Carbon Pricing: The Price Is Wrong

By Gar Lipow, a long-time environmental activist and journalist; his book Solving the Climate Crisis through Social Change: Public Investment in Social Prosperity to Cool a Fevered Planet was published by Praeger Press last year. Cross-posted at Triple Crisis.

For U.S. climate activists to succeed, they must demand serious government spending on energy efficiency and renewables—spending comparable to the current war budget. Calling for hundreds of billions in annual green public investment has potential for the popular appeal needed to build a powerful grassroots climate movement. That investment would be the best policy as well. Massive clean energy spending would not only provide jobs and economic growth on a grand scale. It is the most effective way to reduce greenhouse gas pollution.

It is widely, though not universally, acknowledged that solving the climate crisis will require public investment and subsidies, efficiency regulations and clean energy requirements, plus a price on greenhouse gas emissions. (The idea behind a carbon price: polluters pay per unit of greenhouse gas pollution released.) But, in practice, policy advocates tend to fetishize the carbon price and drop other requirements. For example, James Hansen, perhaps the world’s leading climate scientists says “If we would put this price on carbon it would favor renewables, and it would favor energy efficiency, and it would favor nuclear power—it would favor anything that is carbon-free… ”[i] Charles Komanoff and James Handley of the Carbon Tax center describe a carbon tax as the “sine qua non of effective climate policy”.[ii] Mainstream environmentalism tends to favor cap-and-trade over carbon fees, which indirectly results in a price on carbon. Between carbon tax and cap-and-trade advocates, most climate change opponents prioritize carbon pricing. Few join Komanoff in referring to such pricing as the “sine qua non” of carbon policy. In policy discussions, however, most environmental economists start with cap-and-trade or a carbon fee, and many never discuss anything else.

What is wrong with this? Since we can’t phase out greenhouse gas pollution instantly, it seems fair to require polluters to pay something in return for the damage they cause until that pollution ends. Further, such payments provide some incentive to reduce the amount of greenhouse gas pollution emitted.

The problem arises when pollution prices are prioritized over other solutions. The climate crisis cannot be solved without huge infrastructure investments: wind turbines, solar panels, transmission lines, smart grid upgrades, trains, electric cars and efficiency improvements. Historically new infrastructure has never been built solely or largely as profit seeking, risk taking behavior in response to what economists call price signals.

Consider United States history. The Post Office was considered so essential it is mentioned in the Constitution. The Erie Canal, an early major infrastructure project in the United States, was financed primarily by New York State’s ability to borrow. Telegraph companies paid nothing for rights of way whose value far exceeded money invested to construct them, and direct government funds besides. The great intercontinental railroads were granted free rights of way, plus land on either side of the tracks for real estate development. Similarly, streetcars in cities flourished based on free or discounted rights of way, and other subsidies. Water and sewer infrastructure is mostly public in the United States, and always publicly subsided. Fossil fuel pipelines are granted public rights of way, and often delegated power of eminent domain to secure easements from unwilling private landowners. Electric lines, phone lines, broadband lines require similar arrangements. Public wireless spectrum is sold to private interests at far below market value. Highways, roads, airports and water ports are financed publicly, with very rare exceptions.

Maybe a massive transformation in energy producing and consuming infrastructure can reverse this. For the first time in history a change of this magnitude might be largely privately financed, with public involvement mainly being in the form of ’getting prices right’. Maybe direct public investment and regulation other than setting a carbon price can be supplements rather than the main means. But contemporary as well as historical evidence suggests otherwise.

When deciding where to invest money, businesses generally demand extremely high expected rates of return for energy savings, and other flow operating costs (such as water and raw materials) compared to returns on general investment[iii]. the primary reason businesses give is that energy (and other flow) savings are “not their core business.” In practice, “core business” usually equals increasing labor productivity. Labor savings increase leverage over workers in a way that savings in energy and other flow costs do not increase leverage over suppliers.

Response to price increases is similarly sluggish in owner-occupied residential buildings. because capital is much more expensive for individuals than firms and because people feel the need to maintain savings for emergencies (including job loss). So individuals require much greater returns before, say, upgrading insulation in buildings than utilities require before investing in new generation. Renters have even less incentive to invest in insulation, which becomes a gift to their landlord whose value they may not recover before moving out.

