Tabarrok v. Rodrik

One of things I’ve noticed in my experience of the libertarians I have argued with on the Internet these ten years or more is that they can become so addicted to the zing! they can give themselves when they defend a position that looks counterintuitive (“freedom through slavery”, to recall one unforgettable example) that they seek out such situations.

“I know it sounds crazy to say that eating broken glass can improve your digestion, but it’s counterintuitive!”

Once they get that far, I know I can no longer carry on trying to find evidence that it sounds crazy because it’s actually not true. They’ve become too fond of the idea of it being a crazy-sounding truth.

Alex Tabarrok’s challenge to conventional wisdom sounds like that to me. I prefer the Firesign Theatre‘s version.

one of the lessons that I’ve had to learn over the last few years in the blogosphere is that you can’t and shouldn’t do this

All hail your endurance.

All I’ve learnt reading them is wondering at the socio-economic conditions that led to that cosmic-sized synchronized flatulence that sent them all on this scintillating orbit around their navels.

Or at what we are are going to do with all the morlocks, once we are all, us normals, shiny promethean entwepweneurs.

Or at the birth of a new science : applied teratology, the study of monsters.

… Left me laughing meanly at the Rand-bots too, but that goes without saying.

I may have said this before: there are as many different kinds of libertarians in the world as there are different kinds of lunatics. Taking the views of just one of them to be representative of the rest is as unfair as taking one inmate to be speaking for the whole asylum.

Rodrik isn’t just arguing for libertarians to reconsider their priors. He’s arguing for “moderates” to do so: “My rhetoric was meant to entrap middle-of-the road economists, who see nothing wrong with governments playing a significant role in these other areas, but have an instinctive aversion to industrial policy.”

Alex, I think, would agree that it’s an effective trap for the targeted audience.

I like the Shalizi quote. In my experience, libertarian arguments will tend to converge on his #1 stance (you should suffer for the sake of the market) when it comes to something the libertarian isn’t really interested in but the other person is and #2 or #3 (the state can’t ever do it better, so we should leave it to the market; no matter how it looks, the market way is better) when the libertarian is as much or more interested in it as the other person. There are, as ever, exceptions in the form of libertarians who actually do seem willing to sacrifice some of their own possible gain as well as others’ for the sake of the market, but as a general thing, the list of tolerable state activities or just ones that (for whatever superficial reason) should be set aside for dealing with later matches up quite well with the list of what benefits the arguer most directly.

This is the part that boggles me. not just with libertarians, but also most free-market globalizers:

With respect to industrial policy proper, they refuse to engage with the fact that every nation that has grown rapidly has made use of it.

We’ve been reading forever about South Korea and Taiwan as free-market triumphs, but they both were protectionist, as was Japan during its rise. I’m less sure about Singapore and Hong Kong, but these city-states probably aren’t good models for anyone except other city-states. Has any nation ever risen to prosperity by following the World Bank IMF rules? Chile is supposed to one, but they’re about equal to Russia in GDP-PPP per capita.

The startling thing about PPP-GDP per capita comparisons is that there are 54 countries poorer than Bolivia. Venezuela is the median and Mexico is well above the median.

I’m going to make an apology. I’ve been harshing on libertarians in several threads here and elsewhere lately, and I have to remind myself: these folks are not, in my view, the serious enemy. Insofar as they keep doing dumb and wicked things like championing the conservative movement in exchange for libertarian lip service, yes, they’re aiding and abetting…but precious few of them have any real influence in the institutions whoe leaders and followers are really harming my nation and the world. Regents University has supplied the Justice Department with many bad, hypocritical Christians, for instance; if there are many libertarians among the attorneys general, I don’t know about it. The Iraqi reconstruction was sabotaged in part by free marketeer ideologues, but also by simple corporate greedheads and fools of other kinds, too. Some self-identified libertarians like the bunch at the Volokhs’ place defende policies of torture and other abuse, but there aren’t enough libertarians to fill the ranks of torture planners and executers. It’s not libertarians turning the military academies into religious indoctrination centers and subsidizing private groups to preach what they call crusades in the Middle East. And so on.

Many libertarians annoy me – though some remain people I’d trust with my life, wealth, and health at a moment’s notice – but they’re not pulling the levers of power any more than I am. And it’s not fair of me to carry on as though they’re making the nightmare of the day.

Sorry for loss of perspective.

john / #12 – The way it’s typically put is “Libertarians are Republicans who like to take drugs”.

bruce / #15 – Yes, but they are annoying. I’ve called Libertarians “the street preachers of the information superhighway”. They have little real political power, but they can generate a lot of noise, and in earlier net-days they’d often take-over over open discussion forums (less of a problem now).

