08 Sep 2016

Carbon Tax vs. “Putting a Price on Carbon”

Climate Change, Gary Johnson 31 Comments

My latest at IER. (See David R. Henderson’s follow-up regarding Gordon, which is amazing because I realize I shouldn’t have given Gordon the benefit of the doubt. I made a better case for him in my IER piece, than he did when responding to David.)

I don’t mean to beat a dead horse, but apropos this stuff: In his reason [sic yes they don’t capitalize it] clarification, Gary Johnson said, “[A carbon tax] sounds good in theory, but it wouldn’t work in practice. I never called it a tax. I called it a fee…So, no support for a carbon fee. I never raised one penny of tax as governor of New Mexico, not one cent in any area. Taxes to me are like a death plague.”

So that’s why Johnson’s statement starting around 1:05 in this clip was so interesting.

If someone whose last name rhymed with Dump had pulled a move like this, I believe a lot of Johnson’s supporters would go nuts and wonder how Republicans could support such an obvious liar. *Picture Kermit drinking tea.*

31 Responses to “Carbon Tax vs. “Putting a Price on Carbon””

  1. Andrew_FL says:

    “If someone whose last name rhymed with Dump had pulled a move like this, I believe a lot of Johnson’s supporters would go nuts and wonder how Republicans could support such an obvious liar. *Picture Kermit drinking tea.*”

    Really now Bob, would it have been too much trouble to add “or Hilton” and “/Democrats”

    • Dan says:

      He could’ve but it wouldn’t be really relevant to libertarians since there aren’t many, if any, libertarians supporting Hillary whereas there are supporting Trump.

      • Andrew_FL says:

        Right, and I think he shouldn’t pander to them.

      • Andrew_FL says:

        And come to think of it, your statement doesn’t make sense. He’s trying to shame Johnson supporting Libertarians as no better than Trump supporting Republicans, not libertarians.

        But Bob is writing as if this is a two man race between Trump and Johnson, with Clinton as the afterthought. He could at least shame them for being no better than Clinton supporters, either.

        • Dan says:

          No, what I meant was that if you’re going to use one of the major candidates to make your point to a libertarian audience it makes more sense to use Trump because he actually has some libertarian support. Yes, he could use Hillary, or both, but it’s pretty redundant. I mean, your complaint would be the same as chastising him for not using Jill Stein an the Green Party had he used both Clinton and Trump. I think his point got across just fine without adding in Hillary or Jill Stein.

          • Andrew_FL says:

            ““If someone whose last name rhymed with Dump had pulled a move like this, I believe a lot of Johnson’s supporters would go nuts and wonder how Republicans could support such an obvious liar. *Picture Kermit drinking tea.*””

            If you read this I don’t know how it is possible to come to the conclusion Trump supporting libertarians are part of the intended audience for this sentence. The only way the above sentence makes sense is if the intended audience are people whose preference order goes 1. Johnson 2. Clinton 3. Trump.

            • Dan says:

              You’re completely missing my point if you think I’m saying the target audience was Trump supporting libertarians. And I have fought enough of these kind of battles on this site to know that I’ll never be able to bridge that gap.

            • Dan says:

              Oh what the hell. I’ll try one more. Clearly the target audience is Johnson supporters with that statement. That’s completely obvious. I’m saying the reason using Trump to make that point makes more sense is because Murphy talks about Trump often on this site, libertarians talk a hell of a lot more often about Trump than Hillary – tons of libertarian infighting over him-, Hillary isn’t really controversial in libertarian circles as everyone hates her, etc.

              So, if you’re going to use one of the major candidates to make a point to Johnson supporters, it doesn’t seem outlandish to use the guy you and your audience have been talking the most about.

              Yes, he could’ve made the same point using Hillary. Heck, he could’ve made the same point using Jill Stein. But who cares? His point was clear and he happened to use the most talked about and controversial candidate in libertarian circles to make it. Seems like a perfectly reasonable decision to me.

              My guess is that Dr. Murphy simply used Trump because that was the politician that popped in his head first.

              Again, using Trump or Hillary makes the exact same point, so what does it matter.

              • Andrew_FL says:

                It does matter because you shouldn’t pander to the Trump supporters.

              • Dan says:

                He didn’t pander to anyone. I’m not sure how mentioning Trump in a negative light – noting how Johnson supporters go nuts about his hypocrisy – is supposed to be pandering to his voters.

              • Dan says:

                If you’re claiming his statement is pandering, then why should he have put Clinton instead? Wouldn’t that be pandering to Clinton supporters based on your claim?

              • Andrew_FL says:

                I’m not sure how you didn’t understand I was saying he should have put both. But he’s not putting Trump in a negative light, saying “is he really so bad, compared to Johnson?”

              • Dan says:

                What? That’s not what he is saying at all. He was saying “Look, you Johnson supporters go nuts when Trump does this, but when it’s Johnson you let him slide.”

