Flourishing Economics Lies in Better Tax Laws

In a week in which one of my favourite economists, Yanis Varoufakis was banned by Germany, I have taken a moment to reflect on what I see lies at the heart of new economic modelling for a flourishing world in every way.

In economic terms, I, a complete amateur, have come to see that tax reform is at the heart of transformation of economic potentiality in a renewable energy world. In particular the reform required is for all nations to establish a resource rent tax as foundational. In this tax, no corporation can avoid their tax because the resource exploitation they ‘borrow’ from a nation is readily calculated from public domain information, and such tax can provide a powerful investment in communities and national infrastructures including transport, energy networks, education, and ecosystem restoration and conservation. It has the prospects of assisting communities to own their energy supply and decoupling energy from centralised corporation which has the added effect of empowering democracy.
Following the work of Yanis Varoufakis, personal agency and democracy is further empowered by legislation that protects personal data as property which can only be loaned through contract at a price agreed by the owner or as mediated by the government on behalf.
Personal data exist in a tension with the national interest i.e what personal data do we all provide a public national data base to allow democracy and government to work efficiently and effectively?
However the likelihood that such payments accrue back to the individuals is the possibility of a universal basic income.
Likewise with the resource tax, with a much diminished income tax and elimination of point of sales taxes or housing transaction taxes, the average person accrues more personal savings.
These together, and with the assist of new technologies – robotics, AI, remote communications – open the possibility for new working schedules and the motivation for individuals and groups to define new lifestyle models and technical or service innovation.

The third, and very big draw on the commonwealth, is money laundering including tax havens. International agreements are needed with all nations to ban tax havens, and identify the owners of all transactions by type of trade. Once the trade is identifiable, resource tax can apply and withdrawn externally by Taxation Departments. This also makes slavery and illicit trade easier to trace and prosecute. The productivity and wealth returned to community by the failure of illicit trade is very enormous. Even with 9 billion people, we should all be at ease. Indeed the impact on community resilience could be such that the individual need less to be thinking of their future as of their contribution in the present, knowing that the worst life in the future is one in which they are at basic economic ease and fully engaged as a citizen. As Mahatma Ghandi said, there is enough to provide all our need, just not enough to provide all our greed.

The 3 Scenarios of Climate Response

I’d advise everyone with an interest in restoration technologies such as iron fertilisation to read the new book by the founder of the Foundation for Climate Restoration , Peter Fiekowski.  Peter has been investigating this work and others with a lot of the scientists over a decade or more, so you will find identified in the book the parameters for the appropriate use of such technologies.

On the broad issue of technology and science in climate change solutions. While many investigations were in their early bloom a decade ago, much is now known. And of the unknowns, such as ocean fertilisation, a lot more research in the field is now required. For some people (an I have talked to environmental consultants who raise this objection), trying to solve nature with science is anathema. And they have a lot of well-documented stories of everything that has gone wrong so far. Even if there was an outside chance of making an error, let’s say, to really stretch the argument, making an endangered species, extinct, why might we use science? The answer to this question is a risk management one. It goes like this, (and you can fill in the data gaps): What are the losses of xxx species, xxxxx individuals of flora, fauna and human, and whole local and regional ecosystems, given three scenarios: unmitigated climate change; nett zero emissions by 2050 but only by restoring local ecosystems; and restoring atmospheric CO2 levels using a range of technologies for removing CO2 from the atmosphere and sequestering as such in a variety of ways.

In the first scenario, we are already experiencing touch and go on species loss. At some point we will begin to have local ecosystems fail, here and there. And as that chaotic system change amplifies over time a certain tipping point will probably cause the collapse of all global ecosystems which could increase those losses logarithmically and very quckly. Here’s a species loss story from the USA in the 19th c to exemplify what can occur. There was a pigeon called the Postal Pigeon. It is recorded that there was only one huge flock of these pigeons in such numbers as to darken the sky for hours when they flew overhead. Colonisers would just go out with shotguns and shoot in the air and bring down hundreds of pigeons. It seemed they never dented the population of these birds. Then one year, and it is estimated that the flock numbers were still around 1 million birds, the species went extinct. Apparently less than 1 million birds created a breeding collapse. In other words, we will find it difficult to predict the collapse point. Perhaps we are already near there.