My suspicion for some time has been that Libertarians are persons who think Ann Rand is a serious thinker, which I will only grant that she is, but only for 14 year olds.

Rusell L. Carter: “DeLong’s attempts to periodically rehabilitate him are an oddity, too. ”

More and more I see situations where once you’re in, you’re in forever, *unless* you violate core doctrine. And in most cases, lying fraud, criminality up to mass murder don’t seem to be violations of core doctrine. Even violating proclaimed doctrine (e.g., Mankiw could spout whatever nonsense Bush required) doesn’t seem to be much of a problem.

I think that what happens to many groups is that they warp into protecting their own, even at the long run expense of the group.

bruce,
I’m actually almost optimistic that a secularizing and modern Islam will bring a rigorously argumentative kick to this debate. Islam is or will be the new judaism in western intellectual life.
Fundamentalist christianity is anti-intellectual by comparison.

Seth E. is right about Posner. He’s really awful, and very influential.

“And the libertarians’ opinions provide a sort of populist ‘justification’ for the greedy elites’ efforts to be greedy.”

While the liberals provide a sort of pseudo-moralistic ‘justification’ for the non-elites to be envious and spiteful, in case you haven’t noticed. Because this eases the way for politicians to buy the masses’ votes with the elites’ money, by suppressing any guilt pangs people might feel about it, the result is that you get a lot of support from political institutions. But not, you might notice, for the parts of your program which are inconvenient to politicians.

Really, both libertarians and statists have their own characteristic flaws, and if I had to identify the latter, I would say it is a reflexive rejection of the concept of the ‘necessary evil’, leading you to think that once you’ve demonstrated that some evil is necessary in extraordinary situations, you can just add it to your tool box, and use it whenever it strikes your fancy. Your approach to taxation is rather like the fellow who, having discovered that it’s ok to hotwire a car to get a heart attack victim to the emergency room in time, starts jacking cars to go grocery shopping.

Brett Bellmore:

What a load of bollocks.

For one thing, where does anyone even get the whole idea that when a politician help the little guy — which they should be doing in the first place — it’s equivalent to the corrupt practice of “buying votes”? Oh great, the right thing to do is for the masses to elect an elite into power, so that it can pursue _the elite’s own interests!_

And more importantly, your impassioned rant is totally free of fact. Bush, Gonzales, Alito, Wolfowitz, Bremer, Enron, etc. — they all came into positions of power (and abuse of power) by “buying votes” from those evil tax-loving librulz? Right!

Yes, it’s _libertarians_ who are aiding and abetting this whole corrupt crapfest… and they’re aiding and abetting it in a very big way, by making the corruption look like it’s good for the Free World.

Re your remark on the Economist leader writers, I’d like to note that they’re not libertarians at all. They are on principle advocates of free trade, and they do advance the “government failure” argument sometimes (and sometimes its entirely appropriate), but they’re by no means averse to the idea of government as a force for good. See e.g. their take on global warming.

Slocum:

“Left to it’s own devices, the market would do a far better job in devoting resources to alternatives with real promise.”

How do you know? Specifically, how do you know that laissez-faire for ethanol (which reportedly has never been tried) is bound to be superior to some other sort of government regulation (which, well, has never been tried either — bingo!).

The only real answer I’m hearing from libertarians is the good old “we don’t know, therefore we know” argument.

I have (at least) two major objections to libertarians. The first one goes right back to the ‘original’ debate with the German Historial School in which (and I’m aware that I’ve been boring everyone senseless with this point for some time now) in some senses, I think the ‘wrong guys’ ‘won’. That is, libertarians (either of the Austrian School variety or the neo-classical variety) tend to underestimate (greatly) the impact of politics, science (technology) and other forces (not least environmental) in terms of the ‘creation’ and management of markets. They don’t really understand, therefore, how markets arose or why, and so they tend to assume that they have ‘always’ been there, or that markets arose ‘spontaneously’ or something of that sort.

The classic example is of course the ‘rise of the West’. It’s been established by a number of economic historians, for example, that the West adopted protectionist anti-free trade policies to ‘greenhouse’ their indigenous industries (cotton, steel) and only started to adopt ‘laissez faire’ policies when it was in their interests to do so. It’s almost certainly the case that this was the right thing to do, too, and that ‘premature’ adoption of laissez faire policies can lead to your industries being wiped out. (Libertarians also invariably ignore the effect and point of economic imperialism….the British invaded India and China because both these countries produced better quality goods than the British did in terms of a number of industries and it was simply quicker and easier to destroy their competitors militarily than to invest in the technology that would result in ‘beating’ their competitors ‘on a level playing field’.)

