Last year Guy Pearse, adopting the pose of a Liberal dissident, authored a 417-page conspiracy theory called High and Dry. The book argued that John Howard’s climate change stance was the result of the fossil fuel lobby and ‘neo-liberal’ think-tanks. Pearse’s imagination was running so wild on the CIS’s role that I was incorporated into the conspiracy, despite my silence on the issue.
I’m now wondering who will feature in the Labor version of High and Dry. Yesterday in Crikey (here for subscribers) Pearse said:
Kevin Rudd may not look like he’s following John Howard on climate change, but he may well be. The strategy and rhetoric are more polished, but the confusion between polluter interests and the national interest seems much the same.
While the CIS isn’t featuring in this version of the story (though perhaps when Rudd turned up a the CIS to give a speech attacking our beliefs it was really just a cover, and we control him too), the argument that this is about polluter lobby groups is still there.
I’ve little doubt that the fossil fuel lobby told Howard what he wanted to hear. But like most conspiracy theories, Pearse’s argument misses a far more obvious explanation – that taking action on climate change threatens thousands of jobs and the living standards of every voter in the country.
No democratically elected leader is going to impose such costs on his electors unless he is absolutely convinced that it is essential. And as many people have pointed out, climate change is particularly tricky because even if Australia shut down tomorrow the effect of global emissions would be small. The main reason for Australia acting is to encourage other countries to act as well; the sacrifices of Australians won’t actually do much to solve the problem.
For all his genuine commitment to reducing emissions, Rudd is as aware of all this as Howard, and is not moving as far or as fast as the climate change true believers would like. You don’t need any conspiracy theory to explain democratic politics.
Andrew Norton 
“…taking action on climate change threatens thousands of jobs and the living standards of every voter in the country”
As I’ve previously argued at Larvatus Prodeo (or as Eban Goodstein has previously argued, and been channelled by myself at LP) such claims have been made about proposals for environmental protection and regulation for over thirty years, and have invariably been falsified in practice.
http://larvatusprodeo.net/2006/01/31/greens-dont-cost-jobs/
Apart from Goodstein, there are economists working within the neoclassical paradigm (think Stern and Garnaut, for starters) who have argued persuasively that action on climate change poses much less of a threat to jobs and living standards than inaction. Shouldn’t a classical liberal give more weight to such views than to the scaremongering of aluminium, etc., industry shills who, to paraphrare Craig Emerson’s recent address to the CIS, think the government should be protecting business from markets rather than protecting markets from business?
LikeLike
“threatens thousands of jobs”
Just like cutting tariffs on motor cars and textiles, clothing and footwear threatens thousands of jobs. Strangely, many of the people who argue for go-slow on climate change policy, because it threatens jobs in particular industries, are the very same people who are the most hairy-chested on free trade. They say that any jobs lost in the car and clothing industries will be quickly made up in the service sector, and even if they aren’t, it’s all for the greater good etc. However, jobs in carbon-intensive industries, it seems, are sacrosanct. Go figure.
LikeLike
“The main reason for Australia acting is to encourage other countries to act as well; the sacrifices of Australians won’t actually do much to solve the problem.”
Then howabout reducing emissions just because it’s the right thing to do. It’s not a very nice feeling to be just about the world’s biggest per capita polluters when the consequences will be hardest for the world’s poorest. “Doing your bit” is the right thing to do.
LikeLike
Spiros,
You are comparing apples and oranges. Reducing tariffs and government assistance to industry benefits the entire economy by getting rid of distortions in the market, so resources (labour and capital) can go to where they are most efficiently used. The economy as a whole benefits from the more efficient allocation of resources through higher GDP (although some groups lose out, particularly low-skilled workers in industries that lose protection).
An ETS deliberately distorts the market to favour low-emissions technologies over high-emissions technologies. It will make everybody worse off by reducing GDP, because some technologies that are more efficient than the alternatives (such as brown coal) will be priced out of the market. (Although there will be some winners, like wind farm operators.)
While some people may pick up the argument that the ETS will cost jobs, that is not the central reason to oppose it. The central reason to oppose and ETS is that it will increase costs in the economy, with possibly no benefits (or no benefits for a long time). The loss of jobs is a symptom of the economic costs of the ETS, it is not the only problem.
LikeLike
Russell,
Nobody is stopping you from ‘doing your bit’. Go nuts. But what about the people who are absolutely fine with being the highest per-capita emitters in the world? Should they be forced to act because you think it’s the right thing to do? I don’t think your morality (or mine or anybody else’s should be enforced on others).