Another reason price should not be the primary driver of change is that we simply cannot measure local emissions with a reasonable degree of accuracy or precision. Gases released into the atmosphere spread quickly, so taking samples in a few spots gives us a very good idea of worldwide greenhouse gas concentrations. But local emissions are very difficult to measure, and both precision and accuracy is very rough at that level. Charging a carbon price as far upstream as possible (upon extraction or import), as far downstream as possible (during use) or midstream (during refining or processing) makes no difference. Carbon content within similar types of fuel, and methane and black carbon emissions associated with extraction, transportation and combustion vary too greatly to measure pollution per unit of fuel with much precision. Even a highly imprecise and inaccurate price provides a better incentive to reduce use than a price of zero. But that rough-and-ready incentive is all a greenhouse gas emissions price provides, an incentive people respond to slowly and partially.

So far I have discussed policy reasons why a carbon price should not be the “headline” in climate change policy. But there are important political factors as well. Polls show that a majority of American oppose a carbon tax. One recent poll includes a fee-and-dividend where carbon tax revenues are returned to consumers, without significantly increasing support[iv]. In the same poll, opinion about cap-and-trade public opinion is mixed, divided roughly between support, opposition, and don’t understand/undecided, though opposition is larger than support.

Politically, cap-and-trade and carbon taxes have always been policies designed to bring powerful interest groups on board. The powerful political interests that oppose doing anything to solve the climate crisis, however, won’t yield to persuasion and deal making. They are not parties to a negotiation; they are obstacles that need to be bulldozed by a grassroots political movement. In terms of policy, the best chance of building such a movement is for supporters to headline popular concepts, such as public investment, rather than unpopular or weakly popular ones such as carbon pricing. Climate activists will find more success in a grassroots coalition built around popular large-scale green investments that directly provide jobs and economic growth than trying to attract support with an approach centered around pollution pricing policy.

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About David Dayen

David is a contributing writer to Salon.com. He has been writing about politics since 2004. He spent three years writing for the FireDogLake News Desk; he’s also written for The New Republic, The American Prospect, The Guardian (UK), The Huffington Post, The Washington Monthly, Alternet, Democracy Journal and Pacific Standard, as well as multiple well-trafficked progressive blogs and websites. His has been a guest on MSNBC, CNN, Aljazeera, Russia Today, NPR, Pacifica Radio and Air America Radio. He has contributed to two anthology books, one about the Wisconsin labor uprising and another on the fight against the Stop Online Piracy Act in Congress. Prior to writing about politics he worked for two decades as a television producer and editor. You can follow him on Twitter at @ddayen.

35 comments

  1. Colinjames

    Halleluja. Jobs jobs jobs, tax + cap and trade is about the easiest thing for the right to rally against. Frame out as welcome to the 21st century, too, since we’re stuck in 1950s infrastructure for way too long now.

  2. JL Furtif

    Another way to look at this, is to look at the replacement cost. 1L of fuel contains about 10kWh of energy (apologies for the weird units). An adult can deliver about 200W of energy, so he needs to work ~50h to deliver the power equivalent of 1L of fuel.
    At 10$ an hour and 3.78L per gallon, that puts your fuel at 1890$ per gallon. Such prices would put an immediate end to the 1%-efficient cars everybody is so proud of.

  3. Ran

    This seems the equivalent of the broken-window stimulation solution in economics. To stimulate the economy, we could break windows, requiring home owners and land lords to replace them. Further, to correctly price those windows, we charge a large tax to compensate the poor who must replace windows, train the window replacers, and the bureaucrats to keep everything fair.

    Capitalism clothed in the emperor’s best?

  4. Brooklin Bridge

    Make it rent extraction

    The trick for energy efficiency is 1) to make upgrading mandatory and 2) to require that homeowners can’t do the work themselves, but must contract “licensed” firms to come and do it. This is the model for everything now-a-days and boy does it allow for some dizzy pricing.

    The only ingredient missing is to simply move straight away to the rental approach. Here, one would be mandated (might as well change the constitution) by federal law to pay insurers a monthly fee to cover their “energy efficiency” needs. The insurers would in turn have licensed contractors who would deal with all the myriad codes and restrictions generated by computer, booze, and drunken legislators acting on the wet dreams documents written by the construction industry. They (the contractors) would in turn sub-contract the work to illegal immigrants bused in for the job at a fraction of a livable wage and would pass any fines for illegal cost cutting work that was caught by the stray “honest” inspector along to the consumers via built in co-pays for unusual work circumstances (blame it on the building).

