Stoke Me Up

Greg Mankiw, economist extraordinaire who "was an adviser to President Bush and is advising Mitt Romney", argues on behalf of an energy tax in the Times:

One Answer to Global Warming: A New Tax

IN the debate over global climate change, there is a yawning gap that needs to be bridged. The gap is not between environmentalists and industrialists, or between Democrats and Republicans. It is between policy wonks and political consultants.

Among policy wonks like me, there is a broad consensus. The scientists tell us that world temperatures are rising because humans are emitting carbon into the atmosphere. Basic economics tells us that when you tax something, you normally get less of it. So if we want to reduce global emissions of carbon, we need a global carbon tax. Q.E.D.

The idea of using taxes to fix problems, rather than merely raise government revenue, has a long history. The British economist Arthur Pigou advocated such corrective taxes to deal with pollution in the early 20th century. In his honor, economics textbooks now call them “Pigovian taxes.”

Using a Pigovian tax to address global warming is also an old idea. It was proposed as far back as 1992 by Martin S. Feldstein on the editorial page of The Wall Street Journal. Once chief economist to Ronald Reagan, Mr. Feldstein has devoted much of his career to studying how high tax rates distort incentives and impede economic growth. But like most other policy wonks, he appreciates that some taxes align private incentives with social costs and move us toward better outcomes.      

Well, fine, and one of my ongoing problems with George Bush was his failure, post 9-11, to call on Americans to do anything other than head to the shopping malls.

Now, I can understand how Prof. Mankiw would prefer to trace the history of the carbon tax back to Martin Feldstein, who is not an immediate object of derision amongst righties.

However... how can anyone keep a straight face and leave the history of Al Gore and his glorious BTU tax out of this?

Let me pass the baton at this point - in the course of trying to Google up a history of Al's ill-fated tax, I found that Brad DeLong wrote my entire tirade more than a year ago.  His immediate target was John Tierney of the Times but Greg Mankiw was collateral damage:

John Tierney advocates taxes on energy use. However, it somehow slips Tierney's mind to praise Al Gore, who was the driving force behind the Clinton administration's attempt to raise energy taxes back in 1993.

I observed that the New York Times's John Tierney was calling for a carbon tax, yet had neither the honor, the grace, nor the guts to remind his readers that Al Gore--the driving force behind the Clinton administration's attempt to raise energy taxes back in 1993--had been ahead of him for two decades. Nor did Tierney have the independence of mind to remind his readers that back in 1993 Gore's BTU tax had been blocked by a combination of the oil lobby, the Republican congressional leadership, and a few feckless Democratic senators.

If Prof. Mankiw can persuade Mitt Romney to back a revenue-neutral carbon tax package (he explains it - offset a carbon tax with other tax cuts), more power to him.

I QUIBBLE:  OK, Prof. Mankiw has word constraints in a Times column, but one bit here (emphasis added), on legislating greater fuel efficiency for cars, is not accurate:

Fuel use depends not only on the efficiency of the car fleet but also on the daily decisions that people make — how far from work they choose to live and how often they carpool or use public transportation.

A carbon tax would provide incentives for people to use less fuel in a multitude of ways. By contrast, merely having more efficient cars encourages more driving. Increased driving not only produces more carbon, but also exacerbates other problems, like accidents and road congestion.

Well - if the price of gasoline remains constant, it is less expensive to drive a more fuel-efficient car, so one might reasonably expect the total miles driven to rise, with attendant impacts on congestion and accidents, as noted.

However, it does not also follow that total carbon emissions (or total gasoline consumed) will also rise relative to the original baseline emissions.  Again, assuming the price of gasoline remains constant, people may simply drive until their gasoline expenditures with the more fuel-efficient cars equals their old gasoline bill.  Or, they may drive a bit more total miles but pocket some savings and consume less gas.

