What's wrong with the carbon tax?

[Teo829]

Basically, we would pay more money (in the form of taxes) for gas and pretty much every petroleum based products. This money goes to the government, who spends it on reducing carbon emissions.

Anybody have anything interesting to add?

[Nuke]

My biggest complaint with a carbon tax and cap-and-trade schemes is that they do NOT necessarily reduce carbon emmisions. They just collect money and make us feel better about ourselves (It's OK for me to keep driving my Hummer because I'm paying the tax or buying offsets!). We (and China!) need to actually reduce our emissions, and not just pretend to be doing something about it by paying a guilt tax.

[albino smurf]

It penalizes the poorest states for using and producing coal. It also moves us away from a major domestic energy supply. They need to figure out how to clean up coal, and there are ways. Nuclear seems to me to be the way of the future combined with passive (wind, solar) as well, but we have so much coal that could be used for energy and liquidized for fuel it is silly.

[Puma]

It penalizes the poorest states for using and producing coal. It also moves us away from a major domestic energy supply. They need to figure out how to clean up coal, and there are ways. Nuclear seems to me to be the way of the future combined with passive (wind, solar) as well, but we have so much coal that could be used for energy and liquidized for fuel it is silly.

Yeah, your right. I saw a show on coal. There is a way to clean up coal plants but it is expensive and many plants need some kind of retro-fitting in order to get it done. However, it sounds like a good idea. This is why it probably won't happen, just because its a good idea. We could be putting money toward coal burning plants to help that industry with the cost instead of continued pollution and passing on the expense to consumers. But, we would rather give our money to someone who will steal from us in front of our faces. Go figure

[Enlightened Coelacanth]

It will hurt those least able to pay and cause needless suffering. Does this administration have a substitute for the gas I need to put in my car?

Because if it doesn't it's just picking my pocket because it's run up TRILLIONS of dollars in debt and is looking for money to burn through without giving me any serious options.

[swedechris]

Not much .IMO its a good thing.

[Trainer]

If maximizing profit is the only goal, this sort of thing is idiotic. Why would anyone want it?

But there are other issues.

The basic economics of this lies in the notion of externalities. Businesses should not be able to ignore costs that are external to the transaction. The internalization of externalities is a crucial part of the sustainability of a capitalist system.


http://en.wikipedia.org/wiki/Externality

[albino smurf]

The idea is good, and understandable, but the practical result is that it will hurt poor people and small businesses and does nothing to minimize the emission of these gasses. Utility companies will simply pass the cost of the penalties on to consumers.

[Trainer]

The idea is good, and understandable, but the practical result is that it will hurt poor people and small businesses and does nothing to minimize the emission of these gasses. Utility companies will simply pass the cost of the penalties on to consumers.

Why shouldn't they? And why should everyone else who is not involved in the transaction pay the price for the costs associated with it that aren't realized by either the purchaser or the seller?

[albino smurf]

I'm not saying that they shouldn't be, but to me this is being pitched to the public as fining businesses that are violating these standards, when really it will be the consumers that pay. As a result the people that profit from creating harmful bi-products will continue to profit from them and I'm not sure that is what is intended by the spirit of the legislation.

[Trainer]

I'm not saying that they shouldn't be, but to me this is being pitched to the public as fining businesses that are violating these standards, when really it will be the consumers that pay. As a result the people that profit from creating harmful bi-products will continue to profit from them and I'm not sure that is what is intended by the spirit of the legislation.

If we could trust companies to internalize the costs then it wouldn't be a problem, but because competition gives them the incentive to leave them external, the government has to regulate to protect the interest of the people who are paying these external costs.

But if these taxes are equal across the board, we're can still depend on market competition to keep the prices low. Unless there is price fixing in the industry, this should suffice.

The cost should always be born by the consumer, the issue here is that in the past, the prices have been artificially low because external costs are ignored.

[dave333]

There is supposed to be a cut in the payroll tax in addition to the cap and trade, to offset the difficulties that could come out of a cap and trade program.

[albino smurf]

Regardless, it is too bad in my mind that this is going to hit the poorest states the hardest.

[Teo829]

Awesome discussion people, we got some nice critical thinkers here. Keep them coming.

[swedechris]

Regardless, it is too bad in my mind that this is going to hit the poorest states the hardest.

In your opinion , why do think so?? Reason and some statistics that perhaps back your stance would be good to hear..

Plus can you say why these states are the poorest in the first place?

[stormholloway]

Frankly, you've got to be a complete dupe to think having yet another tax to pay is a good thing.

The government, in reality, has the technology to completely end the issue of energy altogether. Free energy technology exists behind closed doors and they won't let you have it because the same people running our government are the one's profiting from this energy consumption. So not only do they charge outlandish prices for their outdated energy production, their counterparts in government tax you for using it!

And not only that, you think it's a good idea! Hooray!

[swedechris]

Free energy technology... please elaborate..

[albino smurf]

In your opinion , why do think so?? Reason and some statistics that perhaps back your stance would be good to hear..

Plus can you say why these states are the poorest in the first place?

West Virignia and Kentucky produce the most coal and use coal for electric plants. Despite the fact that there is coal, they are two of the poorest states in the US. Electricity is cheap there as a result of the abundant energy source, albeit a dirty one. This new penalty will directly cause the utility price for the citizens of those states to go up. To say why they are the poorest in the first place is probably because they have been primarily agriculture economies and tobacco which is beneficial to the owners but not as much for the workers.

I don't like global warming or necessarily advocate using coal with our existing technology. I am just pointing out that this new legislation is going to hurt the people that can least afford it. I also think that we should figure out how to make coal a viable and clean energy source, because we have a lot of it.

[saremile]

When is there a tax good for business? Never.

[Enlightened Coelacanth]

It's another tax, essentially, put into action with no vote or say so by the people. And it won't clean the atmosphere a bit.
It's stupid and draconian. And Obama is going through with it.

[certifiedjatt]

what 'trainer' mentioned--negative externalities--is the perfect argument for a carbon tax. i happened to have done a mega-report on this for one of my senior classes (college).

the most difficult part of carbon tax is figuring out the perfect tax rate so that it is efficient for each and every single firm, and each and every single person. this of course is impossible. hence the poor feasibility of this.

there are no good financial arguments against the carbon tax, only administrative ones. this tax is NOT like an income tax. the purpose of this tax is to ensure that what we pay for goods is actually their price, and not a discounted value of it. same with firms; firms should have to pay for the TRUE/social (uh oh, i used the S-word) cost of production, not just the private cost.

when you drive your car, it may cost you $x. however, it's impacting the guy with the asthma, the gas emissions (uh oh, another fake phrase) have to go somewhere, so they go up. some of them come down in the form of poor air quality, which impacts the livability of a city. don't think 100 cars; think 1 million. plus, the emissions don't respect state or provincial boundaries. so think of 100s of millions of cars. all that crap has to do some damage to the environment (oh man; a hattrick of fake words and liberal B.S.). thus, a carbon tax would, in theory, indicate the real cost of driving, polluting, producing, etc.


carbon tax is by no means an innovative solutions. that will come from scientists.

[certifiedjatt]

It's another tax, essentially, put into action with no vote or say so by the people.

thank god for that. if the people who talk economics without having taken a class are prevented from voting on economic issues, maybe the world would become a better place. which reminds me: i think voters in democracies should be given a test of competence before voting. this would filter out a lot of stupidity. democracies would be more efficient and probably wealthier and more stable.

if it's an economic issue, independent parties should write up a test on economics and let only those people vote who can pass it. same for other issues. of course, this is impossible to do, so, i'm going back to doing my laundry.

[swedechris]

what 'trainer' mentioned--negative externalities--is the perfect argument for a carbon tax. i happened to have done a mega-report on this for one of my senior classes (college).

the most difficult part of carbon tax is figuring out the perfect tax rate so that it is efficient for each and every single firm, and each and every single person. this of course is impossible. hence the poor feasibility of this.

there are no good financial arguments against the carbon tax, only administrative ones. this tax is NOT like an income tax. the purpose of this tax is to ensure that what we pay for goods is actually their price, and not a discounted value of it. same with firms; firms should have to pay for the TRUE/social (uh oh, i used the S-word) cost of production, not just the private cost.



So good then.. its not a tax.. it is in fact a FEE or if you will , a PENALTY. Use it. its about time.

[S H O W S T O P P E R !]

It's hard to enforce. A company could, in theory, build a pipe to send extra carbon out somewhere it can't be regulated.


But my main gripe is that companies can simply buy out the environment. There has to be an overall limit to how much pollution we send out.

[Enlightened Coelacanth]

So good then.. its not a tax.. it is in fact a FEE or if you will , a PENALTY. Use it. its about time.This is all rhetorical steam. If you tax companies those companies will just pass along the fees government imposes on them. And people who can barely heat their homes in the winter or afford the gasoline they need to get to work or transport family members will bear the brunt.
So that's what you are for. Own it.

[Trainer]

This is all rhetorical steam. If you tax companies those companies will just pass along the fees government imposes on them. And people who can barely heat their homes in the winter or afford the gasoline they need to get to work or transport family members will bear the brunt.
So that's what you are for. Own it.

Uh, yea. It's so funny to me how ignorant you are. Yet, in the light of this, you talk so condescendingly.

One day, when you grow up, you may actually try have a dialogue with someone, instead of this continuous, monotonous diatribe of yours that is remarkable only by the virtue of being consistently shallow.

Learn a bit about economics, get back to me when you have.

[certifiedjatt]

This is all rhetorical steam. If you tax companies those companies will just pass along the fees government imposes on them. And people who can barely heat their homes in the winter or afford the gasoline they need to get to work or transport family members will bear the brunt.
So that's what you are for. Own it.

