Paul Krugman has lamented the lack of incentives in US political life to make sense. There are no sanctions, he argues, against politicians saying and standing for completely crazy things - like that tax cuts generate more revenue.
Anyway, I thought about this looking at this post outlining 'extremeness aversion' in this vignette.
Simonson and Tversky [1992] describe a marketing experiment in which two groups of consumers were asked to choose microwave ovens. One group was offered a choice between two ovens, an Emerson priced at $109.99 and a Panasonic priced at $179.99. The second group was offered these ovens plus a high-end Panasonic priced at $199.99.
By offering the high-end oven, Panasonic increased its market share from 43% to 73%. More remarkably, the sales of the mid-priced Panasonic oven increased from 43% to 60% apparently because it was now the “compromise” choice. According to Smith and Nagle [1995], “Adding a premium product to the product line may not necessarily result in overwhelming sales of the premium product itself. It does, however, enhance buyers’ perceptions of lower-priced products in the product line and influences low-end buyers to trade up to higher-priced models.”
So maybe one way of seeing the strange eclipse of the narratives of the perfidy of its opponents on the left of politics is that it's ignoring this phenomenon. Maybe the left should be a little more comfortable with the crazies on the left, softening up the electorate to think of it as centrist (which it is). I had a conversation with a former Hawke Govt senior minister the other day who said it was very difficult for the ALP outflanked on the left by the Greens. I've always thought that the Greens could be an asset to the ALP in just the same way that John Howard turned One Nation into an asset for his party (it certainly wasn't until he embraced his own inner xenophobe). If the ALP could actually own its inner left leaning spirit, it might somehow manage some politically powerful political collaboration as the more centrist party within left leaning political sentiment in Australia with the Greens representing the more extreme wing - in the same way that the Nationals represent the more right wing wing of the Coalition.
The nationals and Tony Abbott that is. Oh wait . . . .
Perhaps the fly in your ointment is that the distance from the centre right to the mainstream far right (as compared to the nazi style) is not nearly so far as that from the centre left to the greens-left. Maybe I'm not the best judge, being more libertarian than anything, but my sense is that the old-fashioned right are prone to being affronted by leading greens-left policies.
As for the experiment, are Bob and Christine the stainless and marble models to the enamel and laminate of Julia and Wayne? My understanding is that the Apple strategy works because the lower level products look like great value, which seems to be consistent with the quote you provided. I can't see how you could see the same thing happening with pollies, but maybe I'm thinking you're pushing the analogy further than you intend.
Also, as a long-term liberal voter, I can attest that the marriage to the nationals has made it harder for me to vote for the libs.
It is weird that some of the candidates in the USA make some of our worst look moderate. It will be interesting to see what will happen if they get in (why does the word bad come to mind here?). Anyone, I can't wait for Michele Backmann to do some magic and getting petrol prices to half of what they are now, preferably without causing a major depression.
"Perhaps the fly in your ointment is that the distance from the centre right to the mainstream far right (as compared to the nazi style) is not nearly so far as that from the centre left to the greens-left"
Really? I'm not convinced -- the mainstream far right appears to be living on another planet to me, which is not to say the left from the Greens arn't. I also think that the far right are a far worse proposition than the left from the Greens because they are far more likely to be in position where they can actually do something meaningful.
It is weird that some of the candidates in the USA make some of our worst look moderate. It will be interesting to see what will happen if they get in (why does the word bad come to mind here?). Anyway, I can't wait for Michele Backmann to do some magic and get petrol prices to half of what they are now, preferably without causing a major depression.
"Perhaps the fly in your ointment is that the distance from the centre right to the mainstream far right (as compared to the nazi style) is not nearly so far as that from the centre left to the greens-left"
Really? I'm not convinced -- the mainstream far right appears to be living on another planet to me, which is not to say the left from the Greens arn't. I also think that the far right are a far worse proposition than the left from the Greens because they are far more likely to be in a position where they can actually do something meaningful.
oops, sorry about the double post (the first of which went through unchecked -- please delete it. thanks).
This doesn't work.
The problem is that the ALP now winds up almost in coalition with the Greens and the effect this has on voters.
If Howard had wound up in defacto coalition with One Nation centrists would have deserted in droves. He and his team, in particular Abbott, destroyed One Nation.
As a swinging voter who has voted almost exactly 50/50 over 15+ years of voting I can tell you that given that the Greens have so much influence on the ALP it has substantially altered my voting toward the coalition. If there was independent control of the Senate my vote would be far more likely to shift.
Given current polls it appears this attitude may be common enough to cause a serious problem for the ALP.
I've noticed of late Kruggers seems to be in love with the 50's and 60's, plugging at the notion tax rates were much higher then. They were of course, but Kruggers doesn’t quite tell you that deductions and loopholes during that time were massive and the tax dragnet also caught further down much lower income levels. These were the good old times in the US when you could deduct any interest expense from your taxes- finally disallowed by the Reagan 1986 tax reforms (from then, only mortgage interest was allowed). Perhaps Kruggers would recall the Reagan tax reforms seeing he worked for the administration for a while.
