Conservative Group Proposes We Tax Carbon

Will Republicans and conservatives advocate a carbon tax in the near future?

From The New York Times:

A group of Republican elder statesmen is calling for a tax on carbon emissions to fight climate change.

The group, led by former Secretary of State James A. Baker III, with former Secretary of State George P. Shultz and Henry M. Paulson Jr., a former secretary of the Treasury, says that taxing carbon pollution produced by burning fossil fuels is “a conservative climate solution” based on free-market principles.

Well, I don’t know about free market principles. Certainly, Economics 101 tells us that if we tax something, we get less of it.

The rationale in question is why carbon needs taxing. In classical economic thought, the price of anything to be bought and sold contains all the information necessary to make an exchange. Supply and demand, that sort of thing.

Most economists consider classical and neo-classical economics to be a textbook utopia, the assumptions of which do not always apply in the real world. One example is the possibility that there may be costs — to individuals, society at large, and, in a classic example, the environment — which the price does not take into account. Economists refer to such unincorporated costs as externalities.

Though imposing taxes to cover externalities follows a market mechanism, because someone must decide that the object of taxation is actually imposing unrepresented costs and determine what those costs are in dollars, it comes about through politics — democratic politics, if you’re optimistic, but that doesn’t make it any more of a free market source.

To be fair, the proposal would be an improvement upon, and is more free market-based than, what President Obama left us. As The New York Times notes, the plan would “substitute the carbon tax for the Obama administration’s Clean Power Plan, a complex set of rules to regulate emissions which President Trump has pledged to repeal and which is tied up in court challenges, as well as other climate regulations.”

Of course, all of this depends on what the actual costs of additional carbon are to the environment. I am not a climate scientist, nor do I play one on TV, so I don’t claim any expertise, but I’m skeptical. I tend to agree with the point George Carlin adeptly and hilariously made in his classic ‘Saving the Planet’ skit: the Earth has been through a lot worse than 21st century humanity. Obviously, most conservatives share my skepticism.

The American Enterprise Institute’s James Pethokoukis asked whether President Trump might embrace a carbon tax. Because the Baker plan would include regulatory rollbacks, he surmises that it’s a possibility, especially since, as he adds, “the plan would direct approximately $2,000 in carbon dividend payments in the first year to a family of four.” It might have a populist appeal. He also approves of framing it as a sort of insurance.

Still, when Trump has embraced ideas from the right ( and he hasn’t always) he has proven more beholden to rank-and-file Republicans than party elites like Baker, Shultz and Paulson. Arguments that the Gipper would have liked such a plan, as Baker has made, would probably not change many hearts or minds.

But on the other hand, Trump has bucked conservative dogma before, and surprisingly without any political fallout. He may again.

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