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Do we really need radical economic changes to deal with pollution versus just plain properly using the effective systems we've got by internalizing the cost? On

by xoa 6y ago

Do we really need radical economic changes to deal with pollution versus just plain properly using the effective systems we've got by internalizing the cost? One of the fundamental foundations of Free Markets as tools is to have pricing at each step include costs, and I don't agree that failure to do that means the entire thing must be tossed. On the contrary, I suspect it's a lowest common barrier scenario, that if such a relatively simple thing can't be accomplished by societies why would vastly more difficult and ambitious efforts be successful? Really, global warming at least is a pretty much perfect scenario for market solutions, because it's simultaneously a vastly distributed problem and also can be attacked from anywhere in the world (since greenhouse gases naturally disperse evenly worldwide). Just set the price of emitting/extracting a ton of CO2/equivalent at the price of industrially removing it plus some minimum margin (5-7%). Make the latter a ratcheting auction system, completely revenue-neutral to the government, and countries that don't comply internally can have conservative worst case carbon internalization tariffs applied. Then just leave the markets to sort out the best ways to meet that goal. Everything almost instantly becomes carbon neutral, no need for any sort of moralizing about what luxuries are more important, everyone can just see the real prices and decide accordingly where they want to allocate their resources. And as carbon capture becomes large scale and mature, it'll be cheaper to then go negative carbon and reverse the problem. I'm worried a lot of the feelings-based efforts and attempts to mix in huge revolutions are extremely counter productive to dealing with AGW specifically. Yes, there are lots of other major inequalities and systemic problems that desperately need addressing. But AGW is such a huge controversial deal riders should really, really be minimized. Fundamentally asking that economics be honest and properly account for costs shouldn't be as big an ask as a lot of other things, and it genuinely is for all of our benefit too. If measures like "GDP" are distorted based on externalities, the first thing to do should be un-distort them shouldn't it?

