Here is the text of a statement by a panel of eminent economists on climate change, quoted from the Wall Street Journal:
Global climate change is a serious problem calling for immediate national action. Guided by sound economic principles, we are united in the following policy recommendations.
I. A carbon tax offers the most cost-effective lever to reduce carbon emissions at the scale and speed that is necessary. By correcting a well-known market failure, a carbon tax will send a powerful price signal that harnesses the invisible hand of the marketplace to steer economic actors towards a low-carbon future.
II. A carbon tax should increase every year until emissions reductions goals are met and be revenue neutral to avoid debates over the size of government. A consistently rising carbon price will encourage technological innovation and large-scale infrastructure development. It will also accelerate the diffusion of carbon-efficient goods and services.
II. A sufficiently robust and gradually rising carbon tax will replace the need for various carbon regulations that are less efficient. Substituting a price signal for cumbersome regulations will promote economic growth and provide the regulatory certainty companies need for long- term investment in clean-energy alternatives.
IV. To prevent carbon leakage and to protect U.S. competitiveness, a border carbon adjustment system should be established. This system would enhance the competitiveness of American firms that are more energy-efficient than their global competitors. It would also create an incentive for other nations to adopt similar carbon pricing.
V. To maximize the fairness and political viability of a rising carbon tax, all the revenue should be returned directly to U.S. citizens through equal lump-sum rebates. The majority of American families, including the most vulnerable, will benefit financially by receiving more in “carbon dividends†than they pay in increased energy prices.
The signatories of the statement are:
George Akerlof, Robert Aumann, Angus Deaton, Peter Diamond, Robert Engle, Eugene Fama, Lars Peter Hansen, Oliver Hart, Bengt Holmström, Daniel Kahneman, Finn Kydland, Robert Lucas, Eric Maskin, Daniel McFadden, Robert Merton, Roger Myerson, Edmund Phelps, Alvin Roth, Thomas Sargent, Myron Scholes, Amartya Sen, William Sharpe, Robert Shiller, Christopher Sims, Robert Solow, Michael Spence and Richard Thaler are recipients of the Nobel Memorial Prize in Economic Sciences.
Paul Volcker is a former Federal Reserve chairman.
Martin Baily, Michael Boskin, Martin Feldstein, Jason Furman, Austan Goolsbee, Glenn Hubbard, Alan Krueger, Edward Lazear, N. Gregory Mankiw, Christina Romer, Harvey Rosen and Laura Tyson are former chairmen of the president’s Council of Economic Advisers.
Ben Bernanke, Alan Greenspan and Janet Yellen have chaired both the Fed and the Council of Economic Advisers.
George Shultz and Lawrence Summers are former Treasury secretaries.
I have nothing to add to this other than to observe that it overcomes my biggest criticism of a carbon tax in Paragraph V and I think that Paragraph V is all but certain not to be implemented.
Update
Actually I do have something to add. In the absence of serious enforcement of a similar tax in China, their plan would lead to continuing deindustrialization of the United States with industry moving to China, India, Vietnam, etc. A border adjustment system would do nothing to mitigate that. How do they plan to impel China, India, and other countries that are the beneficiaries of this deindustrialization to adopt similar carbon taxes? If that doesn’t happen doesn’t that threaten to increase carbon emissions rather than decreasing them?
How do they plan to measure the results to determine when emission goals have been met?
Are they aware that carbon emissions in China, India, etc. do not stay in China, India, etc.? How do they plan to distinguish between American carbon emissions and Chinese carbon emissions?
Those are among the reasons I have long thought that capture was a better strategy.
I’ve always said, when you want competent advice on climate………..call an economist. These people own a hammer, and view every issue as a nail. Further, these are the people who brought us The Great Depression, have mis-timed policy at every turn, The Great Inflation, the credit required for The Housing Crisis……….
Its ludicrous.
In any event, the Update says it all. To paraphrase Billy Costigan – “hey hotshot, why don’t you just give me a loaded pistol and bottle of scotch and tell me to go blow my brains out.”
I question the whole idea that the gummint can manage a fair carbon tax policy. The gummint has long been pronatalist and any policy will continue to favor breeders over the child-free.
Any tax will be adjusted based on family size, with the most-polluting (large) families receiving a tax deduction or tax credit. More logical would be to impose a tax that rises progressively by family size, as is common for urban water consumption.
Furthermore, the benefits resulting from the current pain of a carbon tax will accrue in outsized proportion to the breeders, since it is their progeny that are destined to gain the most, with everyone else being dead in a couple of generations. The elderly child-free among us will be cheated the most, having been lifelong non-breeders who have contributed the least to deforestation, pollution, and human demands on scarce resources and lebensraum.
A far better and fairer policy would be to impose a carbon tax calculated solely on the basis of carbon load of the offspring a person has, paid only by the breeders. That would provide an incentive for the world’s inhabitants to limit their breeding or adjust the family’s carbon load on the planet, both of which represent positive outcomes for all the planet’s flora and fauna.
Back to Eden, through gradated taxation. As one of the most vulnerable, I can hardly wait.
Has Bill deBlasio considered banning carbonated beverages?
Economics 101:
Week1: How to spell “unexpectedly”.
Week2: Best sources for cargo pants (for your other hands).