have some other side benefits.

    Think of it this way, we are doing the best we can to encourage people to work harder AND smarter. If it turns out that they can't make things more efficient, at least they would be as well off.

  • Chad||

    arch | September 9, 2009, 12:46pm | #
    JB is right.

    First, what evidence do you have the CO2 causes global warming? It has never done so in the past. CO2 levels today are 380 parts per million (ppm). In the past levels have been as high as 7,000 ppm and the planet survived. Increases in CO2 levels follow increases in temperature, indicating that it is a result of warming, not a cause.


    Apparently, poor Arch missed the carbon-cycle class in elementary school. Please try again.

    Without man: 168 out, 168 in.

    With man: 174 in, 168 out.

    Errr, do I need to help you along any further, or do you think you can handle fourth grade on your own now?

    You also bring up the "the atmosphere has had higher concentrations of CO2 way back when" argument, which ignores the obvious: "way back then", the atmosphere, biosphere, and layout of the continents and oceans was completely different, and the sun dimmer. Oh well...

    Keep up the crackpotty goodness. It only makes you look stupid.

  • ||

    Well, it's not like the earth won't survive it it's significantly warmer, it's just that our societies are setup for how it is now.

    For example, sea levels have been much higher in the past, but it would be bad for us if they returned to those levels.

    Same thing with disapearing snow packs etc.

  • ||

    I'm aruging that the tax on something else (carbon with it's problem of exteranlities, and finite amounts) has some benefits, and not as many costs as a tax on labor.

    I do not deny (here) that a Pigouvian carbon tax does not have a place or an economic reasoning all by itself. Nor do I deny that other taxes should be lowered commensurately so as to reduce damage to the economy and to not give the government more money to misspend.

    My point simply is that the economy with a tax on highly elastic carbon energy inputs is likely to be less efficient, dollar for dollar, than the equivalent tax on labor. That is, while "net-zero carbon tax" is a nice slogan, and it is better than the alternative "yet-another-new-tax carbon tax", its deadweight cost is greater than that of more conventional taxes.

    Think of it this way, we are doing the best we can to encourage people to work harder AND smarter.

    Do I have to quote Hayek again?

  • ||

    Neu Mejican,

    You raise good points. As I noted to Kroneborge, my contention is with the notion that a carbon tax can replace other taxes at no cost to the economy. The carbon tax may have its own validity as a Pigouvian tax: It simply doesn't have an economic justification as a replacement for more efficient taxes.

    In much the same way, government spending on infrastructure may have its own validity for public goods reasons: It simply doesn't have an economic justification as a jobs program.

    If you're curious, the economics behind deadweight costs of taxes and how they relate to the elasticity of demand can be found in David Friedman's online Price Theory, leading up to Figure 7-10.

  • Chad||

    MikeP | September 9, 2009, 5:41pm | #
    I'm aruging that the tax on something else (carbon with it's problem of exteranlities, and finite amounts) has some benefits, and not as many costs as a tax on labor.

    I do not deny (here) that a Pigouvian carbon tax does not have a place or an economic reasoning all by itself. Nor do I deny that other taxes should be lowered commensurately so as to reduce damage to the economy and to not give the government more money to misspend.

    My point simply is that the economy with a tax on highly elastic carbon energy inputs is likely to be less efficient, dollar for dollar, than the equivalent tax on labor. That is, while "net-zero carbon tax" is a nice slogan, and it is better than the alternative "yet-another-new-tax carbon tax", its deadweight cost is greater than that of more conventional taxes.


    Mike, the high elasticity argument cuts both ways. Assuming you are correct, over-shooting the "correct" carbon tax would increase the deadweight relatively rapidly compared to labor. However, under-shooting the carbon tax would also face the same steep slope, meaning that being under by just a modest amount means leaving lots of money on the table. That is where we are now....and we are nowhere near overshooting.

    As long as carbon is under-priced (and zero is clearly too low!), then there is no dead-weight at all. Society profits when we increase the price.