                I mean he has consistently been talking about how there has to be some sort of standard for a libertarian candidate. He believes Johnson has crossed that line, so he is using an example of where Johnson supporters see X behavior from Trump, and can’t believe republicans still support him in spite of that. He’s trying to get his point across with libertarians that Johnson isn’t a good standard bearer.

                This wasn’t about Trump at all. Other than to use him to get a point across.

              • Dan says:

                I mean he has consistently been talking about how there has to be some sort of standard for a libertarian candidate. He believes Johnson has crossed that line, so he is using an example of where Johnson supporters see X behavior from Trump, and can’t believe republicans still support him in spite of that. … Yet when they see Johnson do the same thing, they don’t even think to abandon him for the same reasons. … He’s trying to get his point across with libertarians that Johnson isn’t a good standard bearer.

  2. Silas Barta says:

    >Even here, the use of the word “price” is very misleading and inaccurate. A price refers to the amount of money voluntarily negotiated for payment when ownership of a physical good changes hands, or for the performance of a service. If the government is going to impose a “price on carbon,” then strictly speaking that would mean the government owns the atmosphere. Do people really believe that?

    This is absurd and tiring. It feels like you’re deliberately pleading ignorance of the core argument. I reiterate my point from before, about “I guess it must be impossible for courts to award damages then?”

    First of all, whether government “owns” the environment is a distraction: over-emission of carbon screws over some other, specific people. Pigovian taxes are intended to reflect the damage the carbon use does to those other people. Whether you call it “government atmosphere ownership” is irrelevant.

    If we have a system of “you pay for your foul-ups”, then you have to pay some court-assigned award when you, say, destroy someone’s crops. Everyone knows exactly what is meant when you say, “the court put a price on destroying someone’s crops”. Everyone understand the importance of courts “putting such a price” on careless actions that can destroy someone else’s crops, so that certain courses of action don’t look falsely cheap:

    “Well, I could drive to the market by short-cutting through Joe’s carrot patch, but gosh, that shows up as being pretty expensive once I have to pay for the crops.”

    Everyone knows you’re being pedantic when you give this lecture about *true* prices being negotiated in a platonic marketplace &c &c

    • Bob Murphy says:

      My tiring absurdities are the price you pay for reading this blog, Silas.

    • Tel says:

      Well interesting you say that, because it isn’t like Obama (or anyone else) has been able to specifically identify anyone who has personally been damaged by CO2. Yeah I know we have *predictions* of millions of climate refugees whose island homes were lost under the ocean, but *actual* cases are hard to find.

      And then, it’s not like those Pigovian taxes ever get paid over to these supposed victims as compensation either. The carbon tax proceeds go straight into government revenue and get distributed as political favours to the key voter identity groups and to the lobbyists and campaign fund donors as quid-pro-quo.

      Here’s another example: in Australia we have supposed “sin tax” imposed on alcohol and tobacco with governments shouting, “THESE ARE BAD! YOU WILL DIE YOUNGER!!” then you ask them where the money goes from these taxes and they try to pretend it goes to pay for all the medical expenses of the people who are dead from drinking and smoking.

      Statistically it has been demonstrated many times over, based on estimates of lifespan that drinkers and smokers impose lower medical costs on governments… so now I wonder how this price really is calculated… and I still wonder where the money goes?

      • Silas Barta says:

        I agree that it doesn’t go the people who are rightly deserve the revenues from such “pricing”. Nevertheless, I think it’s fair to ensure that such aggressions against other’s property be somehow priced in, regardless of whether the price actually goes there; otherwise, how do agents correctly economize on that resource?

        • Tel says:

          I think the concept of globally correct resource usage is highly questionable. Austrian economics does not even have a global economic metric, and the schools of economics that do have such metrics mix in a great deal of fakery (like GDP for example) to achieve that.

          Each individual agent can make his/her own decision as to correct usage, they can do that any time. No one has demonstrated a market oriented method of calculating and pricing any “externalities”, nor any other method that could be seen as a real measurement. These things consistently end up being some committee deciding “guess so” when you trace out the details.

          A court will follow roughly this process:
          * Identify actual damage done (not hurt feelings, or “it bothers me”).
          * Identify “proximate cause” to figure out who is responsible for damage (might be multiple parties).
          * Use existing market-based prices as a basis for estimate.
          * Add whatever statutory damages, or whatever seems like a good idea at the time.
          * Try to align with common law precedents.

          The process is far from perfect, but it works OK in the small isolated cases like if I break your window and you can prove I did it, and you know what a new window will cost.

          It works very badly when “proximate cause” is diffuse, or when no market exists that can be used as a reference, or when some statute imposes largely arbitrary damages (e.g. mandatory sentencing) or when the actual damage done is very questionable anyhow.

