I recently flew and had to go through the non-TSA line because my wife doesn't have TSA.
It's possible that the reason we have shitty airport security procedures is that the well off can buy their way out of them. The same way we had shitty COVID policies because they had ZOOM jobs. That if they had to put up with it, the procedures might go away. Of course it's possible that they would remain the same and fewer people would be able to pay to escape. But its clearly a shakedown.
I'm reminded of a similar feeling people get related to "fast pass lanes" at amusement parks. While I don't automatically think its a bad idea to allow people to pay money for time, I'd much prefer that the price of admission were simply higher so that the lines were more reasonable (alternatively, that you had the old system of a certain # of tickets for specific rides). I don't want to have to figure out the fast past lane system and be waking up at 7am or whatever to log into some app to try to snag a slot. I don't want to sit there calculating the optimal level of fast passes to purchase for the day. I don't want to know that if my infant has a poop at the wrong time it will derail the carefully planned schedule that is my only hope.
And I don't want to tell my kids that we are going to be next on a ride we've been waiting in the heat for. Only for a family to come up the fast pass lane and delay our going on the ride next because they skip us. And I have to hear my kids whine and scream and not understand while I followed the advice that "fast pass lanes aren't necessary for young children rides" that they say on their website and yet somehow this young children's ride has a fast pass lane.
I get this with traffic. I get that a commute is something you do every day and you can understand, calculate, and adjust your life choices in response to new and clear financial incentives without too much trouble.
But these other pay to play systems that are too damn complicated and your trapped once you are there create a vast tax on my attention, imagination, empathy, and spontaneity.
The argument usually goes like this: the rich are also the powerful, they have disproportionate influence over decisions affecting the broader public, to include how much to invest in public infrastructure and how much to tax themselves to pay for it. If their wherewithal allows for their personal insulation from the public impact of their decisions, they have both a conflict of interrst and cannot be held accountable for deviating from optimal policy since they are not in the same boat as those without similar means and will not experience the fallout of bad decisions.
Two examples come to mind. One is the case of the liberal activist judge who lets every criminal defendant in his court off on any excuse and with at most a slap on the wrist, but who resides in a distant gates community and doesn't have to live or work or worry about his kids playing in the neighborhoods those defendants will continue to terrorize.
On a more banal level, I once attended a meeting regarding the question of how large should a campus parking garage be built, whether enough money should be spent to allow for as many spots as the anticipated demand such that any employee could just drive up and expect to find a place, or whether it should be much smaller, with limited permits issued by priority, and those without permits forced to buy their own spots off campus or else take cabs or public transit. Maybe one could crunch the economic numbers or do a welfare estimation and the decision might have gone either way. But actually, you already know the decision was to save the money for other things and build the smaller lot, because all the key decision-makers at the table were guaranteed priority executive parking spots regardless. You may say that they will might have felt some compunction or some scrupulous pang of duty and ... lolololol ... I'm joking of course, they didn't hesitate to screw over the lower ranks to fund their own pet projects (mostly corruptly awarding contracts to future employers on the understanding of that future employment).
On such matters there really is some social wisdom to what otherwise world seem pure resentment, which is that unless the disproportionately powerful are made to be a captive audience and have their own skin in the game of the experience of the consequences of their decisions, they will discount the harms experienced by others and make bad decisions for bad reasons.
> I don't want to have to figure out the fast past lane system and be waking up at 7am or whatever to log into some app to try to snag a slot.
Here, I've done the "work" for you.
The system is: if you have a pass, you can book an arrival window for one (1) ride, and you'll be allowed onto that ride if you show up during the window. You can repeat this as often as you like throughout the day, except that you can't book the same ride twice in one day. Disneyland has 14 rides that use the system, so you can use the pass up to 14 times in a day if you want to ride every one of those rides. If not, your limit will be lower.
You cannot ever book a slot in advance. You can't book a slot before you're admitted into the park, and you can't have more than one booking at a time. So there's no such thing as waking up early to try to beat the crowd to a slot, except to the extent that if you actually go to the park early the crowd will be smaller. Smaller enough that you probably won't want to consume your pass at that time, because the regular line is short.
I don't think the system can get a lot simpler than "you can use this once per ride, and if you have nothing booked, you can book one thing".
