“Professor Dolan is invited to study the Hayek literature to see if any of the above nine points are not valid. The burden of proof is on him to try to square a classical liberal with disputed externality pricing, ‘tax-bads’ public finance, international tariffs, equity tax-dividend adjustments, and government planning.”

Yale Professor Ed Dolan recently attempted to link the classical liberal scholar F. A. Hayek (1899–1992) to a carbon tax in a piece published by the (misnamed) Niskanen Center. [1]

“Friedrich Hayek on Carbon Taxes” is more than unconvincing. It is shoddy. It fails to make its point and (purposefully?) neglects the obvious themes of Hayekian economics and political economy for a generic issue such as climate change.

Professor Dolan begins by admitting that Hayek never wrote anything on the subject. He concludes by stating that Hayek would have favored a “carbon tax over doing nothing.”

Nolan’s argument is that markets require prices and carbon dioxide emissions must be priced as a negative externality. This begs the very questions that are not settled in climate science, climate economics, and climate policy.

As a multi-disciplinary scholar, Hayek would have assessed the climate literature and reached a reasoned and, as necessary, brave conclusion. And he would have found multiple reasons to reject, not accept, a price on the never priced, non-pollutant carbon dioxide (CO2).

Here are my reasons why Hayek in his prime would have not been in favor of a carbon tax:

1. He was suspicious of scientific ‘consensus,’ given the consensus of Keynesianism and central planning in his liefetime.
2. He would recognize positives, not only negatives, from increasing atmospheric concentrations of CO2. He would not have considered nature ‘optimal’ and thus the human influence as necessarily ‘disequilibrating’.
3. He was not a Malthusian and actually wrote on the subject, questioning conservation for its own sake regarding mineral resource depletion (running out of minerals was the predecessor of running out of livable climate).
4. He would have rejected any particular carbon price as a “pretense of knowledge.”
5. He would have rejected setting ‘border adjustments’ as a “pretense of knowledge.
6. He would have rejected carbon fee-and-dividend adjustments for income inequality as a “pretense of knowledge.”
7. He would have seen government climate planning as a form of central economic planning.
8. He would be suspicious of one-world government in the quest to effectively regulate carbon emissions.
9. He would have applied Public Choice arguments to see “government failure” in the quest to correct “market failure.”

Professor Dolan is invited to study the Hayek literature to see if any of the above nine points are not valid. The burden of proof is on him to try to square a classical liberal with disputed externality pricing, ‘tax-bads’ public finance, international tariffs, equity tax-dividend adjustments, and government planning.

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[1] As I have argued elsewhere: “[Niskanen Center founder Jerry] Taylor’s lawyer’s brief for climate-policy activism–one that most of us could have written if we role-played the opposition–also violates the spirit and memory of William Niskanen, who never bought into climate alarmism/forced energy transformation–and who was not interested in second-best in this area.

Niskanen understood the politics of the climate issue and motivations of the other side and was not about to let a theoretical ideal about controlling real pollutants (choosing taxation over command-and-control) change his views about carbon dioxide. That Taylor is using climate advocacy to fund his new center is a double whammy to Niskanen’s memory. The Niskanen Center should be renamed. And “libertarian” should be taken out of its descriptive and promotional material for so long as climate alarmism/forced energy transformation is atop the masthead.”