Friday, September 16, 2005

Alternate Economics and SE2

It’s been a while since I’ve written anything about alternate economics, and I’ve been meaning to write a bit about Georgism, which is one of those fascinating neither-right-nor-left ideas that appear up from time to time.

And then a few days ago an e-mail popped into my home in box that really reminded me of my favourite form of Georgism, the environmental kind. The e-mail was from my two-jobs-ago life as a reporter for the (sadly departed) Sterling News Service. It was from a city councillor in Abbotsford, reminding me that Sumas Energy 2 was about to appeal the ruling of a National Energy Board panel, and...

I can see you’re going to sleep out here, so let’s speed up. Sumas Energy 2 (aka SE2, aka the fucking thug polluters) wanted to build a big, natural gas fired power plant just south of Abbotsford, in Sumas, Washington State. It would pump out smoke, most of which would have drifted north across the line, and aggravated an already smoggy little atmospheric bowl, full of crap that drifted east from Vancouver.

Now, the SE2 fellows are wily capitalist running dogs. They bought cheap land that was too far north to connect easily to high tension wires anywhere in Washington State. But there were wires just a few klicks over the border. They’d run a power line across and connect to a B.C. Hydro substation, no problem. Hell, Abbotsford’s a real conservative town, full of free enterprise, gun loving Christians (and some Sikhs and assorted others). Surely they’d welcome a power plant!

Ummmm... it turns out that the thing conservatives are most conservative about is the health of their children. This was the result. (Note: I didn’t write that story for the National Post. I wrote it for Sterling, which supplied copy to CanWest, which owns the Post. Yay, convergence. And this was back when it was just a right wing rag, not a shitty right wing rag with no sense of shame or decency.)

So, in the saga of SE2, the intervenors finally won the day. The NEB decided that the costs of the project (smog, asthma, lots and lots of angry people screaming for their blood) somehow outweighed the benefits (a tiny number of jobs to build the power line, a trickle of tax revenue). Until the appeal started. At the Supreme Court.

What the hell, those of you who have stuck in this long are asking, does this have to do with Georgism?

Georgism (quick, possibly error-filled summary follows) is a single-tax idea created by the 19th Century newspaper editor Henry George. He noticed that when land was cheap for the taking, around San Francisco, there was a rough equality of wealth. When land became expensive, and was bought up by speculators, some became rich and others poor.

George decided that land was fundamentally different from other real property. As Georgists say, they aren’t making any more of it. You can own a building, an iPod, or a car outright because it is the product of human labour. But according to Georgists, the outright ownership of land is immoral. Land belongs to the community, and to future generations. The products of human labour belong to those who made them.

George therefore proposed that land be the only thing taxed, based on its value. Land could still be occupied and no one would be tossed out of their house or business, but anyone who hogged land would be penalized for it, financially. The proposal was aimed at penalizing anyone who tried to speculate in land, and at allowing the poor, with their apartments and small lots, to pay less tax and keep more of their income. In theory, it could largely side-step the rent-seeking nature of capital, and avoid Adam Smith’s dictum that rent extracts the maximum amount of profit from its tennants.

George’s books were a publishing phenomenon in the late 19th Century, and his ideas were incorporated, in a watered down form, into legislation in a few countries.

Over the years, Georgism has been expanded into other aspects of the world’s natural resources, everything from mineral rights to the radio spectrum. BC’s stumpage and logging tenure rights system was re-written during the Dave Barrett government of the 1970s by a left-leaning Georgist, and it reflects the principles reasonably well.

So why can’t we apply Georgism to, at the very least, environmental law? SE2 is an example of why it would be a great idea.

Currently, most countries impose limits on emissions of various compounds, such as sulpher dioxide, carbon monoxide and particulate matter. You can spew as much as you want, as long as it’s below X amount. And a lot of firms, accidentally or by deliberate negligence, release more in the certainty that the fines will be less than the cost of upgrading or fixing the problems.

These compounds are not good to breathe, period. Imagine if we taxed industry based in large part on what kind of crap, and how much, they were dumping into the atmosphere and water? Two companies, side by side, each with the same number of workers and the same wages, could be taxed very differently. If one of them has smokestacks, it pays for the scientifically estimated costs of the lung diseases, asthma, emergency room visits and damage to the ecosystem it will cause. The other, zero-emission business pays nothing in environmental taxes, and is only taxed on the amount of land and water it uses.

With the taxes indexed down to the dollar based on emissions, there is no getting out of paying, no minimum level of pollutants. Stop polluting, you pay less, period.

A large part of the taxation system should be moved into the Georgist domain, to provide a spur to efficiency and green business. We’d all pay some of our Georgist fees for driving CO2 spewing cars, too. Switch from eight cylinders to four, pay less.

(The difficulty, of course, is in calculating the tax level. We would have to use the best science available, but it will no doubt be somewhat inaccurate. Companies and communities will need the right to appeal the taxation levels. But we also have to beware of junk science and paranoia. And should the money go the feds, the provinces, the cities, directly to the citizens or to a mixture of several?)

Switching to a Georgist system overnight would be an incredibly hard sell, but when you tie environmental costs directly to the taxation system, I think it would win easy acceptance from Canadians from both the left and right of the spectrum. It would certainly appeal to the conservative, free-market citizens of Abbotsford.


BillG said...

a georgist is one who is solely concerned with the landlord's monopoly of economic rent.

a geoist is concerned with all aspects of the natural and social commons being enclosed and violating our right to equal liberty.

regarding the price of the tax - this is fairly easy...

you have to know what the sustainable yield (Locke's Proviso) is for using our common asset - the sky- as a sink...beyond which creates negative externalities.

then sell a number of annual permits (titles to pollute) on the open market for that amount and require they be purchased inorder to use our common asset as a sink.

by returning the collected economic rent to h e owners of the commons in equal amounts (citizens dividend) we will have put inlace a powerful negative feedback loop (rather than positive) where if the citizens want a higher dividend the number of annual permits for sale is restricted.

Matthew said...

Thanks for the comment.

I'm not sure how restricting the number of sales of pollution permits would give the populace more money, though. Wouldn't it be the reverse? I can imagine a scenario where poor neighbourhoods lowered their pollution-tax rates to attract more dividends.