Something to remember about COP21

Jeremy Warner is probably right about the outcome of COP21 here, that great gabfest to talk about climate change:

Ever clearer is that the debate on climate change is essentially over. Whether just a modern day delusion or not, virtually all political leaders now buy into the idea of man-made warming, and most of them seem willing to do something about it.

The question, as always, is what should be done. We have long taken the above view: the truth or not of climate change is not the important point. Politics is about what people believe, not the truth. Thus we’ve been advocating a carbon tax on the grounds that we know they’re going to do something so we might as well tell everyone to do what will cure the problem, if it exists, at least cost. Usefully, it’s also what every economist looking at the problem has also said, from Stern through Nordhaus to Tol.

However, there’s an implication of that:

Much fiercer carbon taxes are coming, driving huge change not just in energy consumption and production, but in all the myriad industries that depend on hydro-carbons, from plastics to automotive, metal bashing and even many service activities, which can be surprisingly energy intensive.

That’s actually not true, not here in the UK at least. Because we largely already have a carbon tax. It’s not distributed correctly, this is true (too much on petrol, not enough on farming) but overall we’re already coughing up about the “correct” amount as calculated by Stern (and more than Nordhaus or Tol would suggest for today). The combination of the fuel duty escalator, the EU’s cap and trade, the minimum carbon price and so on, while they’re not quite exactly the way it should all be done, do have roughly the right effect and size. According to Stern’s numbers the UK should be paying something like £30 billion a year in carbon tax given the roughly 500 million tonnes CO2 a year. We’re already paying that much when you tot everything up so we’re done.

Yes, it’s entirely true that some other people might have a lot of work to do to meet whatever is agreed in Paris. But as far as the UK is concerned we’re done, we’ve already put the correct and recommended policies into place. We’ve nothing else that we need to do except perhaps a little tinkering here and there. There’s most certainly no justification for significant rises in the general tax level, whatever COP21 agrees. Not that that’s what we’ll be told of course….

There’s a very slight problem with asteroid mining

Much excitement as the US decides that it’s just fine if people go space mining. Which is interesting of course, for the UN rules say that while you’re entirely free to go mining you’re not to do it for a profit, it must be “for the benefit of all”. Which slightly puts a damper on things. But there’s another problem which the new US rules don’t address: it’s still not possible to own a deposit or resource up there. You are, now, under the new US rules, which the rest of the world doesn’t recognise, allowed to explore, find and mine something, for that potential profit. But as soon as you start doing that then anyone else who can get there is entirely allowed to go mine that same deposit. That puts another damper on the economics of the adventure.

However, as we’ve said around here before there’s a rather more basic problem with the idea:

If that proposal is too large to take seriously, your horizons may have become too Earth-bound. The would-be asteroid miner Planetary Resources launched back in 2010. Its investors include Larry Page and Eric Schmidt of Google, whose bet on driverless cars sounded pretty silly a few years ago as well. While space mining remains a moonshot, with vast challenges for its pioneers, the potential rewards are stellar. One estimate suggests a single asteroid could contain more platinum than has ever been mined on Earth.

Mining asteroids to provide materials to build something in space sounds like a great idea given the cost of getting mass into space. Very early American houses were built, sometimes, of brick carried as ballast across the Atlantic: it didn’t take long for people to realise that digging up some American clay and baking it was a more sensible idea. So it will be up there, use the resources there, not carry everything with us.

However, those starry eyed at the idea of those vast resources of platinum. What is the Earth bound price of platinum going to be if we double the amount that humanity has to play with? Somewhat lower than it currently is would be our prediction. And the elasticity of demand is, with respect to price, quite low for this metal. Meaning that a large increase in supply will lead to a very large decrease in price.

Again as we’ve said before, finding a bit of platinum up there would allow it to be sold down here for a high price, but a bit wouldn’t cover the fixed costs of going. And finding a lot would depress the price possibly sufficiently that finding a lot wouldn’t cover the price of going.

Doesn’t mean we shouldn’t go, doesn’t mean we shouldn’t go mining, but our slide rule tells us that mining for precious metals ain’t gonna be the way to pay for it all. Rather an interesting twist on Adam Smith’s diamonds and water paradox really: the truly valuable thing up there is likely to be the water that humans desperately need and is currently in very short supply.

