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They Come Around In The End You Know, They Do Come Around

The Guardian treats us to a piece on how a revenue neutral carbon tax is the answer to climate change:

A carbon dividend feels like a novel, unusual idea. There certainly aren’t many directly comparable fiscal mechanisms in place. But if now isn’t the time to try bold new solutions – when we’ve seen that governments can move mountains in the right circumstances – then when is? And though it looks radical, the dividend really is just a rather elegant solution to a major problem, which neatly circumvents many of the usual political objections to increased taxation. It might even be the first highly popular tax.

Moving market-oriented economies off fossil energy is going to be a long and difficult struggle. Funds will also have to be found to ease the burden of the energy transition in fossil-dependent parts of the economy, helping displaced workers and supporting the communities where they live. But marshaling the power of the price system to rebalance the whole economy away from carbon-intensive industries – while supporting those on lower incomes – seems like a wonderful place to start.

If only we’d been doing this already we’d have got somewhere, right? Especially as someone did tell The Guardian this in 2008:

But enough of this triviality and on to the much more important point: the environmental movement seems to be as a whole deeply ignorant of what economists have to say about their interests. As above we see that they are not ignorant of externalities, indeed they are central to the way the modern subject is taught. We’ve also known, since 1912 or so, how to deal with them: we might tax negative externalities (CO2 being an obvious example) and subsidise positive ones (as we do higher education upon exactly this justification), the 1912 date being when Arthur Pigou published on the subject in Wealth and Welfare. It’s difficult to get much more mainstream as an economist than professor of Economics at Cambridge really and yes, the recent Stern review on what we should do about climate change did indeed advocate the use of Pigouvian taxation. We also have Greg Mankiw, a professor of Economics at Harvard (and a Republican to boot) founding the Pigou Club to push for this as a solution.

That same person going on to point this out at The Guardian today in fact:

Sure a revenue neutral carbon tax is a good idea. That’s why it’s the central recommendation of the Stern Review from all the way back in 2006. It’s also what William Nordhaus has been recommending since the 1990s and is a large part of what he got his Economics Nobel for.

It’s also why 90% plus of economists asked “Well, what do we do about climate change?” have been saying “Have a carbon tax” since whenever.

Yes, obviously, the problem is that emissions aren’t in prices so, adjust prices so that emissions are in prices. Then everyone’s every economic decision takes account of emissions. The basic idea, “Pigou Taxes” is a century old and even economists manage to catch up over that sort of period of time.

As, umm, I pointed out in this very newspaper in 2008:

https://www.theguardian.com/commentisfree/2008/jun/10/economics.climatechange

The solution to climate change is a revenue neutral carbon tax. So, why have we all wasted a dozen or more years without getting on with it?

At which point why is it that it has taken the idiots a dozen years to wake up to the solution? You know, given that it apparently is the most urgent threat to our entire existence?

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Boganboy - The Chemtrail Kid
Boganboy - The Chemtrail Kid
8 months ago

I’d just add the maximum amount of sulphur possible to jet fuel. The increased reflectivity of the cloud layer would reduce the sunlight reaching the surface and cool our fevered planet.

Even better, when the interglacial ended and the ice began to creep south from the pole, they could just reduce the sulphur to the minimum and warm us up again.

Spike
Spike
8 months ago

Simple! but unfortunately, this assumes certainty on the direction in which the global climate is headed, on which the human race has done a complete 180 in the span of a single generation. And assumes change is mostly man-caused, while science still doesn’t have an uninhabited Earth as a control!

It’s not you adjusting the sulphur, it’s the legislature. And their lobbyists from agriculture want it warmer, while ski operators want it cooler!

dodgy geezer
dodgy geezer
8 months ago
Reply to  Spike

“It’s not you adjusting the sulphur, it’s the legislature.”

It’s not the sulphur that wants adjusting, it’s the legislature.

