05 July 2008

Carbon Tax Summary

I ran across this summary today. TokyoTom has done a good job combing the web for logical arguments.

Speaking of global warming (and what to do about it), I have only got round to listening to a debate at Reason on that topic. Read this article for summary comments and watch the videos for the entire debate. From my POV, Fred Smith (of CEI) comes out looking an ideological idiot (that's what I wrote on the margin) due to an excessive use of non-sequiturs.

In contrast to this "performance," Ron Bailey's reluctant defense of carbon taxes is more agreeable, e.g.,
The problem with air pollution—and global warming is a form of air pollution—is that I don’t see a good, easy way to privatize it. The transaction costs are too large. And if you can’t privatize it, you have to regulate it. So now the question is: What’s the least bad way to regulate? And that is why I’ve come out in favor of a carbon tax.
Bottom Line: Use the right technology for the right problem -- without regard for ideology.

18 comments:

Bob Murphy said...

David,

I haven't listened/read yet, but can you give us a hint of the worst non sequiturs (is that the plural? I'm never sure) that Fred Smith employed?

As for your bottom line, yes that's a good statement, unless my "ideology" tells me that carbon taxes won't be implemented properly. If someone said, "We need to do a less-sunshine dance to combat global warming, and don't give me your 'ideological' objections to shamanism" I think that would be silly.

So by the same token, it seems your response to my views would be, "Sure, you think the government won't properly implement the taxes to achieve efficiency, but that's just your ideology talking. If you oppose a new tax, you must use some other reason besides your opposition to tax hikes."

Silas Barta said...

Bob: Recognizing how poorly government works would just mean that you should favor only those policies that attack global warming via clear definition of property rights, and have adequate safeguards against corruption. It cannot be used as a blanket dismissal of all changes in policy, any more than it would be an argument for all government firefighters to suddenly stop putting out fires.

Btw guys, note that I went ahead an started my third attempt at blogging, so I don't have to use other people's blogs to write essays in the comments anymore :-)

David Zetland said...

@Bob -- he says that markets can fix things when there are no property rights.

@Silas -- good comment (my response to Bob would be similar). Too bad you can't "blog" as much over here, but please do continue to stop by...

Silas Barta said...

Thanks, David! :-)

Bob Murphy said...

Silas wrote:

Bob: Recognizing how poorly government works would just mean that you should favor only those policies that attack global warming via clear definition of property rights, and have adequate safeguards against corruption.

You guys keep saying this. "Yes Bob, we know the government usually screws things up, but we're saying if it didn't, then it would be a great agency to combat global warming."

OK that's fine. What if I there do not exist any government policies in the real world that have "adequate safeguards against corruption" in this context?

And Silas, I don't feel trapped by your reductio ad absurdum either. I think the government does a terrible job fighting fires. I'm not saying individual firefighters who work for the government are bad guys, I'm saying if local governments privatized their services there would be less property damage and fewer deaths from fires.

There aren't even major externalities (as with global warming) in the case of fires. Don't you (Silas) and possibly even you David agree that privately run firefighting companies would be better than government-run ones?

I can just use your guys' position on AGW in the same way to reach such conclusions as:

I favor nationalization of the oil industry, just like Maxine Waters suggested. But when we do it, we have to put cost-cutting people in charge, not complacent bureaucrats.

How do you guys like that one?

Do either of you actually think the government will possibly do this "right"?

If you guys were skeptical of the market, I wouldn't be being such a pain about this. But I don't understand your nonchalance about what will truly be the biggest expansion in the US government since the New Deal.

David Zetland said...

Bob -- if private industry can do it, government shouldn't -- e.g., fires, roads, medicine. schools, etc.

If private industry cannot, then government should, e.g., laws, FUNDING education/health, global warming, defense, etc.

Silas Barta said...

Warning: using David's comment section to blog again.

@Bob: Your complaints about how I'm not skeptical enough of the government, will start to have meaning to me when you can point to the private agencies that are currently adhering to the austere ancap principles in establishing globally-recognized well-defined rights in the atmosphere.

Oh, there aren't any?

Oh, well at least you have an explanation somewhere about how you'd like to see a transition to private definition and ownership of the atmosphere, right?

...

Okay, but surely, you've pointed to someone else's handling of such a difficult, complex issue as being something you'd endorse, right?

I see.

****

I'm not saying individual firefighters who work for the government are bad guys, I'm saying if local governments privatized their services there would be less property damage and fewer deaths from fires.

Yes, but it would probably be more productive to search for where we disagree instead of stating generalities where we already agree, implying that I don't agree, and then giving me mean stares.

There aren't even major externalities (as with global warming) in the case of fires. Don't you (Silas) and possibly even you David agree that privately run firefighting companies would be better than government-run ones?

