Why Carbon Taxes Work
timharford.com
Why Carbon Taxes Work
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Re: Why Carbon Taxes Work
#2As long as the pollution tax is higher than the cost to clean up the pollution it works, because then the company cleans up the pollution for you.
Also massive incentives to reduce pollution, and reduce cost of pollution cleaning technologies.
Re: Why Carbon Taxes Work
#3Carbon Taxes work because the market can't solve a problem it doesn't have a price for.
Knowing the word "externality" is all you need to know.
In the Adam Smith/Ayn Rand fantasy of money and the invisible hand, markets are a form of Artificial Intelligence. The fantasy is this AI can run the markets better than any centralized authority. Even if we assume that's true right now the AI has no price for carbon, can't take into consideration, hence it can't "solve" it.
This is the equivalent of having a self driving car that wasn't trained to see bycicles. Obviously, it will keep killing cyclists until you give it training data to see them. There is no "market solution" for a blind AI system that doesn't see carbon, because the AI has no data set for carbon costs.
Re: Why Carbon Taxes Work
#4Carbon Taxes work because the market can't solve a problem it doesn't have a price for. Knowing the word "externality" is all you need to know. In the Adam Smith/Ayn Rand fantasy of money and the invisible hand, markets are a form of Artificial Intelligence. The fantasy is this AI can run the markets better than any centralized authority. Even if we assume that's true right now the AI has no price for carbon, can't t…
So who do you propose to be the centralized authority?
Re: Why Carbon Taxes Work
#5I agree that externalities should be priced in - but I wonder if in practice Governments would end up footing the bill via subsidies.
For example, look at what happened in France with the fuel tax rise which lead to the “gilets jaunes” protests.
If people need to get to work and heat their homes etc. then putting a tax on all of that will hit them hard while the rich will be relatively unaffected and can continue polluting. A simple flat tax on CO2 emissions, while far easier to implement, would be regressive compared to one that scaled with your personal emissions or something.
Such a regressive tax, levied on basic things like energy, fuel etc. that are fundamental to normal life seems incredibly likely to trigger political unrest as we saw in France.
Re: Why Carbon Taxes Work
#6It depends on who gets the taxes.
If it goes to greedy bureaucrats that waste it or are themselves bought and for it will be worse than no tax at all.
Then the system will be used by lobbiests to attack one industry in favor of another.
Re: Why Carbon Taxes Work
#7Global warming is a global problem. While carbon tax would be levied locally, creating incentives to just shift production to low or no tax locations.
Just as harmonisation over Cororate Tax is finally emerging, similar cross-border agreements should be needed for a Carbon Tax.
Re: Why Carbon Taxes Work
#8Watch "Lords of Scam". Carbon taxes not only don't work, they breed corruption.
Re: Why Carbon Taxes Work
#9Global warming is a global problem. While carbon tax would be levied locally, creating incentives to just shift production to low or no tax locations. Just as harmonisation over Cororate Tax is finally emerging, similar cross-border agreements should be needed for a Carbon Tax.
it's complicated, but could tariffs help?
Re: Why Carbon Taxes Work
#10I agree that externalities should be priced in - but I wonder if in practice Governments would end up footing the bill via subsidies. For example, look at what happened in France with the fuel tax rise which lead to the “gilets jaunes” protests. If people need to get to work and heat their homes etc. then putting a tax on all of that will hit them hard while the rich will be relatively unaffected and can continue pol…
> If people need to get to work and heat their homes etc. then putting a tax on all of that will hit them hard while the rich will be relatively unaffected and can continue polluting.
So much this. Here in NL, my heating bill is 70% tax and 30% gas charges (not exaggerating).
The government claims to do this to encourage installation of better insulation and other energy saving measures - however, as a renter (like the vast majority of NL is), I can’t do anything about this and just pay the exorbitant heating bill (1). I have no option but to use gas, and even if I move to a (rare) neighborhood with city heating, they’ll charge me the same amount (2).
(1) https://www.dutchnews.nl/news/2021/09/as-gas-bills-rise-more...
(2) https://www.dutchnews.nl/news/2021/11/homes-with-district-he...