"..people who care barely heat their homes..": you're right, who cares about them? this is supposed to be a capitalist society; not socialist, remember? you need to pick a viewpoint and stick to it. contrary to what you believe, you are NOT an expert on EVERY TOPIC DISCUSSED ON TT. i would LOVE to know your background/education/experience (that is, the truth, not an embellished version to generate credibility in your posts)

passing on the costs to consumers IS what is supposed to happen.this is where innovation comes in. if company A can be more innovative, the amount it passes on to consumers will be less than company B, which isn't as innovative. so, ultimately (long term) the economy will reach equilibrium; this does not mean that there are no costs to equilibrium (people dying, etc), but ummmmm...welcome to a capitalist society.

[albino smurf]

That's all fine and good with your economists view of the world, but the general public is having this sold to them as a penalty for the companies that violate the new standard, rather than as a penalty for consumers of the goods and services of these companies. This is going to hurt poor people and has not been pitched to the public as such. An interesting glimpse at the ramifications of a seemingly good solution to the problem.

As for welcome to a capitalist society, it is harder to swallow as we have socialized some pretty heavy economic losses lately, that once again penalize poorer people for the transgressions of a wealthier class.

[certifiedjatt]

That's all fine and good with your economists view of the world, but the general public is having this sold to them as a penalty for the companies that violate the new standard, rather than as a penalty for consumers of the goods and services of these companies. This is going to hurt poor people and has not been pitched to the public as such. An interesting glimpse at the ramifications of a seemingly good solution to the problem.

As for welcome to a capitalist society, it is harder to swallow as we have socialized some pretty heavy economic losses lately, that once again penalize poorer people for the transgressions of a wealthier class.

you're right about how this is being sold. but that's purely political spin premised on the reality that most people are poorly informed about such concepts. it's disingenuous for sure. saying that this is going to hurt the poor people is obviously not the most politically savvy thing to do--as true as it might be.

and when i said 'welcome to a capitalist society', i was being a bit facetious, as the guy's comments from before have been all about how america is becoming socialist, but all of a sudden now, he's concerned with the impact on the poor.

capitalism will obviously weed out those that cannot survive. and unfortunately, small businesses, small factories, small transportation companies will certainly take a hit from such a tax. that's unjust but, what can you do, eh? i HATE that the brilliant chinese kids in my stochastic calculs class get 100s on midterms and final exams and the prof is forced to curve the average down by a few points every time. my true grade may have been an 88 but it is now effectively an 86.

but c'est la vie.

[stormholloway]

there are no good financial arguments against the carbon tax, only administrative ones. this tax is NOT like an income tax. the purpose of this tax is to ensure that what we pay for goods is actually their price, and not a discounted value of it. same with firms; firms should have to pay for the TRUE/social (uh oh, i used the S-word) cost of production, not just the private cost.

Supply and demand already took care of the price issue you seem to be having. And where exactly would you like to draw the line with these so-called "social costs"? Maybe there should be a breathing tax based upon exhalations per day to reduce carbon emissions from people. On the same note, a fart tax would do quite nicely as well. People will think twice about passing gas when they think of the costs involved.

when you drive your car, it may cost you $x. however, it's impacting the guy with the asthma, the gas emissions (uh oh, another fake phrase) have to go somewhere, so they go up. some of them come down in the form of poor air quality, which impacts the livability of a city. don't think 100 cars; think 1 million. plus, the emissions don't respect state or provincial boundaries. so think of 100s of millions of cars. all that crap has to do some damage to the environment (oh man; a hattrick of fake words and liberal B.S.). thus, a carbon tax would, in theory, indicate the real cost of driving, polluting, producing, etc.

So we're being taxed based upon the butterfly effect now? The usage of carbon fuels is, and has been, an accepted circumstance of our era. Suddenly it has been decided that any distant repercussions of personal actions should be taxed? You go from the guy from asthma to the environment. Which is it exactly? Both?

This carbon tax was born from the theory of man-made global warming and nothing more, and the theory happens to be heavily disputed within the scientific community.

There are countless ways our activity can be perceived to affect those around us. The bottom line is that, in a time of severe economic downturn, this policy is aimed at the poor and middle class. Even Warren Buffet, an Obama chum, says this is a regressive tax. And you're saying there is no financial argument against it? Please explain.

carbon tax is by no means an innovative solutions.

QFT.

[stormholloway]

capitalism will obviously weed out those that cannot survive. and unfortunately, small businesses, small factories, small transportation companies will certainly take a hit from such a tax. that's unjust but, what can you do, eh? i HATE that the brilliant chinese kids in my stochastic calculs class get 100s on midterms and final exams and the prof is forced to curve the average down by a few points every time. my true grade may have been an 88 but it is now effectively an 86.

but c'est la vie.

Since when is government intervention in the market, such as this carbon tax, part of capitalism? It is distinctly not part of capitalism, just as the government seizing all private assets wouldn't be part of capitalism. And you admit it's unjust but you are for it anyway?

I'm hoping you've got a better argument for this tax than "c'est la vie".

[Trainer]

Since when is government intervention in the market, such as this carbon tax, part of capitalism? It is distinctly not part of capitalism, just as the government seizing all private assets wouldn't be part of capitalism. And you admit it's unjust but you are for it anyway?

I'm hoping you've got a better argument for this tax than "c'est la vie".


You can't have a sustainable capitalist system where costs are not all internal to the transaction.

Look up externality , It's a very well known and recognized aspect of the system.

http://upload.wikimedia.org/wikipedia/en/thumb/a/ac/Externality.svg/480px-Externality.svg.png

[stormholloway]

And this carbon tax revenue is going directly to those indirectly affected by carbon fuel consumption? Is that your claim?

And what wasn't working, specifically, within the energy market regarding these externalities? You claim this system can't be sustained but the energy market seemed to be chugging right along without a carbon tax. Too much asthma?

[certifiedjatt]

Supply and demand already took care of the price issue you seem to be having. And where exactly would you like to draw the line with these so-called "social costs"? Maybe there should be a breathing tax based upon exhalations per day to reduce carbon emissions from people. On the same note, a fart tax would do quite nicely as well. People will think twice about passing gas when they think of the costs involved..

supply and demand take care of it based on the PRIVATE costs to firms and individual. YOU driving your car one mile has SOME impact on ME. it's like collateral damage, or being an innocent victim. it is this cost that firms do not incorporate in their production, nor consumers in their consumption. i never said that the tax was feasible, which is why it can't applied to breathing and farting (arguments that are not original, or shocking). and yes, technically, given the impact of your farts and exhaling, you SHOULD be taxed. but the reason you aren't is because of social and political reasons, not economic ones. my argument is an economic one. so, let's stay focused.


So we're being taxed based upon the butterfly effect now? The usage of carbon fuels is, and has been, an accepted circumstance of our era. Suddenly it has been decided that any distant repercussions of personal actions should be taxed? You go from the guy from asthma to the environment. Which is it exactly? Both?

i guess you can call it a butterfly effect. i don't understand what your argument is. carbon tax (or any tax designed to curb negative externalities) is meant to control the impact of one person's actions on another person or that person's property. it is no different from you you washing your car with harmful chemicals and havin those chemicals destroy my lawn. would you not take such an individual to court? (extreme example, but you get the point, hopefully). just because it's "all of a sudden", does not mean it is economically wrong. why should distant repurcussions not be taxed???

This carbon tax was born from the theory of man-made global warming and nothing more, and the theory happens to be heavily disputed within the scientific community.

it doesn't matter what the theory of global warming is. any scientist will tell you that CO2 is bad for humans. you can test this yourself. screw global warming. the point is, carbon emissions--whether they cause global warming or not--are bad. do you like breathing smog???

There are countless ways our activity can be perceived to affect those around us. The bottom line is that, in a time of severe economic downturn, this policy is aimed at the poor and middle class. Even Warren Buffet, an Obama chum, says this is a regressive tax. And you're saying there is no financial argument against it? Please explain..

this policy isn't AIMEd at the poor; it's just that the poor and middle class will be more affected becuase the proprotion of their wealth dedicated to the tax will be higher. i didn't deny that at all! again, my argument is purely based on economics. and it IS a regressive tax. but that 'financial argument' isn't against the tax; it is against the tax under a certain circumstance.

[certifiedjatt]

Since when is government intervention in the market, such as this carbon tax, part of capitalism? It is distinctly not part of capitalism, just as the government seizing all private assets wouldn't be part of capitalism. And you admit it's unjust but you are for it anyway?

I'm hoping you've got a better argument for this tax than "c'est la vie".

ok. more comprehensive reading comprehension is required on your part. not to be sarcastic or to get into a 'thing' with you.

the capitalism argument was not about the implementation of the carbon tax, but the resulting price wars/innovation. i'll articulate it differently. once the carbon tax is already implemented, competition will ensure that the best firms survive (price wars).

of course government interventions is NOT capitalistic. again, my argument was the competition that would continue even after a carbon tax is implemented. the competition part ALONE was what i meant by capitalism and its forces weeding out the weaker firms.

carbon tax ISSSS unfair--but only socially. economically, it is perfectly fair. i would be for it on economic grounds but against it on social grounds.

the argument for carbon tax is really simple: we are not paying what it really costs to consume goods, and companies are not paying what it really costs to produce them. hence, we overconsume and companies overproduce. carbon tax--in theory-- would curb this negative externality by indicating a true price for final goods, and raw inputs.

[certifiedjatt]

And this carbon tax revenue is going directly to those indirectly affected by carbon fuel consumption? Is that your claim?

And what wasn't working, specifically, within the energy market regarding these externalities? You claim this system can't be sustained but the energy market seemed to be chugging right along without a carbon tax. Too much asthma?

whether this carbon tax goes directly to those indirectly affected is an administrative issue, NOT an economic one. again, carbon tax is not feasible--yet. but it's founded on sound economic principles.

his claim was that the system can't be SUSTAINED. sustained implies LONG TERM. the energy market is chugging along because it is NOT including the impact (i.e., cost) oil production has on society. therefore, their private marginal cost (cost per unit: i'm sure you know this, but maybe some don't) is lower than what it ought to be. hence, their profit (which is already much higher than their private marginal cost) is even higher given the underestimated social marginal cost (i.e., the firm's own marginal cost + the cost on society).

obviously, if you're charging a price MUCH higher than your private marginal costs, you are going to be chugging along nicely!

