catallaxy files

catallaxy in technical exile

Economists' poll

with 48 comments

Greg Mankiw reports on a recent survey of PhD economists of the American Economic Association.

Most of the findings would not surprise anyone. An overwhelming majority (over 90 per cent) are against restrictions on outsourcing. Over 85 per cent are for eliminating all barriers to trade and agricultural subsidies.

The more controversial topics polled are worth reporting – there is now a clear majority of economists (67.1 per cent) who are for education vouchers. Well done to the late Milton Friedman. Before he came along I venture to speculate that vouchers would have been seen as a ‘crank’ cause.

Interestingly 65 per cent are also for increased energy taxes. And they are almost split down the middle between those who want to eliminate the minimum wage (46.8 per cent) and those who actually want it increased (37.7 per cent).

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Written by Admin

December 1, 2006 at 9:11 am

Posted in Uncategorized

48 Responses

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  1. 65% of economists don’t have the right to call themselves that.

    You want to impose a Pigouvian tax on an externality without considering the myriad of taxes, protectionism and regulations that contribute to pollution and other externalities by favouring inefficient technologies and killing off innovation?

    You want to put an increased energy tax on top of this to solve the problem?

    Mark Hill

    December 1, 2006 at 11:13 am

  2. other externalities by favouring inefficient technologies

    Mark, you go on about this endlessly.
    I agree that all tariffs and excises should be removed immediately, but could you provide an estimate as to how much CO2 we’d actually save?

    My guess: Too small an amount to measure.

    JohnZ

    December 1, 2006 at 12:13 pm

  3. so you’re putting Mankiw in that category too Mark?

    Basically what JohnZ said. The reason you are getting this kind of response is because the AGW people have won the debate and they have clearly convinced a lot of people, including economists, that CO2 is a problem. Once you accept that premise, the rest of the logic follows. Substantal cuts in CO2 emissions are needed and energy taxes should be increased as one of the means of doing this.

    If there is a fault it is in the factual premise and not the logic which is what economists are expert on.

    Jason Soon

    December 1, 2006 at 12:30 pm

  4. Now, that was clearly a provocative comment I made on the suspicion I would no longer see my computer before next Monday…

    anyway, “once you accept that premise, the rest of the logic follows.”

    But that is precisely the problem. Tariff cuts etc have immediate financial and allocative benefits, and reduce emissions without incurring a net cost. If the CO2 reduction is large enough, you’ve short-circuited the alleged need for Pigouvian taxes.

    Tongue in cheek…but to the point. Why don’t the academic economists see through the poor choice of taxing the use of commodity to reduce its impacts, when the impact is in the first place
    made worse by a series of taxes and regulations?

    “Mark, you go on about this endlessly.” – What is your point John, it doesn’t invalidate the fact that CO2 emissions can be reduced by reducing taxes and regulations, especially tariffs. Pigouvian taxes should be levied only after these contributing factors are removed as they are distortionary. You can argue there is net benefit but you’ve distorted what the costs and benefits actually are.

    ditto for cotton – some argue for a ban on cotton farming and so on. Removing subsidies and charging prices would sort this out.

    There is another benefit to what I propose – the liberalisation route already has pre-existing incentives to join, but carbon trading must be enforced, which is nigh on impossible. Furthermore the Pigouvian tax only considers CO2 production, and not use. So it is a partial equilibrium analysis.

    John: your guess sucks and shows obvious bias. You’re implying that emission reductions through technology aren’t worth pursuing. Now, what is the point of Pigouvian taxes, to stop such activity or force it to become more efficient? Just how is this meant to happen without technological advances? (I argue Pigou taxes just tax technology anyway). You’re arguing implicitly that the Pigouvian taxes are as useful as your assessment of liberalisation, without considering the tax burden paid by R&D.

    As for the MW, I’ve seen people argue that it does no harm if set below the market rate, but what are they arguing in supporting MW increases without any qualifiers?