  • Chad||

    MikeP | September 9, 2009, 5:47pm | #
    Neu Mejican,

    You raise good points. As I noted to Kroneborge, my contention is with the notion that a carbon tax can replace other taxes at no cost to the economy


    I think you are confusing the "economy" with general welfare. There will probably be somewhat less buying and selling after a proper carbon tax is implemented. This is not a bad thing per se.

  • ||

    However, under-shooting the carbon tax would also face the same steep slope, meaning that being under by just a modest amount means leaving lots of money on the table.

    But most of the money "left on the table" is dead-weight loss were the tax to be collected.

    I understand that Pigou must have his pound of flesh, but taking it is most definitely a loss to the economy.

  • ||

    I think you are confusing the "economy" with general welfare. There will probably be somewhat less buying and selling after a proper carbon tax is implemented. This is not a bad thing per se.

    That is the proper position with regard to Pigouvian taxes.

    As you likely know, I think that the fair and proper carbon tax is so low that it is not worth the cost to humanity of empowering the government to collect it.

    Kind of wraps back to the original post, doesn't it. How very incredible.

  • Neu Mejican||

    As you likely know, I think that the fair and proper carbon tax is so low that it is not worth the cost to humanity of empowering the government to collect it.

    I think I follow you, right up to this.
    The costs to humanity being "economic cost" or "general welfare cost"?

    How are you balancing the economic costs against the environmental benefits?

  • Neu Mejican||

    MikeP,

    You raise good points. As I noted to Kroneborge, my contention is with the notion that a carbon tax can replace other taxes at no cost to the economy. The carbon tax may have its own validity as a Pigouvian tax: It simply doesn't have an economic justification as a replacement for more efficient taxes.

    If this is really that well understood, why can't you adjust for the difference in efficiency to make the tax on inputs as efficient overall as the tax on labor?

  • ||

    The costs to humanity being "economic cost" or "general welfare cost"?

    The costs to humanity being "overly large, powerful, and inept government cost".

    Look at the corn-fed biofuel industry. It's utterly insane, given that it is better for atmospheric CO2 to leave fields fallow than it is to use them to grow corn for biofuel.

    Look at Waxman-Markey. Tell me that the implementation of that load of crap will come anywhere close to the optimal social cost of carbon carbon tax.

    The cost of a larger government that has one more giant set of levers that it can use against the people or hand over to politically powerful interests to use against the people is just too great for the small benefits involved in modestly curtailing global warming.

    And note that, as bad as it is to empower the hogfest that is the US Congress with collecting and spending carbon taxes, a globally harmonized tax also demands that the Robert Mugabes of the world collect and spend such taxes too.

  • ||

    If this is really that well understood, why can't you adjust for the difference in efficiency to make the tax on inputs as efficient overall as the tax on labor?

    Every tax has a deadweight cost. That cost is determined by how readily people will substitute for or do without the taxed good. The more readily they will lower their demand for the good, the greater the loss to the economy in imposing a tax on the good.

    I don't know of a way to "adjust" for this. You can'na change the laws of economics!

  • ||

    hmm, that book seems familiar, I might have actually read it wasy back when I was at UCSB.

    Anyway, I would argue though that demand for carbon is probably more inelastic, than the labor market (though I could be wrong here).

    I think people are more likly to change how much they work based on incentives, then how much they drive, or consume electricty. At least over the short run. Which is of course one of the problems we've had.

    I would agree with you that there are limits to how much you would want to collect with the tax, but I think my limit is higher than yours.

    Also, I think a carbon tax could be collected pretty simply. If you just levied the tax on gas, and electric generation, that would get the majority of it, and with very little overhead.

    Plus you could phase it in gradually to give people time to adjust. Say 5c a month for a gas tax until you reached an optiumum point.

  • ||

    Anyway, I would argue though that demand for carbon is probably more inelastic, than the labor market (though I could be wrong here).

    At the point on the demand curve of the socially efficient tax -- e.g., the anchor article tells us Nordhaus's social cost of carbon is $35/ton of CO2 in 2010 -- this is quite probably true.

    Plus you could phase it in gradually to give people time to adjust. Say 5c a month for a gas tax until you reached an optiumum point.

    You reach the optimum point in 7 months.

