“The U.N.’s own report shows that aggressive emission cutbacks—even if achieved through an ‘efficient’ carbon tax—would probably cause more harm than good.” (p. 2)
“Libertarians and conservatives in particular should not simply trust the assurances from the advocates of a carbon tax, but should instead read the relevant literature themselves. In both theory and practice, a U.S. carbon tax remains a very dubious policy proposal.” (p. 36)
– Robert Murphy, Patrick Michaels, and Paul Knappenberger, “The Case Against a Carbon Tax,” Cato Working Paper No. 33, September 4, 2015.
Are opponents of pricing carbon dioxide (CO2) in general, and a U.S. carbon tax in particular, uninformed about the physical science of man-made climate change? Are opponents also in denial about market-failure economic analysis?
Hardly. Serious intellectual flaws exist in the case for CO2 pricing in the peer-reviewed literature, even the mainstream scientific literature.…
F. A. Hayek made many contributions to the social sciences in his lifetime. This post shares his thoughts about natural resources–really mineral resources–from his 1960 book, The Constitution of Liberty. His thinking is contained in the section, “Conservation of Natural Resources,” (pp. 367–71).
The question Hayek addresses is whether self-interested free-market decisions overuse important, even ‘depletable,’ resources, leaving less for posterity from an economic viewpoint. Hayek argues against what might be called conservationism, or conservation for its own sake where present-value analysis does not apply.
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Hayek employed familiar reasoning to explain how privately owned resources had a capital or salable value, which was particularly relevant to mineral deposits for which, ceteris paribus, present production meant less future production. [1] In his words:
…If the owner can get a higher return by selling to those who want to conserve than by exploiting the particular resource himself, he will do so.
“There were times when Lay’s lobbying seemed at odds with his oft-stated belief in free-market solutions. A classic example was Enron’s dependence on such government agencies as the Overseas Private Investment Corporation and the Export-Import Bank, which provided loans and loan guarantees for development project in the third world.”
“Like most Wall Street frenzies, the international development craze was wildly overhyped…. [S]ome of Enron International’s assets were almost comically awful, and others were fields of dreams.”
– Bethany McLean and Peter Elkind, The Smartest Guys in the Room (below)
A best-selling Enron book by Bethany McLean and Peter Elkind, The Smartest Guys in the Room (Penguin: 2003), told of Enron’s many interactions with government. Their treatment of the subject is only the beginning, however. My forthcoming book, Political Enron: A Business History (Part I: 2016), will chronicle Enron’s unprecedented rent-seeking as a warning about the perils of a mixed economy where the worst can get on top.…