Another defence of a carbon tax -

Another defence of a carbon tax

Economists still think it’s a good idea


Greg Mankiw, an economist, Harvard professor and former advisor to George W. Bush, explains (again) the benefits of a carbon tax.

Yet another problem with such regulations is that they can influence only a small number of crucial decisions. In a free society, the government can’t easily regulate how close I live to work, whether I car-pool with my neighbor or how often I don a cardigan. Yet if we are to reduce carbon emissions at minimum cost, we need a policy that encompasses all possible margins of adjustment.

Fortunately, a policy broader in scope is possible, which brings us to the third approach to dealing with climate externalities: putting a price on carbon emissions. If the government charged a fee for each emission of carbon, that fee would be built into the prices of products and lifestyles. When making everyday decisions, people would naturally look at the prices they face and, in effect, take into account the global impact of their choices. In economics jargon, a price on carbon would induce people to “internalize the externality.”

Of course, the basic logic of the policy only matters so much.

Regulations to reduce carbon emissions are less obvious than a carbon tax and so probably easier to implement (and maybe cap-and-trade is less obvious than a carbon tax). Beyond that, it matters what the public believes and is willing to accept. Do voters believe climate change is a serious threat? Do they believe climate change is so serious a threat that they should be asked to pay more for certain things? Do they believe that their paying more will result in significant mitigation of the threat? Ultimately you get back to a discussion about taxation and the public’s general attitude toward government.


Another defence of a carbon tax

  1. Does anyone believe that higher cost because of a carbon tax will make consumers consume less?

    I don’t believe it. But perhaps Justin can convince us all.

    • JT hasn’t endorsed a CT, not yet, and he may not for pretty much the reason you cite, oh deluded one.

      • Deluded Justin, for sure!

        Sitting on the fence Justin, for sure!

        But hey, if Justin wants to take my advice? Great!

        • So now he’s sitting on the fence…bbbbut 5 minutes ago you were sure he was all for it. One thing i’m pretty sure of, he’ll never take advise from you.

          • When have I said that JT was all FOR a carbon tax?

            “Perhaps Justin can convince us all.” is what I said.

          • So he’s just stupid then. The inference seemed obvious to me. Either way your personal vendetta against Trudeau is pathetic…and boring.

          • If you would stop assuming what I am about or what I am saying instead of not take into account what I really say or what I am really about, then, perhaps, you would come to understand reality a bit better.

          • I for one assumed you were talking about Justin Timberlake at first.

          • Pardon?

    • Of course not. Cost has no effect on consumption.
      We only have to consider that poor people live in the same sized houses, drive the same model cars, eat the same food and enjoy the same exotic vacations as the rich to realize how right you are.

      • If the poor were to be rich, they then, too, would spend as the rich do.

        • You don’t say?

        • I think the groundbreaking economic work that Francien has unveiled on this forum might just solve all our problems if we only apply it.
          All we have do is print a bunch of money so that we can give everyone who isn’t already rich, say, a million dollars. Everyone will be rich!
          What’s that you say? This will result in inflation that will make that million almost worthless?
          It doesn’t matter if prices go way up! Cost has no effect on consumption and everyone is rich!

          • But imagine how good yo would feel when you cash your cheques?

            Not so good when you get your change, but you can’t have everything. I should stop giving FV fresh ammo.

        • If apples were oranges, they would have the properties of oranges.

          This is a tautological statement.

    • Economics be damned, the demand to produce carbon dioxide is perfectly inelastic!

      You really need to pick up the intro to economics textbook. You don’t seem to grasp how utterly silly some of your pronouncements are.

      • Carbon tax economics is a false economic interference.

        • What is ‘carbon tax economics’? Why is it ‘false’? How is it different than the GST, property tax, fuel excise tax, income tax?

          I eagerly await your reply.

          • Carbon tax economics is the introduction of a tax to try and even out responsibility when consuming.

            But there is no proof that

            1. people will consume less because of a carbon tax

            2. if a carbon tax were to be paid, such collected taxes could stop or reduce the threat of global warming!

