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Carbon Taxes work because the market can't solve a problem it doesn't have a price for. Knowing the word "externality" is all you need to know. In the Adam Sm

Carbon Taxes work because the market can't solve a problem it doesn't have a price for. Knowing the word "externality" is all you need to know. In the Adam Smith/Ayn Rand fantasy of money and the invisible hand, markets are a form of Artificial Intelligence. The fantasy is this AI can run the markets better than any centralized authority. Even if we assume that's true right now the AI has no price for carbon, can't take into consideration, hence it can't "solve" it. This is the equivalent of having a self driving car that wasn't trained to see bycicles. Obviously, it will keep killing cyclists until you give it training data to see them. There is no "market solution" for a blind AI system that doesn't see carbon, because the AI has no data set for carbon costs.

vasco 5y ago
So who do you propose to be the centralized authority?
- kranke155 5y ago
  I never suggested anything of the sort. I would think a reading of history - ie the book "How Asia Works" has a lot of material on this - shows that there is a hybrid model where intervention of the govt is needed to "steer" the direction of things in order to ensure sustainable income and economic growth. I highly recommend reading that book for an alternative history on how Germany, Korea, Japan and China have succeeded while the West has mostly stagnated.
- kspacewalk2 5y ago
  The governments. They recognize market failures and mitigate with things like the carbon tax. In fact, the whole concept of a market, even the traditional physical one, by definition implies regulation with enforcement (e.g. weights and measures). Without those, there's no market, there's just a free for all.
roenxi 5y ago
> The fantasy is this AI can run the markets better than any centralized authority. I agree with a literal reading of your comment, but will just point out that the wealthy countries all tend to be the ones that let the market do its thing though. We've got a lot of examples now of authoritarian vs free market (the Koreas, Germanys and China pre- and post- Deng Xiaoping leap to mind). People routinely do better when they control their own destiny rather than strong central authorities. If we pick which end of the spectrum is more likely to keep people fed, the answer is pretty much always the intelligence of a free market will do the best job. Starvation tends to be isolated. This is something that central authorities don't do so well, and that has been tested out quite a few times in practice now. I'm still mildly amazed that the continued and ongoing failures of political leadership for decades hasn't made an obvious dent in the number of people wanting the politicians to be in charge. Politicians are popular, not competent. Markets are really good at putting competent but unpopular people in charge which is a better strategy.
- dane-pgp 5y ago
  > Markets are really good at putting competent but unpopular people in charge which is a better strategy. It's only a better strategy if your goal is to increase the wealth and power of the largest entities, i.e. corporations and the rich. If your goals include "popular" ideas like human rights and a non-polluted biosphere, then it can be better to make market participants share their power with elected politicians.
  - roenxi 5y ago
    How is capitalism supposed to work against people's human rights? The capitalists haven't had an enforcement arm since the days of the East India Company. If human rights are getting systematically abused it is pretty much necessary that someone in government is responsible. They control the police and the army. Capitalism didn't produce Guantanamo bay; for example.
    - dane-pgp 5y ago
      > How is capitalism supposed to work against people's human rights? By "capitalism" I assume we are still talking about "unrestrained corporate power". As such, I would remind you that corporations after often found guilty of wage theft, unsafe working conditions, unfair dismissal, spying on employees, and discriminatory hiring practices. None of those practices are strictly necessary for capitalism to function, but letting markets put "competent" people in charge is not going to prevent those abuses from happening. > The capitalists haven't had an enforcement arm since the days of the East India Company. I think you haven't been keeping up with modern developments of this practice.[0] > If human rights are getting systematically abused it is pretty much necessary that someone in government is responsible. So you agree that it is the government's responsibility to limit the actions of companies to prevent them from harming human rights? I think we're on the same page then. [0] https://www.ohchr.org/EN/NewsEvents/Pages/PrivateSecurityOversight.aspx https://www.ohchr.org/EN/NewsEvents/Pages/PrivateSecurityOve...
- kranke155 5y ago
  I never suggested that centralized authorities do better! However, there is a convincing argument - made particularly well by the book "How Asia Works" - for a hybrid approach where the state "steers" the economy through nudges and incentives. The book makes the argument that's what happened in Korea, China and Japan. They, at least from their perspective, followed the example of German development. Their source was the "Historical School" of economics - https://www.newworldencyclopedia.org/entry/Historical_school_of_economics https://www.newworldencyclopedia.org/entry/Historical_school...
nabla9 5y ago
> In the Adam Smith/Ayn Rand fantasy of money and the invisible hand, markets are a form of Artificial Intelligence. Don't equate Adam Smith and Ayn Rand. Adam Smith was not a free market fundamentalist. Adam Smith has unnecessarily bad reputation because he is quoted very selectively. Adam Smith was aware of negative and positive externalities.
- kranke155 5y ago
  True. I think the current usage is sort of a blend of the two though, to justify market maximalism.

