drwex (drwex) wrote,

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Let's talk about something different (economics)


Felix Salmon is probably my favorite economics writer/blogger at the moment. He does have a weird fascination with the (high) art market but he's generally common sense and quite readable. At least, to me. That might be a side-effect of having spent 8 years working in financial services, but I think he's writing for a general audience. He also tends to stay out of politics which has more or less polluted what Krugman is writing these days. Whether or not I agree with Krugman's politics, I think he's less interesting when he writes political stuff.

In this blog entry, Salmon is making an argument for a carbon tax, as opposed to our present (convoluted) scheme of energy credits and subsidies. Whether or not you think taxing carbon emissions is a good idea, I think replacing a complex government scheme with a simpler one is likely to be for the better. Of course it'll get more complex as more details get added, but starting simple is better than starting complex.

I also take it as an item of faith that anthropogenic warming is happening and that its unchecked effects will be catastrophic within our or our childrens' lifetimes. I believe that useful action requires governmental-level change. The two schemes that are most often floated are a "cap and trade" scheme of credits, or a carbon tax. I strongly favor the latter.

Cap and trade, which is currently being tested in California and parts of Europe, is supposed to be more market-friendly, but I think that's something of a hoax, since it's a case of the government setting up an artificial market, setting controls on it (caps), and choosing who is able to participate in it. For example, both CA and the EU have disallowed environmentalists from buying up carbon credits and then "retiring" them, effectively taking carbon out of the system. When you have that overt a government hand in things, calling it a "free market" is fakery of the first order.

Salmon argues that a carbon tax would be revenue-generating and progressive, both of which are potentially true but he doesn't go as far as I would like, which is to say I want the carbon tax to be revenue-neutral. So long as the tax becomes a revenue source there's an incentive to keep it in place and increase it. If the revenue generated from the tax were disbursed so that once the cost of the program was accounted for the net change in government income was zero then the incentives to grow the tax would be much less. And since it would apply to everyone and every industry the government would not have to be so rigid a gatekeeper as in cap-and-trade.

Yes, I'm a raging socialist and this is purely a redistributive effort that takes money from people who make messes and reimburses people for the costs they incur in dealing with such messes. That and the word "tax" mean this has exactly zero chance of ever being enacted in Washington. But I can dream, in between apologizing to my children for the massively fucked-up state in which we're going to hand them the world.
Tags: politics
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