Eschew the Pigou!

Good to see that Greg Mankiw sees limits to Pigovian approaches to negative externalities such as the speculative damage that we face due to anthropogenic climate change.

I think the limits to Pigou are much greater. It is impossible to see how a simple, elegant Pigovian approach can win the policy day given the state of our modern politics. Assuredly, we would get all of the worst aspects of Pigovian taxation and few of the benefits once the Great Sausage Factory was unleashed on this task. More caution on Pigou here and HERE! and here.

And on sin taxes in general (as opposed to sin taxes specific to driving an SUV) there is this, where I cough up two of my brightest gems in the history of this blog (if I do say so myself):

"maybe liberty means the freedom to be a fat, artery-clogged slob...if one so chooses" and

"I am sure that there are similar 'offsetting' effects of the negative externalities of drinking sugary drinks. Maybe the existence and popularity of sugary drinks causes busybody elitists to tip their hand as to what they really think of us all and how they would govern us, causing us to be ever vigilant and protective of our liberty. That is worth having a few extra fat kids in my book. "