Rolling Stone’s Jesse Myerson wrote a provocative piece last week, “Five Economic Reforms Millennials Should Be Fighting For”, arguing that the generation whose job market entry coincided with one of the most damaging recessions in U.S. history needs to champion expansive overhauls of the U.S. economy in order to right the ship for the decades ahead.
The five reforms Myerson offers—guaranteed employment, a universal basic income, a land tax, a sovereign wealth fund, and state-based public banking—are aimed at solidly erasing America’s growing inequality, un- and under-employment, and dangerously speculative financial sector.
There is, however, one important consideration not tackled head-on by Myerson’s manifesto: climate change.
A Changed Climate is Our Future
Though the defined age range for “Millennials” is somewhat nebulous, it is safe to say it includes those born between 1980 and 2000. By the time this cohort reaches late middle age (from 2040 to 2050), climate estimates suggest the world will have warmed up to the 2° C point above pre-industrial levels, identified at the Copenhagen Conference as a danger point.
Research compiled by the World Bank suggests after that threshold is reached, and absent immediate policy intervention, the world will continue a potentially catastrophic warming trend, with extremely hazardous effects to human systems (agriculture, transportation, and coastal habitation).
As global warming is directly related to the emission of carbon dioxide, the best way to reverse that trend is to limit carbon dioxide. Such limits would have be to universal (across the entire economy) as well as coercive enough to guarantee compliance (through a tax or some form of regulation).
Getting Boomers on Board
Congress voted down an effort to introduce a cap-and-trade system early in President Obama’s first term, and a similar national effort has not been revisited (though California did subsequently adopt a state-wide cap-and-trade).
For the purposes of simplicity, however, it is worth considering a pure carbon tax, an assessed fee on each ton of carbon dioxide emitted in the U.S. economy. Unlike cap-and-trade, where the market price for pollution credits would adjust over time, a carbon tax would remain fixed by legislation over a fiscal year.
Firms could plan ahead knowing their operations would eventually cost a fixed amount of money per year. The Environmental Protection Agency already possesses the statutory authority to regulate CO2 as a pollutant, so the beginnings of a regulatory framework is already in place.
A carbon tax need not prejudice efforts to reduce unemployment or fight inequality. Mark Muro and Jonathan Rothwell’s Brookings Institution study posited that a $20 per ton tax, rising 4 percent per year after inflation, would raise around $15 billion a year.
A third of this tax could be earmarked for investments in clean technology (which would, under a carbon tax scenario, be a complement to private firms investing on their own to reduce their exposure to the tax). The rest could be used for a variety of fiscal policy measures: reductions in personal or payroll taxes, cuts to the federal deficit, further endowments to the social safety net, etc.
You could—as Myerson’s sovereign wealth fund would—set up the tax so part of the revenue is paid out to Americans as a dividend, which people could use to pay off personal debt, cushion any increase in utility costs, or other personal priorities.
No Time Like the Present
The exact specifics are less important for this discussion than the general point: that pricing carbon is a long overdue economic reform. It also, incidentally, enjoys a fair amount of bipartisan support, including from many of the companies who would be paying: ExxonMobil, Caterpillar, and FedEx among them, according to ThinkProgress.
If millennials do not want to make the same mistake their parents made—leaving the next generation worse off—they should embrace the climate fight wholeheartedly. The one economic reform that gets us onto that path is a carbon tax. Let’s get to it.