We’ve the usual blathering from over to our left of how we really can mobilise all of society to beat back the terrors of climate change and…..sigh it’s the same old rubbish, isn’t it. We do indeed have a chronic problem which all of the relevant science says will take a few decades to deal with, the best method of doing so being a carbon tax. Get that on and leave well alone.
There are simply far too many who just want to radically change society willing to use this as the lever with which to do so. Rather than, you know, actually consider the actual solution to the problem being stated. And it is me being reasonable here. Last year’s Nobel Laureate, Bill Nordhaus, worked on this for decades. Nick Stern’s report comes to the same conclusion. Add carbon tax, wait a couple of decades, she’ll be right. That’s actually the settled science of climate change.
But of course there are always people who don’t get the message. Like the Senior Lecturer at Islington Technical College:
My argument is that debt can pay for the Green New Deal. This will be debt that might be funded by pensions and ISAs in the UK because I suggest that the conditions attached to these should be changed to prioritise GND related saving given the importance of the issue. There is good reason for doing so. There is very compelling evidence that most saving in the UK is tax incentivised. Pensions and ISAs completely dominate this market. And I do not think that requiring a GND component in either will change that. The result would be that reforming tax incentives could, as I have shown, mean that the required debt to fund the GND could be raised.
No, this is simply drivel. As it always is of course, our task being only to find out why this specific outpouring is drivel.
So, why drivel?
Because our basic problem with climate change is that dealing with it is not privately profitable. It is publicly profitable which is exactly what the problem is.
Think it through. That basic environmental problem is that people gain the benefits from their emissions but don’t have to carry the costs. They are externalities to market prices. So, now we invest in reducing emissions. But the benefits of reducing them are a public good, not a private one. And we all know how difficult it is to profit from the production of public goods. We can’t in fact so profit. Thus it’s not where pension money should be invested.
We could – and probably should – create the environment where the production of that public good does in fact make a private profit. One way is to bring in what all economists say we should do anyway, the carbon tax. Cap and trade would also work, so would more targeted subsidies and premiums etc. Those latter would work in the narrow sense used here – producing private profit from the production of the public good. But then we don’t need special mobilisation of pensions funds, do we? We’ve just made emissions reductions profitable, we don’t need to do anything else, greed will take over.
We can’t push pensions into funding emissions reductions when our basic underlying economic problem is that private investors cannot capture the public value of emissions reductions. And once we have made private profit from emissions reductions possible then we don’t need to push pensions into funding it all.
But then, you know, Islington Technical College….