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Carbon Tax Center

Pricing carbon efficiently and equitably

NY Times Depicts Inequality’s Costs in Dollars and Lives

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A post today by New York Times economics columnist David Leonhardt, America Will Struggle After Coronavirus. These Charts Show Why., casts U.S. economic inequality in especially stark terms. Below, we reproduce the post’s most vivid graphs and striking prose.

This and other graphics in this post are by David Leonhardt & Yaryna Serkez, courtesy NY Times.

Why highlight rampant economic inequality in America? Because we at Carbon Tax Center are convinced that U.S. political action to arrest climate change will remain largely stillborn so long as economic insecurity is rampant.

As I wrote earlier this month in a post co-authored with Christopher Ketcham for The Intercept:

People whose health is tenuous and whose pocketbook is empty can’t easily stand up for climate action, but they may do so if government has put them on a solid footing and, in the Green New Deal, provided a framework for paying them good wages to actually implement it.

Moreover, funding for the Green New Deal can and should come from America’s super-rich. “The past decade’s research and agitation on economic inequality must culminate,” we wrote,” in transmuting extreme private wealth into a new collectively shared wealth of renewable energy and sustainable communities.”

Of late, Leonhardt of The Times — a climate hawk and, until recently, carbon tax supporter before the politics of stand-alone carbon taxing became fraught — has written extensively on economic inequality and its dire consequences for Americans. Except where noted, all of the text below has been excerpted from his post that we linked to at the top.

1. Incomes have stagnated. But not for the rich.

One way to think about the rise in inequality is to imagine how different the economy would be if inequality hadn’t soared over the past 40 to 50 years. In that scenario, with the same G.D.P. that we have today but with 1980 levels of inequality, every American household in the bottom 90 percent of income would be earning about $12,000 more — not just this year, but permanently. In effect, each household in this bottom 90 percent is sending a check for $12,000 to every household in the top 1 percent, year after year after year.

 

2. Whose net worth increased the most? The rich.

The trends on wealth are, if anything, more stark. In 2016 the median American household had a 30 percent lower net worth than the median household in 2007. How could this be, given the bull market during much of that period? The answer is that most Americans own little or no stock. Their main asset is their home. The affluent, of course, do tend to own stock, and the median net worth of the richest 10 percent of households rose 13 percent from 2007 to 2016 (the last year for which the Fed has released data).

3. The richer live longer than the rest of us

The trends in health and life expectancy are also deeply worrisome. Rich and poor Americans used to have fairly similar lifespans. Now, however, Americans in the bottom fourth of the income distribution die about 13 years younger on average than those in the top fourth. No other rich country has suffered such slow growth in life expectancy. In 1980, Americans lived roughly as long as the British and French did. Not anymore.

[Back to CTC]

These are highlights of Leonhardt’s post. Much of it — not excerpted here — concerns equally weighty matters like racial income and wealth disparities, the widening life-expectancy gap between the U.S. and other rich nations, our “uniquely expensive and inefficient medical system,” and the tripling since the early 1990s in rates of “deaths of despair” — from suicide, alcoholism and drug abuse — among American adults (ages 25 to 64) without a four-year college degree. (April 14 addendum: The Times today published an opinion piece by economists Anne Case and Angus Deaton, authors of “Deaths of Despair and the Future of Capitalism,” arguing that Americas unfettered for-profit health-care system “takes from the poor and working class to generate wealth for the already wealthy.”)

And more: the chronic-pain gap and one-parent family gap between families on either side of the class divide; the decline of labor unions that formerly gave non-college workers social solidarity as well as economic strength; and of course differences between labor participation (a more accurate and telling metric than unemployment rates, which don’t reflect would-be workers who have dropped out of the workforce).

Leonhardt’s article conludes:

Given all of this, it makes sense that so many Americans have soured on their own country. For almost 20 years, through economic booms and busts and through presidencies of both parties, most Americans have said the country was headed in the wrong direction. They’re right about that.

To repeat: CTC began bringing America’s stark inequality to the fore late last year, in this brief account and this longer narrative, from two convictions: that wealth taxes must be the primary means to pay for the Green New Deal, and that support for concerted climate action depends on making Americans more secure and making America more just.

The work continues.

Note: Leonhardt’s July 3 follow-on post, The U.S. Is Lagging Behind Many Rich Countries. These Charts Show Why., adds to this rich vein with trenchant comparisons of U.S. with western Europe on union membership, minimum wage rates, life expectancy, health care costs, etc.

Can This Pandemic Spur Climate Action?

