Monday, February 15, 2016

Tax, Tax, Tax

Over the past seven plus years we have examined multiple proposals to "tax carbon". The academic's idea appears to be that by taxing something one uses less of it and thus since "carbon" is bad, hopefully not in the cells of our body but alas these are economists after all who most likely never took a biology course, then by taxing it there will be less of it.

Take a simple example. We tax liquor and gambling. Yep, we sure do. Have we seen its consumption decrease, no. It worked on cigarettes but there we had to tax it to oblivion, but one could also argue that it was social pressure more so.

Take the left leaning web site Project Syndicate. These folks from the left leaning policy house in DC suggest:

If, since then, each $5 increase in the oil price brought a $30 per ton decrease in the carbon tax, and each $5 decline brought a $45-per-ton increase, the result would be a $0.91 difference between the standard market price and the actual tax-inclusive consumer price last month. That increase would have raised the carbon price substantially, providing governments with revenue – reaching $375 per ton of carbon today – to apply to meeting fiscal priorities, all while cushioning the fall in gasoline prices caused by the steep decline in the price of crude. While $375 per ton is a very high price, reflecting the particularly low price of oil today, even a lower carbon price – in the range of $150-250 per ton – would be sufficient to meet international climate goals over the next decade. 

No this is not a paragraph from the new SAT. It is from two fellows who are arguing for a tax on carbon. 

The question should be; what is the problem?

Let us for the sake of brevity assume the problem is carbon emissions. Frankly I like warm weather but I guess my likes are irrelevant. Now the question should then be; how do we reduce carbon? There are two ways to answer this:

1. Economics: Tax the hell out of it.

2. Technology: Develop extraction and emission reduction mechanisms as well as non carbon emitting sources.

Now the first is easy to do if you control the economy and have no idea what else to do.

The second way is the way that took mankind out of the state of nature and into what we now call civilization. We invent things! New idea. So perhaps by not wasting time on a new App we could devote the efforts to carbon extraction. It is not really that hard, just takes focus.

So why the economics's approach. Does it solve the problem? Only at extortionary rates and only by placing the burden on those at the lower income levels. Why not for once consider the technological and stop raising taxes. And yes, the Government will just waste the money the raise any way.