[stormholloway]

.supply and demand take care of it based on the PRIVATE costs to firms and individual. YOU driving your car one mile has SOME impact on ME. it's like collateral damage, or being an innocent victim. it is this cost that firms do not incorporate in their production, nor consumers in their consumption. i never said that the tax was feasible, which is why it can't applied to breathing and farting (arguments that are not original, or shocking). and yes, technically, given the impact of your farts and exhaling, you SHOULD be taxed. but the reason you aren't is because of social and political reasons, not economic ones. my argument is an economic one. so, let's stay focused.

i guess you can call it a butterfly effect. i don't understand what your argument is. carbon tax (or any tax designed to curb negative externalities) is meant to control the impact of one person's actions on another person or that person's property. it is no different from you you washing your car with harmful chemicals and havin those chemicals destroy my lawn. would you not take such an individual to court? (extreme example, but you get the point, hopefully). just because it's "all of a sudden", does not mean it is economically wrong. why should distant repurcussions not be taxed???

Because distant repercussions cannot be accurately quantified, first of all. The impact that my chemicals have on your lawn can be measured. The effect is very clear in that hypothetical. It simply isn't so with regard to my driving. Also keep in mind that there are no viable alternatives to driving cars with combustion engines. There are countless alternatives to toxic car wash soap. Your counterargument will surely be that this doesn't discount the effect that my driving has on you and the environment. Well, first of all, those effects are highly disputed, with particular regard to the environment. Second of all, if you condone such a carbon tax then you must also condone any conceivable tax that seeks to curb any and all externalities.

this policy isn't AIMEd at the poor; it's just that the poor and middle class will be more affected becuase the proprotion of their wealth dedicated to the tax will be higher. i didn't deny that at all! again, my argument is purely based on economics. and it IS a regressive tax. but that 'financial argument' isn't against the tax; it is against the tax under a certain circumstance.

Which aspect of economics will take into account the lack of consumer spending and/or capital investment based on this taxation, which will lead to a weaker economy? Is this not an externality of the carbon tax itself?

[stormholloway]

ok. more comprehensive reading comprehension is required on your part. not to be sarcastic or to get into a 'thing' with you.

the capitalism argument was not about the implementation of the carbon tax, but the resulting price wars/innovation. i'll articulate it differently. once the carbon tax is already implemented, competition will ensure that the best firms survive (price wars).

of course government interventions is NOT capitalistic. again, my argument was the competition that would continue even after a carbon tax is implemented. the competition part ALONE was what i meant by capitalism and its forces weeding out the weaker firms.

First, if you're going to complain about a lack of comprehension, then at least attempt to try with grammar and punctuation. It's somewhat hypocritical.

Regardless of your statement, the carbon tax has nothing to do with capitalism, therefore talking about "capitalism working it out" is misleading. The carbon tax is not a natural evolution of the marketplace. It is a measure forced upon the market by the government. Of course the market would "work it out". It's redundant even mentioning that. The market does its best to work out any variation in the system.

carbon tax ISSSS unfair--but only socially. economically, it is perfectly fair. i would be for it on economic grounds but against it on social grounds.

Meaningless. Guess what? We don't live in a college classroom. Welcome to planet earth, where many people live and die by the difference of a few dollars a month.

whether this carbon tax goes directly to those indirectly affected is an administrative issue, NOT an economic one. again, carbon tax is not feasible--yet. but it's founded on sound economic principles.

Of course it's an economic issue. If you are making one person pay for affecting another person, then the second person should be compensated. Would it make sense if I went to the supermarket to buy a loaf of bread, and instead of paying the store, I simply flushed the money down the toilet? In your world, it'd be fine. I lost a few bucks and gained some bread, but what about the person who lost the bread? Does this make economic sense to you or is this simply an administrative issue?

To me, your argument really hinges on the idea that people should be penalized for affecting other people, but unfortunately the theory has no balance. The affected people are not compensated for their loss. This makes no economic sense, despite your saying so. How is the system more easily sustained in the long term merely by giving more money to the government?

[Trainer]

Jatt,
Thanks for your eloquent explanations. Very clear and concise, it's obvious you're very familiar with the concept and how it functions.

Storm, your whole argument hinges on the notion that these externalities are not directly compensating these disinterested third parties. It is an ideal situation that this transfer would be 100% efficient. But this ideal is unachievable. But the fact is, these external costs are already being paid out by the government in environmental projects, public health programs, hospital subsidies, and medical research. This extra revenue, directly, or indirectly will be able to at least fund the existing outlays that are being funded 100% by disinterested third parties.

Second, this doesn't even address the economic incentives that are created to minimize these external costs. This provides a real, bottom line incentive to create technologies that can promote this sort of innovation. If an engineer can invent an engine or power plant that is 30% more efficient, then automatically, he pays 30% less in this carbon tax.

So the result is twofold. An overall reduction in the external costs, as well as compensation for the existing costs being paid by people who gain nothing from these transactions.

[Enlightened Coelacanth]

"..people who care barely heat their homes..": you're right, who cares about them? this is supposed to be a capitalist society; not socialist, remember? you need to pick a viewpoint and stick to it.I thought the discussion was about a de facto tax
put into place by this administration. Not about an economic system.
You need to decide what it is you are discussing before you even have a hope of coming out ahead.

contrary to what you believe, you are NOT an expert on EVERY TOPIC DISCUSSED ON TT. i would LOVE to know your background/education/experience (that is, the truth, not an embellished version to generate credibility in your posts)Based on your posts, I think I am an expert on subjects like this, relative to the ignorance you spew out.

passing on the costs to consumers IS what is supposed to happen.this is where innovation comes in. if company A can be more innovative, the amount it passes on to consumers will be less than company B, which isn't as innovative. so, ultimately (long term) the economy will reach equilibrium; this does not mean that there are no costs to equilibrium (people dying, etc), but ummmmm...welcome to a capitalist society.Make up your mind if you want to discuss the interaction between
manufacturer and consumer in a free market system, or the relationship between government and taxpayer. You don't even seem to have the basics down here.
It's called a Carbon Tax for a reason. And you seem to be under the mistaken notion that the taxes that government levies on a coal company, let's say, that get passed onto the consumer will magically show up in innovative new products. You are hopelessly mistaken. Money that a coal company collects for the government, go back to the government and the company merely acts as a middle man tax collector when government piles new taxes onto it.
It's ironic you lecture others on their lack of knowledge.

[Trainer]

I thought the discussion was about a de facto tax
put into place by this administration. Not about an economic system.
You need to decide what it is you are discussing before you even have a hope of coming out ahead.

Based on your posts, I think I am an expert on subjects like this, relative to the ignorance you spew out.

Make up your mind if you want to discuss the interaction between
manufacturer and consumer in a free market system, or the relationship between government and taxpayer. You don't even seem to have the basics down here.
It's called a Carbon Tax for a reason. And you seem to be under the mistaken notion that the taxes that government levies on a coal company, let's say, that get passed onto the consumer will magically show up in innovative new products. You are hopelessly mistaken. Money that a coal company collects for the government, go back to the government and the company merely acts as a middle man tax collector when government piles new taxes onto it.
It's ironic you lecture others on their lack of knowledge.

You are incredibly ridiculous. Storm may have irrational arguments against it, but at least he seems to comprehend the argument. You just go off half cocked on what appears to be a persistent mission to convince everyone that you're an idiot.

[stormholloway]

Jatt,
Thanks for your eloquent explanations. Very clear and concise, it's obvious you're very familiar with the concept and how it functions.

Storm, your whole argument hinges on the notion that these externalities are not directly compensating these disinterested third parties. It is an ideal situation that this transfer would be 100% efficient. But this ideal is unachievable. But the fact is, these external costs are already being paid out by the government in environmental projects, public health programs, hospital subsidies, and medical research. This extra revenue, directly, or indirectly will be able to at least fund the existing outlays that are being funded 100% by disinterested third parties.

Do tax dollars not already pay for these things? If this is a strict argument about externality, then simply take a portion of what the American taxpayer is already paying in taxes and call that a carbon tax. Everybody wins: you and your "externality" camp and the taxpayer. Oh wait, the greedy government doesn't win. Oh well.

Second, this doesn't even address the economic incentives that are created to minimize these external costs. This provides a real, bottom line incentive to create technologies that can promote this sort of innovation. If an engineer can invent an engine or power plant that is 30% more efficient, then automatically, he pays 30% less in this carbon tax.

Here's a better idea: let's outlaw carbon fuel usage. Then we'll really see an incentive to come up with innovations. Seriously though, the ends do not justify the means, particularly considering the delicate economic circumstances we are in. This is no time to be man-handling the markets with unjust taxation.

Frankly, the logic is just bizarre. It's as if you condone humanity being treated like some sort of rat maze.

[Enlightened Coelacanth]

You are incredibly ridiculous. Storm may have irrational arguments against it, but at least he seems to comprehend the argument. You just go off half cocked on what appears to be a persistent mission to convince everyone that you're an idiot.I know you have an axe to grind here due to past drubbings (job well done) but maybe you could show me where I have responded to the post of Certifiedjatt like "an idiot".
Better yet, you show me where he is making any cogent points at all.

He has ignorantly and totally confused the role of a corporation as it relates
to passing on government fees, taxes and encumbrances to the consumer, and conflated that with the notion that somehow an external tax that hits a electric generating plant will somehow spur that plant to innovate.
It's a nice high school notion but has no roots in the real world where energy cartels have no competition per se, and therefore no need to innovate.

You may see innovation in the energy industry down the road. But it won't be because granny has to turn her thermostat down in the winter because Obama decides she is using too much energy.
Thanks for checking in anyway, though.

[swedechris]

I know you have an axe to grind here due to past drubbings (job well done) but maybe you could show me where I have responded to the post of Certifiedjatt like "an idiot".
Better yet, you show me where he is making any cogent points at all.

He has ignorantly and totally confused the role of a corporation as it relates
to passing on government fees, taxes and encumbrances to the consumer, and conflated that with the notion that somehow an external tax that hits a electric generating plant will somehow spur that plant to innovate.
It's a nice high school notion but has no roots in the real world where energy cartels have no competition per se, and therefore no need to innovate.

