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So NYC is finally imposing a congestion tax for lower Manhattan. This has long been an obviously good idea. Asking why it's finally happening now is, I'd argue, relevant to the national debate over some kind of Green New Deal. In fact, think of NYC as a mini-GND experiment 1/
The standard economist position on environmental issues, incl climate is, hey, it's a negative externality, so put a price on it via emissions taxes or equivalent -- full stop. But this is both dubious economics and bad political economy 2/
The econ is dubious because emission pricing is only part of what needs to be done. You also need public investments in infrastructure and new technology. The huge recent cost reductions in renewables didn't just happen -- they were partly the result of Obama-era investments 3/
The political economy is bad bc emissions taxes hurt interest groups, which mobilize against them – not just Kochs and all that, but people like the gilet jaunes in France. You need to provide a counterweight 4/
Cap-and-trade tried to buy off polluters by giving them the emissions licenses and hence the rents. It didn't work. Schemes that would rebate the revenue from emissions taxes to the public probably won't work either, for a couple of reasons 5/
One is that the benefits to any individual would probably be too small to be noticed; even if they are somehow made visible, the general public is too diffuse a group to be effective (logic of collective action!) 6/
So you need concrete payoffs to mobilized groups to make externality taxes fly. Which brings me to NYC: the congestion charge revenues are supposed to help fix the subways – an issue people care about passionately 7/
To some extent subway investment is complement to initial goal: better service would mean fewer people using vehicles. But it's also a desirable and politically salient goal in its own right – which helps the political economy a lot 8/
Which brings me back to Green New Deal. The GND that eventually emerges may well include carbon taxes, but only along with lots of other stuff – some of it environmentally relevant investment, some stuff less relevant to climate 9/
It will, in other words, be a "Christmas tree" – legislation with stuff for lots of different interests. Many technocratic types hate that – they want policies to be surgically focused on the goal; hence carbon tax mania 10/
But even aside from carbon taxes being only part of the solution, that's just not how the world works. If we're going to pass anything that helps avert catastrophe, it will have to be a Christmas tree. It SHOULD be a Christmas tree 11/
So being a carbon tax purist may sound responsible and hard-headed, but it's not helpful. In practice, it makes you part of the problem 12/
