More Dumb Ideas:Pigou Club

Alan Viard of AEI has proposed the following:

"Any carbon control policy adopted in the United States should take the form of a carbon tax or a cap-and-trade system with full auction of permits from the outset of the program. A large part of the resulting tax revenue or auction proceeds should be used to reduce marginal payroll or income tax rates or to reduce the deficit. Such a policy would reduce disincentives to work and save while also compensating the public for the burden of higher energy prices. In contrast, free allocation of permits to firms is equivalent to making unproductive transfer payments to high-income stockholders. Don't give away the cap-and-trade permits!"

We have discussed this several times. The assumption is you add a tax equal to from one to five times your current energy usage costs onto energy and then you pay it back via some tax rebates. Let me reiterate to the rather short sighted Mr Viard and the Harvard Economics faculty so enamoured with this the following:

1. The Government have never ever given money back.

2. Retirees on fixed incomes have little if any taxes and little if any income. They stay at home and just pray they can heat their homes in the winter. What do you suggest with them. Let them die! Ah the logic of economists! Are you guys out of your minds!

3. The intent of cap and trade was to use economic incentives to move to different forms of energy. A noble goal. Yet my good friends there is no way to get that energy to the people. That is there is no grid. The environmentalists will delay it forever. Thus this will be just an additional tax, period. It is not an economic incentive to seek an alternative. There is no alternative!

4. Oh I forgot. You can burn wood, paper, furniture, and what a mass of CO2 that will create!

I am amazed each time I read these characters ideas that they are half baked and they never go through to evaluate the consequences. God save us from economists!