Why Couldn’t Hayek Have Been Even Awesomer?


Jason Kuznicki

Jason Kuznicki is a research fellow at the Cato Institute and contributor of Cato Unbound. He's on twitter as JasonKuznicki. His interests include political theory and history.

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18 Responses

  1. Avatar North says:

    One can’t blame cap and trade’s failure on Hayek. That’s nonsensical. The blame lies in the nature of the problem and the natural of people in general. The risks and dangers that are presented are pretty much projected to be invisible until it is too late to stop them. People just aren’t easily persuaded that global warming is that much of a threat. Even at its’ height during higher levels of economic prosperity the GW issue struggles to capture genuine public urgency. Now with the economy struggling there’s no interest in adding the additional burden of cap and trade.Report

  2. Avatar Boegiboe says:

    I agree that carbon cap and trade legislation is a hard sell in a tough economy. It’s hard to see how it doesn’t slow down the hiring of new employees in the short term, and not a complete given that the pace will pick up in the long term because of technology development (though I think this would happen).

    But I don’t get this:
    “Indeed, until China and India are squarely onboard, I’m honestly not sure what we can do.”

    So, the United States leads the Industrial Revolution so successfully that two more of the world’s largest nations want to follow suit, and we have to wait for them to slow down and accept cap and trade before we do? I mean, even if China has just passed us, we still emit almost 20% of the world CO2, for Pete’s sake! India is a distant third to us at under 6%. Anything we do to reduce our carbon will have an impact on its own. Maybe setting the example will help convince China and India to also limit their carbon emissions sooner rather than later.

    I more than half suspect I’m misunderstanding you, because you’ve often addressed immoral behavior on the part of the U.S. by saying other people being worse than us doesn’t make it OK for us to keep doing bad stuff (e.g. torture).Report

    • Avatar North in reply to Boegiboe says:

      @Boegiboe, I think what his point is Boegiboe is that manufacturing is fungible. If we enact cap and trade alone then manufacturing will simply shift to non-capped places like China and India. When you factor in the fact that China and India are actually less efficient manufacturers (in terms of pollution) you’d have a situation where the US enacting cap&trade by itself may cause the US emissions to reduce but the global emissions to -increase-.Report

    • Avatar Jason Kuznicki in reply to Boegiboe says:


      What we have is a prisoner’s dilemma, even under some very generous assumptions about both the seriousness of the danger and our ability to stop it.

      If everyone is onboard and no one defects, then we save the planet with no relative loss of economic competitiveness. (I count India because while its carbon footprint is small right now, that footprint projected to grow significantly.)

      If the United States acts alone, we wouldn’t save the planet. All we would do is wreck our own competitiveness in a world still suffering essentially the same amount of global warming.Report

    • Avatar Pat Cahalan in reply to Boegiboe says:

      @North & Jason,

      “If we enact cap and trade alone then manufacturing will simply shift to non-capped places like China and India.”

      Could we perhaps think of some mechanism to deter this, though?

      I’ve read some of the industrial reports on China. They are indeed building some pretty dirty crud over there in the rush to production (but, as well, as they build an actual middle class, they’re getting pushback from people that don’t want the dirty crud in their backyards any more.)

      If trade (via foreign manufacturing) is an integral part of the problem, that’s doesn’t mean that we throw up our hands and say, “Well, we can’t do anything about it if China and India don’t get on board, so we might as well just buy nice stuff while we can before the biosphere is screwed.” Instead, maybe, we take some sort of leadership position? Carrots or sticks?

      If we enabled cap and trade, or any other mechanism (market, regulatory, or otherwise) that increased the burden of manufacturing… note – I’m not entirely convinced that it will increase the burden of manufacturing, but that’s an aside… you can offset that by any one of a number of other options.

      Give a tax break to any company that makes capital expenditures leading to cleaner production (this will stimulate the economy, since lots of companies are sitting on piles of cash but nobody’s spending anything on CapEx since sales are bad.)

      Import duties on goods manufactured in dirty countries? If you don’t want to get involved in a trade war, heck, maybe we could just stop subsidizing bunker fuel and then the cost of shipping would rise to the point where it no longer makes economic sense to make cheap trinkets in China, because it costs a buttload to ship them here.

      As a side note: given that immigration from the lower half of the continent is regarded as something of a problem, maybe the bunker fuel idea will encourage more manufacturing in Mexico and Central America, as well. More jobs there = less need for them to look for work elsewhere.Report

      • Avatar 62across in reply to Pat Cahalan says:

        @Pat Cahalan, excellent points. Thank you.Report

      • Avatar North in reply to Pat Cahalan says:

        @Pat Cahalan, Fundamentally Pat the global warming concern is that manufacturers using the most inexpensive energy forms (fossil fuels) are causing pollution. If we do anything that will cause manufacturers to use less fossil fuels there is a trade off in that their new energy sources are comparatively expensive. That more expensive energy would be an additional burden on manufacturers seems like a fundamental and non-controversial assumption to me.

