July 2, 2008
The Pigou Club Is After Me
I thought for sure it would be the FDA that would come after me for my blogging, possibly arranging a special clinical trial of crushed razor blades and coffee.
But no, I have run afoul of the Pigou Club. My anti-Pigouvian post of June 26 attracted a smart comment and a link from Mike Moffatt, who writes an economics blog on About.com. Moffatt says "Every decision governments make either implicitly or explicitly make at least one determination about goodness or badness. It is entirely what governments do. Why object to it only in this case?"
A fair point to which I will return. I followed the link to his blog post, An Absurd Anti-Pigouvian Argument Absurd? Pretty strong language from a guy who wears a suit on his blog photo. He excerpts the original (Tim Kane) post and my assent. And continues:
What the author is advocating here is not some limited government libertarian fantasy - he is advocating for anarchy. I will explain with an example:
The example provided is murder. Because I do not support a tax on global warming, I reject the right of government to proscribe murder.
I responded by email (does about.com require membership or registration? the comment link did not work)
Mr. MoffattI appreciate your comment and link to the ThreeSources blog and am certain that the absurd anti-Pigouvian argument you referenced was Tim Kane's and not mine.
I accept your premise that governments do separate good from bad. I offer that:
a) I would like our government to do less of this. Inviting our 535 benighted betters in Washington additional opportunities to attack global warming, or trans-fats, or wide neckties by relative taxation of various pursuits does not seem wise.
b) I would like to separate the collection of revenue from the good/bad decisions. Revenue is required and decisions of what to regulate and proscribe are also needed. To merge those two functions invites more meddling than I would like.
To take your example of murder, there is clear legislation to proscribe it and punish those convicted. Adding a carbon or trans-fat tax creates a new category of behavior that is permitted but discouraged through taxation. You would be correct in pointing out that there are examples of this. I don't think that makes it right.
Let government enact specific legislation to regulate or ban products or procedures. These can be discussed and the legislators can be held accountable. Do not create a new, soft, method for government to further influence behavior.
UPDATE: I went to my sent box to copy the letter and it appears I sent an unspellchecked and horribly typed version. I'm sure he is now telling Professor Mankiw, "Yeah Greg, these guys are something else..." Economics and Markets Posted by jk at July 2, 2008 6:14 PM
"Because I do not support a tax on global warming, I reject the right of government to proscribe murder."
Of course I'm not arguing this! All I'm wondering is, at what point do you allow the government to make decisions of right and wrong? If it's *never* (which you seem to be implying), then how can you be for any law?
"To take your example of murder, there is clear legislation to proscribe it and punish those convicted. Adding a carbon or trans-fat tax creates a new category of behavior that is permitted but discouraged through taxation. You would be correct in pointing out that there are examples of this."
So you'd be okay with the government banning things (say, the government banning trans-fats), but you're against the government taking a more gentler approach (and collecting revenue from it, rather than collecting revenue from, say, higher income taxes)? Your further comment suggests that you are. I don't find anything wrong with that line of reasoning. I just find it, well, surprising.
Posted by: Mike Moffatt at July 2, 2008 7:23 PMWhat I am saying to both is that I am more comfortable separating revenue and regulation. If Congress wants to ban trans-fats, let them try. Let's have a sponsor, co-sponsors, floor debate, a final vote, and a signing ceremony in the Rose Garden. I suspect that such a bill would not make it that far and that those who supported it might face some heated primaries and elections.
The Pigouvian tax is stealthier. Would I prefer an outright ban? At least it would be honest and traceable. The Pigouvian tax we now have is on cigarettes, and its reductio ad absurdum was the California proposition to fund Universal Preschool with it.
I am uncomfortable with cigarette taxes. They are regressive and they represent the social engineering that scares me away from the Pigou Club. (I quit when GHWB was President, so my concern is purely philosophical.)
Posted by: jk at July 2, 2008 7:54 PM"If Congress wants to ban trans-fats, let them try. Let's have a sponsor, co-sponsors, floor debate, a final vote, and a signing ceremony in the Rose Garden."
Unfortunately, that's not how most bans work. (I work for a firm that does regulatory consulting to the chemical industry).
For the vast majority of substances which get banned in the U.S., it's likely going to be in a piece of regulation from the FDA, EPA, OSHA, which is buried somewhere in the Federal Register.
Have you ever seen the size of a year's worth of Federal Registers?
Posted by: Mike Moffatt at July 2, 2008 8:05 PMMore information about the reach of regulatory agencies can be found here:
http://en.wikipedia.org/wiki/Chevron_U.S.A.%2C_Inc._v._Natural_Resources_Defense_Council%2C_Inc.
I guess my big frustration and all this (and my unjustified snottyness than pops up from time to time) is how "conservatives" and "libertarians" keep comparing Pigovian taxes to some kind of idealized libertarian regulatory world that doesn't exist.
If the anti-Pigovians considered how chemical regulatory law works (and surely isn't through ballot box issues and signing ceremonies in the Rose Garden), they'd probably be more amenable to alternatives.
Posted by: Mike Moffatt at July 2, 2008 8:34 PM"Every decision governments make either implicitly or explicitly make at least one determination about goodness or badness. It is entirely what governments do. Why object to it only in this case?"
And those, Moffatt, are precisely why governments *should not* be making economic decision. Tell me how bureaucrats have the right to decide that something is "good" or "bad," when it harms no one but the person voluntarily buying/ingesting/using it.
"Have you ever seen the size of a year's worth of Federal Registers?"
Do you not see the simple answer, that it means the federal government is exceeding its constitutional powers? So don't worry about *controlling* bureaucracy, when you must *destroy* it.
