Carbon Taxes and Commentary on The One-Page Plan To Fix Global Warming

We humans hate changing which is why we need incentives. That’s what economics is. NPR Planet Money’s “The One-Page Plan To Fix Global Warming” podcast explains in simple terms what a carbon tax would look like; click here.

Taxes, when done right, are economically neutral with some people winning and some people losing but the real power is to shift the economy (collective human behaviour) in the right direction.

Me personally, I agree with the economists. I’m not commenting on the science of global warming. Rather, I think of it as a garbage problem. If you can’t pump the gas into your home, then likely it’s unsafe and we don’t want it. Therefore, it’s garbage. Taxes enable us in making the right decisions about how to handle our garbage. The CFC and trans fat situations proves humanity can do this. The alternative is to have a “tragedy of the commons”.

“The tragedy of the commons is an economic theory of a situation within a shared-resource system where individual users acting independently according to their own self-interest behave contrary to the common good of all users by depleting that resource through their collective action. …. [E]nsuring that the users of [a] resource pay for all of the consequences of its use, can provide an alternate solution between privatization and regulation. ” (wikipedia)

One big benefit often not discussed is that a carbon tax favors local production. That is, items that are produced abroad cost more carbon to transport. This has an “on shoring effect” for jobs.

H.S. Dent goes even further.  Exert from his Survive & Prosper newsletter, “The Most Destructive Force on Earth: DENIAL” June 9, 2014

“…I have come to realize that the massive pollution that has enabled our exponential rise in standards of living is the greatest long-term threat to our economy and progress… not rising debt.

Pollution damages the most fundamental capital resources that all life depends on: water, soil and air.

Yet again, denial is keeping those with the power to do something about the situation blind to the danger. …

The solution is simple: Natural resources shouldn’t be considered free anymore. They shouldn’t be seen as inexhaustible. Instead, they should be seen and valued as the financial asset they are. They should have a price on them, just like financial capital or labor.

A carbon tax is a good place to start. But it mustn’t be arbitrary. It must take into account the pollution and clean-up costs, so allowing consumers and businesses in the free-market system to make better decisions for now and the future. Other taxes could be cut to offset this new tax.

We’ve been over-borrowing since the early 1970s. We’ve been over-polluting since the late 1700s.

Debt is the crisis of this decade.

Pollution is the crisis of this century!

If we don’t deal with pollution and rapidly rising CO2 levels we could literally choke ourselves into extinction.

It’s time our politicians and economists break free of their denial… and start to implement policies that are good for the economy and the planet.”

(26Jan2019 update) Bill Gates summarizes the main contributors to greenhouse gases (hint: not typically what people think of). R&D and incentives are needed to help generate business cases that both reduce emissions and make financial sense. That’s where taxes come in.

And see if you can beat my 3/5 score on the climate change quiz:

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