Philosopher’s Corner: The Justice of Carbon Taxes/Permits

As I’ve mentioned in previous posts, my academic background is in political philosophy and I tend to approach policy issues from a rights-based perspective. Though OpenMarket – and CEI in general – tend to focus on the consequences of policies, I think it’s useful to take some time to explore whether policies are just or unjust, not simply whether they are prudent or not. So, in these (few) posts that I will call “Philosopher’s Corner,” I will direct my remarks to those who are concerned with rights, not just consequences.

Today, I will look at solutions to global warming. As Reason Magazine recently pointed out, different libertarians endorse one of three different approaches: subsidizing technology, cap-and-trade/carbon tax, or doing nothing.

Let’s start with subsidies. From a libertarian perspective, taking innocent people’s money to give to others is wrong. (For a more detailed explanation, see Part II of the magnum opus of libertarian philosophy, Robert Nozick’s Anarchy, State, and Utopia.) Subsidies are a form of transfer – albeit targeted at people who make particular goods, not at people with a particular level of income. They are thus unjust.

Now, the question is whether carbon taxes and/or carbon permits are just. On the one hand, they seem like other taxes: the government taking people’s money and spending it. But there is one case in which libertarians agree it is just for the government to take someone’s money: when that person has violated another’s rights and owes her compensation. If I dump toxic chemicals onto my colleague Courtney Long‘s lawn, I owe her compensation. The government may take money from me and give it to Courtney – a typical tort action.

Carbon taxes are like this, on a larger scale. The air, I contend, should be viewed as commonly-owned property. Air is fundamentally non-excludable. The air molecules in my room now will shortly leave and be replaced by new ones; I can’t need to make contracts with individual molecule owners every time I breathe in and out. (Note that my view of common ownership requires a principle of initial acquisition very different than the traditional Lockean version.) Since everyone owns the air, everyone’s rights are violated when someone dumps a pollutant into the air. Since carbon dioxide is a pollutant, carbon emiters violate rights.

But of course, individual victims cannot sue individual tortfeasors; the transaction costs are far too vast. Carbon taxes get around this problem by in essence functioning as a giant class action tort suit. Carbon taxes make everyone pay for every bit of pollutant they emit into common property. Carbon permits do this too, though they allow for trading and they require the government to set a permissible level of caron dioxide rather than a flat price for carbon emissions. The government should take the proceeds of either the carbon tax or the permit auction and distribute them equally, since all have an equal property right in the air.

Such an action would be just, but it may not be prudent. Exactly how bad carbon dioxide is – and thus, how high the tax or the cap should be – is not totally clear. New technologies might substantially reduce the bad impacts of carbon. It may well be that carbon taxes at any level would do more harm to the economy than would warming. So, though taxes or cap-and-trade policies may not be unjust, they may result in bad consequences nonetheless.