The idealized carbon tax is an almost perfect example of what Coase famously called “blackboard economics”: abstract economic theory that proceeds by ignoring a detailed knowledge of the actual economic system. You can’t separate the “merits” of a carbon tax from the “politics” unless you want to compare the kind of carbon tax you could create in the imaginary world where you are absolute dictator to the alternative policies that have to be developed in the real, messy world of democratic politics. It is this practical recognition that explains why all those “dumb” politicians are blind to the incredible elegance of this academic creation.
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