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Libs left with Chinese model

December 3rd, 2009

I usually wait a day or two before reposting my Fin column. But the Liberal Party is such a rapidly moving target that this column, drafted on Tuesday, looks prescient in retrospect, but may well be obsolete by tomorrow.

Apologies in advance if this gets posted multiple times. The server is flaky, so I’m using Posterous which works, but sometimes too well. Please comment on the first (lowest on page) version.

Attentive readers of the Letters page may have noticed a letter from The Hon Wilson Tuckey MP (Quiggin sticks to problem not solution Letters 24/11). Mr Tuckey gave his account of a discussion of climate change policy held at Parliament House, organised by the Federation of Australian Scientific and Technological Societies Great Barrier Reef Climate Change Alliance, in which he and I took part.  As is usual in such cases, I had a rather different recollection of events. But, since Tuckey appeared to be, in Malcolm Turnbull’s words a fringe figure of the far right, I saw little value in responding.

Now, however, the situation has changed. As one of Turnbull’s earliest and most vociferous critics, Tuckey can consider himself vindicated by the decision of the Liberal Party to replace Turnbull with Tony Abbott, someone whose views on climate change are much closer to his own.

More significantly, as Tuckey himself has pointed out, the proposals presented on his website http://www.wilsontuckey.com.au now represent the closest thing the Liberal Party has to a climate change policy. It may therefore be useful to examine these proposals, and, in the process, to recapitulate some of the points I made during our meeting in November.

As was noted in Tuckey’s letter, I did not discuss the specifics of the government’s ETS policy, canvass alternatives such as a carbon tax, or speculate on the amendments being negotiated between the government and the then leadership of the opposition. The position presented by the Great Barrier Reef Climate Change Alliance was that a 25 per cent reduction in emissions was needed by 2020, and that a market-based emissions reduction policy should be the central approach. We did not seek to promote one market-based policy over another, and my answers to Tuckey’s questions reflected that.

I was however, quite happy to explain the merits of a primarily market-based approach as against a centralised command-and-control solution, in which governments seek to determine and impose by fiat, particular technological fixes for climate change. Within a market based framework, there be room for some policies, such as feed-in tariffs for solar energy, aimed at nudging decisionmakers to adopt new technologies. But the central element must be to ensure that there is a price attached to carbon emissions, whether through taxes or through tradeable permits.

A visit to Tuckey’s website reveals a different approach. Tuckey is an enthusiast for the tidal power potential of the Kimberley region, as indeed am I. Given the incentives associated with a high enough price for carbon, and reforms to the National Electricity Market to encourage more investment in long-distance transmission lines, there is huge potential in tidal energy.

But such an incentive-based approach is of no interest to Tuckey. Rather, he suggests ‘To respond to these problems the Government should take an up front role investing in and developing Australia’s only significant and predictable renewable energy resource which is to be found in the tides of the Kimberley.’

Tuckey also proposes extensive public investment in High Voltage Direct Current transmission lines, noting that ‘China will not have an ETS. It will invest in Hydro, Nuclear and other renewable energy. Its Government is already building an extensive HVDC network.’

There are strong arguments for a return to greater reliance on public investment in energy infrastructure.  But, in the context of a policy response to climate change, it is important to avoid ‘picking winners’. There are many candidate technologies for reducing our CO2 emissions, ranging from nuclear power and ‘clean coal’ to extensive investment in energy efficiency. 

The most cost-efficient way to choose options for emissions reductions is to ensure that investors in energy infrastructure, public or private, face a price for each tonne of carbon they emit, and earn a return for each tonne they prevent. If that is done, standard commercial criteria will select the most cost-efficient path.

Tony Abbott has effectively ruled out such an option. Having denounced the government’s emissions trading scheme as a massive new tax, he can scarcely embrace the main alternative, a carbon tax. On the other hand, he has committed himself to achieving the emissions reductions promised by Labor.

In these circumstances, the Chinese approach endorsed by Wilson Tuckey is probably the only feasible option. It is, perhaps, surprising that, having elected its most conservative leader ever, the Liberal Party may have to turn to the Communist Party of China for policy guidance. But politics makes strange bedfellows.

John Quiggin is an ARC Federation Fellow in Economics and Political Science at the University of Queensland.

Posted via email from John’s posterous

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  1. December 7th, 2009 at 16:26 | #1

    @Alice
    LOL. Numbers 1), 2) and 6) in one line.

  2. Alicia
    December 7th, 2009 at 16:39 | #2

    Alice, Jarrah laughs a lot but you can tell he’s humourless like all “libertarians” well as chronically illogical and a history-free zone.

