Gregory Mankiw argues that President Obama should refuse to sign any version of the Waxman-Markey Bill that does not auction off carbon emission permits. Our own Joshua Gans apparently agrees. The opposition is based on the notion that if permits are not auctioned that the lump-sum gains received by firms who get the permits will represent a transfer of higher tax liability from consumers who must pay the higher GGE-charge-inclusive energy costs. Continue reading Mankiw & Turnbull on climate change compensations
Malcolm Turnbull’s statement on the proposed ETS has to be partly understood as a political act seeking to encourage anti-science fruitcakes in the Coalition to learn to live with an ETS. It is mainly seeking to address competitiveness concerns which can be best addressed short-term by emphasising that the tax base is ‘energy consumption’ with a switch toward ‘production’ based taxes further down the track.
Malcolm’s proposals are close to endorsing Labor’s ETS and I have sympathy for his attempt to support the government on this one.
I have already indicated to Malcolm that he faces another constraint in relation to the ETS. Some Coalition supporters (e.g. me) will cease their support and help to consign the party to historical irrelevancy if it does not support a comprehensive and effective ETS. It would have been better if the Liberal Party had devoted its efforts to strengthening the ETS rather than as has sometimes seen to be the case – to sabotage it. Perhaps this message should be communicated to the real fruitcakes of Australian politics – Barnaby Joyce, John Williams and Wilson Tuckey.
This is how I respond to Malcolm’s arguments. I mainly ignore the political issues. These can be clearly seen in Turnbull’s attempts to diffuse ‘carbon leakage’ concerns that are the basis for opposition within his own party to the ETS. Continue reading Turnbull on ETS
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