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21 comments

1 Charles Johnson  Sun, Dec 5, 2010 10:41:14am

If you were describing the real Republican position on climate change, we'd be in much better shape today. We could at least discuss these kinds of issues honestly.

But the fact is that the Republican Party has become the party of absolute denial and blatant dishonesty. Your post describes policy positions that are completely nonexistent in the real world.

And I see Gore's changing his opinion on ethanol as a sign of integrity and honesty, not as something to be criticized.

2 Obdicut  Sun, Dec 5, 2010 10:56:54am
This is what i mean, as a republican, when i speak of 'less government interference'. I do not mean that government should do nothing. I mean that government should do what plainly lies within its purview and ability, which is to create a smart tax policy.

You don't mean that as a Republican. You may mean that as a conservative, but that position bears no resemblance to the Republican position.

It should then stop trying to pretend that it knows which solution is the best. That's why we fund research at universities and facilitate entrepreneurship.

It's also why we address large-scale infrastructure needs with large-scale government funding.

Your favorite solution, nuclear energy, requires huge amounts of government spending, at the very least to create and pay for the insurance that would otherwise be unattainable.

I'm glad you favor taxation on fossil fuels to represent their actual cost. That's a great thing. But I don't get why you think that subsidizing clean energy is wrong. At the very least, clean energy is a military necessity.

3 Aceofwhat?  Sun, Dec 5, 2010 11:15:19am

re: #1 Charles

If you were describing the real Republican position on climate change, we'd be in much better shape today. We could at least discuss these kinds of issues honestly.

But the fact is that the Republican Party has become the party of absolute denial and blatant dishonesty. Your post describes policy positions that are completely nonexistent in the real world.

And I see Gore's changing his opinion on ethanol as a sign of integrity and honesty, not as something to be criticized.

My post describes policy positions that exist quite plainly in the world of mainstream economists like Mankiw. I am doing little more than parroting his line of thought here. Whether that is the 'real world' or not...isn't that a small part of what we're doing here - attempting to drag sanity kicking and screaming into the light of day?

We can still discuss these issues honestly amongst each other, right?

I see Gore's changing of his opinion as a sign of honesty. I see his prior position as a sign of politics as usual. There is something to be criticized and praised here. And this is why i specifically went out of my way to say that the thesis of this page was not to serve as a platform to discuss Gore; because he is neither angel nor demon, and we have far more important things to discuss in any case.

4 Aceofwhat?  Sun, Dec 5, 2010 11:27:10am

re: #2 Obdicut

You don't mean that as a Republican. You may mean that as a conservative, but that position bears no resemblance to the Republican position.

Sure. Whatever. I'm the sort of stubborn individual who will stand around and say that it's the millions of Republicans who aren't behaving as true republicans, but i certainly understand that it's more typical to say that I'm the RINO. That statement, 'as a republican' was meant more to make other conservatives understand that this page is coming from within their ranks, and that i am not here to hold one more tiresome tribunal on the topic of Al Gore. That's a good thing, right...?

It's also why we address large-scale infrastructure needs with large-scale government funding.

Nota Bene: Large-scale infrastructure needs presume that a favored technology or process has already been chosen. That's a few steps ahead. I am talking about the process of choosing the best technologies, a process best left to the millions of smart people across the nation and not in the hands of the folks we tend to elect to our legislature.

Your favorite solution, nuclear energy, requires huge amounts of government spending, at the very least to create and pay for the insurance that would otherwise be unattainable.

Unless we think that the insurance accurately reflects the risk of loss, which AFAIK we don't, government-sponsored insurance would not fall under the rubric of 'distorting subsidy'. Other forms of assistance may or may not, depending on the level to which regulation creates a distortion in the opposite direction (a distorting penalty).

I'm glad you favor taxation on fossil fuels to represent their actual cost. That's a great thing. But I don't get why you think that subsidizing clean energy is wrong. At the very least, clean energy is a military necessity.

