If everyone thought like economists, we'd be taking much more aggressive action
re the Klein mention, I find it helpful to just think of anti-capitalists as trying to attach other Left issues to their agenda to get more folks on board. It's not unique - my Libertarian friends do the same thing. But it's dangerous because it confuses the normies, and instead of building a broader left coalition these actors tend to galvanize opposition to otherwise reasonable ideas. Best to run the country from the middle, please.
The problem is the voters.
1 In France they raised the price of gas via gas tax and the county almost fell apart.
2 80% in Europe and America believes climate is a serious issue and 72% will not vote for $100 I. Higher taxes to fix it.
3 climate activists are really anti capitalist activists. Like China is a low emitting country. Or the USSR was a low emission country.
With climate change as with so many other issues, I think what left-wing activists don't like about economists is the absence of a role for repentance in economics. The kinds of people who admire Naomi Klein (like the twitter account "j.d. vance's 'holler aunt'", a name i remember because i've looked up that one tweet so many times) tend to doubt that any large-scale problem can be solved without a "reckoning" that upsets current moral and social rankings and imposes new ones. Economists could model other people's repentance as a good which people are willing to spend effort to obtain, or people's own repentance as a tax they seek to avoid, but I don't know how economics could incorporate the moral distinction anti-capitalists want to assert between incentivizing actions with shame and incentivizing them with affectively agnostic money or time.
Dave Roberts is hilarious here. He argues that economists downplay political realities when they propose things like carbon taxes, which, sure. But if your solution to that political economy problem is to tie climate policy to even more unpopular ideas like the GND, then you're being a partisan hack, not a serious person.
He also decries applying discount rates to future climate outcomes. But unless he supports diverting medicaid spending to green energy investment, then he applies discount rates as well, he's just too dumb or too dishonest to realize it.
To best understand Roberts' post, it helps to be familiar with some of the long-running intramural arguments in the environmental community. In particular, a prominent piece of folk mythology among a broad swathe of climate activists is that the environmental movement's one-time enthusiasm for a carbon tax was originallyand largely meant as a sop to conservatives.
According to this narrative, left-wing climate types agreed to ditch the command-and-control regulation of corporations that they preferred in favor of less effective but more politically palatable market-based solutions.* Conservatives, the thinking went, hate regulations but love markets, so carbon taxes represented a sort of middle ground that left and right could unite on.
That carbon taxes are a total dead letter, in this telling, reflects the perfidy of the right and the foolishness of environmentalists who were willing to water down their policy ambitions out of political expediency.
In this telling, economists play a sort of pied piper role. Matt quotes Greg Mankiw, but Greg Mankiw is just the problem! Greg Mankiw can go on all day long about how great carbon taxes are, and he can chair the Council of Economic Advisors, and he can advise Republican presidential candidates. What he can't do, however, is actually make Republican politicians care about climate change. The problem here (again, in this telling) isn't with the Republican politicians or voters in general. It's with economists for cheerleading a bunch of hopeless policies that distract all the well-meaning climate activists.
This narrative, as far as I can tell, is pretty much entirely bullshit. I've worked in cimate circles for over fifteen years, and in my recollection the enthusiasm for carbon taxes on the left was entirely sincere. It would take a better historian than me to really dig in on the genesis and development of climate policy thinking and activism, but simply as a matter of common sense it doesn't really track that environmentalists would preemptively organize their agenda around conservative policy preferences.
Regardless, the notion that support for carbon taxes on the left was largely a misguided and unrequited attempt to extend an olive branch to conservatives runs underneath Roberts' critique of economists.
* I am eliding some considerable nuance here. In particular, back in the day, cap-and-trade was seen as a sop to conservatives, with carbon taxes being the purity option for those on the left. (Cap-and-trade = markets = Enron = capitalism = bad.) Over time, as environmentalists have soured on carbon taxes altogether, they seem to have gotten lumped together with cap-and-trade as a shiny bauble that have distracted us from what we should have been doing all along: large-scale industrial policy.