In the second scenario, we already have 95% of the CO2 in the atmosphere. Natural restoration like planting trees is estimated as unlikely to restore the CO2 levels except over a long time. Meanwhile the chaotic climatic conditions are already perturbing though a high flux and that flux drives itself along a positive feedback loop. Some of you will be aware that the mathematical theory called chaos theory was identified by a climateologist, Lorenz. To remind us, Lorenz in the 1960’s found that an 1/1000th of a shift in the conditions (a parameter of data) at any time compared to a predictable order, will create a vastly different weather pattern over time. This came to be called the butterfly effect. The greenhouse in which we are now living is not just a new stabilised system. It is a very unstable system that will, for sure, over a long time, find it new ‘strange attractor’, a new stability, a new more or less predictable pattern. But whatever happens between then and now throws all ecosystems and human communities to the whim of an increasingly unpredictable and volatile weather system. And at ‘then’ the pattern will be most likely unkind to our current ecosystems and therefore unkind to us. We may still find ourselves faced with tipping point collapses of ecosystems, globally.

In the third scenario, we are able to restore the greenhouse to pre-industrial levels. Let’s say over the period 2030-2050 there is a double effect: the gradual movement to nett zero emissions from humans AND the gradual removal of legacy GHGs from the atmosphere. The weather continues to be increasing unpredictable but now also in a different way, hopefully a softer way, as energy is removed from the climate and weather system.  I doubt we can say that we can ‘restore the climate’ which is the catch phrase of F4CR, however, so long as we have i) softened those volatile and unpredictable effects in the first instance; and II) bring the climate to a new more human-friendly balance, we will have mitigated the loss of many species, billions of individual members, local ecosystems and avoided tipping into global collapse, then only being able to say that a species loss (say) is unlikely under a new technology is the only viable stand we can make for a future that can sustain us and the ecosystems we flourish within.

I have come across arguments, the most recent during a trip through a town called Lismore, NSW, Australia, in which an environmental activist told me she would be okay with the loss of human beings from the planet, so long as we just stop playing God with nature, coz the planet will bounce back. Given what we had seen here in 2019-2020 with massive bushfires (wildfires), I must admit to a horrified feeling at the casualness of dealing with the possibility of the losses worldwide. A few weeks after our conversation Lismore had the biggest flood since colonised settlement, 14metres, people clinging to rooftops to get rescued. Two weeks later, it got re-flooded, just a clean-up of the first was partly underway. The issue with this is that, Lismore is flood-prone, it was predictable, except this year people thought the flood period was over, safe for another year, and then it was just worse than ever, and a double dose. I haven’t had the opportunity to find out whether anyone feels differently about the climate ‘mission’, in Lismore. I have some empathy. It is a big ask for us to deal with all of who we are as human beings without feeling it can all go to hell in a handbasket. It is a big ask to take on that we might make choices that result in the loss of a species for the saving of a hundred species (this is the classic challenge from moral philosophical mind games). While there’s no such thing as an isolated species loss as fall-out, definitely not when it comes to endangering the lives of a lot of homo sapien sapiens for those critters have a tendency to hunt and dig up and chop down anything for their survival. Nonetheless, it is an important question for all of use to ask, what would we trade off (let go, even for now) for what we would work towards solutions. I think we can certainly avoid species loss from any technological adventuring as there is no reason why we are unable to finese any work. And there is hopeful expectation in most arenas that the technology even improves ecosystem restoration as well a human economic activity. 

Fundamental characteristics of a Society based on Equity

Magnus Hendrickson in Quillette argues for a contributive justice in social equity. I am in considerable agreement so my comments here are more to do with some of the transformations I see are required to mobilise society as a whole towards those ends:

