How Ron Paul could Win the Presidency in 2008
Ron Paul could win the Republican primary election for president and then the general election in 2008 if he adopts a winning policy for the environment
December 1, 2008
Fred Foldvary, Ph.D.
Economist

Ron Paul, member of the U.S. House of Representatives from Texas, could win the Republican primary election for president and then the general election in 2008 if he adopts a winning policy for the environment.

The economy and the environment are prime political issues in the 2008 American election. Ron Paul has been a strict Constitutionalist and supporter of free markets and private enterprise. Though not one of the top candidates in the polls, he has attracted an enthusiastic and growing following and campaign funds, especially with the use of the Internet. Ron Paul is opposed to the federal income tax and seeks to eliminate special-interest spending and the excessive regulations choking American enterprise. Paul is also opposed central banking and seeks to bring back the gold standard.

But Ron Paul has not taken a firm stand on the environment, particularly on climate change or global warming. He thinks that the global warming projections are overblown. His policy prescriptions are: 1) Reform tort law to allow polluters to be sued; 2) Let the states deal with the pollution within their boundaries and to make environmental agreements with other states.

Ron Paul is correct on the main point. He recognizes pollution as an invasion into others' property, which requires compensation. He is right-on in saying that it was improper for the courts to have ruled against being able to sue polluters.

On taxation, Ron Paul sees excise taxes (taxes on the sale of goods, including tariffs) as a Constitutionally proper way to finance a much smaller federal government. Although Ron Paul opposes new taxes, it would be consistent with his free-market opposition to subsidies and corporate welfare to favor a "green tax shift," replacing income taxes with pollution charges.

Since it would take time and Congressional approval to eliminate income taxes, the income tax could be abolished quickly by replacing individual and corporate income taxes with levies on pollution. A pollution levy is not a tax in substance, but rather a penalty and compensation for polluting. Pollution levies are Constitutional, since like excise taxes, they are indirect, being passed on to the buyers of products, and are not levied directly on the payer as such, but on the pollution.

It's fine to be able to sue polluters, but in some cases, the pollution affects a wide area, including the whole planet. A class-action lawsuit against a polluter such as a coal power plant implies that the polluter compensate all Americans and others affected as an on-going charge. This has the same effect as a pollution levy of the same amount.

Actually, the green tax shift would be even better than a mass tort, because the elimination of the income tax would also eliminate the excess burden of the tax. When wages are taxed, we are hit with two taxes. One tax is the money workers are forced to pay to government. The second tax is the reduction in production, investment, and consumption because of the first tax. The green tax shift would eliminate the excess burden and also replace intrusive and costly regulations such as gasoline additives and engine requirements. If libertarians are serious about eliminating subsidies, they should favor pollution levies that apply the polluter-pays principle to emissions that have millions of victims and that replace punitive taxes on wages and entrepreneurship.

There is not a single candidate in the Republican or Democratic Party primary elections who is advocating the green tax shift. If Ron Paul adopted the shift in his platform and promoted it in his speeches and debates, it would electrify the campaign. Environmentalists would flock to his campaign, cheering. This would put the free-market movement in the vanguard of environmentalism rather than dragging behind.

Even if Ron Paul and other freedom-minded folk are skeptical about the dangers of global warming, the reduction of pollution is good for society and consistent with free-market principles. The green tax shift would help the economy and enhance liberty regardless of how much emissions are contributing to global warming. The first candidate who embraces the green tax shift would have an overwhelming comparative advantage.

Ron Paul! Embracing the green tax shift would make your abolition of the income tax more realistic. Millions of voters are worried about global warming. Rather than dismiss these concerns, adopt them as your own. As the U.N. climate change conference in Bali showed, the tide of history is moving towards a confrontation with the climate change issue. Ron Paul can be in the forefront of the environmental movement and turn it in a free-market direction.

Ron Paul! You have the opportunity not just to be elected president but also to turn global environmental policy away from regulations, deception-laden carbon credits, and problematic cap-and-trade policies, to market-friendly pollution levies.

Ron Paul! Freedom is green! Make history and adopt the green tax shift!

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Fred Foldvary, Ph.D.
Economist

FRED E. FOLDVARY, Ph.D., is an economist and has been writing weekly editorials for Progress.org since 1997. Foldvary's commentaries are well respected for their currency, sound logic, wit, and consistent devotion to human freedom. He received his B.A. in economics from the University of California at Berkeley, and his M.A. and Ph.D. in economics from George Mason University. He has taught economics at Virginia Tech, John F. Kennedy University, Santa Clara University, and currently teaches at San Jose State University.

Foldvary is the author of The Soul of LibertyPublic Goods and Private Communities, and Dictionary of Free Market Economics. He edited and contributed to Beyond Neoclassical Economics and, with Dan Klein, The Half-Life of Policy Rationales. Foldvary's areas of research include public finance, governance, ethical philosophy, and land economics.

Foldvary is notably known for going on record in the American Journal of Economics and Sociology in 1997 to predict the exact timing of the 2008 economic depression—eleven years before the event occurred. He was able to do so due to his extensive knowledge of the real-estate cycle.