That is not true, in fact most of the markets in history operated either without currencies (e.g. barter, farm labor etc) or with currencies that have inherent value (e.g gold, silver). A switch to fiat money implies state backing indeed, but a) it doesn't have to be one particular state (e.g. can do business with US dollars in some 3rd world countries) and innovations like bitcoin enable markets without any centralized currency.
> If we decide we want to subsidize India’s pollution or whatever, we can still do that.
That is the crux of the criticism you say you find silly. How exactly? Please show your work, because I am curious how we can subsidize China or India's emissions resulting from their domestic economy.
> Europe already has its own carbon taxes
Again please pay attention to domestic vs imported carbon. Most of the claims of approximating carbon neutrality is much smaller than in reality, because of the increasing consumption of carbon positive goods from developing countries.
> That is the crux of the criticism you say you find silly. How exactly? Please show your work, because I am curious how we can subsidize China or India's emissions resulting from their domestic economy
Writing them a check would be the most obvious way.
> Again please pay attention to domestic vs imported carbon. Most of the claims of approximating carbon neutrality is much smaller than in reality, because of the increasing consumption of carbon positive goods from developing countries.
I agree, there needs to be a border adjustment, and claims of carbon neutrality need to be similarly adjusted for imported carbon. I don’t see how that materially changes the calculus. Maybe the argument is that wide-scale border adjustments haven’t been proven out, and fair enough, but let’s maintain perspective: we’re speeding toward a cliff and we can’t be too concerned about bumps off to the left or the right.
How much the check should be for exactly? This is important because even if we assume we can get perfect compliance if we paid for it, you might find the amount required surprisingly, I dare say impossibly, high.
As a thought experiment let's say we are going to subsidize the transformation of China's non-green energy production. For comparison I will use a levelized cost of energy which rolls in capital costs, operating costs, operating capacity efficiency (which is low for renewables) and depreciation. The figures are about 0.1$/kWh for new coal (though most coal already has the infrastructure so will only have non-capital costs) and roughly 0.2$/kWh for solar (similar for other renewables). If you write a check to convert 2019 China's non-green energy production (7000TWh * 70%) the figure we get is $1 trillion, which is roughly the discretionary spending of annual federal budget, %5 of US's GDP and 1.3% of the world's GPD. That is for China only.
No political apparatus in a democracy can muster the political will to justify subsidies of this scale.
This is not accounting for the havoc it would wreak in international trade obviously, hurting China's exports is never hurting them alone, because trades not only go both ways, but also through; meaning depending on a lot of Chinese intermediary goods that we export affects US's GDP, and also worlds GDP. If I am understanding suggestion correctly, for example a carbon tax on iPhone's manufacturing would reduce how many iPhones are sold in the entire world, not just US, and ultimately would impact US's economic power in the form of a reduction, which also reduces the ability of "writing checks" for other interventions.
This is why policy design is tricky.
Ultimately I still don’t understand why you’re claiming that we depend on China and India to implement their own carbon taxes in order for us to be successful. If all wealthy countries implement a carbon tax with a border adjustment, China and India will either have to invest in greener tech and practices to compete in the wealthy first world market or be content in a less valuable market where pollution is allowed to be externalized.
> This is not accounting for the havoc it would wreak in international trade obviously, hurting China's exports is never hurting them alone, because trades not only go both ways, but also through; meaning depending on a lot of Chinese intermediary goods that we export affects US's GDP, and also worlds GDP.
Of course it’s going to hurt our economy. We’ve been living partly off of unsustainable environmental debt, and the whole point of a carbon tax is to reckon with that. Economic pain drives us toward greener solutions so we can enjoy a sustainable economy. The only “trick” to a carbon tax is deciding what the carbon tax rate should be at any moment in time to balance economic pain with necessary environmental goals. We should want to avoid an abruptly high carbon tax rate and prefer an initially low rate that rises gradually to allow our economies some time to invest in and implement green technologies, but waiting longer to implement the tax means the carbon tax rate will have to grow more steeply which translates to greater economic hardship.
Markets is simply the name for a particular collective of human interactions in response to pricing signals based on supply and demand, it is not a separate entity of its own. Taxes are exogenous in that they distort the equilibrous price points. That is not saying that it is always bad, because markets do fail.
