5 ms·

yes

by anonymous5133 8y ago

yes

rwcarlsen 8y ago
Taxing externalities is a better approach than subsidising what we think might be the best path going forward.
- vkou 8y ago
  And if you can't tax externalities, do you just throw your hands up in the air, and say: 'Welp, I guess coal is here to stay?' Perfect is the enemy of good enough.
  - Dylan16807 8y ago
    What do you mean "can't"? It's hard for me to picture the government being unable to tax a product. It seems like an irrelevant thought experiment.
    - vkou 8y ago
      Politicians in the United States can't accurately tax coal's externalities in the same way that they can't embark on a campaign of land redistribution. In the current climate, it is political suicide.
- zaroth 8y ago
  Subsidy is more efficient than taxes - based on undergrad economic theory - but it somewhat disregards exactly where the money for the subsidy comes from (at what cost to something else?) so reality will be different. But I will say one thing for subsidy is it allows startups to enter a high tech space and take them as a funding source, ideally in proportion to how well the tech works. Cap and trade can work out similarly (like Tesla selling their credits) to fund the R&D. But the point is you want to do more than just tax the externality, if you can subsidize R&D by startups which fundamentally shifts the curve rather than just trying to move along it.
  - Jeff_Brown 8y ago
    IF the government happens to choose the right technology to subsidize, then a subsidy is efficient. Suppose they pump a lot of money into wind, and then someone discovers a solar solution that's cheaper. That giant investment will have been wasted. By contrast, a tax lets researchers competing on a level playing field find the right substitute.
  - Jeff_Brown 8y ago
    Also, a subsidy does nothing to reduce consumption before the subsidized substitute takes effect, which could be decades.
- hexane360 8y ago
  Externalities can be either positive or negative. For example, education has positive externalities, as well as healthcare. Subsidizing and taxing are both methods of dealing with externalities, and in this case subsidizing non-carbon emitting power sources is nearly equivalent to taxing carbon-emitting power sources.
- my_username_is_ 8y ago
  Isn't a subsidy just a negative tax on what's seen as a positive externality? I get the argument for trying to find a 'market-based solution', but at some point a relatively small group of people (government representatives) need to make a decision that will affect the whole market/population. Whether they're taxing one thing or subsidizing something else, a decision is being made.
  - Brakenshire 8y ago
    It is better to tax the negative outcome, because then the choices about what replaces it are not being made directly by the government, and that can reduce costs and to an extent scale up more quickly. But, US politics seems too dysfunctional for a carbon tax, so unfortunately we’re left with deciding whether to let the perfect be the enemy of the good.
  - mikekchar 8y ago
    Imagine we wanted to influence people to eat burritos instead of tacos. Tacos are currently very popular. The normal cost of a taco is $3 and the normal cost of a burrito is $4. Let's say I have $4. If we subsidise the burrito by $2, then the burrito will cost $2 and the taco will cost $3. I have $4 so I can buy either of them. They are about the same price (with the burrito being just a little cheaper). However since I'm used to buying tacos, there's a good chance that I won't switch. If I leave the burrito at $4 and tax the taco an extra $2, then the burrito will cost $4 and the taco will cost $5. I don't have $5 so I'm forced to buy a burrito. Of course the problem is that in the second scenario everything costs more and the government is pocketing the tax. So while it's arguably going to be more effective at switching people to burritos (because a subset of people will no longer be able to afford tacos), it's easy to market against: "The government is destroying the economy by putting tacos out of reach of the everyday person. Food will be 33% more expensive because of this tax that is designed to funnel money into government coffers. There are 2 million taco makers who will lose their jobs because of this terrible tax. Vote for us and we will return the choice back to consumers." A subsidy is easier to introduce.
    - slavik81 8y ago
- jhayward 8y ago
  First, this is incorrect in general. Others will make the points about tax vs subsidy re: externalities. But the comment also misses one of the main points of subsidies: they aren't simply to offset some externality, they are used to provide efficiently leveraged market availability to products that are at the beginning of an industrial learning curve which will reduce costs over the longer run. They let us get the tech out of the local minima that it would otherwise be stuck in to move further out on the learning curve so that long-term savings can be had.