        I agree that all of the proposed solutions your outline have potential to ameliorate the downside of cap and trade on American manufacturing though many of them also come with their own attendant problems like trade wars, WTO complaints, retaliatory subsidies etc…

        When you factor in that we’re having a hard time convincing the public about the fundamental seriousness of global warming, this becomes really daunting. All by itself global warming initiatives are having trouble flying. When you couple that with trade restrictions, government subsidies and all that it’s like piling more ballast onto an already ground bound balloon.

        Personally I fear that it would take some kind of unambiguous disaster to convince the body politic to act. Of course if global warming fears are accurate by the time such disasters occur it’d be too late to ameliorate it through curtailing the use of carbon fuel.

        As an side though, is bunker oil really subsidized that much? If it was I’d be all in favor of ending such a thing.Report

  3. Avatar Plinko says:

    This is either too way meta for my tastes or you’re completely misreading MattY’s post.Report

  4. Avatar 62across says:

    As Plinko says, you’re giving a pretty disingenuous reading to what Matt has written. It’s hard to see how he is faulting Hayek for anything.

    He is merely noting that Hayek’s position (“the substitution of direct regulation by authority where the conditions for the proper working of competition cannot be created”) is considerably more statist than cap and trade, which tries to create a price mechanism to “uncover the most economically efficient way of undertaking the reductions” in pollution. Way over to the right of these positions, is where the GW denialists and “let China and India go first” excuse makers have set up camp.Report

    • Avatar Mike Schilling in reply to 62across says:


      Nothing new there. It’s exactly like first saying that the legal system can replace government regulation for addressing product safety, and then championing tort reform to ensure that it doesn’t.Report

    • Avatar Jason Kuznicki in reply to 62across says:


      Saying that Hayek “doesn’t think [pollution credit markets] would work” is at best ignorant. Those markets hadn’t even been invented yet.

      Inventing them was a significant development in the history of economic thought — so significant that their inventor, Ronald Coase, won the Nobel prize, largely for the theoretical work behind them.

      So yes, it was a bit of a smear on Hayek.Report

      • Avatar Plinko in reply to Jason Kuznicki says:

        @Jason Kuznicki, In MattY’s comments, it was noted that the idea of Pigou’s work was already known in Hayek’s time. Had he bought into it this would have been a great place to mention it even though he was writing before Coase, the principle wouldn’t have been hard to infer. The idea of pollution markets isn’t necessary to advocate that society would likely be better served by taxing pollution/environmental destruction rather than relying on a bureaucracy to make the decision for us.

        That said, since I now know the post isn’t meta, I guess now I can say that Matt’s writing clearly to say that Hayek, who the Tea Party holds up to be the ultimate rejoinder to Big Governement and slayer of the left’s ideals actually held views that are demonstrably to the left of any mainstream politician in the US on one of the most politically difficult issues of the day. And that Democrats, those anti-Hayekian Statists, actually hold a view that takes Hayek’s view and adjusts it to be more in-line with free-market principles. It’s an attack on the Fox News/Tea Party set and logically effective, though likely to be about as influential as anything else he says.

        Matt’s been praising Hayek regularly on his blog lately, so I don’t see how the post here works (unless you’re being meta).Report

        • Avatar Jason Kuznicki in reply to Plinko says:


          Matt’s writing clearly to say that Hayek, who the Tea Party holds up to be the ultimate rejoinder to Big Governement and slayer of the left’s ideals actually held views that are demonstrably to the left of any mainstream politician in the US on one of the most politically difficult issues of the day.

          Sure — but if he’d known about pollution markets in 1943, do you seriously think he would have dismissed them in favor of Pigouvian taxes? I don’t.Report

        • Avatar Plinko in reply to Plinko says:

          @Plinko, But the question isn’t really what Hayek would say, but that we can be fairly certain whatever he would say would be in direct conflict with those claiming his mantle. To them, Hayek is directly in line with the ‘Big Government’ bogeymen they’ve been screaming about, which more likely implies that they’re misreading him than that Hayek is actually a Big Government statist.Report

      • Avatar 62across in reply to Jason Kuznicki says:

        @Jason Kuznicki, I think the “Big Government Hayek” handle is an awfully blatant signifier that Matt Y is being facetious. There is enough ignorance out there that it shouldn’t be necessary to conflate it with humor.Report

  5. Avatar Pithlord says:

    Yglesias has got you and Wilkinson dead to rights. Unpriced carbon emissions are a massive violation of the property rights of the poorest people on the planet, but you can’t give up the Koch gold, so you make pathetic excuses.Report