          Since “global warming” has already been “scientifically” identified as causing just about everything imaginable (both good and bad), identifying real damage cases amongst the garbage is a rather difficult task.

          http://www.numberwatch.co.uk/warmlist.htm

  3. Daniel Kuehn says:

    I’ve got to say I was a little confused by David’s piece. I don’t think it’s unintelligible to call a carbon tax a tax, obviously, but I also think it’s perfectly intelligible to talk about it as a price. You’ve defined a price as an amount voluntarily negotiated for payment. That’s not a definition I know of, and you don’t link to any source for that, but given that definition are you saying that a (binding) minimum wage for workers is not the price of labor paid by that employer? He’s not voluntarily buying labor at that price. Voluntarily he’d buy more of the same labor at the lower price (under competitive markets) or less of the same labor at a lower price (under a simple monopsony model). But he’s certainly not voluntarily purchasing that labor at that level of payment, so is that not a price in your opinion?

    I think the price/tax separation here serves a particular analytical purpose but there’s nothing special about it and calling a carbon tax a “price” serves other analytic purposes related to the internalization of externalities. If a private entity internalized externalities we’d call it a price – it seems strange not to call it that when a public entity does the same thing just because it’s a public entity.

    • Bob Murphy says:

      Daniel I think you are going to get tied up in knots with your approach on the minimum wage stuff. Yes it’s a price and it’s voluntary; no one is forcing an employer to hire someone and pay him $7.25. That’s actually one of the key arguments that people like Don Boudreaux deploy. Rather, the minimum wage simply prohibits someone from paying less than that.

      Using your approach then, we would have to say mandatory gun locks are also “gun prices.”

      • Daniel Kuehn says:

        Gun locks aren’t exchanged money. I don’t have a problem with that part of the definition of “price”.

        Under a carbon tax you’re still free to buy carbon – the exchange is still voluntary in the same way that a purchase of labor is voluntary under a minimum wage.

        I’m just trying to get a sense of what it is you have a problem with in using “price”, and the use of “voluntary” in your (I think?) made up definition doesn’t seem very tenable. I’m happy to agree that it’s more natural to just call a carbon tax a tax but I think it’s perfectly reasonable to call it a price for all the reasons that Gordon lays out and also because of its internalizing externalities role (rather than a pure revenue role).

        No one is confused by Gordon on this after all. You just think it makes it sound too good. But he probably thinks the same of your position. That’s not a good reason to dismiss a term.

      • Josiah says:

        Yes it’s a price and it’s voluntary; no one is forcing an employer to hire someone and pay him $7.25.

        By the same logic a carbon tax is a price and is voluntary. No one’s forcing you to buy that gallon of gasoline.

        • Bob Murphy says:

          Right, if you think the U.S. government owns all the gasoline in the United States, then it can set whatever price it wants to use it, and that’s voluntary. But I don’t think that’s what people mean.

          If you want to say, “No, it’s charging for the use of the atmosphere as a CO2 sink,” then it means the USG owns the atmosphere and is charging a price.

          • Silas Barta says:

            Right. Or, that it’s an exhaustible resource that everyone has long-standing historical rights in the usage of and in which they therefore have a basis for objecting to others’ overuse of, like traditional commons grazing rights.

      • Silas Barta says:

        What if the government required gun owners to buy a liability insurance policy against deaths from that gun, and which stipulated the payout value for each death, as you expect all property owners would do in Ancapistan? (cf. Chaos Theory)

        Would you say that such a policy “prices in” the risk of death from the gun, or would you be making the same point you are here?

        Extra credit: The government is considering replacing *all* gun regulation with the above policy. Is that an improvement? Or would you be making the same semantic point about prices when criticizing such a policy?

        Extra credit part 2: The government requires that anyone who emits fossil fuels purchase an insurance policy against damage to others’ property from such an emission. It also has taken on the obligation of paying for such catastrophes. What do you think my next question is?

    • Silas Barta says:

      Issues on which Bob has said something so strange that Daniel_Kuehn and I end up agreeing:

      – This one
      Asteroid impacts

  4. Reece says:

    It’s possible Johnson just didn’t remember what he said. I think the problem with Trump is that he lies so much that it’s just unreasonable to believe he could possibly think he is telling the truth. And he doesn’t back down when he is called out for being wrong generally – so, for example, when called out for his lies about seeing Muslims in New Jersey celebrating on 9/11, he refused to admit he was wrong. Johnson, on the other hand, when called out on being wrong, seems to admit it and apologize.

    My bigger issue was many of the Johnson supporters who backed this statement and claimed that the media was lying – which was clearly untrue.

  5. Josiah says:

    Bob,

    In your article, you say that the government putting a price on carbon implies that the government owns the atmosphere. My question to you would be: who do you think does own the atmosphere?

    • Matt M says:

      I think the vast majority of “regular people” (people who don’t get into arguments about political philosophy in blog comments) would probably agree with, or at least would not object to the idea that the government owns the atmosphere. Like, that’s not how they would personally choose to phrase it, but they’d probably go along with it.

      I mean, who do YOU think should own the atmosphere, evil corporations?

  6. guest says:

    Dumps like a Trump – Trump, Trump …

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