You may see innovation in the energy industry down the road. But it won't be because granny has to turn her thermostat down in the winter because Obama decides she is using too much energy.
Thanks for checking in anyway, though.


This 'high school notion' is going to be universal soon... I am thinking you are somewhat of a high school product though yourself in your manners and reasonings.

[Trainer]

Do tax dollars not already pay for these things? If this is a strict argument about externality, then simply take a portion of what the American taxpayer is already paying in taxes and call that a carbon tax. Everybody wins: you and your "externality" camp and the taxpayer. Oh wait, the greedy government doesn't win. Oh well.

Let's try not to be flippant for once. This isn't about the government winning anything. It's about sound economics.

1. Not directing the tax at the users removes the incentive to reduce these external costs. Having this cost tied to these transactions inspires these business models to internalize these costs. And internalizing costs in a capitalist system is key to the benefits that a free market provides. The most important thing that the market does is give us accurate information about the profits and losses in any particular transaction. Allowing a system to do business and profit by ignoring these externalities gives the market inaccurate information and spawns poor business decisions.

2. A skilled politician can take advantage of this by promising to lower taxes on the general public that are used to pay these externalities by directing these costs to those that impose them.

Here's a better idea: let's outlaw carbon fuel usage. Then we'll really see an incentive to come up with innovations. Seriously though, the ends do not justify the means, particularly considering the delicate economic circumstances we are in. This is no time to be man-handling the markets with unjust taxation.

Maybe, maybe not. Using that logic, maybe we should just do away with any environmental regulations, immigration laws, child labor laws, minimum wages, OSHA standards, indentured servitude, etc..etc. I mean, we want to let businesses offer goods and services to us at the lowest possible price....right?

Frankly, the logic is just bizarre. It's as if you condone humanity being treated like some sort of rat maze.

I simply don't condone businesses being able impose on people so they can make more money.

[Enlightened Coelacanth]

This 'high school notion' is going to be universal soon... I am thinking you are somewhat of a high school product though yourself in your manners and reasonings.Says the troll, quite ironically. What do you suppose this says about your manners?
You are an embarrassment. To others, if not yourself.

[Trainer]

I know you have an axe to grind here due to past drubbings (job well done) but maybe you could show me where I have responded to the post of Certifiedjatt like "an idiot".
Better yet, you show me where he is making any cogent points at all.

He has ignorantly and totally confused the role of a corporation as it relates
to passing on government fees, taxes and encumbrances to the consumer, and conflated that with the notion that somehow an external tax that hits a electric generating plant will somehow spur that plant to innovate.
It's a nice high school notion but has no roots in the real world where energy cartels have no competition per se, and therefore no need to innovate.

You may see innovation in the energy industry down the road. But it won't be because granny has to turn her thermostat down in the winter because Obama decides she is using too much energy.
Thanks for checking in anyway, though.

I don't really care what you say anymore. You've proven yourself to be devoid of any education or real insight. Go ahead, keep on ranting...it's funny to me. People like you are a dime a dozen.

[CanadianChic]

I do love popcorn threads.

[Enlightened Coelacanth]

I don't really care what you say anymore. You've proven yourself to be devoid of any education or real insight. Go ahead, keep on ranting...it's funny to me. People like you are a dime a dozen.Okay. I was just checking to see if you just wanted to insult my post because I have opposed you in the past. Or, on the other hand, if you had any real points to make or any special insights about what I said.

We've cleared that up now.

[Trainer]

Okay. I was just checking to see if you just wanted to insult my post because I have opposed you in the past. Or, on the other hand, if you had any real points to make or any special insights about what I said.

We've cleared that up now.

If you want a reply to the gibberish you posted, try reading the frequent posts by me, CertifiedJatt, and even Storm that demonstrate why this is VERY relevant.

Or, stay stupid. your choice.

[Trainer]

Storm.

Let me ask you. Considering the geopolitical situation we find ourselves in, do you really think that the cost of a gallon of gasoline REALLY costs less than 2 dollars? What if we internalized all of the military and sociopolitical costs into that purchase of that gallon of gasoline. Do you really think it'd cost less than 2 dollars? Heck, bottled water costs more than that...

[swedechris]

Says the troll, quite ironically. What do you suppose this says about your manners?
You are an embarrassment. To others, if not yourself.



im merely being funny.. dont you know of self irony ,it does come in handy ,, its not a war you know.


i suppose you equal others .

[Enlightened Coelacanth]

If you want a reply to the gibberish you posted, try reading the frequent posts by me, CertifiedJatt, and even Storm that demonstrate why this is VERY relevant.I DID read the post by Cert and commented on it specifically when you decided to gratuitously insult and attack me, so wake up *-hole. Either address my comments or not but your insults are really the mark of a whimpering beaten dog.

By the way, if you internalize all the costs of a Twinkie or anything else, you can make a specious claim for any b.s. you care to try.
Gasoline costs what we pay for it. No more and no less.
Now go think about that you human colostomy bag. I'm through with your garbage.

[Trainer]

I DID read the post by Cert and commented on it specifically when you decided to gratuitously insult and attack me, so wake up *-hole. Either address my comments or not but your insults are really the mark of a whimpering beaten dog.

By the way, if you internalize all the costs of a Twinkie or anything else, you can make a specious claim for any b.s. you care to try.
Gasoline costs what we pay for it. No more and no less.
Now go think about that you human colostomy bag. I'm through with your garbage.

Good, maybe you'll stop cluttering these discussions with your juvenile BS...

[stormholloway]

Let's try not to be flippant for once. This isn't about the government winning anything. It's about sound economics.

1. Not directing the tax at the users removes the incentive to reduce these external costs. Having this cost tied to these transactions inspires these business models to internalize these costs. And internalizing costs in a capitalist system is key to the benefits that a free market provides. The most important thing that the market does is give us accurate information about the profits and losses in any particular transaction. Allowing a system to do business and profit by ignoring these externalities gives the market inaccurate information and spawns poor business decisions.

I'll admit I'm a bit confused by your argument. The corporation is taxed by the government and that company passes on that tax to the consumer, therefore the corporation pays nothing additionally in the end. So where is the incentive for innovation that you're talking about? In this model, the business is just a middle man in the taxation process. Absolutely nothing changes except the tax burden on the consumer.

2. A skilled politician can take advantage of this by promising to lower taxes on the general public that are used to pay these externalities by directing these costs to those that impose them.

Why isn't this simply done now? And how is this done? A business will always pass this cost onto the consumer. I see no way to stop it from doing otherwise.

Maybe, maybe not. Using that logic, maybe we should just do away with any environmental regulations, immigration laws, child labor laws, minimum wages, OSHA standards, indentured servitude, etc..etc. I mean, we want to let businesses offer goods and services to us at the lowest possible price....right?

Some of those things I would indeed do away with, others are unconstitutional. My point is that there are countless conceivable regulations the government could impose in an attempt to fuel market change, but historically speaking that sort of government intervention just doesn't work.

Storm.

Let me ask you. Considering the geopolitical situation we find ourselves in, do you really think that the cost of a gallon of gasoline REALLY costs less than 2 dollars? What if we internalized all of the military and sociopolitical costs into that purchase of that gallon of gasoline. Do you really think it'd cost less than 2 dollars? Heck, bottled water costs more than that...

Honestly, it's very difficult to say. Bottled water makes for a tough comparison because the bottled water industry is a sham in and of itself. Perhaps the question is: should a bottle of water really be 2 dollars? And ironically, petroleum is contained within the bottle of water itself. I digress.

But yes, I'm familiar with the economic concept at hand. In other words, someone is bearing these costs at some point throughout production. It's probably some poor schmuck starving in the desert. But in the end, the real beneficiaries of the externalization of these costs are the corporations, and under this model they still make out like bandits.

In the strictly logical sense, the concept is sound, but unfortunately when you break this down into logistics, the external costs can't be quantified or assigned to specific parties. It's nebulous, and, therefore, these external costs must simply be accepted as a part of our evolution, as new innovations will certainly present themselves in the future because in the end the carbon tax does nothing but take money from the poor.

[swedechris]

Good, maybe you'll stop cluttering these discussions with your juvenile BS...


i agree.. all too often the guy has hot air and empty words and an acid tone

[Enlightened Coelacanth]

I'll admit I'm a bit confused by your argument. The corporation is taxed by the government and that company passes on that tax to the consumer, therefore the corporation pays nothing additionally in the end. So where is the incentive for innovation that you're talking about? In this model, the business is just a middle man in the taxation process. Absolutely nothing changes except the tax burden on the consumer.EXACTLY. If the logic here was consistent (taxation equals innovation) we would all be driving around in 60 mpg hydrogen powered autos. We see that somehow that's not so.
Businesses merely collect taxes from the consumer that the government makes them pay and passes them on.



Why isn't this simply done now? And how is this done? A business will always pass this cost onto the consumer. I see no way to stop it from doing otherwise.Most people have enough sense to know that they pay through higher prices what government imposes on business.



Some of those things I would indeed do away with, others are unconstitutional. My point is that there are countless conceivable regulations the government could impose in an attempt to fuel market change, but historically speaking that sort of government intervention just doesn't work.Yes, it's known as fascism when government controls private industry to that extent.



Honestly, it's very difficult to say. Bottled water makes for a tough comparison because the bottled water industry is a sham in and of itself. Perhaps the question is: should a bottle of water really be 2 dollars? And ironically, petroleum is contained within the bottle of water itself. I digress.

But yes, I'm familiar with the economic concept at hand. In other words, someone is bearing these costs at some point throughout production. It's probably some poor schmuck starving in the desert. But in the end, the real beneficiaries of the externalization of these costs are the corporations, and under this model they still make out like bandits.

