Global Warming: Have a Contest

For some reason I have seen several blog discussions again on taxing carbon emissions. Let us assume that there is global warming, I see it in my early blooming daylily species, so I have to believe my own eyes. So set that part of the argument aside. Now is that good or bad, well for me it has allowed better hybridizing and perhaps a benefit. I have over fifty new hybrids ready this year, thanks in part to global warming.

Now Posner goes on suggesting

As long as global warming is gradual, and catastrophic effects are not felt for the next 50 to 100 years, there is room for hope that geoengineering will limit or even reverse global warming. Ways of trapping the carbon dioxide produced by burning oil, coal, natural gas, and forests may be developed or sunlight may be blocked by injecting sulfur compounds into the atmosphere, which would reduce the amount of sunlight that reaches the earth (though could create other forms of pollution—sulfur dioxide, for example, creates acid rain). Or safe means of piping carbon dioxide emitted from electrical generating plants underground might be developed. There are even suggestions for “whitening” roofs (on a very large scale) to increase earth’s reflection of the sun’s rays. 

But there is no guaranty that global warming will be gradual. It may turn abrupt; there are a number of examples in earth’s geological history when this happened. For example, a period called the “Younger Dryas” at the end of the last ice age is believed to have seen an increase in the average global temperature by 7 degrees centigrade, which is 12.6 degrees fahrenheit, in only 10 years. Were that to happen again, it would be an unbelievable catastrophe. The probability of abrupt global warming cannot be estimated; but heading off even catastrophic events that are uncertain can make good economic sense if the resources required to do so are modest. 

It is always good to see a lawyer prognosticate on science, so let that stand. How fast is the climate changing? No one really knows. Is it for better or for worse? Again net of the equation no one knows. I suspect the Polar Bears will adapt and eat what the Black Bear around my house does. But that is a tale for another day. Now Posner proposes:

A more efficient method of limiting global warming than regulatory controls such as proposed by the President (and that as described promise to be a bureaucratic nightmare) would be a tax on carbon emissions, which I advocated in my 2005 book and which a number of countries have adopted. 

 Frankly that in my opinion is total nonsense. You see we need electricity, we need to commute to work, we need the results of the infrastructure that create carbon dioxide. I have made that argument against Mankiw time and again. The poor schlub who has to commute to his job in Cambridge cleaning the halls of Harvard must drive at night with a few others in a broken down care from some distance. He has no choice. The same in most cities. There is no elasticity of demand for the poor folks, so tax them?

Even more so, why in God's name tax anything, it just feeds the Government monster, more Government useless workers getting higher salaries bigger benefits and treated to great parties and big bonuses. 

My favorite Economist, Frances Woolley makes several good points in her recent post.

Then I tried the economic freedom line: "A carbon tax makes fossil fuels more expensive, so people have an incentive to consume less. The great thing about them, though, is that people have a choice about how to cut their consumption." 

"Think about the alternative," I said, "Do you really want a bunch of new regulations, people saying what you can and cannot do? This way there's no need for a big government bureaucracy, and people decide what's best for them."

Neither of these arguments made the slightest impression on my cousin. "I don't believe this talk about revenue neutrality," he said, "there won't be cuts to other taxes. The government will just take the money and spend it on useless things like your salary." 

 Now I really like the insight Frances has, it is a rare form, keen insight into the obvious. Rare amongst economists. But the real point is that this is an engineering problem. Engineers face this all the time. Get rid of some byproduct, efficiently. Chem Es do this for a living. So why not solve the problem, not tax it. Even more so I propose a contest. The Government give a prize of say a billion dollars to the first entity to demonstrate an cost effective way to eliminate carbon dioxide. Make them rich. This combines all the key elements of a free market. It solves a problem, it rewards success, it does not tax, and it does NOT add a single Government employee. They did stuff like this when airplanes were new. Why not give it a try?