Last couple points in favor of a tax before I.
Goan is, it's very easy to broaden.
So, remember I told you, broadness and flexibility with it, the
key things to get a cheap way to, to to reduce pollution.
Broadness here is just going to be a, applying
the tax to different sectors, to different factories.
And further you can imagine harmonizing across countries in agreement very easily.
Let's suppose that we have two different countries, that
are trying to agree to solve some trans-boundary pollution
issue, or to solve a climate change problem, and
they're both trying to do it with direct regulation.
One country says well, we're going to mandate that new power
plants do this, or that some of the power plants retrofit.
You get this complicated tangle of regulations.
The other countries promising to do something.
It's really unclear how you harmonize that.
How ,how can I say I'm going to act a little more strongly,
and then I write a hundred pages of loopholes in the regulation, right,
then the other country says oh since you wrote all these loopholes in
we don't have to be so strict right because we're easy to harmonize.
We're charging $20 a ton for sulfur dioxide or carbon
dioxide you can charge $20 a ton for that right?
It's very easy, very clear to see which country is working how hard.
So, I told you my research was in gasoline, so I want to
get a little bit more applied now and down into some of the.
The actual policies we see.
What do we do about gasoline in the US?
We're worried about carbon, we're worried about imports of
crude oil, we're worried about the local pollution from it.
We have a huge number of regulations,
okay, there is a corporate average fuel economy
standard, a low carbon fuel economy standard
in California, which is just now coming online.
We subsidized particular technologies, trying to encourage or mandate
those, electric cars, hydrogen cars, battlefields of all various sorts.
The federal government has bio fuel production
photos, bio fuel mandates, so do state governments.
We subsidize carpools, we subsidize public transport,
and build, encourage more public transport, encourage more
green development in terms of trying to get
people to live closer to where they work.
All right.
Why, why are there so many, right, this is a tiny fraction of them.
Okay?
Why are there so many, regulations out there for cars, for pollution from
cars, when all we're really trying to do here is reduce gasoline use?
The reason, the key reason, and this, this goes to the, the core of the
argument for why prices might be good, it's
because there's so many ways to conserve gasoline.
Can use hundreds of ways to conserve gasoline
and for every way to conserve gasoline that's
in this list of regulations, okay write it here we try to to, build more buses.
For every one that's regulated, I can guarantee I can name you one that's not.
Alright and because there are so many unregulated ways, to
save gasoline we're missing out on a lot of cheap.
Potentially very, very economically efficient ways to, to reduce gasoline use.
And this is the case for a tax, right.
If you were to tax it or raise its price a bit, it feeds through the economy in
all of those little ways, all those little things
you can do to save gasoline suddenly become incentivized.
We got some of them, with the regulation.
We got 20 or 30 or 40 of them with
the regulation, but there's another 200 or 300 out there.
Alright, you combine trips to the store, and so on, right?
There's all these things you can do to save gas that were, that were missing.
And that's the, that's the core of the example in the context of, of gasoline.
Oh and the last point, that I should make, it's sort of
hidden at the bottom of the slide here, the other thing we
want to do if I we want to conserve cheaply, or reduce
pollution cheaply, is to make sure you get them in the right mixture.
Right, you don't want to push public transportation too hard, and not push
hard on enough on getting people to live close to where they work.
Because that's just going to end up costing you
more money to save the same amount of gasoline.
Right, maybe you want to make sure people live close to
where they work and don't worry so much about the transporting.
Again, taxes get that right.
They sort this mixture out, correctly and automatically.