Equivalent In Your Dreams

I understand the theoretical argument for the equivalence of cap and trade and the carbon tax in conditions of full information and perfect compliance, but I think it's sort of crazy to think they're equivalent in any meaningful empirical way. Tyler Cowen helpfully explains why.
Meanwhile, Reason Foundation economist Shikha Dalmia has a good op-ed in the NY Post that I think more or less correctly captures the fiscal politics of the proposed cap-and-trade bill.
My policy preferences in this area are (1) Wait until we have much better estimates of the externalities of carbon use, which requires better climates models that do not rely on rapidly empirically crumbling assumptions about ocean warming and water vapor. Which is to say, do nothing, for now. (2) Straightforward carbon tax with offsetting reductions in other taxes. (3) Cap and trade plus tax cuts.
I understand the appeal of trying to gin up a market in carbon permits by politically inventing scarcity, but I think it's sort of insane to think that route isn't a lot more prone to system-gaming, rent-seeking, and non-compliance from the start compared to a carbon tax. Which is not to say that a carbon tax wouldn't be gamed and lobbied, too. It would be, just not so badly. We already know how to collect taxes, more or less. Cap and trade, on the other hand, basically requires creating an entire new set of institutions, on dubious scientific grounds, in a context of insufficient information about their optimal design. Which doesn't seem promising. The real-world political economics of it seems to me less like implementing an excise tax and more like the process of creating a stock exchange in a developing country.

6 Replies to “Equivalent In Your Dreams”

  1. The property we rightfully own comes from time we (or those who gave it to us) spend acquiring it.
    When you steal or damage that property you are taking that part of a persons life.

  2. GilM,
    My goals are to persuade that the principle “don’t start fights” is one that keeps you from getting into fewer fights on an individual level, is one that human beings do in fact apply intuitively rather than deductively, is one that can be understood to include both “force and fraud” and is one that makes it possible to distinguish “aggression” from mere “coercion”.
    Thought experiment:
    1. Gil has possession of some stuff, and the facts are such that if Chris were to try to take it by force then we would agree Chris would be the one starting a fight.
    2A. Gil tells Chris, “you can have the stuff–I don’t need it anymore”.
    2B. Gil tells Chris, “you can have this stuff if you win the game of cards”. Gil loses an honest game of cards.
    2C. Gil tells Chris, “you can have this stuff if you win the game of cards”. Gil loses a game of cards where Chris secretly cheated to win
    2D. Gil tells Chris “you can’t have this stuff.
    In each case…
    3. Gil puts the stuff on the table and leaves the room.
    4. Chris takes the stuff from the table. (He neither threatens nor uses force as he takes possession of the stuff–remember that Gil isn’t even in the room at the moment.)
    5. At some time later, Gil and Chris have fight about possession of the stuff.
    6. A jury is asked to answer the question of, “Who in fact do you honestly believe started the fight?” The answer to this question then determines whether the transfer of possession should be treated as “valid” or “invalid”.

    And this is indeed where we disagree. You indicate that questions of ownership and property, i.e. whether a transfer is valid or not, should be answered first, before the answer to the question of who started a fight can be deductively answered. You believe that people cannot make judgments about aggression without answers to these other property/ownership questions to explain their judgments. “You have to explain why the person trying to get his property back isn’t the one who’s starting the fight.”
    I feel free to disagree with you because I don’t actually claim that there is an objective answer to the question of who started a fight. I merely observe that people have shown that they in fact can and will make these judgments in a more intuitive manner than you claim they must. We both know what the juries would answer universally in the cases above–and we both know that that, again almost universally, they would disregard any philosophical arguments against their intuitive answers.
    Think about how many theories of “property” really get tied up in knots even defining what property is and how stuff even is transformed into property? Think about how many people use “property” and “ownership” as words that has nearly magical powers to compel human behavior. I believe that complicated social conventions and theories using concepts like “ownership”, “property” and the “validity of transfers” are just complex mechanisms that depend more on hypothetical “who would have started the fight” types analysis to prevent fights from starting in the first place. It makes sense that these concepts start to become incoherent when they are forced into the role of first principles themselves.
    My semantic claim that follows all this is that the “force and fraud” is a necessary word pairing because many people don’t understand how fraud does involve force–just after the fact rather than before the fact. And notice how the alliteration makes it easy to remember.
    By the way, how would you distinguish the sneaky theft from the deceptive fraud where no force is actually used in the transfer of possession? In neither case is more force used than the other in the transfer of possession.