In the strictly logical sense, the concept is sound, but unfortunately when you break this down into logistics, the external costs can't be quantified or assigned to specific parties. It's nebulous, and, therefore, these external costs must simply be accepted as a part of our evolution, as new innovations will certainly present themselves in the future because in the end the carbon tax does nothing but take money from the poor.If we factor in the costs in dental bills and medical problems caused by eating ice cream we could argue that the cost of ice cream is being artificially lowered because dairies don't have to bear the costs of future heart attacks caused by their artery clogging product.

But so what? It's an exercise in mental diddling. Ice cream costs what it costs. And if government decided to add several large taxes on the industry, to discourage it's usage, the cost of ice cream would shoot up with no change to the product (just as in cigarettes).

This sort of market meddling by government to achieve a social aim is never successful and in the case of making energy more costly to discourage it's usage, it's unconscionable when you consider the people least able to
alter their circumstances (too poor to buy a decent energy efficient car or home) will bear most of the brunt of this policy.

It's just stupid. And needlessly cruel. But don't let that change your opinion of this policy. Go ahead and lash out, like your anger makes a difference.

[certifiedjatt]

Because distant repercussions cannot be accurately quantified, first of all. The impact that my chemicals have on your lawn can be measured. The effect is very clear in that hypothetical. It simply isn't so with regard to my driving. Also keep in mind that there are no viable alternatives to driving cars with combustion engines. There are countless alternatives to toxic car wash soap. Your counterargument will surely be that this doesn't discount the effect that my driving has on you and the environment. Well, first of all, those effects are highly disputed, with particular regard to the environment. Second of all, if you condone such a carbon tax then you must also condone any conceivable tax that seeks to curb any and all externalities.

I didn't say distance repurcussions can be measured; this is why coming up with the right tax RATE is impossible. i'm sure i've mentioned that the carbon tax is infeasible based on social and administrative issue, NOT economics. and you have NO idea what my counterargument will be. my counterargument, is AGAIN, for the 11teenth time, that the issues you speak of have NOTHING To do with economics, but administration. and yes, if i condone a carbon tax because it is an instrument to control negative externalities, than i probably condone all instruments that curb externalities. but i do so purely on economic grounds. i am not an environmentalist; not even control. but i do understand the costs of my behavior.

i NEVER said there were viable alternatives to combustions. which is why i said earlier that carbon tax is not an innovative solutions.

Which aspect of economics will take into account the lack of consumer spending and/or capital investment based on this taxation, which will lead to a weaker economy? Is this not an externality of the carbon tax itself?

the things you mentioned are NOT externalities because they can be internalized by the market--i.e., taken into account through prices. not to be condescending, but it's really hard to explain this over the internet and without getting slightly technical--not that i underestimate your ability to understand. i'm just not sure i can articulate it well enough.

and even if carbon tax were to cause externalities, that would not be enough to dismiss the tax based on economic arguments. economics is all about efficient allocation of resources. period. it isn't about fairness or administration or anything else. most importantly, the ONLY way to judge whether an instrument of change (carbon tax) is effective, is to measure its success in changing the variable you are trying to change (lowering emissions). you cannot judge carbon tax and render it bad because it causes further externalities or effects. it may or may not. you raised a good point, though. but it's not a meaningful metric to measure the success or failure of carbon tax.

[certifiedjatt]

Regardless of your statement, the carbon tax has nothing to do with capitalism, therefore talking about "capitalism working it out" is misleading. The carbon tax is not a natural evolution of the marketplace. It is a measure forced upon the market by the government. Of course the market would "work it out". It's redundant even mentioning that. The market does its best to work out any variation in the system.

the carbon tax IS a natural evolution of the market system. the government is an instrument of a carbon control. i encourage you to look Coase Theorem to understand the difference between economics and administration. i think you are arguing against the carbon taxbased on administrative grounds (and i have agreed with you each time!!) and i'm arguing for it on economic grounds.


Meaningless. Guess what? We don't live in a college classroom. Welcome to planet earth, where many people live and die by the difference of a few dollars a month.

ahh the ol' "this isn't a classroom, kid." i understand the real world. i work, too, not just go to college. i gave you my opinion on the context under which i would agree with a carbon tax. if i am put in charge of the world, i would weigh the benefits of it and the costs of it--not just say "ok, economically, it's efficient. let's charge people a carbon tax." again, you are arguing around social/administrative issues, and again, i'm arguing on the economics of it. if i was incharge of the world, i would NOT institute a carbon tax because i'm empathetic, and because i have not heard a reasonable argument for a particular tax rate that is efficient and effective.



Of course it's an economic issue. If you are making one person pay for affecting another person, then the second person should be compensated. Would it make sense if I went to the supermarket to buy a loaf of bread, and instead of paying the store, I simply flushed the money down the toilet? In your world, it'd be fine. I lost a few bucks and gained some bread, but what about the person who lost the bread? Does this make economic sense to you or is this simply an administrative issue?

i dont' get your example. why would you flush money down the toilet???i don't get why you wouldn't pay for the bread....??? how would that be fine in my world??? i seriously don't get it. i'm now 100% sure you dont' know what externalities are, and what a market system is. again, i'm not saying that to be condescending one bit but i think you should do some serious studying.

To me, your argument really hinges on the idea that people should be penalized for affecting other people, but unfortunately the theory has no balance. The affected people are not compensated for their loss. This makes no economic sense, despite your saying so. How is the system more easily sustained in the long term merely by giving more money to the government?

forget the government for a second. the purpose of a carbon tax is TO INTERNALIZE AN EXTERNALITY! even though what i'm about to say seems like it's related to your bread example, it isn't: after you pay the carbon tax, the government CAN JUST BURN IT. the point is, now the externality is internalized because the prices reflect the true cost of a transaction/production. this would indicate a true supply and demand. and thus, a true price/good equilibrium.

we are not arguign over where or HOW the money generated from the carbon tax is best spent. that is an entirely new topic.

[certifiedjatt]

Based on your posts, I think I am an expert on subjects like this, relative to the ignorance you spew out.
i can assure you that if you took a poll on TT to determine the biggest ignoramus here , you would be given highest honors. sometimes, it pays dividends to listen to what people have to say about you, especially when there's a consensus among them.

Make up your mind if you want to discuss the interaction between
manufacturer and consumer in a free market system, or the relationship between government and taxpayer. You don't even seem to have the basics down here. It's called a Carbon Tax for a reason. And you seem to be under the mistaken notion that the taxes that government levies on a coal company, let's say, that get passed onto the consumer will magically show up in innovative new products. You are hopelessly mistaken. Money that a coal company collects for the government, go back to the government and the company merely acts as a middle man tax collector when government piles new taxes onto it.
It's ironic you lecture others on their lack of knowledge.

ummmm...genius...where did i say the government's revenuse come back to teh manufacturer. and that THAT transfer is the cause of innovation. you should read my lecture carefully because i'm going to explian how private sector innovation would work in the case of a carbon tax. after reading this, i want you to man up and say "crap, there ARE economic sequences i cannot understand. thus, i do not know and understand everything." you don't even have to apologize to me. ok? you ready, kid?? ok here goes, genius.

1. many firms in the market, producing product A, identical product (or each firm profuces a very similar product. let's say deodrant or a white shirt or pencils or lamps or something).
2. carbon tax is levied that impacts the production of Product A
3. some firms can't pay for the carbon tax. they must raise prices to compensate their new costs.
4. market prices go up as the cost structure of all firms go up.
5. firms stop making above normal profit (look that up), or incur substantial losses in profit.
6. one firm realizes that the only way to make profit is to lower the cost of production. so, it decides to lower its marginal cost by a certain amount so that it is lower than its competitor. it then can charge a lower price.
7. people start buying product A from the above firm because of a lower price.
8. the second firm realizes, "holy crap, i gotta lower my costs." so it too lowers its costs, so that it is even lower than the previously mentioned firm. it's new price is even lower than the prviously mentioend fimr. people start buying product A from this firm.
9. firm mentioned in number 6, does what firm mentioned in number 8 does. and the sequence continues.
10. some firms naturally close because they can't keep lowering their prices. sad, but reality.
11. now, let's say two giant firms remain (say Dell and Compaq).
12. they know that they can't lower their prices any more. what's the solution???
13. they hire geniuses from MIT and Harvard to figure out how to make their product better so that they can improve Product A.
14. Dell gets lucky and comes to a breakthrough first. Now, Dell controls the market for a BETTER product A.


i challenge you to find the word government transfers in that sequene of events.

good bye. pick up a freakin' book once in a while instead of reciting blogs and newspaper articles.

[certifiedjatt]

You are incredibly ridiculous. You just go off half cocked on what appears to be a persistent mission to convince everyone that you're an idiot.

i think he's succeeding, with relentless energy and enthusiasm.

[certifiedjatt]

He has ignorantly and totally confused the role of a corporation as it relates
to passing on government fees, taxes and encumbrances to the consumer, and conflated that with the notion that somehow an external tax that hits a electric generating plant will somehow spur that plant to innovate.
It's a nice high school notion but has no roots in the real world where energy cartels have no competition per se, and therefore no need to innovate.

IT'S NOT JUST THE ENERGY CARTELS THAT BENEFIT FROM ENERGY. THEY MAY NOT NEED TO INNOVATE BUT OTHER FIRMS DO.
DO YOU KNOW WHAT YOUR COMPUTER IS MADE OF?
DO YOU KNOW WHAT NYLON IS?
DID YOU KNOW THAT 'stuff' IS MADE IN PLANTS THAT HAVE BIG SMOKE STACKS?????
DID YOU KNOW THAT SMOKE IS BAD FOR YOU?
DID YOU KNOW THAT CEREAL IS MADE IN FACTORIES THAT USE ENERGY????? WITH SMOKE STACKS??

UNBELIEVABLE.

jesus hail marry.

[certifiedjatt]

Do tax dollars not already pay for these things? If this is a strict argument about externality, then simply take a portion of what the American taxpayer is already paying in taxes and call that a carbon tax. Everybody wins: you and your "externality" camp and the taxpayer. Oh wait, the greedy government doesn't win. Oh well.

well, that won't work because we are already paying income taxes and other consumption taxes. and, c'mon, it's not an "externality camp." externalities isn't an academic concept; it's real. you make it sound like it was invented 8 days ago. no one is arguing that the governmetn is not greedy. no one has yet made an argument that the revenuse of a carbon tax should remain with the government.



