Tuesday, February 12, 2008

Will the GOP Ever Join the Pigou Club?

Mark Thoma wonders why there is more support for mandates such as CAFE standards over Pigouvian taxes as a means of addressing the problem of global warming and comes up with this:

In thinking about efficiency as the primary reason for promoting one policy over the other, I think we might be missing something important: equity. More choice is best most of the time, but when it's a matter of being constrained, of not being able to do something you want or need to do, people want that constraint on behavior to be shared equally - especially when it involves something as essential to daily life as energy.

Kevin Drum challenges the premise that mandates are politically preferred to taxes, but then adds this bit of realism:

Republican politicians, of course, are a whole different story. Greg Mankiw can yell "Pigou Club" until he's blue in the face, but as a Republican himself he knows perfectly well that it won't do any good because Grover Norquist and the Wall Street Journal editorial page will cheerfully eviscerate any Republican who dares to raise any tax of any kind, regardless of how efficient it is, what it's funding, or whether it's revenue neutral.

Greg does seem to be trying to alter this Norquist dominance over GOP politics. Good luck Greg!

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