    Mark Hill

    December 1, 2006 at 12:56 pm

  5. “but could you provide an estimate as to how much CO2 we’d actually save?”

    You complete fucking idiot.

    You are such a mindless gutless moron.

    What a complete fuckwit you are.

    Having not once put forward the slightest evidence that industrial-CO2 is anything but a positive externality and a damned lucky break….. Like some sort of dribbling, drooling zombie you come in assuming that THIS is some sort of metric from which to judge government action.

    What a fucking tool you are.

    Now.

    How you got some evidence for catastrophic global warming….

    .. Us being in an ice age and all?

    What a fucking wanker to be obsessively doing your bit to make this widespread, fraudulent myth continue and pick up momentum.

    Get the evidence or fuck off. You’re an idiot.

    Imagine building on nothing like that. Having no case whatsoever but attempting to build bullshit upon bullshit.

    “Substantal cuts in CO2 emissions are needed and energy taxes should be increased as one of the means of doing this.”

    No Jason. You are fucking lying. Thats the last thing we need. Thats the worst possible measure we could take.

    No they haven’t won any debate.

    They haven’t.

    You are bullshitting about that as well.

    They may have pulled off a magnificent propaganda campaign. But they haven’t got a case. The data says otherwise.

    GMB

    December 1, 2006 at 12:59 pm

  6. bwahahahahahahahahaha!!!

    ROFCSVFLOL!!!!!!!!

    Rant on GMB – how does it feel to be a voice in the wilderness. Y’know, being a ‘maverick’ isn’t enough – you also need to be correct.

    FDB

    December 1, 2006 at 1:05 pm

  7. ““but could you provide an estimate as to how much CO2 we’d actually save?””

    I would like to know, perhaps this would make a good paper?

    John, I’ve outlined elsewhere about eight different ways market liberalisation could reduce emissions without other environmental costs and could immediately and dynamically increase living standards through normal liberalisation benefits.

    Even if the effect of one is small, in total they would be significant IMO.

    BTW, motor vehicle emissions make up 25% of CO2 emissions I think. But the other reforms I mention would target all other sectors and the consumption of CO2 by natural systems.

    And now the beauty of it: to argue against liberalisation, Graeme has to prove his CO2 warming has a net benefit over reduced emissions and efficiency gains through liberalisation I argue for.

    Mark Hill

    December 1, 2006 at 1:06 pm

  8. FDB: you lefties have gotta love liberalisation too. Tariffs are a very regressive form of taxation, when you consider effective rates of assistance.

    See Jason and John, this plan has the potential for mass appeal.

    Mark Hill

    December 1, 2006 at 1:08 pm

  9. Mark
    don’t you think that if the AGW people thought massive reductions in CO2 of the magnitude they want could be achieved by liberalisation and cutting subsidies they would have thought of this by now? I am with John, I would like to see the evidence for this. I am guessing someone has already crunched the numbers on this.

    The issue is *once you accept the AGW premise* is ensuring the stock of CO2 doesn’t get above a certain threshold by a certain period. In other words, they obviously see this as a time-critical issue and aren’t prepared to wait for innovations to fall from heaven contingent on some liberalisation that may or may not be achived in whole or in part.

    Jason Soon

    December 1, 2006 at 1:13 pm

  10. Graeme
    try to write in English instead of Rantage. Also try and read what I write carefully.

    Jason Soon

    December 1, 2006 at 1:14 pm

  11. “What is your point John, it doesn’t invalidate the fact that CO2 emissions can be reduced by reducing taxes and regulations, especially tariffs”

    Mark I sort of see your point.

    But you don’t want to buy into their bullshit.

    CO2 is good.

    And unless you feel you know otherwise for sure you don’t want to be lending your backing to the contrary point of view.

    Because in the end if CO2 really was some sort of demonic gas… rather then what Madamme Gaia eats in order to shit life….. then the only way we could reduce it would be to put a massive price on its release.