    The consumer would simply pay a monthly fee for all this, along with the monthly fee for auto insurance, and the monthly fee for health insurance, and the monthly fee for real estate taxes, and the monthly fee for telephone, water, internet, and I assume the monthly fee for air to breathe in the not too distant future.

    1. Brooklin Bridge

      Note, for instance, you can’t go into HomeDepot and buy the component material to make yourself a solar installation a la cheap. Instead they try and sell you a rent extraction model where you sign up for a nice long contract in which you must pay some monopoly a monthly fee to come and install something at your home that you may or may not want and which you may or may not be able to change if you find it totally inappropriate. You will be renting that from them, along with all the other things you are renting for a long long time at prices they maintain are incredibly cheap, ha hahaha ha haha, heh. That would be fine if it were optional, if you had a choice in the matter, but it is becoming less and less so. The industry is seeing a huge potential for rent extraction rip off here and they are moving swiftly to get the legislation in place that will tie your hands completely as to what you can and can’t do and how you can do it. Basically, you can’t do anything, but you can pay to have a monopoly industry do it. It will be totally illegal to do any of this your self unless you are very rich. There will always be a loop-hole, of course, for the wealthy.

      The fact of the matter is that once we get going on the climate issue, if we get going at all, and we will only get going when there is massive suffering to humans and the civilized animals, we will use the same sick greedy corrupt pathological solutions to it we use for everything else right now.

    2. Lyle

      Actually if you raise the price enough efficiency will occur because its cheaper to replace units with more efficient ones. This has been true since James Watt improved the steam engine. The pricing for Watt and Bolton engines included a factor for the fuel saved in running the engine. (The older Newcomen engine only made economic sense at a coal mine where the fuel was almost free). Slowly ramp the pricing up over 20 years at say 5% per year and more efficient items will replace less efficient items as the older items wear out.

      1. Gar W. Liopow

        >Actually if you raise the price enough efficiency will occur because its cheaper to replace units with more efficient ones.

        Yeah that is the standard economic story. But in today’s economy, that is an amazingly slow process. Because a lot of profitable opportunities to save energy are not being taken advantage of now. As the article says, it is not that a price won’t have some effect. But to get the depth of change we need will require massive public investments – not to mention phasing out fossil fuels quickly enough.

        Even the old story you tell about Watt’s steam engine is not complete. Why was coal mining competitive with wood in the first place? Enclosure of the commons (state sanctioned violence by aristocrats to privatize common resources) not only took over fields used to grow row crops, but common woodlands used to provide fuel. That helped ensure markets for coal. It also drove people out of the farms and to the cities and helped ensure demand for coal there. Even then coal needed the great ports that coal barges (and to a lesser extend wagons loaded with coal) traveled along. And later on the rail lines along which coal moved. Even the coal revolution was not pure innovation and price pull – but required substantial government intervention.

        1. Gar Lipow

          Er – typo above. Obviously the barges traveled along rivers and canals. They needed the ports to land in. But also the canals themselves were publicly funded and encouraged in various ways.

          1. Synoia

            Why was coal mining competitive with wood in the first place?

            Becuse they ran out of wood for charcoal.

            1. Gar Lipow

              Yes coal became competitive because they ran out of wood for charcoal. Why did they run out of wood for charcoal? Well in part because of the enclosure of the commons. Land that had been farmed in common and woods that had been used in common as a source of fuel were cleared – sometimes to grow row crops, but often to raise sheep. That is where the old crack about England where “the sheep eat the men” came from. And it was cleared by force, with the weight of the Crown behind it. Not something to emulate. But there was a reason coal became the fuel of choice in England when wood was preferred everywhere else. Woods were cleared for agriculture, mostly sheep, and so England needed coal for fuel. (And if we are not careful, carbon trading can end up being another enclosure of the commons. But that is a different story.)

  5. MRW

    reduce greenhouse gas pollution

    Since 95% of greenhouse gases are water vapor, how to you intend to do that?