Here's a better idea: let's outlaw carbon fuel usage. Then we'll really see an incentive to come up with innovations. Seriously though, the ends do not justify the means, particularly considering the delicate economic circumstances we are in. This is no time to be man-handling the markets with unjust taxation.

Frankly, the logic is just bizarre. It's as if you condone humanity being treated like some sort of rat maze.

it's not the logic that is bizarre. it would be rough to implement a carbon tax under conditions such as those that persist today. but now we are looking at macroeconomic variables and carbon tax would be just one of those. the argument is on the effectiveness of the carbon tax to do what it is intended to do: curb carbon emissions. it is unfair to judge its effectiveness by how it impacts other economic variables. that's why you have researchers who research "effects of carbon tax on------------, and ---------".

[Enlightened Coelacanth]

i can assure you that if you took a poll on TT to determine the biggest ignoramus here , you would be given highest honors. sometimes, it pays dividends to listen to what people have to say about you, especially when there's a consensus among them.If I ever see such a consensus I will let you know. As it is, your attempt to take your opinion and make it a universal is far from bright or even handed.



ummmm...genius...where did i say the government's revenuse come back to teh manufacturer. and that THAT transfer is the cause of innovation. you should read my lecture carefully because i'm going to explian how private sector innovation would work in the case of a carbon tax. after reading this, i want you to man up and say "crap, there ARE economic sequences i cannot understand. thus, i do not know and understand everything." you don't even have to apologize to me. ok? you ready, kid?? ok here goes, genius.All your insults and simple minded paternalistic put downs would carry so much more weight if you would just learn some simple English grammar, punctuation and spelling skills. As it is you just seem like an eighth grader trying to get the teacher's goat.

1. many firms in the market, producing product A, identical product (or each firm profuces a very similar product. let's say deodrant or a white shirt or pencils or lamps or something).
2. carbon tax is levied that impacts the production of Product A
3. some firms can't pay for the carbon tax. they must raise prices to compensate their new costs.You can stop right there, professor.
I'm not aware of any company anywhere that "pays" taxes. They simply pass the fee onto the consumer as part of their production costs.
It's a simple economic fact of life. But please go on. The education I'm getting is so illuminating.


4. market prices go up as the cost structure of all firms go up.
5. firms stop making above normal profit (look that up), or incur substantial losses in profit.IF the costs of all firms go up (despite what you said earlier) at a relative rate to reflect the tax they are forced to cover how does that change the profit line they had before such a tax? It doesn't make sense. If all pencil makers are forced to charge a dollar more for their pencils (to recoup the taxes levied by government on them) how would that change the relative profits they had before such a tax?

6. one firm realizes that the only way to make profit is to lower the cost of production. so, it decides to lower its marginal cost by a certain amount so that it is lower than its competitor. it then can charge a lower price.Your argument has been wobbling. Now it's fallen over because you assume things not in evidence. One firm is suddenly unprofitable because it passed on a tax all like manufacturers must shoulder? Why so?


7. people start buying product A from the above firm because of a lower price.


8. the second firm realizes, "holy crap, i gotta lower my costs." so it too lowers its costs, so that it is even lower than the previously mentioned firm. it's new price is even lower than the prviously mentioend fimr. people start buying product A from this firm.
9. firm mentioned in number 6, does what firm mentioned in number 8 does. and the sequence continues.
10. some firms naturally close because they can't keep lowering their prices. sad, but reality.
11. now, let's say two giant firms remain (say Dell and Compaq).
12. they know that they can't lower their prices any more. what's the solution???
13. they hire geniuses from MIT and Harvard to figure out how to make their product better so that they can improve Product A.
14. Dell gets lucky and comes to a breakthrough first. Now, Dell controls the market for a BETTER product A.Sorry. None of that made sense because of logical flaws in structure beginning at about point number three.


i challenge you to find the word government transfers in that sequene of events.

good bye. pick up a freakin' book once in a while instead of reciting blogs and newspaper articles.I challenge you to act like an adult and cut your junior high insults, make an argument that holds any water, and to learn some basic rules of spelling and the English language.
I give your post about a four (out of ten). You really kneecapped your own efforts. Sorry.

[certifiedjatt]

All your insults and simple minded paternalistic put downs would carry so much more weight if you would just learn some simple English grammar, punctuation and spelling skills. As it is you just seem like an eighth grader trying to get the teacher's goat.

wHEN all elSE fails, reSort; to gramer ans splngin.

You can stop right there professor.
I'm not aware of any company anywhere that "pays" taxes. They simply pass the fee onto the consumer as part of their production costs.
It's a simple economic fact of life. But please go on. The education I'm getting is so illuminating.

what happens when you pass on the costs to the consumer? your prices go up. what happens when the prices go up? consumers buy less. what happens when they buy less? you get less money. however, the carbon tax is charged on EMISSIONS, not per UNIT of goods sold or produced. do you even know how a carbon tax works??? it's a proportional tax on production on each unit of EMISSION. every firm in the world has optimal levels of production, and a diminishing rate of return. passing the costs onto the consumer will only work as long as the firms remain withint their optimal production levels. however, if the price is high enough, they will fall out of this zone. and will have to incur the costs themselves. which is why (as you said in another post) the small businesses will be hurt, becuase their threshold is lower than bigger firms. i.e., their economies of scale are smaller than bigger firms. it is here that the complete lack of understanding on your part of how economics works becomes evident. do you know what would cause the firms YOU mentioned to go out of business????? it seems, as always, that you're regurgitating what you read, without anyyyyyyyyyyy intellectual input.

Edit:
i have thought about this and decided i am going to explain the above, that is, explain YOUR argument (small business being hurt)for YOUR understanding. you can dismiss it because you think i'm lecturing you, or you can try to understand it.

a company can pass on the costs to the consumers, but only to a point. suppose you make bread. before the carbon tax, you sell the loaf of bread at $1 each, and sell 60 loaves of bread a month. for simplicity, we'll ignore other costs (wont' change the argument). assume that before the carbon tax, your production costs are .$50 per loaf of bread. your profit would be $60-$30, or $30 a month.

now, enter carbon tax. let's say it's a unit tax, not a proportional tax (won't change the argument in this case). let's say you emit 50 tonnes of carbon a month producing the bread. and the carbon tax requires you to pay $.30 per ton. so now, you owe $15 in taxes per month. your total costs have gone up to $45 ($30 + 15). now your profits are only $15. but, as you say, and as we agree, you pass the costs to the consumer. now you charge them $1.25 (original price + cost of carbon tax per loaf of bread). the cost of carbon tax per loaf of bread is calculated by taking the total cost of tax and dividing it by the number of loaves produced. so, $15/60 = $.25.

Profits = Revenues - Costs

Revenues= $1.25*60 = 75
Costs (production) = $30
(Added carbon tax) = $15

Total Profits= 75-45 = $30. So, everything works out. the firm acts like a middle man and doesn't really "pay" the tax. true enough.

But hold on. do you know what was ignored??? the answer will explain why small businesses will be hurt by such taxes (which is what YOU wrote in another post, evidently without understanding the mechanism. deny it all you want now.)

what is ignored is the price elasticity of demand. given the increase in price, the loaves of bread needed will almost certainly decline. as such, the above firm will probably sell <60 units of bread and make less profit.

now, let's say there are many firms producing. so it's not a monopoly. in order for firms to stay open, they must at least break even. the break-even point up there is 36 units. if you can't figure that out, too bad. as long as people are demanding 36 units of bread loafs, a firm will stay in business and merely act like a middle man for the carbon tax. but there are two issues with this:

1. what happens if <36 units are needed?
2. what happens if it costs the firms too much to produce <36 units (economies of scale/optimal production levels)? this happens if the firm has invested in capital equipment that costs too much to run at X units, but breaks even at X+1 units (it can cost too much again at X+y units where y is beyond the rate of diminishing returns.) X+1 units would be optimal level of production.

In either case, the end result is lower revenue. in the first case, since the firm still needs to open the plant, turn on the equipment, pay the employees (firing them will lower its marginal cost leading to a price war) etc, it has to produce a minimum units. with capital equipment, you have to produce a minimum amount before you get to see the benefits of it. otherwise, you're just wasting your money. so, it is very probable that the firm may need to produce 40 units for it to even make sense to turn on equipment or have staff. however, it's selling only 36. but, the carbon tax is charged on 40 units (whatever the emission level would be). in this case, the firm IS NOT acting like the middle man, but financing the tax from its own pockets. bigger firms can sustain this cost, or at least do so longer. which is why they're less vulnerable to it.

or...the firm can close. and that's why smal lbusinesses will be hurt. you should thank me for explainging YOUR argument. this is why you can pass on the costs to the consumer to a certain point. the extent to which you can do this depends on how deep yoru pockets are as a firm. as such, you are not the middle man in all cass.


IF the costs of all firms go up (despite what you said earlier) at a relative rate to reflect the tax they are forced to cover how does that change the profit line they had before such a tax? It doesn't make sense. If all pencil makers are forced to charge a dollar more for their pencils (to recoup the taxes levied by government on them) how would that change the relative profits they had before such a tax?

SUPPLY AND DEMAND!! HOLY MOTHER OF COW!! read my comment above of how prices impact demand. I ENCOURAGE you learn some basic economics--not newspaper economics, but real economics. please. i beg of you.

Your argument has been wobbling. Now it's fallen over because you assume things not in evidence. One firm is suddenly unprofitable because it passed on a tax all like manufacturers must shoulder? Why so?.

i don't understand this...

i'm going to leave you to yoru devices and sincerely hope that you buy a basic, introductory economics book to understand the dynamics of the market, not just examples from periodicals. seriously. you would do yourself a favor.

[Trainer]

i don't understand this...

i'm going to leave you to yoru devices and sincerely hope that you buy a basic, introductory economics book to understand the dynamics of the market, not just examples from periodicals. seriously. you would do yourself a favor.