            All other taxes collected are for having a source of revenue to fund infrastructure, health care, law enforcement and so forth. That is why we pay taxes!

            If people are really serious about GW, then the people should consume less because they are serious about GW, not being punished by a tax.

          • To address your points:

            1. There is no proof that a carbon tax would not cause reduction in emissions. You certainly haven’t provided any, and to suggest that there would be no reduction in emissions contradicts basic economic theory (econ 101). As a thought experiment, think of an extreme carbon tax of $4000 per tonne of CO2e. That works out to about $10 per litre of gasoline in tax. Do you really think that no one would change their emissions (or consumption of gasoline more narrowly) if gasoline cost $11.359 per litre? That’s not a very credible argument, and the burden of proof lies with those that hold it to be true.

            2. Has nothing to do with economics. This is a climatology question.

            Why is a GST collected to fund expenditure, but not a carbon tax? What if we created a carbon tax that would raise about as much as the GST, and eliminated the GST. Would not the things that were funded by the GST now be funded by the carbon tax? Carbon taxes are not particularly special. They are quite similar to fuel excise taxes or consumption taxes like GST, with side benefits of reducing fossil fuel intensity. Even if you don’t care about CO2 emissions or global warming, reducing fossil fuel combustion has the benefit of reducing air pollution, which kills thousands of Canadians every year. There’s a 9/11 worth of deaths every 45 days in Canada due to air pollution. Are you soft on causes of the death of innocent Canadians?

          • You know what I cannot understand:

            When Obama offers just a partial proof of Assad having gassed his own people, Canadians scream high and low that there is no certainty of proof.

            But when it comes to carbon tax and consumer spending, then it does not matter that nothing can be proven: just make the carbon tax happen!

            Call it what you will, but I will call it complete inconsistency on your part.

          • What you “can’t understand” is a single word Andrew or I wrote.

          • I take it you conceded, now that you’re giving me strawmen instead. I haven’t made a single comment on Syria, so I cannot possibly have made an inconsistent comment.

            I can lend you my intro to microeconomics textbook if you can’t track one down. Also, I’m sure Kahn Academy has some decent videos. I don’t mean this as snark–it makes it easier to understand what is going on in policy debates. Both the left and the right hate economists because they have a nasty habit of poking holes in poorly reasoned ideology. Ideologues prefer truthiness.

          • It’s not considered giving you ‘strawmen’ when pointing out inconsistencies. I merely pointed out the Syria example for drawing out the inconsistency in the ‘left’ thinking.

          • Now you’re moving the goal post. You clearly said that I was being inconsistent:

            “Call it what you will, but I will call it complete inconsistency on your part.”

            I’ve made no comment on Syria, nor will I. I’m also assuming bringing up something irrelevant (Syria) is just your change-the-channel tactic when you’ve conceded. Thanks for coming out, Francien.

          • Ok, I will take the Syria comment off the table.

            No biggie…

            The fact is that neither side of the carbon tax debate can claim if consumption will be affected by a carbon tax. That is my point!

            There is no exact proof of anything at all.

          • Nope, that argument is absurd. The overwhelming weight of empirical evidence is that demand is influenced by changes in price. It’s almost like you’re arguing that there’s no proof of electromagnetism. This is just silly. You really need to take an economics class.

          • There is NO proof whatsoever that people will consume less if there is a carbon tax.

            Cheap products will still be out there.

            People get used to a certain price for gas.

            When the price of gas goes up 13 cents, there is not less traffic on the road!

            Come on: in some jurisdiction the price of gasoline is almost double that of Canada’s and there the roads are full of drivers, all the time and has been that way for decades now while gasoline prices have steadily climbed.

            People all over the world consume more now than ever! And that will not stop unless people start thinking for themselves as to how it all hangs together.

            Over consumption is a choice!

          • You’re just handwaving. You assert a bunch of things without evidence. You’re claiming there is no level of tax that would result in lower emissions. This is ridiculous.

