My colleague Jason Kuznicki nails this:
Ayn Rand hated F. A. Hayek, but in a weird way, the Hayekian idea of the entrepreneur — a little guy who happens to stumble onto a tiny, useful bit of knowledge, and who finds himself free to employ it — is a better fit to the relatively more sophisticated view of Rand’s work, which holds that Atlas is just a metaphor, not a blueprint for world takeover. Schumpeter’s heroic entrepreneur is, I think, empirically wrong, but better suited to a literal reading ofAtlas.
Who is John Galt? An ephemeral process. And if you could follow that, well, you get the libertarian gold star for today.
I get the gold star! Saltative, game-changing, lone-genius invention does happen, but not very much. Sustained growth is driven primarily by an accumulation of tiny productivity-enhancing innovations. Part of the problem with Obama’s Ecomagination Industrial Policy is that it’s looking to finance a quantum leap. Like the dominoes-of-democracy best-case scenario for Iraq, the dreamy upside could be huge, sure. But the smart money is on lower than average returns to investment. The problem isn’t that we’re going to get some wasteful Project X instead of Galt’s motor, because all our Galts went MIA. The problem is that we’re going to get Projects A-Z, most of which will be a bust, instead of some significant number of the billions of tweaks that make innovation and growth happen.
A couple sentences from Robin Hanson for your consideration:
Small differences in growth rates eventually overwhelm most other considerations, so the clustering and innovation externalities that create growth differences deserve far more public attention. Unfortunately most people yawn at growth theory; they prefer stories about conflict, status, moral fiber, heroes, and epic changes.
That is, people prefer romance. Here’s one way to understand the “going Galt” dramatics. Obama is causing a lot of Rand fans to completely flip their lids in part because Obama and his devotees are Bizarro World Randian romantics in the grip of an adolescent faith in the generative powers of the state.
That's exactly why people are freaking out.
The plot of the novel is fairly outrageous where you have giant government stupidity that causes a problem followed by even more government stupidity which makes the problem worse and creates new problems at the same time. And of course the answer to all those problems is more government stupidity.
That is what people are seeing with the housing bubble/financial crisis, followed by Porkulus, and then the Budget to Kill All Budgets.
I'm a recent arrival, so I don't know if you've ever talked about the tragedy of the anti-commons.
It plays in, I think, to my comments in the other thread about public-funded basic research for non-IP, public use.
(It is a both good and necessary that private players be granted Patent, but the process might need some overhaul, with respect to what is truly “novel.”)
You should know better. With $9 trillion in bailout obligations agreed, “porkulus” is small beer.
It is only interesting IMO, because while small it provides a more convenient morality play for a certain element.
“That is, people prefer romance. Here’s one way to understand the “going Galt” dramatics. Obama is causing a lot of Rand fans to completely flip their lids in part because Obama and his devotees are Bizarro World Randian romantics in the grip of an adolescent faith in the generative powers of the state.”
Actually, they're dead-serious adults who have faith in the generative power of the state. Hopefully, it's not only Rand fans who understand the danger of this faith.
Yes, I should have mentioned bailing out failed banks and car manufacturers as well. I just went with the most recent top-of-mind items. I was implicitly including the bank bailouts as part of the financial crisis, but should have explicitly stated that.
Bush shares the stupidity with Obama, but Obama and his ilk are taking it to new levels.
Once we are here, with deeply interconnected banks, I'm not sure how much payout we can avoid.
Though, I've often wondered, and forgive me for wandering into Limbaughsian hyperbole, if Obama's emphasis on innovation, entrepreneurial spirit, etc. isn't just lip service to what he feels is some hopelessly parochial American bromide to which he personally feels no particular intellectual or ideological allegiance. When Obama spoke on why we shouldn't nationalize the banks, he recalled the systemic differences between our and Sweden's banking networks, albeit in a condensed, dumbed down fashion, but punctuated his remarks by saying that we don't do that sort of thing in America because of our unique set of traditions – I'm paraphrasing. But the way he came off was as though he was lamenting, “Alas, because of our quaint, collective fondness for capitalism, I have to make overtures to business and dynamism, and put my more revolutionary plans by the wayside.”