Now, if demand for gasoline is reduced one might expect its price to fall, which would prop up consumption.  Or, Prof. Mankiw may be noting that emissions will fall by less than might have been expected as people drive a bit more - in other words, gasoline consumption falls a lot in response to greater fuel efficiency, then rises a bit in response to the new, lower cost of driving.  But I don't see any reasonable way to baldly assert that with a more fuel-efficient fleet, total gasoline consumption (and hence carbon emissions) would rise relative to the original baseline, as would be the case with accidents or congestion.

My guess is that Prof. Mankiw knew what he meant to say but inadvertently left the impression that higher CAFE standards would inevitably result in higher carbon emissions.

Comments

[Greg Mankiw]

One comment on your last point. My column as originally submitted to the Times was written as follows:

"By contrast, merely having more efficient cars encourages more driving, a side effect that offsets some of the direct carbon benefits. Increased driving also exacerbates other problems, such as accidents and road congestion."

It was then edited down to the version you objected to. I suspect you would have preferred the original.

[Dave Schuler]

I'll add the observation I add every time this subject comes up: why not eliminate (or at least reduce) the subsidies on longer commutes?

And I have a question. Does it increase or decrease worldwide carbon emissions to subsidize moving energy-consuming industries to China where there isn't much in the way of social or legal infrastructure to put efficiencies or controls in place? Serious question. Anyone have an answer?

[Rick Ballard]

Fuel use depends not only on the efficiency of the car fleet but also on the daily decisions that people make — how far from work they choose to live and how often they carpool or use public transportation.

Has the Pigovian politburo reached the proper level of consensus as to the appropriate level of taxation required to move the general population into Le Corbusier designed apartment blocks adjacent to the state run factories which will be necessary to achieve the optimum level of power consumption? If so, is the consensus supported by the level of statistical sophistication employed by climatologists in reaching the degree of absolute cetainty so capably expressed by Al Gore as to the weight of the anthropogenic element in the causation of global warming?

In short, is this something that Lysenko could fully support?

[Ralph L]

I don't know about other people, but I don't keep tabs on what I spend for gas, but I am driving less since I bought a car with 5 mpg less efficiency. Most stores & ad men will tell you people will spend more if they think they're saving money.

[Rick Ballard]

Even the NYT Magazine is publishing directional arrows pointing in the right direction. With proper caveats, to be sure, but nevertheless...

[anon]

1) Temperature rises lead CO2 rises by `800 years)
2) The CO2/IR system saturates at around 200ppm
3) The ONLY evidence that CO2 is the cause of rising temps is provided by computer models.

OT - how 'bout that Hansenology?

[Terrye]

I live in the country and my job requires that I drive. There can be no carpooling either. It is not that kind of a job. I drive a small car in the hopes that it will help on gas. I try to limit other driving and to be truthful once I get home from work I don't much want to drive anywhere.

People forget that rural people don't have a choice, we have to drive. It is not just about extraneous stuff like taking vacations etc. I think a tax like this will only hurt the people who have the least choice in the matter.

People like Al Gore who can fly around in private planes and live in mansions don't really give a damn about some tax. It won't effect them.

And Tom, as for your first remarks about what Bush ask of people following 9/11.... what was he supposed to ask? We went through the Cold War without having to ration gasoline.

I was reading about the Influenza epidemic in 1918 and the loss of life was stunning. 675,000 people dead out of a population of 104 million...and they were rationing all sorts of things. I wonder how people would deal with that today? No, the days when people expect to sacrifice are long gone.

[unstoked]

I propose we do nothing and let the earth get "warmer" - just like we did nothing and let the earth get "colder" in the 70's. That seemed to work out fine.

Oh, and in the meantime, vote any politician out of office who proposes to raise our taxes for the sake of "the planet."

[RichatUF]

from the Good Professor-

So if we want to reduce global emissions of carbon, we need a global carbon tax. Q.E.D.

I'd like to see it enforced on the Global South. Also, wouldn't an energy tax spill over into other activities other than driving-flying for instance. Great plan-if we want to reduce our economic output lets put in place an energy tax. Less economic output-> lower standard of living

[RichatUF]

Rick-

With proper caveats, to be sure, but nevertheless...

