The Worst Possible Greenhouse Gas Regulation

Jon Chait notes a recent poll showing strong public support for EPA regulation of greenhouse gases:

The paradox of climate policy is that the most popular policy responses are those that hide costs from consumers. Cap and trade is more popular than a carbon tax, and regulation is more popular than [cap and trade]. But cap and trade is more efficient than regulation, and a carbon tax is more efficient than cap and trade.1

Well, yeah. The masses are easily fooled, aren't they? That's why credit card companies hide their fees, telephone companies charge you for an unlisted number, and airlines are willing to do almost anything to raise revenue other than increase the headline price of flying from one city to another.

In any case, Jon takes this as an example of where American democracy ought to work: sure, the masses are ill-informed, but elites know better, and Congress should respond to those elites and end up substituting a carbon tax for EPA regulation.

Maybe. But it depends on your definition of "elite," doesn't it? In the case of carbon regulation, the only elites who really matter are big corporations, and I think they've made the tactical calculation that EPA regs are less bad than either a carbon tax or a cap-and-trade system. They might change their minds at some point, but EPA is the devil they know, and its reach has known boundaries. Start mucking around with cap-and-trade and you've created an entirely new monster that you might not be able to control. So my guess is that Congress is responding to elites just fine. Unfortunately, as they usually do, they're responding to the elites that actually matter, not the chattering classes that Jon is thinking of.

1As longtime readers know, I'm not actually convinced of this. In a real-world comparison, I think cap-and-trade might actually be a better, more efficient choice than a straight tax. But I'll leave that aside for the moment.