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[NB: This post is co-authored with Christopher Ketcham. A slightly different version was published earlier today in The Intercept under the headline “What The Coronavirus Pandemic Can Teach Us About The Climate Emergency.”]

Greta Thunberg couldn’t do it. Bill McKibben and 350.org couldn’t do it, and neither could the Paris climate accord. But Covid-19 is cutting human-caused emissions of carbon dioxide and other greenhouse gases as travel and other economic activity in much of the world slow or halt altogether.

While the contraction in CO2 emissions set off by the virus may not be as pronounced as the related though distinct fall in “conventional” pollutants like soot and smog, it is far more consequential. Soot and smog poison and kill only in the present, while greenhouse gases stick around to maim the climate for the next century. Burning a fossil fuel today is tantamount to signing a death warrant for future generations. Conversely, forgoing an action that would have caused a fossil fuel to be burned creates a permanent benefit.

Traffic is unusually light in Oakland, Calif., on the approach to the Bay Bridge on March 17, 2020, after seven Bay Area counties are locked down in an unprecedented shelter-in-place order. Photo: Jane Tyska/Digital First Media/East Bay Times via Getty Images. (Originally published in The Intercept’s April 4 version of this post.)

Until now, the only downturn of note in total worldwide CO2 emissions during the era of climate awareness — defined as the period beginning in 1995 with the first U.N. Climate Change Conference — was in 2009, the onset of the Great Recession. That downturn was brief and mild.

In contrast, the current contraction could be severe enough to cut in half this year’s addition to the atmosphere’s carbon dioxide concentration — the metric that dictates climate change — according to calculations by co-author Charles Komanoff for the Carbon Tax Center.

Is it cruel to point approvingly to the steep reduction in carbon emissions now unfolding, given the skyrocketing deaths, lost livelihoods, and widespread privation? And won’t the reductions be negated as the virus is tamed and emissions come roaring back? No and no.

Like so much else, whether or not the current reduction in CO2 is sustained will depend on who gets to reconstruct society after the virus. But the reduction will not be negated. Just as carbon emissions persist long enough in Earth’s upper atmosphere to act as permanent climate change agents in terms of one individual’s lifetime, avoided emissions are a permanent balm.

The airplane trips you won’t take this year won’t be made up in 2021, for the simple reason that most people who use airplanes do so regularly. A missed trip isn’t a once-in-a-lifetime experience that will be put back next year; it’s a missed trip, period. Ditto for work commutes and leisure activities.

So yes, the precipitous drop in burning petrol for vehicles and aircraft has a lasting imprint. The contraction of the U.S. economy this year could purge 30 to 40 percent of carbon emissions we would otherwise spew. Similar but milder jettisoning of carbon-burning in the rest of the world could collectively trim up to one part per million from the atmosphere’s present 415 ppm concentration of CO2 — a modest climate-protective achievement, to be sure, but one without precedent in the modern era.

The suffering is a different story. Were a happiness/misery calculator able to quantify the pluses and minuses to well-being from events befalling human society, the coronavirus’s flattening of the rising CO2-in-the-atmosphere curve would obviously be swamped by the lost life and the disordering of business as usual.

And yet business as usual must come to an end if we are to hand down a livable planet to our children.

The rub is how to slash carbon emissions with minimum suffering and maximum social and economic justice, and without nature forcing the reductions on us via pandemics or other chaotic black swan events that are surely in store.

The fact that human behavior and activity are undergoing climate-beneficial changes in the crucible of Covid-19 suggests that “business as usual” can be altered, and quickly. Though we can’t yet point to new models of planned and equitable carbon reduction, there are four identifiable pandemic-driven upheavals of social consciousness that should give us hope of instituting the transformations necessary for civilization not to commit collective climate suicide.

One is that science’s prestige and value are being restored. Americans watching Trump’s circus-like coronavirus daily briefings see National Institutes of Health immunologist Dr. Anthony Fauci stepping in to correct the president’s dangerously ignorant commentary. Similarly, we know it is the community of front-line doctors, nurses, and health care workers who will care for the sick; the epidemiologists and science journalists who will inform the public’s response; and trained chemists, biologists, and statisticians who will synthesize and prove the vaccines that will bring the pandemic to an end. As environmental legal scholar Michael Gerrard wrote last week, the climate change lessons of Covid-19 are to heed the warnings of scientists, do everything possible to minimize the hazards they predict, and prepare to cope with the impacts that remain.

Second, the crisis is helping us see just how much our well-being depends on muscular, proactive governance. Government of the people and for the people is literally the thing that’s now needed more than ever.  The people must be sovereign over corporations and not vice versa — a point driven home by the tepid response of big business to Trump’s exhortations to step up manufacture of equipment to protect health care workers.

