Martin Wolf had an article published in the FT yesterday in which he argues that we need a carbon tax or emissions trading system with a price floor to tackle the global climate crisis. But he really does not make a good case. He also does not help by making enemies from the outset, saying:
Unfortunately, the outright opposition of people such as Mr Trump, and the indifference of much of the population, are not the sole obstacles to success [in tackling the climate crisis]. Even some who favour action are a problem, because the climate cause is for them part of a wider campaign against the market.
Thus, many supporters of the Green New Deal view climate as a justification for the planned economy. As British journalist Paul Mason argues: “Labour wants to combat climate change through three mechanisms: state spending, state lending and the state direction of private finance.” This approach allows opponents to argue that the left is more concerned with destroying market economies than saving the planet.
If he could stick to this argument throughout his piece it might help make his position look vaguely consistent, if not credible. but he can't. As he concludes:
What, then, is to be done? The answers include a programme of action over three decades, starting now; pragmatic resort to all policy tools, including market-based incentives; use of the revenue raised from carbon pricing to compensate losers and make the tax system and climate mitigation more efficient; a stress on the local environment benefits of eliminating the use of fossil fuels; and, above all, a commitment to climate as a shared global challenge. In an era of populism and nationalism, is there any chance of all this? Not obviously, alas. If so, we will indeed have failed. But the young are surely right to expect better.
In other words, skipping all the pro-market bits on carbon pricing he runs through in between his near-opening and closing comments that I quote, what he actually does is come to the conclusion that for the climate crisis to be tackled we must have a complete change in government policy, using all available tools to deliver it. This can only be because the market has no solution. So the Green New Deal is right to say so. But he does not apparently realise that.
And he argues that markets must be fixed to increase taxes whose revenues will then be redistributed across international boundaries in a co-ordinated fashion never seen in the world before, and which would defeat the average Trotskyist in terms of delivery.
After which he wants local policy alignment to a global goal, without exception. And somehow this is to be done with market incentives.
This is intellectual incoherence on a quite staggering scale. And the reason is he thinks carbon trading and tax can solve the climate crisis. I think it time to explain in blogs to come why this is just not true. Doing so might, just might, put Martin Wolf out of his logical misery on this issue. He might even realise that saving the planet is more important than saving failed ideology. But on this one I really do not live in hope.
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This is one area where you have to retain hope. It is continuation of the battle that Keynes fought (and arguably shortened his life) – to save capitalism from itself and from destroying all of us. It is a never-ending struggle. And the enemies are on the right and the left. The right, rigging, distorting and subverting markets, bastardising the language of economics and hollowing out democracy is fighting to maintain its ascendancy.
The inevitable reaction on the left is diffused and much of its advocacy of statism smacks of the “invalidism” that Keynes rightly condemned. The first task is to change the language of economics. For example, more and more economists are beginning to recognise the “rentierisation” of the advanced economies and the damage it is doing. But the use of the word “rent” confuses most ordinary citizens. Call it what is is: organised and systematic theft from the majority of citizens that is authorised by law. And the law can be changed by democratically elected legislatures.
The concept of a carbon tax is equally distorted and abused. It is simply an incentive to those who rig, distort and subvert markets to rip-off ever more citizens in the vain hope that they will do something environmentally beneficial. There is no point imposing a tax on citizens when most have limited or zero capability to change their consumption behaviour in the short to medium term. It too is officially organised theft.
Our first task is to “name our world” . Then let battle commence.
Paul
I think we’re in agreement
Richard
Thank you Paul – well put
I’d agree with your point on rentierisation as a term that most people struggle with. I’d see it as being about wealth (value?) creation vs just wealth extraction. Where the process of wealth extraction is unsustainable as it ultimately destroys the environment, society, and indeed wealth itself. So a Green Economy might be one that is sustainable in all three dimensions – environment, society and finance. We are failing on all three dimensions with the current model
Agreed Robin
yes agreed
Erm…. Yes.
Martin Wolf sets off to solve a problem and comes to a sensible conclusion: Climate challenges can only be dealt with by political intervention in markets to change the playing field, and this will require a high degree of international cooperation. (He’s quite right to be pessimistic, given that Brexit, which has much support in the country, is clearly taking a step in the wrong direction to achieve these ends)
I think he’s wrong about carbon trading. I think that will just rearrange deckchairs without changing the number of deckchairs. It might take a while for that to become accepted by people who think there is a market solution to every problem and it must yield money-profit. Only the traders stand to gain from carbon trading. And actually it is likely to be counterproductive because it will require the continuation of a supply of carbon to trade. I don’t see that is going to be helpful.
Agreed
Agreed..
It’s a ‘yes’ from me also
We are united in agreement
Hey ho lets go!