Published on April 13th, 2012 | by Zachary Shahan0
Pricing Pollution (Implementing Full-Cost Pricing) & Reducing Income Taxes — Why Not?
April 13th, 2012 by Zachary Shahan
One of the fundamental problems in the current energy economy, a problem that those still in love with fossil fuels don’t want to admit, is that fossil fuels receive nearly invisible but hugely expensive public health and safety subsidies. Proper, full-cost pricing of electricity is highly needed to correct the market.
As I mentioned in a previous article a month or so ago, one conservative economist, the chairman of George W. Bush’s Council of Economic Advisors, wrote in Forbes recently that we should cut taxes on things we want (i.e. income taxes — taxes on work and jobs) and put or increase taxes on things we don’t want (i.e. pollution). This gets to the same point as the above, and it’s clearly a proposal that liberals (who are often highly supportive of policies to cut pollution, stop global warming, and improve public health) would also get behind. Apparently, the idea also has the support of some 2,500 economists, including 9 Nobel Prize winners in economics.
As noted below, the current full societal cost of gasoline is about $12 per gallon more than what we pay at the pump. So, for the many places approaching or now at $4/gallon, that number should really be about $16/gallon. Hard to swallow, perhaps, but this is the actual, full cost of gasoline.
For all those up in arms about minimal subsidies to clean energy (subsidies similar to the subsidies fossil fuels have been getting for generations), for those who think nothing should be subsidized by government because the ‘free market’ is perfect, it’s important to recognize that there are failures in the market, in the pricing of some products, that should be addressed. The true cost of a product should be internalized by companies selling it so that its price in the market isn’t 4 times lower than its true cost. In very real terms, without correcting these failures, we are creating an environmental bubble that will blow up in our faces and/or those of our children in ways we really don’t want to see.
In this Earth Policy Institute post below (via sister site sustainablog), Lester Brown gets into these issues in more detail and perhaps a bit more elegance. Enjoy the post!
Full-Cost Pricing: Getting the Market to Tell the Truth (via sustainablog)
by Lester R. Brown Moving the global economy off its current decline-and-collapse path depends on reaching four goals: stabilizing climate, stabilizing population, eradicating poverty, and restoring the economy’s natural support systems. These goals–comprising what the Earth Policy Institute calls…
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