  • Neu Mejican||

    MikeP,

    5 cents a month takes 700 months to reach $35.
    No wonder economists have such a hard time making predictions...;^)

  • ||

    $35 per ton of CO2 is approximately 35¢ per gallon of gasoline.

  • ||

    And it is well worth noting: If we consider federal and state transportation taxes, then we are already paying a net-zero Pigouvian carbon tax on gasoline.

  • Neu Mejican||

    If we consider federal and state transportation taxes, then we are already paying a net-zero Pigouvian carbon tax on gasoline.

    No. Those taxes are nominally infrastructure users fees. They are not taxes on carbon. You don't get to count them.

  • Neu Mejican||

    Regarding $35 dollard versus 35 cents.

    Oops, I thought "carbon tax" was spelled "gas tax," ... I blame the English major I got at NMSU.

  • ||

    No. Those taxes are nominally infrastructure users fees. They are not taxes on carbon. You don't get to count them.

    Interesting... Those who argue that carbon taxes can replace, dollar-for-dollar, Social Security taxes seem to be counting taxes that are nominally social security fees.

    Why do they get to count their non-carbon taxes and I don't? Why the discrimination?

  • ||

    hmm, I wonder if that $35 factors in things like the war in Iraq though, or healthcare costs from things like asthma,

    or is it just looking at it from a climate change perspective.

  • Chad||

    MikeP:

    What are the costs of "implementation" of the SOx cap-and-trade policy, or the gasoline tax? I think you will find that they are indeed trivial relative to the tax collected and the scope of the problem.

  • Chad||

    MikeP | September 9, 2009, 8:27pm | #

    Why do they get to count their non-carbon taxes and I don't? Why the discrimination?


    You can indeed count them - once.

    You can't double count them as both a tax on carbon and as a user fee for roads, which is what you seem to be arguing for.

    The gas tax is probably about right for a carbon tax. But if you make this argument, then you have to acknowledge that carbon emissions are still being subsidized through "free" roads.

  • ||

    You can't double count them as both a tax on carbon and as a user fee for roads, which is what you seem to be arguing for.

    Oh, so the part of the social security tax that will be replaced by carbon tax cannot be used as a fee for the insurance that social security ostensibly is? I thought that was the whole point of the net-zero option.

    But if you make this argument, then you have to acknowledge that carbon emissions are still being subsidized through "free" roads.

    I'm all for roads being funded by directly collected road usage fees. I'm also for allowing zero-emissions cars to use roads on the same terms as gas powered cars.

  • Chad||

    MikeP | September 10, 2009, 12:35am | #

    Oh, so the part of the social security tax that will be replaced by carbon tax cannot be used as a fee for the insurance that social security ostensibly is? I thought that was the whole point of the net-zero option.


    The "point" of net-zero options is to buy votes from the right, nothing more. The carbon tax is simply a very efficient and cheap tax, and should be used either to increase revenues OR replace existing revenue streams. Which of these is appropriate has nothing to do with the carbon tax itself.

    Due to the fungibility of money, it really is irrelevant to say "this tax is used for X, that tax for Y". However, you can't say "this tax is used to cover X and Y" when the tax is insufficient for either. The gas tax WOULD be about big enough to cover once area of an appropriate carbon tax (gasoline and diesel use), but then you can't claim those same dollars are being used for roads.

    I'm all for roads being funded by directly collected road usage fees.

    They surely aren't now, even federal highways. Please note that turnpikes typically cost around four cents a mile (plus a 25 cent transaction fee), while if the federal highway system was being provided by the federal gas tax (18 cents per gallon, or about one cent per mile for a typical vehicle), then either:

    1: The government is four times as efficient at building roads than the private sector

    2: The government is subsidizing the highways beyond the gas tax.

    I don't think you like either of these options. Also please note that most turnpikes receive subsidies anyway (a cut of the gasoline tax, tax-exempt bonds for construction, etc) and STILL are far more expensive than highways made by the government assuming the government builds them with only the gas tax. Also note that turnpikes typically avoid city centers and rough terrain, so they should be cheaper than a typical expressway, not more expensive.

    I'm also for allowing zero-emissions cars to use roads on the same terms as gas powered cars.

