June 20, 2017

WE ARE ALL NEOCONOMIST NOW:

This is the one climate solution that's best for the environment -- and for business (George P. Shultz and Lawrence H. Summers June 19, 2017, Washington Post)

We are convinced that the carbon dividends approach first put forward by one of us (Shultz) along with former secretary of state James A. Baker III a few months ago can strengthen the U.S. economy in ways highly valued by both the left and right and simultaneously spur global efforts to address climate change. Adopting a carbon dividend approach would pay huge dividends for the global climate, the U.S. economy and U.S. leadership in the world.

Our carbon dividend strategy has four interrelated elements that account for its strength: a gradually rising and revenue-neutral carbon tax; carbon dividend payments made equally to all Americans, to be funded using all the carbon-tax revenue; rollback of costly command-and-control regulations that were implemented because the environmental costs of carbon fuels have not been incorporated into their price; and border adjustment to ensure a level playing field and U.S. competitiveness.

A carbon tax set at $40 per ton would achieve substantially greater reduction in greenhouse-gas emissions than all of the regulation now on the table. The application of a border carbon adjustment that levied a tax on the carbon content of imported products would incent other countries to adopt carbon pricing, increasing its impact and preventing free-riders. So the carbon dividend approach is best for the environment.

It would also be best for economic growth, which explains why prominent companies are backing it. The alternative to a carbon tax is not the application of the free market. It is the current extensive regulatory apparatus in which government judges the products and production techniques that businesses employ and mandates particular business practices. The enactment of a significant carbon tax justifies the removal of these regulations, thus taking a burden off the economy. And unlike regulation, carbon dividends are consistent with border adjustment, assuring that U.S. firms are not disadvantaged against foreign exporters and carbon-intensive products.

Posted by at June 20, 2017 6:58 AM

  

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