vasco 5y ago

So who do you propose to be the centralized authority?

kranke155 5y ago
I never suggested anything of the sort. I would think a reading of history - ie the book "How Asia Works" has a lot of material on this - shows that there is a hybrid model where intervention of the govt is needed to "steer" the direction of things in order to ensure sustainable income and economic growth. I highly recommend reading that book for an alternative history on how Germany, Korea, Japan and China have succeeded while the West has mostly stagnated.
kspacewalk2 5y ago
The governments. They recognize market failures and mitigate with things like the carbon tax. In fact, the whole concept of a market, even the traditional physical one, by definition implies regulation with enforcement (e.g. weights and measures). Without those, there's no market, there's just a free for all.

roenxi 5y ago

> The fantasy is this AI can run the markets better than any centralized authority. I agree with a literal reading of your comment, but will just point out that the wealthy countries all tend to be the ones that let the market do its thing though. We've got a lot of examples now of authoritarian vs free market (the Koreas, Germanys and China pre- and post- Deng Xiaoping leap to mind). People routinely do better when they control their own destiny rather than strong central authorities. If we pick which end of the spectrum is more likely to keep people fed, the answer is pretty much always the intelligence of a free market will do the best job. Starvation tends to be isolated. This is something that central authorities don't do so well, and that has been tested out quite a few times in practice now. I'm still mildly amazed that the continued and ongoing failures of political leadership for decades hasn't made an obvious dent in the number of people wanting the politicians to be in charge. Politicians are popular, not competent. Markets are really good at putting competent but unpopular people in charge which is a better strategy.

dane-pgp 5y ago
> Markets are really good at putting competent but unpopular people in charge which is a better strategy. It's only a better strategy if your goal is to increase the wealth and power of the largest entities, i.e. corporations and the rich. If your goals include "popular" ideas like human rights and a non-polluted biosphere, then it can be better to make market participants share their power with elected politicians.
- roenxi 5y ago
  How is capitalism supposed to work against people's human rights? The capitalists haven't had an enforcement arm since the days of the East India Company. If human rights are getting systematically abused it is pretty much necessary that someone in government is responsible. They control the police and the army. Capitalism didn't produce Guantanamo bay; for example.
  - dane-pgp 5y ago
    > How is capitalism supposed to work against people's human rights? By "capitalism" I assume we are still talking about "unrestrained corporate power". As such, I would remind you that corporations after often found guilty of wage theft, unsafe working conditions, unfair dismissal, spying on employees, and discriminatory hiring practices. None of those practices are strictly necessary for capitalism to function, but letting markets put "competent" people in charge is not going to prevent those abuses from happening. > The capitalists haven't had an enforcement arm since the days of the East India Company. I think you haven't been keeping up with modern developments of this practice.[0] > If human rights are getting systematically abused it is pretty much necessary that someone in government is responsible. So you agree that it is the government's responsibility to limit the actions of companies to prevent them from harming human rights? I think we're on the same page then. [0] https://www.ohchr.org/EN/NewsEvents/Pages/PrivateSecurityOversight.aspx https://www.ohchr.org/EN/NewsEvents/Pages/PrivateSecurityOve...
kranke155 5y ago
I never suggested that centralized authorities do better! However, there is a convincing argument - made particularly well by the book "How Asia Works" - for a hybrid approach where the state "steers" the economy through nudges and incentives. The book makes the argument that's what happened in Korea, China and Japan. They, at least from their perspective, followed the example of German development. Their source was the "Historical School" of economics - https://www.newworldencyclopedia.org/entry/Historical_school_of_economics https://www.newworldencyclopedia.org/entry/Historical_school...

nabla9 5y ago

> In the Adam Smith/Ayn Rand fantasy of money and the invisible hand, markets are a form of Artificial Intelligence. Don't equate Adam Smith and Ayn Rand. Adam Smith was not a free market fundamentalist. Adam Smith has unnecessarily bad reputation because he is quoted very selectively. Adam Smith was aware of negative and positive externalities.

kranke155 5y ago
True. I think the current usage is sort of a blend of the two though, to justify market maximalism.