Carbon taxes for all
Well, I don’t always agree with Gary Becker but he has a nice post on carbon taxes and why they could be George W Bush’s friend. He says
A tax on carbon emissions from business and household production would not only help reduce global warming–by how much is still controversial–but it would also lower the world prices of these fuels through reducing the demand for fossil fuels. Lower prices would cut the revenues received by Middle Eastern states from the sale of oil and natural gas. This is why a carbon tax receives support from many environmentalists and national security advocates.
National security isn’t such a big deal for NZ when it comes to energy supply, but it’s nice to know that even conservative economic commentators in the US are starting to favour emissions taxation. Hopefully the NZ government doesn’t need quite as much prodding as Dubya before it implements a decent scheme to meet our Kyoto obligations.
The link between oil imports, alternative fuel sources and national security was actually made in Bush’s State of the Union Address in January:
“For too long our nation has been dependent on foreign oil. And this dependence leaves us more vulnerable to hostile regimes, and to terrorists — who could cause huge disruptions of oil shipments, and raise the price of oil, and do great harm to our economy… It’s in our vital interest to diversify America’s energy supply … We must continue changing the way America generates electric power, by even greater use of clean coal technology, solar and wind energy, and clean, safe nuclear power… Let us build on the work we’ve done and reduce gasoline usage in the United States by 20 percent in the next 10 years. (Applause.) When we do that we will have cut our total imports by the equivalent of three-quarters of all the oil we now import from the Middle East. To reach this goal, we must increase the supply of alternative fuels…” [http://www.whitehouse.gov/news/releases/2007/01/20070123-2.html]
But the Becker-Posner blog goes beyond just reducing the US’s economic vulnerability to hostile acts. They also advocate diversitification for the purpose of withholding revenue from Middle Eastern states: “National security also depends on how much revenue is received by oil and gas producing countries that may support terrorism, or are vulnerable to potential takeover by terrorist organizations.”
In other words, they’re dusting off the theory of mercantilism. Which was discredited once people realised that trade surpluses are not necessarily a souce of national economic strength, especially if they’re acheived through tariffs which raise the cost of crucial imports.
It would be nice if the authors identified which oil and gas producing countries, exporting to the US, may support terrorism or are vulnerable to takeover by “terrorist organisations”. Oooh you mean countries with muslims, right??
Of course the last oil producing to be invaded – also the country with the largest oil reserves in the Middle East – was Iraq. Which raises another risk: raise the price of oil through taxes, and you also increase the incentive for the US to invade 😛
Thanks for the lengthy comment. I was aware of Bush’s address but I didn’t think he was an economic commentator worth mentioning. I suppose the key point I wanted to make here was that conservative economists support taxation in order to achieve emissions standards. They’re not all of the opinion that `technology’ will save the day by waving its magic wand. I don’t agree with all of their reasons but I think it’s a good thing that pressure is on politicians to implement such taxes from both ends of the political spectrum.
I absolutely agree with the rest of your comment about mercantilism.and the war on terror. I’m sure, if we wanted to, that we could spend a long time blogging about the War on Terror and its many unpalatable consequences.