One doesn't have to be an anarchist to make jk's argument, and I can assure you that he's hardly one anyway. However, he and I know that the only, ONLY purpose of legitimate government is to protect life, liberty and property. Murder is a violation of someone's life and is therefore punishable. If I eat properly made cannoli, that's not violating anyone's rights.
If I want to buy gasoline, or something made with trans fats, why is it of your concern? Who make *you* God, that you have the right to "regulate" my "behavior"?
Remember that "busybodies," as well as liars and fornicators, are condemned to hellfire. But go ahead, go on and keep worshipping the state, believing it will save you from your own sins, and that through it you can save others from their sins too.
Posted by: Perry Eidelbus at July 3, 2008 9:16 AMOne more thing I'll address, before I leave you and jk to hash things out between yourselves. You said:
'"conservatives" and "libertarians" keep comparing Pigovian taxes to some kind of idealized libertarian regulatory world that doesn't exist.'
That's a ludicrous strawman, and if you have a modicum of intelligence, you know it is. So which is it: are you the moron I'm starting to take you for, or are you deceitful in making your arguments?
A society of freedom and individualism does not exist only because people of your ilk destroyed it and won't allow it to return. You make specious arguments about "regulation," "banning" and the most "efficient" ways to control others' lives to your liking. You use fuzzy logic and throw around "Pareto improvement," when you wouldn't know a real example of the latter if it bit you in the behind. Every time you deny me the right to eat trans fat-laden food or do something that harms no one else, I'm harmed. Period, end of story, quod erat demonstrandum.
Polluters don't have to be regulated; they just need to be held accountable for their damages, by and ONLY by the people who are actually harmed. I suggest you read about polluters in Lew Rockwell's piece about what he would do in his first 30 days.
Go on, return to your worship of the almighty State. I really don't care if you do; you have the freedom to. Just don't make *me* worship it with you.
Posted by: Perry Eidelbus at July 3, 2008 9:29 AM"Lew Rockwell's piece about what he would do in his first 30 days."
Read it. It is highly flawed, as I will demonstrate below.
"Polluters don't have to be regulated; they just need to be held accountable for their damages, by and ONLY by the people who are actually harmed."
And how are you going to manage that?
Stylized Example - Someone gets sick from air pollution (which happens all the time - go visit a respiratory ward and you'll see what I mean) and racks up a $10,000 medical bill. For the sake of argument, assume that 90% of that pollution came from automobiles and there are 30,000 registered cars in the area.
I have clearly been harmed here. But what is my option - to sue each and every driver in the city for 37 cents to cover my damages?
Posted by: Mike Moffatt at July 3, 2008 9:54 AMI wanted to thank Mike for his thoughtful comments, welcome him to ThreeSources, and mention that if he called me an anarchist, pretty soon some real anarchists around here would take umbrage.
I am the blog pragmatist and am often chided for not demanding more of the liberty promised in the Constitution. I don't believe in an ideal libertarian state, but I do fight at the margins every proposal and every election to stop, slow, or possibly even roll back a little government encroachment.
You're right about the supra-Constitutional regulation. I also fight the arrogation of powers to the Executive branch that allows its agencies to make law without deliberation or balance of power. Because we are leaking liberty like a sieve, does not make me any more favorable to the giant drain of Pigouvian taxes. Always fighting at the margins: more liberty, less government coercion.
Posted by: jk at July 3, 2008 10:59 AMI *have* read it, long ago. How else do you think I cited it?
I'd wager you didn't read it till today. The only reason you think it's "flawed" is because you don't think it can work in the real world -- because you're a pathetic, dribbling state-worshipper and don't believe in freedom.
I do like your example of automobiles. It demonstrates that you're harmed by an inconsequantial amount by an individual, but there's no significant damage from any single source. So in the ideal libertarian world, you chalk it up to, "Well that's how life is." It also demonstrates your absurd thinking that you can quantify such things when there are so many involved, and that when all else fails, you want to lump everyone together. A car may be registered in the area, but it does not necessarily have a proportional amount of blame. I drive mostly on weekends only, so should I be held to the same standard as someone who drives to work and also does two trips nightly? When I walk down Fifth Avenue and crinkle my nose at all the second-hand smoke, do I blame all smokers who live and work in the area?
It's the same as someone who lived before modern times, who obtained water from a river that people upstream also used for washing, bathing, etc. If someone kills you, or cuts off your arm, that's easy enough to figure out. But there's no reasonable way, let alone a practical one, to allocate a fixed percentage of blame when you're dealing with so many people of so many different actions. What you *can* do is say, aha, this New Jersey refinery was built in the area where I've lived all my life, I don't smoke, my family has no history of cancer, but I developed lung cancer, and these several independent doctors and biopsies blame it on the type of pollution emitted by the refinery. *That* you can demonstrate beyond a preponderance of the evidence (the usual requirement in civil suits). It's really not hard if you want to *think* about it for a little bit, instead of spewing your state-worshipping drivel.
But even in this "ideal" libertarian world you denigrate, there's the practical side of going after people who harm you only if they've done significant damage. Even the most die-hard anarchist (unless he's actually a psychopath) doesn't talk about going after others for the tiniest infractions, because Pyrrhic victories exist in all real universes. We bump into each other all the time. Unless it's serious, like a broken bone or torn clothes, dust yourself off and move on.
You still haven't addressed the issue of how *you*, who is not deity, have the authority to tell me how to conduct my peaceful, voluntary commercial transactions. Stop dodging the question, if you're not afraid. Meanwhile, take the beam out of your own eye, before telling me about the speck in mine.
Posted by: Perry Eidelbus at July 3, 2008 12:06 PM | What do you think? [9]