[Borodog]

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It would be if the roads were privatized. Ad hoc taxation will not produce the result you desire.

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How would privatizing roads do this?

I'm not necessarily arguing that taxation is the right or best means to internalize externalities. There might be far better solutions. But to say that modest tax credits for low emissions vehicles is tantamount to stealing is a little silly AFAIC.

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Well, I'm an anarchist, so all taxation is theft, IMHO, but that's a different discussion.

If the roads were privatized, their owners could be rightly sued for the pollution they create. In fact they'd be sued so often that they would probably just set up a system to just automatically pay their neighbors without going through the expense of lawsuits. The road owners of course will pass these costs on to their customers. Competition will force them to charge differential rates based on the differing emissions of the vehicles of their consumers. This will provide simple, direct market incentives to purchase lower emissions vehicles. This in turn provides a real, direct market incentive to research, design, and produce low emissions vehicles.

There are a number of other market efficiencies that would come into play that would make the roads cheaper, safer, and cleaner. For example, the technology exists (and has existed for probably a decade) to fully automate the roads, at the very least the highways. 95% of a modern road at full capacity is completely empty. Computer technology could vastly increase the packing efficiency of the roads, which is today limited by human psychological factors. A computer controlled road that is 50% empty still carries ten times the traffic of a modern road. Furthermore, computer control would allow significantly higher speeds. This means that the traffic flux that could be sustained is enormous. The economic implications are enormous. Computer controlled drafting would increase fuel efficiency and lower emissions by a significant fraction (perhaps 20%, although I don't remember the number off the top of my head).

You cannot sue the current owners of the roads for the damage that they do, hence there is no incentive to reduce emissions, other than political pressure. Political pressure, of course, is never applied in the right place to actually solve the problem. Political solutions always create more problems and make the problem worse for a number of reasons (the economic calculation problem, etc).

Currently the system is set up with the wrong incentives. Highway and road bureaucracies recieve more funding when they have more problems, not when they operate better. Hence there is really no incentive for the road bureaucracies to improve the road system. And as you've already noticed the cost of pollution is simply externalized.

By the way, thanks for SSH. Best poker book I've ever read, and I have a stack 4 feet thick.