    The way he/they grunt out the economic growth holy grail mantra reminds me of nothing so much as a pasty-faced gormless 8-10 year old altar boy circa 1950 in a god-forsaken parish in far-north Qld.

  3. Alice
    December 7th, 2009 at 17:45 | #3

    @Alicia
    Alicia – Jarrahs arguments for more economic growth, more economic growth are absurd, given it leads to higher populations which is one of our major problems (whic Jarrah just doesnt get) – our population growth is outsripping our ability for the earth to regenerate naturally – Jarrah hasnt a clue about the law of conservation or its implications. Not a clue. Instead he wants to keep pushing towards some future ideal where at a certain point, if everyone is economically better off we decide to have fewer babies. Just some idealistic future ideal, some utopia that the libertarians think they have all sewn up. Its a dream and they are dreamers. Dreamers extraordinnaire that have no inkling of current issues that confront us now. No, we dont wait for these dreams to magically arrive – we act now, to curb population growth, attack the putridity of our environmental damage and we curtail our energy consumption. Im tired of dealing with those who wear coloured glasses and cant see the trees we are losing and the damage we are doing while we wait for their nirvana to arrive. They are indeed delusionists in every sense of the word.

    Plus they cant even argue straight and honestly and decently and never admit they are or even might be wrong.

    You and I Alicia are dealing with fanatics in the guise of ALS types like Jarrah and Andy. Its hopeless to even engage them and I suggest we dont. They have no valid arguments and in fact are fringe dwellers even in the electorate. Pay no heed. We give them valid arguments and they scoff, twist and turn (and lie) and I will say this – they are nothing but obstructionists to real advance and its real scientific advance and real scientific progress we need right now, not these dreamers. I do not want my children or theirs to inherit a damaged environment.

  4. Chris Warren
    December 7th, 2009 at 19:41 | #4

    Jarrah

    That was an interesting restatement. But;

    - lower mortality due to economic growth is NOT good if it damages others

    - higher education due to economic growth is NOT good if the economic growth misallocates the benefits of higher education

    - longer lives due to economic growth is not good if others lives are shortened

    - Economic growth can cause more hunger and disease for others while benefiting a relative few.

    In general economic growth can lead to political and social disintegration, pollution, over crowding, depleted resources, corruption, increased Gini coefficients, and economic crisis.

    You can find increased poverty, disease and famine-like hunger in the Third World which has attempted to follow the Western model of economic growth. Opposite conditions have been created in the West – but on the backs of the less developed world.

    So presumably the questions for you are:

    - political disintegration for the sake of economic growth is bad, right?

    - higher education for the rich but not the poor is bad, right?

    - shorter lives due to economic growth is bad, right?

    - hunger due to economic growth is bad right?

    - disease due to economic growth is bad, right?

    You cannot make yourself happier or wealthier if, by so doing, others are rendered miserable and poorer.

    So, for large slices of the worlds population, economic growth in the West, is a disaster.

    More importantly, climate change is a product of economic growth and threatens almost the entire global population with unimaginable harm.

    The only way to keep what benefits from growth we have, is by not being too greedy and seeking more when this clearly damages the environment, possibly to life-threatening proportions.

    Economic growth is the problem – I see no other cause for artificial greenhouse gas emissions. If greedy economic growth did not produce artificial greenhouse gases – what did?

    So we need a new pattern of growth – sustainable growth.

  5. December 8th, 2009 at 11:30 | #5

    @Alice
    “No, we dont wait for these dreams to magically arrive – we act now, to curb population growth, attack the putridity of our environmental damage and we curtail our energy consumption.”

    What is your plan for doing so? I’ve asked repeatedly. You say my plan is utopian, but what’s your alternative?

    “Its hopeless to even engage them and I suggest we dont.”

    That’s fine by me. It will save me the pain of reading your apostrophe-free “twaddle”.

  6. December 8th, 2009 at 11:47 | #6

    @Chris Warren
    “In general economic growth can lead to political and social disintegration, pollution, over crowding, depleted resources, corruption, increased Gini coefficients, and economic crisis.”

    It can. Not always, but sure. These problems are not without solutions, though. And while they are some of the costs of economic growth, they have to be weighed against the benefits. Are you seriously suggesting that these costs are greater than the benefits?

    “You can find increased poverty, disease and famine-like hunger in the Third World which has attempted to follow the Western model of economic growth.”