    1. Well, it still looks like an evasion of the issue to me. You’re hiding the interesting issues in the implicit theories of prospective jurors. Those theories may be bad (e.g., “fighting words”, “discrimination”).
      I’m not sure I understand the final question. Both sneaky theft, and deceptive fraud coerce the victim because they deny him voluntary control of his property. That, and not physical force, determines relevant coercion (IMHO).
      I think the confusion comes from the fact that we’re trying to justify the legitimate use of “force” and it’s tempting to say it should only be in response to the initiation of physical force. But, I think coercion as I’ve described it (denying voluntary control of property) is a better description of an act that justifies retaliatory force. So “force and fraud” makes sense.

    2. I don’t really get what work the “fight” here does. If Chris steals Gil’s property, Gil can take it back. Gil can’t punch Chris, and Gil can’t seize some comparable piece of Chris’s property.

  3. 1) I don’t believe that these “who started the fight” judgments for most people are based on theories. I believe these judgments were being made purely intuitively throughout the history of our species, even before anyone had any theories to base them on. Even today, the majority of theories which do exist to rationalize these judgments either boil down to “because God said so” or involve jumping to a conclusion about property and then rationalizing back about aggression.
    2) The less consensus there is about a law then the more likely you will find that it cannot be understood within the “who started the fight” model. Think about how controversial discrimination laws are. “Fighting words” are often excused as the reason for fighting when people believe that the emotions are so strong as to cause physical reactions (e.g. adrenaline rushes) outside the fighter’s control–but even then we still teach children “sticks and stones…”
    By the way, I would agree that application of these intuitive judgments to complex hypothetical situations becomes is very challenging–for an example, think about how in politics (which is an early phase of the lawmaking process) it is better to have simple answers for “issues” rather than consistent principles that get negatively tagged as “ideology”.
    3) Gil and Ben, you both seem to fall back on the assumption of the independent existence of “property”–your conclusions about coercion or aggression appear to depend on who you feel is the rightful owner of the property. But do you actually have answers to the questions of what characteristics property has that other stuff does not, how things becomes property, how people become owners, how ownership rights can be transferred and how to analyze these rights when looking at coercion or aggression? I sincerely do not expect you to do this since it’s a problem that’s long vexed libertarian philosophers–in fact, my long search for theses answers to questions about property is what led me to finally conclude that property can only be explained as a result of the application of the non-aggression principle rather something that can really be understood independently of it.

  4. Libertarian theory is simple.
    People come to the table with property, which is just another name for bundles of rights. Rights may be transferred from one to another through a consensual exchange. To exercise the rights of another without their consent is a violation of their rights
    whether through force (not even seeking consent for an exchange) or fraud (not fulfilling the agreed upon terms of the exchange). It is ok to retaliate with force against those who have deprived you of some of your rights without your consent.
    Aggression or Coercion are mainly just mean sounding evocative terms and not primary to the theory. The key terms are rights and consent. Caplan objects to Rothbard’s attempt to justify rights based on “naturalness”, (an objection I share), and instead substitutes an intuitionist justification (which I do not share).
    Do you have another category of violating someone’s rights that libertarians would not be able to stuff into either force or fraud? I doubt it. I think the theory is fairly tidy on this score. The problems for the theory lie in mainly in the initial distribution of rights and the allowed means of defending your rights.
    The lover withholding affection is not considered coercive (i.e., violating your rights) because his affection is presumed to be his property to to give or withhold at this discretion. This is not to say that you wouldn’t prefer to have his love, or wouldn’t feel worse off without it, or wouldn’t knuckle under to all sorts of things you otherwise would not when under threat of having that love withheld.
    But it is to say that he does not violate your rights by withholding his affection. You are offered an exchange – his love in exchange for the concessions he is asking for. Take it or leave it, but don’t whine about being coerced.
    For the grownups in the crowd, we find such “exchanges” distasteful because they are usually a category of “consensual frauds” – the “lover” manifestly doesn’t have any love to offer (fraud), but the person desperate to hold on to him prefers the lie rather than facing the truth. “Lie to me, I’ll believe.” Neither party to the “exchange” seems particularly admirable.

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