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Andy Dessler Shows Why He Is Not An Economist

September 23, 2012
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By Paul Homewood

 

 

In an earlier post we looked at climatologist Andy Dessler’s claims that Texan weather is getting “hotter and drier”, because of global warming.

Just supposing he is right, what does he suggest we do? Well, he tells us

Thus, there is no free lunch: Either we pay to reduce emissions of greenhouse gases or we pay for the impacts of a changing climate.

He goes on to say

One idea recently floated by a former Republican congressman is that of a revenue-neutral carbon tax swap. The idea would be to put a tax on carbon, while at the same time reducing income taxes so that total revenue raised by taxes does not change.

Such a policy would cost the average family zero: Prices of carbon-intensive goods and services (i.e., electricity) would go up, but decreases in income taxes would offset that. At the same time, it provides a clear signal in the economy for people and companies to take actions to reduce their emissions. Obviously, the devil is in the wonky details, and care must be exercised to ensure that any such policy is fair – e.g., accommodating those at the bottom of the economic ladder who pay no income tax.

On his own blog, he is even more specific, saying that the next president should

implement a carbon tax or cap-and-trade system.

Dessler might be an intelligent climate scientist, but it is clear he is no economist. I am, so let me point out a few holes in Andy’s plans.

 

1) The whole idea, (well, supposedly at any rate), is that a carbon tax would reduce CO2 emissions. The alleged purpose is not to raise revenue for governments. So, Andy, when your tax has successfully slashed our fossil fuel use to next to nothing, and consequently government revenues of carbon tax are zilch, how will the taxman afford to reduce our income tax?

2) Cap and Trade, of course will not even put money into governments’ pockets. They will increase prices for Joe Public, whilst at the same time putting money into the hands of the favoured few who have carbon permits to sell.

3) It gets worse though. There is a naive view that if we just pay a few more taxes and accept a slightly lower GDP and standard of living, everything will be OK. Unfortunately Andy, real life does not work like that. By increasing energy costs, our industries will gradually lose competitiveness, and with that, production and jobs will inevitably disappear overseas to countries with less demanding environmental policies.

At this stage, it is no longer an academic issue, but instead a real life one. Furthermore, the pain will not be shared across the board, but will be inflicted most heavily on a minority of people, firms and districts. Will you, Andy, look these people in the eye and tell them that the sacrifice of their jobs is in the common good?

4) But it gets even worse, Andy. The migration of industry to China, India and other less developed parts of the world will not even achieve your goal. While emissions of CO2 may fall in the US, they will increase in the other parts of the world, and almost certainly by a lot more. Why? Developing countries, and particularly China, do not have the same attitude to environmental concerns as we in the West do. Their overriding priority is to cut costs to the bone, in order to compete in the global market.

Take a look at this if you are in any doubt about it.

http://www.buzzle.com/articles/environmental-issues-in-china.html

 

In future, Andy, I suggest you stick to what you’re good at, and leave economics and politics to those who understand such matters.

2 Comments
  1. September 24, 2012 5:23 am

    Reblogged this on Climate Ponderings and commented:
    GOOD READ!

  2. Brian H permalink
    October 4, 2012 10:42 pm

    Has there ever in the history of the world’s governments:
    a) been a genuinely “revenue neutral” tax scheme imposed, or
    b) one which didn’t have nasty Unintended Consequences (“the unseen”) which cost society far more than the nominal tax rate?

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