    I think the evidence clearly shows this is not the case, though I suspect you are referring to certain specific economic policies and not economic growth itself, which is a completely different argument. And remember, even communism is a growth economy.

    “Opposite conditions have been created in the West – but on the backs of the less developed world.”

    A big claim. One I would dispute, but it’s not really the topic at hand.

    “More importantly, climate change is a product of economic growth and threatens almost the entire global population with unimaginable harm.”

    Yes, climate change is a product of economic growth. It is a serious problem, though not of a scale anything like your doomsday prediction. However, morally you can’t deny economic growth to those who need it – the developing world. I applaud your desire for “sustainable growth”, it’s what I want too. But what does that fuzzy concept really mean? What specific policies would it consist of?

    I would say that technological change is the biggest component, closely followed by regulatory change, meaning greater energy and resource efficiency and a re-alignment of incentives so that we’re not working at cross-purposes and externalities are taken into account.

  7. Alice
    December 8th, 2009 at 15:00 | #7

    @Jarrah
    And ETS not debauched by the liberals would be a good place to start if you want my opinion Jarrah on what we need to do about it “now”. Capping coal exports and reducing subsidies to big coal is another place to start. Take them off the public teat and let the jobs flexibly go elsewhere.
    I but I forgot – you dont believe in global warming or that man is damaging the environment with his production do you Jarrah?

    Thats a genuine question. Do you believe in AGW?

  8. Philomena
    December 8th, 2009 at 15:17 | #8

    The birth rate of Australian Aborigines is significantly higher than that of the rest of the population and they are the poorest group with the worst life expectancy, health, lowest educational levels, living in the worst housing, with the highest unemployment rates, etc.

    Their relative birth rate will continue to rise not least because the Aboriginal population is increasing and is on average a lot younger, the latter being a factor which in itself will continue to boost Aboriginal birth and fertility rates.

    Economic growth that is based on a fundamentally unequal system of economic production, distribution and exchange and social dysfunction will always fuel population growth through higher birth rates among the groups most under pressure (where it doesn’t kill off large numbers of them/us through famine, ill-health, disease, war, catastrophic effects of climate change on food production, water supply, etc). As the world becomes more crisis-ridden and environmentally degraded tendencies towards population growth will become more pronounced precisely within those nations, groups and peoples that feel most threatened by perceived de-population.

    Birth rates significantly increased in many parts of Europe following the outbreak of WW2, a trend that continued for several decades to the astonishment of mid-century demographers who thought they’d been a stabilisation of birth-rates.

    Not so surprising though. The automatic, instinctual response of every species threatened with destruction is…excessive reproduction! It’s a fundamental fact of ecology.

  9. December 8th, 2009 at 16:18 | #9

    Alice,
    Just in case you think it a recent phenomenon (and apologies for the somewhat antiquated language):

    Poverty, though it no doubt discourages, does not always prevent marriage. It seems even to be favourable to generation. A half-starved Highland woman frequently bears more than twenty children, while a pampered fine lady is often incapable of bearing any, and is generally exhausted by two or three. Barrenness, so frequent among women of fashion, is very rare among those of inferior station. Luxury in the fair sex, while it inflames perhaps the passion for enjoyment, seems always to weaken, and frequently to destroy altogether, the powers of generation.

    Adam Smith, 1804.

  10. Alicia
    December 8th, 2009 at 18:17 | #10

    No need to apologise Andy, you’re not Adam Smith, you’re dull old risk managing Joe Blow who has never had anything either original or outre to say in his entire life if your blog comments are evidence of your capabilities!

  11. Alice
    December 8th, 2009 at 18:57 | #11

    @Alicia
    Agree Alicia. So Andy thinks the entire globe can be turned into gated enclaves of barren elites huh?? So who does the laundry Andy? The surrounding deserts of the ultra fertile poor?.

    Your ideas suck Andy. We can do better, much better than that. The deserts of the poor get restless and your barren rich might soon just be hauled out of their comfortable castles and guillotined when it comes down to the matter of the poor eating and feeding their children (offspring of fertility Andy).

    You need to have a reality check.

  12. Alicia
    December 8th, 2009 at 19:25 | #12

    Alice, you just have to go to Miami, Los Angeles or Las Vegas to see who lives in the gated communities and who does their laundry. No coincidence the viagra-gobbling gated ones are white mostly – and male – and the virile illegals and refugees servicing them are brown and black. Actually, that’s a demographic trend loads of even white US women happily live with and encourage so we’re told, even help along if need be.

    Solely in the national interest, of course.

