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Carney, the establishment economist, abolished the best economist-approved carbon policy there is?!
Let's get into it.
Taxes have two broad purposes (three, if you believe the MMTers and their confused take on money demand):
  1. raising revenue for the state and
  2. reducing activities that are harmful (to consumers themselves or others, including the "planet")
Carbon taxes, a popular (in theory) proposal among economists, are pretty efficient (#971152) in reducing "harmful" activities without too much distortion. They aren't introduced for the gov to pay expenses, but for households to face sterner pricing pressures to consume less carbon.

Basic idea: if tobacco is more expensive, on the margin fewer people smoke (and those who do smoke less).

Analogously, if we tax pollution (a bad), we get less of the bad thing and the world is thus better off.
Among all the various proposals for "dealing" with the climate crisis (except the most obvious... to do nothing, and move on...), economists generally like it because it sounds like externalities (which they think they understand): taxes-at-origin can efficiently be propagated through the price system. _Use the thing markets are excellent at to "fix" the thing markets aren't so good at (=internalizing externalities... yes yes, it's a bullshit theory but bear with me here.)
So, Canada was this role-model with its (initially) C$20/tonne tax, rebated to households

Rebated? I thought you said this was an urgent crisis?

Yes, that is the pathetic/dishonest implementation of these things: it's so urgent we're all gonna die in twelve years, but it's not so urgent that we can't/want to also do a little bit of redistribution while we're at it.
(Bonus task for the economics-y oriented reader of ~econ, i.e. @Undisciplined disciple: the structure still makes economic sense since it shifts around the relative prices and thus shifts consumption pressure from carbon-expensive to carbon-cheap things. Drawing up the indifference-curves and showing that, even under full rebate there is some carbon benefit is a common exercise in introductory microeconomics classes.)
I also love that they had to force people to know/appreciate the rebates:
At first, the rebates simply appeared as discounts in individuals’ annual tax statements. Later, they arrived as payments to their bank accounts — but often without labels clearly indicating what they were, until the government passed a law last June forcing banks to change their systems to enable this. Even then, awareness of the rebates was limited by the fact that they were paid out to only one adult in each household.
The scheme, while perfect on paper, worked very poorly since people hated the expensive prices they paid but they were blasé about the various tax rebate/returns they seemingly unrelatedly received. Ooops
Poilievre’s warnings of the tax’s damaging impact on Canadian households “just resonated really hard, even though the data said otherwise”, says Dave Sawyer, principal economist at the Canadian Climate Institute. This meant that even Carney — who had made climate action his main focus since leaving the Bank of England in 2020 — saw no option but to drop the tax. “It’s become too divisive,” he explained in January during his run for the Liberal party leadership.
And so it goes: Pielke's Iron Law of climate policy strikes again (#935095, #968331): You can't make people (feel) poorer when implementing (mostly symbolic) measures to save the world.
recent research is casting doubt on whether those Nobel-winning economists were right to assume that making carbon taxes revenue-neutral would make them more politically viable.
Good riddance, carbon taxes. May you never return to the civilized world.