Professor Kruggers may want to explain this long term chart showing that the US federal government tax take has be stuck with super glue at 19%.
How is someone "more libertarian than anything?"
Irrespective of the various assessments of Krugmans competence, the question remains - how do you reduce a deficit with tax cuts?
what you ask for is difficult, Nick. Aspirational voters have forced left-leaning parties to dis-associate themselves from their more radical cousins who call for higher taxes on the rich and more equality. The main reason is that the dominant political story everywhere for every major party is that they are made up of winners and that you can expect more winning if you vote them in. Under that reality, left-leaning parties are punished for associating too closely with what the aspirationals think of as losers. You can display care for losers from an empathy point of view and thus you can be an advocate for a degree of sharing, but you dont want to make the mistake to be seen as one because people dont believe that voting for losers is going to make them a winner. The key difference is that the right-wing extremists (tea-parties and such) might be seen as nuts, but not as losers and hence less poisonous to be associated with.
Paul,
thanks for your comment, but I can't really see the phenomena you're talking about. Of course the left of the Greens will always argue for higher taxes for the wealthy, but who was it that advocated cutting the top marginal rate? It wasn't Howard and it wasn't Costello, it was Tanner and Emerson. Go figure.
And if you're secretly in favour of keeping taxes high on the rich or even of raising them, then there are plenty of opportunities to raise them - at the right time, having prepared the ground - in some kind of crisis. Howard did it on wealthy super contributions. You just build it incrementally into your shtick, take the opportunities as they come - like Howard did - preferably in a crisis. If you keep the economy doing well, and keep most people's tax down effectively people don't care.
You say aspirational voters have forced left leaning parties away from these policies, but it IS the policy of the Democrat party in the US to up tax on wealthy people. They're just not prepared to fight for it strongly enough (which means since the hostage crisis, being prepared to shut down the government like the other side appears to be prepared to do). So where's the evidence that doing this is such a vote loser?
"spirational voters have forced left-leaning parties to dis-associate themselves from their more radical cousins who call for higher taxes on the rich and more equality"
Funny what we radical these days.
"Of course the left of the Greens will always argue for higher taxes for the wealthy"
I would assume that most of the Greens would actually. If this is one of the defining characteristics that separates the Green left from the rest of the Greens, then I'm not sure who the rest of the Green are.
I think Paul Frijters is right to identify this issue as being Labor's problems in connecting with aspirationals, people who are at the cusp of embodying that apocryphal Churchillian bon mot about being lefty when you're young and conservative when you grow up. These are people with adult mortgages and (often) adult family responsibilities, but they're not always adults in an emotional sense so they can fall victim to dog whistles.
This is the problem, for me, with the thesis in the OP. Howard was able to use Hanson's call to Australians' guttural urge to defend their terra nullius from darkies, something which aspirationals with their new McMansions felt at a personal level. Is there a similarly base emotion that Brown stokes in his supporters that Gillard could co-opt to resonate with her "working families"? I am not sure there is, because Brown is too Canberra these days, the Greens don't talk the language of the suburbs.
From the centre to the right the differences are mostly economic, but from the centre to the left the differences also include substantial social issues. Yes, you can raise taxes if you are careful, but nobody seems to get much success claiming it as a virtue. I don't think it is so hard to understand that average people might think avoiding debt a good thing, or that govt spending needs to be constrained because it is often wasteful. What is the core message of the Tea Party if it is not that?
"the mainstream far right appears to be living on another planet to me"
but which planet are you living on? Are you sure it is planet "Centre"?
"These are people with adult mortgages and (often) adult family responsibilities, but they’re not always adults in an emotional sense so they can fall victim to dog whistles."
I guess it is easy to see some people as crazy when you start from the conceit that they are not emotional grown ups like yourself. I have never believed that Hanson triggered significant underlying racism and I thought at the time that it was exactly Paul's attitude that was really driving her support. As some woman famously said to Gillard "We're not stupid". Even the truly stupid are unlikely to think it of themselves.
"How is someone “more libertarian than anything?”"
http://en.wikipedia.org/wiki/Libertarianism
"Irrespective of the various assessments of Krugmans competence, the question remains – how do you reduce a deficit with tax cuts?"
Maybe people are asking a different question: How do you get the economy moving with tax rises?
We were in a furniture warehouse in fyswick (looking for a night and day couch) asked a young sales assistant to point us to the night and days , she answered
that ' over there were the "entry level" couches , over here are the "premium "level couches and that int the middle were in her exact words the "mediocre level" couches.
The roots of the problem you are discussing go way back to the times that led to Tom Lehrers reason for giving up satire "irony is no longer possible".
Nick,
you ask for where the evidence is that to be seen to favour increased taxes for the rich to the betterment of the poor is a bad thing politically. The more recent occasions that spring to my mind are;
1. The mining-tax saga. Within a week or so of launching it, Rudd had to backtrack on his 'tax the super-rich' storyline because it wasnt working for him. He understandably struggled to find any other story, probably not quite believing that a tax on the super-rich could be portrayed as something bad for the masses.
2. The recent history of the Labour Party both here and in the UK with the unions: union involvement in the internal party apparatus has had to be hidden from view and in both places have the parties been keen to portray a 'clean middle class' image. Suits and powersuits, not 'beer and sandwiches at number 10'.