LikeLike
While Garnaut has said a lot of things, he has not as yet provided the data to show that on reasonable assumptions, unilateral action (by which I mean action that is not a pre-requisite to the major emitters acting) is net beneficial for Australia. Unless China and India say that they will only reduce emissions if Australia does, why would a rational Australian policy-maker commit us to lower living standards?
Tariff reduction is a completely different issue, as it is generally welfare-increasing to reduce tariffs regardless of what others do. The only real issue with trade policy is whether you hold back some reductions as a bargaining tool to encourage other countries to reduce theirs, which is even better than going it alone. But reciprocity is not necessary.
In fact, the paradoxical thing about the greenhouse debate is that the lefties who were opposed to tariff cuts in the absence of reciprocal action are now the ones arguing for Australia to act regardless of whether others’ actions are contingent on ours. That just highlights their anti-capitalist ideology.
LikeLike
STT, I beg to differ. Brown coal only looks efficient because the full cost of brown coal fired electricity, that is, the cost inclusive of the damage to the environment, is not factored into the price of the electricity. The ETS does not seek to distort the market. It seeks to undo the distortion caused by the absence of a carbon price.
So it’s apples and apples. Exactly the same analysis which says that free trade is good for the economy and that therefore there should be no tariffs on imported cars says that carbon costs should be reflected in prices.
Don’t take my word for it. It’s all in Garnaut, and it’s all in the Productivity Commission’s submissions to Garnaut. Of course both Garnaut and the PC are supporters of free trade and the ETS and free trade are opposed by rent seekers.
The interesting (well sort-of interesting) case is people who support free trade but oppose the ETS without realising the logical inconsistency, or more likely realise the logical inconsistency but try to reconcile it on ideological grounds.
LikeLike
Rajat, the point of the Australian ETS is not to make a significant cut in world emissions by itself but to persuade the big polluters that Australia and other small countries won’t sit back and do nothing if they do cut back. We do this by making a credible commitment to bearing our share of the costs, which means setting up institutions and irreversible processes to cut our emissions and by providing various forms of assistance to developing countries to help them cut theirs. Credible commitments are imperative, or else everyone will have the incentive to renege, and then no will do anything. I believe that economists call this the “time inconsistency” problem.
You, I think, call yourself an economist. In which case, you should try and apply the same logical framework to the analysis of economic problems.
LikeLike
Paul – I wasn’t arguing the merits of these policies. I don’t know enough to contribute anything useful to the discussion on that subject. My analysis is purely a political one.
Despite the tone of Spiros’s comment at 2, the underlying point is a sound one: though economic reform did not lead to net job losses, the reality is that some workers in protected industries never worked again. That will be true of people affected by greenhouse reforms as well.
LikeLike
“I don’t think your morality (or mine or anybody else’s should be enforced on others).”
Oh, I dunno.
We act both as individuals and as members of a community. If the community votes to have OH&S laws (even though they increase ‘costs’) you should obey them. If the community passes laws that force car manufacturers to include pollution reducing devices (even though it ‘costs’ more) you will have to pay. There has to be a balance between what we choose to do as individuals and what we choose to do as a community.
In this case, when the scientific consensus is that producing carbon emissions could be catastrophic, it would be a weird morality that would claim that it is right to go on producing just as much as you like.
LikeLike
Spiros, ultimately what you are talking about is an act of faith. An act of faith that the US, China, India, Indonesia, Brazil etc give two hoots what Australia says or does, let alone be pushed over the edge into action as the result of our efforts. Is it any wonder that greenhouse-environmentalism is referred to as a religion? Let the next US President have a shot at forging a global consensus if he wants.
LikeLike
Not just Australia Rajat.
Also Europe (300 million people), Russia (140 million) Japan (125 million) and so on.
And of course the US is not a monolith on this. California, in itself one of the biggest economies in the world, is doing more than us, and is thinking of joining Kyoto.
LikeLike
On Rajat vs Spiros,
I think an additional argument in Spiros’s favor is that if some countries act first, they will provide an example of how it can be done, and that it doesn’t affect the economy nor cost much (e.g., Germany). Once the costs have been shown to be comparatively small, it should make it vastly easier for countries thinking about doing something to do something, since it will be an existence proof against groups with vested interests that make it sound like the costs will send us back to third world.
LikeLike
Quite right Conrad. Spending a bit of money to get more energy-efficient is hardly the end of civilisation as we know it. On the other hand, having the Earth six degree warmer will be the end of civilisation as we know it. The last time this happened, the Earth was one big swamp and there were alligators at the North Pole.
LikeLike
“California, in itself one of the biggest economies in the world, is doing more than us, and is thinking of joining Kyoto.”