The second point is related to the first. Libertarians tend to adopt a very simple (indeed, simplistic) utilitarian approach to the questions ‘what’s best’? But this ignores the question : ‘whats best for whom‘.

Take Slocum’s point about subsidies. Now there is absolutely no doubt that (for example) the CAP is a disaster: it leads to wine lakes, butter mountains etc, and also to the dumping of goods on African markets who can’t compete: hence African (and South American) farming is destroyed. So a ‘lose lose’ situation.

Except…not. CAP does benefit some people. French farmers for example. Also, who says that Europeans actually want Africa to do well, economically? More economic power means more political power means more economic power: there are good reasons as to why Western elites would not want forces hostile to ‘Western values’ (whatever they are) to arise any more than they want them to arise in the Middle East or South America.

So from this point of view, CAP works, and so do other subsidies. But the basic point I’m making (that economics can never be an ‘autonomous’ science: that it can and should always have links with anthropology, psychology, sociology, politics and history) is not one that libertarians tend to be too keen on.

Slocum

“And, it is almost certainly keeping some private money on the sidelines—there are enormous potential fortunes to be made in truly useful non-petroleum energy technologies, but the government pouring money into subsidizing ethanol is certainly going to slow that down. Left to it’s own devices, the market would do a far better job in devoting resources to alternatives with real promise.”

Why would the market do that?! The reason we want alternatives is because the current energy sector is polluting the atmosphere. But this is an externality in that current actors in the market do not have to pay for this pollution and the negative effects will almost exclusively hit people other than the relevant actors (including all of us). Instead it is overwhelmingly people in the future and in other places that will suffer the costs of atmospheric pollution. Left to their own devices rational actors following the logic of markets do not have incentives to do something about these externalities.

Every thinking libertarian I suppose would agree that global warming is a case of a real market failure if looked at from a long term perspective. I guess what they would say is that this problem is just one of those extremely rare kinds of market failures that can only be resolved through government institutions (like law and order and national defense). This is because it is not workable to parcel out ownership of the atmosphere to achieve “efficient” levels of environmental protection as one might be able to do for an over-polluted lake (i.e. something where owners could exclude usage in a cost effective way).

This does not of course mean that libertarians should think that ethanol subsidies are the right way to go. But even the logic used by libertarians commits them to the conclusion that government intervention is necessary if we are to succeed in doing something about global warming.

The problem is that there seems to be an awful lot of libertarians that do not appear to be committed to really working out the implications of their normative premises combined with their economic theories. Instead they operate as knee jerk cheerleaders of the market. This is why those few that appear to be able to combine both tasks with at least some degree of openness, like Cowen, gain much broader attention and regard than the rest.

bi: How do you know? Specifically, how do you know that laissez-faire for ethanol (which reportedly has never been tried) is bound to be superior to some other sort of government regulation (which, well, has never been tried either—bingo!).

I know for certain that markets, left to their own devices, could not have produced the current ethanol-from-corn clusterf**k for the very simple reason that ethanol from corn makes no economic sense without massive subsidies (and makes no environmental sense with or without subsidies). So free markets (appropriately) would not result in ethanol as a preferred alternative energy solution (with the exception of Brazilian corn-from-sugar-cane or unless there is a technical breakthrough in producing ethanol from waste biomass).

Let the inventors and entrepreneurs and venture capitalists place their bets on the most promising, most economic forms of alternative energy.

hidari: Except…not. CAP does benefit some people. French farmers for example. Also, who says that Europeans actually want Africa to do well, economically? More economic power means more political power means more economic power: there are good reasons as to why Western elites would not want forces hostile to ‘Western values’ (whatever they are) to arise any more than they want them to arise in the Middle East or South America.

So to sum up, CAP makes Africans and South Americans worse off economically and politically, and it makes Europeans who are not farmers worse off economically, but what it does do ‘successfully’ is to keep Africans and South Americans poor and politically powerless and, therefore, keeps Europe politically strong in comparison? So Europeans might ‘rationally’ prefer to keep CAP around because although it makes themselves a bit poorer it really keeps the poor, brown-skinned people in their proper places?

Lovely vision that, but I think I’ll stick with libertarianism (or classic liberalism or whatever you want to call it).

“Left to it’s own devices, the market would do a far better job in devoting resources to alternatives with real promise.”

because

“there are enormous potential fortunes to be made in truly useful non-petroleum energy technologies,”

so the obvious thing to do is

“Let the inventors and entrepreneurs and venture capitalists place their bets on the most promising, most economic forms of alternative energy.”

Are cows purple and the sky green polka dot in your world?