3. The recent extension in December 2010 by Obama on the tax-break for the super-rich (http://news.smh.com.au/breaking-news-world/obama-signs-bill-to-extend-tax-cuts-20101218-1913j.html). If taxing the rich more is so popular, why didnt Obama just not sign the bill. If you look at the spending cuts now on the table, what he won with that deal in terms of continued welfare is lost thrice over already.
I dont think either Obama, Rudd, Gillard, or any of the other left-leaning politicians are dumbos when it comes to this issue. I think they feel their hands are forced by popular opinion.
Conrad,
yes, the most left-wing persons I know are all economists. Sometimes I think we are the last bastion of socialism. Perhaps it is because our training gives us a reason for distrusting the fables told around the protection of economic interests.
Pedro,
I am not sure whether you are defending the tea-party or not. I decided they were on the side of the crazies when their exultant leader called for the assassination of an Australian citizen. It was crazy on so many levels: if ever there was a hero defending free speech and challenging big government it was Julian Assange.
What indeed is the core message of the tea party if it does not support such a clear defender of the American constitution?
Pedro, most average people understand debt, it is how they buy cars, houses and other stuff.
A large majority of the govt deficit arises from the failure of the private sector to pay their debts.
Paul
"the most left-wing persons I know are all economists"
Might it be the 'architect' - I design , you implement- syndrome?
The founding father of Australia's very anti-commercial arts policy/funding system was a well known economist. He certainly knew a thing or two about things that were fine in theory.
john,
yes, there is a great tendency amongst economists to believe society can be reconstructed and purified according to some ideal (just read Quiggin or Clark on climate change). And the ideals are all great: everyone has equal innate value, future generations matter, you get more utility giving a poor person a dollar than a rich person a dollar, etc. Its the nice thing about being an economist: you can remain naive and idealistic.
"naive and idealistic." Because humans are never ideal, the term: 'idealistic' can sometimes, become...in-human in action.
Paul F, I'm not defending the tea party, I'm suggesting that the average person will likely find them more palatable than the greens-left. NG said in his post that: "I’ve always thought that the Greens could be an asset to the ALP in just the same way that John Howard turned One Nation into an asset for his party". In other words, Hanson was not so different to the average suburbanite while Christine Milne really is. I don't know anything about your quote, but I'll bet a green somewhere has suggested some awful retribution for John Howard.
Thinking more about this post this morning, and something I heard on the radio, I realised that most of the "centerists" posting and commenting here don't belong to a centre that the average suburbanite would recognise. In truth, and not meaning to offend, most sound like typical latte-lefties. If you want to describe the political spectrum in geometric terms then a cirle is the best candidate, but nobody is in that centre. So how do you define the centre, is it some metric based on typical left and right positions? Or by reference to the most popular policies (to the extent that can be determined)? I certainly don't buy the line that the centre is where everybody is shitted-off in equal measure.
"yes, the most left-wing persons I know are all economists. Sometimes I think we are the last bastion of socialism. Perhaps it is because our training gives us a reason for distrusting the fables told around the protection of economic interests"
All the while missing the lessons about central planning! :-) Seriously, sometime ago I read that a survey of economists had been done in the US and most self-described as liberals.
Rog, really? Ok then.
BTW
This is mob stuff; It is not ideological.
People are very cranky about : pokies and 'their club', their compulsory supper funds going down the gurgle, more and more compulsory costly training for special certificates needed before you can, knock up a garden feature or run a sausage sizzle , compulsory building warranties that will make being a independent bespoke carpenter building posh cupboards virtually impossible and on and on.
Combine that with the perception that these 'people who are so sure of what we should be doing' could not run a chook raffle and bingo. You have a mob.
Pedro,
I agree that many people will find the Greens more off-putting than the Tea Party and was trying to explain that in terms of whom people wanted to be associated with.
I can live with the latte-label and in terms of redistribution am certainly left of center.
The planning issue is interesting within economics. We teach about the folly of central planning in first year but few of us have worked through macro-models where it really is a folly. If you truly take most macro-models seriously that are now taught and used, you would be all in favour of bringing back socialism, as Stiglitz already pointed out of course. It tells you about the limits of our modeling ability that we cant come up with tractable and estimable models in which we shouldn't centrally plan.
Be surprised if the 'tea party' really takes root here.
Deep religious/sociological roots (north German plain) and deep historic roots of violent division ( The Civil War was really the second American civil war ) underpin the 'tea party' as a sociological, faith system , they are not common here .
For many in the US the civil war is still a battle to be won.
Even today there is a lot of emotion tied up with the civil war especially in the south. It must have been heartbreaking for families split on the war and experience losses from action on both sides. Like Henry Clay.
Regardless of carbon tax, the deficit, insulation and other issues I see the current government failing on more mundane issues, that being that the PM is living in sin with a hairdresser, there is a poof in the coalition and a leso is telling us what to do with our finances.
It's just not Australian. (/irony)
"The main reason is that the dominant political story everywhere for every major party is that they are made up of winners and that you can expect more winning if you vote them in. Under that reality, left-leaning parties are punished for associating too closely with what the aspirationals think of as losers."
Paul, I think it is more an issue of understanding than identification. Our Cate can sell weekly magazines by being on the cover, but she can't sell the carbon tax. So people must be interested in her, but not inspired. Cheryl Kernot is another example. And I don't think people vote with the rich. The MRRT is a perfect example of the sort of fuck up that will turn off average people, but you (I think) still regard as a great idea lost to stupidity. Pig-headed arrogance (Rudd and Swan) and the stupid lying that went with it really do shit the average person.
I agree with JW. I've always thought a social democrat party ought to be the natural party of govt, but these guys just can't get it right. The constant little annoyances, like having to pay some dude to give an enviro-rating for your house before you sell it. You really want to just punch someone in the face. And not just the ALP always, I'd like my old light bulbs back! These fluoros annoy the crap out of me, but more than anything I hate being lectured to.
Greg Combet explains the problem perfectly:
"Combet accuses Abbott of climate change racism
... "It sends the signal that it's somehow dubious to trade with foreigners. It's typical dog-whistle politics, trashing the commitment that's existed for many years on both sides of politics to economic liberalisation and open trade," he said.
"It is in effect a white carbon policy designed to harvest more votes no matter what the cost.""
Does anyone really think a fair minded person of at least moderate intelligence will think Combet anything other than a fraud. I don't really care what he thinks of Abbott, the dope is speaking to us as if we are fools. It's bad enough having a serial liar like Swan, Combet is supposed to be one of their great hopes.
More of the rubbish that is sinking the ALP:
"In 2050, Queensland growth will be 4.11 percent lower under a carbon tax, according to Deloittes, with Queensland Treasury estimating it will be 3.5 percent compared to the predicted cut to Australia's GDP of 2.5 per cent in this year.
Depite the reports' findings, Mr Fraser told parliament that the modelling showed the Queensland economy will continue to grow with the "significant economic reform" of a carbon tax."
It's Orwellian, an economic reform that reduces growth.
Pedro, you are proving Krugman correct.
Deloittes forecast that under a carbon tax growth remains strong in QLD.
rog, if I chop of your foot and give you an artificial limb, you can still walk, but you would not call that a biomechanical reform. The general idea of a reform is that it leads to improvements. Economic reforms are supposed to make an economy stronger. Deloittes, like the Qld and Fed treasuries, forecast growth being lower than it would be without the tax.
You might call the carbon tax an environmental reform, but not an economic reform unless you are into torturing commonly understood terms.
Actually Pedro it is an economic reform.
It is taxing an externality.
The growth is reduced because of the assumptions in the model. if industries do not change their reliance on carbon then yes growth will be lower but if they change so will growth.
I think Combet is onto something. an ETS is perfectly okay in OZ but somehow becomes corrupt in Asia is a strange understanding of the system.
Pedro,
yes, I think the mining tax was a great idea and dont think it was lost due to stupidity on the side of the politicians or civil servants. It floundered because the wolves managed to convince the lambs to side with them. Money talked.
Wrong. The mooted negatives predicted by the AGWarmenists will be driven by GHG emissions in OTHER countries. Australia's contribution to the "problem" is trivial and therefore the taxation of Australian emissions does nothing to address the externality hypothesised to be imposed upon us by other countries.
In fact, by NOT adressing the externality, the government is imposing upon the Australian economy a deadweight loss from lost economic output with ZERO offsetting gain.
This is not a reform, in any sense.
It is nothing but deadweight loss, imposed upon us against our will by a shambolic government with an electoral deathwish.
Taxing carbon dioxide is not dealing with an externality?
what an amazing comment
What is the externality, Homerkles?
This time try thinking before you write.
Much as I'd hate to defend Homer, he probably also means to say that the introduction of a carbon tax in Australia, insofar as it has a 'signalling effect' may hasten the introduction of more multilateral measures to price carbon in other countries. And technically he is correct anway, insofar as Australia makes a near infinitesimal contribution to the stock of CO2 negative externality, the tax is still a tax on said externality.
I think you're falling for the same flaw in the logic, Jase. C02 in itself is not an externality. Not in any sense. To quote from the Book of Aviaticus, 13-5: "Gaia eats CO2 and shits life."
Hence my question: "what is the externality"? It's not CO2, else our respiration would constitute an "externality".
The warmenists believe that excessive CO2 is the problem - specifically that excess of CO2 (and GHGs more broadly) in the atmosphere which they expect to cause damaging climate change. It is the mooted change in climate that represents the externality, not CO2 itself.
As I said before, that climate change, if it occurs, will be driven by the actions of much larger countries and their emissions. THAT is the externality, not Australia's emissions, and Australia's carbon tax does nothing to address that externality.
As for the pragmatic argument about Australia's powers of persuasion, frankly those countries that count don't give a fuck what we do because Australia is, again, irrelevant to the issue.
What Fydor said.
