Month: December 2009

John Corvino debates the word:

[T]here’s a difference between identifying [homophobic] bigotry, on the one hand, and labeling any and all people who disagree with us as bigots, on the other. Such labeling tends to function as a conversation-stopper, cutting us off from the “moveable middle” and ultimately harming our progress.

Agreed. Prejudice is complicated. It can exist in the human psyche alongside genuine compassion. No one is defined by hate any more than anyone is defined by love – or at least, that's what my faith teaches me. David Link has a brilliant addition to John's arguments here. Money quote:

Many people who don’t support same-sex marriage are not bigots, and it does not help us to use the epithet promiscuously. John tries to tease out a more helpful definition of “bigot” than dictionaries provide, and moves the ball downfield a bit. But he sets himself a hard task.

That struck home for me when a rabbi (whose name I did not catch) testified against the New Jersey bill, and asked the legislators to think about the fate of an “innocent lonely child” who is adopted by a same-sex married couple. His testimony is at the 8:18 mark in Blue Jersey’s live blog.

The unadorned words do not capture the rabbi’s deep, fearful concern for this hypothetical child. I obviously can’t speak about what moved this man. But listening to him, it is tragically clear that there is no room at all in his world for the simple possibility that such a child might not be lonely in a loving home headed by a gay couple, or that the child could thrive and

have a wonderful life.

The irony is that by eliminating such a possibility from his imagination, he may be preventing some real child that tangible benefit. It is this moral editing – this internal censorship of good possibilities – that exempts some people from being called bigots.

I can’t really imagine how anyone could do that – suppress from their consciousness a fellow human being’s decency or happiness or value. But it is something necessary (if not sufficient) for prejudice to prevail. I don’t think this rabbi wishes us harm; but it is just not within him to see us as blessed. His cramped view of the world takes something essential away from us.

TNC returns to the topic:

One problem with the debate around reparations, when it was hot, was that it allowed us to go where we are all most comfortable–our respective corners–and yell at each other. The focus on money, or on some form of direct payback, obscured a potentially deeper discussion in which white folks acknowledge some of the distressing roots of this country, and black folks acknowledge that some debts can not be repaid. Instead we got this cheap, cartoonish debate about cash. It's like everything else.

Max Blumenthal profiles Rick Santorum:

Santorum complemented his activism with an almost unremitting stream of extreme statements. In an interview with the AP, for example, he compared homosexuality to “man-on-dog” sex, prompting the female reporter to plead, “I’m freaking out here!” In 2005, as he geared up for his reelection campaign, Santorum blamed the Catholic church’s sexual-abuse scandal on the “academic, political, and cultural liberalism” of Boston. Comments like these, along with the denunciations of feminism and single motherhood that riddle the pages of his book-length culture-war manifesto, It Takes a Family, may call into question Santorum’s viability in a general election. Yet in Republican primaries dominated by the Christian right and tea party activists, his strident streak could prove beneficial to him.

Dan Savage may have to update his website.

Not as interesting as the Green Room, but you might enjoy the razzing I get at the end of the segment.

Greg Mankiw offers this testimony from Brookings' Ted Gayer on the superiority of a carbon tax or fee over the cap and trade mechanism. I find it persuasive and reproduce it in full below. The full PDF with footnotes can be found here:

My testimony will make the following points:

1.    Either a carbon tax or a cap-and-trade program will result in substantially lower economic costs than command-and-control regulations that mandate technologies, fuels, or energy efficiency standards.

2.    Given the uncertainty of the future costs of climate policy, a carbon tax is more economically efficient than cap-and-trade.

3.    Carbon allowances in a cap-and-trade program would be susceptible to price volatility. Price volatility causes economic disruptions and complicates investment decisions. It also could lead to political pressure on Congress to repeal or substantially loosen the cap.

4.    A carbon tax, in which the revenues are used to offset economically harmful taxes or to pay down our deficit, would substantially lower the cost of climate policy compared to a cap-and-trade program that gives away allowances for free.

5.    The currently proposed climate bills rely heavily on offsets to reduce the overall costs of cap-and-trade. Given the substantial potential value of offsets, there is a very real concern that offset integrity will not be maintained. This would result in a weakening of the cap, undermining its environmental benefits.

Please allow me to elaborate on these points.

1. Carbon tax and cap-and-trade are preferable to command-and-control.

A carbon tax is similar to cap-and-trade in that they both rely on sending market signals to raise the price of carbon, rather than relying on more inflexible – and thus more costly – technology and fuel efficiency mandates to achieve carbon reductions.1    For existing air pollution regulations, command-and-control mandates result in up to 22 times the cost relative to a market-based approach.2    Command-and-control regulations, such as technology standards, might be preferable to market-based regulations when measuring emissions is costly or infeasible. However, this is not the case with carbon emissions.