Following the logic of everything you say it must be the case that market actors have already solved the energy/climate problem. Or maybe not but this must mean that the market is wildly irrational, hardly an argument for leaving up to them.

The more plausible explanation is that there just are not the kinds of economic incentives that could effect a change in the energy sector of the magnitude we need and at the rate we need (CO2 peaks by 2015 and 50-85% below 2000 emissions levels by 2050).

The lack of free market economic incentives explains why the vast majority of private investment remains overwhelmingly in traditional fossil fuels and not in alternatives.

slocum, I don’t think the absurdity of corn-based ethanol subsidies is a revelation to any of us. (Bob Park has been discussing this in his newsletter for months, if not years.) What you have yet to explain is how the market would naturally adopt any sort of alternative fuel, so long as the cost of oil does not reflect the environmental damage it inflicts, or CO2 mitigation scheme, so long as no one is held accountable for emissions. The market will provide the likes of TerraPass to concerned urban liberals, I suppose.

Climate is not a different issue, it is the issue we have been talking about since you started on ethanol. That is just one example of a government attempt to create ‘the right kind of incentives.’ And you made general claims to the effect that we do not need these kinds of efforts from government, instead we should just ‘let the market bring us into the future.’

Nobody is claiming that markets don’t have a central role to play. What were are complaining about is the typical pseudo-libertarian knee jerk cheerleading of the market and unreflected rejection of the role of political institutions.

A more honest characterization of our discussion is that upon reflection your original claims prove to be false.

Why in the nine hells is Brett Bellmore actually arguing politicians should serve the interests of the few and not the many? Oh, and the privileged few deserve to be privileged because… hey, because they’re privileged! The very fact that they’re privileged shows that they deserve to be privileged!

And Brett Bellmore’s “truths” about how the Evil Forces of Librulizm are destroying America are… still independent of fact. Then again, if you jump up and down and scream “I’m wrong, but I’m still right! I’m wrong, but I’m still right!” often enough, you can turn unfact into fact.

Brett Bellmore:

Oh, the poor “rich people” who are getting “robbed”! Oppressed white males such as Michael Ignatieff, Bill O’Reilly, Steve Milloy, etc. who can help contribute so much more to the world if only we’ll stop robbing them!

And, just to bring Balance to the Force: if we stop “robbing” Stephen Colbert by way of taxes, perhaps he’ll truly be able to turn reality into what we want it to be. And when that happens, Brett Bellmore will be able to make certain facts go away simply by ignoring them. And once taxes are removed, all this and more will be possible.

aaron_m: Climate is not a different issue, it is the issue we have been talking about since you started on ethanol.

Sorry, no — here in the U.S., ethanol is primarily about ‘energy independence’ and $70 oil not Kyoto. We’d have an ethanol program with our without concerns about greenhouse gases (you may have noticed that Republicans who are not keen on Kyoto are, nevertheless, quite enamored of corn ethanol).

Of course it’s true that corn ethanol sucks as much as means to address climate change as a means to achieve ‘energy independence’, so it’s a double failure by government: as an industrial policy and (secondarily) as an environmental policy.

And you made general claims to the effect that we do not need these kinds of efforts from government, instead we should just ‘let the market bring us into the future.

I made no such general claim. I did claim markets would be much more effective in allocating resources to promising alternatives to fossil fuels (and couldn’t possibly create a disaster like the U.S. ethanol program).

What were are complaining about is the typical pseudo-libertarian knee jerk cheerleading of the market and unreflected rejection of the role of political institutions.

My suspicion of industrial policy is by no means ‘unreflected’, but derives from concrete examples of government programs being subverted by powerful interest groups and politicians and turned to their own benefit with the original ‘do good’ rationale serving as a fig leaf (‘energy independence’ and ‘climate change’ in the case of ethanol).

Furthermore, I suggested a specific kind of role for government (Pigovian taxes) which I strongly prefer because they cannot easily be subverted into goodies to be handed out by politicians to powerful interests.

Were you surprised when European governments handed out huge piles of carbon credits to favored industries providing them with windfall profits and generating no reductions in CO2? And are you surprised that we may see a repeat performance? Were you surprised to discover many of the schemes to ‘produce’ and sell carbon credits turned out to be fraudulent? If you were a libertarian, you would not have been surprised — because the incentives are such as to produce just these kinds of results.

“I wonder why libertarians keep forgetting that the US was led out of the depression with the New Deal.”

Probably because we notice that the US, which had a track record of going into and then naturally climbing back out of recessions lingered in the Great Depression for an extraordinarily long time, and strongly suspect that it was the New Deal that put the “Great” in the Great Depression in the first place. And WWII that got us out of it, not the New Deal.