yes

rwcarlsen 8y ago

Taxing externalities is a better approach than subsidising what we think might be the best path going forward.

vkou 8y ago
And if you can't tax externalities, do you just throw your hands up in the air, and say: 'Welp, I guess coal is here to stay?' Perfect is the enemy of good enough.
- Dylan16807 8y ago
  What do you mean "can't"? It's hard for me to picture the government being unable to tax a product. It seems like an irrelevant thought experiment.
  - vkou 8y ago
    Politicians in the United States can't accurately tax coal's externalities in the same way that they can't embark on a campaign of land redistribution. In the current climate, it is political suicide.
zaroth 8y ago
Subsidy is more efficient than taxes - based on undergrad economic theory - but it somewhat disregards exactly where the money for the subsidy comes from (at what cost to something else?) so reality will be different. But I will say one thing for subsidy is it allows startups to enter a high tech space and take them as a funding source, ideally in proportion to how well the tech works. Cap and trade can work out similarly (like Tesla selling their credits) to fund the R&D. But the point is you want to do more than just tax the externality, if you can subsidize R&D by startups which fundamentally shifts the curve rather than just trying to move along it.
- Jeff_Brown 8y ago
  IF the government happens to choose the right technology to subsidize, then a subsidy is efficient. Suppose they pump a lot of money into wind, and then someone discovers a solar solution that's cheaper. That giant investment will have been wasted. By contrast, a tax lets researchers competing on a level playing field find the right substitute.
- Jeff_Brown 8y ago
  Also, a subsidy does nothing to reduce consumption before the subsidized substitute takes effect, which could be decades.
hexane360 8y ago
Externalities can be either positive or negative. For example, education has positive externalities, as well as healthcare. Subsidizing and taxing are both methods of dealing with externalities, and in this case subsidizing non-carbon emitting power sources is nearly equivalent to taxing carbon-emitting power sources.
my_username_is_ 8y ago
Isn't a subsidy just a negative tax on what's seen as a positive externality? I get the argument for trying to find a 'market-based solution', but at some point a relatively small group of people (government representatives) need to make a decision that will affect the whole market/population. Whether they're taxing one thing or subsidizing something else, a decision is being made.
- Brakenshire 8y ago
  It is better to tax the negative outcome, because then the choices about what replaces it are not being made directly by the government, and that can reduce costs and to an extent scale up more quickly. But, US politics seems too dysfunctional for a carbon tax, so unfortunately we’re left with deciding whether to let the perfect be the enemy of the good.
- mikekchar 8y ago
  Imagine we wanted to influence people to eat burritos instead of tacos. Tacos are currently very popular. The normal cost of a taco is $3 and the normal cost of a burrito is $4. Let's say I have $4. If we subsidise the burrito by $2, then the burrito will cost $2 and the taco will cost $3. I have $4 so I can buy either of them. They are about the same price (with the burrito being just a little cheaper). However since I'm used to buying tacos, there's a good chance that I won't switch. If I leave the burrito at $4 and tax the taco an extra $2, then the burrito will cost $4 and the taco will cost $5. I don't have $5 so I'm forced to buy a burrito. Of course the problem is that in the second scenario everything costs more and the government is pocketing the tax. So while it's arguably going to be more effective at switching people to burritos (because a subset of people will no longer be able to afford tacos), it's easy to market against: "The government is destroying the economy by putting tacos out of reach of the everyday person. Food will be 33% more expensive because of this tax that is designed to funnel money into government coffers. There are 2 million taco makers who will lose their jobs because of this terrible tax. Vote for us and we will return the choice back to consumers." A subsidy is easier to introduce.
  - slavik81 8y ago
jhayward 8y ago
First, this is incorrect in general. Others will make the points about tax vs subsidy re: externalities. But the comment also misses one of the main points of subsidies: they aren't simply to offset some externality, they are used to provide efficiently leveraged market availability to products that are at the beginning of an industrial learning curve which will reduce costs over the longer run. They let us get the tech out of the local minima that it would otherwise be stuck in to move further out on the learning curve so that long-term savings can be had.