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Thursday, October 27, 2016

Matthew Lau: How conservatives who backed carbon taxes got duped

...In reality, much opposition to a carbon tax is not based on ignorance or denial, but primarily on the belief that the potential for catastrophic government failure is far larger than the potential for catastrophic market failure. Or, put another way, the certainty that whatever damage comes from climate change will be less than that caused by the screw-ups politicians will make in their attempts to manage the issue.

Michael Munger, a political scientist at Duke University, has a simple test for those who want a more activist government: “Go ahead, make your argument for what you want the State to do, and what you want the State to be in charge of. Then, go back and look at your statement. Everywhere you said ‘the State,’ delete that phrase and replace it with ‘politicians I actually know, running in electoral systems with voters and interest groups that actually exist.’” Indeed, a critical mistake made by many carbon-tax advocates is an excessive faith in politicians. Economists might be excused for this, but it is harder to let conservative carbon-tax activists off the hook for this error.

When these conservatives demanded 1) carbon taxes; 2) a rollback of regulations; and 3) offsetting tax cuts to keep the policy revenue-neutral, did they not expect that most politicians would take their first suggestion and ignore the other two? By clamouring for pricing emissions, in many cases more loudly than they advocated removing inefficient regulations and lowering taxes, they gave tax-happy politicians the political cover needed to impose a carbon tax...

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