Crony capitalists who gain from carbon taxes

Dan Mitchell explains how rent seekers and crony capitalists gain from carbon taxes.

I’m going to revisit the case against energy taxes. Except it’s not going to be a friendly assessment. That’s because there’s a legitimate case (made by Jerry) for a carbon tax, based on the notion that it could address an externality, obviate the need for command-and-control regulation, and provide revenue to finance pro-growth tax cuts.
But there’s also a distasteful argument for such a tax and it revolves around crony capitalists seeking to obtain unearned wealth by imposing costs on their competitors.
Elon Musk already is infamous for trying to put taxpayers on the hook for some of his grandiose schemes. Now, as reported by Bloomberg, he wants an energy tax on American consumers.

Some big oil companies also are flirting with an energy tax for cronyist reasons. An article in the Federalist notes that some of those firms support carbon taxes because they want to create hardships for their competitors.

This entry was posted in Global warming and climate change policy, Rafe, Shut it down. Fire them all.. Bookmark the permalink.

15 Responses to Crony capitalists who gain from carbon taxes

  1. classical_hero

    But it’s government money and that corrupts no one.

  2. OldOzzie

    A political failure on energy – Australian Financial Review Editorial

    After a long period of policy missteps, the crunch has finally arrived for energy markets: in a nation blessed with an abundance of natural gas there are now price spikes and supply shortages. In a country with cheap fossil-fuelled electricity, a mish-mash of renewable energy targets now means that some electricity retailers are opting to pay fines rather than pay for renewables. The cost will then be passed on to consumers to pay for electricity that isn’t being produced.

    When you’ve got a large Queensland-based electricity retailer ERM that is choosing to pay $123 million in fines instead of surrendering its Large-scale Renewable Generating Certificates, because a shortage has driven up the price, it is clear something is wrong with the policy settings.

    On one estimate the combined effect of the state-based RETs (which in South Australia is a staggering 50 per cent by 2025) amounts to a real target not of the current federal level of 23 per cent by 2020, but a much higher 35 per cent by 2030. In practice these high RETs have now put South Australia in a precarious situation where it relies on the weather and other states to fill its energy needs. Further, a lack of policy certainty between the federal and state governments has created a significant disincentive for anyone to invest in new generation capacity.

    Prime Minister Malcolm Turnbull is right to have identified this as an issue over which he can attack Labor leader Bill Shorten, whose 50 per cent RET by 2030 is a policy joke that will lumber Australians with high power prices and a lack of baseload electricity. Mr Turnbull may finally land some blows on Bill Shorten and successfully convince the electorate that high RETs might sound good, but have the practical effect of stopping investment into all electricity except that which is both unreliable and expensive: renewables. Any move away from carbon-based energy simply won’t provide electricity stability at a price demanded by voters an and customers.

    But just because Mr Shorten’s plan is completely mad doesn’t mean that Mr Turnbull is without blame. His scotching of a suggestion in December from Energy Minister Josh Frydenberg than an emission intensity scheme be considered – to assuage the right of his party who caught the whiff of a carbon tax – was foolish. An emissions intensity scheme could have finally gone some way to letting the market decide which technologies were the most energy efficient and mix accordingly rather than those picked by politicians and clean energy rent seekers.

    Then throw into the mix the gas energy debacle. Due to politically motivated moratoriums in Labor and Liberal states, prices have doubled for domestic consumers, just as Australia is poised to become the biggest LNG exporter in the world. Because gas is not considered renewable energy, this clean form of energy cannot be part of the RET mix.

    So, if Australia has dirtier, more expensive and less reliable electricity than would otherwise be the case, it isn’t for want of a better alternative – but an abject failure of the political class.

  3. Ray

    Too many economists graduate from university ready to change the world. They have all learned that Pigouvian taxes are a means to address negative externalities. However, few really understand what Arthur Pigou knew when he gave his name to the idea, that governments cannot hope to provide an accurate estimate of the social welfare cost of a negative externality and so are poorly placed to use such techniques.

    As a result, Pigouvian taxes are nothing more than yet another empty gesture, useful more to assuage the self loathing guilt of a leftist elite than as a means of addressing social and economic problems.

  4. sabena

    For a jaundiced view of Elon Musk and his modus operandi,go to this site and search under Musk:
    http://streetwiseprofessor.com/

  5. None

    Everyone in business knows the object of the game is not to compete but to eliminate your competition.

  6. RobK

    So tell me again, why would you tax an externality such as CO2 which is actually a benefit to all living things put in place for no charge.

  7. Tim Neilson

    based on the notion that it could address an externality, obviate the need for command-and-control regulation, and provide revenue to finance pro-growth tax cuts.
    The word “notion” is the key word here. “Notion” and “psychotically deranged hallucinatory fantasy” aren’t mutually exclusive, nor are “notion” and “false concept put around by disgracefully dishonest fraudsters”.

  8. Art Vandelay

    As others have pointed out, this rent seeking is why Malcolm Turnbull and his mates in the finance industries are in favour of an ETS. They see carbon trading as a future revenue stream.

  9. Bruce of Newcastle

    Shorten must’ve been reading Mitchell.

    Bill Shorten Press Club address: Labor leader outlines jobs plan

    Mr Shorten believes there are many blue collar jobs in wind and solar but he may be backing away from his strong renewable energy target. The Labor leader says a “proper renewable energy policy” will create jobs for Australians.

    “There are real jobs, not just jobs for the scientists, but jobs for blue collar workers, jobs for engineers, jobs for designers.”

    More Wonthaggi white elephants. Useless make-work jobs for the boys paid by the long suffering taxpayer is classic lefty rorting. Even if global warming was happening (which it isn’t) this would be a boondoggle of epic proportions. I bet the ETU and CFMEU are popping their champers right now.

  10. Linden

    It’s got more to do with money being forced to change hands, and there fore the middle men get rich taking off the top their little percentage, after all Turnbull was a former merchant banker, he got rich on it!

  11. RobK

    Sabena,
    I enjoyed your streetwiseprofessor link, thanks.

  12. Empire GTHO Phase III

    Mr Shorten believes there are many blue collar jobs in wind and solar but he may be backing away from his strong renewable energy target. The Labor leader says a “proper renewable energy policy” will create jobs for Australians.

    Shorten got rolled by the emerging progressive faction at the national conference. They mounted a well organised surprise campaign against him and he folded.

    The LNP aren’t the only party with a vacillating leader.

  13. Howard Hill

    Bruce of Newcastle
    #2280430, posted on January 31, 2017 at 3:22 pm

    More Wonthaggi white elephants. Useless make-work jobs for the boys paid by the long suffering taxpayer is classic lefty rorting. Even if global warming was happening (which it isn’t) this would be a boondoggle of epic proportions. I bet the ETU and CFMEU are popping their champers right now.

    Spot on!

  14. .

    Ray
    #2280384, posted on January 31, 2017 at 2:41 pm
    Too many economists graduate from university ready to change the world. They have all learned that Pigouvian taxes are a means to address negative externalities.

    Shut up Graeme Bird. They also learn that Pigouvian taxes are exceptionally silly when leftists pull out tropes like “psychic benefits”.

  15. Rafe Champion

    Thanks Sabena, one for the next Roundup!

Comments are closed.