    1. JL Furtif

      Water vapor is the biggest, but the average quantities of water vapor have not changed much over recent history. The doubling of CO2, the coming-into-existence of nitrogen oxides, decoupling of methane… are the issue.
      If you have a bathtub that fills with 3 gallon/hour and drains 3 gallons per hour, you’re safe.
      Fill it with 3 gallons plus a drop (a 0,01% something change), and you’re in trouble – but not immediately.
      And the nice thing about CO2 is its generosity. Once it’s out in the atmosphere, it will keep on warming us all for thousands of years.

  6. RogueDave

    IPCC and Climate Change: Politically Driven Science using Flawed Climate Models

    If you’ve reviewed the recently released IPCC document that is the Summary for Policy Makers regarding Climate Change you’ll find it extensively referring to Radiative Forcing or RF. In the video at the link below RF is discussed and show to be Non-Measurable. Additionally, the IPCC models use the flawed assumption of constant cloud cover (they do not allow for variability) and that cloud cover leads to a positive feedback effect, when in reality, could cover causes a negative feedback on warming.

    The presenter, a PhD climatologist shows that permitting just a 1% variability in could cover caused by the Pacific Decadal Oscillator or PDO, explains 70% of the temperature change observed in the data used by the IPCC climate models that predict global warming. In other words, the change in CO2 is not the primary driver of global warming. Instead, variability of cloud cover is and recent data gathered by satellites showing the change in cloud cover is driven by the PDO.

    https://www.youtube.com/watch?v=u_Rfls948H8

  7. anon y'mouse

    the same plan was put up here a few weeks ago.

    electric cars will save us.

    wwII style effort.

    rebuild everything NOW.

    no one has a problem with it. why should I?

    1. anon y'mouse

      this response was to another post.

      for this post: is nuclear truly “carbon free”?

      energy is a necessity for everything. why are private companies the preferred method for this at all? shouldn’t this be a public endeavor, as it will benefit all of us?

      why carrot & stick companies into investing in green energy development, especially as they see it as unprofitable? green energy will inevitably be a lot more expensive than what we have now. why should any company be making a profit from it over and above that?

      I just wonder why the private market solution is always put forward for energy. why not public utilities, community-owned?

  8. Curtis

    My money is on nomadic sheep herders who have a life style that will likely survive all of the machinations of the great investors in a Faustian world.

  9. Michael

    Sadly for your story, global warming seems to have gone on a holiday fifteen years ago and has not returned. Better luck finding a real crisis down the road.

  10. Cassiodorus

    So what is all of this infrastructure for, which we’re supposed to need in order to “deal with” the climate crisis?

    The author seems to have missed the point of WHY Hansen thinks we need a carbon price. Hansen thinks we need a carbon price because the point of a carbon price is to phase out oil and coal and natural gas. The idea, then, is to stop the increases in atmospheric carbon dioxide concentration.

    More infrastructure, by itself, doesn’t do that. More infrastructure, by itself, merely supplements the destructive fossil fuel habit.

    Now I don’t think that a carbon price, all by itself, is going to phase out the fossil fuel habit. Nor do I think more infrastructure is going to solve the problem of the fossil fuel habit if you add the carbon price. The problem is that the oil companies have a commodity to sell, under capitalism, and that they will continue to sell that commodity unless and until we stop them. An international treaty to keep the grease in the ground would stop them.

    http://www.dailykos.com/story/2009/09/24/785731/-Keeping-the-grease-in-the-ground-a-challenge

    Now how would the state keep the economy going if we’re going to phase out fossil fuels? I vote that we revive that old bugaboo, socialism, and give everyone a guarantee of financial security while gradually creating the social basis for the new situation in communal households, co-operatives, and other such structures. People need to be freed from economic necessity to the greatest extent possible if they are to devote their time to dealing with climate change.

  11. jfleni

    Electric Cars??

    OK we need a few, especially for business, but getting rid of all the gas-buggies and their electric analogs in favor of good and widely available PUBLIC TRANSPORTATION is the only sensible way to go.

  12. AndyB

    By the time we really experience global warming, if ever, we will experience the effects of the on-going, uncontrollable and worsening Fukushima radiation, already evident at critical elevations in the Pacific and along the west coast of North America. Millions will get life shortening cancers, but no mention in the MSM? I guess the nuke industry must be protected at all costs. Everyone should google Arne Gundersen and Helen Caldicott, 2 reknown scientists who are trying to sound the alarm, but to little avail,

  13. Michael

    PUBLIC TRANSPORTATION is the only sensible way to go.