Yes, Bi, I understand liberals have to know who is being robbed, before deciding if robbery is bad or good. As a ‘justification’ for envy and spite, this rather follows.

Random thought: Libertarian philosophy rests on the assumption that Adam Smith was wrong.

Or rather at least that Smith was only partly right. Sure, magic happens when everyone’s greedy and self-interested in the marketplace, but (so the stock libertarian interpretation runs) this is all within boundaries. Governments might conspire to cover up costs and shift externalities onto others even to the point of innocents’ death and suffering, but corporations just won’t, if they can’t use government power to do it. Corporations are just better than that – if they’re turned loose, they will not immediately seek to grab all the powers the state used to have and use them in just as self-interested a fashion.

The lesson the modern conservative movement is teaching us all over again is, among other things, that the corporate world includes people who are as serious about untrammeled power as any other sort of would-be authority.

Why ethanol, exactly, in a universe of alternatives?

I have no answer, but I wanted to say that I love that type of question. Why this oddity, when there are lots of oddities that could serve the same purpose?

54:…I understand liberals have to know who is being robbed, before deciding if robbery is bad or good.

Income redistribution from the top to the bottom and to the middle is sometimes called ‘robbery’, but only rhetorically. Obviously it’s not really the same as robbery. You call it ‘robbery’, I call it ‘justice’ – and here we are: we’ve cancelled each other’s rhetoric and now you still have to explain why you think a from-the-top-down income redistribution is bad or unfair. You haven’t done it so far.

“So wh aren’t libertarians using high fructose corn syrup as an example of subsidies doing real harm?”

I can’t speak for libertarians as I’m not one. But I, along with other classical liberals, have indeed used this very example of subsidies doing real harm. Protecting the (miniscule) number of sugar growers in the US has lead to the internal to the US price of sugar being some three times world levels. This ruins the Everglades, impoverishes more efficient sugar farmers elsewhere and has lead to the development and use of HFCS as a replacement sweetner. And to things like the Lifesavers factory moving to Canada.
Given the power of the corn lobby (which isn’t likely to change given the position of Iowa in the Presidential campaign trail) plus the sugar lobby, we end up with ridiculous things like high duties on hte importation of sugar based ethanol from Brazil etc. etc.

Actually, thinking about libertarians, I think you’ll find that Cato has used this ver example a number of times.

Two- Markets are not more effective in perusing alternative fuels for climate or self-sufficiency reasons because the incentive structures are not there independent of government. The dependence on government intervention is the relevant issue between libertarians and the rest.

What markets will do is invest in those technologies that have the most promise to produce energy that is competitive with $75 oil. Which is exactly what we want (though that’s not all we want).

Is there a role for governments playing a role in providing incentives for clean rather than dirty alternative energy? Yes, there is but — but not the kind of hands-on ‘industrial policy’ role that involves subsidizing politically favored technologies like corn ethanol.

Contrary to the rather cartoonish ideas here, many libertarians do acknowledge the need for a government role here (see the Pigou Club), but they have specific ideas about how the government should (and should not) play that role. So libertarians think Pigovian carbon taxes are a far superior idea to industrial policy for alternative energy (which is already proving to be a disaster).

Shorter libertarian version — establish a Pigovian carbon tax and let the market sort out the best alternative energy technologies given the costs of developing the technologies themselves and also the cost of carbon emissions.

I like the Pigouvian carbon tax idea, in principle.

Put a high tax on fossil fuels. Say, $70/bbl on oil, imported or domestic. I’m not sure what the tax should be on coal, maybe on the order of $100/ton. We need to get the taxes to be more-or-less equivalent.

And then take the money and distribute it equally to citizens. If the tax brings in, say, a trillion dollars a year, write out checks to each citizen for $3000+ each. Make that $250 per month. For a family of 4, that’s $1000/month.

So if they drive, they can spend their tax windfall on expensive gasoline, or if they find ways to economise on gas they have the money to spend on whatever else they want.

People who consume more fossil fuel or more things that used a lot of fossil fuel to make, pay more. People who do less of that get more tax money than they lose.

It would have exactly the right effect. Just what we need.

But in practice what would actually happen? The government would keep part of the tax. And each year the government would keep more of it. It would wind up being just another tax, and a somewhat-regressive one at that.

The trouble is, you can mostly depend on private industry to do the wrong thing, and you can mostly depend on government to do the wrong thing. And you can mostly depend on the public to do the wrong thing too. I’m real unclear what to do about it.

Russell, Slocum, j thomas and perhaps others all appear to support Pigovian carbon taxes. The problem appears to be pessimism, as reflected in Slocum’s post no. 45, that politicians will not pass a carbon tax when they can instead enact a cap-and-trade program and give carbon credits to supporters and local industries.