Paul, even the miners said that with proper consultation and so forth a deal could have been done. Instead we got a proposal foisted without consultation and on a take it or take it basis. Swan then went around slandering opponents in his typically disgraceful way and they never gave a second thought to the constitutional issues. Having shot themselves in both feet with a stupid approach they made life very easy for the opponents of the tax. The story at the time was that Ruddd and Swan were deliberating picking a fight for the electoral benefits, being dopes, they lost.
Fyodor is playing with words. Yes the issue is an 'excess' emission of CO2 (and other greenhouse gases) which is supposed to lead to a bunch of negative externalities. And what contributes to an excess emission of CO2? Umm, CO2. Taxing CO2 is a means of dealing with this externality under the AGW story, which is what Homer said. And as a matter of basic arithmetic, the less that one country contributes to emitting CO2 the less excess CO2 there is. Which is also what Homer said.
No, not at all. Let me restate it more simply: CO2 is not the externality; climate change is the externality.
There is no externality associated with CO2 emissions other than the mooted effect on the climate. It is climate change that represents the externality, not CO2, and, as I stated, the carbon tax will have no effect upon that externality, as Australia's emissions of CO2 are irrelevant to climate change.
That is, the externality is not taxed. What will be taxed is CO2 emissions in Australia, which make no difference to that externality.
"What will be taxed is CO2 emissions in Australia, which make no difference to that externality."
My tax makes no difference on Australia's total take. Can I stop paying that too?
Pedro is right.
Fyodor
You are still sophistically playing with words. Yes I know homer did initially say the externality itself was taxed but then he amended this to say the carbon tax was a way of 'dealing with the externality' which is technically correct.
The excess CO2 is the cause of the actual externality. There are very few cases where you deal with an externality by actually taxing it. For instance, the US didn't successfully deal with acid rain as it did years ago by taxing acid rain - if there was still acid rain to tax arguably its policy had failed. Instead it implemented a SO2 cap and trade program i.e. it priced the cause of the externality. We didn't successful deal with the hole in the ozone layer by taxing the hole in the ozone layer - we just phased out CFCs.
Insofar as excessive levels of CO2 emission are causing the mooted externality of AGW, then each country's attempt to reduce their emissions will have some impact in addressing the externality.
Claim all you want that the reduction in emissions by unilateral measures is too small to make a difference, claim all you want that the costs of addressing the problem address the benefits in reducing the contribution to the externality. Those are all arguable, intellectually respectable claims. But hyping up such a claim to a claim that any unilateral attempt to put a price on a cause of an externality has 'no effect' in addressing the externality is just logically wrong.
Sure. There'll be consequences, of course, that explain why you won't, and also explain why your analogy is inappropriate.
No, there is no sophistry involved. You would be closer to the mark if you accused me of semantics, as the essential question is the meaning of "externality".
I've already defined the externality, and neither you nor Homer has challenged it. CO2 is not a pollutant; it is not the externality, and Australia's "carbon tax" does not "technically", practically or in any way "deal" with that externality.
Yes, line and length response, as expected, except that there was a clear causal relationship between emissions of SO2 and CFCs with observed externalities, i.e. acid rain and ozone destruction. There is no such clear causal link between excess CO2 and the mooted externality, which has not even occurred yet, and is of unknown impact. That is, both the causal relationship and the extent of the externality are arguable and highly uncertain.
Now, you might argue that the evidence, such as it is, warrants preventative action, and thus taxation of CO2 emissions, but the analogy you've used falls down when you consider both of your precedents, which involved globally coordinated action against an existing and measured externality. Australian taxation of CO2 emissions will be as ineffective in "dealing with the externality" as would Australia going it alone in banning CFCs, i.e. totally ineffective.
Heh. Hype? Nice one.
I don't need to hype or claim anything. It is a simple fact that Australia's CO2 emissions are a trivial component of the global total, and an even smaller proportion of the mooted increase in emissions that is believed by many will result in global warming. It is thus equally simple - and a logical corollary -to state, not claim, that Australia's carbon tax will have no effect on the externality. It is "logically wrong" to argue otherwise, though you're welcome to try.
Fyodor:
"There is no externality associated with CO2 emissions other than the mooted effect on the climate."
False. Ocean acidification is another well documented externality that is, as far as I can gather, widely accepted by scientists with the requisite qualifications.
No doubt you've read Lord Marty Feldman saying otherwise.
Fyodor so far what you are really saying is that Australia alone setting a carbon tax will not make a significant difference in addressing global warming because a global agreement isn't in the works. I would agree with this. Hyping this claim up to saying that a country acting alone will make no difference period is, as I have correctly concluded 'hype'. Moreover Australia isn't acting alone strictly speaking as its measures when combined with the impending measures in UK, the ETS in Europe would make some difference which is more than zero, one would think. Moreover you have still ignored the effect being claimed by proponents of the tax, that it may then kickoff more multilateral measures. Personally I am sceptical but once all these things are taken into account, there is a coherent enough story that a carbon tax in Australia will have some non-zero effect on emissions and hence on the probability of catastrophic warming.
Oh, and an excellent point made by mel. Ocean acidification tends to be ignored in all this. It's as serious if not more serious than the probability of catastrophic warming.
I know there are intelligent sceptics around like Lindzen but unfortunately many of the people who kicked up such a fuss about the ozone layer are also to be found in the current sceptics camp.