  13. December 9th, 2009 at 11:32 | #13

    @Alice
    “I but I forgot – you dont believe in global warming or that man is damaging the environment with his production do you Jarrah?

    Thats a genuine question. Do you believe in AGW?”

    Gosh, you really haven’t been reading anything I’ve written on the subject, have you? Or is it that your comprehension skills approximate those of a 5-year-old? Right here on this blog I’ve stated my position on AGW – warming is real, its main cause is human industry, and it is a threat that should be dealt with.

    I note that your proposals might do a little to slow AGW, but I fail to see how they will “curb population growth, attack the putridity of our environmental damage and we curtail our energy consumption.” Apparently you’re happy to attack my ideas, but don’t have any of your own.

  14. Alice
    December 9th, 2009 at 12:02 | #14

    @Jarrah
    Jarrah – your only “solution”??? to AGW is to ramp up economic growth as far as I can ascertain….please dont take half a page to tell me why it will work. Im having a nap after my swim (anything but another ALS essay on crazy ideas that will produce global Utopia)

  15. Chris Warren
    December 9th, 2009 at 13:14 | #15

    Jarrah/Alice

    Surely the issue is the “form” of growth. Growth based on population growth, or growth in per capita debt, or on growth in resources, seems both illogical and in the end ruinous.

    But growth based on improved standards of living, even with a declining population, no credit growth, and stable or reduced consumption of resources seems far more reasonable and moral for future generations.

  16. December 13th, 2009 at 13:04 | #16

    Sorry to drag this thread up again, but while I was browsing a completely unrelated matter, I came across these interesting and illuminating and illustrative statistics that I believe support my view that economic growth coupled with technological and regulatory change are going to be the best path to sustainability and prosperity:

    “In 2006, the US used 48% less total energy to make a dollar of GDP than in 1975, 54% less oil, 64% less directly-used natural gas, about two-thirds less water.” – Amory Lovins, eco-engineer and efficiency expert.

    http://video.popularmechanics.com/services/player/bcpid1213908606?bctid=1233423657

    And I can’t resist:
    Alice says “please dont take half a page to tell me why it will work.”

    Aw, diddums. Did I exceed your attention span? Am I interfering with your nanny nap? If you find it too hard to bother understanding your opponent’s arguments, then you have no right to insult or dismiss them.

  17. Alice
    December 13th, 2009 at 13:38 | #17

    @Jarrah
    Jarrah says “And I can’t resist:
    Alice says “please dont take half a page to tell me why it will work.”
    Aw, diddums. Did I exceed your attention span? Am I interfering with your nanny nap?”

    No Jarrah – you fell short of satisfying either my interest span or my intelligence span.

    I cant resist either.

  18. Alice
    December 13th, 2009 at 13:59 | #18

    @Jarrah
    Furthermore Jarrah if you want to believe Amory (Who?) Lovins…matter for you.

    Jarrah – real data – not just Mr Amory Lovins thoughts from Bouldersville Farm.

    http://www.eia.doe.gov/emeu/aer/petro.html

  19. December 13th, 2009 at 14:13 | #19

    “Amory (Who?) Lovins”

    I’m happy to help you transcend your ignorance any time, Alice.

    http://en.wikipedia.org/wiki/Amory_Lovins

    “Lovins worked professionally as an environmentalist in the 1970s and since then as an analyst of and advocate for a “soft energy path” for the United States and other nations. He has promoted energy efficiency, the use of renewable energy sources, and the generation of energy at or near the site where the energy is actually used….Lovins has received ten honorary doctorates and won many awards….Harvard…Oxford…about a decade as British Representative for Friends of the Earth…His next major work was co-authored with John H. Price and titled Non-Nuclear Futures: The Case for an Ethical Energy Strategy (1975)….fostered efficient resource use and policy development that they believed would help make the world secure, just, prosperous, and life-sustaining….served in 1980-81 on the U.S. Department of Energy’s Energy Research Advisory Board….His visiting academic chairs in the U.S., Canada, Switzerland, and China most recently included a MAP/Ming visiting professorship in Stanford University’s School of Engineering….advocates “soft energy paths” involving efficient energy use, diverse and renewable energy sources, and special reliance on “soft energy technologies.” Soft energy technologies are those based on solar, wind, biofuels, geothermal, etc.; matched in scale and quality to their task; and widely accessible across society….received the World Technology Award, the Right Livelihood Award (“Alternative Nobel”), the Blue Planet and Volvo Prizes, the 4th Annual Heinz Award in the Environment in 1998[16], and the National Design (Design Mind), Jean Meyer, and Lindbergh Awards. He is also the recipient of the Time Hero for the Planet awards, the Benjamin Franklin and Happold Medals, and the Shingo, Nissan, Mitchell, and Onassis Prizes. He has also received a MacArthur Fellowship and is an honorary member of the American Institute of Architects (AIA), a Foreign Member of the Royal Swedish Academy of Engineering Sciences, and an Honorary Senior Fellow of the Design Futures Council. In 2009, Time magazine named him one of the world’s 100 most influential people.”