The Carbon Tax Center has proposed a revenue-neutral carbon tax of $37/ton of carbon, increasing by that same amount each year for 10 years. That works out to approximately 10 cents a gallon of gasoline ($1.00) after ten years. The carbon tax would be phased in so that energy users have time to adapt either through using less energy or by substituting less carbon-intensive sources of energy. Since the elasticity of demand for gasoline is less than that for electricity, it may well make sense to include a higher gasoline tax. Russell suggests $3.00 a gallon. The obvious question is whether that level is politically feasible.

Ah, political feasibility? Is any carbon tax politically feasible? Our answer is “yes.” There is increasingly a recognition that we have to do something about climate change and that the something should include “putting a price on carbon.” Assuming Congress does not act pass a cap-and-trade program before the next election, which seems to be fair assumption, there should be plenty of time to carefully compare carbon taxes and cap-and-trade.

Politically, a carbon tax does have that inconvenient “T” word. But, cap-and-trade really isn’t any better politically. Don’t forget, the idea of both a carbon tax and cap-and-trade is to put a price on carbon to reduce carbon emissions. Guess what happens when you put a price on carbon? Somebody has to pay. Where does the money go? With a revenue neutral carbon tax, such as that proposed by the Carbon Tax Center, the revenues flow back to Americans through a reduction in payroll taxes or rebates. With a cap-and-trade system, the revenues go to polluters if the allowances/permits are allocated rather than auctioned and to all the lawyers, consultants, brokers and traders looking for a profit. My guess is that when cap-and-trade is closely examined, people are going to prefer the revenue neutral tax.

A carbon tax is far easier to administer than a cap-and-trade system. The carbon tax is administered by the existing tax system and should be relatively uncomplicated. A cap-and-trade system, by contrast, is far more difficult to implement and administer. Unfortunately, that complication means the benefits of putting a price on carbon will be delayed for many years. We don’t have time to waste. See the Carbon Tax Center’s paper comparing carbon taxes to cap-and-trade.

Please check out our web site and tell us whether you think we’re moving in the right direction.

Dan, I looked at your website. I think you’re heading in basicly the right direction, nd I liked some of the specific ideas.

I think you should pay careful attention to the intention. Is the intention to reduce US CO2 emissions? If so, then it would mske sense to to tsx by weight of CO2 produced, not by BTU. If one fuel delivers BTU with less CO2, tsx it less.

But I think the effort should be to use less fossil fuel. Then if we desire the tsx come out to $2/gsllon for gssoline, we’d try to set the other levies so we don’t get cross-substitution. Set cosl low enough to get investment in gssoline from cosl which wouldn’t be done otherwise, would not be good.

You suggest returning money for systems which seguester C. This might be good for reducing CO2 but useless to reduce fossil fuel. It promotes corruption too. i’d suggest keeping it out of your effort. Do the C seguestering in s different bill. Keep this one simple.

Similsrly, don’t do revenue-neutrsl by reducing psyroll tsxes. Give citisens their tsx-free checks. Give every bit of the income to them. Then you need to psy to run the progrsm, but it’s obvious to voters where the money goes. They get it. When the government keeps some of it, it’s obvious. When the government keeps some of the money, it’s only s mstter of time before they keep the whole thing snd it won’t be revenue-neutrsl st sll.

My opinions. I think you’re doing very well even though I see some possible improvements.

(Sorry sbout missing the first letter of the slphsbet, I’ll get s new keybosrd soon. It just guit.)

Mike: “Common sense shows that markets can’t educate the populace better because no nation has achieved a well-educated populace without huge government financial support. Likewise roads, defense, health, infrastructure, etc.”

Common sense? Actually, IIRC, literacy in the US was well over 90% and climbing before compulsory schooling (and well before “huge government financial support”), and likewise roads, health, and infrastructure. Spending does not equal quality (a basic assumption that Rodrik seems to share). Also, you really must consult one of the logical fallacy listings like those on your website; it seems like every time you enter a discussion of policy A, you end up with a list of legitimate activities that goes, “defense, police, A” as if they were on a continuum.

rdf: “2.If that fails they will attack the person that they disagree with, usually with derision and if that doesn’t work obscenity.

“3. Why libertarians are important is because their leaders are paid shills that work for a small group of super wealthy conservatives.”

Your third point is an example of the tactic described in your second point. Ditto your follow-up post.