    And one of those terms should be "pay to pollute". This is econ 101.

  • Neu Mejican||

    MikeP,

    Chad already covered it, but I'll re-emphasize. You can't count existing taxes on gasoline as carbon taxes because they are part of the status quo. They don't add the pollution costs into the price of the gasoline, which is the whole point. You are trying to shift the point of the tax from one use to another, but the argument for a carbon tax is to add in the additional costs of pollution that are not currently being priced into the fuel. They point is to erase the pollution discount. If you shift the current tax to address the pollution discount, but keep the price the same, all you've done is shift the discount over to roads.

    More importantly, electricity generation is the main use of carbon based fuels. The gas tax doesn't address that.

  • ||

    You can't count existing taxes on gasoline as carbon taxes because they are part of the status quo.

    I am willing to see evidence to the contrary, but it is my understanding that computations of the social cost of carbon do not consider taxes on carbon fuels, only the raw prices of those fuels. The Pigouvian tax does not, therefore, apply on top of the status quo, but only on top of the actual price of the actual fuel.

    If you shift the current tax to address the pollution discount, but keep the price the same, all you've done is shift the discount over to roads.

    There are two sides to a tax: collection and spending. The whole point of a Pigouvian tax applies only to the former. You can argue that it is disingenuous to use the proceeds of a Pigouvian tax to resubsidize the same activity. I might even concur.

    I mostly brought up the observation that we already pay the fair carbon tax on gasoline because most of those who argue for such taxes think the carbon tax should be much, much higher.

    More importantly, electricity generation is the main use of carbon based fuels. The gas tax doesn't address that.

    Yes, coal will be hammered by a $35/tCO2 tax, and there isn't any other activity-subsidizing tax on coal like the current transportation tax on gasoline.

  • Neu Mejican||

    I am willing to see evidence to the contrary, but it is my understanding that computations of the social cost of carbon do not consider taxes on carbon fuels, only the raw prices of those fuels.

    That is beside the point. Even if you calculate the cost of carbon and the tax based on the raw price, if you add that tax in at the same time you take away the current tax you have not done anything to internalize the externalizations of the carbon.

  • ||

    No. The externalities of the carbon were already internalized.

    Just because it wasn't called a Pigouvian tax doesn't mean it wasn't one. If the bonus tax on gasoline had gone straight to the general fund, there would be no question of its being a Pigouvian tax.

  • ||

    External costs exist only if carbon dioxide is causing climate change. The real data are making it increasingly clear that the carbon dioxide/warming hypothesis is false.

    Furthermore, if we are to calculate externalities, should we not also calculate the positive externality of increased crop yields that carbon dioxide appears to cause?

  • Chad||

    MikeP | September 10, 2009, 2:28pm | #
    No. The externalities of the carbon were already internalized.

    Just because it wasn't called a Pigouvian tax doesn't mean it wasn't one. If the bonus tax on gasoline had gone straight to the general fund, there would be no question of its being a Pigouvian tax.


    And if we replaced gasoline taxes with tolls, there would be no Pigouvian tax at all. This is all a distinction without a difference.

    The fact of the matter is that gasoline taxes are used to pay for just a fraction of our road building. There is none left over to cover the carbon costs, and you can't double count and claim the same dollar is covering both costs.

  • Chad||

    MikeP | September 10, 2009, 1:17pm | #

    Yes, coal will be hammered by a $35/tCO2 tax, and there isn't any other activity-subsidizing tax on coal like the current transportation tax on gasoline.


    You get something right, here, MikeP. Coal will and should be hammered. It is the enemy, not oil and gas, which are high value and would likely be burned despite carbon taxes.

    Coal, on the other hand, is incredibly laden with externalities, much more than just carbon. It almost certain fails any honest cost benefit when compared with nuclear, wind, or natural gas.

    We can probably escape the worst of climate change if we rapidly move away from coal, but milk our natural gas and oil supplies until the end.

  • ||

    There is none left over to cover the carbon costs, and you can't double count and claim the same dollar is covering both costs.

    Ignore for the moment that roads are an anti-Pigouvian subsidy.