    Ever lived anywhere west of the Mississippi? Newsflash – there is life, commerce and infrastructure outside of NYC and public transportation is NOT the answer. Even in major metropolitan areas companies (Microsoft, Google, etc.) create their own transit systems for employees as an alternative to public transportation.

  14. john c. halasz

    Both a progressively ratcheted up carbon tax-and-rebate scheme and a large amount of public investment and indicative publicly guided industrial policy and infrastructure planning will be required. The rebate would cushion the blow of inevitably rising prices, (which will occur ad be felt one way or another), while providing incentives for changes in consumption and investment behavior. There is no need to use carbon taxes to fund infrastructure changes, since public credit systems could readily do the job, whereas rebates would both maintain mass support for the long transition and begin the development of a citizen’s dividend (from what amount to anti-rents), since reduced work hours will have to be part of the long-run solution. (A cap-and-trade system is formally functionally equivalent to a tax, but in reality far more likely to be corrupted by speculative financial and corporate interests). Incumbent interests will be massively opposed to any and all of this, since it would entail massive destruction of the “value” of currently invested capital stocks and the market-dominant rents that accrue to them, But that’s inevitable and no excuse for trading off one part against another of the overall required policy mix.

  15. Gar Lipow

    Again to those who say we need both – I agree! But when you are trying to sell a program of both why emphasize what is the least important and least popular policy? Both are important – but public investment is more fundamental. And Public investment is more popular as well. It is not true that public investment only “supplements” existing fossil fuel use. It can replace large portions of it. We definitely do need carbon price as a supplementary measure. But when you are pushing for change that should not be the headline.

    The people who think a carbon price is primary are trying to avoid the need to make social choices. “Just put a price on carbon and let the market decide what replaces it.” The fact is every infrastructure change happens because government “picks winners”. The USA is as auto dependent as it is because of a series of governmental choices, including letting GM and Standard Oil and one of the big tire companies tear down streetcars, an existing light rail infrastructure.

    If you want to see this article in longer form with more complete citations, you can find it on Grist at http://grist.org/article/the-price-is-wrong-by-gar-w-lipow/

    1. john c. halasz

      ObamaCare is unpopular according to the polls. (I myself dislike it, because it is a crappy half-measure that maintains much current dysfunction). However, if you poll the individual provisions of the package, they generally receive popular support.

      The moral is that opinion polling is not a reliable gauge of popular support, rather than a journalistic convention. The questions and their framing are well known to influence answers and effectively you can manipulate polling to get any result you want. (In depth sociological interviewing, to get at the complexion of what people actually think, is rare, because both too expensive and too methodologically difficult).

      My surmise is the opposite of yours. Once people start receiving some extra money in their pockets and are given a discretionary personal choice for spending it on cost savings or continuing necessities, according to circumstance, they would come around to increasing support. On the other hand, long-term programs of public investment are difficult and will entail jams and set-backs. So maintaining public support throughout the long transition is key, regardless of momentary opinion polling.

  16. Gar Lipow

    How do you get something unpopular (Like a carbon tax) passed in the first place? One way is through deal making. But anything that will work to prevent climate disaster faces too many enemies. Not just to fossil fuel companies, though they are bad enough, but the major fossil fuel consuming industries – the auto industries, the shipping industries, the steel industries, the airlines. And agriculture will have to change (whether forced via a carbon tax or regulations.) So they hate the idea. And buildings will have to be built differently. So there goes most of the construction and real estate industry. And yeah it is short sighted. But since this is Naked Capitalism, you may have noticed that Capitalism is short sighted. And the World Bank pledged to stop funding fossil fuel development projects and then turned around and funded a bunch of new coal projects. So the financial industries are not going to be long-sighted either.