1. Education should be founded on moral education i.e those characteristics that underline one’s opportunity to contribute to the community including a world view that we human beings are in the one boat, so to speak.
2. Education should be designed around the enactment of contribution / service from the earliest ages (3years) and enrolling both parents, teachers and others in the community contribution in action pedagogy required to facilitate the child’s and youth’s growth in contribution through their age related developmental stages.
3. Education teaches fundamental skills necessary to take part as a fully fledged member of society: reading, writing, basic mathematics.
4. Education provides access to advanced skills to realise the full potential contribution of the individual in society.
5. Education format design has 3 equal aspects: i) Basic through advanced learning of epistemologically objective subjects; II) progressive and community integrated service (experiential training) in family and community with specific responsibilities including team work and leadership; iii) development of the integrated individual with the ecology (human and natural) as might be facilitated through natural environmental access, agriculture, the arts, and trade skills including team work and leadership.
6. Economic models should be based in commons models e.g Henry George. In such modelling each human being is seen as having equal ‘ownership’ of the planets resources. Such ownership is as regulated by the elected government to realise that view, not as an economic equalisation of everyone but as a conservation of the commons for the long term future of the human optimal ecology. Within such modelling is required: i) an acknowledgement of the basic resources for every human being to participate fully in society e.g in today’s world not to have ready and reliable access to the internet is a poverty; II) economic behavioural modelling is enrolled to design economic policy including taxation that creates the appropriate incentives and disincentives that on one hand conserve the commons and on the other hand motivate the individual and business toward their optimal contribution, added-value, productivity, and legacy. Profit might be one incentive, status another – esp if being known as who-has-made-a-significant-difference to community. iii) Commons law (government regulation) aims to mange rent payable for access to resources (human and natural) on behalf of all constituents. In this way, who has more access to the commons returns some of the gains of that to the constituency as public services and infrastructures. In an economic sense the process provides incentive for individuals and businesses to realise innovations or higher value adding while amply recognising those people who provide untrained, technical or trade services i.e following a more rote skill training.
7. Government is founded on participatory democratic process at all levels, with education and election processes that amplifys the meritocracy of contribution or service to community, from local to national governance, not necessarily a meritocracy of the most profits or academic results, nor the most argumentative or trained political careerist. Although I would fully expect that people of strong intelligence and moral character some who also show acumen in business or science or arts or agriculture or social leadership.

The Commons and a Well-Being Economy

The new treasurer of Australia aspires to bring a well-being economy to bear. This article in The Conversation also includes a video report from Jane Davidson of Wales on their introduction of laws that define a well-being economy.

A well-being economy is a fabulous core designator, and certainly the human-ecological relationship is core to that. One of the big questions from a commons point of view is, How do we identify what the fundamental share of the world, looks like? What model would we use to define that. If we use human development modelling this would suggest that all humans should have access to what will allow them to be fully self-actualised beings. What things really create access to self-actualising? It is in the human development that innovation works, so it is essential to the wellness economy. It can also be argued that the development of governance system such as the upgrade of the democratic model is vital for the mass of people to self-actualise – a form of feedback loop. The issue of strategies to provide access is another questions and a complex one as well but it at least lies in education and health systems that also requires the innovations of individuals who are incentivised by government.

The whole issue around achieving the ecology we need can be defined in law and policy, yet, given that the use of the commons resources are required in any case, how do we tax business and corporations to ensure that the government is able to avail the populace of those things that give them access to self-actualisation.

With a restoration orientation, policies could be developed that incentivize going concerns. For example let’s say the law ensures that there are contiguous wildlife corridors connecting all conserved key ecological nodes across Australia. We could say that this is a primary value to us all. So we could probably determine the cost of each kilometre of new corridor (given the widths of some corridors are wider than others to achieve the ecological purposes). For example, a large cattle property that requires a couple of extra wildlife corridors to fit the plan, might then be allowed to a) offset conservation costs on their tax, or b)apply for a government paid plan. Another incentivization here can be that, DIY corridors may not require full planting but fencing off and weeding while allowing regrowth to occur from nearby vegetation. So then the farmer, by becoming a local ecological expert gets a tax offset without needing to pay the going rate for planting a whole corridor. Next, the corridors in place, evidence suggests that the property is likely to increase productivity. Indeed there is also the possibility of additional productivity e.g honey, tourism, sharefarming more intensive agriculture. Now that additional productivity belongs to the farmer(s) and, under appropriate tax scheduling, will derive additional taxes. The farmer has gotten wealthier, the government has gotten wealthier and the communities have gotten a return in the form of those elements of life that give them the best chance for self-actualisation.

