We should be organizing a big educational event the Fall. If whatever carbon tax initiative that gets on the ballot fails, we will all be talking about how we need to do more educating on what a carbon tax is and how it works. We should be doing this work now, and I mean more than just one person going around giving talks.

Are there people in this group who have contacts with high school teachers? Writing about and debating carbon taxes would be a great subject for high school students.

Todd

If “reduce sales tax” is in the actual ballot title, I think the chances of ultimate approval by voters would be significantly improved.

Yes, carbon taxes would be better. But they are not happening. They are the proverbial fictitious can opener. Let’s move on and do what we can do. Renewables provide lots of home grown jobs, so indirectly bolster effective demand at a time when we have large output gaps, they reduce balance of payments imbalances, provide geopolitical security – I could go on.

Remember fracking was born out of government financed R&D, tax credits and subsidies. The free market only kicked in to scale the technology when sufficient risk had been removed. See here:

http://thebreakthrough.org/blog/Where_the_Shale_Gas_Revolution_Came_From.pdf

But yes, carbon taxes are a ‘new devil’, and most people don’t even think of the external cost of carbon-based power as being an implicit subsidy. Explicit subsidies – like the much meddled-with US PTC – are much higher in the scrutiny list.

A very interesting post. I think you are absolutely right in pointing out the limited political constituency that supports a carbon tax (basically economists – not much of a constituency really!).

But this is what it is. Accordingly, when it comes to the climate change policy debate, economists are frequently missing in action. They are running around on a desert island, as in that classic 1970s economist joke, shouting “imagine a can opener”.

As a result, I think they should get more involved in pushing second best alternatives (they can always add a footnote saying that in the best of all possible worlds a carbon tax is the way forward but in the meantime….). To me this means advocating renewable subsidies, which lead to a larger installed renewable base that provides public goods as opposed to fossil fuel public bads. Getting renewables down their cost curves through economies of scale and learning by doing seems eminently sensible policy-wise.