The fact that you have to reserve a slot suggests that there is more fast pass interest than Disneyland is willing to accommodate. There are two reasons they might limit fast pass arrivals: (1) they make each other slower; (2) they make the regular line slower. I don't think the carefully rationed fast pass arrivals are going to make much of an impact on the regular line. If they do start to do that... fast passes aren't fixed-price products. Disneyland will raise the price.
1) Trick poor people into buying tickets and then realizing they can't actually ride the rides.
2) Get rich people who have committed to being at the park to decide that surge pricing makes sense once you are sunk cost committed.
3) Get childless Disney adults with disposable cash to dump it in the park because they have the free time to exploit this system.
Feels like the same logic I see at the movie theater trying to get people to buy overpriced popcorn or the 7/11 trying to get people to buy cigs and scratch offs. I can smell "spreadsheet asshole praying on human weakness" when I see it.
Hi Bryan, the link at the bottom of the page doesn't lead to Pigou's biography book. Instead, it mistakenly redirects to the youTube video "There Is a Liberal Answer to Elon Musk | The Ezra Klein Show."
> The Pigovian remedy for negative externalities: set taxes equal in magnitude to the severity of the externality — and then leave the market alone. No regulation, no bans.
> The Pigovian remedy for positive externalities: set subsidies equal in magnitude to the severity of the externality — and then leave the market alone. No regulation, no government ownership.
[later]
> governments strongly prefer to directly own industries with (alleged) positive externalities.
These are related observations. There are many, many people who would like to describe themselves as following an economically rational Pigovian policy of taxing some undesirable behavior. You see them everywhere.
But they're all bluffing. When the behavior they're taxing doesn't go away, they point to that as evidence that the tax isn't high enough. If it were high enough, it would 𝘴𝘰𝘭𝘷𝘦 𝘵𝘩𝘦 𝘱𝘳𝘰𝘣𝘭𝘦𝘮, because that's the point of having policies.
Of course this has nothing to do with a Pigovian analysis. Political discourse on Pigovian taxes is essentially parallel to political discourse on the Laffer curve. You decide what you want to do, and then you try to display an academic justification really quickly, before anyone can question the relationship between the policy and the justification. Next topic.
This total lack of any measurement of the size of negative or positive externalities explains why the government needs to own the positive ones directly. There's no problem with advocating for infinitely high taxes while pretending Pigou would have been on your side. But there is a problem with advocating for infinitely high subsidies.
I think the problem is fundamental; more effort devoted to the problem is not going to yield more accurate estimates of the size of externalities in cases where people are unhappy with the status quo. Pigovian taxation and spending is a useless concept.
No one has the price information necessary to calculate the magnitude of any given externality; externalities by definition are extra-market phenomena where a price for the particular benefit or harm involved can't be negotiated. Moreover, a tax or a subsidy isn't neutral with respect to the rest of the economy (at a minimum, the government itself will generate a deadweight loss), and it is highly unlikely that the taxes and subsidies will offset each other.
The actual solution to the externalities problem is the peaceful acquisition of ownership rights and their subsequent enforcement, thus empowering owners to exclude others from imposing harms or extracting benefits without their consent. In that case, a price can be negotiated. Under a system governed by private property rights and voluntary association and exchange, externalities can persist only because the cost of creating and enforcing the relevant property right is more than the benefit of preventing the externality. What that means though is that the cure for the externality is worse than the disease.
I've observed that the climate alarmists (1) have often greatly overestimated the rate of CO2-induced global warming in past IPCC forecasts (likely due to persistent failures to correctly model changes in cloud albedos and poleward thermohaline heat transfers), and (2) never talk about the potential harms of acting on their decarbonization agenda (e.g. letting the planet naturally revert back to a glaciation phase) nor the potential benefits of warming the planet further. Their real goal is to seize and centralize power at the expense of the unprivileged masses, not to make a good faith attempt to calculate and correct externalities. The problem with Pigou's prescriptions, apart from the lack of price information, is that politics is itself inherently a source of costly negative externalities.
Here's an objection to using Pigouvian taxation. No one knows even approximately the dollar value of an externality, which means that no one knows even approximately the level of taxation appropriate. A second objection is this; mandatory taxation is immoral.
He’s aware of these objections (and probably even accepts them pro tanto. But he would agree that they’re less bad than other taxes, so he’s pointing out that the government doesn’t even operate on the more theoretically efficient model.
But should we not try to know? How can you be sure that a greater than zero tax is not optimal. Shouldn't' your preferred policy position be a conclusion, not a premise?