    That leaves the alteranative of a grass roots movement. And grass roots movements don’t form centered around something freaking unpopular! So look. I make a good case that even from a policy standpoint that a carbon tax is the side dish and that public investment and old fashioned regulation is the main dish. And maybe you think the opposite, or at least think they are equal in importance. But I think we agree that all three are needed. So to get all three, why not feature the popular ones – public investment and regulation and then slip in the carbon tax as an “oh by the way we need that too”. And I agree that fee and dividend is the way to do it. As I said in my longer article getting fee and dividend passed won’t be particularly easy, but if we ever do get it giving everybody a monthly check/wire transfer/addition to a free debit card will make it politically immortal. But you won’t win fee-and-dividend as a stand alone program or even as the headline of a larger program. Make it the side note. Let it be carried politically by a program of public investment and regulation. Once a law containing all three is passed, then the divedend part will so popular it will help make sure the whole program is tough to sabotage or repeal. But I’m not just being “clever” in not featuring the carbon price. I think the carbon price legitimately is reinforcement. But even if you want to disagree, you might still find this approach the best politically. Again, let me recommend you read the longer version that goes into more detail and makes the exact point you are making – that a carbon price is unpopular before it passes, but when structure right becomes extremely popular in practice.

    One last point on opinion polling. That a carbon tax is always unpopular until passed and that cap-and-trade varies between being unpopular and weakly popular is not just something a few polls show over even a lot of polls over a year or so. You can look at polls going back decade and carbon taxes are unpopular, cap and trade is usually unpopular, but sometimes weakly popular, but regulation and public investment are strongly popular and popular by wide margins. If we can’t get something through deal making, if we need a popular movement to force the people in power to do the right thing it will have to be centered around something popular.

    Here is a link to the long version. http://grist.org/article/the-price-is-wrong-by-gar-w-lipow/

    1. john c. halasz

      I did read your full post, though quickly. I’ll just add a few points here.

      Polling is largely just a part of the complex of ideological manipulation and shouldn’t be treated as a fixed given. (There is not only little discrimination between degrees of informedness and intensity, but the contradictions in opinions aren’t addressed). I think it better to start out by considering what would be functional and work out from there.

      I fully agree with you that a carbon tax is insufficient to deal with the vast scope of the problem and that it partakes of one of the basic fallacies of neo-classical economics, namely, that the economy is reducible to transactions on a static/simultaneous basis, ignoring the different constraints involved in organized production systems with long-term fixed or sunk cost investment and the interlocking of technological complexes, which is where the main transformation has to occur. However, I think there are advantages with starting there. For one thing, many conservative and even libertarian economists, insofar as they acknowledge the scope and urgency of the problem, favor such an approach, and insofar as a “deal” is to be made short-run, at least on an “elite” level, there is a basis for a limited alliance. For another, the technical problem you raise about measuring emissions, (and especially with methane, where you’re entirely right), is partly addressed by such a tax, since once you put a monetary price on the matter, your create incentives toward developing such measures, (and not just by enforcers). Thirdly, it acts fairly quickly through forward-looking expectations and hits the worst sources of emissions, (such as tar sands), hardest first, since that is where the tax cost-component will be most concentrated and increase the most.

      On the other hand, public infrastructure investment is scarcely immune from the sorts of political economy problems you raise. The public may support it in polling, but equally might support contradictory things such as debt-reduction, or be thinking only in terms of job creation/current employment, (for which it is not the best way), while rejecting “artificial” forms of employment and demand creation, (even as we’d want to transform and not merely expand consumption demand). But most of all, there is nothing to guarantee that public infrastructure spending programs wouldn’t largely be captured by incumbent interests, and serve to reproduce and expand current forms of infrastructure, rather than transform them. Consider, for example, Obama’s neo-liberal proposal for a public/private infrastructure bank. What is the difference between that and direct government borrowing to finance infrastructure spending? About 200-300 bps. extra per year. Some “deals” aren’t worth making, since they foreclose what they ostensibly intend to accomplish.

  17. Gar Lipow

    The difference is that public invetment and regulations let you tackle means where a carbon tax only deals with ends – real problem when the ends are tough to measure.

    The point you make about public investment and regs done wrong are problematic apply just as much to carbon tax. But public investment done right is more effective than a carbon tax done right.

    Polls over the long run, over decades mean a little more than varieations from day to day.

    As to the appeal of a carbon tax to conservatives and libertarians: it has appeal to them only as long as it has no chance of passing. Remember the reason cap-and=trade was originally popular was that it was more conservative that a carbon tax! Instead of levying a tax,(crucifixes come out at the word) create a new property right and give that right away to the rich. (There was even conservative justification; he who is already doing something has the right to go on doing it. So give away the property right to pollute the largest polluters and if the cut pollution, they can sell that right).) Remember the McCain-Lieberman bill which McCain ended opposing? Forget trying to appeal to libertarians and conservatives. They will support action against global warming the same way they “supported” civil rights. Decades after it passes they will claim they always support it, and whatever actions they take to reverse it are “reforms” to make it better. I’m sorry, but there is no point trying to negotiate with conservatives or right-wing libertarians. They are obstacles to be overcome. If the Cantwell-Collins bill had every come to the Senate floor I would bet folding money that Collins would have voted against it.

