"the optimal tax is increasing as a function of p and is positive for any p>0". No. It is simply being assumed that carbon is doing more harm than good. If p is low and there is a higher probability that carbon produces net benefits (more agricultural production, opening up of land previously too cold, fewer deaths due to cold, etc.), then it is false that the optimal tax is positive for any p>0. And that's without taking your fixed costs point into account.
He would say that broccoli consumption is not a classical externality situation. If there are benefits to consuming broccoli, the consumer gets them, and if no one else gets helped or harmed much, then there's no good case for a tax to nudge behavior. The tax is for when there are private gains that come at the cost of public harms.
It makes sense on the face, but I can dream up possible threats all day long and we'll run out of money quickly. And incidentally, there are other risks I would rank much higher than global warming. It's very random to me that this is the one everyone latched onto.
The other thing is that we have fixed funds, so every expenditure has opportunity cost. You need to prove not only that X is worth funding, but that it is more worth funding than what you are taking from.
"Every micro textbook tells us that when the price of a good gets so low that firms can't recoup their fixed costs, it makes sense to simply close up shop – or not open in the first place. The same goes for government programs." I think you mean can't recoup their variable costs. That is, If AVC< P < AC, continue to operate in short run, but if P < AVC < AC, shut down now. Of course, this assumes fixed costs are non-recoverable (which is nearly always implicitly assumed in textbooks). But fixed costs, strictly speaking, only means a cost that is not a function of Q (given Q> 0), and thus some could be recoverable. For example, I sign a one year lease to rent a warehouse. Assume cannot get of contract. If I shut down, suppose I could sublease this warehouse and recover some of my least payments. The the proper rule should be if P < average recoverable costs, shut down.
When the Soviet Union justified all its actions citing SCIENTIFIC socialism, I just sat back and said "I am not a scientist so I can't judge one way or another". NOT!
It is not hard to do an internet search to find many scientists defunded because they don't support the hysteria driven by the UN. Start at the CO2 coalition.
"the optimal tax is increasing as a function of p and is positive for any p>0". No. It is simply being assumed that carbon is doing more harm than good. If p is low and there is a higher probability that carbon produces net benefits (more agricultural production, opening up of land previously too cold, fewer deaths due to cold, etc.), then it is false that the optimal tax is positive for any p>0. And that's without taking your fixed costs point into account.
Wouldn't Mankiw's position make basically any government program justifiable, no matter how ridiculous?
"Well, I don't know much about broccoli science so if someone proposes a broccoli tax then I should support at least a modest one."
He would say that broccoli consumption is not a classical externality situation. If there are benefits to consuming broccoli, the consumer gets them, and if no one else gets helped or harmed much, then there's no good case for a tax to nudge behavior. The tax is for when there are private gains that come at the cost of public harms.
It makes sense on the face, but I can dream up possible threats all day long and we'll run out of money quickly. And incidentally, there are other risks I would rank much higher than global warming. It's very random to me that this is the one everyone latched onto.
The other thing is that we have fixed funds, so every expenditure has opportunity cost. You need to prove not only that X is worth funding, but that it is more worth funding than what you are taking from.
"Every micro textbook tells us that when the price of a good gets so low that firms can't recoup their fixed costs, it makes sense to simply close up shop – or not open in the first place. The same goes for government programs." I think you mean can't recoup their variable costs. That is, If AVC< P < AC, continue to operate in short run, but if P < AVC < AC, shut down now. Of course, this assumes fixed costs are non-recoverable (which is nearly always implicitly assumed in textbooks). But fixed costs, strictly speaking, only means a cost that is not a function of Q (given Q> 0), and thus some could be recoverable. For example, I sign a one year lease to rent a warehouse. Assume cannot get of contract. If I shut down, suppose I could sublease this warehouse and recover some of my least payments. The the proper rule should be if P < average recoverable costs, shut down.
When the Soviet Union justified all its actions citing SCIENTIFIC socialism, I just sat back and said "I am not a scientist so I can't judge one way or another". NOT!
It is not hard to do an internet search to find many scientists defunded because they don't support the hysteria driven by the UN. Start at the CO2 coalition.
Doesn't this formulation just kick the can down the road of trying to determine the value of p?
Mankiw favors flat taxes himself on efficiency grounds, so he should expect the cost of having a tax different from everything else to always have some positive cost. https://scholar.harvard.edu/files/mankiw/files/optimal_taxation_in_theory.pdf