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> The correct allocation of energy should be based on the price people are willing to pay for the energy. Why? Why is that 'correct'? Why would we not want to

by Nursie 5y ago

> The correct allocation of energy should be based on the price people are willing to pay for the energy. Why? Why is that 'correct'? Why would we not want to ensure the population has affordable energy for home use, but others seeking to make a profit from it rather than use it for basic needs pay more? You phrase your reply as some sort of moral absolute, but it's nothing of the sort.

AnthonyMouse 5y ago
> Why would we not want to ensure the population has affordable energy for home use, but others seeking to make a profit from it rather than use it for basic needs pay more? Because we already have the former and we don't need the latter. A carbon tax with a dividend doesn't make life harder for lower income people, because they already have below-average energy consumption (wealthier people have bigger houses that need more heat etc.) and as a result the dividend would be larger than what they pay in tax. But you still want them to have good incentives. If they can use the dividend to switch to solar or buy an electric car, you want them to do this, because that's the whole point. Meanwhile there is no reason to charge profit-seeking enterprises more than the true cost of their usage, because all that's doing is inhibiting economically productive activity. Aluminum smelting uses a tremendous amount of electricity, but what you want is to cause them to switch to non-carbon electrical generation, not to shut down operations.
- Nursie 5y ago
  > A carbon tax with a dividend Is not what was being proposed in the free-market fundamentalist post I was replying to. > Meanwhile there is no reason to charge profit-seeking enterprises more than the true cost of their usage But there might be if it's merely "burning energy for a new financial product", society might decide that it's not worth the carbon to have that around, regardless of tax, but that aluminium is a useful physical product. We have differential taxes on all sorts of things, I don't see why they would be so wrong here. But even given all that, my comment you're replying to was specifically adressing the "price should be the only indicator" assertions in the libertarian spiel above.
  - AnthonyMouse 5y ago
    > Is not what was being proposed in the free-market fundamentalist post I was replying to. A carbon tax with a dividend is the free-market fundamentalist proposal. Markets require externalities to be priced and a dividend is the most economically efficient use of the revenue so generated. > But there might be if it's merely "burning energy for a new financial product", society might decide that it's not worth the carbon to have that around, regardless of tax, but that aluminium is a useful physical product. The way of determining which is pricing. If society values "new financial product" more than the cost of the energy, including the carbon tax, then it gets produced. If the carbon tax increases energy costs to the point that "new financial product" isn't viable in the market, it doesn't. Or it switches to non-carbon electrical generation at which point you can't blame them for climate change anymore and they're expediting the transition to renewable energy by financing the creation of generating capacity and increasing economies of scale.
    - Nursie 5y ago
      > A carbon tax with a dividend is the free-market fundamentalist proposal. It's specifically not the one I was replying to - "The correct allocation of energy should be based on the price people are willing to pay for the energy. Like any other commodity." > The way of determining which is pricing. It's not the only way, it's not even the only way that's employed right now in a lot of places, for instance we don't apply sales tax to items we deem 'essential' here in the UK, have a 5% rate for some things and 20% for 'luxuries'. Price is not the only mechanism available, nor is it always the best one.
      - AnthonyMouse 5y ago
        > "The correct allocation of energy should be based on the price people are willing to pay for the energy. Like any other commodity." This is in no way inconsistent with the need to price externalities, which is the default assumption in free market theories. (Otherwise you have obvious problems with people dumping industrial waste into rivers etc.) > It's not the only way, it's not even the only way that's employed right now in a lot of places, for instance we don't apply sales tax to items we deem 'essential' here in the UK, have a 5% rate for some things and 20% for 'luxuries'. Just because somebody does something doesn't make it a good idea. Things like that have counterintuitive economic consequences. See what subsidized student loans do to education prices. Is this what we want for "essential" goods? If we do that, the tax rate has to be higher for non-"essential" goods in order to generate a given amount of revenue. Now you're into central planning to determine what's "essential" and what isn't. Is a laptop a luxury good? A poor person might need one. What about an electric car? Meanwhile every such decision of what to tax more is subject to lobbying and corruption. If you want to help the poor, give them money. They know what's "essential" to them better than the bureaucracy does.