I agree about 90%. [I'm an economist, after all.] The 10% is in WHY the pubic opposes a carbon tax. I don't think it is primarily that they don't take climate change seriously enough, but rather think that a carbon tax would be much more disruptive (i.e. much higher increase in their gasoline and electricity bills) than would in fact be the case. And this fear while real should not be taken 100% as given. In part it is driven by some climate activists exaggerating the harm from climate change and conservatives exaggerating the size of and harm from a carbon tax. Economists' message that we have a (comparatively) easy solution to a very real and growing problem is a hard sell.
It's sort of like removing restrictions on more dense residential and commercial development and affordable housing. Everyone is afraid the low-income skyscraper will go up on the lot next to them.
Matt is telling us that, if our goal is to solve climate change, then there's no point in hating on economists -- it's just not instrumentally effective.
I can live with that.
I never thought that hating on economists was a way to address climate change in any case. It just seemed like the rational reaction to economists per se, no matter what you think about climate change.
I just don't *get* David Robert's point here. He seems to critique a carbon-pricing solution because it faces "political-economy problems". Yet, his approach seems best summed up by the title of one of his prior podcasts: "How to replace everything in the industrialized world". How does that face far steeper "political-economy problems"?
We are annoying to other academics. It’s too bad because when we do take the time to choke down a little humility, they let us onto their grants and then realize we do have some good ideas. We also eat our own kind. I’ve worked with non economists on joint articles who observe that Econ peer reviews are particularly harsh relative to their disciplines. And an econ faculty meeting during budget cuts is like the Serengeti during a drought. Still, carbon tax just seems so obvious (see, lack of humility).
Thanks, Matt, for this good rejoinder to David Roberts. But Roberts was not all wrong. There are good arguments and bad arguments both for and against carbon taxes. Economists are sometimes on the right side and sometimes on the wrong side.
Roberts is right when he says that economists go-to knee-jerk argument in favor of carbon taxes -- the argument based on efficiency or optimality -- is not a strong one. BTW I am an economist myself (PhD Yale) and if you read my Econ 101 textbook and some of my blogs, especially older ones, you will find diagrams that show that if you have a market that is perfectly competitive except for an externality in the form of carbon emissions, and if you calculate the correct social price of carbon, and if you put a universal tax equal to that social cost of carbon on all emissions from everywhere in the global economy, you get a perfectly efficient, optimal degree of reduction in carbon emissions. That is true proposition. But it is so far from describing the real world that it has only limited relevance to the climate debate. We can't calculate the social cost of carbon, markets aren't competitive, carbon taxes can't be imposed globally, etc.
At the same time, though, we need to recognize that many of the arguments that climate activists make against carbon taxes are no less flawed. For example, many left critics say that carbon taxes are not good because they can only achieve incremental reductions in emissions, not deep decarbonization. Not true. (See here: http://tiny.cc/DeeP ) Or the argument that carbon taxes are a one-trick pony that can cut a bit off the demand for fossil fuels, but does little else. Not true. (See here: http://tiny.cc/versatility ) Or the argument that carbon taxes are a trick invented by capitalists to increase their profits by destroying the world. Hardly even worth refuting.
But David and Matt and lots of other more thoughtful critics are right when they say that economists don't pay enough attention to the political downside of carbon taxes. Anything that raises the price of gas at the pump is not popular. Not even if the money goes to filling potholes rather than something as hazy as making life better for our grandchildren.
But I have just one thing say about that argument. What makes me hopping mad is the disingenuousness of climate activists who say that we can't have carbon taxes because they are politically unpopular, when it is THEIR OWN wrong, ill-informed, ideologically driven rants against carbon taxes that are a lot of the reason they are politically unpopular.
Come on guys. We are all on the same team. We all want to save the polar bears. Let's behave like a team, not like a bunch of Bolsheviks arguing with a bunch of Mensheviks. Carbon taxes are just a tool, one that is not a silver bullet but one that can make other climate policies work more effectively.