I know I sound like the most paranoid, raving dittohead, but when it comes to liberal politicians, I always get this feeling when they talk about private enterprise and free markets, that they're doing it begrudgingly. It's like when you were a kid and you got invited to eat at your friend's house for dinner, and his mom made something God awful. You bit the bullet, smiled, and swallowed. But when you got home, you hugged the toilet.
I'm pretty sure I have talked about the anti-commons before (maybe I haven't used that term). Anyway, I agree that IP badly needs an overhaul. And I heartily agree that all tax-financed research (barring some defense stuff) should be in the commons. I also agree that (relevant to the other thread) that government funding of basic research often makes a lot of sense and that it in many cases it's hard to see what the private alternatives are. There are some problems with the politicization of grantmaking, etc., but on the whole U.S. science policy is pretty good. I start having big problems when the government moves downstream into engineering and financing the development of applications. I don't think that's its comparative advantage.
Sorry, but I can't resist… you might have titled the post “The Nine Billion Names of Galt.”
“devotees are Bizarro World Randian romantics in the grip of an adolescent faith in the generative powers of the state.”
To be fair, I've yet to meet a liberal who's in the grip of any kind with respect to the generative powers of the state to the exclusion of all other kinds of innovation. Regardless of whether they are employed at state run Universities or by silicon valley start ups, it is individuals who are the engines of innovation, not governments.
That said, I think liberals would argue that individuals who feel safe, and have expectations of reasonable reward for their efforts, are more likely to be creative and productive than people living hand to mouth. Innovation betters lives. And better lives promote innovation.
At this very moment though, our expectations are in rapid reverse. To make life tolerable enough that those billion little tweaks are possible; that's something (so the argument goes) that the state can achieve.
Cal, I think it's a political signaling problem. As crazy at I'm sure it seems to a lot of people, I think Obama's economic advisors, other than Bernstein, are way to the “right” of his party, and they really don't intend for government to devour the private sector. (But because these guys are weak on public choice dynamics, they'll devour more than they mean to.) And they really don't want to freak the markets. At the same time, the Democratic Party is starving and wants blood. Talking about private enterprise and free markets, but begrudgingly, while also promising not big government but better government, while also announcing huge new projects, etc., is the politically smart rhetoric. Maybe a different way to put it is this: I think if Obama was an autocrat, and freed from the demands of his party's main interest groups, he'd likely have better economic policy than we're getting. I don't think he is, in his heart of hearts, a socialist, but actually reflects something like academic consensus liberalism which is pro-growth, moderate social democracy. I don't think this package makes sense, but it's not a longing for full-on socialism either.
Also – Will?
“That is, people prefer romance. “
People don't 'prefer' romance. Rather – we're biologically driven that way. Our brains have evolved to prefer the details of stories — which are easily recalled because we can 'inhabit' the thought — to numbers. Any serious thinking about political science and social policy must incorporate this fact.
Pingback: That’s one of the best quotes I have read lately « Muse Free
For the record, my suspicions of the proverbial “Real Obama” are in no way those of the many who imagine that he reads Das Kapital to Sasha and Malia each night. I do believe your assessment of him is correct in terms of social democracy, but I might put it to you that that form of left-liberalism owes more to a certain hostility towards the private sector and the general chaos of the market than it gets credit for. I also feel, after having read sentiments of his in his books (for whatever they're worth), that he has a very immature view of modernity and prosperity. Much of his critique of industrial and post industrial society can really be boiled down to a crude form of pastoralism, which, if you're reading Romantic poetry is great – organizing an economy and making trade decisions that will gravely affect developing third world nations … not so much. Politically, I'll concede, he is much more moderate – to the right of even say, Michael Moore or Jon Stewart (an avowed Socialist), but psychologically, he is somewhat wedded to certain principals and irrational fears that make him seem indistinguishable in ideological temperament (contrary to the refrain of his even keel) from John Kenneth Galbraith. I'm not saying he's not rational enough to see the practical errors in applying Galbraithian policies, but the fact that his politics spring forth from a belief that prosperity categorically begets inequality is a sticky wicket.
“…adolescent faith in the generative powers of the state.”
Irony meter pegged.
Is there a more juvenile belief system than Libertarianism?
None come to mind.
“Is there a more juvenile belief system than Libertarianism?”
