So, OK, the French peeps are out in the streets shouting at their betters in the government. This must be the morning then. And yet there’s an interesting idea underneath all of this. What is it that these riots can tell us about climate change? The answer being that perhaps we shouldn’t be doing anything about it?
Sure, we know why the diesel taxes were raised – in order to be a Pigou Tax against climate change from CO2 emissions. Fine. Good way to do it, the right way even. And yet les choufleurs don’t seem to be in favour of this. What does that tell us? Well, actually, it tells us that the discount rate is too high.
The protesters are known as the “gilets jaunes” (yellow vests), because they have taken to the streets wearing the high-visibility clothing that is required to be carried in every vehicle by French law. Their core complaint is a hike in diesel taxes. President Macron says his motivation for the increase is environmental, but protesters call him out of touch – particularly with non-city dwellers who rely on their cars.
The basic thing about climate change is that if we considered it as we do other human decisions then we’d do absolutely nothing about it. The costs are so far into the future the benefits of doing nothing so immediate, that that is the entirely rational thing to be doing. That’s if we use normal market interest rates – which are themselves just the way that you and me in aggregate value that present and that future.
So, in climate change, we don’t use market interest rates. We use a lower discount rate. This probably does make sense. We’re not a notably long lived species, the thought of the great grandkiddies drowning in the superheated water from the ice floes isn’t something that greatly motivates. But society will be around, the species will be – probably – so perhaps we should have that different and lower discount rate for societal or specieist decisions? Which is what we do.
If we used market interest rates in this calculation then the extra tax for climate change would be a cent per litre. Something that no one would even note. We don’t, we use lower rates, meaning that the taxes are 10 and 20 cents – extra, note, over and above normal fuel taxation – per litre.
At which point, great, we’ve solved climate change. Except, except. We’ve done this by ignoring what the people think on the matter and used the value judgements of the sort of people who write academic papers and those who set fuel taxes. And that’s not really how this democracy thing is supposed to work, is it? Instead, it’s what we the peeps say, our values, which should predominate. At which point we get the riots in the streets over the imposition of the correct climate change tax. So, obviously enough, the peeps don’t think that is the right rate for the climate change tax. And the peeps should win too.
If people riot against climate change policies and taxation then perhaps the correct climate change policy really is nothing? They are making it pretty clear that they don’t like not having climate change after all, or at least paying to not have it.