We should not try to know that which cannot possibly be known. It is flatly impossible for anyone to know the future. It isn't even possible for anyone to know whether there is a net cost to increased CO2 in the atmosphere. In fact, the earth is 20% greener today than it was a decade ago. You never hear the climate change warriors mention that, do you? We have zero evidence that the levels of CO2 in the atmosphere are net net harmful for life on earth. Tell me how someone is supposed to know how much to tax CO2 in the name of saving the planet, given just the simple facts I've mentioned. If you don't want to believe me, read David Friedman's numerous writings about this issue.
You do seen to be using some data in you conclusions (“greener than it was a decade ago). Surely you must believe that it is possible to predict and increase in CO2 accumulation in the atmosphere, but in your model the accumulation if neutral if not benign and conclude that the optimal Pigou tax is zero. I’m inclined to go with Nordhaus’s model over yours, but I’m not going to try to persuade you to do the same.
My model is based on about 50 years of noticing that dire predictions about the future have always been wrong. Do you recall in the 70s it was global cooling that was sure gonna get us? That's but one low-hanging-fruit example.
If you recall, we learned that we are technically in an ice age, but a thousands of years long “interglacial period.” This has nothing to do with whether CO2 accumulation the atmosphere will produce costs that it is worth some investments to avoid. I’ll still take Nordhaus over old News/week articles. :)
I take neither Nordhaus or old news week articles. 😊 I prefer the scientific and logical analysis of these people:
David Friedman for the economics. These guys and other like the for the climate science.
1. Richard Lindzen: An American atmospheric physicist and emeritus professor at the Massachusetts Institute of Technology (MIT), Lindzen has questioned the extent of human influence on climate change. He has argued that climate sensitivity to greenhouse gases may be lower than commonly estimated.
2. John Christy: A climatologist and professor of atmospheric science at the University of Alabama in Huntsville, Christy has expressed skepticism regarding the magnitude of human-induced warming. He has highlighted discrepancies between climate models and satellite temperature observations.
3. William Happer: A physicist and professor emeritus at Princeton University, Happer has questioned the risks associated with increased carbon dioxide levels, suggesting that higher CO₂ concentrations could have beneficial effects on plant growth.
The problem with Nordhaus and most other economists doing some kind of cost benefit analysis is that they ignore all the reasons why CBA is not possible at the aggregate level. As one who has done tens of cost benefit analyses for pay, I can't take even Hordhaus seriously.
You have just restated as if discovering the Mediterranean the usual economist's argument f for Pigouvian taxation. The Publick no more hostile to Pigou taxation than to lots of other economist ideas like freer trade, freer immigration, low deficits. [BTW, I don't think the current unpopularity of taxing net CO2 emissions stems from Social Desirability Bias]
Please, yes. I want to be able to pay more and skip lines everywhere, *especially* in cases of bureaucracy.
This is the whole point of valet parking, toll roads, Global Entry and TSA pre, and paying Instacart 2x to shop for you, and we need LOTS more of this.
1. Need your driving license renewed, or a temporary plate or registration? Either go stand in line at the DMV all day, or pay 3x and get it renewed online, instantly - they'll mail you the new one.
2. Have a problem and the only way to resolve it is to navigate an intentionally-adversarial phone tree that is deliberately constructed to make it impossible to get an agent? Pay $20 and you can get a 2nd level agent right away! Pay $40 and we'll make it happen anytime, even outside of business hours!
3. Interacting with somebody who sucks at a given business? Pay $20 and immediately upgrade to interacting with a manager / somebody competent.
4. Waiting at a restaurant? Pay 2x and your food goes to the front of the line in the "priority queue," and your service gets upgraded to at least a top decile server, as ranked by average tip size.
Please businesses take note and make this happen immediately, all of these are obvious low hanging fruit.
I am particularly a fan of getting rich people to pay dramatically more for accelerated government services, as this could very well fund better services for everyone in an absolute sense!
Heck, go all the way. Pay 250k a year, you get to drive in the bus lane or carpool lane by yourself. I am all for giving rich people extremely expensive minor benefits to raise more funds.
> Some defenders, including the Commerce Secretary Howard Lutnick, say that tariffs don't necessarily cause inflation. My view is that these defenders have a point, but not a good one.
> I think it is best to say that tariffs reduce productivity because they prevent the international marketplace from allocating resources to their best use. Lower productivity means lower real incomes. Lower real incomes could take the form of either (1) a higher price level for given nominal incomes or (2) lower nominal incomes for a given price level. Whether (1) or (2) occurs depends largely on monetary policy.
