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Wednesday, July 25, 2007

Brad DeLong: Robert Samuelson's "Intellectual Three-Card-Monte"

Since Brad took the time to do this good deed, I should help out as I can, so here's his reaction to Robert Samuelson's latest column:

Carbon Blogging: "In That Case, We Have No Time to Lose. Plant [the Trees] This Afternoon!" (Why Oh Why Can't We Have a Better Press Corps?/Robert J. Samuelson Is a Bad Person/Washington Post Edition), by Brad DeLong: Mark Thoma does an evil deed by telling me that somebody should take note of Robert Samuelson. And he's right: somebody should. But why does it have to be me?

First, some history: The last time we tried to put a "Pigou tax" on carbon emissions--back in 1993 with the Gore BTU tax proposal--Robert Samuelson opposed it: "Congress," he said, "should... deliver a firm message: We won't pass this [energy] tax... [without] more spending cuts. This would give Congress more time to evaluate the energy tax and put more pressure on the White House to cut spending.... Congress... [should not] be stampeded."

Remember that: Robert Samuelson did not want Congress to be "stampeded" into including a carbon tax in the 1993 reconciliation bill.

Economists believe that things work well when the incentives individuals face--the good or ill that their actions cause for themselves--match up to the good or ill of the impact that their actions have on society as a whole. Thus our liking for energy taxes...: ...a tax on carbon makes [individuals] feel that harm in their pocketbook and so matches up individual incentives with social outcomes. That's what the Gore BTU tax proposal was trying to do.

There are in general two ways that you can match private incentives with social outcomes.

The first is to take individuals' preferences over material goods as given, and use taxes and subsidies to raise the prices of goods that have negative and lower the prices of goods that have positive "externalities"... The second is to try to shift individuals' preferences: appeal to altruism, or to the moral sense ... to get people to feel good about doing deeds that have positive externalities, and rearrange social markers of status and approval to shift people's preferences over goods without changing their material characteristics or prices. Economists generally prefer to work on the tax-and-subsidy side rather than on the preferences side, out of a disciplinary commitment to the idea that cash-on-the-barrelhead is strong and pats-on-the-back are weak. But we do what we can: if we cannot pass a BTU tax, telling people who fund carbon offsets or drive fuel-efficient cars that they are good, responsible, moral people is a perfectly orthodox and constructive thing to do.

But somehow Robert Samuelson doesn't think so today. Attempts to work on the preferences side by saying "good for you!" to Prius drivers get him really, really angry:

Robert J. Samuelson: Prius Politics: My younger son calls the Toyota Prius a "hippie car."... [L]ike hippies, [Prius drivers] are making a loud lifestyle statement: We're saving the planet; what are you doing?... Prius politics is... showing off, not curbing greenhouse gas emissions. Politicians pander to "green" constituents who want to feel good....

California Gov. Arnold Schwarzenegger is the champ of Prius politics, having declared that his state will cut greenhouse emissions to 1990 levels by 2020.... However, the policies to reach these goals haven't yet been formulated; that task has been left to the California Air Resources Board. Many mandates wouldn't take effect until 2012, presumably after Schwarzenegger has left office. As for the 2050 goal, it's like his movies: make-believe. Barring big technological breakthroughs, the chances of reaching it are zero.

But it's respectable make-believe. Schwarzenegger made the covers of Time and Newsweek. The press laps this up; "green" is the new "yellow journalism."... Even if California achieved its 2020 goal (dubious) and the United States followed (more dubious), population and economic growth elsewhere would overwhelm any emission cuts. In 2050, global population is expected to hit 9.4 billion....

[H]ere's what Congress should do... gradually increase fuel economy standards for new vehicles... raise the gasoline tax over the same period by $1 to $2 a gallon... eliminate tax subsidies... for housing.... But practical politicians won't enact these policies, except perhaps for higher fuel economy standards. They'd be too unpopular.

Prius politics promises to conquer global warming without public displeasure.... Deep reductions in emissions... might someday occur if both plug-in hybrid vehicles and underground storage of carbon dioxide from coal-fired power plants become commercially viable.... Prius politics is a delusional exercise in public relations that... [is] not helping the environment [and] might hurt the economy.

In my view, Robert Samuelson is a bad person: when a carbon tax was on the agenda and we had a real window of opportunity, he fought it; now when the only things on the agenda are preference-shaping tools that I regard as very weak compared to a carbon tax, he's against them as well on the grounds that "hippie... Prius politics is... showing off" and that a carbon tax would be good. A little intellectual three-card-monte here, doncha think?

Let me contrast Robert Samuelson's sneering at the "hippies" who want to take the weak "Prius politics" steps at fighting global warming we can take now with one of the favorite stories of somebody I once knew--somebody whose place on the ideological spectrum was the same as Robert Samuelson, but who I think was a good person--the late Lloyd Bentsen, who liked to tell this story and claimed he'd gotten it from John F. Kennedy when they were freshmen in the House of Representatives together:

If you travel through Lorraine, between Neufchateau, Toul, Epinal, and Nancy you find the Chateau de Thorey-Lyautey, retirement home of the French Marshal Louis Hubert Gonzalve Lyautey. Around 1930 the nearly eighty year-old Marshal had a conversation with his landscaper:

Lyautey asked his landscaper if he would on the next day start planting a row of oaks to line the road up to the chateau.

"But Mon Marechal," said the gardener, looking at the aged Lyautey. "The trees will take more than fifty years to grow."

"Oh," said the Marshal. "In that case, we have no time to lose. Plant them this afternoon!"


Notes: Here's the tape from 1993:

Robert Samuelson, Washington Post: March 25, 1993: The Clinton... BTU tax would increase the price of oil by $3.50 a barrel, or about 18 percent of today's price. A ton of coal would increase $5.60, a 26 percent jump. A thousand cubic feet of natural gas would rise about 13 percent.... Yes, it would depress oil imports - but not by much.... Likewise, the tax wouldn't reduce pollution or greenhouse gases because it doesn't cut overall energy use. Economic and population growth will raise energy consumption an estimated 15 percent in the 1990s; the tax might shave the total by 2 percent, says the administration.... The CBO has estimated how big a tax would be required to stabilize emissions of carbon dioxide, the main greenhouse gas and a byproduct of fossil fuels. Compared with the Clinton proposal, the overall tax would have to be twice as high and the tax on coal three times as high....

Clinton... is simply trying to stampede his program through Congress. He envisions a one-time spasm of deficit reduction. By fall, all the political dirty work would be done. This means... accepting a Clinton package that has too many taxes and too few spending cuts....

Congress should separate the energy tax from the Clinton package and deliver a firm message: We won't pass this tax - or its equivalent - until you propose more spending cuts. This would give Congress more time to evaluate the energy tax and put more pressure on the White House to cut spending. Unfortunately, Congress shows no interest in asserting itself. It prefers to be stampeded.

As Robert Samuelson knew back then--and as we all know now--there were no Republican votes for deficit reduction in 1993, no matter what program Clinton proposed. The Republican leadership had decided that they were going to make Clinton's presidency a failure, and would oppose the 1993 budget no matter how many spending cuts were included. Additional spending cuts would have lost left-wing Democratic votes for the reconciliation package. As it was, the reconciliation bill passed by a single vote in each of the houses. Thus a call for Congress to refuse to be "stampeded" was a call for no budget reconciliation bill at all, and thus a call for no increases in taxes--not even on carbon.

    Posted by on Wednesday, July 25, 2007 at 11:16 AM in Economics, Environment, Policy, Press | Permalink  TrackBack (0)  Comments (27)

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