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Carbon Tax & Australian Politics

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Delton Chen

Jul 19, 2014
10:13

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Most people I know here in Australia are concerned about Climate Change and are not supportive of our new government's policies. I don't watch TV, so I may have missed something, but I have not heard a mainstream discussion of fee-and-dividend. My take is that F&D would work, probably too well, and that's why the media ignores it. Australia is also economically very competitive and the cost of living is rising quite quickly. Prices here are higher than in many/most other countries. We also have a real estate bubble sustained by immigration and high wages. My assessment of the current Aussie government, is that it finds its identity in representing the private commercial sector, almost to the point of embarrassment. I think the prime minister does not believe that climate change is a serious threat; his policies say that much. There are many well educated people here who support climate change action, and feel very let down by recent events. The world should move ahead strongly towards Paris 2015, with, or without, a carbon tax in Australia.

Robert Dedomenico

Jul 19, 2014
02:43

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By "carbon fee and dividend", you do mean to tax (essentially) carbon based fuels, and then use that revenue to distribute evenly back to the population like general welfare, right? There could be a few problems with that approach, and one of them might be that as the typical household acquires more income, they tend to spend that income on goods and services. Don't goods and services these days generally depend upon fuel at various points in their life cycle? Certainly transportation does. Over the past ten years in the US, there has been a resurgence in youth sports, and this has been particularly strong in "travel teams". I have often wondered just how much gasoline is consumed per game of little league baseball, but never felt compelled to attempt to estimate it, as it is already obvious that it is significant amounts. Even more gets consumed in "travel" play. Families not having the level of disposable income to allow this kind of expense tend in general to avoid signing their children up for these leagues, even the local ones. So if, as has been claimed, about 2/3 of families would receive more in dividends than they pay in higher fuel cost, etc., under certain proposed carbon fee and dividend schemes, then won't that offer more disposable income for them to consume more goods and services? When you take money from some people only to give it to others, that only changes who will be spending the money. I saw a quote, "It's not a tax if the government doesn't keep the money." Really? In deficit years such as we are currently experiencing, the government is not keeping any of the money. In fact, it is spending all of it and more, going deeper into debt. If we mandate by law that citizens must pay money to the government... that is a TAX. That's the definition of tax. It's not a tax if you don't have your wages garnished, or go to jail for not paying it. How could anybody making such a statement be seriously considered an expert? An expert at con games and power grabs, maybe... but not solutions. Unless there is some public undertaking requiring the revenue, the government should not be taking a tax. Doling out universal "dividends" is only a public undertaking in the communist system of governance. We really should carefully think over sweeping changes in public policy before jumping to conclusions about what will spur the economy and lead to utopia. None if this is to say that I do not see that it would be a good thing if humanity would begin consuming less, only that it is actually a difficult thing to do. What makes it most difficult, is that actually nothing short of population control will ultimately prevail in solving the problem. No matter how much more efficiently we consume, if our numbers never stop growing, we will either over consume until there is strife over scarce resources, or over pollute until there is fighting over who is to blame. It may not have been a popular policy, and there may not be a lot of positive sentiment among Americans for Chinese innovation, but credit is due for the wisdom expressed in the Chinese policy that had for some time been in place (and may still be, for all I know,) of one child per family. After all, it should not require much proof to claim that if we do not collectively control from withing our governance our current population explosion, then some outside force(s) will eventually make the adjustment for us, without our input into what pains we will suffer for it. I read in this Colab what somebody wrote in defiance of this reality, saying that when he rejects this as plausible, and when he hears anybody explain this he asks of them, "Are you going to volunteer then to have no children? Or only one child?" How could anybody willing to accept the truth that under continually rising fuel burn rates exhaust gasses will build up in a finite atmosphere and therefore something must be done about it, yet at the same time deny that a continually rising population can safely be ignored? I think it is safe to say that we can all agree though, that if the problem(s) were easily solved, then we would already have solved them. We should also agree that when we do recognize things that at least contribute to an ultimate solution, and these things would not present such difficulties in implementing, then they should be pursued. Cost effective energy efficiency is one such thing that should always earn universal acceptance. After all, how many businesses operate inefficient engines from the past, when there are replacements whose total cost of ownership, by virtue of efficiency, is far less? Taken to the extreme, if we could boost energy efficiency in all aspects of the global economy such that only 50% as much energy were being consumed while still supporting all present human activity, would that not at least cut the problem in half? I appreciate your comments, Delton, and agree with more than as much as I question, I am sure. Sincerely, Robert

