RE: Consumption based taxation: Policy formation

Wilson, Dale (WILSONDO@phibred.com)
Wed, 30 Dec 1998 10:46:19 -0600

Greg,

I want to address the other points you brought up related to policy and
incentives.

> Whether consumption comes naturally or if the
> consumption paradigm has been generated by continuous

You are treating consumption as a value, but consumption is particularized
into many individual transactions. All these are regulated by price. I
believe that high levels of consumption in general are simply caused by
affluence. But exactly what is consumed makes, a difference to wild nature
and to sustainability.

> input by a media that has taken over as the main
> source of information, entertainment and even nurturing
> of our children, it will not be able to be maintained
> if it violates every rule of sustainability. It is
> therefore logical to do everything possible to alter
> the consumption paradigm before reality forces painful and
> costly change.

Affluence will guarantee consumption, but the mix of goods and services
purchased depends on relative prices. For example, written information is
continuously in demand, and it will be marketed in some form. The ubiquity
of electronic media and its low cost is starting to push paper books and
journals off the shelves. Lumber is becoming expensive, and this is
encouraging the use of steel and recycled plastic studs in construction.
This trend has been accelerated by government policy that restricts
harvesting of forests.

In Latin America, most middle class people have maids. It only costs a few
dollars per day in many countries to have a live-in maid. This too is
consumption, but it is environmentally benign. Some things people buy, such
as computers and VCRs and especially software, have a large labor component
in their value compared to their raw material content. Why would anybody
buy a physical chessboard for $20, when you can buy chess software for $10
that can also play against you? When you buy such items, you are actually
buying service.

My point is that it is possible to shift patterns of consumption in
environmentally friendly directions using price. Taxes can shift patterns
of consumption by increasing the net price of certain items. This provides
a mechanism to make consumers to pay for the environmental degredation or
natural resource depletion their choices incur.

>>> IMO costs need to be assessed for all the 'externalilities'
>>> of those benefitting from our socialistic/capitalistic
>>> society. (Greg)

>> I agree. But setting the prices of the externalities is a
>> difficult political problem. It seems like people tend to
>> set the price too low. Or maybe they just ignore the whole
>> issue, which amounts to the same thing. (Dale)

> Yes...why is that? What cause such continous, inadaquate
> assessments of an externalizrd cost? How can we fix that? (Greg)

First, I don't think most people value environmental quality as much as
people on Sanet. There is nothing to do about this except keep trying to
sell your values in public fora.

The second reason is inertia. People don't take action until a crisis hits.
The big example here is the oil market. When oil is so cheap, few people
think about conserving it, even though everyone realizes that it will only
be a few decades until shortages occur.

The third reason is another manifestation of the commons problem,
competition between nations and regions. Again, petroleum provides a good
example. OPEC is in shambles, because each country wants to cash in at the
expense of the others. They have the mechanism and even the will to
restrict supply, but OPEC lacks the authority to make it work.

Fourth, we are not used to thinking of tax in this respect. The pathway of
public valuation of natural resources into tax policy is not well worn.
There may be other approaches to commodification of environmental value such
as carbon credits and air quality credits. These subsidize environmentally
friendly technology, reducing the prices of certain goods. This is the
mirror image of taxation, but it is the same kind of intervention.

Finally, the political system is manipulated to some extent by powerful
interests that would just as soon despoil the environment free of charge.
But I don't think the manipulation is so powerful that it cannot be overcome
by political involvement of individuals. After all, only about 40% of US
citizens vote. That's a disgrace.

> My personal spirtual belief is that these are some
> the...obstacles we are to over come to reach perfection.

We will never reach perfection. We must learn to live with our
imperfections.

>> When people don't have to pay for use of the commons
>> (ie natural capital), the commons will be overused.
>> This isn't "a lie" just bad policy. (Dale)

> The lie come in, in that capitalism will not continue
> as it is practiced because it is unsustainable.

You are including many values in "sustainability" beyond strictly the
ability to keep on going. The danger to wild nature is that capitalism will
indeed keep on going, but the changes necessary to protect wild nature will
be so intractable politically that they won't be made. Anyway, the
alternatives to capitalism aren't so great either.

> We are playing make believe if we think the next
> generations will not suffer from our joy ride
> today. It is a lie to make believe we can continue
> as we are going.

The oil will run out, wild nature will probably be swept away in a sea of
farmland, people will continue to place their hope in the future and
struggle for a small piece of the pie. They won't remember or care about
cheap oil or wild lands. Capitalism will probably keep going.

Rather than seeking the perfection of a new Eden and spouting divisive
rhetoric, I would like to see the environmental movement work with the
political center to nudge the beast (humanity) into pathways that leave some
room for wild nature. This means working in the policy arena.

Happy New Year!
Dale

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