> When Trump critics say that tariffs raise inflation, they are implicitly assuming case (1). That case may be the more likely one, but it is not necessarily the way things will play out.
I generally think of "inflation" as being a fall in the value of the dollar, but let's run with the idea of a rise in the price level instead.
It's unambiguous that the tariff causes a fall in the value of the dollar. After enactment, your one dollar can buy less than it could before; the market has been restricted.
Mankiw's point seems to be that what *might* happen is, the value of the dollar as measured against labor rises sharply - one dollar will now buy a lot more labor than it used to before - and this rise might be so sharp that the value of the dollar as measured against everything but labor stays flat. In this case, the price level doesn't rise and there is "no inflation".
But I don't see how an increase in the value of the dollar against labor, coupled with no change in the value of the dollar against everything else, can add up to an overall fall in the value of the dollar. If I'm taking the average of some set of numbers and the average is negative, one of those numbers must have been negative too.
In answer to my skepticism of the Pigovian approach, ChatGPT offered the following: “In situations where the cost to mitigate harm far exceeds the tax burden relative to a firm’s profitability, relying solely on Pigovian taxes may lead to a situation where harmful practices persist. In such cases, regulations that directly require firms to prevent harm (coupled with effective enforcement) might indeed be a more socially beneficial strategy. Many economists recognize this nuance and argue for a balanced approach that might incorporate both taxes and regulatory measures depending on the context.”
Grok, on the other hand, suggested that “the tax must be calibrated not only to the externality’s severity but also to the producer’s financial context”. This point from Grok seems to suitably address ChatGPT’s concerns about a purely Pigovian approach and my own initial skepticism about it.
In the case of choosing between education systems, how do you see this impacting the quality of the free K-12 option? The rich obviously wouldn't consider this a choice if public and private education had similar quality levels. If the poor cannot afford a decent education, which will likely keeps them poor, wouldn't this destroy social mobility?
I wonder if it’s a fool’s game to try get folks to stop using the word “free” as shorthand for “government provided.” I’ll tackle that once I get everyone to say “progressive “ instead of “liberal.”
I think of it as shorthand for "free at point of service". But you also bring up a good point of how whether this system could even afford to pay for the "free" K-12. How certain are we that this system would generate a profit?
> If the poor cannot afford a decent education, which will likely keeps them poor, wouldn't this destroy social mobility?
Social mobility is fake, an artifact of choosing noisy endpoints and measuring only a single generation. If you look at lineages, all the 0.15 - 0.5 "status persistence" countries like the Scandinavian actually have ~.75 status persistence, and this is true literally all over the world in every country measured.
Greg Clark wrote an entire book about this called The Son Also Rises.
One of the more interesting results from Son Also Rises was the fact that there's basically ZERO change in persistence rates of "social competence," when you look at spans of time that include massive educational changes in the UK, Sweden, the US, and others.
For example, going from "only elites can and do get their kids educated" to "state funded education through high school / undergrad / Phd" drove ZERO change in persistence / social mobility across multiple countries.
This is an additional triangulation point that education is mainly about signaling, and that the trillions spent on it are largely wasted, at least in the sense that we think it drives "more equal opportunity" or "increased social mobility," because apparently that is not true in the aggregate.
> The rich obviously wouldn't consider this a choice if public and private education had similar quality levels.
This is only true in an all-inclusive sense. You're paying for every part of the school, and every part of the school figures into your estimation of whether it's worth it.
As far as the education goes, public and private education already do have similar quality levels. The difference is in the classmates.
Would you agree that there are approximately zero private schools as poor as the worst public schools and that the vast majority of private schools are at least as good as most suburban schools?
I recently flew and had to go through the non-TSA line because my wife doesn't have TSA.
It's possible that the reason we have shitty airport security procedures is that the well off can buy their way out of them. The same way we had shitty COVID policies because they had ZOOM jobs. That if they had to put up with it, the procedures might go away. Of course it's possible that they would remain the same and fewer people would be able to pay to escape. But its clearly a shakedown.
I'm reminded of a similar feeling people get related to "fast pass lanes" at amusement parks. While I don't automatically think its a bad idea to allow people to pay money for time, I'd much prefer that the price of admission were simply higher so that the lines were more reasonable (alternatively, that you had the old system of a certain # of tickets for specific rides). I don't want to have to figure out the fast past lane system and be waking up at 7am or whatever to log into some app to try to snag a slot. I don't want to sit there calculating the optimal level of fast passes to purchase for the day. I don't want to know that if my infant has a poop at the wrong time it will derail the carefully planned schedule that is my only hope.
