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Weekend reflections

June 12th, 2009
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It’s time again for weekend reflections, which makes space for longer than usual comments on any topic. As always, civilised discussion and no coarse language.

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  1. Peter Rickwood
    June 12th, 2009 at 19:05 | #1

    Can anyone point me to good sources of information on the pros/cons of moving to a tax system that is based mostly on externality taxes (this includes things like carbon taxes, but would be much broader, including things like congestion taxes & pollution taxes)? I’m not after opinion pieces, but more serious analysis of what it would be like substantially away from taxing labour and non-resource consuming services. I know economists and others have looked into this, but would appreciate any suggestions on the best books or papers to start reading. thanks in advance anyone who responds!

  2. June 12th, 2009 at 22:42 | #2

    Congestion isn’t an externality. If you’re one of the people creating it then you’re also one of the people suffering it. That does not mean we shouldn’t seek to manage it better.

  3. June 12th, 2009 at 22:45 | #3

    p.s. Taxes themselves can in some instance be an example of an externality.

  4. June 12th, 2009 at 22:46 | #4

    JQ – I really like the new blog layout. Very neat.

  5. SJ
    June 12th, 2009 at 23:12 | #5

    Peter Rickwood Says:

    Can anyone point me to good sources of information on the pros/cons of moving to a tax system that is based mostly on externality taxes (this includes things like carbon taxes, but would be much broader, including things like congestion taxes & pollution taxes)?

    This is one of the topics that falls under the heading of “welfare economics”. You could try the Wikipedia entry on the topic, or Johansson’s text An Introduction to Modern Welfare Economics

  6. SJ
    June 12th, 2009 at 23:19 | #6

    P.S., if you do read through any of the material on welfare economics, you’re likely to come to the conclusion that “a tax system that is based mostly on externality taxes” doesn’t have many pros.

  7. hrvoje
    June 13th, 2009 at 03:07 | #7

    I’ve been visiting US for the past month and on the last leg I’ve been in San Francisco for the last three days. Yesterday I’ve decided to visit University of Berkley campus, and while there I thought to drop in and see Brad De Long and Robert Reich in person, just to tell them in person that I’m a big fan of their blogs and that they do a great job educating and informing the public, even outside US. So I went to Evans economics building to level 6 and there he was, Brad bunkered in his office full of books looking like a typical academic. I had a quick chat to him, told him how good his blog is, and that I discovered it few years ago from JQ. He remarked that JQ is a great guy and a great economist. So yesterday besides riding on San Fran cable car I had the opportunity to see a personal hero. Reich was away. Now I just have to see JQ and Krugman in person, and my life will be complete:)

  8. June 13th, 2009 at 10:34 | #8

    TerjeP wrote “Congestion isn’t an externality. If you’re one of the people creating it then you’re also one of the people suffering it.”

    That does not follow, although it does depend on how you define your terms. Each new driver adds congestion to the whole, himself included, yes, but also to all the others. He does bear costs, but not the full costs.

    I see the point, though, which is why I do not like to use the term “externality” when analysing the Tragedy of the Commons – there also, the spread costs do not fall on distinctly outside others, but on others within the same group who are basically the same in the material respects. This creates distorted incentives in the usual way.

  9. Donald Oats
    June 13th, 2009 at 10:56 | #9

    I’ve been reading more than is good for the soul on the manner in which science is systematically undermined when the science conflicts with power. Finished Chris Mooney’s “The Republican War on Science”, which follows the two Bush terms and the ructions caused in the US. As the title clear indicates, Mooney’s focus is narrow – Republicans may find the book hard to take – but the points made are still accurate enough. In brief, the installation of political warriors into major government institutions, the rise and rise of the lobby groups, the creation of institutes and journals which mimic scientific intstitutions in look-and-feel but not in processes or content, etc, is an egregious development.

    The ubiquity of the Internet and the rise of blogs and online newspapers has meant that a snapshot of history is captured in the raw, as it were. The History Department of the future is going to have a hugely important resource for dissecting the process of social and political changes in the late 20th century and early 21st.

    PS: what TerjeP said ’bout new layout.

  10. Kevin Cox
    June 13th, 2009 at 15:49 | #10

    Peter Rickwood

    Not sure if this helps.
    You might look at some of the effect of taxes on externalities

    Here is one on reducing the ozone hole through cfc taxes

    http://yosemite.epa.gov/ee/epa/incsave.nsf/22dcaad1f2bc15e8852567840015b4f6/511d430d23ed4d8585256636004f926c!OpenDocument

    Unfortunately the evidence on the effectiveness of this is not good.

    http://www.sciencealert.com.au/news/20081809-18171-2.html

    Here is another one on putting on a fat tax which suggests that it will have little effect. http://www.economics.emory.edu/Working_Papers/wp/2008wp/Frisvold_08_08_paper.pdf

    This is a good one where you can put in your own assumptions about the way the economy works and see what happens with a carbon tax

    http://www.climate.yale.edu/seeforyourself/

    The interesting thing is that under all assumptions using these models the economy keeps growing.

