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Moving money in the economy

More on climate policy in the Dem debate

Posted by David Roberts at 10:24 PM on 06 Jan 2008

Responding to some of the comments on Dot Earth:

Obama is right that a cap-and-trade program with 100 percent auctioned permits would be the functional equivalent of a carbon tax. Yes that does, in Richardson's rather daft phrase, "take money out of the economy," in the sense that any tax does. Happily, the other half of Obama's plan is to plow the money right back into the economy, reducing the financial hit on the working class, supporting renewable energy programs, and creating green jobs programs. The effect will not be to remove but to move money in the economy, from traditionally favored fossil fuels to efficiency and renewables.

Also, Clinton was exactly right to make the pivot she did. Americans are concerned about the economy, and as long as they think climate policy is all "sacrifice" they won't support it. Until a candidate makes the case that an aggressive climate/energy program can revitalize the economy, the cause is doomed.

grand vision

but a hope a prayer will not get enacted

at a minimum, the public needs to see some confidence builders that green energy works

I think it is possible, but very specific proposals to help specific technologies need to be identified (limited number), and support organized

as for the "kill coal" agenda (ie., 100% auction), it will not even start to be feasible for at least 10 years, and you are buying yourself a lot of staunch opposition if you insist upon that fight now

Coal and auctions

100% auction need not be a "kill coal agenda." The price of emission credits will depend on the overall cap chosen. It could well be that the cap is set well above a sustainable level of emissions to begin with, then declines dramatically over the course of decades.

Auctioning all permits is necessary for economic efficiency. A permit auction ensures that emissions will be cut in order from least to most costly. Granting special exemptions for certain industries will distort those incentives, maintaining some emissions that would be relatively inexpensive to abate.

There is also a critical fairness issue. A general system of auctioned credits would create a level playing field, not 'target' certain dirty industries as their promoters argue. Nobody has the right to pollute and impose ecological harms on others. The idea that the coal industry - or any other - has an inherent right to emit must be opposed for reasons of fairness and environmental effectiveness.

a sibilant intake of breath

A proposal for passive spectatorship

Until a candidate makes the case that an aggressive climate/energy program can revitalize the economy, the cause is doomed.

Revitalize the economy?  How much power do the politicians have over that?  Economic "vitality" was, for the most part, a matter of US manipulation of its global reserve currency, the almighty US dollar.  I suppose they could hand out large cash grants to Americans in order to balance out an economy in which a rich few own practically everything and the rest of us are debt peons.  What those cash grants would be worth in light of the sinking value of the dollar on currency exchanges is beyond me.  Such a move would, moreover, be against the special interests who want us to be participants in a cheap labor pool.  These are the folks who buy your politicians.

At any rate, the real economic picture is one of declining real growth rates over the long run.  From William K. Tabb:

Real global growth averaged 4.9 percent a year during the Golden Age of national Keynesianism (1950-1973). It was 3.4 percent between 1974 and 1979; 3.3 percent in the 1980s; and only 2.3 percent in the 1990s, the decade with the slowest growth since World War II. The slowing of the real economy led investors to seek higher returns in financial speculation...

(I did, btw, request this paper from Tabb himself, and these statistics are calculated off of one of Angus Maddison's OECD compendia.)

Within this decline-and-fall trajectory, the US role within the global economy is that of the consumer of last resort.  Remember, dollar hegemony implies an economy in which "world trade is now a game in which the US produces dollars and the rest of the world produces things that dollars can buy."  Aggressive climate/ energy programs, however, imply less consumption and less production.  So, yeah, climate change is likely to be a tough sell.

Actually, it's even stricter than that.  An effective program would imply an absolute prohibition on certain types of energy production -- the reasoning being that if you keep the grease in the ground, people won't use it, whereas if you bring it up and refine it, it will be used, and if it's used, you get more climate change.  And that runs directly contrary to the profit motives of the oil companies, which buy the politicians.  I myself would start with a total ban on coal mining, enforced worldwide.  If China doesn't like it, let's pay them a subsidy to keep quiet about it.

On the other hand, if we are altogether too shy of offending the politicians and their sacred allegiance to the economic system, neoliberalism unto death and all that, we could just wait until abrupt climate change wrecks the capitalist system as a whole.  (Look, for instance, at the chapter of Mark Lynas' Six Degrees titled "Five Degrees" for greater detail.)

At any rate, when capitalism is dead (taking with it, say, about 2/3 of the human race), we (or, rather, those few of we who are still around) can then begin to think about ending the economy based on commodity production, and creating an economy based on Joel Kovel's notion of "ecological production" -- production that intentionally produces its ecosystem substrate.

http://www.dailykos.com/User/Cassiodorus

It's the economy...

...Stupid.  Remember who said that?

The FDR-like economic stimulation of an energy revolution.  And the lower energy prices, food prices, and lower inflation of a renewably powered economy.  That is the political message that can work against pub proclamations that a green revolution is too expensive.

As with the great depression, that prevailed when FDR took office, this new recession can only be ended with a change of direction.  More of the same status quo "free" market fall into run away inflation won't do.

http://amazngdrx.blogharbor.com/blog

How limitless is planet Earth?

The FDR-like economic stimulation of an energy revolution.

Big diff -- FDR's economic stimulus was World War II, remember, and it resulted in vastly increased consumption across the board.  Is that's what's supposed to save the world from abrupt climate change?

And the lower energy prices, food prices, and lower inflation of a renewably powered economy.

  1. Under capitalism, energy prices will only go up, and up, and up, until they are high enough so that the oft-paraded "alternative energies" become market-competitive.  And at that point we will be stuck with an old, expensive, and fossil-fuel-dependent infrastructure that will be rather expensive to get rid of.

  2. Food prices will also go up, as fossil-fuel-based fertilizers become more expensive with the increased price of oil.  Maybe after we do away with capitalist agriculture food will be cheap again, but that doesn't matter now to the poorest 1/8 of humanity who can't afford enough food, and it won't matter then, either.

  3. At this point, inflation is a matter of how quickly the Bank of China and other big dollar-holders (the Chinese hold about $1 trillion in dollar-denominated assets) unload their dollars... the Fed needs to keep interest rates low to keep certain debtholders afloat, so that feeds inflation too... meanwhile, the Bush administration keeps spending and spending, cranking more and more money into the economy, and unless Kucinich or Paul becomes President it looks like another big (military) spender will take the helm in '09, too... don't see how energy is going to change that...

The problem is that the politicians are wedded to an economic model that is fast becoming obsolete.  

http://www.dailykos.com/User/Cassiodorus
Not just politicians...

LegumeSam said: "The problem is that the politicians are wedded to an economic model that is fast becoming obsolete."

Two comments. 1) the model was always obsolete which is why we have problems today. 2) Most people buy into the model because a] it's what everyone else buys into so no one needs to think about it; and b] it's what make us feel good about being greedy (e.g. getting raises) and consuming more stuff (I'm entitled).

The politicians won't/can't divorce themselves from the model until the people understand that it is killing us. Now, how likely is that?

George

George Mobus, Associate Professor, Institute of Technology, University of Washington Tacoma, and Professional Student for Life

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