Convergence of forces

John Boehner has committed the house majority to accept new revenues under the “right conditions”.  The California legislature has a 2/3 D majority in both houses, which means it can actually raise taxes, and the CA electorate that pulled the legs out from under its government a third of a century ago voted to increase taxes.  The presidential candidate who wants to raise taxes on the rich won. The American public evidently views those who take without giving back as morally culpable: when Romney blithely and wrongly tarred half the population with that brush, voters despised him for it.

The “conditions” are now right: I add to the foregoing the occurrence of a climate-change-mediated catastrophe unprecedented in US history, along with a basso continuo ostinato of drought, steady sea-level rise, melting of the arctic sea ice, glacier retreat and all the rest.  What did James Inhofe say about Sandy? This would be an excellent time to do as Bob Frank advises: tax bad things and not good things,  and one of the worst things is the takers who use up the finite capacity of the atmosphere to process CO2 without paying a dime for it.  Everything Romney wants to believe about retirees who paid their social security taxes all their lives (not to mention sales tax this very week) is wrong about them, but right about us: takers and free-riders.  More if you light your house with coal electricity and drive a big car when you don’t have to, less if you bike to work and happen to live where your power comes from a dam or a nuke, but takers, all of us.

Every economist wakes up in the morning with a little prayer that more things should be sold at their real marginal cost, but the survival of an inhabitable planet is being sold way below cost and we’re using up too much of it.  Economists are praying from the right missal here.  Many have a little too much faith in getting this particular price right: properly responding to global warming, even with a atmosphere user fee working its incentive magic throughout human affairs, still requires government to provide things like bike paths and trams.  But the moral case and the technical case for what I prefer to call a “carbon charge” – because that’s what it is, a user charge for services you consume and therefore deny to others – are perfectly aligned.  We’ve wasted two decades hoping for a magic bullet climate policy that requires no heavy lifting by anyone and maybe will make a fortune for an existing interest group: denial? cap and trade? clean coal? biofuels subsidies and mandates?  Understandable hope, but doomed like all magical thinking. If we don’t get the prices right, and we expect the whole economy to flout the law of demand…well, better think about selling that coastal property.

California has been out front with climate policies and would be an excellent place to pilot a carbon charge.  Twenty dollars a ton, increasing at 5% per year for a couple of decades would be not bad. And nationally: unless he can’t read election results, Boehner should find it easy to get a lot of his caucus behind a revenue measure that doesn’t have to be called a tax (my framing is not a quibble or a verbal trick).

 

Comments

  1. NCG says

    Amen. It would be great to have some way to ease the pain for low-income people, but even without that, I think we have to do it. We’ve certainly run out of excuses not to.

  2. Dan Staley says

    what I prefer to call a “carbon charge” – because that’s what it is, a user charge for services you consume and therefore deny to others – are perfectly aligned.

    Agreed – we charge a fee to use the landfill, yet there is no charge for the airfill. As soon as we start pricing things like pollution and water use, market signals will drive behavioral changes; behavioral change will not happen until then.

  3. kevo says

    How about a recycling requirement for manufacturers of resource heavy capital goods like automobiles, large household appliances and that occasional mega-yacht owned by our beloved 2%ers. A dismantling process for future, recycled materials to fill the future gaps in such things as copper mining and metallurgy. If our manufacturers were legally required to provide consumers user friendly instructions on how to scrap that car or turn in that ancient refrigerator, and had an infrastructure better than the now Pic-n-Pull destinations or curb-side pick up, to coordinate efficient and effect reclamation of needed industrial materials, would we not achieve yet another moment of rewarding sound practices and punishing detrimental economic traditions?

    • Cranky Observer says

      = = = How about a recycling requirement for manufacturers of resource heavy capital goods like automobiles, large household appliances and that occasional mega-yacht owned by our beloved 2%ers. A dismantling process for future, recycled materials to fill the future gaps in such things as copper mining and metallurgy. If our manufacturers were legally required to provide consumers user friendly instructions on how to scrap that car or turn in that ancient refrigerator, = = =

      That’s been the law in the EU for at least 10 years now; phase-in should be just about complete.

      Cranky

      That said, most heavy goods are pretty recyclable even if not designed for disassembly. For that matter the scrap guys around hear pick up almost everything we put out. Electronics are a problem though.

  4. dave schutz says

    I think a carbon tax, and for revenue, is a wonderful way to go. We have to raise a lot of money if we are even to be able to keep doing what we have been doing, still less do big new things. A lot of the things we do with carbon are at least partially optional: we can choose 55 degrees and a sweater, or 75 degrees and not bothering to weatherstrip the windows. It aligns personal incentives with what is good for the country/economy.

    Another good way to align private incentives with public goods is to pay for most of the cost of roads from tolls. Useta be, the big economic cost of tolls was lost time for people waiting at the booth. Now, you can have scanners reading bar codes on the windshield as you drive by, no deadweight loss from waiting. There’s no better way to encourage car pooling! You win both ways: people behave better, and the roads get paid for.

    Kevo – we had a house fire, and had to pull a lot of stuff out of the damaged part of the house to rebuild. There were many eager recyclers coming around for our copper and iron! I remember the rusting hulks of 30s Buicks by rural roads when I was a kid – all of those have been scooped up and there are signs on the lamp posts offering $200 for any car, any condition. Towns like mine are trying to squelch the free lancers who come around looking to recycle stuff put to the roadside on trash day. Victor Davis Hanson has written sad tales of metal thieves in the San Joaquin Valley. So I don’t think we need recycling requirements, this is happening.

    Mike – I think Charles WT is not wrong, a pilot program in Cali would send a lot of jobs to Arizona. This should be national, and for revenue. The Mexico border is enough of a barrier that people would think twice about moving an economic activity. The Arizona border, not so much.

  5. says

    We need carbon taxes (and other internalizations of pollution costs) *and* higher taxes on rich people. It’s not either/or. Especially because environmental taxes are ultimately self-limiting — you can decide to implement all those low-emission processes people have been laughing at for decades, but you mostly can’t stop people wanting to earn more money.

    I’m not sure about Arizona getting a lot of job gains, though, at least until they get rid of all their rules about being out in public while not white.

  6. Ron E. says

    Right on. This is the only kind of tax reform that makes sense right now: replacing part of our current taxes on work with taxes on pollution. Therefore it will never pass the House of Representatives which is where good sense legislation goes to die. It’s a great dream though.