It has finally struck me, albeit in the middle of the night. I have been pondering why, in the face of all the evidence and despite a growing willingness on the part of all nations to address the issue, efforts to reverse climate change are so insipid. Climate change is still in the too-hard basket. Conference after annual conference never fails to disappoint us and Warsaw 2013 wasn’t much different. A Guardian commentator called Warsaw “more like a shuffling of feet”.
OK what is this Road to Damascus discovery? It is to do with affordability. We are trying to add an extra tax, a carbon tax in a context of deflation, where the affordability of everything is declining. Prices are going up relative to disposable income. We are losing our purchasing power (well apart from the 1% I suppose). So it is no surprise the climate change issue is too hard for politicians. Given the choice of putting up petrol and electricity costs when their constituents are already suffering, politicians will kick for touch and argue they need a ‘balance’. Disappointment is inevitable.
Well then how do you solve this political problem? The answer is by addressing the affordability issue head on.
So let’s look at what is reducing the purchasing power of people on this planet? Why, it is the same old two culprits – the bank issued money system and the illogical tax system.
What do I mean? Well if money is issued as interest bearing debt, then interest is built into the price of all goods. How? Every car comes out of a factory whose owners borrowed money at interest from banks. Every piece of furniture, clothing and kitchen goods is manufactured where the owner borrowed money from a bank at interest to do so. Every potato, every steak, every drop of milk and every orange came from a farm whose owners were mired in debt to a bank. The cost of the bank interest is built into the price of all goods. So if we issue money without debt the price of goods relative to wages will drop. Purchasing power will increase. Affordability will improve.
Then there is the incredibly silly tax system. When we tax labour, every manufacturer or primary industry producer has to build the tax in to the price of their goods. Take off income tax and your purchasing power increases. It is the same as GST and company tax and a range of other illogical taxes.
So part of the price of all primary produce and manufactured good is the burdensome tax and the totally unnecessary interest charged when issuing money. Solve those two problems and our purchasing power rises.
Our solution of having a parallel national currency spent into existence without interest and unburdened by these deadweight taxes will dramatically give more purchasing power. Affordability will improve. See this slideshow or read this site for more on this.
So when we change the tax system away from taxing labour and sales and towards charging rents on the right to use the commons, including the biosphere, it will be politically more possible to do something significant about climate change. After all, in proposing a carbon tax, climate change activists are only asking for a regular rental on the right to use the biosphere to get rid of their greenhouse gases.
If a currency flows freely through the economy and only meets opposition when it comes up against the constraints of the commons, it will stimulate innovation in producing and manufacturing clean liquid fuels and give impetus to the whole post fossil fuel economy. The term “green growth” will transform from rhetoric to reality and innovation will thrive.