Yes, but your reference to externalities here reveals inability to identify the relevant parallels. Here they are:

-Some of government's activities are bad because they should not be done at all. Examples: imprisonment for drug use, ag subsidies.

-Some of government's activities are bad because they would be more efficient if handled by the private sector, but are not in themselves objectionable. Examples: firefighting, enforcement of property rights.

What we have here is a case where something should be done (definition of atmospheric property rights) and no one is doing it. By objecting to things that should be done, because it would be the government doing them, you obligate yourself to oppose all such instances, and yes, that means firefighters, as well as enforcing any existing property rights, even as a temporary measure until private alternatives exist. That is the parallel, which does not hinge on whether there are externalities.

I have stated before that opposing government attempts to define atmospheric property rights until all governments are out of the property enforcement/definition business, would leave the atmosphere in a tragedy of the commons indefinitely, and that the latter would be very bad. I have also stated that there are ways government could handle the rights that would be worse than a tragedy of the commons in the atmosphere, and that we should oppose policies that would allow this.

That is in no way analagous to supporting nationalization of the oil industry "if we can just get the right people to be in charge"; the comparison is just sloppiness and/or a knee-jerk reaction on your part.

Bob Murphy said...

OK I will do just one more on this thread, since it might be getting tacky for Silas and me to argue on David's blog...

To clarify with the oil nationalization analogy: What I was specifically objecting to, Silas, was your caveat that the government's actions on climate change should be done with "adequate safeguards against corruption." So my point is, sure, if you are going to cover yourself that way, your position isn't so objectionable to me. You might as well throw in, "...and if the politicians listened to the climatologists when handing out the permits."

But my point is, these caveats won't be honored by the actual people in Washington. So I don't know whether you are making a symbolic stance, or if you actually think I'm exaggerating when I say these clowns are going to make a disgrace of cap and trade.

Maybe you guys think I am just cynical because of Waco or the Bay of Pigs or something. No, I am cynical because of the rhetoric coming from the people who will actually be drafting the cap and trade legislation that will probably pass next year. Have you guys seen this analysis of the oil company leasing issue? I know David that you aren't a proponent of more drilling, but I hope even you will recognize that these people are just making up ridiculous statistics to score political points. (Of course Republicans do it too for their proposals.)

Lastly, Silas, you keep expecting me to draw up a plan for something that I do not think is the efficient outcome. You seem to think that in a pure libertarian world, the private courts would have sold off CO2 rights by now. I am not at all convinced of this.

The problem of leakage, the uncertainties in the climate models, and the possibility of geo-engineering in 30 years leads me to think that even in a pure libertarian world, the true "market solution" to the threat of harmful climate change would be Coasian side payments (by insurance companies, Bill Gates foundation, etc.), public persuasion campaigns, etc. I really don't think the market outcome would be trading in CO2 rights on a worldwide scale. So that's why I feel no obligation to describe how a market would assign such rights.

Bob Murphy said...

Sorry, I forgot to link to my critique of the Congressional analysis of oil companies' leasing of federal land.

Silas Barta said...

Several of the issues raised in my discussions with Bob are handled in greater depth at my new bloggy, and in the posts linked therefrom, so I recommend interested readers to also go there.

Also, before continuing, I'm requesting David Zetland's comments on this discussion.

@Bob: One of my complaints has been that you use your government cynicism inconsistently. If you can dismiss any policy on the grounds that it will get butchered later, you've successfully argued against all policies, including complete conversion to market anarchy! All that government cynicism gets you is rejection of policies that grant too much latitude.

The other inconsitency that bothers me about your position is this: you will scream bloody murder at the prospect of anyone, anywhere, having any amount of land seized from them, irrespective of compensation paid. But when people enrich themselves by engaging in activities that cause entire nations to be flooded, your response is, essentially, "Meh. Deal." What the hell gives?

Now, I want to look at your specific objections:

The problem of leakage,

Enforcement of any prohibition or mandated compensation by any private court is going to have the problem, especially pacifist courts, which is probably why you're perpetually silent about how they'd actually work. What makes it different here?

the uncertainties in the climate models,

Like I argued on the mailing list to others, your moral and economic philosophy must be *capable* of handling the situation if it *were* true, and as far as I can tell you can't. So every time I hear, "climate science isn't true", I also hear, "I'm desperately trying to argue away the results of a field I have no expertise in, in order to patch up an irredeemable hole in my philosophy." Is this a fair characterization?

and the possibility of geo-engineering in 30 years

That's not a solution to the dilemma at hand; it's a *rearrangement* of the dilemma. Someone still has to pay for the geoengineering, and it's not worth it for any one victim to, most likely. If you can't coordinate worldwide CO2 regulations, how can you coordinate worldwide geoengineering purchases? And why should the victims rather than emitters pay?

leads me to think that even in a pure libertarian world, the true "market solution" to the threat of harmful climate change would be Coasian side payments (by insurance companies, Bill Gates foundation, etc.), public persuasion campaigns, etc.