And I don't want to tell my kids that we are going to be next on a ride we've been waiting in the heat for. Only for a family to come up the fast pass lane and delay our going on the ride next because they skip us. And I have to hear my kids whine and scream and not understand while I followed the advice that "fast pass lanes aren't necessary for young children rides" that they say on their website and yet somehow this young children's ride has a fast pass lane.
I get this with traffic. I get that a commute is something you do every day and you can understand, calculate, and adjust your life choices in response to new and clear financial incentives without too much trouble.
But these other pay to play systems that are too damn complicated and your trapped once you are there create a vast tax on my attention, imagination, empathy, and spontaneity.
The argument usually goes like this: the rich are also the powerful, they have disproportionate influence over decisions affecting the broader public, to include how much to invest in public infrastructure and how much to tax themselves to pay for it. If their wherewithal allows for their personal insulation from the public impact of their decisions, they have both a conflict of interrst and cannot be held accountable for deviating from optimal policy since they are not in the same boat as those without similar means and will not experience the fallout of bad decisions.
Two examples come to mind. One is the case of the liberal activist judge who lets every criminal defendant in his court off on any excuse and with at most a slap on the wrist, but who resides in a distant gates community and doesn't have to live or work or worry about his kids playing in the neighborhoods those defendants will continue to terrorize.
On a more banal level, I once attended a meeting regarding the question of how large should a campus parking garage be built, whether enough money should be spent to allow for as many spots as the anticipated demand such that any employee could just drive up and expect to find a place, or whether it should be much smaller, with limited permits issued by priority, and those without permits forced to buy their own spots off campus or else take cabs or public transit. Maybe one could crunch the economic numbers or do a welfare estimation and the decision might have gone either way. But actually, you already know the decision was to save the money for other things and build the smaller lot, because all the key decision-makers at the table were guaranteed priority executive parking spots regardless. You may say that they will might have felt some compunction or some scrupulous pang of duty and ... lolololol ... I'm joking of course, they didn't hesitate to screw over the lower ranks to fund their own pet projects (mostly corruptly awarding contracts to future employers on the understanding of that future employment).
On such matters there really is some social wisdom to what otherwise world seem pure resentment, which is that unless the disproportionately powerful are made to be a captive audience and have their own skin in the game of the experience of the consequences of their decisions, they will discount the harms experienced by others and make bad decisions for bad reasons.
> I don't want to have to figure out the fast past lane system and be waking up at 7am or whatever to log into some app to try to snag a slot.
Here, I've done the "work" for you.
The system is: if you have a pass, you can book an arrival window for one (1) ride, and you'll be allowed onto that ride if you show up during the window. You can repeat this as often as you like throughout the day, except that you can't book the same ride twice in one day. Disneyland has 14 rides that use the system, so you can use the pass up to 14 times in a day if you want to ride every one of those rides. If not, your limit will be lower.
You cannot ever book a slot in advance. You can't book a slot before you're admitted into the park, and you can't have more than one booking at a time. So there's no such thing as waking up early to try to beat the crowd to a slot, except to the extent that if you actually go to the park early the crowd will be smaller. Smaller enough that you probably won't want to consume your pass at that time, because the regular line is short.
I don't think the system can get a lot simpler than "you can use this once per ride, and if you have nothing booked, you can book one thing".
The fact that you have to reserve a slot suggests that there is more fast pass interest than Disneyland is willing to accommodate. There are two reasons they might limit fast pass arrivals: (1) they make each other slower; (2) they make the regular line slower. I don't think the carefully rationed fast pass arrivals are going to make much of an impact on the regular line. If they do start to do that... fast passes aren't fixed-price products. Disneyland will raise the price.
I did not read your post.
It seems to me the purpose of the system is to:
1) Trick poor people into buying tickets and then realizing they can't actually ride the rides.
2) Get rich people who have committed to being at the park to decide that surge pricing makes sense once you are sunk cost committed.
3) Get childless Disney adults with disposable cash to dump it in the park because they have the free time to exploit this system.
Feels like the same logic I see at the movie theater trying to get people to buy overpriced popcorn or the 7/11 trying to get people to buy cigs and scratch offs. I can smell "spreadsheet asshole praying on human weakness" when I see it.