Because we don't yet know which clean energy source will turn out to be the best investment, depending on the situation. And our government is quite terrible at predetermining such things. We would discover that for ourselves if the entire nation, including the military, was taxed into a sudden urge to discover the most efficient replacement for fossil fuel for a particular application.

5 Obdicut  Sun, Dec 5, 2010 12:03:38pm

re: #4 Aceofwhat?

Sure. Whatever. I'm the sort of stubborn individual who will stand around and say that it's the millions of Republicans who aren't behaving as true republicans, but i certainly understand that it's more typical to say that I'm the RINO.

But you, in no way, shape, or form, represent the Republican party. Those that do, have views that aren't in the least bit in line with yours on this issue. It's not that it's more 'typical'.


Nota Bene: Large-scale infrastructure needs presume that a favored technology or process has already been chosen. That's a few steps ahead. I am talking about the process of choosing the best technologies, a process best left to the millions of smart people across the nation and not in the hands of the folks we tend to elect to our legislature.

I have lost track entirely of what you're talking about. How on earth is the free market going to determine the best alternative energy, when what we're talking about is the inability of the free market to evaluate technologies on ineffables like their impact on the environment?

If the government needs to tax fossil fuels because they have a negative impact on the environment, aren't you admitting that the free market doesn't actually choose technologies well in this case?


Unless we think that the insurance accurately reflects the risk of loss, which AFAIK we don't, government-sponsored insurance would not fall under the rubric of 'distorting subsidy'.

Nobody else will provide insurance for them. Only the government will. There is no free market insurance for nuclear power plants.

Because we don't yet know which clean energy source will turn out to be the best investment, depending on the situation.

And? Why do we need to select the 'best'? Putting all of our eggs in one basket is nuts. We know a lot of solutions that are promising, and we need to focus on quite a few of them. No one energy solution is going to be the magic bullet.

We would discover that for ourselves if the entire nation, including the military, was taxed into a sudden urge to discover the most efficient replacement for fossil fuel for a particular application.

And they might come up with corn biodiesel instead. Which the government would then need to penalize because it's not actually a good solution. So in the end, you really are relying on the government figuring out the best solution, since you're relying on them to correctly evaluate the negatives from any particular technology. Somehow, you don't trust them to evaluate the positive aspects of stuff, but think they're brilliant at evaluating the negatives.

The logic of that escapes me.

6 Aceofwhat?  Sun, Dec 5, 2010 1:17:51pm

re: #5 Obdicut

And? Why do we need to select the 'best'? Putting all of our eggs in one basket is nuts. We know a lot of solutions that are promising, and we need to focus on quite a few of them. No one energy solution is going to be the magic bullet.

Please note that i said, in my original post, solutionS. That is, different areas and different activities will lend themselves to different solutions. Geothermal power is probably a great solution in some areas for some types of climate control, and it's probably not a great solution to power cars. Or, take the case where the government decided that ethanol was a good solution to power cars. That could hardly have gone worse.

And they might come up with corn biodiesel instead. Which the government would then need to penalize because it's not actually a good solution. So in the end, you really are relying on the government figuring out the best solution, since you're relying on them to correctly evaluate the negatives from any particular technology. Somehow, you don't trust them to evaluate the positive aspects of stuff, but think they're brilliant at evaluating the negatives.

No. We are somewhat proficient in measuring the pollution output of a particular activity. We can therefore tax the activity accordingly. That is far, far, far simpler than the complex process of evolving different energy technologies for different areas and different applications as efficiently as possible.

I am not asking the government to evaluate the negatives. They need only tax emissions, which is inordinately simpler than regulating the evolution of myriad clean energy sources for myriad applications. If corn biodiesel isn't anywhere near an economically viable solution once its emissions are taxed, it won't be adopted. No additional government intervention needed

Hopefully i've helped you to capture at least a little of the logic...

7 Obdicut  Sun, Dec 5, 2010 1:22:03pm

re: #6 Aceofwhat?