I believe the over-reliance on inflexible command-and-control regulations in the existing Clean Air Act and in the House energy bill [HR 2454] will result in much higher economic costs than would reliance strictly on a carbon tax or cap-and-trade. Indeed, were cap-and-trade or a carbon tax to be enacted, the additional command-and-control regulations – such as the renewable fuel mandate, the renewable electricity mandate, and the various energy efficiency requirements – would likely just add to the overall cost of the program without accruing any climate benefits.

2. Given cost uncertainty, a carbon tax is more economically efficient than cap-and-trade.

When there is uncertainty about the costs of reducing a pollutant, a carbon tax and cap- and-trade yield different results with respect to economic efficiency.3    With respect to climate change, the benefits of carbon reduction are related to the stock of the pollutant, whereas the costs are related to the flow of the pollutant. Under these circumstances, a carbon tax yields more economically efficient results than cap-and-trade.

3. Carbon allowances in a cap-and-trade program could be susceptible to price volatility.

The main distinction between a carbon tax and cap-and-trade is that the former gives certainty about the price of carbon, whereas the latter gives certainty about the quantity of carbon emitted. Market participants prefer stability of prices, in order to better plan capital decisions, including long-term investments in low-carbon technologies. The price volatility of a cap-and-trade program would likely also increase pressure on policymakers to eliminate or substantially weaken the cap, thus creating more uncertainty about future prices.

Price volatility, as well as my previous concern about cost uncertainty, could be addressed relatively easily within a cap-and-trade program. For example, a cap-and-trade program that included a safety valve price – in which the government offers to sell additional allowances above the cap at a pre-established price – would eliminate the risk of high-end price volatility. A Congressional Budget Office study on the policy options for reducing carbon emissions also noted that a safety valve would limit the cost of a cap- and-trade program.    And a recent paper by my colleagues at Brookings suggested a price collar, which would establish both a price floor and a price ceiling for cap-and-trade allowances, thus addressing the problem of price volatility.    Unfortunately, the House energy bill does not include any such provisions. A carbon tax could offer a cleaner approach to tackling the issue of price volatility.

4. A carbon tax that uses the revenue to offset harmful taxes would substantially reduce costs.

A carbon tax generates public revenue. A cap-and-trade program generates public revenue only when the allowances are auctioned off by the government. In practice, this rarely happens, and the allowances are instead given away for free to regulated entities. Failing to capture and direct this public revenue to reducing economically harmful taxes and deficits would substantially increase the cost of any policy.

Any successful climate policy would increase the prices of such things as electricity and transportation. These price increases amount to a reduction in real incomes, which in turn magnifies the economic inefficiencies in our overall tax system.   These inefficiencies – known as the tax-interaction effect – can substantially increase the overall cost of any environmental regulation, even in some cases leading to negative net benefits.
The way to address this problem is to use public revenues from a carbon tax to offset inefficient taxes or deficits. A carbon tax set at a similar stringency to the House energy bill’s cap-and-trade program would likely result in $60 to $100 billion per year9 that can be used to reduce other economically harmful taxes. A revenue-neutral carbon tax would achieve former Vice President Al Gore’s aim to “tax what we burn, not what we earn.”

5. Carbon offsets could undermine a cap-and-trade program.

In a cap-and-trade system, an offset is a reduction in carbon emissions from sources that are not subject to the mandatory cap. The advantage of offsets is that they can provide many sources of low-cost reductions, thus significantly reducing the overall cost of achieving an emissions reduction goal. This can be seen in the currently proposed climate bills, which rely heavily on offsets to reduce overall costs of cap-and-trade. According to the EPA’s analysis of the House energy bill, international offsets would average over 1 billion metric tons of carbon dioxide equivalent per year.    Without international offsets, the allowance price would increase 89 percent.

But offsets also pose a substantial problem in that they are difficult to measure. The enforcement of a carbon tax or a cap-and-trade program relies on measuring carbon emissions, typically by measuring the carbon content of fuel inputs. Offsets, on the other hand, rely on measuring emission reductions, rather than emissions. This introduces a host of problems, because it is difficult to know what would have happened to emissions absent a given offset project. For example, planting a tree will only lead to a net reduction in carbon emissions if 1) the tree would not have been planted without the offset provision, and 2) the tree will not be subsequently destroyed after the offset purchase takes place.

The difficulty of measuring emission reductions could lead to honest mismeasurements, in which reported reductions are not real. And given the substantial value of offsets in the proposed cap-and-trade programs, it could lead to deliberate mismeasurements of carbon reductions. A similar problem that also arises with cap-and-trade is the treatment of early reduction credits. These are credits given to count against the cap, based on reductions that have occurred in years past. These early reductions are even more difficult to measure than any future offsets, so are more likely to undermine the integrity of the cap-and-trade program.
Unless the integrity of carbon offsets and early reduction credits can be assured at relatively low cost, the environmental benefits of a cap-and-trade program could be substantially undermined, resulting in a program that transfers wealth without achieving climate benefits. Given the financial crisis of the past few years, we should be cautious about creating an active market in a poorly-measured financial instrument.