    Are you saying that carbon taxes can't be used to offset social security taxes because "the same dollar is covering both costs"? That is the whole story behind net-zero carbon tax policy, after all.

  • Neu Mejican||

    MikeP,

    I guess if the goal is to reduce the use of carbon by increasing its cost, then piling up the programs that are funded by the carbon tax will do that. At some point that becomes ridiculous of course (funding all of the government on carbon taxes would not be the best system surely). But, it seems to me, all those additional carbon revenues would have to be taxes over and above the tax rate that offsets the carbon's negative externalizations.

    Otherwise, you are doing the "double counting" that Chad mentions.

  • ||

    I guess if the goal is to reduce the use of carbon by increasing its cost

    The goal is to optimize the use of carbon by charging its actual cost. Presently, the social cost of carbon fuels due to externalities that induce future global warming is $35/tCO2 higher than their market price. That is the proper value of the one and only carbon tax. There is no "piling up" of carbon "revenues" upon carbon taxes.

    That answers what the tax is and how much is collected. The other question is what does government do with the revenue? Many who advocate applying carbon taxes have suggested using them to offset payroll taxes. Others suggest a carbon dividend progressively rebated to the populace.

    But part of the whole bargain needs to be that the tax is the entirety of CO2 emission regulation. The entire social cost of carbon is captured in that tax. No one gets to play games of piling more taxes on top or suggesting other market distortions to reduce carbon usage. The carbon tax optimizes carbon use today and in the future. That is the total optimal extent of government regulation.

  • Neu Mejican||

    MikeP,

    I think you just restated what I said.
    But perhaps I am missing something.

    1) carbon tax - offsets cost of externalizations of carbon.
    2) fuel excise tax (or whatever) - offsets wear and tear on infrastructure from driving (or whatever).

    You can't count one as the other on the collection end, no matter how you spend the revenue. You can't say...we already tax carbon at the correct rate because the excise tax exists. That is double dipping.

  • ||

    Okay, here's how we'll see whether we're saying the same thing.

    Assume:

    1. There is no current excise tax on gasoline.
    2. Roads are paid for out of the general fund.

    Then:

    3. A 35¢/gallon tax whose revenues go into the general fund completely fulfills the Pigouvian carbon tax requirement on gasoline.

  • Neu Mejican||

    MikeP,

    If you remember where this all came from - it was this statement...

    If we consider federal and state transportation taxes, then we are already paying a net-zero Pigouvian carbon tax on gasoline.


    We have to start here.
    Those taxes are not carbon taxes.
    On the collection side, if you want to add a carbon tax you would add a carbon tax...since the carbon tax would apply to all carbon sources, gasoline would get a hit from the tax...no matter whether there were other taxes or not.

    So, we can assume that there are no federal gas taxes and say that IF THIS WERE TRUE then the carbon tax would add the same hit as the current taxes.

    That said, there IS a federal gas tax, so a proposal for a revenue neutral gas tax MIGHT simply replace the current gas taxes (that's one way to do it), but since gas is not the only carbon source (or even the major one), other taxes (such as labor taxes) would also go away to balance the increased revenue from the carbon tax. Most of the proposals have all of the revenue offsets come from elimination of labor and income taxes. I doubt the federal gas tax would be one of the ones that went away.

    And certainly the state taxes are a whole 'nuther ball game.

  • Neu Mejican||

    In other words, I think we are saying the same thing.

    But they way you stated it (the many ways) made it seem that you were making an argument against the carbon tax (on gasoline) because of the existence of other taxes on gasoline already offsetting the externalizations of the carbon.

    But that is not what they do. They do other stuff (e.g., fixing leaking underground storage, highway trust fund, mass transit). The system could be designed so that the carbon tax on gasoline replaced those taxes and funded those programs, sure.

  • ||

    The system could be designed so that the carbon tax on gasoline replaced those taxes and funded those programs, sure.

    Yes. A distinction without a difference.

  • ||

    Hello. Carbon dioxide is not causing global warming. There are no such external costs.

  • abercrombie milano||

    My only point is that if you take the Bible straight, as I'm sure many of Reasons readers do, you will see a lot of the Old Testament stuff as absolutely insane.

  • nike shox||

    is good

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