    But since CO2 is a good thing we don’t want to reduce it.

    Being more efficient isn’t (at least in the long run) going to reduce it.

    I mean it probably will for any given output of GDR.

    But efficiency leads to MORE AND NOT LESS consumption in the long run.

    And thats a good thing because we want more of the free gift of CO2 out there in the World.

    GMB

    December 1, 2006 at 1:16 pm

  12. 1. I am guessing they haven’t.

    2. A cursory glance on google scholar indicates most analysis favours embedding Pigouvian taxes in trade agreements. I can’t find anything on the particular issue I raise.

    3. Trade reforms ensure some efficiency reforms up to a certain level given the bias against efficient imports.

    4. A holistic approach will have much larger benefits and the time criticality may not be an issue then.

    5. How long are we talking about?

    Mark Hill

    December 1, 2006 at 1:23 pm

  13. Jason,

    If Pigouvian taxes are necessary, we should have the liberalisation reforms anyway, as they have a net benefit on their own and contribute to a reduction in CO2 emissions. It is also then possible to calculate more accurate costs and benefits of such a programme (even though I think the Pigouvian system is impossible to put into practice).

    I would like John to show why liberalisation reforms won’t work, contingent on technological change, but Pigiouvian taxes will, also contingent on technological change.

    Mark Hill

    December 1, 2006 at 1:26 pm

  14. “The issue is *once you accept the AGW premise* is ensuring the stock of CO2 doesn’t get above a certain threshold by a certain period. In other words, they obviously see this as a time-critical issue and aren’t prepared to wait for innovations to fall from heaven contingent on some liberalisation that may or may not be achived in whole or in part.”

    Thats all totally arbitrary as well.

    Quiggin and others have cherry-picked this one from Lovelock and there is nothing backing it at all.

    There is no such threshold level in the context we are talking about. We could have the level three times as high as it is now and be happy for the opportunity.

    The threshold level seems to be put together by baby-induction.

    Like they double the pre-industrial level and call it about right. And then they take Annans bullshit estimate of 3 degrees C as the result of a doubling and they say (wrongly) that 3 degrees average increase is probably a tipping point for disaster. And then they start glazing over and thinking of what they can say that demands more government money. And 560ppm sounds about right to them.

    Actually I don’t know what the fucking lunatics chain of mystical reasoning actually runs forward.

    I know how it runs backwards and thats from the DON-ARTHUR-CONCLUSION.

    Which can be summarised as:

    Must steal…. must steal…… must steal.

    Its not science we are talking about. Its an obsession with thieving. Its a lust to get in our pockets and filch all our cash, credit and assets.

    And its not anything more then that.

    Lovelocks on an whole other plane. I figure the old bloke has been taken in just like the rest of us.

    GMB

    December 1, 2006 at 1:40 pm

  15. You’re implying that emission reductions through technology aren’t worth pursuing.

    A strawman worthy of JC, I won’t bother responding to it.

    Your most frequently cited example is efficient motors in luxury cars being substituted for cheap motors in cheap cars.

    You’ve made the claim, now let’s see the numbers.

    JohnZ

    December 1, 2006 at 2:33 pm

  16. Frankly, I’m more concerned that 15% of ‘economists’ are against removing all protectionism, one-third are against education vouchers and over one-third want to increase the minimum wage than that there are many in favour of higher energy taxes.

    Rajat Sood

    December 1, 2006 at 2:39 pm

  17. John

    Nice to see you’re using my name in some vain attempt to excuse your idiocy.

    Do you realize that on nearly every issue you never take the libertarian position, yet you have the audacity to claim membership of the LDP.

    JC.

    December 1, 2006 at 2:43 pm

  18. Actually, c8to can’t remember whether he posted my membership or not so I’m probably not a member.

    I’m not interested in proving to you that I’m in your little cult – excommunicate me if you like.

