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July 14, 2012

AEI's Carbon Tax Flirtations

Last Wednesday, the American Enterprise Institute, "a community of scholars and supporters committed to expanding liberty, increasing individual opportunity and strengthening free enterprise", held a meeting at its headquarters for the purpose of promoting a carbon tax initiative. It was apparently the fifth in a series of such meetings.

If that strikes you as completely at odds with its stated mission, well, you're not alone.

Left-right coalitions can be principled and desirable. For example, I worked with environmental groups to help end the ethanol tax credit, and I work with them now to develop the case for eliminating the ethanol mandate. We collaborate because we share the same policy objective, even if not always for the same reasons. The free marketers want to end political meddling in the motor fuel market and the environmentalists want to end federal support for a fuel they regard as more polluting than gasoline. The common objective is consistent with each partner’s core principles.

But such cases are the exception rather than the rule. In general, when left and right join forces, the appropriate question is: Who is duping whom?


Ben Domenech reported on this meeting in his Transom newsletter this week and characterized it as follows:

The agenda paints a clear picture: this was not an event with economists discussing the merits or problems of a carbon tax agenda, which would be a worthwhile discussion at any thinktank. Rather, it is a strategy session for how to pass something by coin-operated shills, the sort of thing that should be held at a lobbying shop, not a thinktank. The political dynamics of this are simple: much of industry, including ExxonMobil, GM, and others have long supported carbon taxes because it doesn’t damage their competitiveness – they can just pass through the tax – and because they know politicians in Washington find raising taxes politically dicey. The property and casualty insurance companies support these steps as well, because they can use them to justify higher insurance premiums. As is typical with corporate interests, this is their way of being “for” something instead of just being against cap-and-trade and higher CAFE standards. But in order to achieve that, they need cover on the right and the left – they need to have the gloss of the AEI and George Mason brands – and they need active and willing participants in this effort.

That's spot-on. It would be one thing to invite in the leftists and debate global warming or climate change or whatever they're calling it this week. The Heartland Institute does this every year.

But that's not what this meeting was. From all appearances, they accepted the leftists' Carbon Dioxide, the Silent Killer™ argument at face value and moved right into discussions of how best to eliminate it via punative taxation.

Domenech and others rightly point out that this wasn't technically an AEI meeting. It was just organized by one of their scholars and held at their headquarters. Forgive me if I'm unimpressed with the distinction.

If there was a meeting at NRA headquarters for the stated purpose of discussing a legislative strategy to reinstate the so-called assault weapons ban with representatives of the Brady Campaign, Coalition to Stop Gun Violence, etc., there'd be calls for Wayne LaPierre's head on a pike for, if nothing else, having the incredibly bad judgment of allowing the organization's name to even be tangentially associated with such an effort. AEI's actions here are no different.

To stick with the analogy for a bit, much like the intimidation tactics of gun control activists on gun rights supporters, environmental groups shout "denier", "the science is settled" and accuse those on the right of being "anti-science" simply as an attempt to stifle legitimate debate so they can have their way. They report out their agenda as "science" (Michael Mann, meet Michael Bellesiles). And they'll spare no effort to muzzle dissenting views because the facts aren't on their side.

These tactics have been laid bare by the Climategate emails and, even closer to home for an organization like AEI, by Fakegate. Yet AEI apparently still thinks it can pick up their carbon tax turd by the clean end.

Curiously, AEI hasn't made any general statement in its defense on this issue that I've been able to find; however, they did provide this response to a question from Reason.

I reached out to AEI for a reaction, and AEI Director of Public Affairs Veronique Rodman offered this official response:
In recent years, AEI has been accused of being both in the pocket of energy companies and organizing to advocate a carbon tax. Neither is true. AEI has been, and will continue to be, an intellectually curious place, where products aren’t influenced by interested parties, and ideas from all are welcome in seeking solutions for difficult public policy problems.

Rodman also explained that AEI has absolutely no institutional position with regard to a carbon tax. She added that AEI scholars have the intellectual freedom to explore whatever public policy ideas that they find of interest.

Maybe they should think about taking an institutional position, given that the sole purpose of a carbon tax, after boiling away all the enviro-weenie bullshit, is to further the statist agenda of the left, which is diametrically in opposition to AEI's stated mission. Kenneth Green at AEI's own blog highlighted some reasons they should be opposed in a post from last year that was republished yesterday (in response to this kerfuffle, I'd imagine).

For coauthoring [a study finding that a revenue-neutral carbon tax was better than cap-and-trade, which would be better than regulation], my friends in the more purist domains of the free-market movement lambasted me for playing into the hands of an insincere green movement. At the time, I thought they were going overboard. I naively thought that a revenue-neutral carbon tax might be possible, and if done right, might offer economic benefits that might mitigate its economic harms; if we replace taxes on productivity with taxes on consumption, we might get a net, economy-wide benefit.

However, watching states loot "dedicated" eco-taxes for general revenue, seeing the emergence of more proposals for revenue-raising carbon taxes to finance continued deficit spending, and generally bearing witness to endless insincerity on the part of greens and their allies, I have to admit that my friends in the free-market movement were right: A carbon tax would simply become another general revenue raiser and a step in carbon-seduction. "Oh, come on, you've already accepted the tax, now let's do cap-and-trade and regulation."

Hence, my views on the carbon tax have evolved: I no longer believe that such a tax (or, for that matter, other eco-taxes) can be implemented in the sort of ideal, economically beneficent way that people favoring individual liberty, free markets, or limited government might sanction. Here are a few reasons why: ...

You have to give credit to Kenneth Green for admitting that the people who have consistently seen through this crap were right and he was wrong. These critics are the same people who are questioning why AEI continues to lend support to the carbon tax argument. And they're still right.

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