Green taxes' place in the big picture of climate change

I hope you've all read Charlotte Gore's avalanche of posts against green taxes. I have defended the idea a little in the comments section, finally reaching the point that green taxes need to be seen as an effective part of a bigger picture of how we combat climate change. So here goes.


The insignificance of the individual

Does it matter what I do, whether I drive or fly or explore outer space? Does it matter what or when this or that minister or MEP drives or flies? Honestly? No, not really. My carbon emissions are a drop in the ocean. If everybody did the same as me it would matter enormously what I do, but they don't and it doesn't. Immanual Kant suggested that we should do only what we would have as a universal law, or something like that, which was a jolly good idea at the time, a leap forward in our understanding of ethics as being more than about what might make baby Jesus cry. But the ethics of example-setting is perhaps of limited use in a free and diverse society. But what, I hear you ask, if everybody had my attitude, wouldn't it be awful? Yes, I suppose it would. It is so much better only 95% of us being like this.

Let me be clear - people who go out of their way to minimise their impact on the environment are doing good. They should be applauded and not sneered at. But this 5% will only do about 5% of what is needed. The other 95% will have to come from political action, by which I mean measures like international agreements, green taxes, and promoting investment in renewable energy, rather than lecturing. Governments should not be telling individuals that what they choose to do really matters in the big scheme, because it doesn't. See above.

The environmental movmement believes in individual responsibility, largely I think because it was politically out in the cold during all its formative years. It gave us the chance to feel we were at least achieving something. Today politics has woken up and we should have some political ambitions.


The insignificance of the UK

The next reason for doing nothing is that whatever the UK does will be lost the tide of rising emissions from that villain du jour China. And this is quite true - if we were trying to stop global warming on our own, we might as well forget it. In a world population of a few dozen significant countries, the Kantian argument is a little better than it is among individuals. Most countries are doing something, and very few are doing a lot. China is not the worst and the UK is not the best and so that choice of contrast is more than a little snotty. However the feeling we ought to do our bit, the effects on national pride, and so on are still nowhere near strong enough, and will not deliver the measures needed.

What we need are international agreements to cut carbon emissions and make various land use reforms. This is more or less the bottom line. But to make such agreements possible we need a number of things. We need more precise predictions of the effects of global warming. Fortunately, these are getting better all the time, and it is getting harder for people who prefer to believe it will all be fine to cling on to that.

We need ever better ways of generating energy. Fortunately, these exist and they are becoming more economic all the time. Uptake may be driven as much by increasing fossil fuel prices, and energy security considerations, as much as anything else and this is more good news. As Stern commented, energy counts for a tiny fraction of our costs, and so if we have to pay much more for it, while this will hurt, it is not pain on any kind of revolutionary scale.

Finally we need to show that we can do without some of the more marginally useful energy uses without becoming significantly worse off. A large part of this is improving energy efficiency, but we might also make different choices, if the full environmental costs of each choice were included in the price. Again, technology is key here to improving efficiency and giving us more choices.


So green taxes....

Charlotte asked me if there wasn't a better way to combat global warming, and the sort of thing you hear suggested is technology or international agreements. But I am convinced that this is completely the wrong way of thinking about it. Technology and international agreements are not alternatives, they are complementary, because the agreements won't be reached until it can be shown that they will not hurt too much (and that it will hurt a great deal not to make them). Similarly green taxes and technology are not alternatives, they are complementary. Green taxes blend into market signals (and market signals work) to buyers and innovators to make better products and better choices.

If green tax revenue is used to cut income tax, then - within reasonable limits - this shouldn't harm the economy and may even benefit it. It is much like the case for Land Value Tax: taxing things that are intrinsically limited in supply (land, carbon) in preference to those where more can be produced (labour, goods) will reduce the drag and distortion to the economy. The intrinsic limits are of different kinds for land and carbon, but I don't see why the argument shouldn't apply, and doubtless someone will tell me that carbon emissions are a kind of land anyway.


