In another post, we are getting bogged down in the comments over whether there is a meaningful sense in which an alleged negative externality–such as emitting CO2–isn’t really a “bad,” even though it has negative implications. The standard claim in the climate policy debates is that taxing CO2 is penalizing a “bad,” while taxing work is penalizing a “good,” and so (it seems) a revenue-neutral carbon tax would involve “taxing bads not goods.”
Ken Green had challenged that vocabulary, and I agreed with him, since CO2 emissions are tied to (low cost) production in various lines. In the comments, Silas Barta challenged him (me), saying that we effectively eliminated the idea of a “bad” at all. Even bank robberies, Silas claimed, would then be “goods,” because the economically optimal amount of bank robberies is positive.
Even on standard, neoclassical grounds–the sort that Steve Landsburg would use, not a Rothbardian framework obviously–I don’t think this is right. Even if we stipulate for the sake of argument that the “consensus” IPCC climate models are correct, and that William Nordhaus is approaching this issue in the right way, I think there is a qualitative difference between carbon dioxide emissions versus bank robberies, such that the latter are definitely “bads” in a way that the former aren’t.
However, I do not want to type out my reasoning just yet, because I want to make sure I dot all the i’s and cross all the t’s. In the meantime, I’m hoping one of you hits it out of the park so I can just say, “Yup.”