by Nursie 5y ago

AnthonyMouse 5y ago

> Why would we not want to ensure the population has affordable energy for home use, but others seeking to make a profit from it rather than use it for basic needs pay more? Because we already have the former and we don't need the latter. A carbon tax with a dividend doesn't make life harder for lower income people, because they already have below-average energy consumption (wealthier people have bigger houses that need more heat etc.) and as a result the dividend would be larger than what they pay in tax. But you still want them to have good incentives. If they can use the dividend to switch to solar or buy an electric car, you want them to do this, because that's the whole point. Meanwhile there is no reason to charge profit-seeking enterprises more than the true cost of their usage, because all that's doing is inhibiting economically productive activity. Aluminum smelting uses a tremendous amount of electricity, but what you want is to cause them to switch to non-carbon electrical generation, not to shut down operations.

Nursie 5y ago
> A carbon tax with a dividend Is not what was being proposed in the free-market fundamentalist post I was replying to. > Meanwhile there is no reason to charge profit-seeking enterprises more than the true cost of their usage But there might be if it's merely "burning energy for a new financial product", society might decide that it's not worth the carbon to have that around, regardless of tax, but that aluminium is a useful physical product. We have differential taxes on all sorts of things, I don't see why they would be so wrong here. But even given all that, my comment you're replying to was specifically adressing the "price should be the only indicator" assertions in the libertarian spiel above.
- AnthonyMouse 5y ago
  > Is not what was being proposed in the free-market fundamentalist post I was replying to. A carbon tax with a dividend is the free-market fundamentalist proposal. Markets require externalities to be priced and a dividend is the most economically efficient use of the revenue so generated. > But there might be if it's merely "burning energy for a new financial product", society might decide that it's not worth the carbon to have that around, regardless of tax, but that aluminium is a useful physical product. The way of determining which is pricing. If society values "new financial product" more than the cost of the energy, including the carbon tax, then it gets produced. If the carbon tax increases energy costs to the point that "new financial product" isn't viable in the market, it doesn't. Or it switches to non-carbon electrical generation at which point you can't blame them for climate change anymore and they're expediting the transition to renewable energy by financing the creation of generating capacity and increasing economies of scale.
  - Nursie 5y ago
    > A carbon tax with a dividend is the free-market fundamentalist proposal. It's specifically not the one I was replying to - "The correct allocation of energy should be based on the price people are willing to pay for the energy. Like any other commodity." > The way of determining which is pricing. It's not the only way, it's not even the only way that's employed right now in a lot of places, for instance we don't apply sales tax to items we deem 'essential' here in the UK, have a 5% rate for some things and 20% for 'luxuries'. Price is not the only mechanism available, nor is it always the best one.
    - AnthonyMouse 5y ago
      > "The correct allocation of energy should be based on the price people are willing to pay for the energy. Like any other commodity." This is in no way inconsistent with the need to price externalities, which is the default assumption in free market theories. (Otherwise you have obvious problems with people dumping industrial waste into rivers etc.) > It's not the only way, it's not even the only way that's employed right now in a lot of places, for instance we don't apply sales tax to items we deem 'essential' here in the UK, have a 5% rate for some things and 20% for 'luxuries'. Just because somebody does something doesn't make it a good idea. Things like that have counterintuitive economic consequences. See what subsidized student loans do to education prices. Is this what we want for "essential" goods? If we do that, the tax rate has to be higher for non-"essential" goods in order to generate a given amount of revenue. Now you're into central planning to determine what's "essential" and what isn't. Is a laptop a luxury good? A poor person might need one. What about an electric car? Meanwhile every such decision of what to tax more is subject to lobbying and corruption. If you want to help the poor, give them money. They know what's "essential" to them better than the bureaucracy does.