Great call Spiros! The price of power in California is driving energy intensive industries to other states. At the same time, the rate of energy consumption is sustained by drawing power from other states (that is , living off the evil pollution by other people!). How viable are those options if you are talking about the bigger picture, beyond the boundaries of the single state?
Simple arithmetic, regardless of the scientific arguments, says that our actions will make no discernible difference while the developing world goes on its way to catch up with our level of prosperity and consumption.
LikeLike
“our actions will make no discernible difference”
So, we can escape any responsibility by hiding ourselves in a group, and saying “overall, our tiny group of people doesn’t produce as much pollution as that huge group of people over there, so, even though we individually produce 10 times as much pollution as any person in that group, we don’t have to do anything”.
You support a concept as ridiculous as global ‘free trade’ but apparently don’t think of yourselves as global citizens when it comes to reducing the global threat of pollution. That’s shirking your individual responsibility, it’s immoral.
LikeLike
So, we can escape any responsibility by hiding ourselves in a group, and saying “overall, our tiny group of people doesn’t produce as much pollution as that huge group of people over there, so, even though we individually produce 10 times as much pollution as any person in that group, we don’t have to do anything”.
It’s not really a matter of ‘hiding’ but, yes.
I don’t see how support for free trade means we should see ourselves as “global citizens”. In fact, I can’t think of any reason to think of myself as a global citizen.
LikeLike
Mitch, when the scientific concensus is that producing greenhouse gases is likely to lead to climate change which will cause severe hardship for other people (does it matter if they’re Bangladeshis?), how can you say that we have no responsibility to take all reasonable steps to reduce producing those gases? To answer “I’m just one person so what I do doesn’t matter” is surely a cop-out. You’re either needlessly adding to the problem, or you’re not.
LikeLike
I don’t get why you keep talking about a responsibility. Australia has contributed a miniscule amount of world carbon emission in the last 50 years. And in the next fifty it will be the same big countries that have prospered with big CO2 emissions (though most of those same countries have had the sense to incorporate nucler power into their energy production) as well as the likes of China, India, and other now high pop. developing countries that will produce the vast majority – per capita and total – CO2 emissions.
Sure Australia produce a lot per person, but we could just have easily had a much larger population and produced even more with a lower per person rate.
Also on that note, think of all the people that come here from places like Asia and suddenly their actually able to have a much bigger “carbon footprint”. We could cut our CO2 emissions plenty simply by cutting our immigration rate. (ie There’s a lot of immoral things we could do that improve our “morality” in terms of emission levels, but they’re really not worth it.)
“I’m just one person so what I do doesn’t matter”
I never said that. I think it’s you that can’t think of individuals as mattering on this issue.
LikeLike
The tariffs comparison is different because irrespective of losses to particular individuals, the nation as a whole stood to gain immediately through lower prices and input costs. With the ETS as has been repeatedly stated unless there is a compulsory international agreement Australia’s effort will do bugger all for the AGW problem. In fact it may even do worse than bugger all because if some production moves to less environmentally friendly developing countries we end up with net increase in emissions. The benefits of the ETS rest on the already slim chance that
1) somehow it will have a demonstration effect that will galvanise the rest of the world into cutting their emissions
2) somehow all this will be enough to cut back the contribution to the stock of CO2 in the atmosphere before some major tipping point is reached
3) somehow the margins introduced by an international ETS will spur innovators to make that great breakthrough we’re all waiting for to save us
Possible? Yes
Anything like the high certainty of benefits from tariff cuts? No
LikeLike
Something very interesting about the entire climate change policy framework is that it is one particular response to the question of how socieities manage the risks of climate change given incomplete information. This risk management problem is not new of course, but the difference between this situation and others is that the range of (potential) risks associated with climate change includes some outcomes in which there are enormous impacts.
It is very interesting to think about how to attempt to manage risks given the range of potential outcomes.
LikeLike
“I think it’s you that can’t think of individuals as mattering on this issue.”
That’s so different to what’s usually said by right-wing commenters – usually there’s quite a lot about individual rights and responsibilities.
Now we know where all that litter along the edge of country roads comes from: there they are cruising along in their BMW 4WD’s and chucking those empty bottles out the windows. Why not? There’a a huge amount of litter out there – seems everyone else is throwing their rubbish out, what difference is just their little bit going to make?
Of course individuals and what they do matters.
LikeLike
“Now we know where all that litter along the edge of country roads comes from: there they are cruising along in their BMW 4WD’s and chucking those empty bottles out the windows. Why not? There’a a huge amount of litter out there – seems everyone else is throwing their rubbish out, what difference is just their little bit going to make?”
If you say so. A carbon trading scheme (or tax) still doesn’t equate to individual responsbility, but rather government superseding just that.