  11. June 13th, 2009 at 21:25 | #11

    I have a friend who is very intelligent but does not believe that climate change is man-made. Can anyone suggest a single URL that will change his mind (preferably in a hurry, given that people are not wont to dwell on tings they consider a waste of time)?

  12. nanks
    June 13th, 2009 at 22:29 | #12

    gandhi – http://bravenewclimate.com/2009/05/18/climate-denial-crock/
    is a good site in it’s own right, but the links in this prticular article are good – check them out and recommend whatever you think your friend will respond to

  13. jquiggin
    June 14th, 2009 at 05:32 | #13

    hrvoje @ #7, That was very enterprising of you. Drop in next time you’re in Brisbane and have a cup of coffee with me!

  14. Socrates
    June 14th, 2009 at 11:07 | #14

    Juan Cole has a depressingly clear explanation of why he thinks the Iranian election result was stolen by the fundamentalists:
    http://www.juancole.com/

  15. Donald Oats
    June 14th, 2009 at 12:23 | #15

    Senator Fielding was interviewed on the Insiders this morning. Although he is pushing the party line of the warming stopped in 1998 and yet CO2 kept rising (ie there is no correlation b/n Temperature and CO2 change), he did say that he would be meeting with Penny Wong and the Chief Scientist on Monday.
    The chief scientist is an astronomer of some note. Would like to be a fly on the wall for that meeting of minds…

  16. Donald Oats
    June 14th, 2009 at 12:29 | #16

    Of course, Senator Fielding would do well to read this week’s edition of Nature.

    He would see the <A href="http://www.nature.com/nature/journal/v459/n7248/edsumm/e090611-09.html"article (Nature 11th June 2009):
    Letter: The proportionality of global warming to cumulative carbon emissions
    H. Damon Matthews, Nathan P. Gillett, Peter A. Stott & Kirsten Zickfeld
    doi:10.1038/nature08047

    Paywalled of course >;-(

  17. Donald Oats
    June 14th, 2009 at 12:30 | #17

    Oops, no preview button. The link should be:
    article (Nature 11th June 2009):
    Letter: The proportionality of global warming to cumulative carbon emissions
    H. Damon Matthews, Nathan P. Gillett, Peter A. Stott & Kirsten Zickfeld
    doi:10.1038/nature08047

    Paywalled of course >;-(

  18. Jill Rush
    June 14th, 2009 at 13:07 | #18

    Donald Oats #9
    It is probably of little comfort but history is riddled with people who have followed science only to have to recant, hide the evidence or be prepared to suffer for their findings because those in power didn’t like what was being said. Leonardo Da Vinci devised a code for his work to protect it and himself. For instance the observation that the world was not the centre of everything was a nasty shock to those who believed it was and it was dismissed for a long time.

    Similarly Darwinism is a theory that even now has its disbelievers. Ideas which challenge the prevailing views of the powerful take a long time to gain acceptance and even after they do there are those who prefer other non evidence based belief systems. Why would anyone accept a theory that would weaken their power, influence and wealth?

    In that context it is interesting that it has been largely the religious power base which refused to accept the scientific evidence and burned witches, tortured heretics and bullied the people into the old world view. This type of approach is entrenched in the Taliban who hate any kind of education apart from religion for boys and the USA Religious Right who also distrust education as a subversive activity.

    Steve Fielding is an old fashioned religious type so it is not surprising that he would be inclined to an anti science position. After all as God is good and is looking out for the world he wouldn’t let people mess it up even though man has been given dominion over it. Using the year of 1998 as the benchmark year for those used to forming beliefs identical to those in their religious group is a way of avoiding the issue by dismissing all of the other evidence whilst maintaining their social links.

    In that context it is surprising that there is so much acceptance of climate change and that the naysayers aren’t even more powerful since religious faith is so strong and powerful.

  19. nanks
    June 14th, 2009 at 14:33 | #19

    The 1998 date as the warmest is incorrect, 2005 was warmer and 2007 similar to 1998. Fielding should be aware of this – I emailed him about it and no doubt many others have. Regardless, it is an easy statistic to look up.
    And of course the trend is obvious. If Fielding is sincere he will soon announce his dissatisfaction with the information he received at the Heartland meeting.

  20. Donald Oats
    June 14th, 2009 at 19:33 | #20

    As far as I’m aware, the revisions in the NASA dataset for global average annual temperature flipped 1998 and 1934 in the order of 1934 then 1998 has the hottest years, but the discrepancy IIRC is 3/100 Celsius Degrees, way below the error bars for the measurement of the temperature anomalies in both 1934 and 1998. In other words, arguments about which is the hottest year are about a paper-thin difference. Clearly both years were stinkers.

    [NB: depending upon the statistical methods used to calculate the various annual anomalies, the ranking of the top few years may vary from dataset to dataset eg NASA vs HADCrut3, etc. Since there is no uniquely appropriate way to do the analysis (especially when missing values enter into the dataset, as happens in sunspot data for example), some small variations are guaranteed but don't in anyway falsify the analyses. ]

    Good on you for emailing him Nanks, but I doubt it will make much difference. My beef with Fielding is that he seems to have raced over to the extremely skeptical – through to the outright ridiculous – crowd, without first doing some homework with the fulltime climate scientists who do this stuff for a living. I’m hoping there will be some relaying of what the Chief Scientist Penny Sackett has to say about it on Monday.

