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I would be, except I'm not a leftie. I remember being called a hopeless rightwinger for advocating market based approaches to pollution, back when such were new. For being a reactionary for thinking most production should be in the private sector, even some things that were traditionally in the public sector in most of the civilized world. I have friends I respect who are lefties, as I have friends I respect who are Christians. I am no more a leftie because I support a limited welfare state and selective interventions where there are fairly clear market failures, than I am Christian because I read the bible and pray.
I would be, except I'm not a leftie. I remember being called a hopeless rightwinger for advocating market based approaches to pollution, back when such were new.
Well, there was all that Nobel Prize hoopla over such notions when they first emerged from the usual gang at the Chicago School. As time passed, however, they all seemed to degrade into what they seem always to degrade into -- elegant graphs of ideas that rather consistently fail to produce the proposed effects in the real world. Not sure you'd be a right-winger for having advocated those ideas back in the day, but you probably would be if you did so today.
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Originally Posted by brooklynborndad
...For being a reactionary for thinking most production should be in the private sector, even some things that were traditionally in the public sector in most of the civilized world.
The public sector excels at producing public goods and services -- those, for example, that are not divisible and have no discrete point of sale. The private sector is simply not equipped to address such needs. The unaided private sector also manages to fail at producing some needed goods and services efficiently. Natural monoplies are one example. When these can be provided with greater efficiency and therefore at lower cost with some public sector guidance, regulation, intervention, or outright control, then those are the ways to go. Trust the private sector to feed the markets that it is good at feeding. Keep them out of the ones where they are bound to just muck things up.
Well, there was all that Nobel Prize hoopla over such notions when they first emerged from the usual gang at the Chicago School. As time passed, however, they all seemed to degrade into what they seem always to degrade into -- elegant graphs of ideas that rather consistently fail to produce the proposed effects in the real world. Not sure you'd be a right-winger for having advocated those ideas back in the day, but you probably would be if you did so today.
sulfur dioxide pricing has been the law in the USA since the clean air act of 1990. AFAIK its worked out quite well.
I beleive a similar market based approach, using either an emissions trading scheme (cap and trade) or simply pricing carbon, is the optimal approach to dealing with GHGs today Supporters of that include Paul Krugman The textbook economics of cap-and-trade - NYTimes.com
If I am a right winger, I am at least in good company, with Krugman, Delong, et al. The idea DID get a lot of oomph from the work of Coase, who WAS Chicago School. It was very much based in mainstream neoclassical concepts though. That of course was back when the Chicago School was sane.
The public sector excels at producing public goods and services -- those, for example, that are not divisible and have no discrete point of sale. The private sector is simply not equipped to address such needs. .
I would think its clear from the examples I cited that I was thinking of goods and services for which there is a market, not pure public services. Again, I was trying to distinguish a mixed economy from capitalism. Adam Smith famously enumerated public goods - I think it would be misleading to say that Adam Smith was thereby advocating a mixed economy.
The latter would be true if the price-elasticity of demand for petroleum were relatively high over significant potential price ranges. All research tends to suggest that the price-elasticity of demand for petroleum is quite low over most potential price ranges.
oh dear. No his problem is more basic.
first off @ $100 a barrel - US oil consumption is about 18 million Barrels per day, or about 6 billion per year. Hence $600 billion in revenue per year. that less than 2/3 of total federal income tax revenue, assuming quantity demanded stays exactly the same. Thats excluding all other federal taxes (like social security, and other taxes) and state and local taxes. ANd federal borrowing.
But demand likely WOULD drop - not only does VMT recently show some elasticity with respect to prices, but such taxation would lead to fuel substitution in transportation, and impact the remaining non transportation usage of oil. So it would be less revenue. Maybe far less.
But would it lower world oil prices? Total world oil production is almost 90 million barrels a day. US consumption is only 20% of that. If consumption in the US dropped by one half (which would kill his already shaky revenue dreams) that would be a drop in global quantity demanded of only 10%. To expect the world price of oil to drop by much more than say 10% in response is to expect global oil supply to be less elastic wrt to price than I imagine it is.
sulfur dioxide pricing has been the law in the USA since the clean air act of 1990. AFAIK its worked out quite well.
Yes, and that's certainly a horse, but not one of the same color that I was thinking of. The acid rain program actually has a lot of elements, most of which are EPA-imposed, not market-based. The issuance and trading of allowances is essentially a market-based initiative within a broader iniitiative, one designed to create for producers existing at the time a high degree of flexibility in deciding how best to comply with the imposed requirements over time. The system overall has worked fairly well and allowances have consistently traded at prices below what was projected for them. But the key developments were drops in the price of low-sulfur coal and in the cost of rail transport along with what seems to have been a one-time leap forward in scrubber technology. Allowances have certainly been a valuable and helpful thing to many individual producers, but their overall effect on reducing sulfur-dioxide and related pollution has not been so significant.