jolux 6y ago
I think what you’re describing constitutes a “radical economic change” unfortunately. I think it’s still a good idea and overall productive approach to price in externalities as taxes, but there’s pretty significant opposition to this in the US, to take one example.
- dantheman 6y ago
  There is a huge problem with pricing externalities as taxes because those who are harmed are not compensated, the cost of the externalities should paid to those who are harmed. This requires better understanding of property rights and measurements - if you want to pollute the air then those effected have to sell you the right -- that would be the ideal solution instead of the government taking more money out of the economy for it's uses.
  - nkingsy 6y ago
    Usually this is paired with dividends paid equally to everyone. As you said we don’t have the sophistication to apply reimbursement fairly to those affected.
  - jolux 6y ago
    The system you describe is the government. The government would tax it and then redistribute the revenue to the communities of those affected, if that’s what we decided was most important. The state is the mechanism through which groups of individuals take action in public.
    - mschuster91 6y ago
      > The government would tax it and then redistribute the revenue to the communities of those affected, if that’s what we decided was most important. That's also problematic because CO2 acts globally - and you don't really want to give dictatorships of poor countries who are affected the most (e.g. Africa) a steady supply of money.
      - jolux 6y ago
        I was talking purely about domestic policy, just to clarify. In the US people in the southeast are most immediately affected by global warming, in the form of severe storms (incidentally states in the southeast are also already among the greatest recipients of federal aid, because of their high levels of poverty). On an international level there will need to be economic cooperation as well but it will look different because there isn’t a single sovereign to collect and distribute revenue. Typically such solutions focus on agreements to reduce tariffs in international trade provided certain conditions and such.
Miner49er 6y ago
The yellow vest protests could be a sign of how this idea might fail, isn't it? The fuel tax increase was not accepted by the working class.
- nradov 6y ago
  Any carbon emissions taxes would have to be phased in very gradually in order to give people enough time to adjust, such as by purchasing electric vehicles. Otherwise it will be impossible to maintain political support.
- mantas 6y ago
  Truly universal CO2 tax would be OK with yellow vests. Now the problem is that CO2 for cheap gasoline cars is taxed a lot. While CO2 for airplane fuel for better off to go on holidays is not. And they get tax credits to buy nice electric cars. Regressive taxation at it's best.
  - everybodyknows 6y ago
    If you can quantify, roughly, such tax differences, you'll have the core of an unassailable argument.
    - selectodude 6y ago
      Well, here in Illinois, a gallon of diesel fuel is 85 cents per gallon. An international flight to Hong Kong will take a little over 40,000 gallons (but is tax exempt), so 34000 dollars worth of taxes are not paid per flight.
      - p_l 6y ago
        Jet fuel isn't tax exempt - there are both federal and state taxes to be paid on it
        selectodude 6y ago
pjc50 6y ago
> Just set the price of emitting/extracting a ton of CO2/equivalent at the price of industrially removing it plus some minimum margin (5-7%) Emitting or extracting? The two are radically different and done in different countries. And how in both cases do you deal with simple but massive cheating? > countries that don't comply internally can have conservative worst case carbon internalization tariffs applied I look forward to some future US administration trying to impose tariffs on Saudi Arabia and a sheik turning up saying "Your campaign. How much?" and writing a bribe for a couple of billion dollars.
Bakary 6y ago
The coronavirus halted a portion of world economic activity to a degree that could only be described as revolutionary or at least politically unthinkable. Yet global emissions have only slowed by a comparatively small amount. Clearly the market or even political approach is doomed, as only a form of carbon recapture or some other technology can fix the issues technology has created.
- erentz 6y ago
  It’s not as disconnected as you might think. The pandemic is on track to cause a roughly ~7% drop in emissions for 2020. And (depending on the ever changing forecast) something like ~5-7% drop in global GDP for 2020. So the link and magnitude appears pretty strong and the results appear pretty much expected. We know how to do this. One: stop the emissions by switching to renewables and nuclear, and away from fossil fuels for transport. Two: drawdown the carbon we’ve already emitted (and will emit during the transition in One above) through reforestation, rebuilding wetlands, building new carbon sinks, and carbon capture. The market and a political approach are the only solution. How else are you going to institute the subsidies and taxes and government scale infrastructure and environmental programs.
  - Bakary 6y ago
    The point I'm trying to make is that the fact that all of these unsustainable, revolutionary changes only generated a 7% drop indicates a few things: -For political change to be effective, it would have to completely change how the economy functions, and essentially turn into some sort of WWII total war mode where almost all actors are focused on the same outcome, except many more countries have to be corralled together this time -The market might produce the technology we need, but it would have to be black swan level good for it to have an impact, otherwise we are looking at investments in infrastructure so massive that we will need the total war mode described above anyway I don't want to extrapolate too much from a single figure, but that 7% did indeed shatter many of my previously held beliefs. A complete revolution in the way things work for only 7%! I can't emphasize how disturbing that is. We have an albeit limited but at least hard datapoint that the current mindset is doomed. In a technical sense, it will indeed be a market and political approach but it will be so different from what most people mean with this phrase (i.e. carbon taxes will fix it, let's just carry on as usual but more carefully) that it's no longer a meaningful conversation
aqme28 6y ago
It's never as easy as it sounds to "just" do something. I'm hugely in favor of the carbon tax you've described, but it will not be easy to enact it globally.
Technically 6y ago
If you see an axe headed at your head, you don't try to duck it with the smallest margin possible. Especially when we need to reverse carbon emissions a good amount simply to preserve our current climate....

by xoa 6y ago

jolux 6y ago

I think what you’re describing constitutes a “radical economic change” unfortunately. I think it’s still a good idea and overall productive approach to price in externalities as taxes, but there’s pretty significant opposition to this in the US, to take one example.

dantheman 6y ago
There is a huge problem with pricing externalities as taxes because those who are harmed are not compensated, the cost of the externalities should paid to those who are harmed. This requires better understanding of property rights and measurements - if you want to pollute the air then those effected have to sell you the right -- that would be the ideal solution instead of the government taking more money out of the economy for it's uses.
- nkingsy 6y ago
  Usually this is paired with dividends paid equally to everyone. As you said we don’t have the sophistication to apply reimbursement fairly to those affected.
- jolux 6y ago
  The system you describe is the government. The government would tax it and then redistribute the revenue to the communities of those affected, if that’s what we decided was most important. The state is the mechanism through which groups of individuals take action in public.
  - mschuster91 6y ago
    > The government would tax it and then redistribute the revenue to the communities of those affected, if that’s what we decided was most important. That's also problematic because CO2 acts globally - and you don't really want to give dictatorships of poor countries who are affected the most (e.g. Africa) a steady supply of money.
    - jolux 6y ago
      I was talking purely about domestic policy, just to clarify. In the US people in the southeast are most immediately affected by global warming, in the form of severe storms (incidentally states in the southeast are also already among the greatest recipients of federal aid, because of their high levels of poverty). On an international level there will need to be economic cooperation as well but it will look different because there isn’t a single sovereign to collect and distribute revenue. Typically such solutions focus on agreements to reduce tariffs in international trade provided certain conditions and such.