    Now run along, boy. I’m sure you have “taxation is theft” chanting sessions to attend.

    JohnZ

    December 1, 2006 at 2:47 pm

  19. “I’m sure you have “taxation is theft” chanting sessions’

    I did and it felt great.

    JC.

    December 1, 2006 at 4:14 pm

  20. There is an inherent inconsistency in the “collection of economists” argument; on the one hand they want to lift arbitrary impositions on business and on the other they want to impose them.

    Maybe they should stick to changing light bulbs.

    rog

    December 1, 2006 at 6:55 pm

  21. “arbitrary impositions on business”

    Such as?

    fatfingers

    December 1, 2006 at 8:10 pm

  22. “Rant on GMB – how does it feel to be a voice in the wilderness. Y’know, being a ‘maverick’ isn’t enough – you also need to be correct.”

    Well thats good.

    Because I AM right.

    And you don’t have a case.

    GMB

    December 1, 2006 at 10:10 pm

  23. Didnt you read the post FF, “all barriers to trade and agricultural subsidies”

    rog

    December 2, 2006 at 1:18 am

  24. They’re not arbitrary, rog.

    fatfingers

    December 2, 2006 at 12:59 pm

  25. I find the supporters of the minimum wage the most disapointing… but I’m not surprised.

    Jason, if you accept the AGW is a problem it does not necessarily follow that the government should do somethign about it. That is government-lover falacy number 1. It case it needs to be pointed out — while the govt can provide a benefit by fixing market failure, they also create costs. And if the costs of government action exceed the benefits, then the government shouldn’t act. Public policy 101.

    John Humphreys

    December 2, 2006 at 1:17 pm

  26. I clicked through and found that the sample size was 81 and I’ll bet the response rate was pathetic. The poll seems to be worthless.

    TimLambert

    December 3, 2006 at 2:37 am

  27. JohnH: I think your position is reasonable, but I have a question for you.

    The benefits and costs of AGW will not flow evenly to all countries e.g. Norway may benefit while Bangladesh suffers greatly.
    If the world decides that there’s no net benefit to action on Global Warming, do you think it’s reasonable for the beneficiaries to sign treaties guaranteeing compensation for the losers?

    JohnZ

    December 3, 2006 at 8:45 am

  28. An interesting and worthwhile questions Mr Z. These are just some initial thoughts…

    One libertarian answer would be a freer immigration system around the world — but in reality Norway isn’t going to jump at that idea.

    Another response is that rich countries already provide a significant amount of international aid to poor countries.

    Another point to consider is that the current models assume poor countries will have higher growth rates — contributing more to co2 emmissions & getting relatively more benefits from cheaper energy. So poor countries do not avoid responsibility for some global warming and may be the major losers from Kyoto.

    I’m not convinced that there is necessarily a moral imperative to compensate any potential distributional consequences of GW. If inequality matters then it is perhaps total inequality that is more important rather than changes in inequality caused by GW.

    But like I said… these are just some initial thoughts. What are your thoughts? Do you think distributional consequences should be compensated? If so — how would you suggest it be done?

    John Humphreys

    December 3, 2006 at 2:22 pm

  29. Tim makes a good point, people. The sample size is pretty dodgy not to mention self-selected.

    skepticlawyer

    December 3, 2006 at 2:24 pm

  30. I am still waiting for an answer to this, John Z:

    “I would like John to show why liberalisation reforms won’t work, contingent on technological change, but Pigiouvian taxes will, also contingent on technological change.”

    Which is apparently a strawman. Explain why this is so.

    Mark Hill

    December 4, 2006 at 12:03 pm

  31. Don’t even bother asking ABL. He uses the term strawman in almost every second sentence. It just means that you’re right and he doesn’t have a good reply.

    JC.

    December 4, 2006 at 12:10 pm

  32. Mark:

    “rich countries already provide a significant amount of international aid to poor countries.”

