The polluted hand of the market
Well, petrol is at a record high today, as I’m sure you are all aware, but one person welcoming the news is hybrid car dealer Stephen Pollard, who is featured in this Herald story.
David Farrar is holding this up as an example of how the invisible hand of the market always works. I’m glad to hear that he’s thinking about buying a hybrid (he could also consider a Honda Jazz like Jeanette and Sue B, which is equally efficient), but I’d like to contest his implication that the market works and that everything will come out in the wash.
He’d be correct if all the true costs of goods and services - including environmental costs, food miles, carbon impact, greenhouse emissions and so on - were included in their price, but for most consumer good this is not the case, which has allowed market forces to wreak environmental havoc.
April 12th, 2006 at 1:29 pm
True costs indeed… including the price of carbon which needs to be facilitated by Govt.
We simply need to be more aware about what we endorse as consumers. Mr Farrar is right in so far as the power of the dollar is the key to consumer society, but we’re kept in the dark with regard to far too much consumer information.
You may wish to take a look at my blog entry from last month at http://shoppingfix.blogspot.com/2006/03/stink-my-ride-car-is-most-like ly-one.html
Its an environmental attempt to cut to the chase of the new car market in NZ. Take a look at who got my tick…
April 12th, 2006 at 1:35 pm
I’d have been more impressed that if instead of misquoting DPF you’d mentioned that people rail traffic in Auckland has hit record highs (source: TV1 news this morning), and musing if this is a shift to public transport as a result of rising fuel prices. (I was going to say high fuel prices, but they aren’t - yet)
April 12th, 2006 at 7:53 pm
is that crude oil at a record high as well as NZ petrol
http://tinyurl.com/8c9ab
April 12th, 2006 at 9:39 pm
$70 is the physcological barrier for the traders.
It’ll be interesting to see where the price goes this summer.
Have you heard of Agric’s law re crude prices ?
April 13th, 2006 at 9:43 am
“He’d be correct if all the true costs of goods and services - including environmental costs, food miles, carbon impact, greenhouse emissions and so on - were included in their price, but for most consumer good this is not the case, which has allowed market forces to wreak environmental havoc. ”
OK, well let’s start doing the same for health and education, which you wont agree with - let’s start charging people for the positive externalities of economic activity, like how their property values increase when business in an area grows or if an investor takes rundown land, cleans it up and builds something people want there. There are positive externalities - enormous ones - from private investment. If I repair, refurbish my house, get rid of noxious weeds and add substantial value to the property, it benefits many others - but they don’t pay me for that. The multiplier effect of new inventions rarely compensates the inventor for anything like the positive externalities from the product.
If you believe all goods and services should be charged to consumers at cost - then stop taking money from some consumers to pay for other consumers, and start charging for the full benefits. Externalities work both ways, which is why - fundamentally - they are meaningless, once you pay the full costs and full benefits, you may as well not bother.
April 13th, 2006 at 10:00 am
Give me one good reason why I should pay for carbon emissions when China dn the USA are not.
Alternatively, give me an alternative that doesn’t diminish my quality of life, and I’ll gladly take it. Fast, frequent electric trains spring to mind.
The Greens should focus on the macro issues- no-one is against a decent electric rail network; everyone is against a bunch of extra taxes on fuel.
Oh and how about a coal gasification plant for Auckland electricity? The great thing about coal gasification is that you can control the emissions…
April 13th, 2006 at 10:40 am
Well, I’m glad hybrid cars are becoming popular, in terms of reduced greenhouse gases — but they don’t address the main car-related problems -
It takes a vast amount of energy to manufacture and distribute cars to the saleyard. Cars of any sort (green halo or not) still kill people in car crashes, and they still cause congestion, and they still don’t give you the health benefit of exercise. They still require vast amounts of land for motorways and parking, like the gas-guzzling variety. People will still use them to drive to the dairy when they could really do with walking or cycling…(around 60% of car trips in NZ are still under 6km, a very easily bikeable distance)
And so on…
Get on your bicycles, folks!
see http://www.can.org.nz
cheers
Sally
April 13th, 2006 at 10:45 pm
The invisible hand is infallibly correct and efficient IN RETROSPECT, it is incredibly fallible and inefficient when prevention and prediction are required.
Since nobody on the right has any interest in preventing anything until it has already happened, the problems of the future go unanswered and the quality of life OF OUR CHILDREN will be diminished by their stupidity.
UK-Kiwi… if we don’t embrace a market solution, even one that is pushed into being by government intervention to PUT a price on the damage we do, then there is NO chance that the US will be able to generate the political will to do so. However, there is a more important legacy I leave to my children, and that is that I did MY best to mitigate the problems to them.
