Wednesday, February 07, 2007

Howard's trippin

Howard seems lost on climate change. The other day he was saying that he does not support a tax on carbon but is happy to set a carbon price. But what's the difference? Now he is supporting a global emissions scheme but I don't see the big difference between a tax and cap-and-trade emissions target. Basic economics tells you that setting the price is equivalent to setting the quantity.

Much more important is how you are going to enforce either system, it would appear pretty easy for businesses to dodge the amount of carbon they emit; much easier than, say, minimising their profits for tax purposes. And even more worrying is how to discipline governments whose nations emit to much, perhaps lying about their emissions. What are we going to do to China? Invade them!

Turnball has the right message on the politics: sure it's a problem but there is nothing that Australia can do on its own. Even if we cut our production to nothing it still ain't going to materially change the warming to come. It's a global externality which requires a global response. Labor wants to play politics with a serious issue and is willing to put Australian wealth at jeopardy to score political points.

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