Suboptimal, certainly. But not really complicated. The way Washington really bleeds (my mother actually worked at DOE in renewables) is that huge quantities of money get sucked out invisibly through schemes that are too intricate for anyone to understand. It’s hard for USG to just give away money to lobbyists. It has to come up with something clever.

Pigouvian taxes are extremely ripe for all sorts of chicanery. And they are dwarfed by carbon credits, which are already a swamp of pure Third World sleaze. Note that just as Washington prefers taxes to a simple quota scheme, it prefers carbon credits to taxes. Negative selection wins again.

Suboptimal, certainly. But not really complicated. The way Washington really bleeds (my mother actually worked at DOE in renewables) is that huge quantities of money get sucked out invisibly through schemes that are too intricate for anyone to understand. It’s hard for USG to just give away money to lobbyists. It has to come up with something clever.

Pigouvian taxes are extremely ripe for all sorts of chicanery. And they are dwarfed by carbon credits, which are already a swamp of pure Third World sleaze. Note that just as Washington prefers taxes to a simple quota scheme, it prefers carbon credits to taxes. Negative selection wins again.

Of course, it relinquishes control over the (Pigou-equivalent) tax rate. Because there is no way to sample the demand curve except where it intersects, any policy must lose control over one of these numbers.

Aside from this, I think the main attraction of “oilpartheid” is that it has no obvious way to grow hair. Taxation schemes develop loopholes and turn into complexity furballs. Buying oil is just buying oil. It is relatively hard for Beltway bandits to horn in on.

And if there is no premium on domestic oil, obviously either (a) the quota is unnecessarily high, or (b) you’re done.

Of course, it relinquishes control over the (Pigou-equivalent) tax rate. Because there is no way to sample the demand curve except where it intersects, any policy must lose control over one of these numbers.

Aside from this, I think the main attraction of “oilpartheid” is that it has no obvious way to grow hair. Taxation schemes develop loopholes and turn into complexity furballs. Buying oil is just buying oil. It is relatively hard for Beltway bandits to horn in on.

And if there is no premium on domestic oil, obviously either (a) the quota is unnecessarily high, or (b) you’re done.

What you’re proposing is just about exactly equivalent to a tax. If you know how many barrels per year you want to country to consume, you can simply set the tax to the difference between the market price and the price your auction would provide. Of course, it would take a few years to adjust this right, but presumably your version would be introduced over a few years too.

One difference is that the Pigous ask that Uncle Sam reduce the income tax rate to keep his revenue constant. (You could do the same.)

A bigger one is about where this goes… in your scheme, the consumption of oil will be forever the size of the auction lot. But in a P scheme, if somebody manages to make solar/nuclear/geothermal/biofuel just a little cheaper than oil+tax, then the consumption of oil will fall off dramatically. Which is presumably good.

What you’re proposing is just about exactly equivalent to a tax. If you know how many barrels per year you want to country to consume, you can simply set the tax to the difference between the market price and the price your auction would provide. Of course, it would take a few years to adjust this right, but presumably your version would be introduced over a few years too.

One difference is that the Pigous ask that Uncle Sam reduce the income tax rate to keep his revenue constant. (You could do the same.)

A bigger one is about where this goes… in your scheme, the consumption of oil will be forever the size of the auction lot. But in a P scheme, if somebody manages to make solar/nuclear/geothermal/biofuel just a little cheaper than oil+tax, then the consumption of oil will fall off dramatically. Which is presumably good.

As for things like aerosols and black carbon, I sincerely hope that all parties to the debate would be moved by the law of unintended consequences. I suppose the law applies everywhere, but it seems to apply in spades to trying to engage in another polluting activity to fix global warming.

As for things like aerosols and black carbon, I sincerely hope that all parties to the debate would be moved by the law of unintended consequences. I suppose the law applies everywhere, but it seems to apply in spades to trying to engage in another polluting activity to fix global warming.

The most common problem with prediction markets, at least of the imaginary sort peddled by Professor Hanson and his cronies, is that they bet on events in the emperor’s-nose category. For example, imagine a prediction market for earthquakes. Since no one can predict earthquakes (at least for certain values of the word “predict”), the market will be pure noise and completely useless. There is no way for your market to breed a population of good earthquake predictors.
You said they pick poor topics and then gave an example of a topic they didn’t actually pick. And aren’t geologists or seismographers or some other specialization supposed to know something about the occurrence of earthquakes? This indicates it’s plenty imprecise and sketchy but better than the unknown nose example.

You might be interested in A Manipulator Can Aid Market Accuracy. Hal Finney made the same point about asymmetric information (though he referred instead to no-trade theorems) in the first link of this comment.

Like “climatology,” the entire field of economics is a quack science.
You have a lot of respect for Austrians despite that though.

Its practitioners should remember that it’s never too late to build a real career in a real field.
I hear the job-market in the private sector for economists is quite good. How do you determine what’s a real career vs a fake one?

In the productive sector, oddly enough, there is not so much emphasis on making all decisions, even important decisions, as the result of objective scientific processes.
The first prediction market was among the employees of the Xanadu project. The organization best associated with prediction markets now is Koch Industries, which is supposed to be the most successful private company in the country. Yahoo, Microsoft and Google are also significantly into prediction markets. They don’t use them as much as they could, but you yourself are fond of pointing out that modern corporate governance is not optimal. I don’t know of any governmental agency that actually implemented one yet.

You may be willing to argue racism with Will Wilkinson, but you’re too chicken to actually go toe-to-toe with any prediction-market proponents, even when you knew the author of Predictocracy was simultaneously arguing his case at two different blogs.

Regarding the government entering the oil business, I think it’s an awful idea simply on public choice grounds. Why trust them with anything like that? It sounds like carbon credits. A Pigou tax is simpler, though I don’t trust them to use the revenue for its intended purpose.