I love the carbon credits system, traded on the stock exchange. It's the most lightweight and capitalistic incentive we can build around polluting externalities.
Ah the irony: and the US government (the US being the pinnacle of capitalist society) is refusing them at every chance. Isn't this what Kyoto was proposing? Has not the US (effectively) killed Kyoto? Whatever carbon trading is taking place in the US, is probably not internationally sanctioned.
The US practices this international tactic of dragging its feet as long as possible, giving time to its companies to catch up with international standards (and to hell with everything else if need be, environment be damned!). At the same time, it will very willingly impose international standards wherever they feel their local companies are at an advantage. This is why lots of European population are skeptical of the TTIP: the US is probably sending us a Trojan horse.
its natural that players will attempt to modify the game (or keep it skewed in their favor) . The externalities have always been there, but some industries have never had to pay for them. I wouldnt be surprised if some industries are not even profitable once you account for their externalities.
But macroenconomic principles mean nothing if you have greed. If one is greedy, then its just a matter of maximizing what's on your plate, with no regard of how much you're taking from others (potentially future generations)
I've read bad things about carbon credits. Specifically that it's inefficient—you now have the overhead of a new market and middlemen making their cut. Whereas revenue neutral carbon tax is a far simpler method that still changes behaviour.
A revenue-neutral carbon tax requires impossible knowledge to implement. Without a market price system, you cannot determine such a tax.
Further, tax changes move at a glacially slow pace compared to the process changes and technological progress that would be natural reactions to increased costs of producing carbon.
I'd love to hear how you rationalize a tax requiring "impossible knowledge to implement". Taxes are a pretty universal way to disincentive economic behavior, the only question seems to be what tax rate to add. But, that seems easily solved.
For example, a carbon tax obviates the need for market pricing, simply set your target, e.g. 20% reduction in carbon use in 10 years, and fix carbon tax increases/decreases tied to that target, so that if you fall behind reaching that target a tax rate increase automatically kicks in for the next year.
I don't say a tax requires impossible knowledge. A revenue neutral tax would be though. The intent there is to achieve economic efficiency, which cannot be determined in the absence of prices. This link provides a pretty good overview of the issues and the extra reading/criticisms are worthwhile[0].
>For example, a carbon tax obviates the need for market pricing, simply set your target, e.g. 20% reduction in carbon use in 10 years, and fix carbon tax increases/decreases tied to that target, so that if you fall behind reaching that target a tax rate increase automatically kicks in for the next year.
This is neither a strategy for implementing a properly revenue neutral tax, nor to drive toward any sort of efficient allocation. It is completely viable, though, if your goal is not revenue neutrality or efficiency.
I do not here make the argument that revenue neutrality or efficiency must be the aim of such governmental action, only that these two specific aims cannot be accomplished by a government imposing taxes.
I see the point made by the economic calculation problem for state planning, but don't see how it applies to a carbon tax as a scheme to incentivize behavior.
Eg. Governments do a lot already to (dis)incentivize behavior through tax policy. Are you saying this doesn't work?
I'll do some further reading on cap and trade, most of my knowledge on this matter is from the book Storms of my Grandchildren, which speaks to the issues against cap and trade at length.