Conclusion

I acknowledge that my arguments in favor of a carbon tax over cap-and-trade are made easier in that I am comparing my ideal hypothetical carbon tax to the actual cap-and- trade programs either passed by the House or proposed in the Senate. Indeed, a cap-and- trade program that included a safety valve and that auctioned allowances would achieve many of the economic advantages of a carbon tax.

The most frequent criticism of a carbon tax is that it would be politically unpopular. But to quote Milton Friedman, I think my role is to “prescribe what should be done in light of what can be done, politics aside, and not to predict what is ‘politically feasible’ and then to recommend it.” You, of course, have the more difficult task of determining what is politically feasible. But given the magnitudes of the costs and benefits associated with any climate policy, I recommend to you a careful consideration of the merits of a carbon tax.

A reader writes:

Many climate change activists — myself included — do wish that James Hansen would shut up. The man has a deserved reputation as an environmental hero because of the attention and moral urgency he has brought to this issue. Unfortunately, the closer we get to implementing actual solutions, the more his naivete and lack of policy knowledge get in the way.

Although carbon tax advocates furiously resist this notion, carbon taxes and cap-and-trade are functionally equivalent programs. Either will work fine to put a price on carbon emissions. Let's dissect the passage you quote:

A gradually rising carbon fee…

A gradually declining carbon cap…

would be collected at the mine or port of entry for each fossil fuel (coal, oil and gas).

There's no distinction being made here. Either carbon pricing mechanism requires measurement of fossil fuel use, and the method can be exactly the same in both cases.

The fee would be uniform, a certain number of dollars per ton of carbon dioxide in the fuel.

Here there's a genuine difference: carbon taxes require the government to pick prices (which are subject to intense bargaining and political pressure). Cap-and-trade requires the government to pick emission levels (which are also subject to intense bargaining and political pressure, but also have some grounding in science).

The public would not directly pay any fee, but the price of goods would rise in proportion to how much carbon-emitting fuel is used

in their production.

Once again, there is no distinction being

made here.

The cost of carbon permits is a fee paid by producers in direct proportion to the amount of fossil fuel used, and that fee gets passed along in the same manner regardless of the structure of the carbon pricing scheme. This is true regardless of whether permits are given away or auctioned.

And on and on. It's trivially easy to design equivalent carbon tax and cap-and-trade schemes because the two are means of achieving the same end. To be sure, the policies have small differences that translate into minor theoretical advantage (cap and trade systems are easier to harmonize internationally, carbon taxes exhibit less price volatility, etc.), but the overriding question is which policy has any chance of passage in the U.S. Congress. And by that criterion, there's never been any contest.

The other objections you raise are similarly insubstantial. Cap and trade requires a mountain of regulation? This is just the complexity whine raised by any issue advocates pushing their own "clean and simple" version of a bill. Carbon offsets are deservedly controversial, but they can exist just the same under a carbon tax scheme. And regardless of whether financial "speculation" (an oddly populist left-wing notion for you to embrace) takes place under cap-and-trade, it has absolutely no bearing on the environmental integrity of the cap.

Hansen's proposal is indeed elegant; it's the type of program I would put in place if I were dictator. But I'm not dictator and neither is James Hansen, and by the time his elegant little proposal made it through Congress, we'd be lucky if it looked half so pretty as Waxman-Markey.

Jeff Weintraub does a bang-up job, as usual, of fairly presenting the excruciating calls involved.

Steve Coll previews various sorts of engagement:

[T]here will probably be efforts to renew the aborted Saudi-led negotiations with Taliban leaders around Mullah Omar, which were conceived as a strategic initiative to engage the Taliban in talks that might eventually draw them into a national political settlement in exchange for a time-bound American withdrawal plan. Hamid Karzai has expressed an interest in such negotiations, although his record of succeeding in such talks, dating back to the nineteen-nineties, is not very strong. If achievable, such a settlement could certainly be desirable, if it left behind an Afghan government and army strong enough to defend the country from Al Qaeda and like groups. Such a settlement would be more durable still if it were linked to or coincided with improved relations between India and Pakistan.

A reader writes:

I got my book yesterday.  And it did NOT disappoint. 

Your foreword is beautiful.  I loved the  chronological format.  The Views have always made me happy, too.  And now I can pick up the book anytime.  I got through the whole thing last night, but I want to revisit it to really study each photo. 

What a wonderful way to bring the people of the world together. 

The reviews, now that people are getting their copies, have been uniformly raves. Don't miss out. It's a great Christmas present for Dish addict friends and family. Preview the book online here. Buy it here. The crowd-sourced price of $16.25 will soon run out, after which it will cost $29.95, the regular price. Click here to purchase.