Out of Control Policy Blog

Do you Pigou?

Greg Mankiw's Piguo Club–named after the economist A.C. Pigou who pioneered the use of taxes and subsidies to correct externalities–is getting plenty of pub. In fact, one day Mankiw may be more famous for his Piguo Club than for being the guy who took a (horribly unfair) drubbing for defending offshore outsourcing.

Anyhow, Russell Roberts does not Pigou. Here he sounds off on the prospect of raising the gas tax and links to a podcast where he explores the issue with Mankiw.

Key nugget:

    It would be naive to argue that we shouldn't worry about pollution because people will feel guilty polluting and that will discourage pollution. Similarly, it strikes me as naive to encourage government to solve the pollution problem via a gasoline tax if you know that the level of the tax will be set wrong and that the money will be badly spent.

Related: Why I prefer tolls to taxes

Ted Balaker is Producer


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