Alternative carbon policy

Every now and then – just for kicks – I like to play armchair senior public servant and imagine alternative policy. I’ve struck on what I think is a pretty good alternative carbon policy.

Now, not being and actual senior public servant, I don’t have access to Treasury advice and am thus liable to get some terminology wrong. I’m not sure if this is an emissions trading scheme, or if it’s a carbon tax. It is the bastard love child of carbon trading and the GST.

It seems there are three criteria that a good carbon policy has to fit:

1. It needs to work in some reasonably intuitive way, and do so efficiently.
2. It must attend to the real or imagined threat to “trade-exposed” companies.
3. It must not harm Aussie battlers.

Now, Rudd’s policy initially hit points 1 and 3, but completely missed point 2. In order to fight back on point 2, Rudd watered the policy down. Now it misses point 1.

Abbott’s policy really doesn’t address any of the points above. It’s targeted at an alternate policy problem: how to win elections.

My alternative – let’s call it a Wholesale Carbon Levy (WCL – need something snappier?) – works this way. “Wholesale” carbon emitters – coal miners, oil wells, importers, farmers, etc – buy a certain number of carbon permits. That’s the carbon trading part. No mystery there.

“Wholesale” carbon emitters then pass that cost on to their customers (retail carbon emitters – power plants, petrol stations, financial services companies), but they pass it on as a separate item on any invoice or receipt. Using existing GST infrastructure (software etc), retail carbon emitters are able to pass this forward to their customers, and so on. That’s the GST part.

So far, so bad. The twist is that the ATO will allow a company to tax-deduct any WCL-amount on any goods and services sent overseas, until such time as a binding global agreement is reached.

This addresses the three points above:

1. Only so many carbon permits are available. Therefore, carbon emissions are reduced. Same as any ETS.
2. Trading-exposed companies are reimbursed for any WCL amount, and so business has little cause for complaint (assuming GST infrastructure can be used easily.)
3. Naturally, part of the additional revenue from the WCL would be directed to income tax cuts for Aussie battlers. As with every policy, weak points can be hidden behind tax cuts.

I’d very much appreciate any criticism the internet can muster. Suggested starting points: the stunning lack of originality (references please), or how it will cripple Australian farmers.

What it is to be good

Prelude

In a previous life, I was a philosopher. Not a terribly good one, but certainly keen. One thing that some philosophers like to talk about is pre-philosophical intuition. That’s what you think before you start thinking. You can jot it down, and then go away and think. Once you’ve thought, you might see things differently, or you might see things the same.

Now some would argue that your pre-philosophical intuition isn’t worth a whole lot. A belief has no value unless you have a theory backed by evidence to support it. They might start saying things like ‘knowledge is a justified true belief’; the sensible conversationalist will disengage.

Others will argue that a philosophy that clashes with deeply held pre-philosophical intuitions cannot possibly be right. These intuitions tell us something important about the world. Any theory or evidence that would force us to throw them away must be wrong, incomplete, or misunderstood.

Like most people, I’m somewhere in between. Intuition can tell us useful things about the world, but I wouldn’t trust it as much as Malcolm Gladwell. And reasoned theories supported by evidence are to be aspired to, but there’s only so many hours in the day. (If I had my notes in better order, I’d talk about the role belief plays in all rational thought. For now, I’ll leave that as an exercise for the reader, or a future self – links most welcome!)

Good people do good things

Where’s all that leading? To my pre-philosophical intuition about personal morality, of course. As I mentioned, I was a philosopher in a previous life. As I also mentioned, I wasn’t very good at it. Thus, my pre-philosophical intuitions are by and large intact. My basic intuition is that that a good act is one that makes the world a better place. A good person is someone who does good acts. A bad person is someone who doesn’t.

Simplistic, yes. But perhaps also instructive. Now, it’s vague, but on this measure, I would have to say that I’m a bad person. Don’t get me wrong – I don’t do horrible things. It’s just that I don’t particularly do things that make the world a better place. Certainly, I could tweak this standard here and there to get a different result. I could put together a wonderful argument that its the height of arrogance and naivety to say that everyone should make the world a better place. What about the world’s poor? Are they bad people simply because they don’t have the opportunity to change the world for the better?

I would have to concede that those are good arguments; that they invalidate my intuition. Yet despite that, I still feel that there’s something to the intuition. It tells me something important about the world. Any argument that would force me to throw it away entirely must be wrong, incomplete or misunderstood. And so I keep this intuition around as a measure for myself, even if it’s not ready to share with anyone else (except you, internet.)