No. We are somewhat proficient in measuring the pollution output of a particular activity. We can therefore tax the activity accordingly. That is far, far, far simpler than the complex process of evolving different energy technologies for different areas and different applications as efficiently as possible.

Oh, so you only want the 'pollution' aspect of it taxed, and not other environmental damages?

If corn biodiesel isn't anywhere near an economically viable solution once its emissions are taxed, it won't be adopted. No additional government intervention needed

No, you're not getting it. Corn biodeisel is very economically viable once its emissions are taxed. It doesn't have a bad emission profile; that's not why its inefficient. It's because of the emissions that are necessary to produce it; the emissions for the harvesters, combines, trucks transporting it, etc. etc. Which is actually a quite complicated calculation.

As is, for example, figuring out whether or not photovoltaic cells made with rare-earth elements-- that have to be extracted using energy-intensive methods-- are actually a net energy benefit.

Why do you think these calculations are simple?

8 Aceofwhat?  Sun, Dec 5, 2010 1:36:14pm

re: #7 Obdicut

Oh, so you only want the 'pollution' aspect of it taxed, and not other environmental damages?

Isn't pollution synonymous with environmental damage? Ok, that's a little tart. I think that the answer you're looking for is yes, i should be saying "taxing co2" and not pollution. pollution should have a hard cap, because i don't want companies simply paying tax in order to dump mercury all over the place. sorry if that was unclear. we're taxing carbon emissions.

No, you're not getting it. Corn biodeisel is very economically viable once its emissions are taxed. It doesn't have a bad emission profile; that's not why its inefficient. It's because of the emissions that are necessary to produce it; the emissions for the harvesters, combines, trucks transporting it, etc. etc. Which is actually a quite complicated calculation.

No, you're not getting it. The harvesters, combines, trucks, etc. are paying taxes on their own emissions, because they're buying heavily-taxed fuel, unless they're running on clean energy. It'll drive the price of corn biodiesel through the roof, unless the supply chain is running on clean energy. Follow?

As is, for example, figuring out whether or not photovoltaic cells made with rare-earth elements-- that have to be extracted using energy-intensive methods-- are actually a net energy benefit.

No need to figure it out. The energy source is taxed, adding cost to energy-intensive work, which adds cost to the price of the mined elements.


Why do you think these calculations are simple?

Let me make a simple illustration: if you told company X that their fuel prices would rise 50%, they could tell you in very short order what the new price of their products would need to be in order to maintain their current margins.

It eliminates all of the finicky complexity of figuring out supply chain emissions because it's factored into the price of the fossil fuels, and companies have been modifying sell prices in response to fuel price variation for a looong time. Hell, i've done it. (and if i can do it...)

This is fun...i don't often get to talk supply chain management...

9 Mad Prophet Ludwig  Sun, Dec 5, 2010 1:47:33pm

re: #7 Obdicut

Oh, so you only want the 'pollution' aspect of it taxed, and not other environmental damages?

No, you're not getting it. Corn biodeisel is very economically viable once its emissions are taxed. It doesn't have a bad emission profile; that's not why its inefficient. It's because of the emissions that are necessary to produce it; the emissions for the harvesters, combines, trucks transporting it, etc. etc. Which is actually a quite complicated calculation.

As is, for example, figuring out whether or not photovoltaic cells made with rare-earth elements-- that have to be extracted using energy-intensive methods-- are actually a net energy benefit.

Why do you think these calculations are simple?

You also need to add the impact of growing fuel rather than growing food, and the fact that when you burn any hydro carbon you are still making CO2.

A better emissions profile argument might have been viable 30 years ago had the governments of the world taken this seriously. Today, better emissions profile means it kills you slightly less quickly.

If we do not cut total global carbon emissions by 80% by 2050 starting now, we guarantee a 2 degree warmer world.

If we do something half assed like burn a bunch of ethanol up until 2050, we start guaranteeing a four degree world in the 2070s. We simply can not afford ant fantasies on this.

Further that reduction in emissions needs to be thought of in light of the warming Siberian and Canadian bogs and methane release from there and the oceans.

10 Obdicut  Sun, Dec 5, 2010 1:49:07pm

re: #8 Aceofwhat?

Isn't pollution synonymous with environmental damage?

No.

No, you're not getting it. The harvesters, combines, trucks, etc. are paying taxes on their own emissions, because they're buying heavily-taxed fuel, unless they're running on clean energy. It'll drive the price of corn biodiesel through the roof, unless the supply chain is running on clean energy. Follow?

Oh, you're seriously proposing an instant tax that would affect every farmer, every truck driver, etc overnight? I thought you meant a tax on the energy companies, not a tax at the pump. That would be absolutely disastrous.

No need to figure it out. The energy source is taxed, adding cost to energy-intensive work, which adds cost to the price of the mined elements.

The energy source would be in China.

11 Aceofwhat?  Sun, Dec 5, 2010 1:51:22pm

re: #9 LudwigVanQuixote

You also need to add the impact of growing fuel rather than growing food, and the fact that when you burn any hydro carbon you are still making CO2.

A better emissions profile argument might have been viable 30 years ago had the governments of the world taken this seriously. Today, better emissions profile means it kills you slightly less quickly.

If we do not cut total global carbon emissions by 80% by 2050 starting now, we guarantee a 2 degree warmer world.

If we do something half assed like burn a bunch of ethanol up until 2050, we start guaranteeing a four degree world in the 2070s. We simply can not afford ant fantasies on this.

Further that reduction in emissions needs to be thought of in light of the warming Siberian and Canadian bogs and methane release from there and the oceans.

i do like the 'ant fantasies' bit.

and i don't disagree that faster = better. it's the beauty of straight taxation...forget the labyrinthine regulations and wasted subsidies. tax a thing, and people will avoid it faster than we could have otherwise persuaded them to.

12 Aceofwhat?  Sun, Dec 5, 2010 1:57:58pm

re: #10 Obdicut

Oh, you're seriously proposing an instant tax that would affect every farmer, every truck driver, etc overnight? I thought you meant a tax on the energy companies, not a tax at the pump. That would be absolutely disastrous.

Not when [mostly] offset by lower income and property taxes. And of course you'd need to give folks a little time to prepare. But the point is to remain mostly revenue neutral.

And please tell me you don't think there's a substantive difference between taxing a producer and taxing their product. You really think the cost won't melt its way down to the end product? Come on, dude.

It's not the producers we're after, not if they are changing their portfolio of energy products. Why would you spend millions to audit whether a conglomerate like BP paid correctly given their mix of fossil and clean fuel production when you can just tax the fossil fuel in elegant simplicity?

The only difference in what we're saying is that your method is more difficult, more expensive, and less effective. But the price at the pump is going up either way.

13 Obdicut  Sun, Dec 5, 2010 2:23:14pm

re: #12 Aceofwhat?

Not when [mostly] offset by lower income and property taxes.

What are you talking about? A lot of the people affected by that tax wouldn't be paying any significant income tax whatsoever, nor property tax.


And please tell me you don't think there's a substantive difference between taxing a producer and taxing their product. You really think the cost won't melt its way down to the end product? Come on, dude.

Yes, I do, because I know how products are priced in the real world, and it's not by applying cost + x. It's what the market will bear.


The only difference in what we're saying is that your method is more difficult, more expensive, and less effective. But the price at the pump is going up either way.

The price at the pump will go up to the extent that the new ideal price changes. That price is not determined by the production costs alone; it is mainly determined by what people are willing to pay for the product. If the company could be 'passing down the cost'-- i.e., charging the higher amount-- they would be doing so already.

It is true that a portion of the cost of the tax will be passed down to the consumer-- if you make the tax on the actual commodity itself. What I'm saying, however, is taxing the profits of the energy companies in proportion to how much those profits are made on CO2-producing sources, not taxing the actual material itself-- with that tax forgiven if they spend those profits on genuine clean energy research and implementation.