Delton Chen

Jul 19, 2014
11:59

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Hi Robert, The fee-and-dividend is not my proposal, though, it is Citizens Climate Lobby. They did economic modelling to provide quantitative evidence that it could work, and I have not investigated further, as that is a specialised topic and I am working on a different policy. Global 4C Mitigation (g4cm.org). I believe g4cm can address many of your concerns. I think if Australia had F&D that would be much much better than no tax at all. F&D could work politically because the public are able to adjust their personal budgets. I recommend that you read Garrett (2012) who provides a conceptual model of the global economy. He has some surprising comments about the role of population and energy efficiency in the long run. Sincerely Delton

Robert Dedomenico

Jul 20, 2014
04:15

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Hi, Delton. It would be difficult to ever convince me of the merit in having the government tax the fuel that people use, so that they will use less fuel, while at the same time doling out money indiscriminately so that the people can still afford to buy that very same fuel. The only reason to include the wealth redistribution part of the scheme is to build popular support... to work up the mob to rob the castle. But the scheme offers no actual help in alleviating the actual problem it attempts to solve. How would we live, 7 billion of us, without using fuel to grow our food, build our homes and factories, keep warm in winter, manufacture and distribute our goods, and dispose of our waste? The advent of the engine and consumption of energy is what allowed the population to boom to this extreme level. Instituting a circular tax only adds to the problem. It would only cause us to spend more time and energy collecting another tax and redistributing the booty. The only answer is simply burning less fuel, and there are only two ways to do that: 1. Reverse the current trend of the global average fuel use per person still rising. 2. Reverse the current trend of population still rising. If neither of these things can be accomplished by human effort, then nature will eventually accomplish it herself, as we run out of fuel, or fill up with waste, or descend into the next global war. If I had to write a text book on the subject, it would say something like that. I have to have a look at that Garret book you recommend and see what he says. Thanks again for the conversation. Yours, Robert

Gary Horvitz

Jul 20, 2014
05:54

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Robert, I'm afraid you have limited view of carbon fee and dividend. First, the tax is applied only to carbon as it enters the economy. In the US there are perhaps 3000 entities who put carbon into the economy. Not a massive issue of collection at all. 2. They are taxed according to the CO2 content of the fuels they are selling. 3. The revenues collected are distributed to households, not "indiscriminately" as you suggest. Existing electronic transfer systems mean the expense of distributing the revenues is minimal to non-existent. Estimated total revenue over a decade? About $1T. Want some of that? 4. The fee per ton escalates every year, meaning that the sellers pay more and the public receives a higher dividend. So let me ask you, if you saw your energy costs going up and you were getting a check in the mail every month to compensate for that, wouldn't you be trying to buy less of what is costing more? Of course you would. And this is the whole point. As energy costs increase, so does the dividend, and people will use that dividend in such a way as to come out ahead. They will invest in low carbon technology. Insulate the roof, buy solar, use less gas, buy an electric car, plug it into your solar battery and pay ZERO for fossil fuel. By the way, the quote, "It's not a tax if the government doesn't get to keep the money" is attributed to George Schultz, former US Sec of the Treasury and Sec of State.

Dennis Peterson

Aug 1, 2014
08:50

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Let's work out the numbers and see if the dividend really gets people to spend more and thus emit more CO2. Let's say you're an average American emitting 20 tons CO2 per year. We set a fee of $100/ton so you get an annual dividend of $2000. That's based on the national average so you get that same dividend no matter how much you emit. You have the same money in your pocket as without F&D, because while you do have that extra $2000, you're also paying an extra $2000 for the carbon emission from your gasoline, electricity, and the manufacturing and shipping of all the products you bought. You break even. If you emit an extra 5 tons, you still get $2000/year, but your carbon expense is $2500. You're $500 in the hole. If you drop down to 15 tons, your carbon expense is down to $1500 but you still get the $2000. You come out ahead. The less carbon you emit, the more you profit.

Richard Gillaspie

Jan 21, 2015
06:40

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I think F&D might have merit if tied to household efforts to reduce carbon footprint. Most folks I know won't change behavior unless they see the impact shot term.

Richard Gillaspie

Jan 21, 2015
06:35

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In Metro Nashville a recycle program provides a container for recyclables. Less than half the households on my street even bother to use them.
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