I am prepared to consider the possibility that AGW may well be manageable through adaptation rather than mitigation. By the same token I'm sceptical of those claiming the skies will fall if we have a carbon tax,
Pedro, the carbon tax is a reform as is giving up the gaspers. But given the evidence so many still want to smoke and we all have to share their habit?
Jason, in the original comment I said that the carbon tax should be called an environmental reform and not an economic reform. Taxing a pollution externality is an economic method to achieve an environmental goal. Perhaps the difference is that I think like a lawyer, and notice misleading and deceptive conduct, and you think like an economist.
As for the question of whether the tax is addressing an externality, then clearly it is, just not to any useful purpose because the problem will be unaffected at some cost to society.
Pedro, the problem is guaranteed to remain unaffected (and hence most likely result in huge destruction of livelihoods and massive economic costs) if countries like Australia choose to do nothing. Anyway, aside from the whole avoiding-tipping-points issue, even if Australia was the only country to significantly reduce its emissions, it's probably still one of the more cost effective ways to save potentially 100s of 1000s of lives (human and otherwise).
Wiz, how many lives will the carbon tax save if we go it alone?
Pedro, you hadn't heard? The End Of The World, Forever® now comes in a limited-time-only Australian Edition ;)
I am 100% confident that no country, nowhere, is going to do anything about carbon, or be more or less likely to, as a result of us doing something, or not. There may be other reasons like preparing ourselves for punitive trade measures and trying to accelerate the 'hollowing out' of heavy industry, but inspiring global change is one of the stupider reasons I have ever heard, particularly from apparently intelligent and sophisticated people who have clearly dealt with Chinese, Indians and Americans before.
Pedro, as a reference point, somebody estimated the the heat waves of 2003 caused in the order of 30000 excess deaths in Europe. If we allow that global warming was responsible for those heat waves being 1 degree hotter than they would have been otherwise, then I'd think something in the order of 5000 deaths could be reasonably attributed in that one year to warming so far, of which Australia's emissions could be said to be responsible for 50. So over the next 100 years our emissions alone seem likely to contribute to a minimum of 5000 excess human deaths, and given the threat to human life will increase as temperatures continue to increase (and further, under BAU, Australia's percentage of contributes is only likely to increase as our population grows faster than that of other higher-emissions countries), it could very well be much higher. I don't know if anybody has done attempted a more rigorous method of estimating this!
both Stern and Garnaut have made the point it is far better to undertake to something about AGW now than later.
This means you actually do get more economic growth.
It is an economic reform , it is also an environmental reform
"I am 100% confident that no country, nowhere, is going to do anything about carbon, or be more or less likely to, as a result of us doing something, or not"
And I'm confident that once Australia has a few years of successfully managing a transition to a lower-carbon economy under its belt, we will be well placed to motivate and assist other nations in doing the same. Though I'd agree China and India wouldn't be at the top of such a list of other nations we can realistically expect to significantly influence.
I will say one point in your favour is that even though B.C. have had a carbon tax for 3 years now, and *even* though national polls have shown Canadians generally think it's a good idea, and the outcomes of the tax so far have been largely positive, there is at this point still no other province considering doing the same, which is a little mystifying. If in another 2 or 3 years the situation hasn't changed I'd have to concede that the likelihood of Australia's early adoption influencing other nations' decisions is rather lower than I'd like to think.
(And yes I know I was cherry-picking in 55., but it was the only data point I could find).
Pedro Strictly speaking there's nothing wrong with calling the carbon tax an economic reform. Economics isn't about maximising GDP, it's about promoting efficiency, not efficiency in the engineering sense but in the sense of allocative efficiency, ensuring spillovers and externalities are taken into account in decision making about resources, etc. This is the purported objective of a carbon tax, whatever criticisms might be made about its efficacy in practice.
Jason we are not going to have a carbon tax unfortunately,
We are going to have a fixed price for a certain period until an ETS comes into operation.
Technically, I believe the term for what Australia is going to have is 'nothing'...no matter what the current government might wish.
Lol
Look over there. It might quack like a duck but Homer reckons it's a miniature giraffe with feathers and beak.
JC,
I think you will find a fixed price is a necessary corollary before an ETS is up and running. Garnaut recommended that.
This is different to a carbon tax. It would help to understand a topic before writing.
umm Homer, what is the main difference between a carbon tax and an ETS? In ETS the quantity of emissions is fixed, with a carbon tax the price is fixed. For all intents and purposes, the proposal is a carbon tax now. Whether it gets replaced with an ETS later is another issue.
Homer:
Please don't turn this into another Skanky ho moment... (or in your case Skanke ho).
Jason a carbon tax would not be fixed for a certain period.
Howard's ETS had a fixed period, the ETS negotiated by the Government and Oppostion was for a three year fixed period before the ETS started.
No, reading your contribution it's more Graham Chapman that springs to mind. Specifically: "Burma!"
Why is "ocean acidication", i.e. decreasing pH, an externality?
So you agree it won't make a difference, but saying so is "hype". Righto.
More than zero! How bold your forecast!
Mostly harmless. Good one.
