Sunday, January 10, 2010

Robert Frank pummels a straw man

In todays NY Times "Economic View" Frank opines:

"At the heart of attempts to curb carbon dioxide emissions are two related proposals: taxation of those emissions and a system of tradable emission permits, also known as cap and trade. Both have been attacked as unacceptable restrictions on individual liberty. The attacks have come from both sides of the political aisle, but have been pressed with particular insistence by conservatives and libertarians."

Yet, throughout the entire article Frank goes on to name exactly zero libertarians who oppose a carbon tax and only one conservative, some guy named Henry Lamb.

Let me go him two better in my debunking here:

Greg Mankiw is a well known conservative (and NY Times columnist) and is famously in favor of a carbon tax. I am small (invisible?) potatoes compared to Mankiw, but I am a quasi-libertarian and I am in favor of a carbon tax as long as it is overall revenue neutral (meaning that the increase in revenues from this tax are offset by decreased revenues from other taxes).

Even though, in principle, a cap and trade program can be designed to have the same anti-pollution effect as a given tax, I think Mankiw and myself both dislike the current cap and trade bill because of how the permits are not going to be auctioned off and generally how stinky something becomes once it emerges from our grand sausage factory.

It's nice to see the shout-out to R. H. Coase in the article, but Frank is attacking a straw man throughout.

All taxes and regulations are obviously infringements on personal liberty in some sense, and there may well be libertarians who think our current levels of taxation represent "unacceptable restrictions", but I am not aware of libertarians who specifically object to a carbon tax.

ps. the article also contains the following sentence:

Climate scientists agree that the cheapest way to combat global warming is to curb carbon dioxide emissions.

Is that true? Is curbing CO2 is the "cheapest" way to combat global warming?


clay barham said...

Science turned on its side to give power to a small elite special interest by frightening the untutored is nothing new. We are supposed to accept heavier-than-air plant food (carbon dioxide) as blanketing the earth to keep the sun's radiated heat trapped. We never add moisture to that, even though it is lighter than air, we can see it as clouds, and we feel it as well, cold on clear nights and warmer on cloudy ones. It is harder to snooker the folks with that, and moisture is, by far, the biggest greenhouse gas. Keep the folks in the dark and the biggest organized crime syndicate in history, the Federal Government, can take the cash.

Norman said...

Are climate scientists even the right experts to identify the "cheapest" anything? Wouldn't the people who do well thought out cost-benefit analysis be, I don't know, economists?

pm said...

The cheapest marginal ghg reductions are largely efficiency measures - residential insulation, more efficient home appliances, that sort of thing. That results in less electricity (or gas/oil for heating), which largely comes from burning fossil fuels. So, yes, for small to moderate reductions. Larger reductions in emissions require other measures, of course.

White Rabbit said...

You favor a carbon tax that is revenue-neutral, but you oppose a tradable-permits scheme because the permits are not to be auctioned off? WTF indeed.

Anonymous said...

Take a look favor a 'solution' to a non-existent 'problem' ...

Tom said...

I'll come out as a libertarian who specifically objects to a carbon tax (without giving up my general objections to taxation).

If a carbon tax is to have any relationship with greenhouse gases, it must pertain to adding carbon to the environment, not "emitting" carbon. The carbon released by burning wheat straw, for example, should not be taxed, since that carbon was extracted from the atmosphere a few months earlier. But what about a tree? Burning wood releases carbon that was in the air a few decades earlier. What's the time limit? Carbon from peat was in the air a few centuries ago and carbon from coal was in the air somewhen.

Also, carbon is fungible. If I sequester some carbon, can I deduct that from my bill? Could I get a so-called refundable credit? Will the government pay me to sequester carbon, while I'm using energy from an unknown source in China?

Carbon taxes are unworkable, cannot even resemble fairness, and rife with opportunities for those who like to game the system. Besides, shouldn't the RATE for the tax be proportional to the cost that the carbon emission imposes on... well, on whom exactly? If warmer climates save lives, as Bjørn Lomborg believes, we'll subtract that from the costs imposed on the Fijians, right?

A carbon tax is just a general tax on energy, together with swell opportunities for swindlers, rent seekers, political favoritism. AND it's addressing a very dubious theoretical problem

Angus said...

Mr. Rabbit: permits could be auctioned off in a revenue neutral way, no? Not sure what the conflict is. I'd prefer to auction them and use the revenue for tax relief (albeit temporary), than pass them out to connected firms for free.

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