> The notion of the "free market" is a toxic fiction.
Free market is a useful fiction for some economic modeling. No one has invoked the notion that real world markets has to/can be free, as mentioned, they do fail. But also interventions on them do fail catastrophically too.
This is important, because whether to intervene with markets or not is not as hard as the question of exactly in what manner to intervene. Our pet economic policy/intervention ideas might sound nice but rarely work exactly the way intended without side effects. Lack of a carbon tax is doesn't have to be due to a conspiracy of misanthropic apocalyptic evil but simply due to the difficulty of the multi-agent cooperation it requires based on the current incentive structures.
In short what Paris Agreement intends and what it fails to achieve. It assumes signatories will be voluntarily reducing their carbon emissions without binding enforcement, and they don't.
For a while let's assume that energy production is the only activity that causes carbon emission. Compared to staying at status quo, reducing carbon emissions is at least expensive for its infrastructure transition costs, but can also be more expensive for its operating costs if the country was particularly rich in non-green energy resources. This means, making a transition while others are not is particularly disadvantageous to that state's economy; they will be producing everything for more expensive while buying cheaply produced non-green imports from non-abiding countries. This is even worse if we consider that no single country's carbon neutrality means much for meeting global warming targets.
This means defecting is very profitable for any given country, which creates a game theoretic equilibrium at no one doing any decarbonization. Transitioning to the other equilibrium (where everyone is handicapped equally with green production) requires every agent to be ensured that other agents are not defecting in a lockstep fashion, and current policy tools cannot achieve that (at least yet).
Paris agreement was an attempt at this but also demonstrated that we still couldn't muster the political will to do anything sufficiently concrete. Unlike nuclear weapons, which has much fewer agents to coordinate with and a more immediately imaginable impact, climate change proves to be difficult problem regarding the nature of coordination it requires and ease of popularizing the policies around it. We need tools to match that difficulty.
In whatever case, I can’t imagine an environmental solution that won’t have the same (or worse) political problems. As far as I can tell, border adjuster carbon tax most neatly and efficiently aligns incentives.
In the US, the necessary flexibility is provided by agencies issuing regulations under statutory authority.
While lack of a carbon tax might not be the result of active evil -- throughout history it has been the result, instead, of garden variety ignorance and sloth -- evil can certainly play a role, and does.
In the US, failure ever to apply laws on the books enabling direct prosecution of corporate officers, or revoking corporate charters, or regulating behavior of monopolies, are indications of evil at work.
I find that perspective very naive. Economy doesn't have an undo button. If that was the case we could have reverted all the financial crises, depressions etc before they spiraled out. History is full of such failures caused by or made worse with interventions. Economists get a lot of crap for not being a proper science or not being able to predict the future perfectly, but they are what stands between such failures and the impression of "almost always without causing failure". Economy is like a pool table, in which you might aim for your ball to one hole, but might inadvertently hit your opponent's ball into a hole or mess up the table otherwise. There is no undo once you make the hit. Job of the economists is to find the best angles.
> In the US, failure ever to apply laws on the books enabling direct prosecution of corporate officers, or revoking corporate charters, or regulating behavior of monopolies, are indications of evil at work.
Well good luck with that then, because I don't know any solution to solve "evil" other than calling the priests. When we turn these dynamics into conspiratorial archetypes, we shoot ourselves in the foot because it messes up with the framing of our agency. We either give up in resentment to the "evil", or we need to be a force of "good" and fight it, while forgetting that we are dealing with massively complex, dynamical, emergent systems with parameters too many and too big to optimize by a single person, ideology or solution. Just like we don't debug code by invoking "good and evil" because it is a stupid dichotomy that doesn't match the sophistication of the problem, we most likely can't debug society/economy/ecology with that either.
Taxes are not market forces, they are exogenous interventions on markets. Which means having wealthiest countries implement a carbon tax is not riding market dynamics for free, but a difficult multi-agent cooperation problem that makes defecting competitively very advantageous. This includes for example requiring cooperation with India (5th in GDP) and China (2nd in GDP) who have been enjoying high, multi-year economic growth, whose de-carbonization would hurt their economies disproportionately, unlike other rich countries. Unfortunately exports only account for ~20% of their GDPs so there is only so much leverage to apply there either.