My bad! I initially wrote 'anything that moves,' but I entered my essay into Claude to clean it up a bit, and that was changed to 'all forms of transportation.' For extra clarity, I edited the text to say: "Moreover, the production of almost every good and service generates carbon emissions at some point in the production process. As a result, a carbon tax would give the government the authority to impose an arbitrary tax that hits every sector of the economy."
The social costs of carbon and optimal carbon tax both range dramatically. Thus, closing the gap between private and social costs of emissions via a Pigouvian tax is much more difficult in the real world than doing so on a graph. I don't think either of us would contest that point!
I'm curious what you made of the rest of the article? Do you agree that growth is the best way to deal with known/unknown risks? What do you make of the Gordon-Cowen argument about secular stagnation?
Yes. That is to point. that every transaction in the economy include the effected of internalizing the CO2 accumulation externality. And I stand my my protest at the word “arbitrary.”
Estimates of the social cost of carbon range from at least $50 to $190 per ton of carbon. That’s a wide spread, which makes setting an “optimal” carbon tax a somewhat arbitrary exercise. You’re not picking a number at random, but you’re also not picking one with clear scientific precision.
As much as I appreciate your close reading of the piece, perhaps we can move our discussion beyond that one word. :)
I responded to your point about C&T vs. taxes in the comments to your restack. I agree that taxes are better than C&T. But I think it's better/more practical to maximize economic growth and adapt to climate change rather than aim for the Goldilocks Pigouvian tax.
Fissher: ?? "As a result, a carbon tax gave the government the authority to impose an arbitrary tax on all forms of transportation."
The tax would not be not imposed on the using sector but the first sale of the fossil fuel into the economy.
The estimate of the optimal tax on net CO2 emissions is contestable, but it would not be "arbitrary."
And you know my answer to the free riding problem: border adjustment levy
My bad! I initially wrote 'anything that moves,' but I entered my essay into Claude to clean it up a bit, and that was changed to 'all forms of transportation.' For extra clarity, I edited the text to say: "Moreover, the production of almost every good and service generates carbon emissions at some point in the production process. As a result, a carbon tax would give the government the authority to impose an arbitrary tax that hits every sector of the economy."
The social costs of carbon and optimal carbon tax both range dramatically. Thus, closing the gap between private and social costs of emissions via a Pigouvian tax is much more difficult in the real world than doing so on a graph. I don't think either of us would contest that point!
I'm curious what you made of the rest of the article? Do you agree that growth is the best way to deal with known/unknown risks? What do you make of the Gordon-Cowen argument about secular stagnation?
Yes. That is to point. that every transaction in the economy include the effected of internalizing the CO2 accumulation externality. And I stand my my protest at the word “arbitrary.”
Estimates of the social cost of carbon range from at least $50 to $190 per ton of carbon. That’s a wide spread, which makes setting an “optimal” carbon tax a somewhat arbitrary exercise. You’re not picking a number at random, but you’re also not picking one with clear scientific precision.
As much as I appreciate your close reading of the piece, perhaps we can move our discussion beyond that one word. :)
The optimum amount of anything will be hard to estimate with "scientific precision."
What is the argument for trying to reach the optimum concentration (optimum path) with a quantity based policy over a price based policy?
I responded to your point about C&T vs. taxes in the comments to your restack. I agree that taxes are better than C&T. But I think it's better/more practical to maximize economic growth and adapt to climate change rather than aim for the Goldilocks Pigouvian tax.