Tuesday, August 16, 2011

Why Is Mankiw Still Pushing Pigovian Taxes?

Greg Mankiw is still pushing this "Pigou Club" stuff even as the always speculative theory of AGW has been cast much further into doubt and disrepute. Even before the East Anglia CRU scandal and the new NASA study and the whole non-warming in recent years, the prudent case was to "eschew the Pigou". Now it's all that much more important. Precisely because a Pigovian strategy is so effective, you don't resort to Pigovian tax policy until you are 1000% sure of a cause and effect relationship. That whole initial step - "are we sure?" - seems to be unexamined or glossed over in Mankiw's zeal for Pigovian taxes, understandable given the orthodoxies of the academy, but dangerous nonetheless.

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