Institutional systems in Australia then will also need to make good on the promise in such laws as in developing local access to the outcomes of self-actualisation. Else we are ever left in the bind that our regions grow slowly without inspiration nor aspiration, and so many of our next generation go off to the city, taking their innovations with them. Nonetheless we could incentivise institutions to make a bigger play in the regions in the same way we are incentivising carbon sequestration, the government pays for requisite enterprises that draw young people back to the region, paid on that they have achieved a sustainable result and, except for seed funding grant, not ‘to achieve’ a pipe dream.

In ensuring that conservation characteristics are preserved or restored, businesses should either restore or pay government to restore. I agree with Jane Davidson that we don’t want these types of laws linked to prison type punishment for people or businesses that avoid their responsibilities. However, I think fiscal punishment is vital and must be set so that it is just a no-brainer for corporations to pay for or complete the restoration work. This should not be seen as a fine but as a punishment equal to recompense for the negligence and disincentivize any future actions. For example, say the estimation for restoring a particular environment is assessed at $10million. A corporation that damages such environment could be given the choice to restore it (and always a timeline) or pay the government $10 million. If the corporation rescind their responsibilities then a fiscal punishment could be twice the original assessment. Multiple acts of such negligence should also come with a doubling of each next act, even to bringing the corporation to bankruptcy. Although perhaps even before that a three strikes law could see a corporation banned as a business in the particular field.

A well-being economy needs to be clearly associated with the human and ecological outcomes we actually desire. The government’s role in law, policy and taxation is to design a number of clear and straightforward incentives and disincentives to realise those outcomes.

Scarcity, Energy, Climate Solutions, and a New Civilisation

Andrew Nikiforuk of The Tyee, writes, “So, if our current civilization is to survive in any shape or form it needs to fundamentally rethink all energy spending, from how we harness it to what we use it for. As Michaux concludes in his number-crunching report, “replacing the existing fossil fuel powered system (oil, gas and coal), using renewable technologies, such as solar panels or wind turbines, will not be possible for the entire global human population. There is simply just not enough time, nor resources to do this by the current target set by the world’s most influential nations. What may be required, therefore, is a significant reduction of societal demand for all resources, of all kinds.”

Erin Remblance responds, “How we make that transition to lowered demand should be the most prominent discussion in our media, classrooms and households. Why is it nearly invisible?”

She goes on to note, “Years ago the great psychologist Bruno Bettelheim wrote a book about what happens to people in dehumanizing environments. Having survived two Nazi concentration camps, Bettelheim knew the subject well. Near the end of The Informed Heart, he offered this prescient observation. Jews who accepted the status quo and believed in business as usual perished. Those who did not believe in business as usual left before the Germans arrived, sailed to Russia or America or joined the resistance. Many survived. “Thus in the deepest sense the walk to the gas chamber was only the last consequence of a philosophy of business as usual,” wrote Bettelheim. It was “a last step in no longer defying the death instinct, which might also be called the principle of inertia.”

Now a widespread inertia prevents us from seizing control of our fate. We must do all we can to overcome that torpor. The implications are plain. Those communities that reject business as usual and cut their energy spending and all the materialist values that go with it, just might survive the long emergency and write a different ending to this story.

I have two responses to Erin’s points. They are my elaboration on the two key notions in her comments: Business as usual, and scarcity of energy.

I open talking about business as usual because seeing this clearly is the foundation of any transformation of civilisation, and technological and energy paradigm shift is pivotal in sweeping civilisation transformation along. (See particularly the copious and optimistic works of Jeremy Rifkin). What some have called ‘spiritual malaise’ and others “tranquilised obviousness”, business rarely is as usual, and if, like the history of European Jews, you punish a group regularly in small to harsh ways, I reckon they might just think the next bit of noise is just more of the same.