Your plan-- to tax the actual consumption of fossil fuels, is, first and foremost, unworkable. People who have an oil furnace at home are going to need to burn oil to survive the winter. They're not going to suddenly be able to do without that, or find a clean energy source. A clean energy solution is not going to pop up overnight. And you're not going to be able to make it up to them by cutting their taxes when many of them do not pay significant amounts of income taxes anyway.

14 Aceofwhat?  Sun, Dec 5, 2010 2:50:00pm

re: #13 Obdicut

What are you talking about? A lot of the people affected by that tax wouldn't be paying any significant income tax whatsoever, nor property tax.

Sure. You could increase low-income tax credits. Those people would still have incentive to reduce the amount of fossil fuels that they burn, to save more money, but don't need to starve in the meantime. Again, this isn't terribly complicated.

Yes, I do, because I know how products are priced in the real world, and it's not by applying cost + x. It's what the market will bear.

Nope, not when the product is essential in the short term.

The price at the pump will go up to the extent that the new ideal price changes. That price is not determined by the production costs alone; it is mainly determined by what people are willing to pay for the product. If the company could be 'passing down the cost'-- i.e., charging the higher amount-- they would be doing so already.

But then you're missing the point. We're not trying to find a price that the market will bear. We are trying to depress the sale and use of a very specific set of products. That is one of many reasons why taxing the producer is less efficient for the purposes of reducing fossil fuel consumption.

It is true that a portion of the cost of the tax will be passed down to the consumer-- if you make the tax on the actual commodity itself. What I'm saying, however, is taxing the profits of the energy companies in proportion to how much those profits are made on CO2-producing sources, not taxing the actual material itself-- with that tax forgiven if they spend those profits on genuine clean energy research and implementation.

Yes. That is clunky, expensive to administrate, contains the potential for abuse, and difficult to forecast. You still haven't elaborated on any single advantage to that approach, much less a confluence of advantages that would make it preferable to a Pigovian solution.

Your plan-- to tax the actual consumption of fossil fuels, is, first and foremost, unworkable. People who have an oil furnace at home are going to need to burn oil to survive the winter. They're not going to suddenly be able to do without that, or find a clean energy source.

Do we have a lot of time to reduce emissions or not? I don't get the impression from the Ludwigs of the world that we can dither around. So of course we wouldn't do this overnight, and of course lower-income folks may need a tax credit to offset some of the cost. But we need rapid change, and we're not going to get it without some stern incentives. The same people you're talking about are the ones most likely to suffer if our climate really starts to go haywire. If we don't all pay a more punitive cost for fossil fuels, we won't change.

A clean energy solution is not going to pop up overnight. And you're not going to be able to make it up to them by cutting their taxes when many of them do not pay significant amounts of income taxes anyway.

There are an absolute wealth of things that folks could do to conserve energy if the cost were more dear. They simply don't have the proper incentive to do so. Taxing energy companies won't light nearly the same fire as a pigovian tax.

And get the income tax thing out of the way - that's easy - call it income tax credits. That's not an obstacle to anything i'm proposing. We already hand out tax credits to low-income earners, remember?

15 Obdicut  Sun, Dec 5, 2010 2:51:32pm

re: #14 Aceofwhat?

Sure. You could increase low-income tax credits. Those people would still have incentive to reduce the amount of fossil fuels that they burn, to save more money, but don't need to starve in the meantime. Again, this isn't terribly complicated.

Really slowly this time:

Tax credits don't help if the people aren't paying taxes in the first place. Unless you're actually proposing paying them money to cover the cost of the fuel-- which would actually obviate the effect of having the tax in the first place, in a supremely useless move.

You're not listening. I'm done talking.

16 Aceofwhat?  Sun, Dec 5, 2010 3:41:38pm

re: #15 Obdicut

Really slowly this time:

Tax credits don't help if the people aren't paying taxes in the first place. Unless you're actually proposing paying them money to cover the cost of the fuel-- which would actually obviate the effect of having the tax in the first place, in a supremely useless move.