Now, being an exemplar of homo economicus, you should consider the dynamic analysis.
Do you think the economic damage done to our economy, and thus our capacity to adapt to "catastrophic warming" [no hype there, clearly], by this unilateral action of the Swillard-Brown government will be:
a) zero;
b) more than zero;
c) less than zero; or
d) Burma.
Riddle me that, Batman.
"What Mel said." Heh.
On what basis do you assert that ocean acidification is at least as serious as "catastrophic warming"?
Really? Who?
"Skies will fall"? Hype, much? I don't think anyone here asserted that. It's a supid policy that will distort the economy for no gain to the environment. BFD.
Jason, yes, but the average person regards economic reforms as things that are supposed to improve the economy, that's all I mean.
Wiz, so the carbon tax will be reducing future heat waves even though other countries do nothing?
Patrick, yes, and we're only getting the carbon tax because that was the price for a gillard govt. If they'd won one more seat then the folly of the NBN would have been enough to form govt and they'd not have bothered with a tax that even wayne swan would know will likely kill them the next election.
It does seem that we won't get this tax, but it looks like we can thank Craig Thomson's dick for that.
Homer, how is it cheaper for us to reduce emissions now when the alternative energy costs will be much lower later? Also, identify the relevant assumptions that look like coming true. And don't just wave your hands and squawk "Stern".
Pedro, if Australia's emissions are 1% of global emissions, then why isn't it reasonable to suggest that our emissions will be responsible for 1% of whatever effect excess global CO2 levels are having on the climate, whether it be heat waves, drought, cyclones, flooding or you name it, and hence responsible for 1% of any excess deaths caused by such events?
Pedro,
I didn't say cheaper.
I said economic growth would be higher because of such policies than without those policies in the long term. I was merely repeating what Stern and Garnaut have said.
Homer, I can feel the breeze from here.
Wiz, you've been getting logic lessons from Homer. A reduction of a small part of 1% of global emissions will not lead to a proportionate reduction in heat waves or deaths. Nobody is asseting a meaningful reduction in global temperature from our proposed reductions.
If it is true that global warming is leading to more killer heat waves then it would also be logically true that imposing a bob-brownout on Australia would allow us to claim we have no responsibility for those deaths. But that is not the same as reducing the number of deaths.
Pedro,
have a .
yikes that should be have a read.
"A reduction of a small part of 1% of global emissions will not lead to a proportionate reduction in heat waves or deaths"
Well it's true the relationship isn't likely to be linear, but it's simply not true to say that if Australia's emissions went to zero tomorrow there would be no reduction in extreme climate events and consequent deaths that would occur otherwise.
However I do accept that it would silly for Australia to act on its own if we really could be sure other nations weren't going to do so. A carbon tax isn't likely to hurt our economy particularly, or measurably affect our ability to adapt to rising sea levels and climate shifts, but it's not that hard to think of better ways we could achieve some the positives that are likely to come about from such a system (indeed, the exemption of petrol nullifies many of what I'd see as the shorter-term benefits anyway).
Actually, wiz, it’s simply not true to say that if Australia’s emissions went to zero tomorrow there would be
noany significant likelihood of a reduction in extreme climate events and consequent deaths that would occur otherwise.As for your second paragraph, you have clearly swallowed the preventative principle whole. The test for massive regulatory programs is not 'do it unless we are sure that there is an obvious harm' it is 'do NOT do it unless we are sure that there is a benefit'...similarly we shouldn't be doing this unless we think there is no hope, we should be looking for a clear degree of hope first.
I.e. we should have introduced 'painless' taxing at say $5, focused on shutting down Playford and Hazelwood, and then ramped up the tax or converted to trading as international conditions suggested. Had we done that we might have had our first full-term labour PM of the millenium.
"....Economics isn’t about maximising GDP, it’s about promoting efficiency..."
If you get that wrong then there is nothing in economics that you can possibly get right. Economics is the science of wealth creation. Backtrack and try again.
Thanks for setting us straight Alfred. We obviously needed it.
Homer, the question is begged.
Wiz, actually, I think you can say that. Our gross output of CO2 is dwarfed by the growth of emissions from Brizil, China and India.
"A carbon tax isn’t likely to hurt our economy particularly, or measurably affect our ability to adapt to rising sea levels and climate shifts."
Treasury did measure it.
I used to agree with Patrick that it made sense to have a very limited system so the machinery is in place and ready to respond. But since the election I have realised that the prospects of international anything are tiny and the likelihood that some dope would want a higher tax for national self-flagellation is high.
It seems to me that the impulse to penance is strong.
Is AN a new bird disguise?
My pleasure Nick. And with regards to what Jason is talking about it shows that we have to be absolutely obsessive about energy. We need to think hundreds of years ahead when it comes to energy. Because energy is not just another consumer good. Energy is inherent to wealth creation. Which involves capital accumulation, update, and the lengthening of the structure of production.
There is specific difficulties with adopting new energy forms in a timely fashion. Since if energy is too cheap we won't substitute, but if we purposely make energy more expensive our capital accumulation, update, and the potential for lengthening the structure of production is limited. So our wealth creation will be hobbled.