You lasted quite a while CJ. If he understands this, the cognitive dissonance must be unbearable. But that's the optimistic view. The fact is, he's probably just too dense to grasp it.

[certifiedjatt]

You lasted quite a while CJ. If he understands this, the cognitive dissonance must be unbearable. But that's the optimistic view. The fact is, he's probably just too dense to grasp it.

i do owe him lots of gratitude for refreshing some economic concepts i was first exposed to in my first semester of college. many months ago when i first became a member and read his posts, i thought he was just violently enthusiastic and that was the reason he couldn't see the others' point of view. but recently i've realized that he is in fact dense.

[stormholloway]

i dont' get your example. why would you flush money down the toilet???i don't get why you wouldn't pay for the bread....??? how would that be fine in my world??? i seriously don't get it. i'm now 100% sure you dont' know what externalities are, and what a market system is. again, i'm not saying that to be condescending one bit but i think you should do some serious studying.

This really isn't that hard to grasp. And I find it amazing that you basically reiterate my hypothetical situation below even though you say you don't get my example!

And yes, you are being condescending. I know what external costs are.

forget the government for a second. the purpose of a carbon tax is TO INTERNALIZE AN EXTERNALITY! even though what i'm about to say seems like it's related to your bread example, it isn't: after you pay the carbon tax, the government CAN JUST BURN IT. the point is, now the externality is internalized because the prices reflect the true cost of a transaction/production. this would indicate a true supply and demand. and thus, a true price/good equilibrium.

The purpose of the carbon tax is to internalize an externality? Well, guess what? That doesn't mean a thing, friend. I haven't heard an example of how such a system can't be sustained in the long term, and your whole argument is based on the idea that it can't be. War is a business that produces more external costs than any other and this business has been sustained for millenia.

How can you go from not understanding my bread example to repeating my bread example in different words? You're saying it doesn't matter where the money goes as long as the person pays what it really costs. As long as the guy at the store buys the bread and pays what it really costs, it doesn't matter where he puts the money.

I've said this a thousand times by now: the external costs of carbon emissions cannot be quantified. Your argument that "pollution can't be good for you" is insufficient. You've spent a lot of time attempting to explain the concept of external costs, which doesn't need explaining, and no time actually proving that these emissions even have external costs or identifying them specifically. Do you believe this part of the argument to be irrelevant?


we are not arguign over where or HOW the money generated from the carbon tax is best spent. that is an entirely new topic.

Right. Like you said, the government can burn it. I'd say that more or less destroys your argument. This doesn't accomplish anything except satisfy the requirements of an economic theory. I haven't seen an argument that putting more burdens on the market is worth this.

[stormholloway]

the argument is on the effectiveness of the carbon tax to do what it is intended to do: curb carbon emissions.

I'll make this simple: why?

it is unfair to judge its effectiveness by how it impacts other economic variables. that's why you have researchers who research "effects of carbon tax on------------, and ---------".

It's sort of ironic. Your argument is based on external costs, yet the costs of those not directly involved in the carbon tax transaction don't matter. Looking at these external costs is "unfair". You believe that since the carbon tax internalizes external costs than any effect the carbon tax has on disinterested parties is irrelevant simply based on some equilibrium that has been created by this internalization.

Still, your biggest problem is that you have to prove these external costs.

[certifiedjatt]

I'll make this simple: why?
why what??? you should have made it simpler i guess! why is the effectiveness of the carbon tax based on its ability to curb emissions??



It's sort of ironic. Your argument is based on external costs, yet the costs of those not directly involved in the carbon tax transaction don't matter. Looking at these external costs is "unfair". You believe that since the carbon tax internalizes external costs than any effect the carbon tax has on disinterested parties is irrelevant simply based on some equilibrium that has been created by this internalization.

i didn't say those directly involved in the transactions of carbon tax don't matter. if i said it somewhere in different words, than i was most surely trying to say something else.

and no no...the impact on disinterested parties (i don't know if disinterested is the right word) is not irrelevant. but, once again, it isn't the job of the carbon tax to address these consequences. once gain, the carbon tax's job is to curb emissions (i NEVER said it actually does! this is why i said many times that to measure its effectiveness, we would have to see whether it actually curbs emissions). if there are impacts on "disinterested parties", than there should be DIFFERENT instrument to address those impacts. i never--nor did any one else--wrote that carbon tax was simple. economic instruments as well as public policy, as you surely know, is messy and often has a domino effect. one policy is going to impact some other, seemingly unrelated area. and then that will impact something else. but we cannot judge a policy's effectiveness based on multiple variables, if it is designed to impact only one.

Still, your biggest problem is that you have to prove these external costs.

ohh agreed! but Storm, that is a scientific issue, not an economic one. it is IMPOSSIBLE to say that the reason i have asthma is because the blue mazda miata license plate Ac7thYl emitted .45 tonnes of carbon and 95% of those entered my lungs and caused me to incur $4573 in medical expense plus interest over the last 4 years...

given the nature of fluid nature of emissions, it is also impossible to link one particular plant with the impact it has on other people. but again, that's a science issue. economists are not scientists.

a scientists will tell an economist, 'hey, emissions suck. plus, no one right now feels accountable for them. what do i do?" economist will be like "dude, i got an idea. let me draw some downward and upward sloping curves and see where they intersect and then let me shift up some curves to find a new intersection point. THAT is your new price! voila!"

my argument for the carbon tax is:
1. based on the assumption that emissions are bad
2. purely based on economics, not politics, social values, ethics, morals or feelings.

[certifiedjatt]

This really isn't that hard to grasp. And I find it amazing that you basically reiterate my hypothetical situation below even though you say you don't get my example!

but my example is different. in your example (under my current misunderstanding of it), you're not paying the party from whom you acquired something. the price on the bread is not an indirect cost. that is priced in the market. so you're stealing. my example is drastically different. in my example, the revenues the government gets are from indirect costs; the cost of the goods/services have already been accounted for in the market.

And yes, you are being condescending. I know what external costs are.
ok than i apologize. as i mentioned, i wasn't trying to be deliberately condescending. but i can see how explaining things line by line can appear as such. but on the bright side, maybe someone who didn't know what they were before, knows now.

The purpose of the carbon tax is to internalize an externality? Well, guess what? That doesn't mean a thing, friend. I haven't heard an example of how such a system can't be sustained in the long term, and your whole argument is based on the idea that it can't be. War is a business that produces more external costs than any other and this business has been sustained for millenia.

i'm assuming you meant ''can be''. ok, it does mean a thing. just because we don't have the right tools to make it effective, does not mean that the concept has no instrinsic value. it has no value now only because we can't implement it effectively. i never said it CAN be sustained. war is soooooooo different, though, Storm. i dont know which external costs of wars you're talking about so i won't cloud my post with assumptions. if you share what you meant, i can share how i think war and carbon emissions and the resulting external costs may be different. there may be some or many similarities!


How can you go from not understanding my bread example to repeating my bread example in different words? You're saying it doesn't matter where the money goes as long as the person pays what it really costs. As long as the guy at the store buys the bread and pays what it really costs, it doesn't matter where he puts the money.

so i did understand it right. as i said before, in your example, the producer didn't get anything. the consumption of bread itself is not an externality, which is why bread is priced in the market. so, you have to pay for the bread because it's the Price. externalities are by definition, NOT priced.

I've said this a thousand times by now: the external costs of carbon emissions cannot be quantified. Your argument that "pollution can't be good for you" is insufficient. You've spent a lot of time attempting to explain the concept of external costs, which doesn't need explaining, and no time actually proving that these emissions even have external costs or identifying them specifically. Do you believe this part of the argument to be irrelevant?

i am arguing for the tax under the ASSUMPTIOn that the costs can be quantified. i didn't say that we can actually do it. but again, that is a scientific/innovation issue. however, for now, the most reasonable proxy is to price the emissions, versus the specific costs. it's similar to any othe type of pricing really. when a producer makes a product, there are clear costs (inputs, labour etc) and then his desires for more money. that desire may be quantifiable to him, but it's totally arbitrary. still, we pay the price for that good, a price that has producer's desires in it. it's similar with pricing emissions--it's just a proxy for the external costs.

so no, i don't find fact that i have not proven there are external costs to the emissions and identifying them to be irrelevant at all! i think that's highly presumptive on your part. i am arguing on the economic validity of a carbon tax, its purpose. i wish i could think of a good analogy to address this issue but for the moment ic an't.



Right. Like you said, the government can burn it. I'd say that more or less destroys your argument. This doesn't accomplish anything except satisfy the requirements of an economic theory. I haven't seen an argument that putting more burdens on the market is worth this.

it doesn't destroy the argument because people have incurred those extra costs already. there surely will be outrage, but, thats'a political phenomenon. in economics, a person is referred to as a "rational agent" or "utility maximizing agent". that should tell you how distanced it is from feelings and society. as bad as it is, there are some critical benefits, like determining whether an economic policy can in fact do what it is designed to do by exluding all other variables that can validate it.

i don't know what you mean by 'worth' it? worth it meaning socially? health and wellness? or economically???

if you mean economically, than i don't know if it is worth it at a macro level. obviously, enforcing a carbon tax is going to have impact on the economy. but, and pardon the condescensions (not intentional!) in the following:

1. carbon tax is meant to control a negative externality
2. a negative exernality means that there is overproduction of the good and overconsumption
3. it also means that the price and cost is too low (which is why we overconsume and overproduce)
4. a fee on this externality will increase the cost and price and reveal the TRUE equilibrium.

that's it. ok i got a somewhat good example. in some stores, they'll have a sign like "shoplifting is bad...it causes us to charge higher prices to make up for the losses we incur". it's sort of like that.

you can judge a carbon tax only on its ability to control the externality. that's it. it may be TERRIBLE for the economy as a whole! but, its own economics are sound and fundamental.

[stormholloway]

but my example is different. in your example (under my current misunderstanding of it), you're not paying the party from whom you acquired something. the price on the bread is not an indirect cost. that is priced in the market. so you're stealing. my example is drastically different. in my example, the revenues the government gets are from indirect costs; the cost of the goods/services have already been accounted for in the market.

