Saturday, February 23, 2019

Why Any Green New Deal Must Include a Carbon Tax

No Democrat is going to win the 2020 presidential nomination without a position on the Green New Deal. At least six of the declared Democratic presidential candidates have endorsed the GND to one degree or another. Some of their endorsements have been notably lacking in specifics. 

For example,  Sen. Kamala Harris,  endorsing the GND in her first-of-the-season town hall on CNN
stuck to safe generalities. Climate change is an “existential threat,” she said. “Children need to breathe clean air and drink clean water,” “we have to invest in solar and wind,” she went on.

We would expect such sentiments from a Democratic candidate, but as Brett Hartl,  government affairs director for the Center for Biological Diversity, recently told the Washington Examiner,  “Just saying you support the goals of the Green New Deal is better than nothing, but it really does matter what those details are.”

One detail that definitely matters is the role for a carbon tax in the GND package. The draft version of the GND resolution currently being circulated in Congress is clearly still a work in progress. Section 4(B) of the draft speaks of  "ensuring that the Federal Government takes into account the complete environmental and social costs and impacts of emissions" through "existing laws" and "new policies and programs." That certainly could means a carbon tax.

Friday, February 1, 2019

Properly Measured, It's Never Cost Less to Drive your Car

You have probably noticed that the price of gasoline has fallen a little lately. In January, the national average retail price of gasoline in the US fell to $2.20, as low as it's been in 15 years. I filled my car at Costco a few weeks ago for just $1.92 a gallon.

But how much does it really cost to fuel your car? Or, as an economist would put it, what is the opportunity cost of buying motor fuel? I would argue that the proper measure of opportunity cost in this case is the number of hours your have to work to buy the gasoline you need to drive your car 100 miles. That turns out to be lower now than it has ever been in the history of the automobile. Let's take a little tour through the ages to see just how cheap gasoline is today.