The basic premise of capitalism is that the price of a good or service reflects basic market forces — supply & demand. But what if the price doesn’t accurately measure the true cost? If the government subsidizes me to buy a pencil, then I’ll buy more pencils, and for some reason, the government has decided it is a worthwhile use of tax revenue.
Subsidies are generally written into law, much like the Biden Administration’s Inflation Reduction Act put subsidies for electric vehicles, solar, wind, and energy efficient products into codified law, which has resulted in almost 200,000 new clean energy jobs in the US because market demand for these clean tech products is growing alongside the price reduction. However, what about subsidies that aren’t written into law? These are called externalities (or externalized costs), and they’re the crux of pretty much every problem in the world that has been caused by capitalism. The cost of pollution, including climate changing pollution, is not included in the cost of the products and services we buy. That cost is instead externalized onto society, who has to deal with its consequences. Putting a price on carbon fixes this broken part of capitalism, at least in terms of climate change. ToOne is a carbon tax. It’s simple. For every ton of carbon emitted by a company, the government would add a ta