Please! Share-the-wealth socialism is the ideology of the nursery school. It requires no more intellectual firepower than believing in Santa Claus, and for the same reason. In both cases, the magical free lunch for the unproductive is provided behind the scenes by hard-working grownups who receive little credit for their contributions. It takes much more intellectual sophistication to understand the theory behind “a rising tide lifts all boats”, and to comprehend the lessons of history that have proved this again and again.
I'm not getting your issue with cap-n-trade, WW. It works. It's an American invention, and it's been proven to work with the NOX & SOX market. Emissions trading for these acid-rain gases hasn't ended the world as we know it, and when was the last time you even heard the term “acid rain?”
Further, it's not an Obama policy you can blame on GE. That link is frankly crazy talk.
We already have mandated cap-n-trade for carbon going on in this country in the Northeast and the West is soon to follow. These are state-level initiatives. Carbon has had a public price in the US since last fall.
If the world has exploded, it's been due to the fall of Lehman, not mandatory carbon trading. I don't understand really how come people hyperventilate over something that's already happening without any apparent ill-effect. How will this end life as we know it?
Love it, embrace it, it's been happening since September – it's called RGGI.
Cap and trade says that there is a perfect level of pollution. As far as I can tell, the harmful affects of pollution are not quantized. There is not perfect level of pollution. At every level of pollution there is a marginal benefit in terms of productivity, countered by the marginal negative externality. Presumably these two should be equal. Cap and trade does not do this, and furthermore encourages a system of favors, inspectors, and unaccountable bureaucratic corruption that collects rents from the government and industry.
Got any evidence Nathan? Again, please show any studies of how NOX & SOX trading has just ruined us all. I thought not. . . .in fact, even for carbon. . .please show me how the regulated EU-ETS system has just put Europe flat on its back. You can't, because it hasn't.
As for your groundless fears of “favors,” “inspectors,” and “unaccountable bureaucratic corruption,” again, show me the money with NOX & SOX. The carbon market system largely depends on independent, 3rd part verifiers. Not that I'm saying we shouldn't improve on the EU-ETS. Because we should. It has a many flaws we shouldn't duplicate here.
It's bizarre that all of a sudden on this issue people lose their understanding that markets – capitalism – is the way to go.
If you were a real Libertarian, you'd refuse to post on the government-funded internet, John.
And avoid embarrassing yourself.
Is there a single Libertarian who actually lives up to their own one-dimensional “standards?”
I've never met one.
You don't have to save them all. Many, many banks were not involved in this nonsense. Let at least a few of the big, stupid ones go out of business and have them transfer accounts to smaller, smarter banks.
So what do you want? Are you a fan of government in every orifice all-the-time?
Your belief of government as god is fairly sick. Make fun of libertarians all you want, but we don't worship Hitler, Stalin, and Mao like you statists do. That's what the State is good at: killing lots of people. Let's make everyone equal by making them equal in death.
Well, the last time I heard the term acid rain was when I googled “china acid rain” a few seconds ago (though I didn't actually hear it, of course).
Turns out that when you ship a huge portion of your heavy industry halfway around the globe, your pollution gets outsourced along with your jobs. I'm not arguing against cap and trade, but China's slave wages and total lack of environmental regulation (except when the Olympics are in town!), combined with increased ease of capital movement to just that kind of “environment”, surely has more to do with North America's progress on acid rain than cap and trade does.
So you get to keep all the money you've taken from libertarians, but they don't get to use what you've purchased with it?
I oppose agricultural studies. Does that mean I should starve myself to death?
Will opposes the mortgage deduction. Should he go sleep in the streets?
Your understanding of libertarianism is sorely deficient.
I agree!
Webgrrl,
I think there are several aspects of your argument that are problematic. First, I would take issue with equating the attention of a problem given by the media with its relative importance. Acid rain may or may not be a problem, but I would be loath to base that assessment on the frequency of hearing the term, particularly in relation to other environmental concerns. Second, I think it is debatable to what extent acid rain has been alleviated by cap and trade – at least in ways that are repeatable for carbon. As DMonteith mentions, some of this may be related to moving a portion of our manufacturing base over seas. But a bigger stumbling block may be that the technical challenges for dealing with SOX and NOX are far easier than carbon.
