The Canberra Times in its lead story of Saturday 30th reports the coal industry as saying reducing greenhouse emissions is too expensive, financially risky and untested. If we put a surcharge onto energy production that causes greenhouse emissions then we would soon find that reducing greenhouse emissions would be inexpensive and financially sound and that the technologies would soon be tested. All we need to do is to make the surcharge on greenhouse gases so that the total cost of energy produced by coal with greenhouse emissions is higher than the cost of energy without greenhouse gas emissions. The problem is to find a way of disposing of the surcharge that is positive and has a low inflationary impact. If energy companies keep the surcharge then it will encourage them to produce more energy with greenhouse gases. If the government collected it as a tax then it would be spent on other things in the same way royalties collected on oil production goes to consolidate revenue and it would be inflationary. A solution is to give the surcharge to the people who live in ways that cause few green house gas emissions and require that the surcharge monies they receive be invested in ways to reduce green house gases. This has to be an election winner for the party that endorses it. No increase in tax, solve the greenhouse gas problem, create an export industry in clean technologies, and reward voters with a low greenhouse gas footprint with an investment stake in the new greenhouse gas free infrastructure.
A market driven approach to peace
Violent conflict both individually and internationally is caused by the inability of people to resolve disagreements by other means. What is needed are mechanisms to resolve conflicts. In practise most disagreements boil down to the division of resources. Hence if we have a good way of resolving resource division then we may well resolve most conflicts and it may turn out to resolve conflicts over issues such as ideology.
Markets have proved to be one way of resolving the conflict inherent in the distribution of resources. In a very real sense markets are a human artifact that gives expression to the idea of survival of the fittest. A market is formed by enabling individuals to make choices between different alternatives offered by others and enables the fittest to survive.
Traditionally markets have been for goods and services offered by a variety of suppliers. The customers choose between the alternatives and use money to express their choice. Because money is limited the choice is a real one because they have to decide on whether to spend money on different goods and services. If money was unlimited then there is no choice.
Let us take this idea of a market and apply it to the resolution of conflict between States. What are the goods and services? Goods and services can be thought of as ideas on how states behave to each other and to matters which affect different parties. Such things are resolution of boundaries, trade agreements, laws of the sea, etc. The choices we have are to choose between different ideas. The methods of choice we have at the moment are votes in the United Nations and multilateral and bilateral agreements.
What is missing from the system is a satisfactory method of expressing choice. We do not have the equivalent of money to allow choices to be expressed. Money has the characteristic of being in limited supply and it is quantifiable. Let us invent a new form of currency whose purpose is to help nations express their choices. Let this money be called votes and let us issue votes each year to nations. The number of votes is determined by the population of the states and by their economic wealth. Let votes be permanent but disappear when they are spent. That is, a vote in one year if unused can be banked and used in future years. Let voting be secret. Let voting have an auction feature to establish the cost of an idea. That is there shall be three votes with the final vote being the one that applies and where votes between rounds can only be increased not decreased.
What will happen if we have such a system? Countries will only use their votes to resolve conflicts with others on things that concern them. When there is an item of conflict then each group that has an idea on how to resolve the conflict will propose an “idea” for resolution. The number of votes used will depend on how important each country believes in the issue.
There will need to be a arbitrator and countries can vote on the best way to set up an arbitration or legal system. There will need to be some form of punishment for countries that do not follow the agreements and perhaps that can be in the reduction of the votes allocated to the country in the subsequent years. Again the details on how it can work can be resolved by the system.
The particular form the system will take will be resolved by the system itself. That is, countries will come up with different ideas on how it should work. If there is now a method for countries to make genuine choices through voting tokens then it is likely that the fittest solution will arise.
Of course this approach can be taken to whatever level we like. For example it could be applied to conflict between different jurisdictions between regions within a State such as the Australian Federal System. It could be taken to the level of parliaments where each person representing a group of people could get a set of votes and vote accordingly. It would not remove the need for political parties but it could help the promulgation of ideas and give a mechanism for societies rules to change more rapidly.
Alternative solution to greenhouse gas abatement
Most agree that the cost of green house gases should be built into the price we pay for energy. The solutions suggested are carbon credits (letting people pay to be able to pollute) and green house gas taxes (giving the government money to distribute). Both these mechanisms have problems. An alternative is to increase the price of energy that produces green house gases but to leave the control of the surcharge in the hands of the purchaser. It is something like frequent flyer points but we will call it carbon abatement funds. These funds can be sold but they can only be used on infrastructure that will reduce green house gases. The approach is not a tax because you can sell your carbon abatement funds to others who can use them or you can decide to invest your funds in some way to reduce carbon – perhaps growing trees, or solar water heater or a nuclear power plant or carbon sequestration. This approach should appeal to economists because it creates a market that distributes the carbon surcharge which is missing from a carbon tax. My back of the envelop calculations indicate that a 30% carbon abatement funds will give enough investment funds to turn Australia into a 100% carbon gas free economy within 10 years. The approach will work for any country and does not need international agreements to implement – just a country with vision enough to show the way.