    Interesting. There’s no formal obligation to do so, and some of the richest (I’m looking at you, USA & Australia) only set aside a piddling % of GDP.

    If globalisation is to be taken seriously, how would we formalise this – a la some kind of GDP (PPP) “aid-free threshold” followed by a flat rate?

    Agreed on the total disparity being the more important thing.

    FDB

    December 4, 2006 at 12:26 pm

  33. Sorry, that was for John H.

    FDB

    December 4, 2006 at 12:27 pm

  34. John: I’m not so concerned with the “distributional consequences”, but simply the idea that one country can knowingly damage another’s property without compensating them. This would be intolerable if it were done within a country, and I see no moral reason why the same should be tolerated internationally.

    Afterall, eminent domain could be justified with a similar argument: Smith can confiscate Adam’s property as long as he can demonstrate a net economic benefit.

    As for how compensation would be worked out, this is the tricky bit. Massive cash transfers from the west to corrupt 3rd world governments are likely to achieve nothing.
    Ideally 3rd world individuals could launch lawsuits against Australia, US etc and claim compensation for damages but obviously the transaction costs make this impossible.

    If you accept that one shouldn’t be able to damage another’s property without compensating them, the net benefit argument comes unstuck because the transaction costs make the compensation prohibitively expensive.

    Mark said:

    I would like John to show why liberalisation reforms won’t work, contingent on technological change, but Pigiouvian taxes will, also contingent on technological change.

    Mark, I can’t prove a negative. YOU are implying that we can make massive CO2 savings through liberalisation reforms. YOU provide an estimate of the savings (like I requested in the 2nd comment of the thread) and I will critique your estimate.

    I don’t think I need to explain the concept of a “public good” to you.

    The atmosphere is a public good. I’ve seen no credible alternative to Pigouvian taxes.
    Therefore, I support pigouvian taxes.

    JohnZ

    December 4, 2006 at 8:30 pm

  35. “John: I’m not so concerned with the “distributional consequences”, but simply the idea that one country can knowingly damage another’s property without compensating them”

    Are you, er , able to prove loss here John or is this just another “fig tree” of that impoverished imagination of yours squire.

    One exampe would be more that sufficient.

    JC.

    December 4, 2006 at 8:46 pm

  36. “Mark, I can’t prove a negative. YOU are implying that we can make massive CO2 savings through liberalisation reforms. YOU provide an estimate of the savings (like I requested in the 2nd comment of the thread) and I will critique your estimate.

    I don’t think I need to explain the concept of a “public good” to you.

    The atmosphere is a public good. I’ve seen no credible alternative to Pigouvian taxes.
    Therefore, I support pigouvian taxes.”

    Alternatively you can show me how much Pigouvian taxes will reduce emissions without taxing technology.

    This is where the negative is being proven. You can’t do this. I don’t have empirical data. Since we do not have this information, we must assess the theoretical merits of the two.

    What you have failed to do is say why Pigouvian taxes will cause abatement without welfare losses through technological change, whereas trade liberalisation won’t. How trade liberalisation works is known. I want you to explain how Pigouvian taxes will create incentives and institutional change across industries to actually change technological outputs. The second part of this question is then to ask how Pigouvian taxes will be more effective when their firm level impacts are unknown, but liberalisation will not be effective even though micro and macro level cause and effect is well documented. This is not a negative. This is a theoretical and conceptual problem for you.

    The fact remains a Pigouvian solution is problematic (it may be a public good but what about issues of triviality and inconsistent interpersonal and intertemporal preferences) and trade liberalisation has welfare benefits either way.

    Mark Hill

    December 4, 2006 at 9:52 pm

  37. In addition to the final para, there is still a proposed user fee (Pigou tax) on top of an input which is being used in capital and consumer goods which are highly and regressively taxed (tariffs and luxury car taxes).