SOX and NOX are the result of the presence of sulfur and nitrogen in the fuel (sulfur in the hydrocarbons and nitrogen in the combustion air) and the resulting SOX and NOX can be mitigated by through “cleaner” fuel and altering the combustion process (NOX is formed in high temperature or long duration combustion), or through chemical scrubbing process such as limestone/lime (Ironically, some of these scrubbing process produce more CO2 but back in the day that was a perfectly good trade-off). I don’t know if any comparable methods exist for CO2. The problem with CO2 is that it is (by definition) a direct product of combustion. Reducing CO2 isn’t really possible other than reducing combustion (Unlike SOX and NOX which can be reduced without a change in combustion quantity) although CO2 could be captured in some way. This isn’t to say that cap and trade couldn’t have played a role in pushing these cleaner technologies for SOX and NOX (I don’t know enough about the history of the regulation in the 70s and 80s), only that I fear the low hanging fruit (so to speak) may already have been picked.
Finally, my understanding, which I admit may be a bit limited, is that Europe is, in fact, having difficulty with their carbon trading scheme – particularly as a result of the current economic conditions (http://www.guardian.co.uk/commentisfree/2009/fe…). They aren’t on their backs, but I think they do offer a warning of what not to do – although you recognize this as well.
This is to say nothing of the issue as to whether there is any significant danger to increasing carbon emissions in the first place (I remain skeptical for a variety of reasons), but as Nathan mentioned, the usefulness of cap and trade (or any pollution scheme for that matter, I suppose) is dependent on the ability to understand the negative social costs. I don’t have the sources at the moment, but I recall hearing a pretty wide range of estimates on the cost of carbon.
Bizarre, how? There are two decisions to be made about carbon: how much to emit in total, and who should produce what fraction of that total? A carbon tax leaves the market to answer both questions; cap-and-trade lets it answer only the second, replacing its verdict on the first with a bureaucratic diktat. So people who understand that markets are the way to go (assuming they agree that carbon emissions represent significant negative externalities) prefer a carbon tax. No puzzle at all.
I agree with Paul. Webgrrl, you make it sound like Sachs' auction schemes for privatization in Russia, since it used “a market” was somehow the ideal solution from the perspective a market lover.
Anyway, creating markets out of thin air by inventing a scarce good, declaring a monopoly over it, and then setting up a market for trade in it, isn't my idea of capitalism. Though it does sounds a good bit like what the Fed does.
Yes, it was definitely all those bizarro, Obamaniacal policy whack-jobs who caused the otherwise staid, sober Randian fundamentalists to lose their composure.
…creating markets out of thin air by inventing a scarce good, declaring a monopoly over it, and then setting up a market for trade in it, isn't my idea of capitalism.
The ability of the earth's atmosphere to absorb carbon dioxide without negative repercussions isn't an “invented scarce good”, it's an actual scarce good. If establishing a market to maximize and efficiently allocate the returns on scarce goods isn't your idea of capitalism, then I'm very confused about what your idea is.
Oh, that's right, pollution sinks are “natural capital”, which doesn't actually exist…
Sorry to keep beating this horse, but you do keep highlighting your limited understanding of some of the issues at play, and I'm here to help!
And I think defenders of cap and trade show a very limited understanding at the political dynamics at play. But I'm also here to help. A carbon tax is better.
Fair enough. But pointing to the politics of the possible is a very different argument than “cap and trade isn't capitalism”.
The choice here seems to boil down to price uncertainties for business (c&t) versus emissions uncertainty for society (and the biosphere) as a whole (tax). Given our current understanding of the variables at play, I'm not sure why you seem to think that the preponderance of risk lies on the price uncertainty side of the equation rather than on the uncertainty of sink capacity side.
I would also note that, as one of the rising stars of libertarianism, your claiming that cap and trade is not capitalism has an effect (perhaps small, but non-negligible) on the political dynamics here.
If carbon emissions are in fact excessive and constitute market failure, setting up an emissions permit market could count as wise regulation. But regulation is what it is. There's something sort of neat about the idea of devising one market to limit others (sort of like the idea of setting up a government agency that gets to keep half the waste it identifies in the budgets of other agencies). But the fact that you can regulate markets with markets doesn't imply that an emissions market is something other than a regulatory intervention by government. It's just one way of applying a tax, and a way of applying a tax doesn't strike me as “capitalism” in the sense of “free markets.” The whole idea of the market-as-tax is that the market-as-market will destroy us all if left free.