Maybe you should read the post.
Imagining the system you don't want is unlikely to persuade anyone who's aware of the system that exists.
Hi Bryan, the link at the bottom of the page doesn't lead to Pigou's biography book. Instead, it mistakenly redirects to the youTube video "There Is a Liberal Answer to Elon Musk | The Ezra Klein Show."
> The Pigovian remedy for negative externalities: set taxes equal in magnitude to the severity of the externality — and then leave the market alone. No regulation, no bans.
> The Pigovian remedy for positive externalities: set subsidies equal in magnitude to the severity of the externality — and then leave the market alone. No regulation, no government ownership.
[later]
> governments strongly prefer to directly own industries with (alleged) positive externalities.
These are related observations. There are many, many people who would like to describe themselves as following an economically rational Pigovian policy of taxing some undesirable behavior. You see them everywhere.
But they're all bluffing. When the behavior they're taxing doesn't go away, they point to that as evidence that the tax isn't high enough. If it were high enough, it would 𝘴𝘰𝘭𝘷𝘦 𝘵𝘩𝘦 𝘱𝘳𝘰𝘣𝘭𝘦𝘮, because that's the point of having policies.
Of course this has nothing to do with a Pigovian analysis. Political discourse on Pigovian taxes is essentially parallel to political discourse on the Laffer curve. You decide what you want to do, and then you try to display an academic justification really quickly, before anyone can question the relationship between the policy and the justification. Next topic.
This total lack of any measurement of the size of negative or positive externalities explains why the government needs to own the positive ones directly. There's no problem with advocating for infinitely high taxes while pretending Pigou would have been on your side. But there is a problem with advocating for infinitely high subsidies.
I think the problem is fundamental; more effort devoted to the problem is not going to yield more accurate estimates of the size of externalities in cases where people are unhappy with the status quo. Pigovian taxation and spending is a useless concept.
No one has the price information necessary to calculate the magnitude of any given externality; externalities by definition are extra-market phenomena where a price for the particular benefit or harm involved can't be negotiated. Moreover, a tax or a subsidy isn't neutral with respect to the rest of the economy (at a minimum, the government itself will generate a deadweight loss), and it is highly unlikely that the taxes and subsidies will offset each other.
The actual solution to the externalities problem is the peaceful acquisition of ownership rights and their subsequent enforcement, thus empowering owners to exclude others from imposing harms or extracting benefits without their consent. In that case, a price can be negotiated. Under a system governed by private property rights and voluntary association and exchange, externalities can persist only because the cost of creating and enforcing the relevant property right is more than the benefit of preventing the externality. What that means though is that the cure for the externality is worse than the disease.
And excellent idea, but premature when applied to accumulatio of CO2 in the atmosphere.
I've observed that the climate alarmists (1) have often greatly overestimated the rate of CO2-induced global warming in past IPCC forecasts (likely due to persistent failures to correctly model changes in cloud albedos and poleward thermohaline heat transfers), and (2) never talk about the potential harms of acting on their decarbonization agenda (e.g. letting the planet naturally revert back to a glaciation phase) nor the potential benefits of warming the planet further. Their real goal is to seize and centralize power at the expense of the unprivileged masses, not to make a good faith attempt to calculate and correct externalities. The problem with Pigou's prescriptions, apart from the lack of price information, is that politics is itself inherently a source of costly negative externalities.
Here's an objection to using Pigouvian taxation. No one knows even approximately the dollar value of an externality, which means that no one knows even approximately the level of taxation appropriate. A second objection is this; mandatory taxation is immoral.
He’s aware of these objections (and probably even accepts them pro tanto. But he would agree that they’re less bad than other taxes, so he’s pointing out that the government doesn’t even operate on the more theoretically efficient model.
Mandatory income taxation already exists.
We do for CO2 accumulation.
https://www.nobelprize.org/uploads/2018/10/nordhaus-lecture.pdf
I must push back. No, we do not. Nordhaus is a fine economist, but he doesn't know either. Pure hubris.
But should we not try to know? How can you be sure that a greater than zero tax is not optimal. Shouldn't' your preferred policy position be a conclusion, not a premise?