Quote:
Originally Posted by brooklynborndad
I beleive a similar market based approach, using either an emissions trading scheme (cap and trade) or simply pricing carbon, is the optimal approach to dealing with GHGs today.
As I recently wrote in some thread if not this one, markets are a machine that produces a result. Where that result is good, the machine can save a lot of time and money and so should be relied upon. But the result is not always good. The cap-and-trade model is good, but it would depend to some degree on how its markets behave. That can't always be reliably determined in advance.
Quote:
Originally Posted by brooklynborndad
If I am a right winger, I am at least in good company, with Krugman, Delong, et al. The idea DID get a lot of oomph from the work of Coase, who WAS Chicago School.
Yes, Coase was the jockey on that horse I was thinking of.
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Originally Posted by brooklynborndad
It was very much based in mainstream neoclassical concepts though.
So was the work of Marx.
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Originally Posted by brooklynborndad
That of course was back when the Chicago School was sane.
Well, not sane enough to have found their way past those pesky Pigou effects or to have managed to do anything but turn Chile into one of the most polluted countries in the western hemisphere during their 15-year turn at the controls there.
No that would be classical economics, not neoclassical (I use neoclassical to refer to the postwar synthesis of keynesianism and with earlier neoclassical micro). Certainly Marx was well read in and influenced by Smith, Ricardo, Malthus. I suppose there are some policy recs of his that would be as close to those of the classical economists, as Coase's approach to the internalizing of pollution externalities is to the logic of Samuelson, Solow, et al, though I can't think of any.
I am not aware the the UC grads who had a lead role in the chilean economy implemented any sort of emissions trading scheme.
Last edited by brooklynborndad; 06-30-2011 at 03:35 PM..
As I recently wrote in some thread if not this one, markets are a machine that produces a result. Where that result is good, the machine can save a lot of time and money and so should be relied upon. But the result is not always good. The cap-and-trade model is good, but it would depend to some degree on how its markets behave. That can't always be reliably determined in advance.
Of course where there are market failures, they need to be examined, and potentially addressed (with the caveat that sometimes fixing the market failure itself has a negative cost benefit, due to the admin cost of some fixes)
I dont see any particular reason to expect a market failure in emissions GHG trading any more than in any other market. If that is a concern, a carbon tax, which is also a market based approach, would be an alternative.
My point however, was that this
"Well, there was all that Nobel Prize hoopla over such notions when they first emerged from the usual gang at the Chicago School. As time passed, however, they all seemed to degrade into what they seem always to degrade into -- elegant graphs of ideas that rather consistently fail to produce the proposed effects in the real world. Not sure you'd be a right-winger for having advocated those ideas back in the day, but you probably would be if you did so today. "
is incorrect. The Coase theorem has not degraded into graphs that fail to produce proposed effects in the real world. In terms of emissions trading schemes (not its only subject matter), they have been used for SO2, and indeed for CO2 in the EU (where tweaks have been required, but the consensus seems to be to keep it).
I find it odd that you would find me a right winger for advocating an approach that is supported by Profs Krugman and DeLong, and is used by the EU. One need not agree with everything that came out of UC on macro, or even on law and econ, to see useful things that came out of that time and place. To reject such a position or charecterize it as rightwing because of views on macro, or because of what happened in Chile, strikes me as being as rigid and ideological as, well, folks who think that a program to give density bonuses to developers who designate a few affordale units is a form of socialism.
Let me quote a great man
Who cares if the cat is black or white, as long as it catches mice?
Deng Xiaoping
I would think its clear from the examples I cited that I was thinking of goods and services for which there is a market, not pure public services.
There is clearly a market for public goods and services. People very much do want things such as weather reports and inflation numbers and air traffic control. Not to mention defense against all enemies foreign and domestic. But these things can't be efficiently sliced up and sold two-for-a-dollar from behind a table at a flea market. They don't fit that model, so we divvy up the costs of all these public goods and services and pay for them through taxes.
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Originally Posted by brooklynborndad
Again, I was trying to distinguish a mixed economy from capitalism. Adam Smith famously enumerated public goods - I think it would be misleading to say that Adam Smith was thereby advocating a mixed economy.
Capitalism is part of a mixed economy. Capital is an essential ingredient for economic growth and stability, so producing some of it is a good idea. Where people -- though not Adam Smith -- tend to go wrong is in assuming that capitalism calls for the fruits of capital all to be distributed among some tiny clique or other, while the rest of society struggles along at the level of Malthusian subsistence. Smith himself deeply mistrusted capitalists and was pointed in his calls for the wealthy to support the lives of the workers. That, of course, would have been redistribution of wealth. The commie.
I just asked Tone whether this would be possible, and he said he had seen other forums do this (and succeed).
Basically, this thread is intended for respectful discussion of just about anything, so that way we don't have to squelch good discussion (and risk a good thread getting closed). It can't be stickied, though.
Tone, would it be possible to move posts from a thread that's getting respectfully derailed and glue them here?
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Off-Topic thread for C-D Northern Virginia