J Thomas,

Yes, the intent is to reduce CO2. We’re proposing a Pigovian tax that internalizes the costs of carbon. That’s why we’ve proposed a tax on a per ton of carbon basis. Our focus is on CO2, for environmental reasons, as opposed to fossil fuels. Substituting natural gas for coal-fired electricity generation is something that we want to encourage. Of course, substituting solar or wind for fossil-fuels would result in greater CO2 reductions and would be preferable.

We propose a credit for sequestration, since sequestered SO2 is not released to the atmosphere where it will contribute to climate change. There will obviously have to be carefully developed protocols to avoid corruption and to ensure that sequestered carbon dioxide is not released to the atmosphere at a future date.

We are indifferent to whether the carbon tax revenues are returned via offsetting tax reductions or monthly rebate checks.

Thanks for sharing your thoughts.

‘What we object to is the government having the power to actually DO anything for business in response to the lobbying’.

But your argument (not logically, but empirically) contradicts itself. To repeat, as Tim Worstall pointed out (and most libertarians are in practice very loathe to admit this), in the modern world, most pressure for subsidies, protectionism, etc. comes not from ‘the left’ but from businessmen themselves, as they see these things (rightly) as being in their own self-interest (this is particularly the case with the military).

And these people fund political parties, especially of the Right and expect to have (and do) an effect on the policies pursued (if you think ‘lobbying’ is simply another word for free speech you really should get out of your ivory tower more. Lobbying is another word for what we used to call ‘bribery’: ie I give you money, you do what I tell you).

So parties of the Right are (as one might expect), in favour of subsidies and protectionism that benefits their donors and parties of the Left are in favour of subsidies and protectionism that benefit their donors (i.e. trade unions….except in the case of Britain where both Labour and the Conservatives are in favour of subsidies and protectionism for private donors (‘lobbyists’)).

This is the ‘left-right’ divide. He who pays the piper etc.

And this will never change until party funding changes, but libertarians tend not to be in favour of this as it restricts ‘free speech’, and so a logical trap is created.

The only alternative is that some libertarian party might be swept into office with a radical libertarian agenda. And here is where the libertarian’s view is so different from what is actually the case. There are dozens of libertarian parties in almost every country. They remain small and powerless (i.e. politically…they may control think tanks etc.) because, overwhelmingly, people do not want to vote for them, and this is not because people are misinformed about libertarianism but because they are informed too well.

Libertarians also tend to be fantasically naive (or ignorant) about how markets actually function in the real world (as opposed to how they ‘ought’ to function), how they arose in the first place (libertarians tend to assume that markets have ‘always’ existed, which is false), and how politics and markets interact (not least in terms of the function of wars and empire) but that’s enough to be going on with for now.

Tim

what’s the ‘classical’ (i.e. Adam Smith) position on, for example, the Competition Commission (previously the Monopolies Commission)?

You seem to imply that the ASI would be against it but surely the existence of such an agency strengthens rather than weakens the state?

And a final point: yes ok perhaps the Cato institute does rail against corporate subsidies. But do they accept that corporations want subsidies not because they are irrational but, on the contrary, because they are being only too rational? In other words, are they arguing that corporations want subsidies because they are being ‘irrational’ and don’t know what’s best for themselves, or do they admit that corporations are entirely rational and that free markets are best ‘for the public good’ (but not necessarily for individual corporations/businesses)?

This isn’t a loaded question: I don’t know much about libertarianism and would genuinely like to know.

‘I haven’t seen the discussion about how to keep rich people from bribing the legislators to make bad laws.’

And how could you possibly have that discussion without discussing strengthening the state, at least in some respects?

I would also point out to bb that historically democratically systems have a better record of promoting free markets than any other sort of government, in spite of occasionally being corrupted by plutocrats (giving the opportunity for populists to fight back). I know that Libertarians imagine some sort of robot dictatorship, but I personally prefer dynamic, evolving democracy.

Libertarians and funding.
Both the George Mason economics department and CATO have gotten the bulk of their funding from a single person – Charles Koch.

I said above that many pundits were shills. Here is some data that I’ve collected on the connections. You can draw your own conclusions:

Charles Koch and Libertarianism – How to “Buy” a University

Despite my title there is no editorializing on my part in the paper.

Notsneaky:
GMU is supposed to be a state school, what do you mean by a libertarian university?

Rich people give to universities all the time – they endow chairs, put their names on buildings and fund science that interests them. Where do you think Harvard gets it money from? The idea that Charles Koch has given $23 million to fund Tyler and I as corporate shills is pretty damn funny. I guarantee you our words are not worth that much! :)

notsneaky, do you seriously deny that the ranks of corporate shills are heavy with libertarians?

when people say “shill”, notsneaky, they don`t mean a person defending their ideological view that a particular social arrangement might be better for everyone – like, say, Paul Krugman defending free trade.