It will require new rental agreements but I'm sure with the proper terms it can be all worked out. How much has Yucca Mt. cost the federal government close to $25 billion? I'm sure some realize that it would be more lucriative to loot nuclear power producers from the inside than trying to bankrupt them from the outside.

[BarbaraS]

All such a tax would do is raise the price of goods just like to rise in gas prices did. Never forget that anything that raises the cost of manufacturing and delivery will be paid for by us. Companies will not nor should they absorb these costs. All this crap is about scuttling our economy and letting the socialists take over once that happens. Besides, does anyone seriously think the government doesn't tax energy enough now. A global energy tax would probably be paid to the UN and I am against those people getting anymore of my money period.

[Charlie (Colorado)]

Well, fine, and one of my ongoing problems with George Bush was his failure, post 9-11, to call on Americans to do anything other than head to the shopping malls.

I realize this is somewhat skew to the topic, but every time you say this, Tom, I find myself wondering "what would he want?" If Bush had asked people to enlist after 9/11, he'd just have been turning away droves, and while it might have been nice to have asked for an increase in the size of the military at the same time, what would we have done with them? (I realize I'm about the only person left in the US who pays attention to this, but we just kicked ass in two countries without raising our fatality rate much over what the military has in traffic accidents during peacetime. Dogface infantry aren't what you need in wars now.)

I suppose he might have asked for more taxes, but what he got was what looks to be a multiple trillion dollar increase in the size of the economy for about three quarters of a trillion dollars in additional debt, and net tax revenues quickly converging with spending. As we're seeing, when they do get more tax money, it's almost impossible to keep them from spending it on donkey and mule museums --- why encourage them?

But then if enlisting was no help, and adding taxes would have been actively harmful, what other sacrifices did you want? White calfs? First-born children? Virgins? Either of them?

[Rick Ballard]

Rich,

That wouldn't carry quite the frisson that one must feel having made a moral decision to save the entire world by taxing "bad" behavior. Far too simple to just peel the dough off the utility companies (customers, that is). How would it ever become known just how extraordinarily "good" those kind economists actually are?

Besides, think of the efficiencies to be achieved through proper centralization of decision making concerning allocation of all resources. The wonder is that it hasn't been attempted to date. One would think that someone would have thought of this before.

[RichatUF]

Barbara S-

Good point

I'm not only worried about the theives and rapists working at the UN, but also the organized criminal conspiracy know as the US Congress.

[Soylent Red]

Late again to the comments, and perhaps redundant but...

When are people going to finally tire of being "managed" by our betters? Good intentions or not, I bridle at government programs/incentives/punishments to change my behavior, for my own good. I am particularly suspicious when this manifests itself as "taxation to affect motivation".

Things may operate differently in the magical world of the Global Intellectual, but that was not my understanding of what taxation is supposed to be for.

[RichatUF]

Rick-

How would it ever become known just how extraordinarily "good" those kind economists actually are?

Yea, we would have to figure out how to get good press to the Do-Gooder Mafia™ because the rent wouldn't be enough. Maybe Gore could hold an "Economists Aid" concert and loot some third worlders to provide for a pastured academic.

[SR]

Ah Soylent, you may be the last holdout as the politicians continue to dream up new ways to convince everybody that they can get something for nothing.

[kim]

I second anon at 6:13. Also, the earth is cooling, starting in the last decade. The determinant of temperature is clouds determined by cosmic rays, determined by the earth's magnetic field, determined by the sun's magnetic field, determined by the distance of the sun from the center of gravity of the solar system. Also, Gerlich and Tscheuschner have shown that the IPCC model of Greenhouse warming is unphysical; basically it requires transfer of heat from a warmer upper stratosphere, through a cooler lower stratosphere, to heat a troposphere, which violates the Second Law of Thermodynamics. The Gorebellied Fool will soon be exposed as a fraud as monstrous as the Piltdown Mann, and Man's effect on the climate, through the release of fossil carbon, will be understood to have the trace effect that it does, which is mainly fertilizing.
==========================

[kim]

Also, the War in Iraq is essentially over. Say it with a big smile to everyone you meet. They'll laugh, and remember.
=============================

[Clarice]

Charlie, I'm willing to sacrifice Congressmen..one at a time..to propitiate the gods. Though one wonders at their standards if this would do it for them.