There. Fixed that for you…

Spike
Spike
8 months ago
Reply to  dodgy geezer

This is too clever for me to understand. If you are saying that this issue is not about what it’s about, but is about political jockeying, I agree.

dodgy geezer
dodgy geezer
8 months ago
Reply to  Spike

I would also agree, if I knew what i was talking about. I remember explaining it to myself some time ago, but unfortunately I wasn’t listening…

Ian Baxter
Ian Baxter
8 months ago

We use to have a Carbon Tax here in Oz compliments of Julia Gillard. The biggest sinners were targeted and they just happened to be the power companies. Income taxes and the personal tax-free threshold were adjusted to compensate for the inevitable flow on of an increase in costs. Then along came Tony Abbott promising to repeal the tax and by implication lowering household power bills. And no mention of re-adjusting income taxes. We like freebies as much as everyone else so we voted the Mad Monk in. And in the meantime all the urbanites are bitching about climate change… Read more »

Spike
Spike
8 months ago

But it isn’t the most urgent threat to our existence! The most urgent threat is all-powerful government! But you are willing to embrace a “revenue-neutral” carbon tax (a lie with no consequences, like “15 days to slow the spread”) out of enchantment that your ADVERSARIES come around to your “novel, unusual idea…bold new solution…” They might offer you personal recognition for the innovative solution to the crisis THEY DEFINED. Scary weather! to be solved by, ultimately, the United Nations!

Tim the Coder
Tim the Coder
8 months ago

If you have a carbon tax, are you allowed to breath without proof you’ve paid?
Do you need to exterminate all wild animals for tax evasion?

Spike
Spike
8 months ago
Reply to  Tim the Coder

1. Under a licensing regime, you are not allowed to do anything without prior approval. And anything you do “is a privilege not a right,” meaning it can be revoked without due process or the presumption of innocence.

2. No. You will be surprised how quickly the legislature codifies exempt groups! “How’s your man in Washington?”

dodgy geezer
dodgy geezer
8 months ago
Reply to  Spike

Actually, you will find that the legislature does not need to be particularly rapid in exempting woke groups. The executive authorities applying the legislation will automatically apply it in a suitably biased manner. Thus BLM protestors will be supported in their rampages and infrastructure damage, while middle-class housewives and pensioners will be beaten up in the streets if they raise their voices….

Spike
Spike
8 months ago
Reply to  dodgy geezer

This particular inconsistency isn’t the legislature but the TV networks, but yes, based on yesterday’s riot, we now conclude that ideas cause misbehavior. Thus Trump must resign forthwith and let Pence play out the streak; but Maxine Waters and The Squad can stay. And Kamala Harris will not be bailing anyone out of jail this time.

Barks
Barks
8 months ago

Has humankind ever witnessed a “revenue neutral” new tax that was not bastardized by the end of the very next session of the governing body, resulting in it being an addition to the tax scheme? It defies all political experience.

john77
john77
8 months ago
Reply to  Barks

That is because anyone who actually really wants to balance the new tax with tax reductions elsewhere *doesn’t need* to talk about “revenue neutral”. SuperMac, Reggie Maudling and Geoffrey Howe didn’t talk about “revenue neutral”.

Spike
Spike
8 months ago
Reply to  Barks

In addition, anyone claiming a new tax will be “revenue neutral” is probably not trustworthy to predict revenue in the first place, as his salesmanship does not allow mention of the new tax’s effect on the production of the thing being taxed.

jgh
jgh
8 months ago

We (in the UK) already pay swinging purchase taxes on carbon fuels, petrol tax, ‘leccy tax, gas tax, plus VAT on top of them.

Quentin Vole
Quentin Vole
8 months ago
Reply to  jgh

Indeed. There’s already ~75p tax on a litre of unleaded, which results in 2.3kg of CO2 emissions, or ~£300 ($400) per tonne. That’s 5 or 6 times what Stern recommended.

dodgy geezer
dodgy geezer
8 months ago

Giving opressive and incompetent governments new excuses for taxation is a BAD idea. The Earth does not seem to be warming according to the raw data. It’s only warming after the data is ‘corrected’. And even then only slightly – the CET data set, for instance, shows England has been cooling ever since 2006. I am sure that many readers here will have seen Richard North’s work on proposing a ‘least-disruption’ Brexit. It has failed, because he forgot to include the establishment politics in his proposals, and they were happy to cause disruption so long as their status quo was… Read more »

John B
John B
8 months ago

When the French Govt passed a ‘revenue neutral’ carbon tax, it was struck down by the Constitutional Court on the grounds it would be impossible to ensure revenue neutrality throughout France as rural France had little public transport and thus more car use, and a big reliance on LPG and heating oil. Plus the Act contained so many exceptions so as not to bankrupt industry and businesses, it could not possibly meet its stated aims. The Govt then bemoaned the fact not being able to impose the tax would leave a 4€billion hole in the budget – so much for… Read more »

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