COVID has shown us the degree to which different groups will lift a finger for the common good.
The right has shown the only finger they will lift for the common good is their middle finger at doctors. The left has been better in this instance, but only because the stimulus programs that happened was fairly naturally aligned with their prior desires in terms of a more generous welfare state, at least for now.
But the left also has zero clean hands on the climate issue. The minute you want to upzone Berkeley, where average house prices are well past 1.5M and HHI approaching 100K, leftist like Robert Reich send in letters opposing over matters like parking. Sure, they wrap the issue in a thin veneer of "but muh working class" by talking about how poor people drive more. But it's all bad faith, all the way down.
Bottom line, people are selfish, tribal creatures that like to pretend they care about the kids and "the future", but would more often than not sell their own kids into indentured servitude for a free cruise if you gave them the chance.
SF, where you'd think climate issues would be winning ones, can't even close a street through golden gate park because the local ex hippies lose their minds if you take away so much as one parking space where they park their gas powered 60s era hippy bus.
If your climate plan depends on the goodness of humans making sacrifices of any type for more than two weeks, it is politically DOA and will not happen.
The reason people hate Elon isn't because he is rich. It's because he offers a way out using technology that does not require some sort of moral absolution in order to get there. Which strips authoritarian leftists of their fantasy world where you take a bunch of people who disagree with you and force them to live in the manner of your choosing. Similar to how the authoritarian right wants to force everyone to live in a Christian Nation where the society depicted in The Handmaid's Tale is seen as a utopia.
This is why technology advancement is *the only* way that this gets solved. Inventing things requires a small group of people with a clever idea - and isn't subject to your average self-interested meat sack with nose attached vetoing it. Solar is powerful (pun intended) because despite its flaws, you typically don't have to ask for permission to deploy it (though some will try - don't give ppl more ideas). Electric cars are powerful because Elon, bless his heart, figured out a way to make something on balance good for the planet also something that allows idiots to still go "zoom zoom".
Agree with all of this. Economics can't, though, supply an answer to a central question underlying the question of what we should do about climate change -- who is "we"? There isn't agreement about collective obligations to other people even among those currently living in the same national community today, let alone what is the obligation of humans living today to make sacrifices for some degree of improvement in the lives of future humans. I.e., how much of the future is their problem, not ours.
In arriving at a proper discount rate for climate costs, how do you account for the significant possibility of technological improvements and breakthroughs in addressing the costs far more cheaply in the future?
It took me over an hour to drive home yesterday because there are too few bridges crossing I-75. It took me almost as long to drive from work to pickleball the day before because Jonesboro road is still two lanes even though the population it serves has almost doubled. These problems are recent. Yet MY thinks we have plenty of roads and bridges and is boosting transit projects that won’t make my life any better.
Today, he wrote repeatedly that voters are the problem. Strange words for a popularist. I’m happy to support subsidized wind and solar power and research into nuclear and batteries. I’m happy to create jobs weatherizing old buildings, and I love attacking rich carbon spewers. I’m not willing to take a big lifestyle hit and that makes me normal. Dismissing my need for better roads and bridges while telling me that my views are part of the problem is a political dead end.
Fund my roads and I’ll fund your research. That’s how politics works.
I'm a conservative economist, and I also have long supported a net zero carbon tax. IE, one that lowers taxes on labor and replaces them with taxes on carbon. Moreover, I remember reading conservative economists in the Weekly Standard advocating the same probably 10+ years ago.
I also strongly agree that while capital budgeting (discounting of the future) is a great way for companies to look at projects. It makes little sense from the standpoint of society as a whole.
Because capital budgeting basically says our grand children have no value. But most would disagree.
Matt mentions GRE scores for economics being high…what are they for sociology? Sociologists are creating infrastructure for massive future employment with DEIA departments and these will be high paying jobs because if they aren’t it will be a signal the organization doesn’t take it seriously. In the analysis of easy degree vs high pay this is going to be the way to go!