Chronic. In his work Logic of collective action (University of Brussels, 2011), the economist Mancur Olson (1932-1998) explained that the most difficult political measures to implement are those which present diffuse benefits and concentrated costs: the individuals doomed to bear the costs vigorously oppose the proposed measure, while beneficiaries will gladly take advantage of it, preferring to see someone else go through it.
Olson’s vision applies to the most pressing political challenge facing humanity today: climate change. Economists agree that a carbon tax, by reducing emissions, would produce benefits for all the inhabitants of the planet. However, several specific segments of society – the concentrated interests that Olson evokes – are doomed to bear a disproportionate share of the costs. Carbon taxation represents higher costs for residents of small towns and rural areas than for city dwellers. Likewise, poor households spend a greater share of their income on food and transport compared to better-off households, who spend more on greener services. In the United States, the share of income absorbed by a carbon tax would be three times higher for the lowest income quintile than for the highest.
The “yellow vests” of France are the perfect illustration of this. Diffuse interests, represented in the National Assembly, agreed in 2014 to increase fuel taxes. The farmers and the “yellow vests” blocked the roads, then waged their fight in the cities: the government repealed this tax hike in 2018. Olson would not have been surprised.
Qualified analysis
In the United States, the Biden administration faced opposition from fishermen and whale-watching tour operators against an offshore wind farm near the island of Martha’s Vineyard (Massachusetts) and had to cancel an even more ambitious project off Cape Cod. Opposition to a carbon tax is to be expected to be concentrated in Texas, North Dakota and other oil, gas and coal producing states. Workers in the energy and transportation sectors will blame these taxes, even if the cause lies elsewhere. Households struggling to refuel at the pump will see the carbon tax as an elite project defended by obtuse intellectuals. The shock of Chinese competition led to Donald Trump. An imposed carbon tax could lead to even worse.
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