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Comment by zorga | Hacker News Reader

No, a tax is not a free market solution, it's the exact opposite.

A carbon tax is specifically imposed to force markets to consider externalities. That is a free market solution. The opposite would be quotas and bans.

I actually favor quotas and bans to deal with carbon dioxide emissions.

The problem with the externalities argument is that nobody really knows what they cost. A market solution would be based upon true supply and demand and agreement on price in buy / sell transactions. A tax representing the "externality" is just a politically made-up number. So it's sort of free market but not really.

> The problem with the externalities argument is that nobody really knows what they cost.

One asks to what degree do we not know the costs? And these costs aren't ketchup economic prices but actual primary environmental effects. You can't buy your way out of those by having the central bank provide more liquidity.

> A market solution would be based upon true supply and demand and agreement on price in buy / sell transactions.

This is worse because the market not only has no way to price these cost but it is _blind_ to them. That you don't realize this means you think 'free markets' are 'magical'

> A tax representing the "externality" is just a politically made-up number. So it's sort of free market but not really.

FTI: Your free markets don't exist without politics.

> This is worse because the market not only has no way to price these cost but it is _blind_ to them. That you don't realize this means you think 'free markets' are 'magical'

Not the guy you're replying to, but you're wrong. This isn't a debate about effectiveness, it's about whether the tax is a free market solution or not. No one is arguing that the market isn't blind to it; this very well could be a case of a market failure and a tax may very well be the correct solution, it is not however a free market solution. A tax is government interference in the market and is by definition not a free market solution.

> That is a free market solution.

No, it isn't. Taxes are not free market solutions. End of story. Taxes are government interference in the market; this isn't debatable, it's just a fact.

A tax is only opposite a free market to the extent that it distorts the market. The more direct and simple the tax, the freer the market. And when the tax is directly addressing externalities that are normally not paid, it makes the market less distorted.

> And when the tax is directly addressing externalities that are normally not paid, it makes the market less distorted.

Agree, but that doesn't make the tax a free market solution. A free market solution would be a solution from the market, not a government imposed tax.

Totally off topic. But I’m curious. With your line of thinking I guess all gonverment imposed rules are anti free market.

So if we remove those completely, take away rule of law, abolish property rights and all of that.

Would there then exist a market to speak of at all? Would it be “free”?

Markets exist with or without government, governments make markets more stable and handle cases of market failures, and markets do fail. But under no case is government intervention a free market solution. Lack of government does not abolish rules or property rights, it just changes how those things are enforced as it leaves everyone to defend their own property and it leaves enforcement of rules to private security forces.

I'm not claiming government intervention isn't good; I'm simply arguing you can't call it a free market solution, because it isn't. Taxes are not free market solutions.

What would be the process for establishing rules?

Briefly.

A carbon tax is the most market-friendly approach on the table, so is de facto the free market solution, short of "do nothing."

No. While it may be the most market friendly approach, it's not a free market approach. There is not de facto free market solution, it's entirely possible the free market has no solution; that does not make the best available solution a market solution.

How will you lower the transaction costs enough that it's practical for polluters to pay compensation directly to all >7 billion victims?

One can agree that the tax should be implemented without agreeing with its categorization as a free market solution.

"Solution that maximally utilizes the free market to sort out the details and implementation", perhaps?

Then we can avoid disagreement over the definition of "free market solution"

Finally, someone who actually understands the conversation being had. Absolutely correct; carbon taxes might be the best solution available, but they are not a free market solution.

You seem to be the only one in this thread with the clarity of thought to see the obvious.

It is a market solution.

No, the opposite would be confiscating your oil by force. Compared to that, taxing the externalities is extremely free market.

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