            Gas prices are double in Europe, as you say. Are you also claiming that their gasoline consumption is equal to that in Canada? You’d be very wrong.

            At this point you’re squirting water in my eye from the fake flower on your lapel. Take your oversize shoes, big foam red nose and tiny (gas guzzling, I’m sure) clown car and move on. We’re done here (at least until next time). In the mean time, pick up that economics textbook.

          • In Europe, the distance between places is much less than is the distance between places in North America.

            Have you ever been to Europe?

            You can show me no proof that a carbon tax will limit consumption. None. I cannot show you any proof that a carbon tax will not limit consumption. Those are the facts, to be certain!

            We are both speculating or we are both voicing opinions of what we believe will happen in case a carbon tax is introduced.

            I will add that most Canadians do not want a carbon tax imposed (see Dion’s Green Shift). But keep trying or learn from Australia, either way.

          • If you’re to believe the Conservatives, any price on carbon is a carbon tax, in which case, voters in that election and the more recent one overwhelmingly endorsed a carbon tax.

          • Why not learn from BC, where they introduced a carbon tax, it has broad support and it resulted in slow emissions growth that the rest of Canada?

            Francien, you’ve lost and now you’re resorting to pretending that economic theory is still a matter for debate.

            Now you’re going to tell me bigfoot exists because I can’t provide proof he doesn’t and you can’t provide proof he does, therefore there’s a 50/50 chance bigfoot exists. My god, I know you’re not that stupid, so please stop acting as though you were.

          • No economics textbook needed. My 5 y.o. wouldn’t be able to read it anyway, though I’m pretty sure he doesn’t need to in order to understand that the more things cost, the less of them he can afford.

  2. “When making everyday decisions, people would naturally look at the
    prices they face and, in effect, take into account the global impact of
    their choices. In economics jargon, a price on carbon would induce
    people to “internalize the externality.”

    I’m onside for a CT in principle, but i have a problem or two that may not have occurred to a Harvard prof [why should it, he’s only human.?]
    In my community and throughout the north there are still far too many homes heated with diesel – a nasty product carbon wise, smelly, expensive to transport and no longer cheap. If you put on an across the board CT you push the price up. Those who can adjust will. But unless there’s a viable alternative many wont, they will just have to absorb the cost and probably do with less[not much of an option here] or cut elsewhere…there goes the cats eh.
    There needs to be some real thought put into carrots as well as sticks. Some people will have little option but to take the beating. We need realistic, affordable alternatives.We need to find a way to make the transition affordable for those who are just hanging on.

    • “We need realistic, affordable alternatives” Yeah, it’s called ‘making choices’ as in all individuals knowing how to make choices.

      • No… It’s about some individuals not being able to afford to make better choices – particularly if the choices aren’t readily available.

        • And what does any of that have to do with a carbon tax? People can make the right choices without a carbon tax.

          • Go back and read his post again. You clearly didn’t get it the first time.

          • So people can only make the right choices with a carbon tax?

          • So people can make “the right choices” without criminal laws, bulding codes, bylaws etc?

          • Which choice is right can be changed by a carbon tax, from a purely financial perspective. Although I realise you deny that taxation (at least on carbon emissions) has any impact on behaviour at all.

  3. Trust worthy politicians making election promises of taming the weather for our great grandchildren by taxing the air we breathe with bankster-funded and corporate-run Carbon Trading Stock Markets? Sounds perfectly reasonable to me!

  4. “Regulations to reduce carbon emissions are less obvious than a carbon tax and so probably easier to implement…”

    Yes, and probably easier to implement very slowly and filled with holes. All they need are talking points and good titles for the legislation: The Savaging Carbon Emissions Whilst Promoting Turgid Economic Growth Act, or maybe The Protect Our Children From Horny Cannibals and Also Keeping Lakes Smelling Nice Act.

    Doesn’t matter how effective the legislation actually is, the Conservative spin robots will convince 37% of Canadians that Harper is the Environment Prime Minister.

  5. yeah!!!! CARBON TAX!!!

  6. I <3 Carbon Tax