Taxes v Cap and Trade

Here are some useful reminders of just why honest politicians in favor of restricting emissions should be arguing for a carbon tax against cap-and-trade:

• Harvard’s Greg Mankiw, Chairman of the Pigou Club
• SMU’s Stephen Postrel, who scores the two options on desirability criteria
• Guelph’s Ross McKitrick, who reminds us of the “carbon cartel”

Of course, a tax is not a “market mechanism,” so they can’t dress the proposal up as “market-friendly.” It’s a political restriction on the market. So is cap-and-trade, of course.