Pigouvian Taxes and Porn

Many of my friends have been sharing this petition via social media, which asks the White House to require pornography to be an "opt in" feature with Internet service providers (ISPs), rather than a standard feature. Let me discuss why this is the worst way to a limit porn consumption and make an alternative proposal which would achieve (while skipping over the irony that some of these same people were likely sharing/signing petitions to keep net neutrality not so long ago...).

I'm a fan of gov't interventions
such as contract enforcement.

Background: My first college econ professor had an interesting course schedule: for the first half of the semester, he did everything in his power to prove the efficiency of markets and the inefficiency of government interventions (such as taxes, quotas, etc.).  The second half of the semester was the exact opposite, with the professor teaching how market inefficiencies required government intervention.  What I began to learn is that there are efficient and inefficient ways the government can interfere with markets.

(Note: many students I knew would move right on the political spectrum during the first half of the course, then back left during the last half.  I wonder how many people started the course as libertarians and ended up more moderate.  Too bad he doesn't take political surveys throughout the course to see the marginal effects of basic economic knowledge...)

Sometimes, we find markets in which any government intervention may be financially inefficient, but socially efficient.  For example, interstate highways are not financially profitable to build (and thus there are no major private highways), but provide great payoffs to society, so the government collects taxes (and debt) to build highways for society's benefit. The government decides whether the costs in tax monies are worth the societal benefits, but let's save a discussion on externalities and public goods for another time.

Bad Idea: While shrinking porn consumption may be a good idea for society, the petition to the US government to require porn as an "opt in" feature with ISPs would be an inefficient intervention for several reasons.

1. Net neutrality is lost - this precedent may lead us down a slippery slope.
2. Shrinks a market - there are already heaps of private services to block porn at a device level.
3. Opt in at ISP level - opting in at the ISP level still requires blocking at the device level in households where adults want to consume porn but keep their children from it, etc.
4. No financial offsets - there are no revenues generated by the "opt in" policy to offset the costs to the ISPs or government, so the expenses of implementation are borne by the internet users and the costs of enforcement are borne by the taxpayers (yes, that means most people see increases to internet costs, unless enough bandwidth is saved to cut costs, and everyone sees a tax increase).

+ECON's Alternative Proposal: Tax pornography! If you really want to reduce porn consumption, make porn a taxable good and the following will happen:

1. Payment needed - since a credit card will be needed to view porn, even minors with cards can get caught, even if the tax is low (e.g. $0.01); spouses/partners can also be discovered (unisex word because, contrary the beliefs of many, women are consuming more and more porn).
2. Financial offsets - enforcement costs will be about the same, but now some or all of those costs will be borne by those consuming porn with the remainder paid by taxpayers (hopefully the tax would be higher than my example of $0.01 in #1). Taxes would need to be applied like an extra sales tax and would thus be pushed onto the consumer.
3. ISPs and net neutrality aren't bothered - slippery slope avoided (well, one of them).

Such a tax is called a "Pigouvian", "excise", or even "sin" tax, and is already common (e.g. huge taxes on tobacco).  So tell me, is taxing porn a better idea than the "opt in" strategy?  Or is there something even better?  Let me know in the comments!

Either way, enforcement would be incredibly hard!  We've already know this with the difficulty of enforcing the bans on 'child porn'.

Finally, below is a video with more thoughts on using taxes to create better world: