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The issues presented in this Q & A presents what journalist/economist/anthropologist David Brooks calls an "emergent system," or a situation made more intense than the sum of its parts--and therefore more difficult to solve. Environmental justice sounds like an issue that cannot be solved just by fixing the one "lynchpin" issue, but requires addressing air quality, poverty, transportation, healthcare, and all the other issues mentioned. I think that Tejada realizes that the issue is comprehensive and cannot be easily defined or easily fixed. So I would also warn readers to consider the "successes" and remember that solving problems requires more than just defining them.
Doug's above point references the "3 methods of Pursuing the Optimum Amount of Carbon Emissions" discussed in class-- tax, cap-and-trade, and command and control. As Doug explains, with cap-and-trade, the amount of emissions can be certain but the method doesn't necessarily create the lowest abatement costs. But on the other hand, doesn't it have the option to have a LOWER overall abatement cost? What if all firms are exaggerating their abatement costs and it ends up being a less costly solution? We've talked about this in class that many firms actually exaggerate the cost and find it easier to reduce than they thought. Plus, cap and trade offers the option of making money. If we can admit that climate change is actually a problem, then I think people would agree that cap and trade is the best solution. The American spirit is build on adaptation-- so politicians and lobbyists digging their heels in only gets us so far, and burying our head in the sand only buys us so much time before we actually have a serious problem on our hands.
Toggle Commented Mar 9, 2013 on Another Political Football at Jolly Green General
Cort brings up a relevant point, about economic incentives. It's one thing to be shocked and grossed out by air quality, it's another to present the issue as an economic one. The biggest consideration, to me, is that of productivity. In class Professor Casey explained that many US firms looking for outsourcing labor and manufacturing are skipping over Mexico for China because of the heightened productivity China offers. But the issues Flanagan mentions in the article--air pollution, water quality, and soil contamination-- scream out productivity issues. Workers won't be able to work as much, soil won't be as fruitful, and firms can't use contaminated water without cleaning it. So the production possibility graph we've looked at in class will shift down, because capital won't yield as much output. And if China wants to keep its edge over Mexico, it needs to deal with these issues. And bringing about this change won't come from imploring companies to do so--like how car companies invented the SUV to skirt US car emissions regulations. Companies and consumers need to see the economic benefit in changing their ways.
Toggle Commented Mar 2, 2013 on Off The Charts at Jolly Green General
The 45% additional reduction is great news, and surely a testament to the states' success with the RGGI. The author talks about the economic benefits and savings, and certainly makes it an attractive package, from a governmental standpoint. This Keynsian approach shows how government spending can spark the economy, with revenue, energy savings, and jobs created. I agree that at this point in our government's fiscal situation, we need more creative solutions, and need states to step up, instead of foisting the problem onto the federal government. The RGGI is an exciting, compelling tale that will perk the ears of other states, I just worry that more conservative (stubborn?) Southern states won't be as amenable. Further, the carbon pollution reduction is great, and might buy us more time, but more states and countries need to hop on board.
This article is particularly pertinent as our nation deals with the fiscal cliff looming, debt growing, and a budget that can't handle another financial burden-- dealing with self-imposed natural disaster costs. I'm typically a proponent of small government and lower taxes, but I think that we do need to find a way to meet in the middle and collect as much as we spend. What's especially interesting--or ironic-- is that this article comes at the same time as Virginia governor Bob McDonnell proposing eliminating the gas tax in the state of Virginia to encourage economic growth, stimulate travel and tourism, attract industry to the state, etc. He plans to make up the losses of a gas tax with higher sales taxes. This article says that the gas tax would encourage people to burn less fuel and raise a lot of money. McDonnell's proposal would do the opposite: encourage more fuel consumption, induce more wear and tear on the highways, create traffic, and make more pollution. All these are negatives but it goes to show that environmental priorities are far from his mind and that the public has little concern over equating social and private costs. Gas is a hot-button issue and McDonnell's proposal may be popular but it won't help us if we fall over the fiscal cliff or if another Katrina hits and we can't afford to send help.
The author of this post makes an interesting clarification, and since I'm still a less-than-savvy economics student, I wouldn't have noticed it had he not pointed it out. The "tax policy" concept for adjusting behavior is too broad to fully capture what an environmental Pigouvian tax actually does. A Pigouvian tax adds a price onto of the "market price" to fully capture the cost in negative externalities, and instead of decreasing efficiency as a fiscal tax does, it increases efficiency because it captures the full cost. The author of this post says that this style of tax doesn't actually create deadweight loss, and I think Professor Casey's post title addresses the fact that this is a common mix-up. The win-win result that Pigouvian tax engenders means that the policy doesn't increase social costs, and instead creates a positive indirect cost, or a gain, if you will. Taxes diminish negative behavior by adding in the real cost of the negative externality, and earn more revenue at the same time. So to use the example from class, while may kids want more crayons at a lower price, the tax does not present an indirect cost, because it's keeping toxins out of their little bodies. The direct cost of the tax may still include identifying the externality, measuring it, monitoring it and enforcing it, but the indirect cost cannot be considered deadweight loss because this actually improves efficiency, and more importantly, it keeps toxins out of kids… just because they want to eat them doesn't mean they should. So Pigouvian taxes are actually a tax we can all get on board with, because everyone likes a win-win, right? My hunch is that it's not that simple, but on ethical grounds, not purely economic grounds. I envision people protesting the government restricting crayon-eating, saying that if I want to eat crayons I should be able to. This argument omits the fact that crayon-eating is inefficient because it will lead to medical costs, possible decreases in productivity as our children grow up into sub-par workers with brain damage, etc. etc. (who knows what it really does...?) This crayon example falls short because it doesn't create a negative externality for others, like second-hand smoke, water pollution, etc. might. In those cases, the fallacy of the deadweight loss is better illustrated, because taxing companies on water pollution might create a difference in how much pollution the company wants to create, but it captures a gain for society, and more money for the government which could be used for, hopefully, education, clean-up, and research about the problem.
Toggle Commented Jan 21, 2013 on My Bad..... at Jolly Green General
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Jan 14, 2013