[RichatUF]

from the article-

...But Gilbert Metcalf, a professor of economics at Tufts, has shown how revenue from a carbon tax could be used to reduce payroll taxes...together with a rebate of the federal payroll tax on the first $3,660 of earnings for each worker.

Here is the plan. Great idea, tie a Green Employment Tax
Swap (GETS), to employment. Fewer people working, less pollution. I have an even better idea; how about we stop subsidising the eco-cultists and tax the eco-mongers about 5000 dollars a word. I really hope the Romney campaign isn't listening to this guy.

[richard mcenroe]

Well, this is one vote Romney just lost...

Terrye-- As I rec'lect, we rationed gas under Carter, but he was a kinda lukewarm Cold Warrior...

[Barry]

I realize I'm about the only person left in the US who pays attention to this,

Well, there is at least two of us.

This is just a conspiracy to make me stop driving my Wagoneer at 7mpg. I'm personally keeping the world from going to the next ice age...

[MayBee]

My husband has about a 15 mile commute into the city each morning. On the LA freeways, this seems to take anywhere from 30 to 90 minutes. I would have loved to live closer to the city, but some OTHER do-gooders have done their best to destroy the public school system. We almost literally just kept driving until we found the best public schools system we could afford, then set up camp there.

So now another do-gooder wants to add a tax so that it's more expensive to commute, all because we want a good public education for our kids? I don't think so.

Fix city schools before you expect people to stop commuting in from the suburbs, or tax the people that are ruining the schools for the commute the rest of us have to make.

[kim]

Charter schools, MayBee. Public education with accountability for teachers, students, and parents, by contract.
=============================

[Rick Ballard]

"Charlie, I'm willing to sacrifice Congressmen..one at a time.."

Surely we can do better than that? I can come up with 128 who would never, ever be missed. As an added bonus, their absence would raise the mean IQ of Congress to close (within 10 points) of triple digits. Say, four tranches of 32 spread over a four day celebration of Earth Day.

Considering the quality, quantity is the only answer.

[RichatUF]

And in other news [wia Drudge] Hillary!CARE has gotten the "It takes a Village" Treatment. Now its not greedy companies, greedy doctors, etc its will just be put those bastards out of business using Medicare and FEHBP.

BTW, Hillary! does look like Pinhead and calling her Hsu-donors HillRAISERS opens the doors to so many things. A pity that I haven't seen a good photoshops...Yet.

We have Republicans getting advice on carbon taxing schemes and the Democrats want to go back to the Magaziner-inspired disaster of Hillary!CARE I. I still get misty eyed thinking about the broken down bus covered in red-tape.

[PeterUK]

Is work unit Ballard questioning the Party line?

[sylvia]

"Fix city schools before you expect people to stop commuting in from the suburbs"

I agree with Maybee that there are other factors more pressing than a dollar or two to the cost of gas that determine how much Americans drive. People drive in this country to maintain class and racial barriers. We are self segregating in this society and that feeling is I believe so strong that no reasonable gas tax will make a difference.

We drive to live in nice neighborhoods to get nice schools, we drive downtown to avoid exposure to the crime that can go along with public transportation and walking. Although the easy way to fix this might be to cry for more integration, I also think our self segregation is perhaps responsible for keeping peace in this country that didn't happen in, say Yugoslavia. In other words, there is not much need to fight among race and class here because we have enough space that if you can't get along with one group you can basically vote with your feet and move to the area you want to be in. So I don't see anything changing.

And then some people may be like me, and whenever I get gas, I celebrate my full tank by going for a drive around town. And I won't change that either if there is a gas tax.

[BarbaraS]

Richatuf

In regard to Hillary?'s $110 billion universal health care, no wonder she wants us out of Iraq. All that money that could go to her wonderful health initiative that has failed all over the world. But then again she states she has"learned" since her failure to get it passed in 1993. She would have to raise taxes to pay for this system and that would sink the economy. Socialism one step at a time although her health care would be one giant leap.

