The most viable solution is to harness the consumer economy to combat climate change. Do this by imposing of high carbon taxation on locally consumed goods and services. In concert with consumption tax reduce the size of the state to maximise the amount of consumer driven change possible.
Western capitalist societies dominate the worlds economy and are consumer driven, not production driven. The thinking behind Kyoto and Cap'n'Trade is that limiting production will drive the economy to a low carbon future - this fails. The refusal to address the causes of crisis with the most powerful driver to a solution is killing the planet. We need to empower consumers to make changes to the global economy and fight climate change this has become imperiative, because we have suffered years of Kyoto driven pollution.
We embarked on the disastorous Kyoto derived Cap'n'Trade pollution generation process for two self-serving reasons. The Green movement has been captured by the political Left who are very much against relying on consumer driven solutions, because ultimately such solutions require empowering consumers and reducing the state. The movement arose in the consumer society democracies of the West where the imposition of high consumer taxation was not going to be popular and so the Kyoto process of Cap'n'Trade was born to shift costs elsewhere. Cap'n'Trade is an effort to create a global market in pollution that will spread the cost across the globe, through trading imposed costs on production.
Cap'nTrade will not be adopted worldwide as China, India, Indonesia, Malaysia, Brazil, Vietnam are developing countries who have production driven economies and cannot afford production cost increases. The developing world citizens are less than keen to endure poverty as the solution for a problem caused by the developed world. (Even if Cap'n'Trade were to be adopted worldwide it could only ever be a second best solution, because of the arbitrariness of how the Caps are assigned it will never be the most efficient way to run a planet.) Without a global market Kyoto/ETS/Cap'n'Trade has served to drive production to the developing economies and consequentially increase pollution - Kyoto kills the planet faster than doing nothing at all. The Cap'n'Trade attempt has failled, as it was always doomed to. Al Gore is part of the problem, not the solution and we need a new direction.
The solution now is to do what we should have done in the first place - use the most powerful economic tool at our disposal to confront climate change. We are consumer driven democracies, we must empower consumer growth in enviromentally sustainable pathways - we must give consumers more access to wealth and tax pollution to Jupiter. We should leave production well alone to be freely responsive to consumer demand, there should be no targets set.
The pollution taxation should be as high as we can possibly make it, as high as our economy can stand. This taxation rate should be higher than the costs imposed by a Cap'n'Trade, but it will differ in positive ways. Taxation should be in the form of a Value Added Tax cummulative pollution ultimately charged to the domestic consumer. Equivalent pollution tariffs to be charged on imports and the taxation requirement stripped from exports - standard VAT procedure. Thus our productive economy is unharmed able to adapt quickly to changed demand, whilst our consumers are directly aware of the saving to be made by reducing the amount of pollution they buying will create that demand.
Since the new taxation regime will couple consumer driven change to saving the planet we need to maximise the amount of consumer involvement. This means reducing the size of the state, because the state is not a consumer since its funding mechanisms (taxation and borrowing) are immune to the effect of consumer taxation. This means cutting current non-pollution taxes by lots, slash them by half or more. Get rid of all non-essential state enterprises and move state employees to the private sector. Institute school voucher programs and sell state schools. We need to motivate as much of the economy as possible to save the planet as quickly as possible.
Welfare programs could be increased to cope with the additional demand pollution taxation places on the poor, but make sure these programs are asset tested (to avoid funding anyone wealthy - transform such things as affirmative action to be for poor people only). Pension payments should be increased, but again asset tested otherwise we will just be subsidising wasteful behaviour.
The best solution to climate change is to adopt small government and maximise the strength of the private sector. Climate change catastrophy is imminent we need to act now.
Labels: climate change, ETS, NLG
