Saturday, March 2, 2013

Simms solutions?

Andrew Simms, an important progressive economist in Britain, has a new book about climate economics, called Cancel the Apocalypse: the New Path to Prosperity

This is a welcome addition to the climate debate.

I have to say, I've been very disappointed by the lack of economic literacy and common sense in several of the prescriptions I've read from environmentalists recently, even quite famous and important ones, so I'm looking forward to reading Simms's book.

Simms is a Keynesian with training in ecological economics, which, regular readers will know, is what I think is the correct approach, or mix of approaches. There are very few folks in the economics profession who have this background.

Most ecological economists and quite a lot of climate campaigners want to abolish a good deal of private property and make a fair chunk of normal capitalistic activity illegal. They may not quite realize they want to do this, but this is the natural consequence of some of their prescriptions.

They need to think it through some more.

Here's an example. Suppose we came up with a policy prohibiting the use of coal in the US, desirable from a climate point of view? This would essentially abolish the value of a large amount of private property in US coal. It would also cause difficulty for industrial processes that use coal as in input in production, such as the steel industry.

Or a policy banning the use of tar sands in the US, again quite sensible from a climate point of view?

Is oil from Canadian tar sands as nasty a product as, say, illegal drugs from Canada? Probably, considering the climate damage, but it's very hard for the US to completely ban it, given current rules and regulations and the primacy of capitalism in general in both the US and Canada. What if the tar sands have already been refined and are essentially indistinguishable from ordinary oil products such as gasoline? Can they still not be imported? This would mean that every "Irving" oil truck (a Canadian brand with many outlets in Maine) that crosses the border would have to have chemical analysis to performed on the contents.

You see the difficulty.

I tend to think that taking steps like these might be reasonable and even desirable, but are unrealistic in today's political economy. Public opinion in the west, especially the US, Britain, Australia and Canada -- the countries with the strongest version of free market economics -- is not even close to taking steps this radical.

Even though I'm quite willing to admit that taking such radical steps might be reasonable, given the climate consequences, I don't think they are politically feasible.

I tend to think we will do better, faster, if we choose to work with the list of typical Keynesian measures: taxes, subsidies, encouragements to invest, and fiscal stimulus, but all targeted carefully to promote renewable energy and energy efficiency, and, of course, targeted carefully against high-carbon energy sources. Then we don't have to take on capitalism and climate change at the same time. We can use capitalism as an ally in the battle against climate change, not make it an enemy, as we seem to be trying to do now.

So I'm looking forward to reading Simms' book. In his article for the Guardian, linked above, Simms even cites Keynes' most important work (in my opinion), the short pamphlett  How to Pay for the War.

It's coming from the UK, so it will be a while. But I'll let you know.

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