That obligation is NOT dependent on the willingness or lack thereof, of ANY other person to do their duty to future generations. My decisions and my responsibilities are MINE, and responsibility is something you TAKE. It can’t be thrust upon you. There are people in the USA who are trying to turn it around, but if “clean green NZ” isn’t willing or able to meet its obligations, those efforts MUST fail. Even if we do our best, those efforts may not succeed, but WE have to lead, not follow.
respectfully
BJ
April 14th, 2006 at 12:28 am
UKK: Give me one good reason why I should pay for carbon emissions when China dn the USA are not.
Well, give me one good reason to pay income tax, when that beggar XXX or YYY cheats on his.
There’s no answer to that. In the end, you’re either a moral entity or you’re someone who will only do the right thing through coercion or normative social pressure.
April 14th, 2006 at 12:41 am
Greatscott: Externalities work both ways, which is why - fundamentally - they are meaningless
No, it’s your shonky analogy which is meaningless. It completely fails to address the issue, which is one of free access to the commons. An unregulated market is inherently incapable of managing the commons.
What about fishing quotas, Scott? I imagine you must be fundamentally opposed to those. The company with the biggest trawler and the finest net MUST be free to drag the ocean till it’s empty. Externalities are meaningless, remember?
April 14th, 2006 at 2:13 am
Fishing quotas are a form of property rights- which is the appropriate way to deal with what is basically a form of land (ocean area). There are enormous positive externalities from activities that are deemed to be negative - it is largely a matter of opinion. Aviation enthusiasts get great pleasure from lots of planes, others hate the noise and fumes - property rights in the commons are the appropriate way forward when scarcity needs to be managed, but not taxes.
April 14th, 2006 at 2:52 am
Good, we’re making progress.
A fishing quota is not a tax, but a form of property right.
I suggest, therefore, that we handle carbon emissions in a similar way, in order to manage this common resource. The problem here is not strictly speaking one of scarcity, but one of a negative outcome (production of greenhouse gases).
Hey, we could introduce quotas for that, too. Companies producing greenhouse gases would have an entitlement to a tradeable quota (a form of property right over the atmosphere), which would give them a market-driven incentive to reduce their emissions.
Hey, I wonder why nobody’s thought of that before?
April 16th, 2006 at 7:21 pm
I’d just like to point out that the Honda Jazz isn’t as efficient as a Prius, whatever the dealer told you - see http://en.wikipedia.org/wiki/Comparison_of_economical_cars
Actually, my MG is more economical than a Jazz - I get 40mpg out of town.
Or are you factoring in manufacturing energy usage or something?
April 18th, 2006 at 2:23 pm
Why give companies property rights over the atmosphere, Alastair? The atmosphere is a global commons and rights to it belong to everyone. We could issue certificates and allow them to rent them to those who want them (if you allow the outright sale you get into inheritance issues as present generations shouldn’t be allowed to sell future ownership of a commons).
Likewise we could give everyone a right to a certain usage of roads. Since I bike most places (which uses less space, causes very little wear and tear etc.), I’m likely to have a surplus I could sell. We could adopt similar systems to deal with other commons and socially useful institutions such as oceans, fish, national parks, health, education, wildlife etc. Of course, this is utterly absurd. We’d end up putting so much time into trading and resolving disputes the whole system would grind to a halt.
There was a policy in the old McGillicuddy Serious Party manifesto calling for privatisation of fisheries by tagging all fish in New Zealand waters, assigning them to individual owners and allowing fisherpeople to negotiate a purchase price with the owner if they were caught, or a catching fee to be paid to the fisher by an owner wanting the fish delivered. The policy envisaged an enormous increase in the police and justice systems to ensure people’s fish weren’t illegally caught, stolen or damaged before a sale was negotiated.
April 18th, 2006 at 2:34 pm
WRT to CO2 emissions, I’d much rather have a scheme similar to the one mentioned last year in Britain, where every citizen is given a ration for fossil carbon. If you don’t use it, you can sell it to someone else.
http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2005/07/02/nrg02. xml&sSheet=/portal/2005/07/02/ixportaltop.html
It’s interesting that this idea was buried by big Oil and the car companies.
April 18th, 2006 at 8:48 pm
Quite so, Sam. But I was quite bowled over to see an alleged libertarian falling into the trap of regarding fishing quotas as ideologically OK. He no longer has a leg to stand on if he wants to oppose the Kyoto process or similar mechanisms with respect to carbon credits.
Both are in fact nothing to do with property rights : they simply recognize a form of squatter’s rights, over fishing grounds and the atmosphere respectively. Ideologically they satisfy nobody.
Clearly, a company has no inherent right to pollute. Assigning such a right (air share, fossil carbon ration or whatever) to individual people is cute, but it amounts to an assertion that we humans own the planet, which I have a problem with.
But the main problem is that it’s just unworkable, because no steelworks or cement factory will shell out the millions required to buy quota, just to be allowed to continue operating.
Tradeable fishing quotas are a sort of working prototype of how a carbon-credit system could work. There are all sorts of enforcement problems and perverse effects, but the mechanisms have the advantage of being applicable in the real world, bearing in mind the established positions of the various actors.