When [Jackie] Robinson joined the [Kansas City] Monarchs, [Buck] O’Neil believed, the Monarchs started learning from him very quickly. Previously, they had always traveled by bus, and as they swung through the South, there were certain places they always stopped for gas and food. There was a place in Muskogee, Oklahoma, where they had always gassed up, but where the owner never let them use the rest rooms. Robinson had not known that, so when the bus pulled in, ready to fill up its twin fifty-gallon tanks, he got out to go to the men’s room. “Where you going, boy?” the owner said, and Robinson answered that he was going to the men’s room. “No, you’re not,” the owner said. “You boys know that.” Robinson never even hesitated. “Take the hose out of the tank!” he said immediately, and that was no idle threat, for one hundred gallons of gas was a big sale, a fair percentage of the amount of money the man might make on a given day. The man looked at Robinson and saw the anger and strength in his face. He was not the first, and certainly not the last, white man to see that conviction, and he immediately backed down. “You boys can use the rest rooms,” he said. “Just don’t stay there too long.”
This is from David Halberstam, October 1964. I’m enjoying learning a lot about early baseball. I didn’t follow it much until the late 1980s. And of course the interplay of baseball and racial discrimination is a major theme of the book.
The Kansas City Monarchs were a baseball franchise in the Negro American League. Jackie Robinson joined the team in 1945. Buck O’Neil was the Monarchs’ manager from 1948 to 1955.
Although I don’t know if economist Gary Becker knew this story, I’m pretty sure, given his insights about how free markets undercut racial discrimination, that he wouldn’t have been surprised and, of course, would have been delighted.
READER COMMENTS
Stéphane Couvreur
May 3 2022 at 4:55am
Regarding the carbon tax at 23:20, I am not surprised that a government official speaks of this instrument as her preferred option to reduce carbon emissions. What I find more surprising is the lack of reaction of economists, who could argue that cap-and-trade is preferable. There can be a reasonable debate about this claim, of course, but I believe cap-and-trade to be preferable because:
1) it doesn’t have the word “tax” in the title and generates no revenue for the governement (provided that the quotas are allocated for free),
2) as a consequence of 1), there is no need to redistribute the receipts from the carbon tax as is standard with a Pigouvian tax,
3)
Jon Leonard
May 6 2022 at 5:36pm
A key difference between a carbon tax and a cap-and-trade system is how they handle errors in forecasting. That is, under a tax system it is easier for individual businesses to adjust if the overall target was chosen incorrectly. Under a cap-and-trade regime, the total amount of pollution is pre-determined; this either pollutes more than necessary if the cap is “too high”, or stifles the economy more than necessary if the cap is “too low”. As in many cases in economics, the central plan can be suboptimal.
Stéphane Couvreur
May 3 2022 at 5:08am
(Oops!)
3) as a consequence of 2), there are fewer opportunities of rent-seeking and buying constituencies with the said tax receipts.
I have seen no economist making those points. Nordhaus prefers the tax because, as he writes in an endnote, quotas are more susceptible to cause corruption in developing countries. Sumner considers “foolish” the idea of allocating the quotas for free in a cap-and-trade system (I don’t understand why, cf. opportunity cost). Harford considers that a tax or a cap-and-trade are almost equivalent and points to Weitzman’s 1974 “Prices vs quantities” article. Levitt fears that firms would be better at distorting politically the allocation procedure in a cap-and-trade system than with a tax.
Do you have an opinion on the subject, David?
Best regards,
Stéphane
David Henderson
May 3 2022 at 7:03pm
Stephane,
I have two opinions.
First, either the tax or the cap and trade opens things to rent seeking. Your point #3 applies, but you didn’t mention the extensive fight that would go on as various firms, individuals, and governments pushed for more than their pro-rata share of permits. It’s hard for me to judge which is worse.
Second, your point about not getting revenue for the government is a good one. They’re likely to waste a lot of it. In my ideal world, which I think is highly unlikely, given the political system, the revenue would go to reducing the federal debt or reducing the most distorting taxes, dollar for dollar. Those are likely to be taxes on capital. But the political pressure would be strongly against that and in favor of giving each person and household a check. So the chance to either pay down the debt or reduce distorting taxes would be wasted.
A bigger point, in my view, is that there’s not much justification at this point for either. Remember that the goal is to “solve” global warming, not to reduce carbon usage per se. Reducing carbon usage is one way to do so, but there’s virtually no evidence that it’s the least-cost way. I think that some form of geo-engineering is likely to be substantially less costly.
Stéphane Couvreur
May 4 2022 at 1:07am
Thanks a lot for this long and thoughtful response.
A quick reaction:
Your third and bigger point is entirely right. No system solves for the optimal trade-off between reduction and adaptation. I will keep this in mind.
As for the first point, as long as there is some emission reduction, I believe cap-and-trade offers fewer opportunities for rent-seeking. Here’s why:
– it can be organized to be a one-time thing, so the rent-seeking contest occurs only once, initially, whereas the fight for the carbon tax receipts can go on forever;
– there is not much in it for bureaucrats, whose task would be to monitor emissions and not to regulate or collect a tax, so there’s a chance they will be more impartial.
Going back to your third point, I agree that cap-and-trade is far from “perfect” in any meaning of the word. Most economist I’ve heard criticizing it had a very different argument: “The price of tradable permits turns out to be too volatile to encourage firms to invest in carbon reduction technology”, they say (sic).
Your answer is implicitly that adaptation is better than reduction. This makes a lot more sense. It was also David Friedman’s answer.
Stéphane
David Henderson
May 5 2022 at 10:41pm
You’re welcome.
Good point about one-time.