Thomas Friedmann in the NYT making the case for a carbon tax (or at least a much higher tax on gasoline) yet again:
The two most important rules about energy innovation are: 1) Price matters — when prices go up people change their habits. 2) You need a systemic approach. It makes no sense for Congress to pump $13.4 billion into bailing out Detroit — and demand that the auto companies use this cash to make more fuel-efficient cars — and then do nothing to shape consumer behavior with a gas tax so more Americans will want to buy those cars. As long as gas is cheap, people will go out and buy used S.U.V.’s and Hummers.
There has to be a system that permanently changes consumer demand, which would permanently change what Detroit makes, which would attract more investment in battery technology to make electric cars, which would hugely help the expansion of the wind and solar industries — where the biggest drawback is the lack of batteries to store electrons when the wind isn’t blowing or the sun isn’t shining. A higher gas tax would drive all these systemic benefits.
Which one of these things wouldn’t we want? A gasoline tax “is not just win-win; it’s win, win, win, win, win,” says the Johns Hopkins author and foreign policy specialist Michael Mandelbaum. “A gasoline tax would do more for American prosperity and strength than any other measure Obama could propose.”
Now I’m pretty sure, there should be several ‘lose’s in there as well. After all, if this were a true Pareto improvement, I’m pretty sure it would have happened already somewhere in the world. But the overall benefits of a carbon tax are so overwhelming and the loses can probably be kept to a minimum if we structure it right (e.g. by cutting payroll taxes, upping the EITC and other things to replace the lost purchasing power) that there is really no good reason not to do it.