Home Finance Californians, if they are like the rest of America, have already answered

Californians, if they are like the rest of America, have already answered

by trpliquidation
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Californians, If They

The majority of Californians have decided.

“California must decide whether it wants low carbon prices or low gasoline prices.”

That is the title of an article published by the “Energy Institute at Haas”, part of the University of California, Berkeley.

It’s from James Bushnell, professor of economics at UC Davis, who received his Ph.D. in Operational Research. The article is here.

First, as co-blogger Pierre Lemieux would quickly point out, the article is mistitled. “California” cannot decide anything; it is not a conscious being.

But Californians, if they are like most Americans — and they may not — have already made up their minds.

In his long article, Bushnell talks about the trade-off between low gasoline prices and low CO2 consumption. But unless I missed it, he gives the reader no idea how much Californians would have to pay to achieve the ambitious goals of the California Air Resources Board (CARB). I feel like it’s very expensive.

But maybe Californians are willing to bear big costs to reduce carbon use, right?

Wrong.

In “68% of Americans would not pay $10 a month in higher electric bills to fight climate change,” Cato at FreedomOn March 8, 2019, Emily Ekins, vice president and director of polling for the Cato Institute, presents a graphic that tells a lot. Some of it is in the title of her piece. And $10 a month must be a significant underestimate. The cost of any observable impact on global temperatures would almost certainly be at least a hundred dollars per month. Only 16% of respondents would be willing to pay that much.

Although Bushnell does not give us any cost figures that we can compare to the figures in the study, which took place much earlier articleRobert P. Murphy did that. He cited an MIT study that found a generic cap and trade program would cost $3,100 per average household. As Murphy noted, although the MIT professor strongly objected to the mention of his number, he did not deny it. On the contrary, he argued, the net cost per household would have been “only” $800 per year because the income would be returned to people. But as Murphy noted, to make that happen, revenues would have to be cut efficiently. Does that sound like the government you and I know?

But let’s assume, against almost all the evidence, that the government did distribute revenues efficiently. An amount of $800 when this MIT professor wrote (let’s say in 2008), adjusted to the Consumer Price Index, would have been $950 in 2019 when Emily Ekins wrote. That’s $80 per month. Only 15% of people surveyed would have paid $75 per month.

So unless Californians are much different from other Americans—and unless Californians have changed a lot on this issue in five years—James Bushnell can rest easy. The majority of Californians have spoken.

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