Your view of the efficacy of negative feedback loops in (dare I say it) regulating the operation of complex systems seems, um, quite flexible.
The fact that you're not dead of cancer right now is thanks to “regulation” of cell growth. There is no judgment as to whether or not cell growth is good or bad implicit in that fact. However, It is true that cell growth, if “left free”, will kill you.
One more thing, global warming is going to “regulate” our economy one way or the other. It seems like the better part of valor, however, to utilize our capacity to foresee such an eventuality and choose the method of regulation ourselves rather than to let nature pick for us.
There's also the question of inter-generational justice here. The largest negative effects of global warming (and other resource depletion issues) will be borne by future generations. Your sensitivity to the plight of those trapped by political boundaries does not extend to those trapped by temporal ones? There's a moral dimension to discount rates.
Incidentally, while it's useful to think about Schumpeter in this context, he's certainly not just Rand-for-political-economists. The routinization of innovation was a crucial part of his model.
DMonteith's gibberish about “temporal boundaries” suggests he doesn't understand the meaning of discount rates.
Why are emissions something we need to be certain about? The whole point of the carbon tax is that so long as the environmental damage is priced into fossil fuel, the market will find the correct emission level on its own.
“I do believe your assessment of him is correct in terms of social democracy, but I might put it to you that that form of left-liberalism owes more to a certain hostility towards the private sector and the general chaos of the market than it gets credit for.”
It seems to me that Alan Wolfe's book — The Future of Liberalism — describes the inconsistencies perfectly — government control of the economy is illiberal except when government needs to contol the economy.
Your original claim about Cap and Trade was that “it's looking to finance a quantum leap” rather than a lot of smaller innovations. Is there any reason to think it's more inclined to quantum leaps than a carbon tax? Or are you now just pointing out that it's a form of regulation, which seems like a much less devastating critique?
I made a mistake in mixing up Obama's plans to directly subsidize “green” technology initiatives and his plans to implement cap and trade. It's the subsidies meant to directly finance discovery of new technologies that are banking on a quantum leap. Cap an trade is just one, indirect, element of the scheme, meant to help make a market for “green” innovation by making traditional carbon-based energy more expensive.
If you think wealth is a matter of “natural capital” and you project that the future will be wealthier than the present, then the only way to rectify that inequality is by consuming more natural capital now, right?
There is a moral dimension to discount rates. And the lower the discount rate, the less willing you should be to hurt growth.
That is to say, I should have linked to something else. The article I linked to confuses the issue.
Aw, DMonteith….
“DMonteith Says:
March 7th, 2009 at 5:39 pm
I’ve spent some time commenting over there in recent weeks (and in the linked thread), and pushback against WW’s misconceptions seems to be a project with very little in the way of returns. Given that he seems to be the best that Cato has to offer, ignoring everything that comes out of there seems to be the best utility maximizing strategy.”
You haven't been persuasive so there's no hope?
Why does Yglesias' comments always devolve into chest-beating tribal discussions why those in other tribes do not deserve to be taken seriously?
Anyway, I enjoy the challenge of good argument, so I hope you don't really give up, or stop listening to people you don't already agree with.
The whole point of the carbon tax is that so long as the environmental damage is priced into fossil fuel, the market will find the correct emission level on its own.
What price accurately reflects the environmental damage? By limiting emissions to a known number, the market can figure that out. This is just the other side of the same coin, but from the point of view of prioritizing emissions reductions, a tax involves three moving parts–tax rates, what emission levels that result from them, and what effect on climate those levels have, whereas c&t involves just the levels and the atmospheric results without dealing with question of price. From a scientific perspective, fewer variables is better.
This also intersects with the political dynamics. A tax is easier to demagogue (by people from Cato, perhaps?) than is a permit, unless there's a high profile “permit revolt” movement that I'm unaware of.
In case you're wondering, I'm not currently planning to man the barricades if a carbon tax is passed rather than cap and trade. Either one is a step in the right direction.