I think Charlotte is right about the political difficulty with green taxes. People are feeling got at and there is a backlash. The other parties may dump green policies altogether. I think there are two reasons for this that we need to challenge. First that there is despair in the face of China, etc, because green taxes are not seen as part of the bigger picture I have painted here. Second is that we are pretty sick of being told what to do all the time and it seems that green taxes are another kind of lecturing and another kind of punishment. We need to convince people that this is not the case - that green taxes are a necessary evil, just like other taxes, albeit one with an extra silver lining. And we need to convince them that we are not trying to tell them what to do, rather that it is after all their job as voters to tell us as politicians what to do. With green taxes in place there is less need to worry about the environmental consequences of a choice, not more. So maybe we can all relax a bit, and backlash against something else this week.

Reinventing the State Chapter 22: Communicating Social Liberalism

The "at least three brains" team of Steve Webb and Jo Holland has made a noble attempt to bring together this disparate collection of essays. As much as I would like to go with the flow I found much of the language and argument grating.

"Relying exclusively on unfettered market mechanisms to deliver a liberal and democratic society is doomed to failure."

This looks like a straw man to me. Markets do not deliver a society, they deliver goods and services. Relying on markets to deliver a cutthroat dog eat dog society would be doomed to failure because it is a society and not a product. Of course I know what Steve and Jo are getting at, that laissez faire is freedom only for the few. But then this is hardly a shocking statement or a distinctive position - even the Tories won't disagree with this, publicly at least.

"There are many areas in society - such as educational or health outcomes - where such inequalities [as arise from unfettered markets] would be totally unacceptable'"

And what about the inequalities we have already? How unacceptable are they? Personally it is not the inequalities I have a problem with. Health and education are good things and nobody deserves less of them, however much they have already. What is unacceptable is how little some people have of each. We all agree that we want more access to health and education, particularly for those who have the least access at the moment. But I am bemused by this emphasis on what seems to be an straw man position: instead we should look at where the country is and consider what direction to move it in.

Anyroad, this is the first part of Steve and Jo's argument: "the failures of unfettered markets".

Markets fail due to a lack of competition. Tim Farron's example of milk suppliers is referred to - although how agriculture can count as unfettered while subject to trade barriers and the CAP, is a mystery.

In part 2 of the argument, markets fail when the price of something does not reflect its true cost. This failure can be corrected by Pigouvian taxes and subsidies "in some cases". Now I am a big fan of Pigouvian taxes, particularly green taxes, yet I find myself disagreeing with the conclusion.

"Whether we are dealing with social costs or social benefits, both need to be fully reflected in market prices if the market is to deliver socially optimal outcomes, and only the state can ensure that this happens."

No... Social benefits are largely unmeasurable. You want to keep post offices open because they have a real social benefit, subsidise them, call it a Pigouvian subsidy if you like because that benefit is real. But it is a political judgement what that benefit is worth, not a matter of number crunching. And it should be a simple formula, not a "full reflection" of the value of a pensioner's opportunity to gossip while buying stamps.

In part 3 of the argument, markets fail because of inequalities in income and wealth. Markets, you see, are only geared up to providing things to people who can pay for them. At least that's how I would have put it, and it might be what the authors are getting at with that stuff about horse races and redistributive taxation, I'm not sure.

Again it is so uncontroversial as to be hardly worth saying that we would rather have a national health service than leave the sick dying in the streets. Why is the point so laboured? I don't know. A real dilemma is almost addressed at one point:

"However, the King's Fund recently found that the middle classes were likely to choose the best hospitals, while those who were less well-educated tended simply to go to the local hospital."

They are right that there is a danger of widening inequality here, but, at the same time, isn't it good that more people use better hospitals? Patients choosing a better hospital are increasing the size of the pie, not taking a larger slice of the same pie. This should be commended not bemoaned.

"While Liberals are instinctively in favour of 'choice' ... these examples clearly demonstrate that unfettered markets can simply lead to a beggar-my-neighbour form of choice, akin to the biggest and strongest barging past other people in the queue."