    1. john c. halasz

      Look. Our political system in its current guise is thoroughly rancid and rampantly dysfunctional. And we’re already 15 years late in addressing the issue much at all. (Polls indicate that public acceptance of AGW has been trending down, even as scientific consensus on the matter has been trending up. And Obama’s speech on the issue amounted to a pro-fracking speech). So nothing will happen until something gives; current “political viability” and forming any mass-based movement around the issue, (together with all the other unaddressed issues of popular interests), are moot.

      But Pigou taxes are standard in the neo-classical tool-kit and economists such as Mankiw and Tyler Cowen have explicitly endorsed them. (By “elites”, I didn’t mean political operatives, and current political representatives, and their moneyed backers, but the cognitive “elites” that ultimately must feed their ideas). Assuming both complete bad faith and complete overcoming there is nonetheless wishful thinking.

      But at any rate, if you’d start with a carbon tax and progressively ratchet it up, say, at 5% with another 5% each year, (while cushioning the blow with rebates), then pressures would build precisely for the sort of public investment, regulation and indicative planning that you (and I) are advocating, in order for business organizations in various sectors to cope with the losses entailed in the transformations that need to occur. History does roughly show that capitalists tend to recur toward state supports, which they otherwise ideologically despise, when their very survival is at stake.

      And I have no idea what distinction between means and ends you are making.

  18. Gar Lipow

    The representatives who actually carry out ideas are acting in bad faith, regardless of what Tyler Cowen does. I know it is bad news that we need a grassroots movement, that our elites (the ones with power) are simply insane.

    In terms of means and ends distinction. What I mean is that you cannot measure emission locally with any great accuracy. And by locally, I include extraction. Even a carbon tax that is levied when oil and gas and coal are drilled, mined or imported will have the kind of variance I mentioned. But we can have standards for cars that say they have to have so many miles to the gallon or better yet must be electric. We can fund trains. We can fund transmission lines. We can build and deploy millions of wind turbines and tens of millions of solar panels. And we don’t need to be able to divide emissions into neat equivalent packages to do those things. At the unit level, we can measure means (factories, cars, buildings and so on) with much more precision and accuracy than we can measure emissions at that level. (We can measure aggregate emissions for the whole nation much more precisely.) So yes, command and control make more economic sense in that context. Does not mean we don’t need an emission price. Needed to prevent rebound effect, and do leak plugging. Plus reinforcement for other policies.

    In terms of the politics. The only way I can see ever doing anything about global warming is an overwhelming victory of forces well to the left of Obama – at the very least very liberal Democrats, maybe to the left of that. I don’t think we will ever get a climate movement that can implement what needs to be done (not even the carbon tax piece) except in the context of a general victory for people who are serious about tacking inequality, opposing militarism and getting the corporations under control, who are out at minimum to undo not just the Bush years, but the Reagan years and the deregulation of the Clinton years, and the deregulation and tax cutting of the Carter years. And that is minimum, not optimum. Like I say I wish I did not believe did. The odds against anything like that happening are overwhelming. So I’d be much happier if I thought there were sane conservatives with actual power who might try to use the climate crisis to advance their agenda while actually doing something that would actually tackle the crisis. But I see zero signs of that. And even most conservative intellectuals like Cowan who acknowledge the crisis downplay its seriousness. So I’m not sure you will even find allies in conservative intellectuals. What I KNOW is that you won’t find them among any conservatives with power.

    There really is something different about today’s corporate elites – not just the system but the individuals. The “Man in the grey flannel suit” would have done something about the climate crisis if knowledge about it had been widespread in his day. It might have been the wrong thing, maybe paving the country from end to end with nuclear power plants, but he would not have pretended it did not exist or was unimportant. Today’s conservatives (I mean again the ones with actual power) can’t be reasoned with. Not even the so-called moderates. They end up backing the lunatics on every important issue.

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