Oil and the Carbon Tax in Your Future

 

Lawrence Summers, Harvard professor and past president, former treasury secretary and economic adviser to President Barack Obama, has written an op-ed for the Washington Post proposing that the time has never been better for a carbon tax.  His reasoning is sound only when viewed in the context of someone who believes in the federal government as a catalyst for social change. 

 
Mr. Summers and I both think that the current plummeting costs of crude are artificial, forced and temporary.  We also would agree that the 3 trillion barrel limit on available oil on this planet will probably be met sometime in the next 50 years. 

Summers says there is no debate that increased carbon taxation is desirable, but that conversations can occur on its size and how the proceeds of that tax should be deployed.  My reaction is that how the proceeds are going to be used is the key to the conversation.  It is the use of tax revenues that justifies the tax itself.  Tax revenue should never be the desired end of an act of legislation it should be the means to an end.   The difference in this view is one of the things that separates a well-meaning liberal from a well-meaning conservative.

I have no problem with paying taxes.  I like what taxes provide but taxes are designed to provide those services that cannot efficiently be provided by smaller communities or the free market.  Taxes and I part company when they are a bludgeon used to force people to make social or market decisions. 

Summer says that those who use carbon-based fuels or products (everyone and everything) do not bear all of the costs of their actions.  He then quickly segues to the effect of carbon-based technologies on global climate change.  This is really a kind of, “bait and switch” mental exercise.  First of all every good or service you buy does reflect the cost of carbon-based components.  If you so much as order a pizza you are paying for the flour, tomato sauce, sausage, etc. and all of those costs reflect the fuel, fertilizer and processing it took to produce them.  You are paying for the ovens that cooked the pizza, the building it was made in, the wages of the people who produced the pizza—and we haven’t even talked about the cardboard box it came in, or the delivery car.  In economics all goods and services reflect four components: land, labor, capital and entrepreneurship, and each of these has a cost.

Summers skates by this reality and instead lands us in the liberal loving land of global climate change.  That is the project he wants attacked and funded by the carbon tax.  He then justifies all of this by employing an economic axiom, “That which is not paid for is overused.”  Summers would not apply this same logic to welfare or food stamp payments, or socialized medicine, but he will apply it to carbon.  He then adds, “Even if the government had no need or use for revenue, it could make the economy function better by levying carbon taxes and rebating the money to taxpayers.”  Here he is talking strictly about income redistribution, an act which flies in the face of his earlier axiom.  If you give people money they have not earned, they will simply come to treat it with benign contempt and overuse the government’s largesse.

Summers and those he keeps company with are going to try very hard to get President Obama to enact (by executive order) a carbon tax.  

Learn a little economics and keep the faith.