Er, no they don't. For one health and education are not examples of unfettered markets, they are examples of near state monopoly. There are beggar-my-neighbour forces at work in public services - selection of pupils by schools is one (it should be the other way round) - but this has nothing to do with markets.

"Unfettered markets" here seems to be used to mean so-called "market based reforms" of public services. By all means make that case, and I would probably agree with most of it, but do try to call things by recognisable names. "Unfettered markets" would probably also fail, I guess, but we don't seem to have been talking about that.

Moving on, Steve and Jo make a case for intervention when markets fail. This is the natural follow up to the previous section - anti-trust laws, pigouvian taxes and so on - but noting that such intervention should not be knee jerk: some failures are not as bad as the intervention that would be necessary to correct them. So far so good.

They refer to Duncan Brack's argument on inequality as persuasive. (Er, no).

"...that inequality of outcome in and of itself can undermine society to the detriment of all. This would seem to imply a greater amount of redistribution than we have sometimes advocated."

No, That implication is not sound. It may well be that more redistribution is justified, but saying "X is bad for society" only works as an argument in an all-else-being-equal kind of way, yet putting up taxes makes all else very unequal. Brack's argument would be equally applicable to a society with half as much or twice as much inequality as ours, and this is a sign that it is failing to address the nub of the issue.

Inequality may be bad, but I am pretty sure that poverty is worse. Perhaps I benefit from living in the north and not having swaggering bankers on my doorstep. Or perhaps I have taken the stoicism of Featherstone and Boyle to heart to the point of not being so bothered by other people's status - in which case why didn't I agree with them?

At this point Steve and Jo admit that the foregoing arguments "could also be espoused, to a greater or lesser extent, by a socialist." Or a Social Democrat I suppose. And they are right - socialists love attacking markets, especially straw man positions on markets.

The difference is that the state should do as little as possible, as locally as possible and as accountably as possible. While I agree that this is a difference I don't think it is quite good enough. Many socialists will support localism and democracy quite sincerely. Socialism may naturally tend to paternalism and centralism, often in ways I fear this anti-market so-called social liberalism may also do so. If social liberalism is just localist social democracy, why not call it localist social democracy and we can all understand each other better. I don't take the view that something must be called liberalism to be worth supporting, rather I will listen to arguments for any -ism, and be suspicious of anybody trying to shift the meaning of an existing -ism to include what they don't want to bother arguing for.

This is a little unfair of me because Steve and Jo do say that the state should only what needs to be done and no more, although that is the one point of the three they don't expand on. Personally, I support a few things the state does that don't strictly need to be done, so perhaps I am not so extreme a classical liberal as they are. Yet even this principle is empty if it is not proved by example: the state should stop doing this, or that.

Localism too, while I agree we could do with a great deal more of it, is an argument with problems. The same abstract arguments would apply in a country ten times as decentralised already which again suggests that the arguments are missing the nub of the issue. State intervention must be "as local as possible", we are told. But why? This is just dogma. It would be possible, but pointless, to set VAT rates street by street. Surely what we should be saying is that the optimal level for much if not most state activity is more local than the present level.

The chapter and book concludes with a section on communicating this idea of social liberalism. Having not really got the idea myself I have little to say on how to communicate it. But I will have a go at explaining what I mean by social liberalism and how I might communicate it in a later post.

Looking back on the whole book (or rather the Brack-Featherstone-Holmes-Farron-Webb-Holland thread within it) perhaps it works better as a vehicle for communicating liberalism to socialists and social democrats; for saying to them: we share your concerns, come admire our values. A noble project worth a few cheap pot shots at markets. Clearly it is an attempted response to the Orange Book, although it has many of the same authors. I might draw together some of this if I can remember how it started - I started this review in September.

Still, it has been fun. Buy the book, and read the chapters I have said are good. Or better still pass off my views on it as your own to seem better read than you are. Better again, continue the argument. We may yet reinvent the state.

Reinventing the State Chapter 21: A Rational Defence Policy

Well it has been a while, but my copy of Reinventing the State has turned up again, so here I am.