non-paywalled here: https://archive.md/T68lx
Firstly, the notion that the rebate was full is debatable. Do you trust the government and their economists ability to accurately measure the true cost of carbon pricing on everything in the economy and rebate accordingly? I will take the under on that and like the CPI I am sure the guesstimate was in the government's favour.
Secondly, the consumer tax is cancelled but an industrial carbon tax is being put in it's place. Industrial price might end up costing the consumer less than the consumer price but there will be a cost borne by the consumer that we can be sure of.
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I'm guessing you didn't see it as a net benefit for your family?
These carbon taxes are usually sold as financially positive for the middle class, since they consume a disproportionately smaller amount of carbon compared to the wealthy, but any number of implementation details could change the reality on the ground.
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13 sats \ 1 reply \ @grayruby 5 May
Certainly the rebates didn’t cover the amount cost of living increased but it’s impossible to gauge how much prices increased solely due to carbon taxes vs just increasing in general.
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Just count one or two clear ones — gas and electricity, and compare to rebated amounts
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the notion that the rebate was full is debatable. Do you trust the government and their economists ability to accurately measure the true cost of carbon pricing on everything in the economy and rebate accordingly? def no!
But I believe they just rebated whatever they raised in revenue, no? (which has/should have fairly objective paper trail)
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And, if that's what they did, this is closer to what the government is supposed to do, according to the externalities literature.
Normally, they just pocket the revenue from taxing bads, which obviously doesn't compensate whoever's harmed by the bads, it just reduces them closer to the socially optimal amount.
The way this stuff is really "justified" theoretically, is by measuring how much each individual is harmed by an externality, taxing the producer by the aggregate amount, and then giving that money to the harmed parties. The biggest problem with this is that it's metaphysically impossible to know how much those individuals are harmed. The lesser problem is that once you account for the costs of administering a realistic government process, it's no longer a net social benefit.
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Undisc brings the thuuuunder.
Yes, indeed.
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I dunno, I still kinda support it in principle. I mean, I put a non-zero probability on carbon actually being a problem, and so if the government was going to tax something I'd rather they tax carbon than my personal income, which is a roundabout way of saying, "Plz rebate me the carbon tax receipts."
In the broader zeitgeist though, I think the bigger problem is just that climate activists are off the reservation, which gives the opening for any climate policy to be attacked via guilt by association. I have friends who refuse to drive EVs because they oppose them ideologically, not for any reason about cost, convenience, or drive quality.
Maybe in a world where climate activists weren't crazy, a revenue neutral carbon tax would be more politically feasible.
Also, maybe it's just a branding problem. I dunno what Canadian tax returns are like, but in America everyone files their own taxes and thus the various tax credits are very in your face. If people here got used to a substantial annual "carbon credit" on their tax returns, they'd be reluctant to let go of it.
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One of the big problems, though, is that there are pretty good reasons to think CO2 is actually a social good (at least for Americans).
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Ouuuwwh, feisty.
You mean in terms of greening of the world, or fewer people dying fr heat than cold...?
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Both, and more. Bob Murphy walks through this, using the IPCC's own numbers and models. Obviously, there are plenty of credible climate scientists who are skeptical of those.
Even for the "consensus", whether CO2 should be treated as a good or a bad depends on the discount rate in the model. That's because their own models have CO2 being a net benefit for the next few hundred years. It only is a problem now, because they think it will become a problem in the far distant future, if we stay on our recent emission trend.
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right.... the optimal temperature/Nordhaus projection argument.
I haven't heard this mechanical "net benefit" thing...?
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This isn't exactly what I was thinking of, but it seems to hit most of the same points.
which is a roundabout way of saying, "Plz rebate me the carbon tax receipts." indeed!
Beautifully put.
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While you deny and reject the overwhelming global scientific consensus that human caused climate change is real and a significant threat.
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read the article again (or this one that I just released too, #972338) and tell me what your (asinine) comment brings to the table
To the extent that
overwhelming global scientific consensus that human caused climate change is real and a significant threat is a sentence with any meaning, it's irrelevant/immaterial to my much larger, much more important point
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What is your self defined 'larger point'?
This? 'You can't make people (feel) poorer when implementing (mostly symbolic) measures to save the world.'
This statement if it is your larger point is full of holes- the biggest obvious one is that climate change is a GLOBAL problem and so any action taken by any jurisdiction will be only proportional in relation to that jurisdictions size globally but this is where the difficulty is- nobody with your mindset wants to take responsibility for their share of the problem- because what any jurisdiction can do can always be portrays as insignificant on a global scale- what you completely miss is that this is a problem that requires all jurisdictions to do their bit toward solving the problem rather than denying there is a problem and making excuses for doing nothing.
You then say-
' Good riddance, carbon taxes. May you never return to the civilized world.'
So how would you address climate change in a politically practical and economically equitable manner?
Or do you deny human caused climate change?
You do not offer any credible alternative to the carbon taxes you criticise- you leave the 'larger problem' of climate change itself unsolved and implicitly, denied.
Your implicit denial of climate change is a reckless irrational, unscientific, irrational and untenable position for anyone who asserts it. The evidence of human caused climate change is now undeniable.
It is simply a lazy way of avoiding the problem- in your case probably because it is a problem that cannot be fixed with 'market forces' and implicitly demands a consensus for collective government led response.
It is not a problem that market forces can logically address because climate change is due to consequences of human actions which do not provide any meaningful market driven disincentive or penalty to the beneficiaries and initiators of those actions.
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For any nation to take meaningful action on climate change it will require some sacrifice of wealth for the citizens of that nation. In other words for the world to address climate change, short of a world government, nations need to take action individually which result in them each as much as possible contributing to a collective action and result that is sufficient to deliver a meaningful reduction in GHGs. This is obviously a challenge for democracies and even autocracies- as you are asking your citizens to suffer somewhat in the short term in the interests of acting responsibly in the longer term interests of all global citizens. It is very easy for populist politicians to appeal to voters and powerful energy sector lobbyists and not take such action.
Such a refusal to take action is accompanied with an implicit or explicit denial of climate change- because to acknowledge climate change and its projected (and already measured) implications would expose those populists as the selfish reckless idiots they are.
Trump exited the Paris Climate Accords - signalling what he is and where he stands on this- FUCK the WORLD, We the USA are going to continue consuming far more per capita, and emitting far more GHGs/capita than most other nations and we don't give a fuck about the millions of people globally who will be negatively affected by our selfish short sighted greed. Some Libertarian 'economists' appear to be parroting Trumps climate change denial Death Cult Insanity.
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In 2015 Carney acknowledged climate change in this speech.
Human caused climate change is a risk and one that is of such significance and potential impact that anyone who rejects it does not deserve to be taken seriously.
How to respond to it is debatable but denying its reality is not credible.
It is a challenging topic for Libertarians who deny the importance of the state and its role in the economy- believing that instead 'the market' will deal better with all challenges we face.
The fact that human caused climate change mostly originates from activities where the user of resources does not receive any market signal about the external costs imposed by their use of the energy/resource seem to be beyond the capacity of Libertarians to comprehend.
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Human caused climate change is a risk and one that is of such significance and potential impact that anyone who rejects it does not deserve to be taken seriously.
man, I know I had you muted for a reason.
Jezus, fucks
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You try to shoot (and silence) the messenger because you cannot credibly or convincingly refute the message.
If you were confident of your assertions and they were based on credible reasoned arguments you could easily refute my response.
But you have not, and I suspect, cannot, and that renders you conceding defeat, by default, in this contest of ideas.
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