Eric Crampton: Peace dividends and carbon dividends

At the end of the Cold War, western governments substantially reduced military expenditure. US President Bush and UK Prime Minister Thatcher called it the “peace dividend.”

It was not a “dividend” in any normal sense of the term. It only meant that instead of spending money on bombs and planes, governments could reduce taxes or fund other expenditures. No one received a dividend cheque.

This week, in a similar vein, National proposed a ‘carbon dividend’.