Tim Garden offers a useful primer on the issues behind defence expenditure, and I can do little but endorse some of the key points.

Defence is a world of escalating costs and overstretched forces. Procurement necessarily has very long lead times that equipment coming into service was commissioned when demands were very different. Recruitment and training decisions have similarly long term effects.

The Eurofighter was concieved during the cold war, and while a very capable aircraft it doesn't not have enough of a role to justify its cost; although as far as I can see it is much too late to cancel to see any worthwhile savings.

Inevitably new equipment is more capable and expensive than its predecessors. And wages also have to rise faster than inflation, leading to cutbacks even when funding is maintained in real terms. (Much the same, it has to be said, can be observed in healthcare, and perhaps much of local government.)

While the military can surge its effort to meet an emergency, it cannot sustain surge levels year after year - attempts to do so affect retention and equipment, causing a deterioration in quality and capacity over time.

Faced with this, Tim charactersises three options for our contribution to international tasks:

a. Punching above our weight
b. Matching national commitments to resources
c. Sharing the burden more equitably internationally

Punching without funding above our weight is the cause of overstretch and a decline in the quality of the armed forces.

Matching our commitments to our spending would mean a big cutback in our commitments. While we would like to get out of Iraq, the situation in Afghanistan is more finely balanced. And there are operations we do wish to support such as UN-sponsored humanitarian operations.

Better multinational co-operation is clearly the way forward. Tim contrasts well the 4 principle multinational agencies: the UN, NATO, the EU, and the ad hoc US-led coalition. The UK "has a special position with respect to all four multinational actors. This compounds the problem of over-tasking as we try to show continuing commitment to each." And each merits different handling.

We should look to the EU and NATO to find economies of scale and pooled capabilities where appropriate. It should raise eyebrows that arms suppliers are national champions rather than competing on merit for custom, even within the EU.

What we can't afford to do, in either sense of the word, is stand alone in the world.

In defence, perhaps more than any other policy area, we need to reinvent the role of the state by accepting that the sovereignty of the state can be most effectively exercised through international collaboration.

Extra Joe Elsewhere

I have a post up on Lib Dem Voice arguing that guarantees of choice and respect within schools for believers and non-believers alike is a good way to address the problems of faith schools, while recognising that many are good schools that people want to use. Feedback much appreciated.

So, yes, I went to the Lib Dem conference in Liverpool. Met some marvellous people and elephants. If I had known I was in shot here I might have closed my mouth (5th photo), but then I notice Nick Clegg seemed to have his mouth open for all the photos in the conference agenda, so maybe that is the done thing.

Continuing the theme of comparing myself to the party leader, the local paper seems to think it fitting here - the second thumbnail has the correct caption.

Facebook and real panto

What does facebook have in common with pantomime? I suppose it is that when you get something wrong, it is in front of 200 people.

It has been a real pleasure to play the character of Simple Simon in this year's Hallam Players panto Jack and the Beanstalk, alongside Nick Clegg and Richard Allan and many other talented locals.

So I discover the hard way, during the final show of the run, that, having met one's co-star on stage that forgetting a line can sometimes give the next line added comic poignancy. "I'm awfully glad we bumped into each other" I said to her. Then a pause... under my breath... "I'll remember why in a minute". The prompt came to the rescue: "My name's Simon". Ah, yes, I am introducing myself. "My name's Simon. People think I'm simple. But I'm not really." I'm afraid to admit that after having forgotten my own name, it was difficult to deliver the rest of the line with conviction, or a straight face.

Ah well, worse things happen at sea. So I was talking to another member of the cast at the after show party about Mitch Benn, and how he admired Tom Lehrer. "Tom Lehrer?" "I'll send you a link to something on YouTube."

Of course sending links by email is so 90s. No I'll post it on your facebook funwall. Well that was the plan. Actually I posted it on the facebook funwall of all my friends.... [Update: actually maybe I didn't. Notifications, right, that's just spamming some feed that tells other people that I have sent someone, not them, a video. What will they think of next.]

I will get back to Reinventing the State at some point.