  21. Hal9000
    June 14th, 2009 at 20:07 | #21

    “If Fielding is sincere”

    If Fielding was sincere he’d not have spouted such easily checkable falsehoods as the ‘scientists haven’t looked at solar flares as a possible source of GW’ nonsense.

    If Fielding was sincere he’d have talked to some of the many Australian scientists working in the field, and not gone off to the Heartland Institute to get his talking points.

    If Fielding was sincere his contributions to the national political scene would have been something other than maintaining conscription for private health insurance, keeping alcopops cheap, and spreading FUD about AGW.

    Fielding’s sincerity ranks alongside Peter Foster’s, it’s safe to say.

  22. Alice
    June 14th, 2009 at 20:09 | #22

    I agree Hal – Fielding has been nothing but a shallow empty disappointment since he got in to politics. A country bumpkin I might be rude enough to say.

  23. SeanG
    June 14th, 2009 at 21:33 | #23

    I dislike him but his interview on Insiders was impressive for a person who is not renowned for being able to string together a coherent sentence.

    He does raise a good point – if there is not the correlation between carbon emissions and global warming then public policy focusing on carbon emissions is wrong. It is a logical argument.

  24. SJ
    June 14th, 2009 at 21:41 | #24

    Donald Oats Says: As far as I’m aware, the revisions in the NASA dataset for global average annual temperature flipped 1998 and 1934 in the order of 1934 then 1998 has the hottest years, but the discrepancy IIRC is 3/100 Celsius Degrees, way below the error bars for the measurement of the temperature anomalies in both 1934 and 1998.

    Not true, even in this limited fashion. The series in question was only for 48 states in the US (i.e., minus Hawaii and Alaska), and never purported to be “global”.

  25. SJ
    June 14th, 2009 at 21:49 | #25

    SeanG Says:

    He does raise a good point – if there is not the correlation between carbon emissions and global warming then public policy focusing on carbon emissions is wrong. It is a logical argument.

    Well, yes, if it was true, it would be a logical argument. But it isn’t true, so it’s not.

  26. SeanG
    June 14th, 2009 at 22:29 | #26

    If scientists are saying that carbon emissions are going up year-after-year but there is not the comparable increase in global climate temperatures, then does this not suggest that it is a far more complex collection of issues than carbon emissions?

  27. nanks
    June 14th, 2009 at 22:32 | #27

    Fielding has made a clear statement of intent with respect to the evidence. Nothing I have heard from Fielding indicates he has anything other than incorrect information with respect to climate change. This is not a moral or philosophical issue but a scientific one. He cannot walk away from his claimed intention to abide by the evidence. It will be interesting to see how he responds this week to the mountains of evidence against the Heartland position.

  28. SeanG
    June 14th, 2009 at 23:26 | #28

    Fielding will eventually side with the Government… if only to save his own skin and not to be seen as some sort of odd-ball.

    To what extent is climate change natural and to what extent is it caused by man?

  29. SJ
    June 14th, 2009 at 23:29 | #29

    Shorter SeanG: Blah, blah, blah.

  30. Donald Oats
    June 15th, 2009 at 00:05 | #30

    SJ #24, you are of course correct. The HADCrut3 global average temperature anomaly graph makes it pretty clear just how large a discrepancy there is b/n 1934 and pretty much any year since the mid-90s (allowing for error bars). Anyone can have a gander at the HADCrut3 data, including graphs.

    Cheers,

    Don.

  31. SeanG
    June 15th, 2009 at 06:56 | #31

    SJ :Shorter SeanG: Blah, blah, blah.

    Very droll. How about answering the question?

    If only a proportion of climate change is caused by man then our environmental policy and risk management apparatus is built upon the false argument that once we sort out man-caused environmental change than that would be the end of it. This means we will lack the flexibility to deal with the fact that no matter how much we try – climate change will still occur.

    If carbon emissions is a leading cause of climate change (global warming) than low-carbon emitting technologies must get a look in including nuclear energy. Do you want nuclear plants or are you one of these green chappies who believes that renewable sources are the only way to go despite their lack of efficiency and effectiveness?

  32. Ernestine Gross
    June 20th, 2009 at 07:17 | #32

    Peter Rickwood @1,

    If you were to take out the ‘pros and cons’ bit in your request I might be able to suggest some literature.

  33. hrvoje
    June 20th, 2009 at 20:00 | #33

    @jquiggin
    No worries, will do.

  34. Martin
    June 21st, 2009 at 02:49 | #34

    @SeanG #31: are you suggesting a thought process along the lines of, “I am against nuclear energy, therefore there is no global warming”? I believe this is called wishful thinking, and usually classified as a logical fallacy. Global warming has to stand on the scientific evidence, irrespective of any policy consequences.

  35. SeanG
    June 21st, 2009 at 06:05 | #35

    Martin, I was not suggesting that. Maybe if you re-read my comments you would come to see what I meant was that if you are very concerned about man-made climate change due to high carbon emissions, then nuclear energy would be an acceptable source of power.

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