We should not try to know that which cannot possibly be known. It is flatly impossible for anyone to know the future. It isn't even possible for anyone to know whether there is a net cost to increased CO2 in the atmosphere. In fact, the earth is 20% greener today than it was a decade ago. You never hear the climate change warriors mention that, do you? We have zero evidence that the levels of CO2 in the atmosphere are net net harmful for life on earth. Tell me how someone is supposed to know how much to tax CO2 in the name of saving the planet, given just the simple facts I've mentioned. If you don't want to believe me, read David Friedman's numerous writings about this issue.
You do seen to be using some data in you conclusions (“greener than it was a decade ago). Surely you must believe that it is possible to predict and increase in CO2 accumulation in the atmosphere, but in your model the accumulation if neutral if not benign and conclude that the optimal Pigou tax is zero. I’m inclined to go with Nordhaus’s model over yours, but I’m not going to try to persuade you to do the same.
My model is based on about 50 years of noticing that dire predictions about the future have always been wrong. Do you recall in the 70s it was global cooling that was sure gonna get us? That's but one low-hanging-fruit example.
If you recall, we learned that we are technically in an ice age, but a thousands of years long “interglacial period.” This has nothing to do with whether CO2 accumulation the atmosphere will produce costs that it is worth some investments to avoid. I’ll still take Nordhaus over old News/week articles. :)
I take neither Nordhaus or old news week articles. 😊 I prefer the scientific and logical analysis of these people:
David Friedman for the economics. These guys and other like the for the climate science.
1. Richard Lindzen: An American atmospheric physicist and emeritus professor at the Massachusetts Institute of Technology (MIT), Lindzen has questioned the extent of human influence on climate change. He has argued that climate sensitivity to greenhouse gases may be lower than commonly estimated.
2. John Christy: A climatologist and professor of atmospheric science at the University of Alabama in Huntsville, Christy has expressed skepticism regarding the magnitude of human-induced warming. He has highlighted discrepancies between climate models and satellite temperature observations.
3. William Happer: A physicist and professor emeritus at Princeton University, Happer has questioned the risks associated with increased carbon dioxide levels, suggesting that higher CO₂ concentrations could have beneficial effects on plant growth.
The problem with Nordhaus and most other economists doing some kind of cost benefit analysis is that they ignore all the reasons why CBA is not possible at the aggregate level. As one who has done tens of cost benefit analyses for pay, I can't take even Hordhaus seriously.
Anyone can avoid the tax by eschewing the taxed activity, which is rarely if ever required for staying alive.
Good post.
Duh
You have just restated as if discovering the Mediterranean the usual economist's argument f for Pigouvian taxation. The Publick no more hostile to Pigou taxation than to lots of other economist ideas like freer trade, freer immigration, low deficits. [BTW, I don't think the current unpopularity of taxing net CO2 emissions stems from Social Desirability Bias]
Please, yes. I want to be able to pay more and skip lines everywhere, *especially* in cases of bureaucracy.
This is the whole point of valet parking, toll roads, Global Entry and TSA pre, and paying Instacart 2x to shop for you, and we need LOTS more of this.
1. Need your driving license renewed, or a temporary plate or registration? Either go stand in line at the DMV all day, or pay 3x and get it renewed online, instantly - they'll mail you the new one.
2. Have a problem and the only way to resolve it is to navigate an intentionally-adversarial phone tree that is deliberately constructed to make it impossible to get an agent? Pay $20 and you can get a 2nd level agent right away! Pay $40 and we'll make it happen anytime, even outside of business hours!
3. Interacting with somebody who sucks at a given business? Pay $20 and immediately upgrade to interacting with a manager / somebody competent.
4. Waiting at a restaurant? Pay 2x and your food goes to the front of the line in the "priority queue," and your service gets upgraded to at least a top decile server, as ranked by average tip size.
Please businesses take note and make this happen immediately, all of these are obvious low hanging fruit.
I am particularly a fan of getting rich people to pay dramatically more for accelerated government services, as this could very well fund better services for everyone in an absolute sense!
Heck, go all the way. Pay 250k a year, you get to drive in the bus lane or carpool lane by yourself. I am all for giving rich people extremely expensive minor benefits to raise more funds.
> Heck, go all the way. Pay 250k a year, you get to drive in the bus lane or carpool lane by yourself.
Love it - municipalities should hold auctions for this with a limited number of slots - then you maximize status and cachet AND income to the city.
That's even better, I can't believe I didn't think of an auction
Not the worst thing to link to
This isn't really related, but it's at least related to economics.
