NoPigou Strikes Back
jan/074
I have to admit that my last post about wiggle room was not met with universal praise. Everyday Economist replied on his website:
- The Pigou Club dismisses my argument by falsely assuming that their are no transaction or transition costs.
Not quite. In my post I just pointed out there is plenty of room for reducing gas consumption. Wikipedia also has this to say: The average fuel efficiency of European cars is over 40 mpg, Japanese cars 45 mpg, and North American cars 20.4 mpg. Do pigovian taxes create costs for the "sinners"? Of course they do, no one ever denied that. Another criticism comes from Three Sources, which starts off by saying that he has little respect for this site and continues:
- I complained that the site was all but completely devoted to Global Warming.
I’m sorry about that, that seems to be the hottest topic on the menu. Oh and Mankiw’s Pigou Club manifesto starts with: With the midterm election around the corner, here’s a wacky idea you won’t often hear from our elected leaders: We should raise the tax on gasoline. The criticism continues:
- …many people have a long term commitment on their transportation..
Again the manifesto comes in handy: I would like to see Congress increase the gas tax by $1 per gallon, phased in gradually by 10 cents per year over the next decade. Other complaints are more general and could be applied to taxation in general not just pigovian taxes.
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1:33 dopoldne on januar 30th, 2007
I did not mean to disrespect the PigouClub site. I meant to say that – while the bona fides of Gregory Mankiw cause me to doubt myself when I part company with him — the instant respect accorded him is non-transferable. . I said that clumsily; I respectfully disagree with the PigouClub.
I am not convinced of “Deleterious Anthropogenic Warming of the Globe.” Doubt rises as I move from right to left down that tendentious acronym. If your main support for the harmful effects of a gas tax is to prevent something that I’m not sure exists, we have a problem.
More important, on “Milton Friedman Day,” is my skepticism, noted in the post above, of empowering the government to choose the bad behavior that warrants a tax. I suggest that the government taxes us enough to fund itself but refrains from picking people to punish with extra taxation.
7:32 dopoldne on februar 6th, 2007
I think I can add something to this debate over the pigovian gas tax. If someone else has said this before me I’m unaware of it. I think both sides of the argument would agree with the following proposal:
Tax Gas, but then cut taxes somewhere else. Maybe income taxes. This way, gas becomes more expensive and as a result, people will have an incentive to use less but they won’t suffer any purchasing power loss. A compromise of sorts, tweaking the market to achieve what everyone wants: Lower carbon emissions without harm to the individual.
8:07 dopoldne on februar 6th, 2007
Somehow this missed my first post.
I do not make the case that carbon emissions are causing Global Warming, or even that Global Warming exists even though the evidence is truly convincing. What I think can be agreed upon is that in either case, carbon emissions probably don’t help the enviroment.
8:02 dopoldne on maj 27th, 2007
> I am not convinced of “Deleterious Anthropogenic Warming of the Globe.�
How unconvinced are you? According to the Stern Report, the cost of continued warming will be 5% or more of the world’s GDP, while the cost of acting will be only 1%. Of course, that only measures tangible goods, so the overall cost will actually be greater.
So, unless I’m crazy (and I admit I’m not an economist by trade or degree), it seems that you need no more than a 1/5 = 20% confidence in the report’s figures before the expected cost of continued warming is greater than the expected cost of acting.
(Yes, that takes into consideration the case where warming will continue with or without human activity. I’ve done the math on this, and it actually cancels out.)