imacapitalist replied to your post “Recipe for Success”
Apparently @imacapitalist unfollowed me because I support a carbon tax. Here’s why I think that’s a silly thing for a self-professed capitalist to do.
First off, anthropogenic climate change is pretty undeniable at this point. There’s no rational way to look at the data from the last century and conclude that carbon dioxide emissions are not the most probable cause—especially given the well-established physical mechanisms. I’m a rocket scientist, not a climate scientist, but understand enough about the research process in general to know climate scientists are genuine and that there’s no reasonable grounds for doubting their conclusions.
So what should we do about it?
I’ve heard libertarians of discuss property rights as an alternative to government pollution controls. The line of reasoning is valid so far as it goes: pollution (including, we presume, greenhouse gas emissions) are a negative externality, and those affected by pollution have the right to be compensated for the damages. The Coasian framework applies in the case of, say, dumping toxic waste on someone else’s property, but breaks down in more complex cases. Privatizing rivers sounds difficult, but at least theoretically plausible.
I have yet to hear any serious proposals for how we’re going to privatize Earth’s atmosphere.
We’re dealing with a classical commons tragedy. A certain amount of greenhouse gas emissions are economically desirable, but we’ve long since passed that point. There are better technologies available but no clear incentive structure for switching over. In the case of, say, an overfished pond, we can reasonably enclose the commons and let the ownership’s profit motive direct the socially optimal price per catch. There’s no easy way to do that with the atmosphere of an entire planet.
The obvious alternative is having economists determine the socially optimal price of carbon emissions, and having the government charge that price.
I see this as directly analogous to the situation with police and national defense. Sure, we can imagine scenarios where private policing becomes the norm without developing a monopoly, but that’s not really the best place for us to be spending our energies. It makes more sense for the government to provide those services to all citizens rather than lose a huge amount of utility from hyperbolic discounting. There’s plenty to criticize the current implementations of the police and military—the US government is spending way more than is socially optimal—but contrary to the anarchists I don’t see that as a disproof of the concept in general.
Current carbon pricing proposals are easily the most market-friendly strategies for mitigating the effects of climate change. Instead of a massive government spending program or invasive regulations, we can relax existing emission limits and simply charge a flat fee per ton of CO2 emitted. A bill considered in Congress last year proposed starting at a relatively low rate and increasing it over time to account for the increasing social cost of greenhouse gas emissions.
The capitalist should support the basic idea of a carbon tax because it provides an impartial incentive to convert to cleaner energy at the pace appropriate for the entity in question. Combined with deregulation and a reduction in subsidies to “green” energy, this can represent a serious policy improvement. Instead of the government playing favorites, we can simply charge a uniform penalty for pollution and let the market sort it out.
Carbon taxes are the only way to achieve “free market energy policy” while accounting for the long-term impacts of CO2 emission. Currently, marketplace actors do not take those impacts into account because, for various reasons, they tend to think in the very short-term. Some of this is thanks to onerous regulation and the general instability of non-libertarian representative democracies, which I certainly agree we should address. I am not an anarchist, but still a libertarian—just a consequentialist one.
It’s quite clear that many of the governmental attempts to help the environment have done more harm than good, but we have to be realistic here. We’re not rolling back the regulatory state overnight, and even if we did, humans would still be subject to hyperbolic discounting. Carbon pricing deals with that problem.
For the record, my preferred carbon pricing schemes don’t put the money into the general pot (though that might not be the worst way to balance the federal budget). The economically optimal solution involves a citizen’s dividend that returns the money to the citizenry. Because the carbon tax will increase the sticker cost of products and services which entail the emission of greenhouse gases in their provision, a carbon tax will necessarily reduce the wealth of the populace. I don’t deny this. A carbon tax and dividend plan, such as that proposed by the Niskanen Center, would give all that money back to the people. In a way, this is a sort of redistributive system, but only insofar as it punishes the destroyers of future value and compensates those who gain the least in the meantime from that destruction.
I’d love to live in a world where this isn’t necessary, and a properly-crafted carbon pricing scheme would sunset once global greenhouse gas emissions drop to environmentally acceptable levels. Nobody wants to damage the environment; pollution continues primarily because non-polluters are incurring an economic cost that makes them less competitive. (Combining a Pigouvian tax with the divident system reverses this incentive structure: individuals receive the dividend regardless of whether or not they pollute, but can avoid paying the tax by purchasing genuinely green products and services.) The current situation is a straightforward coordination problem; one of the few places where state power is justifiable.
Justifiable does not equal justified, mind you: we need reason to believe that state intervention will have the desired positive outcome. I think that most of the government’s attempt at environmental stewardship fails this test; a carbon tax and dividend does much better for the reasons I’ve outlined above.
If you see a more practical strategy for dealing with climate-related externalities, I’m genuinely curious. I haven’t heard one yet.