The difference between wealth and income is important here. If I have a million dollars in the bank (wealth) and I can make (inflation adjusted) 5% on it, then if I live on $50,000/year (income), then I'll be at least as wealthy in the future as I am now. If I exceed this level of expenditure and therefore begin to deplete my wealth, I have higher income now at the expense of future income and present wealth. Obviously, it can make sense to spend more now for some purposes, particularly if I plan to offset that spending with saving later. The regime I have outlined above is economically “sustainable”, no?
If you consider the source and sink capacities of the planet as “wealth”, then the logic of economic sustainability and environmental sustainability are exactly the same. Insofar as the scale of your economy's throughput of energy and material remains within the abilities of the various sources and sinks you depend on to provide those services (i.e natural income–forests grow, carbon is sequestered, etc.), you're golden.
If you've been paying any attention at all to recent scientific developments there is good reason to think that we're well past that point on a number of fronts right now (topsoil, fish populations, rain forests climate, oil, etc.) and are seriously compromising prospects for future income.
There is obviously room for debate as to what constitutes an optimal level of natural capital (most of this debate should be informed by empirical study, of course), but the parties to that debate have to agree it exists first.
Hmm. I am not a believer in strictly exclusive OR thinking (x but not y, y but not x). I think most big innovations, when they happen, are likely composed of small incremental steps. As a musician and software developer the methodical (or random) tiny steps may lead to startling epiphonies (aka big innovations). Whether you're John Coltrane or Jonas Salk or trying to put an astronaut on the moon. Innovation is more about thinking outside of the box (rusty cliche) but valid. Getting there can be pretty much stepwise. Innovation and small stepwise refinementss are necessary complements to each other in my experience.
One last thing: the last statement in your post is utter crap to my way of thinking. Makes for a provocative comment-inducing babble but should be labeled for what it is: utter crap.
Utter crap.
Pingback: Conservative and Libertarian Misconceptions of Liberal Viewpoints - Liberal Values - Defending Liberty and Enlightened Thought
Nothing you could have said would make me more certain that cap-and-trade is a bad idea. I started out with only a moderate preference for a carbon tax; that was because I assumed that under the alternative the cap would be set by some sort of cost-benefit analysis, and I thought that we could cut out an unnecessary and fallible step by building the costs into fuel prices and leaving it to the market to balance them against the benefits. But if the cap is to be set arbitrarily I would prefer any other arrangement, including the old-style fixed permits; at least with them you might get CBA done on a case-by-case basis.
You haven't been persuasive so there's no hope?
I'd be more hopeful if your argument didn't essentially consist of “I've never heard of that so it must not exist”. To the extent that my lack of persuasiveness may stem from just being a messenger, I recommend that you read the economists Nicholas Georgescu-Roegen, Kenneth Boulding, and especially Herman Daly. The ethicist/theologian John Cobb is good read on the moral issues too.
If you read some of their stuff, come away unconvinced and explain why, then I'd be happy. Dialogue, given its relative scarcity, is probably more valuable than agreement anyway.
As for the Cato crack–just calling it how I see it; maybe you can change my mind.
But if the cap is to be set arbitrarily…
Who said anything about arbitrarily? Throwing a dart at a bunch of numbers on the wall would certainly be a very stupid way to set emission targets. Of course better metrics, both economic and climatological, would be ideal, but letting the perfect be the enemy of the good is, in my opinion, unhelpful.
But if it helps you make your decision to think of cap and trade advocates as drooling idiots who have never heard of cost-benefit analysis, more power to you.
But since the existing internet was government-created, surely it must suck and the private sector could do better! Lord knows this internet is terrible and has led to no innovation.
If, as you have implied, we can't estimate the costs of carbon emissions, there's no non-arbitrary way to set the cap.
P.S. Grow a skin.
This conversation has now turned into a mobius strip. The cap would be based on scientific evidence regarding the current state of the atmosphere, and presumably modified by CBA and empirical feedback. How is this arbitrary?
My skin's fine, thanks. Here on the toobz, snark is the coin of the realm.
If we can do CBA, then we must know how much emissions are costing us in environmental damage, and we can base a carbon tax on that knowledge. QED and out.
If we can do CBA, then we must know how much emissions are costing us in environmental damage, and we can base a carbon tax on that knowledge. QED and out.