And here is a more fundamental disagreement. While such a world would have the *structure* of a libertarian world, it would not have the *morality* of a libertarian world. I do not envision a libertarian world as one in which some can so severely victimize others with such impunity.

David Zetland said...

Silas -- what, in particular, shall I comment on? You guys seem to have a good dialogue going.

I *will* say that geo-engineering is stupid. If anything, engineering (usually gov't engineering: USACE, Reclamation, et al.) has got us *into* a lot of these problems.

Bob Murphy said...

Silas,

I'm not going to argue with you point by point here. Unless I say, "You're right, Silas, and I've been a jack*ss for doubting you this whole time," you will never be satisfied. I don't think I am anywhere near to saying that at this point, and so I'm dropping this argument until you or I publish something in a more official venue. E.g. if you write something up on this and get it published somewhere (even if the equivalent of LRC), then I'll happily debate it on a blog thread spurred by the article's publication.

Bob Murphy said...

David,

You said:

I *will* say that geo-engineering is stupid.

Wow, you guys are really confident in what the world will be like in 30 years. Are you really that sure?

I wasn't there myself, but I've read that people in 1900 were really concerned about the problem of horse manure in growing cities. People conducted exptrapolations and showed that with the rate of growth thus far established, Manhattan would be buried in horse dung by the year 19xx.

If someone had said, "I'm not going to worry about it, I think someone will mass produce oil-burning automobiles within 40 years," what would the cautious scientists have told him?

We don't have a clue what the technological situation, and the understanding of climate change, will be like in 30 years.

If you want to say, "geoengineering is a very risky strategy and I can't support it," OK fine. But to casually dismiss it as "stupid"?

It would be pretty tragic if the world "spent" $10 trillion on mitigation efforts, and then in 2027 somebody perfected a way of cheaply using microbes to condense immense quantities of atmospheric CO2 back into a storable liquid fuel, such that individual companies in this new industry could reduce CO2 by 1ppm each year starting in 2028. (Sorry for the long sentence.)

Incidentally Silas, this kind of thing shows how you are mishandling the geo-engineering suggstion. You are assuming it would cost the same as mitigation efforts, but no, that's the whole point: It might cost $2 billion to put enough solar panels into space to both (a) generate power for space stations and (b) reduce sunlight hitting the earth. And it's self-financing. So private industry might do that, even though the market couldn't coordinate $2000 payments from 6 billion people on the planet in order to pay trillions emitters to switch to low-carbon techniques.

David Zetland said...

Bob,

I've never seen geo-engineering work as advertised. Often it doesn't even work at all. Messing with nature (levees, river routing, introduced species, dams, etc.) almost always has negative, unintended consequences.

Do you have any examples of where geo-engineering worked well? Perhaps the best example are dutch dykes, but they are OLD technology that's not too far from the natural process...

Bob Murphy said...

David,

Well, I guess we have to define what we mean by "geo-engineering." E.g. I think agriculture and animal domestication were good ideas.

You and I would probably agree on the disasters wrought by the TVA, and the Chinese government more recently, but I think that is more a reflection of unaccountable bureaucrats getting taxpayer money to do stuff, rather than a reflection on man's inability to alter nature in positive ways.

Just to be clear, I am not recommending that the gov't spends $3 billion per year studying geo-engineering solutions. I too would be afraid of what they did to "save the world."

As you may have learned from my critique of Nordhaus, I am not nearly as convinced as you are, that something drastic needs to be done within the next 20 years. What I am saying is that even if it turns out to be the case, we will have so much more information in the future that I think we should be very hesitant before letting a genie out of its bottle today (i.e. worldwide gov't control of carbon emissions).

Silas Barta said...

I've responded to Bob's post on his blog and that includes correcting his assumption that I shared David's pessimism about technology.

@David: Since Bob won't respond to me, perhaps you could bring up the corresponding problems when societies *don't* identify and internalize externalities early enough, such as the Dust Bowl or overhunting of ocean-wide species. (Wow, talking about natural resource economics reminds me of knowledge I didn't even know I had about the topic!)

TokyoTom said...

Bob, actually there was a surprising amount of common ground among Bailey, Smith and Kiesling, and shared agreement at least on deregulation of electricity and that much of the ad homs against Gore are unfair.

I have a summarized the key disuccsions by all speakers here: http://mises.org/Community/blogs/tokyotom/archive/2008/06/23/good-stuff-ron-bailey-fred-smith-and-lynne-kiesling-debate-climate-change-policy-at-reason-org.aspx

TokyoTom said...

David, thanks for the link on carbon taxes. I'm glad you found it useful.

TT