When you pull up to a gas station, you might notice a little sticker on the pump that tells you the amount of state and federal taxes that are added on top of the basic fuel price to determine how much you pay per gallon. In Maine, we pay approximately 18 cents in federal taxes and another 32 in state taxes per gallon on top of the basic price of fuel.
Given our deeply ingrained habits of personal mobility, which is easily conflated with the more abstract American notion of freedom, there is probably no more immediate nor sensitive an indicator of daily household well being than the price of gas at the pump. Every time the price ticks upwards, we feel it; sometimes acutely. It gets reported religiously on the evening news, especially during presidential campaigns, as if the current occupant in the Oval Office has his or her oily hands on the spigots of worldwide oil flows. The fundamental American freedom to roam across the vast open spaces of the country—or at least back and forth to work—is one of the big reasons it is hard for politicians to talk about a carbon tax levied on the consumption of coal, oil and natural gas. Who wants to end their legislative term of pomp and privilege prematurely?
So imagine you are an elected representative in a state or national legislature with the power of taxation, a power taken away from kings long ago and given to more representative bodies, of which you are now a respected part. Some well meaning, hand-wringing environmentalist, either in Birkenstocks or Cole Haan loafers, urges you, his or her legislator, to support a brand new tax that each and every one of your constituents will pay and hate day after day, week after week, year after year. You begin to visualize your face on the sticker at the gas pump! And the reason you should support a carbon tax, you are told, is to slow climate change down by maybe a degree Centigrade (whatever that means) over the next half century and to provide an immediate price signal and incentive for the development of alternative fuels. It’s preposterous on the face of it. But you are patient with this extremely naïve and earnest constituent, because it is your job to listen to all sorts of foolish requests.
Your constituent then proceeds to lecture you about an obscure British economist of the 1920s with the unfortunate name of Arthur Pigou, after whom a whole category of taxes have been named. A Pigovian tax, you learn, is a tax on a transaction that in the ordinary course of business creates indirect “disservices” or negative effects on society. Thus, we have imposed taxes on alcohol, because drunkenness, which Pigou called a “negative externality” that accompanies its sale, creates a need for more policemen, doctors and nurses, the cost of which the general public (you) otherwise gets stuck paying. The same goes for taxes on restaurants that pay for regular garbage collection, lest rats feeding on their back alley refuse spread disease, mayhem and other public health risks. Purely Pigovian.
Okay, the legislator in you thinks, but I am never going to quote a man with a name like that.
But back to negative externalities. There are other ways of dealing with this noxious concept, you think. Like regulation. Hmmm”¦ but that’s another bad word. Congress mandated the regulation of sulfur dioxide and nitrous oxides coming out of power plants because their negative externality is the acidification of lakes downwind where anglers are denied landing their prized rainbow trout on a Green Drake fly. The big difference between sulfur dioxide and carbon dioxide emissions is that there are an identifiable number of coal-burning power plants producing sulfur dioxide, while we burn carbon in every large or small industrial and manufacturing enterprise in the country, not to mention all our houses and vehicles. You could not regulate them all, even if you wanted to—which you don’t, although the E.P.A. is thinking about it.
So we circle back to this tiresome notion of the carbon tax. You ask yourself, didn’t we kill cap and trade a year and a half ago, a market based plan for trading carbon pollution credits, which had all kinds of corporate backers like the CEO of General Electric and all those Silicon Valley billionaires. Do we have to do this discussion all over again so soon? I mean, what has changed?
Well, now you’ve let your hectoring constituent open another can of worms. What has changed, you are reminded, is the drought this summer—worse than the worst year during the Dust Bowl—that led to huge crop failures, the massive forest fires in the West that raged out of control for a good part of the summer, and the effects of tropical storm Irene last year and Sandy this year. And the ocean being two degrees warmer off the Atlantic coast and the early shed of lobsters in Maine that caused havoc in the market, not to mention rising sea level and the most extensive loss of sea ice ever recorded in the Arctic Ocean.
Stop, stop! You are sorry to be reminded of what the future might bring. But suddenly you remember the most trenchant piece of advice you ever got from an old political lion who cautioned you not to vote for anything that would supposedly create some future benefit. “Remember,” he said, “the future doesn’t vote.”
So instead you say, the American people don’t even believe in climate change, let alone a carbon tax. Wrong again, you are told. Two years ago, just 57 percent of Americans believed climate change was happening. By March this year, the number had risen to 66 percent and by September to 70 percent—and that was a month before Sandy hit New Jersey and New York.
And then comes the coups de grace: even Grover Norquist—Grover Norquist!—is reported to have said that a carbon tax does not violate his principles because consumption taxes are more economically efficient than other forms of taxation. If this is true, you think, maybe I should get on this bus, but how much will it cost me to ride it (and will I need to pay a carbon tax just to go along for the ride?).
In the end, your thoughts turn to your children who are going to be living with the world you left them. What if this climate change stuff is not a hoax, with all due respect to Senator Inhofe from the oil patch in Oklahoma; what if you actually listen to the science-based facts and to economists who insist that Americans are waiting for a major price signal to change their behavior—a carbon fiber two by four across the forehead.
And so you prepare to lock arms with your colleagues on both the left and right fringes to march off the carbon cliff together and maybe, just maybe, save small parts of the world as we know them.
Philip Conkling is president and founder of the Island Institute based in Rockland, Maine.