  20. Alice
    December 13th, 2009 at 14:37 | #20

    @Jarrah
    Ok Jarrah – you got me on Amory Lovins. Ill concede you a point …but I will ask the question – where exactly do Amory Lovin’s stats come from…and you dont know. Its a bit hard swallowing peoples off cuff comments when they are also selling their own private business interests Jarrah, just because they say so doesnt make it so. He may be more credible than some but there are so many delusionists and spin merchants out there and I still find those stats interesting to say the least.

    Meanwhile global warming continues despite these interesting market based solutions. Perhaps we need regulation to compel people to adopt more of Lovin style ideas? Because the market alone isnt making it happen on its own (reductions in agw) fast enough Jarrah and in fact quite the reverse – its getting warmer (despite your stats). Your solution of more economic growth as a cure for AGW is still a nonsense and I am not sure exactly how you are linking your original idea of more economic growth as a cure, to this link you posted.

    Lovins is talking about better production methods and innovative solutions here, not more growth.

    Now Im going to the beach to cool off. Its Sunday and I was being damn lazy not checking your source and you got me (for once!!!!), Consider yourself lucky Jarrah. It doesnt happen often.

  21. nanks
    December 13th, 2009 at 16:37 | #21

    @Jarrah
    thanks for the links and the mention of Lovins – obviously tech is way more efficient now, however is GDP measuring the same thing from 1975- 2006. In other words are the various components of the gdp measure in the same proportions across that time span. I’m guessing that stuff like financial services will make up a fair slab of that figure in 2006 compared to 1975 and that manufactures will make up proportionately less. So one would expect lower energy usage if that were the case. But I’m no economist and maybe my reasoning is way off the mark.

  22. December 13th, 2009 at 19:43 | #22

    @nanks
    It’s a good point, nanks, and you’re not wrong. Someone (I forget who) made a study of US GDP over time and found that today’s GDP physically weighs less than that of decades ago, reflecting the change from manufactures to services.

    This also ties in with my preference for greater economic growth. As I have said before, this shift from agriculture to manufacture to services to the quaternary sector is driven by (and perpetuates) economic growth. Competition drives efficiency gains (and if it doesn’t, look to perverse incentives from regulatory failure) as well as economic growth – so preventing competition (a standard Left tactic due to the fear of economic dynamism) is counterproductive in multiple ways.

    So Alice, you are right that things are going to get worse before they get better, but I’m yet to see any proposal that is any improvement on grow/improve.

    “Perhaps we need regulation to compel people to adopt more of Lovin style ideas?”

    I don’t think it’s necessary. Lovins doesn’t either!

  23. nanks
    December 13th, 2009 at 19:56 | #23

    @Jarrah
    my concern here – as often – is with the blindness of nationalism or delimited group membership. Consider a global economy that only had services – ie everyone had ‘grown’. Clearly it could not function. Can you show how it could – if not, then surely you are limiting (spatially/demographically) growth and its benefits under your proposal?

  24. Chris Warren
    December 13th, 2009 at 20:00 | #24

    Jarrah

    You have missed the point.

    Only “fair” competition drives efficiency. Also this is just economic efficiency, not necessarily social efficiency.

    In other words you can get greater economic efficiency, but at the cost of social justice.

  25. December 13th, 2009 at 20:26 | #25

    @nanks
    “Consider a global economy that only had services – ie everyone had ‘grown’. Clearly it could not function.”

    Obviously that’s a strawman argument. Economic growth is characterised by a reduction in human effort going towards lower orders of economic activity to a point >zero, not an elimination. Though it’s certainly possible that a technological breakthrough, perhaps in nanotechnology, would create a world where the manufacture of anything at any scale was possible at virtually zero cost. The post-scarcity economy, if you will. That really would upend all our socio-politico-economic paradigms! But such imaginings are fanciful and not worth dwelling on when considering future public policy.

  26. December 13th, 2009 at 20:30 | #26

    @Chris Warren
    Chris, you are employing weasel words and handwaving concepts. If you expect me to respond, you’re going to have to get specific.

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