Flashback: CBO says carbon tax reduces GDP by 1%

From 1990. CBO, of course, is routinely wrong. The carbon tax would likely be even more costly as it only makes goods/services cost more without accompanying economic/social benefit. [Carbon Charges Global Warming 19901990 CBO Report]

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2 responses to “Flashback: CBO says carbon tax reduces GDP by 1%

  1. Prof. Victor Yakovenko (U of MD) is developing an economic model that is based on the mathematics of statistical mechanics and the physics of thermodynamics. In this model ‘taxation’ represents a loss of energy from the economic environment that is analogous to friction. While a powerful system can accommodate small ‘parasitic losses’ (to use a term from electrical engineering) to perform certain necessary control functions, as the losses grow, the system becomes less efficient.
    If the parasitic losses become excessive, the system performance becomes seriously sub-optimal and it may seize up completely like the engine in my Chevy did after it lost too much lubricant.

  2. Howdy tadchem
    Your “parasitic” analysis is especially accurate. From an economic point of view, anything that has to be subsidized is “rent seeking” by bloodsuckers. From an environmental point of view, any energy system that costs more to run than the system it’s supposed to displace is probably harder on the environment than the supposedly harmful system was, even discounting the reindeer effect (in the post above).

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