Good luck with that Jeremy, good luck with that

It’s not unusual to find people arguing that the State should be given near fascist (in some cases, actually fascist) powers over the economy: but only if the right people are in charge. The right people being defined as those who would use those oppressive powers in only the manner that those proposing the powers desire. The usual answer to this is that that’s not quite how democracy works. If you don’t want your enemies (ideological or actual) to have such powers as the electoral cycle turns then you’re really no business arguing that your folks would do just fine with them.

Shuffling all the Social Justice Warriors off into the Bedlam they need to recover is admittedly appealing. Yet we do not recommend such precisely because such powers might be used against us, those who froth at the mouth over the joys of free markets and voluntary cooperation, in the fullness of that time and variance of who the public elects. Better that none have such powers, eh?

At which point we have this rather plaintive cry from Jeremy Warner (or perhaps the subeditor who wrote his headline), someone we usually rather agree with:

If the state must meddle, it should do it better

Given the pedigree of those who do go into politics and other forms of “public service” that meddling never will get better. The answer is therefore as we have long suggested. Yes, there really are things which need to be done and which only the State can do. Said State should limit itself to only those things covered by that intersection and refrain from doing things which can be done by the State but do not have to be done, and also avoiding those things which do need to be done but which will not be well done by the State.

Limiting government to what it must do seems suitable given the limited skills and talents of those who govern us.

Marianna Mazzucato, wrong again as so often

Marianna Mazzucato is the right sort of writer for The Guardian: as the Daily Mash puts it, that newspaper is wrong about everything, always. So, here she is telling us that it’s very important indeed that government spend lots of lovely money on the area that Professor Mazzucato thinks important:

Growth is determined by strategic spending on areas that increase productivity, which in the UK is still below the OECD average. This includes investing in training, education, research and development, and state-of-the-art infrastructure. So while there has been a boost to some infrastructure spending, the lack of vision on what kind of economy we need for sustainable long-term growth means there has been little discussion about the direction of growth.

Growth is most certainly produced by investment spending, this is entirely correct. But as Matt Ridley has pointed out, it does rather depend upon who does that spending:

In 2003, the Organization for Economic Cooperation and Development published a paper on the “sources of economic growth in OECD countries” between 1971 and 1998 and found, to its surprise, that whereas privately funded research and development stimulated economic growth, publicly funded research had no economic impact whatsoever. None. This earthshaking result has never been challenged or debunked. It is so inconvenient to the argument that science needs public funding that it is ignored.

There’s not much of a case left for government spending on such things after that, is there? Which leaves Professor Mazzucato’s argument where it always has been, a justification for the EU to determine what is researched via research money funneled through the EU. Which is why, in our opinion, the EU funded her research in the first place.

The terror of the tampon tax

Following the Autumn Statement on Wednesday, women all over Britain have been in uproar. Why? Because George Osborne has decided to direct the £15 million pounds the treasury receives from the tampon tax into women’s charities and services.

As an article in The Guardian says here:

Women will now fund services that protect them from violence perpetrated almost entirely by men. Hey, men, not only do you not have to pay for violence that you inflict on women, but when we get raped, abused or brutalised, we won’t cost the state anything either! What message is that sending other than violence against women is some kind of “women’s issue”? It’s not. It’s largely a male issue.

And The Independent has chimed in, too:

Since the Tory government has failed women in so many ways, it makes undeniable sense for it to help us to help ourselves. Give a woman a tampon and she’ll use it for free; teach a woman to pay tampon tax and she won’t even cost anything extra to the state when she gets raped, attacked or laid off at work.

So if you’re a woman escaping from an abusive relationship in the Chancellor’s Britain, you can now pay for your own counselling through the redistribution of an unfair tax on your sanitary products. Isn’t that just perfect? It has a beautiful circularity, kind of like the menstrual cycle itself.

However, this view is misguided. The government cannot get rid of the tax completely due to EU laws, so they’re going to receive an income from it, no matter how much various women dislike that fact. Isn’t it therefore a good thing Osborne is at least diverting it into something that the women who pay the tax will directly benefit from? Would these groups rather the government used the money to bomb Syria? Reduce the bank levy? Cut taxes on top earners? Probably not.

From 2010-2015 the Tories spent £40 million on support services and charities aiming to help women who have suffered from domestic violence or abuse. This clearly shows that yesterday’s policy announcement is nothing new: taxpayer’s money has always been going towards helping women’s organisations. The difference is, women can now be safe in the knowledge that their £1.50 of tampon tax money per year is at least being spent on a cause they agree with.

Stop complaining about this decision, there’s no bloody point.