Rant on Carbon Tax
I enjoy writing for investingblog.org as a way to communicate with investors and those interested in financial news. I like discussing ideology and thinktanks and dissecting what is really going on. After a comment on the carbon tax credit post, I had to continue the discussion. I think with an open ended conversation we can all better understand what’s going on around us. Here it is, right here, on why I dislike any carbon tax. A bit of a rant, if you will…
My problem is not that the government would lose money on the operation. Government does not create anything, instead it transfers, terribly inefficiently, large sums of money from one to another. If anything, it loses money simply due to the massiveness of the operation.
My issue is that the private sector will be instantly less competitive regardless of how much of a tax credit is passed on. Even if I have more money, I would not be more inclined to buy a US made good compared to another good that does not have extra carbon costs.
Microwave made in the US $60, microwave made in China, $55. Which do I buy, considering that I’m unlikely to read where the product was made? China.
For far too long we’ve relied on a consumption based economy. We buy things we don’t need and can’t afford from overseas, then borrow money from overseas to finance the purchase. If we were buying something to create wealth it wouldn’t be an issue. But since we’re buying something to consume, to use for a few months then throw away, we’re exchanging productivity for virtually nothing.
We need people to buy things that are made in the US. We need to EXPORT products, rather than import them. We export little and import plenty. And one of our biggest imports is energy. ENERGY. We can’t make more expensive what we cannot already afford. Its bad policy, we won’t buy proportionally less, instead we’ll spend MORE. More overseas and less here, that’s what put us in the mess to begin with.
If the rest of the world follows suit in catching up with the whole carbon tax, there would be no loss. But now is not the time to give other nations an absolute advantage over your productive elements of society.
And by the way, if you’re thinking about it, good luck carbon taxing imports. There’s no way it could be done effectively, you risk creating a black market of goods, and it would be nearly impossible to record every import into the United States. To police the tax would cost more than lost revenues. Many nations have made it clear that protectionism will not fly, taxing imports would create a G20 crisis.
Maybe later, but not now. The quest for fuel efficiency has taken us down a road that is presently not affordable. It may be in the future, but right now its nothing more than a powerball ticket. Play the odds, keep it safe, don’t make any big macroeconomic decisions.
I agree on the possible negative impacts of carbon tax on internal manufacturing and/or production, however competitiveness against import goods can be retained or balanced with sort of custom duties which means governmental action necessary on this. So the situation is not that desperate, one should bear in his mind that climate change is more important than daily concerns and small calculations.