Friends, I know the cool thing to do these days is to bash carbon pricing, but I think it's a huge mistake. First, let me say @mmildenberger & @leahstokes's essay is good, & very worth a careful read. But I think they get a number of big things wrong & are unnecessarily divisive. https://twitter.com/mmildenberger/status/1312166169382535169

First, they're clear that carbon pricing hasn't worked to date. Truth!

They say "we need to disrupt the political power of carbon polluters before we can meaningfully reshape economic incentives." YES!

But does this mean we should abandon carbon pricing? No, not at all.

Let me be clear: economists have muddied the water here and have done more harm than good. Decades of economists have said a modest carbon price would solve all our climate woes, oh, and we should use that money to cut taxes on the rich. They were wrong then & they are wrong now.

Ppl like Norhaus & Goulder have done tremendous harm to the debate, & have poisoned the carbon pricing well. Second, economists have been hellbent on the SCC to find the "right" carbon price. Let's be honest - we have no idea what it is! Pricing isn't a panacea. No silver bullet.

Grps like the @TheCLCouncil made deals w/ the devil that we should NEVER accept. Small carbon prices for regulatory rollback & FF immunity? GTFO!

So where does this leave carbon pricing? Bruised and battered, and for understandable reason. EJ groups have also soured on pricing

as policy design has failed to deal with hotspots - cutting emissions in wealthy areas while pumping it up in frontline communities.

How should we think about carbon pricing? I'm glad you asked! Carbon pricing, if done well, amounts to an *insurance policy for our planet.*

As the late Frank Ackerman, an exceptional heterodox enviro economist, pointed out, "We need to buy insurance for the planet." A carbon cap (no trading) should be passed in order or ensure emission reduction targets are met. Say reduce emissions by 10%/yr?

Now, we should lead w/ massive investment + smart regulations. Justice needs to be at the heart and center, with huge investments in frontline communities & careful regs to promote equity. But we don't know how much emissions will be reduced per $1T in green investment.

We also have to be honest that we're in the final inning and the clock is winding down. We simply can't leave any tools on the table. Why leave carbon pricing on the sideline?

Additionally if we're concerned about regulatory capture, what makes one think that it'd be easier to

avoid in green investment or smart regs then via carbon pricing? We need to break the back of fossil capital. The easiest pathway there is through nationalization via the Fed as I've written about w/ @carlaskandier & Rory Renzy. https://www.peoplespolicyproject.org/wp-content/uploads/2020/06/OutofTime.pdf

The key takeaways I get from @mmildenberger & @leahstokes are 1) small prices don't work; 2) regulatory capture is a problem; 3) voters care about jobs. These are all right, but don't mean we should write off a carbon price. I hope we can agree that it's time to deploy it all.

One other thing: we live in a mixed economy. Prices do indeed play a role, although not as big a role as economists like to claim. Price adjustments can be helpful for small nudges, but tend to be less helpful when retooling the entire economy (see WWII). That doesn't mean they..

don't have a *complementary* role to play here. In my work w/ Anders Fremstad we've advocated for a large price coupled w/ investments and regulations. Together, we can get the job done. https://www.peoplespolicyproject.org/wp-content/uploads/2018/09/CarbonTax.pdf

To be clear, @leahstokes and @mmildenberger are stand up scholars. I've learned a great deal from both of them and respect them deeply. This thread is meant to add to a healthy academic debate and shouldn't be read any other way