More misleading salvos in the great carbon tax debate
Professional lost-cause Ralph Nader has found another arena in which to unhelpfully intrude: carbon policy. On the Wall Street Journal op-ed page, no less, he argues for a carbon tax.
I personally have no dog in the carbon tax vs. cap-and-trade fight. It seems pretty clear that either policy can effectively put a price on carbon, and that a lot hinges on the particulars of any proposed system. It also seems clear that cap-and-trade is what we’ll end up with, so the sooner we get started, the better.
But I suspect that most readers of the Wall Street Journal op-ed page don’t share my favorable disposition towards carbon pricing. I suspect that they aren’t pumping their fists in the air and cheering when Nader asks us to “make peace between man and climate” by passing a global carbon tax, “adjusted annually, by a global body,” and designed to transfer $100 billion per year from “we in the rich world” to countries like China.
Rather, I suspect that Nader is playing the useful idiot for WSJ editors when he asserts that cap-and-trade is a form of “unhinged environmental protectionism” and then draws a direct line from Lieberman-Warner through “Washington’s K Street lobbyists” to — wait for it — “massive global depression.”
To be fair, though, this kind of stuff is fairly typical in the carbon tax vs. cap-and-trade debate. The basic problem facing any policy partisan is that there simply isn’t enough daylight between these two carbon pricing schemes, and the meaningful differences that do exist tend to be both fairly abstruse and also dominated in importance by more purely political considerations.
Facing these built-in impediments, Nader’s op-ed plies the usual ground:
1) Say stuff about cap-and-trade that isn’t true:
Cap-and-traders assume, without much justification, that one country can put a price on carbon emissions while another doesn’t without affecting trade or investment decisions.
This phenomenon is called leakage, and I’d be amazed if you could find any knowledgeable source who assumes it doesn’t exist.
2) Allege things about cap-and-trade that apply equally well to a carbon tax:
At the top of the piece, Nader warns darkly that “the Lieberman-Warner Climate Security Act, contains provisions for retaliatory action to be taken against imports from carbon free-riding nations [that] would almost certainly lead to a collapse of the multilateral trading system.” I hadn’t realized Nader was such a staunch advocate of the multilateral trading system, but set that aside for a moment. A few paragraphs later, he touts this feature of his carbon tax proposal: “The stick for carbon free-riding countries would come in the form of incrementally severe penalties, leading up to countervailing duties on carbon-intensive imports.” Retaliatory action vs. countervailing duties. Got that?
Again, the basic issue here is leakage, which is a problem for any carbon pricing scheme regardless of format. Devising a harmonized, global carbon price is primarily a political challenge. Which brings us to …
3) Assume that a carbon tax will magically dispel all of the actual problems that bedevil any politically negotiated carbon pricing scheme:
Special interests will fall in line. China and India will hop on board the love train. Congress will spend the tax revenue wisely and justly. American voters will happily submit. And if any of this sounds unduly optimistic then …
4) Invoke the apocalypse.
Surprisingly, the WSJ piece doesn’t try to draw a line between cap-and-trade and the current financial crisis, a rhetorical leap that some other carbon tax advocates have happily made. Maybe Nader figured the WSJ’s audience wouldn’t go in for vague banker-bashing, so he offered up another form of red meat: trade protectionism-bashing. The fact that villains can be swapped so readily shows just how glib and content-free these criticisms are.
It is, of course, entirely appropriate that people advocate for policies they believe in. Carbon taxes really do have certain advantages over cap-and-trade — and vice versa. I take economists at their word that a carbon tax is the more efficient vehicle, in theory, for reducing carbon emissions. But in the real world the advantages are a lot murkier and anyway we’re not going to get a carbon tax, so it would behoove carbon pricing advocates to stop running a scorched-earth campaign against the next best thing.