The conclusion has to be that if we are concerned with wealth creation we have to be thinking about energy 24 hours a day like some women think about chocolate. This line of reasoning only seems to come when we start getting serious about our definitions. A further insight would have to follow that the left is not thinking about energy enough for the short and medium term and the right is not thinking about energy enough for the long term. Basically nobody is thinking seriously enough about energy.
pedro, Google 'Alfred Jay Nock' and you'll have your answer
Thanks Alfred.
Well I think you would agree that no-one - NO-ONE - could reasonably accuse Troppo of not taking the issues (any issues really) seriously. In fact I'm thinking that hundreds of years is pretty short term really. Most of my thinking these days is looking forward a millennium or two. And then I think we'll looking backwards that doesn't even take us back to the Egyptians.
Well yes you are completely right. Imagine we take the lengthening of the structure of production to extremes. Well the transport implied would be prohibiting. But everyone knows that the cheapest way to transport heavy cargo is on the water. So if we are thinking real far ahead we want to emphasise water transport. But having all ones factories and houses on the coast is hazardous if we are thinking in thousands of years. So it is implied that what we really want is a lot of inland canals. Yet to make ubiquitous inland canals a reality (in a cost-effective way) might take thousands of years. We really have to think in these sort of time-frames if we want to take matters seriously.
Yairs. It all went downhill after the Martians gave the Egyptians pyramids and fractional reserve banking.
Birdie, I hear ya. I'm thinking about it 24/7. US refinery stocks in and around Cushing Texas purchase unrefined at below West Texas and then on sell the refined at Brent Crude. They are literally printing money.
Well then we all need to be more like JC in this one aspect. Think about energy all the time.
Its my view that we ought to be putting coal royalties sky high but wave those royalties for local use. We can make up the lost exports revenues but what we cannot make up is the lost capital accumulation of expensive energy. We need to be making alternatives tax exempt. That is to say stand-alone companies that deal in alternative energy or in energy saving technologies, ought to be tax-exempt. But we want to be depleting the stuff we currently can use cost-effectively ... we need to be depleting this stuff at a slower rate. We want to be thinking about the transition now. Buying ourselves more time for that transition, by exporting our energy bounty at a slower rate.
Why Birdie? Most people around the world live around coast lines. Most, not all. So why the need to plan Eerie canals everywhere for 1000 years when there's plenty of open seas?
How do you figure you deal with say the Rockies that run slap bang in the middle of the continent in the case of the US. Would you propose an inclined canal with pumping stations all the way uphill. I gotta say the downhill leg would be a screamer though.
Thx Fyodor,
LOL.
But if I could ask for a little more seriousness please. This is Troppo.
Because the fact is that we have extinction events, near extinction events, and events that are merely catastrophic. And the coast is no safe place to be when these sort of deals go down.
What extinction events?
You want to live in central Australia? I'll take my chances on the coast.
What extinction events?
http://en.wikipedia.org/wiki/Extinction_event
We've had at least two pretty serious such events in just the last 12-13 thousand years.
Of course. However, in all seriousnessness, you're saying it all wrong.
It should be: THIS. IS. TROPPO!!!
Groan, it is Bird! Another thread ruined. You seem to change your name more these days birdie, are things speeding up in your head?
Pedro these are important concepts in economics. A thread on economics is not ruined at the precise point where you no longer comprehend the ideas in it. Rather that is the point at which the thread has become worthwhile for people more sophisticated then yourself. If you want to know something ask. Don't parade your ignorance around as some sort of virtue.
@94 - lordy. Best and most deserved putdown I've seen in a long time.
My vote for the two most boring commenters ever on Oz blogs: Pedro and Homer.
Bird, extinction events are important economic concepts now?
Thank you
Do I really need to go over it all again Pedro? Its your dimwitted nature matched up with your belligerence that has got to ruin any thread. Okay then. Lets go over it again.
In this context OBVIOUSLY extinction events are an important economic concept. Because if you put all your factories on levees along the coast .... as the principle of the lengthening of the structure of production ... would eventually encourage you to do, (in a hyper-developed economy, far beyond anything we've yet seen), then sooner or later almost all the productive capacity of your entire civilization could get wiped out overnight. And thats putting aside the more prosaic military need for defense in depth.
We've seen a forshadowing of this just this year. You usually need to put your nuclear power on the coast, as you need a constant supply of cold water. And naturally enough a great deal of Japans productive capacity was near the shore. Its been a terrible thing to see so much wealth destroyed so quickly and all the trouble they had with their nuclear facilities. I had to go over the extinction event because JC was trying to be a smart alec, and I now had to go over canals versus excessive coastal development because you cannot seem to read, think, and understand. But the concept of the lengthening of the structure of production is one of the most important and neglected in economics. And if you think its implications through, certain matters follow directly from it. Like the continuing concern we need to have about energy production.
Economics is not just showing up at Mankiw's blog and sniffing the wind direction Pedro. It takes some serious thinking.
That's birdie, I feel enlightened.
Its only a feeling. You aint any smarter than before. Your economics is to do with brand names. You didn't even realise that nothing worthwhile in economics ever came out of Harvard.