You're not listening. I'm done talking.

Even slower: do you know what an earned income tax credit is? It's a person who doesn't pay tax, but receives a tax credit. Not a break. Not a deduction. A credit. You do know that the government pays credits in cash, right?

And it wouldn't obviate the effect of having the tax in the first place. Say that i raise your fuel costs by $1000. You get an additional tax credit from the government for (i'm making this up) $750. The tax credit will slowly phase out in X years. You now have a powerful incentive to switch to a different furnace, or at least greatly increase the efficiency of your existing furnace, because the faster you switch, the more you'll benefit from the increased credit, which won't last forever.

Don't pout when I'm the one working to help you understand. Pigovian, revenue-neutral solutions aren't exactly revolutionary in economic circles.

17 Velvet Elvis  Sun, Dec 5, 2010 6:39:24pm

Alternative energy should not be subsidized?

Petroleum, nuclear and natural gas already get huge subsidies. Nuclear could never work with subsidies because no plant could afford to self-insure.

18 Velvet Elvis  Sun, Dec 5, 2010 6:43:00pm

re: #16 Aceofwhat?

Even slower: do you know what an earned income tax credit is? It's a person who doesn't pay tax, but receives a tax credit. Not a break. Not a deduction. A credit. You do know that the government pays credits in cash, right?

And it wouldn't obviate the effect of having the tax in the first place. Say that i raise your fuel costs by $1000. You get an additional tax credit from the government for (i'm making this up) $750. The tax credit will slowly phase out in X years. You now have a powerful incentive to switch to a different furnace, or at least greatly increase the efficiency of your existing furnace, because the faster you switch, the more you'll benefit from the increased credit, which won't last forever.

Don't pout when I'm the one working to help you understand. Pigovian, revenue-neutral solutions aren't exactly revolutionary in economic circles.

I know quite a few poor people who haven't filed a tax return in years. Most people who have no over the table income don't file tax returns. That's why anything based on helping people via tax credits is stupid. It assumes everyone files a tax return when the poorest and most destitute american almost never do. To do so you have to have a permanent address and income you can report and things like that.

19 freetoken  Sun, Dec 5, 2010 8:15:46pm

Ethanol was sold to the American public primarily as a means to reduce oil imports, not as a way to address AGW. Even the recent defenses of the ethanol subsidies, by Sen. Grassley, still are based around reducing oil imports.

In reality, of course, it's just been a subsidy for the corn growing states, and the Senators of those states, regardless of party, have always pushed for the subsidies.

In the science world it has been a bone of contention for some time - corn based alcohol has been shown to produce too little net energy gain (when one subtracts the energy needed to produce it) to make the whole thing worthwhile.

Biodiesel is probably a better long-term plan for North America. Places like Brazil can grow sugar cane cheaply.

20 lostlakehiker  Sun, Dec 5, 2010 8:16:55pm
And I see Gore's changing his opinion on ethanol as a sign of integrity and honesty, not as something to be criticized.


Agreed, to a point. Honest Abe wouldn't have endorsed the boondoggle in the first place.

This moves Gore up a notch in my estimation.

21 lostlakehiker  Sun, Dec 5, 2010 8:23:06pm

re: #15 Obdicut

Really slowly this time:

Tax credits don't help if the people aren't paying taxes in the first place. Unless you're actually proposing paying them money to cover the cost of the fuel-- which would actually obviate the effect of having the tax in the first place, in a supremely useless move.

You're not listening. I'm done talking.

Suppose you put a heavy tax on gasoline, say $10 per gallon. You then turn around and have a tax credit big enough to cover the average amount of use. The average user can go on as before, if they like.

But is this just waste motion? What if the average user concludes to use less and pocket the difference and spend it elsewhere?

The combination of tax on fuel, and tax credit to cushion the blow, would probably result in some fuel conservation, together with some increase in the deficit---because people would be avoiding the gas tax that with static scoring would have covered the tax credits.


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