A commenter on a old post of mine about global warming points at a response by Greg Mankiw. Both are from 2007. The issues have not changed since then and, while I responded to Mankiw at length by email, I do not think I ever did so publicly.
Mankiw supports a carbon tax. I argued that while a carbon tax might make sense as the answer to the question "what is the best policy for dealing with negative externalities due to global warming," it did not make sense as the answer to the question "what policy should economists support to deal with global warming" since there was no good reason to believe that, if a carbon tax was implemented, it would take the form economists would recommend. Interested readers should probably read both my post and Mankiw's before going on to my response below, which I have copied from my email correspondence with him.
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It seems to me that you are making the error that was the norm in textbooks and the profession fifty years ago, before public choice theory. You are evaluating proposals for government policy on the basis of what they could do if optimally implemented not on what one can expect them to do given the incentives of the people making the decisions—what used to be referred to as the philosopher king model of government. It makes no more sense than evaluating the market alternative on the assumption that all the decision makers in that case will act to maximize social welfare rather than in their own interest. The question is not whether an optimal carbon tax designed and enforced by wise and benevolent economists would produce net benefits—very likely it would. It's whether passing a carbon tax designed and implemented as we can best expect it to be would produce net benefits.
Two further points with regard to your original blog post:
1. I wasn't making a slippery slope argument. If I had been, I would have argued that carbon taxes would initially be a good thing but would set the precedent for other bad things. In fact I argued that, as implemented, they would probably be a bad thing. As I made explicit in my post, it was a public choice argument—completely ignored in your response. I plan to send in my complaints to the Society for the Protection of Straw Men just as soon as I can find their email address.
2. My argument is consistent with my father's views. For evidence, take a look at the discussion of professional licensing in Capitalism and Freedom. The argument is not that professional licensing, applied by wise and benevolent officials, could do no good. It is that we can expect, on grounds of both theory and evidence, that professional licensing will usually be controlled by the profession and used to restrict entry and raise prices.
If you look again at the quote from him you link to, he isn't saying that one should recommend policies independent of how one thinks they will be implemented—consider the "in light of what can be done." Professional licensing that isn't captured can't be done, or at least not reliably done, on the evidence. He is saying that one shouldn't refrain from making a proposal merely because you think it can't be passed.
In this context, the implication is that one might argue that a specified form of carbon tax would be a good thing and simultaneously that any carbon tax that could be passed would be a bad thing. I don't believe that is your position.
And, again:
Can you see any hint of evidence that the people proposing cap and trade have made any effort to estimate marginal cost of reduction of carbon dioxide, optimal level of emission, or any of the information necessary for a scheme designed to actually produce net benefits?
Isn't that question relevant to how one can expect a carbon tax (or cap and trade) to be implemented, and isn't that relevant to whether one ought to be in favor of it?
Two further points with regard to your original blog post:
1. I wasn't making a slippery slope argument. If I had been, I would have argued that carbon taxes would initially be a good thing but would set the precedent for other bad things. In fact I argued that, as implemented, they would probably be a bad thing. As I made explicit in my post, it was a public choice argument—completely ignored in your response. I plan to send in my complaints to the Society for the Protection of Straw Men just as soon as I can find their email address.
2. My argument is consistent with my father's views. For evidence, take a look at the discussion of professional licensing in Capitalism and Freedom. The argument is not that professional licensing, applied by wise and benevolent officials, could do no good. It is that we can expect, on grounds of both theory and evidence, that professional licensing will usually be controlled by the profession and used to restrict entry and raise prices.
If you look again at the quote from him you link to, he isn't saying that one should recommend policies independent of how one thinks they will be implemented—consider the "in light of what can be done." Professional licensing that isn't captured can't be done, or at least not reliably done, on the evidence. He is saying that one shouldn't refrain from making a proposal merely because you think it can't be passed.
In this context, the implication is that one might argue that a specified form of carbon tax would be a good thing and simultaneously that any carbon tax that could be passed would be a bad thing. I don't believe that is your position.
And, again:
Can you see any hint of evidence that the people proposing cap and trade have made any effort to estimate marginal cost of reduction of carbon dioxide, optimal level of emission, or any of the information necessary for a scheme designed to actually produce net benefits?
Isn't that question relevant to how one can expect a carbon tax (or cap and trade) to be implemented, and isn't that relevant to whether one ought to be in favor of it?
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