The former head of President George H.W. Bush’s Council of Economic Advisers and conservative economist Gregory Mankiw makes the case for Washington State’s carbon tax initiative on the PBS program Making Sen$e.
“The first principle of economics is that people respond to incentives. What carbon tax tries to do is try to harness that principle to get people to reduce their carbon footprint,” he explains. “Any time you put carbon in the atmosphere, you’re going to pay a price for it. So if you drive your car a little bit more, you’re going to pay a little bit more for that. If you use a little more electricity generated by coal, you’re going to pay a price for that. So what we want to do is we want to give people price incentives to reduce the amount of carbon they emit into the atmosphere.”
Mankiw goes on to describe a carbon tax as the “conservative approach to dealing with climate change,” particularly if it’s revenue neutral, which will “shift economic activity away from high carbon-intensive activities towards low carbon-intensive activities.” The ballot initiative in Washington state is revenue neutral, with the proceeds from the tax reducing other taxes such as the sales tax.
“The alternative to giving the people the right incentives and letting them make free choices is to regulate their behavior and that’s what we’ve been doing to a large extent for a variety of pro-environmental regulations. If we give people the right incentive with the carbon tax, then a lot of those regulations will become unnecessary because people are automatically incentivized to do the right thing,” he says.
“Anyone worried about climate change should gravitate” toward a carbon tax, according to Mankiw. Recent polls indicate the Washington initiative has approximately 42 percent of likely voters in favor and 37 percent opposed.