    Mark Hill

    December 4, 2006 at 9:54 pm

  38. Mark, apart from vague references to more efficient motors, you haven’t provided a theory as to how economic liberalisation will solve the problem.
    Why do you keep peddling this argument without even a back-of-the-envelope calculation?

    1) Estimate how many cheaper cars will be substituted for luxury cars if the excise is removed.
    2) Estimate how much more efficient these luxury cars actually are, taking into account that high powered sports cars may deliver more watts / litre of petrol while still emitting more CO2 / kilometer.
    3) From (1) and (2), estimate the anticipated net change in CO2.
    4) Express it as a proportion of Australia’s annual CO2 output.

    My guess: the amount will be less than a rounding error.

    As to how Pigouvian taxes create incentives, I think you’re as well aware of it as I am.
    Nuclear power is probably not cost competetive with coal, a modest carbon tax would probably make it cheaper.
    This means lots of $$$ spent on nuclear research, as well clean, green nuclear power plants which cut CO2 emissions considerably.

    I don’t see the purpose of the second part of your question – I’m fully in favour of trade liberalisation, I just can’t see how buying cheap DVD players from China will reduce global CO2…

    JohnZ

    December 4, 2006 at 10:59 pm

  39. “Why do you keep peddling this argument without even a back-of-the-envelope calculation?”

    1. Because the tariffs contribute to unnecessary pollution.

    2. The tariffs can go without reducing the alleged efficacy of a Pigouvian tax.

    Sorry that I can’t provide a empirical answer. I think it is a worthwhile study. Jason doesn’t even think this is so even though there appears to be no similar studies on the issue.

    “My guess: the amount will be less than a rounding error.”

    Why I think this is garbage:

    1. The effective rate of assistance on local automotive production is around 25%. This doesn’t include luxury car tax or stamp duty. Stamp duty is just a tax on all new cars: it is a direct tax on technology.

    2. Automotive use contributes to roughly 25% of our CO2 emissions.

    3. The more efficient imports are 10-20 more efficient than local cars.

    Actually 1. is irrelevant because over a short time horizon all cars would exceed current efficiency levels.

    So I need to know 4. what the current composition of fuel use is.

    “As to how Pigouvian taxes create incentives, I think you’re as well aware of it as I am.”

    No they don’t. They create disincentives. Showing a simple graph of marginal and private social costs does not show how the tax actually changes the R&D and product mixes of firms. The simple example refers to a polluting producer. It does not make any reference to a problem like automotive waste emissions. It does not show how technological change is encouraged by taxing consumers. I could counter argue you haven’t considered vehicle and fuel elasticities to produce your non-existent back of the envelope calculations.

    Hypothetically, fuel will be more expensive, and tastes will shift to more efficient cars. This cannot be done effectively without removing tariffs and luxury car taxes. Furthermore, you don’t know fuel elasticities. You have not shown why Pigouvian taxes are are just a tax on R&D (even if they force substitution into R&D). I would prefer a carbon based tax to excise tax: this is a crude Pigouvian tax but this is a cash cow for Government, and a very regressive one.

    The change in the number of fuel efficient cars sold due to trade reform is not contingent upon fuel elasticities.

    Really my question is how are you sure that Pigouvian taxes engender technological change (no empirical evidence) but trade liberalisation doesn’t (supported by mountains of evidence).

    And my point is that some economists wish to tax an externality partially created by a regressive and distortionary tax. It makes sense to abolish the latter, the former cannot be effective either without the latter, and the latter has immediate widespread welfare benefits whereas the former has massive welfare costs.

    Mark Hill

    December 4, 2006 at 11:27 pm

  40. “Nuclear power is probably not cost competetive with coal, a modest carbon tax would probably make it cheaper.
    This means lots of $$$ spent on nuclear research, as well clean, green nuclear power plants which cut CO2 emissions considerably.”