I wasn't using the bread analogy as a literal example. You're saying it doesn't matter where the money goes that is taken from the party creating external costs, but this is no different than anything other economic format. It's economics either way. Either a party is compensated or not. You're saying it doesn't matter if the affected party (whether it be a party that inhales smog or loses bread) is recompensed.

i'm assuming you meant ''can be''. ok, it does mean a thing. just because we don't have the right tools to make it effective, does not mean that the concept has no instrinsic value. it has no value now only because we can't implement it effectively. i never said it CAN be sustained. war is soooooooo different, though, Storm. i dont know which external costs of wars you're talking about so i won't cloud my post with assumptions. if you share what you meant, i can share how i think war and carbon emissions and the resulting external costs may be different. there may be some or many similarities!

I think you misunderstood because I wasn't clear enough. You're claiming that a system with unrectified external costs can't be sustained in the long term, and that's the reason for the carbon tax. The fear is such a system can't be sustained in the long term. If a carbon tax is to be implemented because a system that doesn't internalize these costs can't be sustained, the burden is on you to prove that it can't be sustained. Do you have an example of an economic system that failed because of it didn't internalize costs? I ask this genuinely.

i am arguing for the tax under the ASSUMPTIOn that the costs can be quantified.

I see. Then I suppose I'll do the same for the sake of the argument, but please keep in mind that this assumption is a big one. I think my butterfly effect point works quite well here. If such external costs should be internalized in the form of tax then all such "ripple effect" costs should be taxed for the sake of consistency. All or none.

you can judge a carbon tax only on its ability to control the externality. that's it. it may be TERRIBLE for the economy as a whole! but, its own economics are sound and fundamental.

So this is the purpose of the carbon tax. Carbon emissions however, are a direct by-product of production, i.e. growth. In the end, the carbon tax limits growth. My question now is: why do we need to control this externality?

In the end, you could apply this economic theory to support the extinction of the human species. Since every human being is responsible for external costs and killing them all would completely eliminate these costs, all humans should be killed. While your carbon tax "seeks to control external costs" my extinction idea eliminates them forever.

[certifiedjatt]

this is probably the most productive debate i've had in a long while! you're bringing up the incompleteness in my argument, and in return, i get to recall some concepts in the process of addressing the incompleteness.

I wasn't using the bread analogy as a literal example. You're saying it doesn't matter where the money goes that is taken from the party creating external costs, but this is no different than anything other economic format. It's economics either way. Either a party is compensated or not. You're saying it doesn't matter if the affected party (whether it be a party that inhales smog or loses bread) is recompensed.

right. i am saying that it doesn't matter if the party that is adversely affected AND is a bystander is directly compensated. that's key. i couldn't see the external costs in your bread example, though because the bread seller is not a bystander. the problem with the bread example is that the person who lost the bread (i.e., the bread seller) is not paid the price of the bread. the price of the bread, hence, is NOT an externality by definition. bread is part of the market; whereas an externality is NOT. i don't think the crux of your argument rests on the bread example so we'll just leave it at that!:)

I think you misunderstood because I wasn't clear enough. You're claiming that a system with unrectified external costs can't be sustained in the long term, and that's the reason for the carbon tax. The fear is such a system can't be sustained in the long term. If a carbon tax is to be implemented because a system that doesn't internalize these costs can't be sustained, the burden is on you to prove that it can't be sustained. Do you have an example of an economic system that failed because of it didn't internalize costs? I ask this genuinely.

ahhh ok. now i get it. yes, i am claiming that a system that does not internalize external costs cannot be maintained in the long run. the "long run" however, can be VERY long. the reason is that many effects take centuries (climate change) to develop. so, it may seem that a system is running fine, but in fact, things are happening that may not become evident until much later. at this point, the system may suffer catastrophic failure. take AIDS for example, or cancer. after getting infect with HIV, it can take a decade for a person to show symptoms of AIDS. given the lifespan of a person on average, i think it's like 70 years or so, that's more than 14% of a person's lifetime gone without any sing of trouble. it's the same with economies, i guess!

i personally do not subscribe to the anthropogenic climate change hypothesis---yet. only becuase i have not seen (actually, i don't have the ability to understand) any unequivocal arguments. but, i can see how it MIGHT be true. for a similar reason, i would not support a carbon tax as of now. it is impossible to come up with a feasible tax rate. it is currently impossible to isolate carbon emissions as the causal variable in climate change (perhaps because i'm skeptical, but mostly because i don't have the necessary information or technical knowledge). it is also impossible to isolate one particular industry from another. for exmaple, maybe emissions from cars are more responsible for climate change/asthma/whatever than emissions from factories. so, car emissions should be taxed more. these are all critical handicaps. however, the central point of the carbon tax is to ADDRESS an externality, or the way i see it, bring people to pay attention to social/external costs. perhaps we can voluntarily drive less or consumer fewer plastics. again, i'm no environmentalist, but i can see how my actions can impact other people--people i may never see or hear of!

i honeslty don't know of an economic system (city/country/province/state) that failed because it didn't enforce internalization of external costs on industires. so the only examples i can give you are small analogies which are probably not a good way to demonstrate something.

however, companies (which can certainly be looked as economic systems) are great examples of failing to internalize costs or successfully internalizing costs. this is why they get sued and settle...


I see. Then I suppose I'll do the same for the sake of the argument, but please keep in mind that this assumption is a big one. I think my butterfly effect point works quite well here. If such external costs should be internalized in the form of tax then all such "ripple effect" costs should be taxed for the sake of consistency. All or none.

ohh it's a HUGE assumption...as it is based on CURRENT data. but data change all the time. who knows? maybe 50 years from now, there will be unanimous consenus on carbon emissions as causal variable in climate change. that's why it's good to come up with the theory now so that it can be applied later (simplistic, i know, but still logical, i think.)

the butter fly effect fits in very well for sure! and you got my vote for the 'consistency' recommendation! but that's where politics come in and social/moral values begin to play a role. both are often antithetical to economics, though!

So this is the purpose of the carbon tax. Carbon emissions however, are a direct by-product of production, i.e. growth. In the end, the carbon tax limits growth. My question now is: why do we need to control this externality?

carbon tax MAY limit growth but only temporarily. eventually, companies will survive and grwoth will once again be on a balanced growth path.there is lots of data on how, even if a country invests heavily, it will eventually come back down to its "balanced growth path." it's the same with individual companies. in the short run (decade, 2 decade! 3 decades...) companies will take a hit, but, entrepreneurs are naturally built to survive. we went from tapes to dvds to blue ray or whatever. from gigantic cd players to mp3 players the size of a pinky!

we need to control the negative externality because it is a negative impact on people--by definition.


In the end, you could apply this economic theory to support the extinction of the human species. Since every human being is responsible for external costs and killing them all would completely eliminate these costs, all humans should be killed. While your carbon tax "seeks to control external costs" my extinction idea eliminates them forever.

nope! here's why. macroeconomics is concerned with efficiency at a macrolevel, which means it would have to include many many many variables. so, a carbon tax in itself may eliminate all emissions and thus be 100% efficient (HIIIGGHLY stylized). however, that does not mean it is an efficient instrumetn for the entire economy.

pretty much all of economics comes down to efficiency. you probably know since you seem well read, that it doesn't make sense to do something beyond a level at which your marginal costs of doing that thing exceed yoru marginal revenues/benefit. marginal meaning costs/revenus for the next unit (explaining for someone else's understanding). with carbon tax, there is an "efficient" tax rate. at this tax rate, the externality is not completely eliminated but is at an acceptable level (society at large would define what is acceptable.). at this rate, or at this POINT, producing one fewer "unit" of the thing that is causing the externality is bad for society, as is producing one more. usually, the ''acceptability'' would depend on whether society can properly weigh the beneifts of growth with the costs of growth. as i said earlier, finding this tax rate is almost impossible--which is why it is infeasible right now.

this is also why killing everyone wouldn't be good from an economist's point of view. while you've eliminated the externality, kyou've also eliminated production. so it is not efficient because there are no benefits.

tedious and probably a bit evasive, i know! but there really is a lot of merit. do you know the Coase Theorem??? it's pretty interesting way to look to externalities that does not involve the government beyond assigning property rights. you should definitely check it out. there are lots of BIG assumptions in that as well (no transations costs) but it's a good tool for enahancing understandings about externalities and how societies can address them.

[stormholloway]

Ok, for the sake of time and space on the page, I'll summarize some points.

Ultimately, this system is argued to be unsustainable in the long term on the basis of climate change. This is the reason for the carbon tax, which seeks to internalize external costs caused by carbon emissions. Being extremely skeptical of anthropogenic climate change, this is why I've always been against the carbon tax. In fact, I may have been the first to bring this subject up a while back while arguing about global warming (back patting).

we need to control the negative externality because it is a negative impact on people--by definition.

If the carbon tax is essentially being implemented to reduce negative impacts on people, then the negative impacts created by the carbon tax itself must be considered at the same time. I realize that the negative impacts of the carbon tax wouldn't be considered external costs, but rather natural side-effects of an evolving marketplace, but ultimately if the whole objective is to minimize negatives on the people, then the carbon tax fails.

Also, if society determines what tax rate is deemed acceptable, then it could just as easily determine 0% to be acceptable though governments would surely disagree. In my opinion, the negative impact of the tax rate, no matter how small, will always outweigh the external costs. If we were talking about landmine production this might be a different case, but we're not.

this is also why killing everyone wouldn't be good from an economist's point of view. while you've eliminated the externality, kyou've also eliminated production. so it is not efficient because there are no benefits.

But keep in mind there is also no consumption. You don't need production if there are no consumers. Economics only seeks to satisfy demand.

Overall, I think you've supported the carbon tax as well as one can. There is logic is there (assuming certain variables, such as climate change *ick*). In the end it will be looked at from all angles and not just in this strict economic sense. The overall effect it would have, particularly in developing nations, would be negative in my opinion.