Green Totalitarianism....

Terence Corcoran in the Financial Post today on the coming green totalitarianism...it looks like it's going to start in the UK.

To avoid catastrophe, the report calls for a global assault on energy and carbon consumption. Greenhouse gas levels can be stabilized at something like 500 parts per million (current level 430 ppm) at a cost of "only" a 1% reduction in annual global GDP. How do we do that?

Enter Arthur C. Pigou, 20th Century socialist economist who is credited with inventing the idea that market failures create externalities that need to be fixed by government, especially through taxation. Pigou plays a big role in the Stern report. "The first task of policy," says Stern, "is therefore to introduce taxes or prices for GHGs. The Pigou treatment of externalities points to taxes based on the marginal damages caused by carbon emissions." How big a tax? It should be "equal to the social cost of carbon at the point where it is equal to the marginal abatement cost."

Stern gets a bit technical and jargon-filled on these issues, but the report claims to have reached a "preliminary calculation" that the right price is something like $85 for each tonne of carbon dioxide emitted. If oil is 85% carbon, a new tax would have to double the price of oil to meet the Stern target.

Doubling the price of fuel -- for transportation, industry, electricity, heating, air conditioning -- would just be the start. Stern acknowledges that the there are many obstacles to success. We may need "additional measures." Because people might not trust government, business and individuals might need new special incentives -- subsidies -- to push them into carbon-reducing programs. And then there's the need to "remove barriers to behavioural change." For this, there may be a need for "regulatory measures," such as minimum standards for buildings and appliances.

Here the Pigovian tax theory starts running into some real world problems. It may be, says Stern, that "price signals alone may be too muted to have a significant impact." So the market signals of prices will need to be supplemented with major intervention in corporate and individual decision making. We will need, in short, a global master central plan to get carbon under control.

Wait until we see the details of Taliban Jack Layton's plan!