    So *you* are now making massive empirical assumptions. The real reason why nuclear costs too much is because of the regulatory bias against it – we ban the free mining of it and planning regulations kill it on the spot. Carbon taxes would not make nuclear cheaper. Only relatively cheaper. Carbon taxes would in fact be an implicit subsidy to nuclear. Until we have nuclear powered electricity and electric cars, carbon based fuel is an input to nuclear energy.

    I think this is the “second part of the question” you are referring to:

    “The second part of this question is then to ask how Pigouvian taxes will be more effective when their firm level impacts are unknown, but liberalisation will not be effective even though micro and macro level cause and effect is well documented. This is not a negative. This is a theoretical and conceptual problem for you.”

    Precisely, free trade does maximise technological change due to competition, but if you can’t explain how Pigouvian taxes actually engender technological change, why endorse them?

    Mark Hill

    December 4, 2006 at 11:35 pm

  41. FDB: I agree there is no formal obligation to give aid and I wouldn’t support there being such an obligation.

    The level of aid that comes from the US government is relatively low as a percentage of GDP. However, the amount of aid coming from the US (public + private) is quite high. Private american citizens are some of the most generous on earth.

    If the west have helped poor countries more than they have hurt poor countries — then it is a bit cheeky for the poor countries to demand compensation.

    John Humphreys

    December 5, 2006 at 12:07 am

  42. Mr Z — I don’t think that any country is knowingly damaging another’s property at all.

    No country owns the temperature nor do they have a god-given right to a certain water level. These things change.

    Many things impact on others, and externalities (positive & negative) are ubiquitous. Consider the benefit to poor countries of being able to trade with rich countries (rich countries didn’t have that benefit when they were developing) or the world gets from US pharmacuticals, or the benefit of knowing your family loves you. But this doesn’t necessarily justify intervention.

    I’m not a big fan of eminent domain.

    I’m glad that you agree that the standard aid approach (giving money to corrupt leaders) is flawed.

    I don’t think it is just transaction costs that make a law suit unlikely. If it was winnable, somebody (George Soros?) would fund it. But I don’t think it would be winnable because there is no link between factory A’s specific co2 emissions and the exact piece of water that flooded your house.

    If you accept that a compensation policy is not achievable, that does not remove the argument based on benefit-cost analysis. Just because the benefits and costs apply to different people doesn’t change the total impact on utility.

    John Humphreys

    December 5, 2006 at 12:19 am

  43. 1. Because the tariffs contribute to unnecessary pollution.

    Reasserting your case gets us nowhere. Automotive use does not contribute 25% of CO2 emissions. The transport sector in total does 23%. Motor vehicles, perhaps 80% of that (based on old ABS stats).

    So all motor transport does around 18.5% of total emissions. As far as I am aware, only luxury passenger vehicles are subject to luxury car tax. Passenger vehicles are around 65% of total transport emissions so we are down to 12%.

    Now, luxury sales tax only kicks on over $55,000. I don’t have ready numbers as to how many cars sold are subject to the tax. I seriously doubt that it’s more than 5% of all cars sold. Let’s be generous and say an additional 5% of car buyers will switch to the more expensive versions.

    Furthermore, to simplify things we’ll do this in the long run. So we’ll evaluate the policy in 20 years so that everyone has had a chance to switch to a luxury car when their old one was retired. So with your policy, 5% of cars on the road will emit 10% less emissions.

    Assuming that luxury cars are driven as much as normal cars (probably the opposite is true), this means that emissions will be reduced by:

    12% * (% change in luxury car ownership) * (% efficiency gain) = 12% * 5% * 10% = 0.06.%

    Less than a rounding error, mate.

    You seem to be implying that I’m against trade liberalisation. For the third time, I’m not. We should unilaterally lower all trade barriers immediately. We are discussing ways of reducing CO2 emissions and trade liberalisation has little or nothing to do with it.