Once more, for whatever it's worth:
Science tells us that emission level x is advised. Cap and trade starts with a cap higher than x but lower than current levels, call it x+y. The goal is to gradually make y equal to zero. As we do this we are receiving accurate feedback on the costs of the emission reductions through that miracle of markets, price discovery. This is information that we can use to adjust the rate of y's diminution or to re-evaluate the advisability of achieving x (in other words, CBA with an accurate understanding of the C part). Meanwhile, we have guaranteed that emissions actually are x+y, no more, no less.
Under a tax, we guess at a price that we think will achieve x+y emissions. Next year, when actual emissions turn out to be x+q, we guess again. If the relationship between prices and different values of y is non-linear, these guesses will be very hard to get right. Eventually, however, we get close to x+y, but our energies have been focused on figuring out a price, not on what an accurate understanding of the costs involved imply for our future course of action.
Meanwhile, I'm certain that our principled libertarian friends will restrain themselves from “taking advantage of a good crisis” and not claim that government sucks at setting prices and that this proves that reducing emissions is a misguided idea. Hahahaha!
Take your pick.
Under a tax, we guess at a price that we think will achieve x+y emissions.
Better google “Pigovian tax” before getting into a debate like this again. It's hard to talk sense about something when you misunderstand it this completely.
From Wikipedia:
One difficulty with Pigovian tax is calculating what level of tax will counterbalance the negative externality. Political factors such as lobbying of government by polluters may also tend to reduce the level of the tax levied, which will tend to reduce the mitigating effect of the tax.
How can your suggestion that we review remedial economics not be considered an “own goal” on your part given the above quote?
Dazzle me.
From Wikipedia:
One difficulty with Pigovian tax is calculating what level of tax will counterbalance the negative externality. Political factors such as lobbying of government by polluters may also tend to reduce the level of the tax levied, which will tend to reduce the mitigating effect of the tax.
How can your suggestion that we review remedial economics not be considered an “own goal” on your part given the above quote?
Dazzle me.
Gosh, no one warned me there was a difficulty involved. Curse you, Greg Mankiw!
Part of the reason I'm so reluctant to comment on politics is because almost everything everyone says about it is such nonsense, a confection of wishful thinking, untestable conjecture, and self-aggrandizing blame of the partisan opposition. But here goes anyway. It is not at all hard to figure out what the root cause of the current crisis is, and it is neither the oppression of the self-styled Galts who have suffered under what they imagine to be the interminable Obama administration which began sometime a few decades ago, nor is it due to the zero government spending, gold standard following Bush administration with its well concealed exploitation of labor power, colonial and domestic. It was artificially low interest rates induced by the Fed, a practice begun in the 90s when Greenspan drifted from righteous concern about price stability to panicky concern about keeping post-dot.com bubble stock prices artificially high. Low interest rates mean excess borrowing by the unqualified, artificially high prices for what they buy (real estate), culminating in massive defaults. Low interest rates mean lenders have to make up in quantity what they lack in quality. Securitization of risk was the anaesthesia facilitating the process. There's enough blame to go around to make everyone uncomfortable, but the root causes are at the Fed, or more to the point, at the very idea of there being such a thing as the Fed.
I was at a party once and someone defiantly asked me “name one businessman who resembles a positive character in Atlas Shrugged.” I promptly replied, “Ed Land of Polaroid.” If I were asked again today, I would add Steve Jobs. I can't think of anyone else. I doubt Miss Rand would disagree. But her extraordinarily peculiar and still largely misunderstood book is also filled with repulsive businessmen who engage in unfair competition, monopolistic practices, lobbying for special favors, manufacture of tortious products and services that kill people, etc. etc. etc. When innovation leaves, the world they've built destroys itself. Interestingly, no one identifies themselves or others with all of those characters. Fans and critics alike misread her if they think they know who she supported or opposed, or would support or oppose. As for what happens when the creative dynamo upon whom everything depends walks away and then returns, historians of Apple, Inc. know the answer to that, as do its shareholders.
Let's review, shall we? “Arbitrary caps” has been shown to be a bogus objection, and we now both agree that c&t addresses a major shortcoming (or “difficulty” if you prefer) of Pigouvian taxes.
“QED and out”.
I need to remember onething here..During the president electon When Obama was elect as president he told why we shouldn't nationalize the banks.. also he recalled the systemic differences between our and Sweden's banking networks,
topsoil Screener