No, what we mean is a bunch of cheap, extremely morally flexible prats taking money from very partisan sources to attack the facts behind issues that affect everyone`s health and wellbeing, to the benefit of those partisan sources.

Or perhaps you have been sleeping through the debates about tobacco, DDT and global warming?

Still, you stand up to libertarian form, telling others that their opinions are “really freaking stupid”, and yet being too conservative to say “fucking”. There can be no doubt, half-jokingly or in half-jest, that you are a dick.

The fact that this discussion is about “libertarians” and assumes that they are all right-wing free marketeers says it all about the power of money to distort political discourse.

Until the 1970s, libertarian meant in America (as it still does, in other countries) an anti-state socialist like Proudhon, Bakunin, Goldman and so on. For these libertarians, “property is theft” (see “An Anarchist FAQ” — http://www.anarchistfaq.org) The right-wing appropriated the name for their form of extreme capitalism. With the amble funding by right-wing millionaires, the original use of the word has been forgotten.

Needless to say, genuine libertarians do not consider rule by capitalists and landlords as being remotely libertarian or anarchistic. After all, what is “libertarian” about a boss banning unions (i.e., freedom of association and speech) on their property?

If the state interfered as much as bosses do in the lives of their subjects, most people would agree it was tyranny. The task of right”-libertarianism” is to justify the power of property and the authoritarian social relations it generates. A better word to describe them would be “propertarian.”

“Most libertarians agree that we need a court system and police to enforce the laws, since without that we depend on individual initiative to stop corporations that compete by blowing up each other’s factories etc.”

Well, yes, that’s the problem with anarchism: Corporations would evolve into states! Until we find a way to stop this, we’re best off having a state around to avoid ending up with a worse state. But acknowledging this is scarcely the same as going, “States are good, rah rah rah!”

I’ll say this about Austrian economics being propaganda for the rich: who else can afford books in Routledge’s “Foundations of the Market Economy”? Each book is $170.

Oy. Try getting books on the Cambridge Capital Controversy. That, um, Them, Ponies, will run you into 700$ or so. Labor theory of value and all you know. It took a lot of “socially necessary labor” to produce’em. As opposed to the above where it’s obviously the very high level of subjective valuations that makes for high prices.

You think I was just joking, but it’s true. It’s all propaganda for something or other:

http://www.ifilm.com/video/2744648

“notsneaky” is being silly. Cohen and Harcourt’s expensive collection is obviously targeted at sales to libraries for their non-circulating references, not individual academic researchers. Not that I don’t think both sets are too expensive.

And I don’t know what the Labor Theory of Value has to do with anything.

notsneaky, my point is merely that in real life most people are too polite to divert a conversation away from an inconvenient fact by calling their interlocutor stupid. I’m sorry if by extending this (perhaps too charitable) assumption to you I gave you the mistaken impression that there was some kind of boast about my biceps involved. You don’t have to be touchy about it though – just answer the original question (or ignore it, if you really honestly think that it is so mind-bogglingly stupid).

sg, i guess this needs to be spelled out for you. Your question was in the classic “do you deny that you still beat your wife?” spirit, hence not even worthy of the mocking attention that I’ve given it so far.

yeah notsneaky, if the question were presaged by presentation of a medical certificate, photos of the bruises, and a signed confession of a history of beating. Then “do you deny that you still beat your wife” is a slightly different question, no? Especially if the person being asked the question had popped up at a public discussion to imply that it never happened, or it’s normal behaviour or something.

Libertarians are shills. Their leading “thinkers” (if such a word can be applied to a rabid ideology) are paid by big companies to defend those companies’ interests. The unpaid libertarians all cheer on the deceptions and thuggery of their paid counterparts, and accept everything they are told unthinkingly. The paid shills routinely accuse scientists of making up science in order to get money from the government, but their cheer squad get very upset when the same accusation is made of them. In the process of engaging in this dirty little circle jerk, libertarians have attempted to drag the reputation of whole branches of science and public health through the mud.

This is all well known, except apparently to libertarians and their fellow travellers, who seem to think that money only corrupts when it is given by governments to scientists.

J. Thomas

If I ever come up with a wonderful idea to improve the world by encouraging people to practice simple decency, and then somebody tries to take over the world and gets billions of people killed in the name of my idea, I am going to be pretty upset. At least if I survive to hear about it.

Sounds like Karl Marx to me. Do you have somebody else in mind?

I think we were just joking past each other. For what it’s worth I knew you weren’t being serious and replied in the same spirit but then it occurred to me that quite likely some people around here might take that at face value, hence my later comment.