    The real reason why nuclear costs too much is because of the regulatory bias against it

    Prove it. Nuclear power receives massive government subsididies the world over. Ziggy’s recent report argued that it would not be cost effective without a carbon tax.
    Blaming the government is not an argument, It’s just another assertion.

    Carbon taxes would in fact be an implicit subsidy to nuclear.

    No, it would be a tax on coal making it relatively more expensive. Wind power is becoming cheaper every year, it may even be cheaper than nuclear in the long run. The government should not be in the business of picking technoloical winners. The government should change relative prices where applicable then get out of the way.

    As for how a carbon tax would “engender technological change”, I already explained this.
    It encourages investment in technologies which produce energy without CO2. While there is no price on carbon, this won’t happen to any great extend – what incentive could there be to develop technologies which will probably always be slightly more expensive than coal?

    No country owns the temperature nor do they have a god-given right to a certain water level. These things change.

    No country owns their land nor do they have a god-given right to a certain border. These things change

    no link between factory A’s specific co2 emissions and the exact piece of water that flooded your house.

    Perhaps not, but there is a link between say, the US emitting CO2 and Bangladesh losing some of its land to the ocean.

    JohnZ

    December 5, 2006 at 9:11 am

  44. There are at least three taxes that make the automotive sector pollute more than it needs to.

    i) Tariffs and NTBs

    ii) Luxury car taxes

    iii) Stamp duties

    i) Makes the pre tax-market price of all cars about 25% more than it needs to be. We are taxing some makes of car into category ii) taxes. Factor in inflation and the effect increases every year.

    Whilst a back of the evelope calculation is small, you’ve only considered one tax, and in a static, not a dynamic manner. Your long-run analysis used one tax and ignored dynamic changes to Australian production.

    Do you want to know the real cost of tariffs, NTBs and “Australian standards” – the prices of some foreign cars are basically doubled. Your analysis is flawed in another way: the changes in the tariff strucutre will mean that Australian produced cars will also be cheaper and more efficient too.

    To say that protectionism, stamp duties and luxury car taxes have only a marginal long-run effect on CO2 emissions is false. You say I am making assertions, but use one slightly corrected figure and then just assume everything towards the least integrative and pessimistic result possible. You never set out to see if removing taxes would remove emissions, you set out to defend the status quo.

    “No, it would be a tax on coal making it relatively more expensive. Wind power is becoming cheaper every year, it may even be cheaper than nuclear in the long run. The government should not be in the business of picking technoloical winners. The government should change relative prices where applicable then get out of the way.”

    No it would be exactly that, an implicit subsidy to nuclear. A tax on one competitor is an implicit subsidy to all others. Nuclear would merely be more expensive than before. All energy sources would be unecessarily expensive. Picking winners is precisely about changing relative prices. That is what you would be doing. If wind is getting cheaper, then it will eventually dominate the market.

    “It encourages investment in technologies which produce energy without CO2. ”

    How? It merely subsititutes a lower level of investment in more expensive alternate sources. How does that create more technological advances than a wide range of investment in all soruces at a lower cost?

    You should note any removal of taxes to reduce CO2 emissions is simply a small part of an overall CO2 policy.

    Mark Hill

    December 5, 2006 at 10:33 am

  45. John, how are you going to either: a) enforce carbon trading, or b) encourage nations to join a treaty, which unlike trade treaties, is based on disincentives rather than incentives; imlying that cheating the agreement will be rampant?

    Mark Hill

    December 5, 2006 at 10:39 am

  46. FDB

    December 5, 2006 at 11:13 am

  47. test

    FDB

    December 5, 2006 at 11:13 am

  48. “John, how are you going to either: a) enforce carbon trading,

    imlying that cheating the agreement will be rampant? ”

    As a result of cheating the price of carbon has fallen to Euro7.90 per ton. it started off at Euro 30. Fallen because Euro nations have given themselves a higher ceiling.

    It’s a rubbish system.

    JC.

    December 5, 2006 at 12:29 pm


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