Wait and mitigate (maybe with offsetting taxes)

Holman Jenkins is one columnist you don’t ever want to miss.  From today’s Wall Street Journal, Birth of a Climate Mafia:

The one impeccable finding of climate science is a 40% increase in atmospheric carbon, even if our ability to detect its impact on climate is hampered by extraordinarily noisy weather data and the inadequacies of climate modeling. That’s reason enough many voters might accept a modest carbon tax that would be offset by reduced payroll and income taxes. And if a technologically superior answer to our energy needs is in the cards, tax reform is a better way to help elicit it than anything else government might do.

By the way, if we had to bet, our bet (not preference) would be that humanity will not organize a coherent and meaningful carbon policy. The worst-case climate scenarios will prove overdrawn. Fossil energy will be outmoded over some period by cheaper alternatives. To boot, the world will discover that climate change is not the greatest challenge facing it after all.

And yet, and yet… it’s politically next to impossible to sunset a tax, even in exchange for a new one.  We tend to end up with both the old and the new.  There’s also the problem of global enforcement, which of course requires some form of pooled soveriegnty (or worse!).  As Jim Manzi says in why I oppose a carbon tax, the problem is with the implementation:

To understand why we shouldn’t, let’s move from the world of academic model-building to the real world of geostrategic competition and domestic politics. To realize this gain of $3.4 trillion, we would have to agree to, and enforce, a global, harmonized tax on all significant uses of carbon in any material form. This would require the agreement of — just to take a few examples — the French National Assembly, the Parliament of India, the Brazilian National Congress, the Chinese Politburo, Vladimir Putin, John Dingell, and the U.S. ethanol lobby. As is well known, all these players are completely incorruptible and solely concerned with the comprehensive good of all mankind through all time, and will not let their better judgment be overruled by any narrow, sectarian interests.

All this aside, let’s imagine we actually could negotiate such a binding agreement. Isn’t it possible that all the side deals that would be required to get this done would create enough economic drag to more than offset the benefit of 0.17 percent of present value of global output? Our track record in closing and implementing such deals as the Kyoto Protocol, or even the current round of the GATT process — which, remember, is supposed to make the signatories richer — shouldn’t inspire much confidence that the theoretical net benefits will outweigh the costs created by the agreement.

Further, even if we got to an agreement de jure, we would then have to enforce a set of global laws for many decades that would run directly contrary to the narrow self-interest of most people currently alive on the planet. How likely do you think a rural Chinese official would be to enforce the rules on a local coal-fired power plant? These bottom-up pressures would likely render such an agreement a dead letter, or at least make it in effect a tax applicable only to the law-abiding developed countries that represent an ever-shrinking share of global carbon emissions.

In summary, then, the best available models indicate that 1) global warming is a problem that will have only a marginal impact on the world economy, and 2) it is economically rational only to reduce slightly this marginal impact through global carbon taxes. Further, practical knowledge of the world indicates that 1) such a global carbon-tax regime would be very unlikely ever to be implemented, and 2) even if it were implemented, the theoretical benefits it might create would probably be more than offset by the economic drag it would produce.

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