Why is carbon pricing so hard?

I’ve just published a piece in Aeon (an excellent and free online magazine) drawing on the analysis in my (about to be published) book Economics in Two Lessons. I make the case that carbon pricing, whether through a tax of an emissions trading scheme, is the most cost-effective way to stabilize the global climate. Moreover, it’s straightforward to offset any adverse effects on low-income earners, displaced workers and others.

That raises the obvious question: if carbon pricing is so good, why is it so hard to implement, compared to less efficient alternatives like mandatory renewable targets. One factor, which I discuss, is that the creation of property rights over previously open-access resources creates obvious, and often powerful losers.

I was limited by space, so I couldn’t discuss the more puzzling problem of why regulations are more politically salable than prices even in the absence of income effects.

Monopoly: too big to ignore

That’s the headline given to my latest piece in Inside Story

Here’s the opening para

Two hundred years after the birth of Karl Marx and fifty years after the last Western upsurge of revolutionary ferment in 1968, the term “monopoly capitalism” might seem like a relic of outmoded enthusiasms. But economists are increasingly coming to the view that monopolies, and associated market failures, have never been a bigger problem.

and the conclusion

The problems of monopoly and inequality may seem so large as to defy any response. But we faced similar problems when capitalism first emerged, and Western countries came up with the responses that created the broad-based prosperity of the mid twentieth century. The internet, in particular, has the potential to enhance freedom and equality rather than facilitate corporate exploitation. The missing ingredient, so far, has been the political will.


Today I sent off the corrected proofs of Economics in Two Lessons to the publishers, Princeton University Press. They won’t look at it until New Year, but it doesn’t matter. The book is done, and I can sit down to Christmas dinner with the family knowing it’s off my hands.

Opportunity cost and fish

This story about the four-hour abalone fishing season in WA is reminiscent of a number of similar cases discussed in my soon-to-be-published book, Economics in Two Lessons (extract over the fold). However, it turns out to be something of a special case: a recreational fishery where economising on effort isn’t really relevant, and where the activity is culturally significant, mainly for people of Asian background. In these circumstances, a short season, with open access, makes good sense.


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Economics in Two Lessons

’ve just sent the final manuscript of Economics in Two Lessons back to Princeton University Press. I’ll have to correct the proofs, but apart from that, my work here is done.

US publication is currently scheduled for May 2019, hopefully with an Australian edition to follow. I’ve set up a Facebook page (see below) and have been posting extracts regularly.


Economics in Two Lessons Facebook Page: https://www.facebook.com/EconomicsInTwoLessons/?modal=admin_todo_tour