Political economy of global warming

The political economy of global warming will be discussed by
Spencer Graves and Stephen Melton, interviewed by host Craig Lubow. This includes a discussion of bills currently before the US Congress with various proposals for “Carbon Fee and Dividend“, as supported by the Citizens’ Climate Lobby (CCL).  Stephen is the CCL  for Kansas City, Missouri.  Spencer is a researcher with a PhD in statistics and a Program Associate with KKFI, most active with Radio Active Magazine.

POLITICAL ECONOMY:

Spencer says that the most important thing people should know about global warming is that greenhouse gasses should be taxed in proportion to the damage they are doing to the global economy.  Canada started increasing the tax on carbon in 2019 at 17 cents per gallon of gasoline increasing at 8.4 cents per year until it reaches 42 cents per gallon ($20 per ton of carbon increasing to $50 per ton).  In the US, instead of carbon being taxed, fossil fuels get subsidies amounting to roughly 28 cents per gallon.

To understand why fossil fuels get subsidies when they should be taxed, Spencer cites three general principles:

1.  MEDIA AND HUMAN PSYCHOLOGY:  (1.1)  Everyone thinks they know more than they actually do, and (1.2) major media everywhere exploit this to benefit those who control the money for the media.  [This is discussed in more detail in the Wikiversity article on “Confirmation bias and conflict“.]

2.  FREE MARKETS:  Free competitive markets are the most efficient way known to allocate scarce resources to the extent that all the costs and benefits to society are reflected in the price to the consumer and the consumer can make informed decisions.  The problem is that markets like this rarely exist.  To the extent that they do, business leaders routinely scheme to prevent them from functioning to benefit society, as Adam Smith wrote in his 1776 “Wealth of Nations“.

3.  GOVERNMENT:  A primary function of government is to ensure that (3.1) markets are free and competitive, (3.2) all the costs and benefits to society are reflected in prices, and (3.3) consumers have access to the information they need to make sensible decisions.  This is routinely threatened by regulatory capture. In Debt: The First 5000 Years, David Graeber (https://en.wikipedia.org/wiki/David_Graeber) claimed that prior to the industrial revolution, governments generally did the opposite:  They gradually transferred power and wealth to a favored few at the expense of everyone else.  Every few decades or centuries, a peasant revolt interrupted this process, overthrowing the old nobility, after which the cycle began again.  Acemoglu and Robinson (2012) Why Nations Fail say that English Bill of Rights of 1689 dramatically strengthened the ability of entrepreneurs to benefit from the fruits of their innovations.  They also credit the growth of democracy especially in the English colonies in North America that declared independence to become the US in 1776.  This was accompanied by the growth of a free press, which undergirds all the advanced industrial democracies, limiting political corruption and fueling broadly shared economic growth.

GLOBAL WARMING:
Global warming has been predicted by experts for decades.  However, discussion of it in the media has been largely suppressed, because it threatens the social status of those who control the money for the media, consistent with the discussion of “Media and human psychology” above.  This media bias in nominally democratic countries largely prevents the public from getting the information they need to protect their interests in the ballot box, so they unknowingly vote contrary to their best interests. This facilitates regulatory capture, also mentioned above.

Economists insist that the primary driver of global warming is the fact that the price to consumers of goods that generate greenhouse gases does not properly reflect all the costs to society.  Fossil fuels should be taxed at a rate proportional to the damage they cause.

Many countries that have tried to increase taxes on gasoline have experience political protests and even riots.  To counter this, Canada’s fossil fuel tax is revenue neutral, with the tax money being returned to citizens, so they can afford to pay the higher gasoline prices while transitioning to more environmental friendly modes of living, e.g., more fuel efficient transportation.

The web site of the Citizens’ Climate Lobby includes a discussion of five different bills currently pending in the US Congress proposing different carbon fee and dividend schemes for the US, similar to what Canada is doing.

“America’s Clean Future Fund Act of 2021” has been officially introduced into both chambers of the US Congress (H.R.2451 and S.685), but has only 9 co-sponsors in the House and none in the Senate, beyond Rep. Marie Newman (D-IL) and Sen. Dick Durbin (D-IL), who introduced them.  The “Energy Innovation and Carbon Dividend Act of 2021” (H.R.2307) has 91 co-sponsors as of 2021-12-23, including Rep. Emmanuel Cleaver, in addition to the official sponsor, Rep. Ted Deutsch (FL).  The Kansas City Citizens’ Climate Lobby is encouraging their supporters to ask their elected officials in the US House to support this bill and ask their Senators to support a companion bill in the Senate.

CCL lobbied to get bipartisan support for the Growing Climate Solutions Act (S. 1251).  It was passed by the Agriculture, Nutrition and Forestry Committee 2021-04-22, only two days after it was reintroduced into the US Senate.  It passed the full Senate 92-8 on 2021-06-24 with 54 cosponsors including Senators Blunt of Missouri and Marshall and Moran of Kansas.  CCL believes it will pass the house and be signed into law early in 2022.  It is designed to encourage farmers, ranchers, and foresters to be paid for regenerative practices.

Other organizations are working to divest from fossil fuels:  The goal of these efforts is to make it harder and more expensive for the fossil fuel industry to get financing for future expansion.  Spencer regards fossil fuel divestment as a cosmetic “feel good” activity that people can pursue, but it’s not clear if it will have much real impact, because the industry is already fairly stable and can generate internally the revenue they need without borrowing from others.  CCL has not supported divestment.

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