Pigou and the “Bad Things”

Michael Giberson

Greg Mankiw called it “the Pigou Club in a Nutshell“, quoting the following from Tim Kane:

we should aim to tax the bad things (noise, gasoline, trash, violent crime, evil foreign dictators) and untax the good things (homegrown profits, employment, innovation).

But take another look at that list of “bad things”: noise, gasoline, trash, violent crime, evil foreign dictators. As they used to sing on Sesame Street (and maybe they still do), “one of these things is not like the others.”

Can you tell which one is not like the others?

If you guessed this thing is not like the others, then you’re absolutely…right!

5 thoughts on “Pigou and the “Bad Things”

  1. I dropped Mankiw’s blog because he wouldn’t get off this Pigou crap.

    Pigou taxes have the fatal problems of all central planning.

  2. Fair enough, but air pollution and greenhouse gas emissions ARE bad things and taxing gas is a good proxy for (and easier than) taxing the emissions and pollution caused when you burn gasoline.

  3. WWCD–or “What would Coase do”? (Hasn’t he already settled this dispute?) Those individuals who don’t like companies emitting “excessive” amounts of harmful greenhouse emissions should take the time and effort to inform the public of the injustice.

    Perhaps these individuals should make a list of the alleged wrongdoers, provide substantiated facts, promote their cause, and let an informed market take care of the rest.

    Poor resource allocation—either from the law of unintended consequences, or more likely from some form of political sliminess i.e. pork barrel/plow share politics or another type of opportunistic behavior—often results anytime the government gets its greedy/ignorant hands involved.

    If a democratic society doesn’t feel the environmental cost of pollution-omitting production outweighs the benefits of less polluting alternatives, the society is either correct, and those claiming an externality exists are incorrect, or the society is misinformed, and those claiming an externality exists have yet to do their jobs of informing the misinformed society. The matter of closing this gap in information should be done by science—not public choice.

  4. Greenhouse gas emissions ARE NOT bad. Greenhouse gas emissions are essential to continued life on earth as we know it. Approximately 97% of greenhouse gas emissions are natural; the remaining 3% are anthropogenic. The suggestion that natural emissions are good and essential, but anthropogenic emissions are bad and pollution, is rather tough to accept.

    Also, it is tough to accept that the CO2 in automotive exhaust is different from/worse than the CO2 we and our domestic animals exhale.

  5. Mike, unless you are suggesting that anthropogenic CO2 is causing a “tipping point” to be reached in atmospheric terms, I think that you are on the wrong track. One volcanic eruption, and our 3% contribution can dwindle to mere tenths of a percent of total annual emissions.

    Further, “pollution” is another term for “naturally occuring substances” that are “in high concentrations,” just as anything can be a poison, if consumed in a high-enough quantity.

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