The Problem With Putting a Price on the End of the World

The key political advantage [of] performance standards – [they] focus voters on the end goal, rather than on the technocratic mechanism for achieving it. Carbon pricing puts attention on the mechanism, be it a dreaded tax or a byzantine cap-and-trade system. Mechanisms don’t inspire people. 

by David Leonhardt Read full NY Times Magazine story here

…When a product becomes more expensive, people use less of it. Carbon pricing is an elegant mechanism by which market economics can work on behalf of the climate rather than against it….

….As Nordhaus acknowledged in his speech, curbing dirty energy by raising its price “may be good for nature, but it’s not actually all that attractive to voters to reduce their income.” … Climate change may be an existential crisis, but in their day-to-day lives, many people are more worried about the problems created by the most obvious solution than by climate change itself. …

…The province of British Columbia enacted a carbon tax in 2008, and it has worked well. It includes a clever provision to reduce political opposition: Every dollar that is raised is returned to families and businesses through tax credits. An all-star roster of Nobel laureates and former Republican and Democratic presidential appointees — including Treasury Secretaries George Shultz and Lawrence Summers and the Federal Reserve chiefs Janet Yellen, Ben Bernanke and Alan Greenspan — recently signed a joint statement in favor of a similar carbon tax for the United States. But it remains a long shot in this era of government distrust. …

….The financial crisis and its aftermath intensified many families’ economic problems. Income growth has since been sluggish. Amazingly, the wealth of the median American household has fallen 30 percent since 2007, according to the most recent Federal Reserve data, making higher energy costs an even harder sell. The second change is political. A decade ago, there was reason to think that carbon pricing could be bipartisan…

…The key political advantage is that performance standards focus voters on the end goal, rather than on the technocratic mechanism for achieving it. Carbon pricing puts attention on the mechanism, be it a dreaded tax or a byzantine cap-and-trade system. Mechanisms don’t inspire people. Mechanisms are easy to caricature as big-government bureaucracy. Think about the debate over Obamacare: When the focus was on mechanisms — insurance mandates, insurance exchanges and the like — the law was not popular. When the focus shifted to basic principles — Do sick people deserve health insurance? — the law became much more so….

…In Nevada, the measure did get on the ballot, and the campaign in favor of it has some lessons for winning future fights. The messages were simple and powerful. They focused on the immediate benefits from clean-energy use, like fewer health problems, lower medical costs and more jobs that pay well. …

….The better bet seems to be an “all of the above” approach: Organize a climate movement around meaningful policies with a reasonable chance of near-term success, but don’t abandon the hope of carbon pricing…
Eventually, Americans may decide to punish politicians who deny or play down climate change. By the time a price on carbon took effect, it might not be so unpopular anymore. But we can’t wait for the politics to change to begin taking action.