Muck and Mystery
   Loitering With Intent
blog - at -
January 24, 2007
Real Reality

Understanding how democracies really function, and the constraints this imposes on grand schemes, was discussed a bit in Staying Alive. This is the problem with the current enthusiasm for Pigou taxes. As Don Boudreaux said last month:

Even if global warming is a reality, another reality -- one with a much more consistent track record throughout history and across different countries -- is the perversity of political incentives. Given these perverse political incentives (not to mention the inevitable scrawniness of government's access to information and knowledge), I don't trust government to impose and administer a Pigouvian tax with sufficient disinterestedness and skill to make such a tax a plausible policy option.
After the recent SOTU and the expected increased convolution of regulation, Greg Mankiw, the grand high Pigouvian, asks:
. . . if this tangle of regulation is the alternative, isn't it time for them to reconsider?
Boudreaux once again clarifies the issue.
I'd be happy to replace all or even most attempts to reduce gasoline consumption via command-and-control and replace them with a higher tax rate. But that Club is a quixotic club—Archer Daniels Midland and others who benefit from ethanol regulation along with whoever it is that benefits from CAFE standards (regulators and politicians who get lobbied to see it tweaked or delayed?) will make sure that Club's mission is never achieved. But the Pigou Club's goal very well may be achieved and will add a higher gasoline tax to the existing tangle of regulations.
That's reality. It's just another tax rather than rationalized taxation. That's how democracies work. If you wish to have more rational governance the only way to get it is to reduce governance. This won't achieve your heart's desire, but it's a closer orbit. You never get there, but you aren't as far away.
Posted by back40 at 06:06 PM | Energy

TrackBack URL for Real Reality -