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> Just about everything humans do is an exogenous intervention on markets, one way or another

Markets is simply the name for a particular collective of human interactions in response to pricing signals based on supply and demand, it is not a separate entity of its own. Taxes are exogenous in that they distort the equilibrous price points. That is not saying that it is always bad, because markets do fail.

> The notion of the "free market" is a toxic fiction.

Free market is a useful fiction for some economic modeling. No one has invoked the notion that real world markets has to/can be free, as mentioned, they do fail. But also interventions on them do fail catastrophically too.

This is important, because whether to intervene with markets or not is not as hard as the question of exactly in what manner to intervene. Our pet economic policy/intervention ideas might sound nice but rarely work exactly the way intended without side effects. Lack of a carbon tax is doesn't have to be due to a conspiracy of misanthropic apocalyptic evil but simply due to the difficulty of the multi-agent cooperation it requires based on the current incentive structures.




Can you elaborate on multiagenct cooperation? I grant your abstract point that markets are hard, but carbon taxes specifically are pretty straight forward and we can see that Europe has no disastrous consequences in their implementation. Further, we know to a very high degree of confidence that continuing our carbon subsidy will have disastrous consequences. A carbon tax is the simplest and most elegant solution.


> Can you elaborate on multiagenct cooperation?

In short what Paris Agreement intends and what it fails to achieve. It assumes signatories will be voluntarily reducing their carbon emissions without binding enforcement, and they don't.

For a while let's assume that energy production is the only activity that causes carbon emission. Compared to staying at status quo, reducing carbon emissions is at least expensive for its infrastructure transition costs, but can also be more expensive for its operating costs if the country was particularly rich in non-green energy resources. This means, making a transition while others are not is particularly disadvantageous to that state's economy; they will be producing everything for more expensive while buying cheaply produced non-green imports from non-abiding countries. This is even worse if we consider that no single country's carbon neutrality means much for meeting global warming targets.

This means defecting is very profitable for any given country, which creates a game theoretic equilibrium at no one doing any decarbonization. Transitioning to the other equilibrium (where everyone is handicapped equally with green production) requires every agent to be ensured that other agents are not defecting in a lockstep fashion, and current policy tools cannot achieve that (at least yet).


It seems like you’re correctly identifying the tragedy of the commons nature of environmentalism, but then advocating that we ruin the environment because if we don’t someone else will, which is to say the only sure-fire way to lose. Maybe I’m misreading—it’s late. Hopefully you will correct my error.


I am not advocating that, in fact I am with you in how bad it is, but I am also telling what the incentive structure looks like and what would it take to move it to the other equilibrium point. There are many and different types of agents in this game and appeals to morality or apocalypticism just don't work on them. There needs to be a concrete, depolarizing, global leadership that coordinates this transition, to make sure parties don't defect despite cheating being very profitable, and they also believe that this will be the case with others.

Paris agreement was an attempt at this but also demonstrated that we still couldn't muster the political will to do anything sufficiently concrete. Unlike nuclear weapons, which has much fewer agents to coordinate with and a more immediately imaginable impact, climate change proves to be difficult problem regarding the nature of coordination it requires and ease of popularizing the policies around it. We need tools to match that difficulty.


Thanks for clarifying. I don’t see why the Paris Agreement is a useful analog for a carbon tax. A carbon tax doesn’t depend on the good faith of partner countries, but the border adjustment itself incentivizes other countries to reduce their emissions (they want to trade with us). The more wealthy countries who implement a carbon tax with border adjustment, the stronger this incentive mechanism becomes. There is a political problem in getting a larger block of wealthy countries on board, but it’s not unrealistic to think of Europe and North America forming that initial block, and surely there’s enough wealth in those markets that it would incentivize other countries to get on board.

In whatever case, I can’t imagine an environmental solution that won’t have the same (or worse) political problems. As far as I can tell, border adjuster carbon tax most neatly and efficiently aligns incentives.


Yet people are continually intervening in markets, almost always without causing failure. An intervention that produces undesired results can be stopped or modified, provided it it not forced by legislation or biased perception, and something else tried. That is how most ongoing interventions have evolved.

In the US, the necessary flexibility is provided by agencies issuing regulations under statutory authority.

While lack of a carbon tax might not be the result of active evil -- throughout history it has been the result, instead, of garden variety ignorance and sloth -- evil can certainly play a role, and does.

In the US, failure ever to apply laws on the books enabling direct prosecution of corporate officers, or revoking corporate charters, or regulating behavior of monopolies, are indications of evil at work.


> Yet people are continually intervening in markets, almost always without causing failure. An intervention that produces undesired results can be stopped or modified, provided it it not forced by legislation or biased perception, and something else tried

I find that perspective very naive. Economy doesn't have an undo button. If that was the case we could have reverted all the financial crises, depressions etc before they spiraled out. History is full of such failures caused by or made worse with interventions. Economists get a lot of crap for not being a proper science or not being able to predict the future perfectly, but they are what stands between such failures and the impression of "almost always without causing failure". Economy is like a pool table, in which you might aim for your ball to one hole, but might inadvertently hit your opponent's ball into a hole or mess up the table otherwise. There is no undo once you make the hit. Job of the economists is to find the best angles.

> In the US, failure ever to apply laws on the books enabling direct prosecution of corporate officers, or revoking corporate charters, or regulating behavior of monopolies, are indications of evil at work.

Well good luck with that then, because I don't know any solution to solve "evil" other than calling the priests. When we turn these dynamics into conspiratorial archetypes, we shoot ourselves in the foot because it messes up with the framing of our agency. We either give up in resentment to the "evil", or we need to be a force of "good" and fight it, while forgetting that we are dealing with massively complex, dynamical, emergent systems with parameters too many and too big to optimize by a single person, ideology or solution. Just like we don't debug code by invoking "good and evil" because it is a stupid dichotomy that doesn't match the sophistication of the problem, we most likely can't debug society/economy/ecology with that either.




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