Greg Mankiw just posted a short argument to his blog ( http://gregmankiw.blogspot.com/2025/03/do-tariffs-cause-inflation.html ):
> Some defenders, including the Commerce Secretary Howard Lutnick, say that tariffs don't necessarily cause inflation. My view is that these defenders have a point, but not a good one.
> I think it is best to say that tariffs reduce productivity because they prevent the international marketplace from allocating resources to their best use. Lower productivity means lower real incomes. Lower real incomes could take the form of either (1) a higher price level for given nominal incomes or (2) lower nominal incomes for a given price level. Whether (1) or (2) occurs depends largely on monetary policy.
> When Trump critics say that tariffs raise inflation, they are implicitly assuming case (1). That case may be the more likely one, but it is not necessarily the way things will play out.
I generally think of "inflation" as being a fall in the value of the dollar, but let's run with the idea of a rise in the price level instead.
It's unambiguous that the tariff causes a fall in the value of the dollar. After enactment, your one dollar can buy less than it could before; the market has been restricted.
Mankiw's point seems to be that what *might* happen is, the value of the dollar as measured against labor rises sharply - one dollar will now buy a lot more labor than it used to before - and this rise might be so sharp that the value of the dollar as measured against everything but labor stays flat. In this case, the price level doesn't rise and there is "no inflation".
But I don't see how an increase in the value of the dollar against labor, coupled with no change in the value of the dollar against everything else, can add up to an overall fall in the value of the dollar. If I'm taking the average of some set of numbers and the average is negative, one of those numbers must have been negative too.
What have I misunderstood?
In answer to my skepticism of the Pigovian approach, ChatGPT offered the following: “In situations where the cost to mitigate harm far exceeds the tax burden relative to a firm’s profitability, relying solely on Pigovian taxes may lead to a situation where harmful practices persist. In such cases, regulations that directly require firms to prevent harm (coupled with effective enforcement) might indeed be a more socially beneficial strategy. Many economists recognize this nuance and argue for a balanced approach that might incorporate both taxes and regulatory measures depending on the context.”
Grok, on the other hand, suggested that “the tax must be calibrated not only to the externality’s severity but also to the producer’s financial context”. This point from Grok seems to suitably address ChatGPT’s concerns about a purely Pigovian approach and my own initial skepticism about it.
Pigovianism is valid if the purpose of government is tweaking with social knobs and fiddling with cultural dials.
Externalities are rarely, if ever, purely social. They're economic, and by definition outside the ambit of bargaining between the parties.
Economics is production and consumption, and that all takes place in society.
In the case of choosing between education systems, how do you see this impacting the quality of the free K-12 option? The rich obviously wouldn't consider this a choice if public and private education had similar quality levels. If the poor cannot afford a decent education, which will likely keeps them poor, wouldn't this destroy social mobility?
I wonder if it’s a fool’s game to try get folks to stop using the word “free” as shorthand for “government provided.” I’ll tackle that once I get everyone to say “progressive “ instead of “liberal.”
I think of it as shorthand for "free at point of service". But you also bring up a good point of how whether this system could even afford to pay for the "free" K-12. How certain are we that this system would generate a profit?
> If the poor cannot afford a decent education, which will likely keeps them poor, wouldn't this destroy social mobility?
Social mobility is fake, an artifact of choosing noisy endpoints and measuring only a single generation. If you look at lineages, all the 0.15 - 0.5 "status persistence" countries like the Scandinavian actually have ~.75 status persistence, and this is true literally all over the world in every country measured.
Greg Clark wrote an entire book about this called The Son Also Rises.
One of the more interesting results from Son Also Rises was the fact that there's basically ZERO change in persistence rates of "social competence," when you look at spans of time that include massive educational changes in the UK, Sweden, the US, and others.
For example, going from "only elites can and do get their kids educated" to "state funded education through high school / undergrad / Phd" drove ZERO change in persistence / social mobility across multiple countries.
This is an additional triangulation point that education is mainly about signaling, and that the trillions spent on it are largely wasted, at least in the sense that we think it drives "more equal opportunity" or "increased social mobility," because apparently that is not true in the aggregate.
> The rich obviously wouldn't consider this a choice if public and private education had similar quality levels.
This is only true in an all-inclusive sense. You're paying for every part of the school, and every part of the school figures into your estimation of whether it's worth it.
As far as the education goes, public and private education already do have similar quality levels. The difference is in the classmates.
Would you agree that there are approximately zero private schools as poor as the worst public schools and that the vast majority of private schools are at least as good as most suburban schools?
No?
Oh well, never mind then.