The lead article in the summer issue of Regulation magazine, the Cato Institute’s flagship publication, is titled “What is the right price for carbon emissions?” The author is Bob Litterman, a Ph. D. economist who is currently a partner in a NYC-based hedge fund.
Here is Litterman’s conclusion: “It would be best to get started immediately by pricing carbon emissions no lower, and perhaps well above, a reasonable estimate of the present value of expected future damages, and allow the price to respond appropriately to new information as it becomes known.”
Litterman’s article is followed by four comments by Robert Pindyck, Daniel Sutter, Shi-Ling Hsu, and David R. Henderson. Pindyck and Hsu are for a carbon tax; Sutter and Henderson are opposed.
These articles were described by someone at Cato as “exploring the case for a carbon tax from a free market perspective.” But I don’t see anything resembling a free market case for a carbon tax being made in Litterman’s article or in the pro-carbon tax comments of Pindyck and Hsu.
Nor can I find anything in Litterman’s background or in the references in his article to suggest that he is a free market economist. He was at Goldman Sachs in high positions for twenty-some years and is a member of the board of the World Wildlife Fund. Goldman Sachs is one of the leading practitioners of crony capitalism. The World Wildlife Fund supports a variety of command-and-control environmental and energy-rationing policies that help keep poor people poor around the world.
It appears that some people at Cato are warming to the idea of rule by experts. Manipulating the tax code in order to remake society and force people to conform to some authoritarian agenda is really just another variant of central planning. Rule by experts was criticized insightfully in a 1945 essay, “The Use of Knowledge in Society,” by Friedrich A. Hayek, the Austrian economist for whom the Cato Institute’s auditorium is named. Hayek argued that rule by experts threatens human freedom. In my own view, the proper “free market perspective” on a carbon tax is: No way in hell.