Wednesday, April 8, 2009

Friedman prefers carbon tax to cap & trade

Here's his piece from yesterday's New York Times.

Theoretically, the efficiency and outcomes of a carbon tax and a cap & trade system should be the same. Practically, the tax requires us to "get the price right" while the trade system requires us to "get the quantity right".

Friedman seems to be arguing for the tax on the grounds of political acceptance, which is usually the opposite of what we hear. One of the main arguments against a carbon tax is that it contains the word "tax", which will immediately turn people off. Considering the recent debacles in the financial world, the black box mystery of cap & trade might indeed be more of a turn off.

He also argues for having the discussion of carbon policy be framed in terms of national security rather than in terms of climate change. I agree with this, though I'd add saving money at the household level to that thought. Those that don't believe that humans are affecting the climate aren't going to change their minds very easily, so telling them that the tax will help a problem that they don't believe exists is a waste of time. If however, you can argue that the same actions will make us better off as a nation for other reasons and save them money, then you're more likely to get buy-in.

Friedman handles the macro concerns nicely. For the micro, driving a fuel efficient vehicle, re-using plastics, composting veggie waste in your garden, eating less meat and using less water will save you lots of money. No one can argue against that, no matter what they believe about climate change.



Drew Moxon said...

I think the other problem is that it's not just the average people you have to convince. It's the lobbyists. The cap and trade system may be easier to create loopholes in than the tax (which is what corporations often look for in legislation). Look at Europe. When you allow carbon offsets, you open the floor for misuse of the rule. There are countless opportunities for bogus offset programs that would put corporations in compliance with a C/T system, but not really help the problem. That's another reason that I think a carbon tax might be better than C/T.

Andrew McGlashan said...

I agree with Drew. We have to do something about lobbyists. A corrupt government is never going to do the right thing when big dollar signs are involved. I think we should first start taxing the corporations. I dont think we can effectively tax the citizens. To get the citizens to stop creating carbon emissions we need to appeal to them in a different way. I say screw oil efficent cars lets do hydrogen. Lets start making them look cool. We need to have the wealthy and famous driving them on tv and showing up in them to set a trend. This crap tends to work. Hell how do you think the SUV (a more expensive gas guzzler) beat out the mini-van?- Trend setting! The same thing can happen here. We just need car companies producing these vehicles and fuel stations providing the liquid hydrogen. If GM goes bankrupt maybe we could use this to our advantage. We issue them the hydrogen car contract, (I dont think they will though, GM is outsourcing to China now). As for water conservation General Electric is finding efficient ways to filter sea water. What if we filtered sea water and then send it down a pipe line to places that needed it? We could then water deserts and unfertile areas so we could produce more resources with it. I dont know what do you guys think? I think this is definitely possible, we just need good management.

Kendyll Goeman said...

This was just on Hardball yesterday:

I would say that I am very conservative in many of my beliefs, but I am embarrassed that there is a Republican following that dismisses greenhouse gas’ contribution to global warming. The rebuttals spewing from Republican Rohrabacher’s mouth make me cringe. I agree with Friedman that this matter of National Security needs to be combated on the macro and micro level. I think it’s outrageous that people are still making the issue about whether or not global warming even exists- the debate shouldn’t be about opinions! I love Dr. Schuhmann’s last line “driving a fuel efficient vehicle, re-using plastics, composting veggie waste in your garden, eating less meat and using less water will save you lots of money. No one can argue against that, no matter what they believe about climate change.”- so true!

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