Miner49er 6y ago

The yellow vest protests could be a sign of how this idea might fail, isn't it? The fuel tax increase was not accepted by the working class.

nradov 6y ago
Any carbon emissions taxes would have to be phased in very gradually in order to give people enough time to adjust, such as by purchasing electric vehicles. Otherwise it will be impossible to maintain political support.
mantas 6y ago
Truly universal CO2 tax would be OK with yellow vests. Now the problem is that CO2 for cheap gasoline cars is taxed a lot. While CO2 for airplane fuel for better off to go on holidays is not. And they get tax credits to buy nice electric cars. Regressive taxation at it's best.
- everybodyknows 6y ago
  If you can quantify, roughly, such tax differences, you'll have the core of an unassailable argument.
  - selectodude 6y ago
    Well, here in Illinois, a gallon of diesel fuel is 85 cents per gallon. An international flight to Hong Kong will take a little over 40,000 gallons (but is tax exempt), so 34000 dollars worth of taxes are not paid per flight.
    - p_l 6y ago
      Jet fuel isn't tax exempt - there are both federal and state taxes to be paid on it
      - selectodude 6y ago

pjc50 6y ago

> Just set the price of emitting/extracting a ton of CO2/equivalent at the price of industrially removing it plus some minimum margin (5-7%) Emitting or extracting? The two are radically different and done in different countries. And how in both cases do you deal with simple but massive cheating? > countries that don't comply internally can have conservative worst case carbon internalization tariffs applied I look forward to some future US administration trying to impose tariffs on Saudi Arabia and a sheik turning up saying "Your campaign. How much?" and writing a bribe for a couple of billion dollars.

Bakary 6y ago

The coronavirus halted a portion of world economic activity to a degree that could only be described as revolutionary or at least politically unthinkable. Yet global emissions have only slowed by a comparatively small amount. Clearly the market or even political approach is doomed, as only a form of carbon recapture or some other technology can fix the issues technology has created.

erentz 6y ago
It’s not as disconnected as you might think. The pandemic is on track to cause a roughly ~7% drop in emissions for 2020. And (depending on the ever changing forecast) something like ~5-7% drop in global GDP for 2020. So the link and magnitude appears pretty strong and the results appear pretty much expected. We know how to do this. One: stop the emissions by switching to renewables and nuclear, and away from fossil fuels for transport. Two: drawdown the carbon we’ve already emitted (and will emit during the transition in One above) through reforestation, rebuilding wetlands, building new carbon sinks, and carbon capture. The market and a political approach are the only solution. How else are you going to institute the subsidies and taxes and government scale infrastructure and environmental programs.
- Bakary 6y ago
  The point I'm trying to make is that the fact that all of these unsustainable, revolutionary changes only generated a 7% drop indicates a few things: -For political change to be effective, it would have to completely change how the economy functions, and essentially turn into some sort of WWII total war mode where almost all actors are focused on the same outcome, except many more countries have to be corralled together this time -The market might produce the technology we need, but it would have to be black swan level good for it to have an impact, otherwise we are looking at investments in infrastructure so massive that we will need the total war mode described above anyway I don't want to extrapolate too much from a single figure, but that 7% did indeed shatter many of my previously held beliefs. A complete revolution in the way things work for only 7%! I can't emphasize how disturbing that is. We have an albeit limited but at least hard datapoint that the current mindset is doomed. In a technical sense, it will indeed be a market and political approach but it will be so different from what most people mean with this phrase (i.e. carbon taxes will fix it, let's just carry on as usual but more carefully) that it's no longer a meaningful conversation

aqme28 6y ago

It's never as easy as it sounds to "just" do something. I'm hugely in favor of the carbon tax you've described, but it will not be easy to enact it globally.

Technically 6y ago

If you see an axe headed at your head, you don't try to duck it with the smallest margin possible. Especially when we need to reverse carbon emissions a good amount simply to preserve our current climate....