LikeLike
Spiros raised the tariffs comparison as a counter to the “ETS will cost jobs” scaremongering and, in that respect, he is correct. Employment land unemployment levels are affected predominantly be macroeconomic phenomena and labour market polices; not by pollution abatement policies.
LikeLike
Mitch, just as we can make responsible decisions about buying green power or replacing the car for a bike where possible etc, we can vote for a government which will build railways, tax carbon etc – which is what most people did at the last election, so the government is not superseding individual reponsibility but reflecting it into areas where we have to act as a community.
LikeLike
It is the self righteous priggishness of people like Russell which alienates moderates on this issue like me. I have never littered in my life. The analogy doesn’t work because it costs you next to nothing to just wait until you get home or stop somewhere to chuck your rubbish in the bin. For what it’s worth, I have no problem with people found littering being punished with a few lashes of the rattan in public.People with such a poor degree of self control deserve everything they get.
Cuting back emissions costs Australia money and all for a very speculative possibility that other countries will reward us for the goodness of our hearts. A more appropriate analogy is if a beggar passed the hat around for a heart operation and we give him a generous $1,000 donation hoping that everyone else will chip in about the same amount.
LikeLike
Jason – the analogy does work because it relates to the sentiment: “because the consequences of what I do are almost insignificant compared to the totality of the consequences of what everybody else is doing” I might as well do whatever I want.
I’m not talking about if “other countries will reward us for the goodness of our hearts” but what we need to do to maintain a bit of goodness in our hearts. You might think it’s OK for Australians to go on building bigger, airconditioned houses with fewer people in them, buy bigger vehicles etc when they know that’s it bad for the environment .. I think they’re just evading they’re responsibilities.
LikeLike
That’s a fine sentiment but everyone has a price. Waiting till you get home to chuck out your rubbish has far less opportunity cost than making do with less CO2 emitting activities than anyone else.
LikeLike
“That’s a fine sentiment but everyone has a price”
All the talk of saints and martyrs from Pell & Pope remind us that you’re not quite right Jason, but most of us (as yet not morally perfect beings) do take price into account. But hopefully we can at least sort of head in the direction our conscience tells us is the right way to go ….. the word ‘pollution’ doesn’t have many positive connotations, does it.
LikeLike
I prefer the dog turd analogy. People walking their dogs mostly pick up their dog’s shit, even though the contribution of that shit to the total is insignificant. It’s not costless to pick up dog shit, but people do it anyway.
And it’s not the threat of fines that makes them do it because that threat is unenforceable. It’s a combination of wanting to do the right thing, and realising that if people don’t pick their dog shit, then other people will think there’s no point. The neighbourhood will soon become a big steaming of dog shit, and that is in nobody’s interests.
LikeLike
Then howabout reducing emissions just because it’s the right thing to do. It’s not a very nice feeling to be just about the world’s biggest per capita polluters when the consequences will be hardest for the world’s poorest. “Doing your bit” is the right thing to do.
No, it’s not a matter of doing it because it’s a nice thing to do. Going out with a good looking chick is also a nice thing to do and about as relevant to the issue as your assertion. There is a very being concern that we will seriously damage both our short and long term living standards because it is a nice thing to do. In other words there are serious costs involved. Buy your partner some flowers this evening as that is a nice thing to do. we need to measure serious economic consequences resulting from ETS and going it alone may be a very silly thing to do.
LikeLike
Don’t agree JC. Just as it would hardly impact most people’s standard of living to pay for greenpower, have a solar hot water heater etc I trust that the government will do the right thing in not setting a price for carbon that will wreck the economy. We can improve in easy stages.
JC – you don’t have a bumper sticker that says “Polluting and proud of it” do you? I didn’t say that it would be ‘nice’ to be trying to reduce emissions, I think it’s the right thing to do … what’s that Google motto “do no harm” ?
LikeLike
Serious costs? 1-2 per cent of GDP over 50 years is not a serious cost. That’s not 1-2% per year. That’s over the entire period. It’s a trivial cost. And it’s not the ETS which is costly, even at that level. It’s the cost of investing in some energy saving devices.
And that’s got to be measured against the costs of not doing anything, which are much higher.
LikeLike
It’s 1 to 2 % per year. for the next 50-100 years. Those costs we’re burdening the economy are dead weight perpetual costs for the period they remain imposed. Please, get up to speed and keep up with the class spiros as you’re falling behind.
LikeLike
JC, you are wrong. It’s 1 to 2% in total, not per year.
LikeLike
Spiros — you are wrong. While the impact is reported as a once off, it will impact the economy every year. Every year going forward, the economy will be 1 to 2% smaller than what it otherwise would have been.
LikeLike