In yesterday’s post I set out Professor Lowe’s proposition that we are facing a ‘global ecological crisis’.The evidence for this approaching disaster is not there. What you might say is that the increase in population is causing humanity to build more cities, grow more food, and build more infrastructure, and that these processes have environmental costs and well as benefits. In the developed countries societies are aware of these costs and are coping with them. Australia may not be leading the pack, but it seems to be doing a decent job.
Nonetheless, Ian Lowe wants us to have a new approach to the economy, based on spending at least as much on the ecological crisis as we do on defence, which is about two per cent of GDP. He doesn’t say where that money is to come from, whether from reduced spending elsewhere or through increased taxation. He has three broad proposals.
- We should invest in smart, clean industries and infrastructure.
- We should tax pollution more and productivity less.
- We should measure and invest in community wellbeing.
Apparently it would cost somewhere between $200-240 billion to shift to 100 per cent renewable energy by 2030. Why wouldn’t we do this, rather than maintain ‘a highly polluting energy system’ which will cost a lot to maintain anyway? Well, I think there are two reasons. The first is that our current energy system is not ‘highly polluting’, because carbon dioxide is not a pollutant, and the other noxious by products of creating energy through burning coal are already well dealt with. The second is that no such system exists anywhere in the world, and would not be available by 2030 even if it were. It would depend on the presence of a massive storage system for solar energy, which is only being explored. And it would presumably cover large amounts of land with wind turbine and solar arrays, which he does not mention.
For smart transport, Ian Lowe sees the electric car and much better (‘sustainable’) rail as the solutions. Presumably both are to be fed from the renewable energy grid already mentioned. The electric car is not doing well at the moment anywhere in the world, and I wrote about that some time ago. It can only exist at the moment on enormous subsidies, though I am told that we are likely to see cheap electric bicycles before very long, and in time clever people will find new ways to ‘electrify’ the car cheaply. As is usually the case, the market will operate if there is a real incentive.
His taxation proposals seem to me to be built on the assumption that some activities are ‘polluting’, and should be taxed more, and some are ‘productive’, and should be taxed less. What are ‘productive’ activities? Well, ‘workers and companies that grow and distribute our food, that build and maintain our houses, that reuse and recycle, that educate our children and care for us when we are sick’. What are the other ones? Well, mining, of course, and car manufacturing, presumably. It’s not clear. Anyway, those polluting activities are to be hit with taxes and deprived of whatever subsidies they have. That will force everyone to use alternative energy. And at the same time company and personal taxes will go down, so that we are all better off. We won’t export coal or uranium, but we shouldn’t anyway, because they’re bad for the world. I think I’m summarising it correctly, and all I can do is shake my head. Not only will this not work, but no conceivable Australian government would ever do it, and I can’t see any Australian electorate insisting that it do so.
OK, off to community well-being, where I can agree with Professor Lowe on something. I too feel that GDP is a poor measure of national well being, and it doesn’t measure voluntary activity, which is a cornerstone of ‘the Australian way of life’. Ian Lowe reminds us of the 1973 Treasury paper about which I wrote approvingly some months ago, and tells us that Treasury then saw growth as there to improve the welfare of the Australian community. But ‘Our national leaders, and most economists, have forgotten this basic insight. Economic growth is treated as something to be pursued for its own sake, regardless of whether it is actually leading to improvements in people’s lives or the wellbeing of the community’.
I don’t think that’s right. I think that everyone just takes it for granted that economic growth does improve the welfare of Australians. It is indeed hard to show that it doesn’t. It is true that just because Australia is three times wealthier than it used to be, Australians are not three times happier. But that’s a different point. Australians now live longer, have more to eat (perhaps too much!), are able to travel more, and do more, than was the case fifty years ago. That would seem to me an example of increased welfare. Anyway, Ian Lowe wants us to measure welfare in a better way, and I wait to see what that might be. There are apparently new candidate measures about to appear.
In the meantime, I remain puzzled about his whole speech. He takes the reality of the AGW scare for granted. Most don’t, and the government is backing away from it. He imagines that we are in an ecological crisis. That isn’t obvious. He talks about the ‘reckless growth’ of cities as though there is somebody, somewhere who should have put a stop to it at some time. He proposes an energy system that would be extraordinarily expensive and is presently unworkable. And he offers economic and taxation measures that would lead to the defeat as soon as possible of any government that tried to introduce them.
What was the point of all this?