Economics: Why Americans Voted Against Carbon Tax And Why This Is Good For The US Economy

(Drivebycuriosity) - Last week the citizens of the US state Washington voted against the introduction of a carbon tax. "This raises the prospect that the carbon tax may be dead as a policy for the time being, including at the state level", commented Tyler Cowen, an economics professor at George Mason University and owner of the influential blog Marginal Revolution ( marginal).

The vote is not a surprise. It can be explained by basic economics (economics 101). These voters followed just their self interest - confirming Adam Smith  (driveby).  A carbon tax would have harmed them. Many of the voters are drivers. Many are living in the suburbs (sprawl) and need cars to go to work, to job and to spend their leisure times. A carbon tax would have reduced their standard of living.

I think the decision is good for the US economy. A carbon tax would not have curbed gasoline consume much. Americans are addicted to cars & driving. Especially people in the sprawl wouldn´t drive less as explained in the first paragraph.  They would have been forced to curb spending for other goods & services in order to cover the higher gasoline costs.

A nationwide carbon tax might even cause a recession if it leads to a huge jump of gasoline prices. Higher cost for transportation would raise the cost of almost everything you can find in a shop, reducing consumer spending, the engine of the economy. A study by Prof.  Hamilton shows that jumping gasoline prices - from summer 2007 through July 2008  -  turned the economic slowdown into a severe recession (econbrowser).

Thanks to the voters of Washington State the US could avoid this fate.