It does take quite a bit of training to be able to get up in the morning and take a fresh look at what’s happening, and that requires even putting yesterday in the past. It also requires being fully cognizant of our biases and mindsets. Anyone who says they don’t have any are doomed to play them out. What then do we hold to that gives us some predictive viability? First is cultivating an independence of thought, a detachment from the tribe whether professional, national, sub-cultural, or party as usual. And that is not antipathy, even the opposite, what others have called “indifferent love”. This stance supports an ability to: follow the evidence from several fields of science; hold doubt without discarding anything until resolved in evidence; and reviewing fully any arguments against. This ability for independent thought supports the interdependence of all independent thinkers for it is only in the recognition of true independent inquiry (search for truth) that a collective of thinkers can divine a greater magic.

This situation we find ourselves is a call to be so much more than we have ever been, so much more than we wound up being, individually and collectively. We will either rise to the call or we will fall. And whatever happens will be what happens. As the WWII holocaust found traction, Lydia Zamenhoff chose to go back to Poland from the USA in the face of immanent danger, she chose to support the last moments of her community and die with them. We don’t know how many hands she held but we do know she died with them. Those of us in the frontline of transforming this civilisation may well find ourselves in a future of ‘holding hands’. We must accept that this is one possible future.

In terms of policy, economics, and human behaviour, the basic economic reality of scarcity does work. Many people living in rural Australia grew up looking after water usage. If you have to make a meagre annual rainfall and a watertank last a year, you have watch usage like a hawk. On the other hand, if old people can’t afford heating in winter, they could die. Well, that’s a time honoured tradition. Australia has ineptly allowed gas companies to sell much of its gas, internationally, leading to scarcity and high prices for energy as we enter winter. I’m expecting an unusual winter death rate among the elderly this year. Feeding into an inflationary boom, those on more basic incomes can be expected to suffer housing dislocation. This in, perhaps, the wealthiest per capita nation on the planet.

Meanwhile the environmental impact of windfarms is already been felt and the next phase of renewable energy farms will not be given such an easy ride. The real difficulty is that we aren’t learning fast enough because, here in Australia, for the last 20 years 80% of our intellectual energy has been spent on arguing climate change denialism with our government. In the end, the example of the holocaust goes to one characteristic of modern politics so far – we are often very slow to the table. Timing being the essence, and we can’t escape the clear timing the IPCC have provided, we will damage our way out of this catastrophe. The question is, which is the lesser poison or the better trade off? Presumably the one that improves the chances of the ecosystem and human civilisation. There’s not much chop in voting for the view that 1 or 2 or 3 billion people can just suffer and die. There’s not much chop in loosing much more of the world’s ecosystems and species than we already have, because that will inevitably lead to the billions of people suffering and dying. The inextricableness of human development and a narrow range of climate and a particular variety of ecosystems, is conclusive. I support the work of the Foundation for Climate Restoration, the third and often overlooked leg of climate solutions. The scalability of technologies of removing CO2 from the atmosphere over the next decade is likely to have less impact and perhaps even a very positive total impact on ecosystems, than any other climate change solution, namely renewable energy development and population adaptation. To solve this crisis, to transform global civilisation so the next phase of human development is of a higher order of workability for people and ecosystems, we’ve got to work urgently together on all fronts, even if it means government ordered rationing.

The UK in WWII proved that a people faced by a single existential threat can adhere to austere rationing policies for several years. Even in the 1930’s the mathematical and nutritional knowledge was ample so that there were no cases on malnutrition in the UK during WWII. Today, we certainly have the capacity to design sophisticated systems for the allocation of energy, the development of renewables, the weaning from fossil fuels, and the equitable establishment of systems worldwide, together with an food security systems. What is still required is for nationalistic governments to get to the table put aside their extreme patriotisms for the future of humanity and the planetary ecosystems that support us.

We have a political choice: the easy choice or the hard choice. The easy choice is for all national governments to come to the table with good will to design global systems that will create both equity in resource access and as rapid a transition from fossil fuel energy as possible. The hard choice is to continue to bicker and terrorize each other.

Either choice will lead to the new civilisation, will lead to the transition off fossil fuels and to equitable distributions of resources. Even if making the hard choice, once a billion people have died and billions of others have suffered through the defensive and aggressive attitudes of extreme patriots, the billions of people of good will remaining,will see those extremists off. Such has been the way of history to date. Will this be the moment we will be able to put our past in the past and take the easy way, or will we insist that the past dictates our actions and only massive numbers of deaths will convince us that another model of governance and social organization is viable.?