Doing nothing a false choice

David Friedman comes out against carbon taxes (at least he's an anarchist, so that is a valid policy choice for him, not so for others). But Friedman really just opposes doing anything:

Finally, I suspect that widespread acceptance of the catastrophist view of global warming would result in quite a lot more than carbon taxes. It would provide a new justification for politically motivated interferences in a wide range of human activities. Anyone who questioned such policies would be labelled a denialist, accused of wanting Bangladeshis to drown and African children to starve. Again, look at the ongoing exchanges on Brian's blog.

Hence I conclude that serious efforts to combat global warming would have large costs, costs justified only if there were good reason to be confident that not taking such efforts would have catastrophic effects.

Not doing something sane (i.e., cabon tax) is going to lead to result in other practices Friedman will like much less, for example blunt regulation, crazy subsidies, and politically manipulated cap-and-trade markets -- also far worse than Pigouvian tax, as spelled out by Steven Postrel:

So the final score is: Permits get a moderate edge on political economy/public choice issues; taxes have a big advantage on institutional/governance issues; and taxes deliver a big can of whipass on traditional economic efficiency concerns. So conditional on accepting the weak case for CO2 emissions control, the Pigou people have a strong case against the cap-and-trade brigade. Maybe they should start making it.

Last quote via pointed out by Greg Mankiw.

The Friedman post comes via the NoPigou Club, which has yet to answer the question if not Pigou, then what?

A pro-Pigouvian anarchist!

It seems even anarchists accept that Pigouvian taxes are superior. Or at least hard-core libertarians can accept this, as Kitchen Linker is not certain that Degrees of Freedom is an anarchist, though the probability is high given DoF linkage. After a list of moralistic reasons taxes in general are bad, DoF says:

If a tax on gasoline could be implemented as a dollar-for-dollar replacement for the tax on capital gains, even I would be in favor of that.

DoF doesn't think a tax shift is possible because politicians like to spend, but then no tax reduction would be possible ever, and obviously taxes have been cut at various times. The important thing though is that a NoPigou type has admitted that Pigouvian taxes are superior!

Should other anarchists reconsider? And if anarchists, the only group that can logically oppose Pigouvian taxes, then everyone else should join the Pigou Club, pronto!

An anarchist comments!

Someone who claims to be an anarchist has commented on a post in which Kitchen Linker said:

Unless all NoPigouClub members are anarchists, they will admit that taxes need to be collected. The level of energy tax should not be set by the EPA or Commerce Department, but by Congress ... just as Income and other taxes are now set, mostly according to what Congress thinks it can get away with and how much is needed to cover spending minus borrowing. There is no additional planning, just a shift from one sort of taxes to another.

And the shift is better if you care about the environment, the economy, or simply distrust planners.

Why?

1. Taxes on income and capital suppress positive externalities (ex: economic growth).
2. Pigouvian taxes substitute for regulation and prohibition of greenhouse gas and other pollutant emissions.
3. (Redundant, but Kitchen Linker must drive home the point) Without pigouvian taxes, we will continue to have damaging tax on labor and capital AND extremely inefficient and politically determined non-solutions to our environmental problems (ex: the SugarCorn mafia)

Come to grips with reality NoPigou and switch clubs!

So Francis St Pierre is an anarchist. Other NoPigouers, come out or come to grips!

Unfair hearing for Pigou Club

Greg Mankiw says Bloomberg's Amity Shales gives the Pigou Club a "fair hearing." Kitchen Linker isn't going to judge "fair" but the columnist gets everything wrong in Gas Tax Fans Invoke a Telling Name for Road Hogs. Her three anti-Pigouvian arguments:

Well not all. For there is already a No Pigou Club, founded by Terence Corcoran, editor of Canada's National Post. Corcoran offers some compelling counterarguments. Pigovian taxes change behavior, he notes, but not necessarily as their sponsors wish. Gas taxes may depress driving, but perhaps not enough to matter. Late in life Pigou himself acknowledged this, writing that when it came to such taxes ``we seldom know enough to decide'' which is the right tax or the right tax rate.

The second argument against a gas tax is that today, when even GE calls itself green, it's a hard sell. Democrats in Washington believe they won in November by playing against the stereotype of their party. So they are unlikely to push for a levy associated with Al Gore.

But the strongest argument against a gas tax is that revenues from such taxes tend to be used for purposes other than those intended. The states' cigarette taxes, for example, are classically Pigovian, punishing an unwanted behavior. But the billions those taxes have earned have promoted another kind of sin: excessive government spending. Too often the money has gone into state general revenue coffers instead of paying for smoking prevention and medical care for smokers.

The second is not an argument against Pigouvian taxes per se. It just says they will be politically difficult to enact. So what? Is any change from the status quo politically easy? As noted previously, any tax change is hard, so why not go for a big and much better one?

The first and third arguments only make sense if Shales is an anarchist. Does anyone ever argue against taxes on labor or capital because it is hard to figure out their "optimal" level? The fact is the primary purpose of taxation is to raise revenue for government, nevermind their "optimal level" for any other purpose. Quite simply Pigouvian taxes discourage harmful behavior, most taxes (for example on labor or capital) discourage productive behavior. Any questions?

Any anti-Pigouvian non-anarchist ignoring these facts needs to address them or completely miss the point, verging on dishonesty.