[SlimGuy]

Riddle me this.

Just how does someone get a walk on to an Amtrack train on short notice and get a sleeper car bunk, when it normally takes reservations a month or two in advance to get that type of ticket on this particular route?

Also it is noted that at this time of the year, that particular train has almost "season ticket" holders who choose to travel it for the change of seasons viewing.

Just one of those little things falling between the cracks here.

My only guess to make that occur, he had to locate a passenger waiting to board and bought their ticket at a scalpers price in a cash deal to try to hide his trail.

[Extraneus]

Has the Pigovian politburo reached the proper level of consensus as to the appropriate level of taxation required to move the general population into Le Corbusier designed apartment blocks adjacent to the state run factories which will be necessary to achieve the optimum level of power consumption?

Perfect, and well-deserved.

What I find most entertaining about these climate do-gooders is the clueless arrogance in their belief that the present temperature of the Earth is ideal.

True conservatives.

[jimmyk]

the clueless arrogance in their belief that the present temperature of the Earth is ideal.

Yes, and the professor also seems oblivous to the fact that we already have substantial taxes on carbon emissions. The gasoline tax is on the order of 25 percent. Where is the calculation that says that is too low?

[MayBee]

People drive in this country to maintain class and racial barriers. We are self segregating in this society and that feeling is I believe so strong that no reasonable gas tax will make a difference.

Sylvia- had we moved to Chicago, my kids would have been in the racial minority at the school we had chosen, which was an excellent public school within walking distance of where we wanted to live. We just moved from a place where we've been the racial minority.
It isn't about racial self-segregation, it is about good schools.

[Lycurgus]

Mankiw comments that "when you tax something, you normally get less of it." A seemingly unexceptional statement. So why do economists not also agree that when you tax income, you normally get less of that? I know -- its economically illiterate and probably mendacious to boot to suggest that there could be any reason behind the notion that tax cuts stimulate the economy and, perhaps, even increase tax revenue -- but I've never claimed economic literacy so I'll go ahead and say it anyway.

[Sara]

I don't see a word from Mitt Romney that indicates he supports anything like an energy tax.

Romney on Energy policy

Romney on taxes

Mitt is a no new taxes, low taxes guy. On energy he is for finding alternate sources and seems to be really big on something called "liquid coal."

Of all the candidates, I would trust Romney the most when it comes to all things economic and financial.

[cathyf]

Just how does someone get a walk on to an Amtrack train on short notice and get a sleeper car bunk, when it normally takes reservations a month or two in advance to get that type of ticket on this particular route?

Nah, it's not that hard to get a ticket. I just popped over to www.amtrak.com and looked up buying a ticket from Emeryville to Denver on the Zephyr leaving tomorrow morning (less than 24 hours from now), and all five classes of fares show tickets available. From the description I read of him having neighbors across the hall, he would have been in a superliner roomette (hall in the middle, rooms on both sides). Those rarely sell out -- that is the most plentiful room. A superliner sleeper has 14 roomettes, 5 bedrooms, 1 wheelchair-accessible roomette and one family bedroom. There are usually 2 or 3 sleepers on the zephyr. Those family bedrooms do tend to sell out, but the roomettes don't...

Go here and click on virtual tour to see the sleeping car layout.

[Charlie (Colorado)]

Charlie, I'm willing to sacrifice Congressmen..one at a time..to propitiate the gods. Though one wonders at their standards if this would do it for them.

Um, is that really a sacrifice?

[Clarice]

It's as public spirited as the neighbors who knock on my door asking me to support their plan to block other neighbors from doing to their property what the zoning laws permit--all done, of course, in the most high minded tones of protecting the neighborhood from (urgh)Devlopers (not in the real world terms of hoping to maintain forever free easements they've grown to enjoy).

[RichatUF]

Sara-

Mitt is a no new taxes, low taxes guy. On energy he is for finding alternate sources and seems to be really big on something called "liquid coal."

I'll take a look and thanks. Coal Gasification is a pretty interesting technology.

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