Third, we may be shaking loose the defeatism that nothing can be done quickly. Take the example of those of us sheltering in place: We are learning, overnight, that simplicity isn’t necessarily austerity, frugality need not be privation, and that we can forgo quite a lot of our leisure and consumer entitlements if it serves some higher purpose — at present, to stop the sickening and death of our fellow human beings; in the longer run, to bend the rising curve of carbon emissions and put a hard stop on climate chaos.

Moreover, if our society can act, finally, to manufacture a million ventilators and a billion protective masks, surely we can within a few years act on a far grander scale to erect, say, a million wind turbines, insulate and solarize a hundred million buildings, carve ribbons of bicycle paths throughout our cities and suburbs, and so on. With the pandemic enforcing a brutal but necessary reset, the NIMBYism that has impeded this kind of progress practically everywhere might be swept into the dustbin for good.

Volunteers for nonprofit organization Martha’s Table load bags of fresh produce to distribute to people in underserved communities on April 1, 2020, amidst the coronavirus pandemic in Washington, D.C. Photo: Chip Somodevilla/Getty Images. (Originally published in The Intercept’s April 4 version of this post.)

Most hearteningly, the crisis is instilling a renewed appreciation of social solidarity. The more we are forced to quarantine and isolate, paradoxically, the more we become cognizant of the need for mutuality and social relations and social conscience. As New York Times columnist Roger Cohen wrote yesterday, “If this plague that cares not a whit for the class or status of its victims cannot teach solidarity over individualistic excess, nothing will.”

My well-being depends on your not being sick. My ability to be fed depends on your ability to grow and transport and distribute food. My life is now literally in your hands, as you make decisions whether to restrain your activity in the public sphere, keep your distance, self-quarantine.

If we so fully need each other, how can I abide your not having affordable health care? In this moment when the precarity of half or more of American households is laid bare, how can I abide a government that places the well-being of billionaires — whose wealth each week generates more money than many of us earn in a lifetime — above that of the 90 percent of Americans who make less than $100,000 a year?

What does solidarity have to do with climate? Everything. People whose health is tenuous and whose pocketbook is empty can’t easily stand up for climate action, but they may do so if government has put them on a solid footing and, in the Green New Deal, provided a framework for paying them good wages to actually implement it.

Synergies abound. With the U.S. government providing direct payments to American households, it’s only a step or two to paying coal miners and cattle ranchers to become solar installers and wind farm maintainers. Enacting some form of guaranteed income, even just temporarily, could pave the way for the “carbon fee and dividend” approach to taxing carbon fuels without further burdening the less well-off. In a different vein, trading frenetic foreign travel for staycations could downsize socially destructive companies like Airbnb, making rental apartments more affordable and in turn diminishing long-distance commuting and slashing carbon footprints.

Table shows assumptions supporting Carbon Tax Center assertion that pandemic-caused economic disruptions could shave 1 ppm from atmospheric CO2. See linked CTC post for full discussion.

As for the super-rich, never have their fortunes been so fully revealed as hollow and corrosive. Worldwide, the wealthiest 5 percent of households collectively burn more carbon than the entire bottom half, according to a comprehensive new report from the University of Leeds. Could the past decade’s research and agitation on economic inequality now culminate, in the pandemic’s wake, in an insistence on transmuting extreme private wealth into a new collectively shared wealth of renewable energy and sustainable communities?

Table presents the calculations and assumptions underlying Carbon Tax Center’s assertion that economic disruption from the pandemic could cut 1 ppm from atmospheric CO2. For fuller discussion, follow link from “calculations” higher up in the text.This, more than fossil fuel divestment or class-action litigation, is the kind of program that will actually cast off the yoke of the fossil fuel empire upon which the portfolios of the super-rich depend. In the process, the toxic aspiration to join the super-rich could be swept aside. Bye-bye, lusting after commuter helicopters. Bye-bye, hungering for one’s own island. Bye-bye, legislatures purchased by dark money.

As for those in the rarified upper classes who, in Margaret Thatcher’s iconic phrasing, embrace the libertarian right-wing precept that “there is no such thing as society,” let’s hope they will be answered by the millions of commoners who see clearly, as the pandemic rages, that we are all in this leaky boat together.

Charles Komanoff, a New York City-based economist and activist, directs the Carbon Tax Center.  Christopher Ketcham, an upstate New Yorker, is author of “This Land: How Cowboys, Capitalism, and Corruption are Ruining the American West.”  

Could COVID-caused economic cratering trim 1 ppm from atmospheric CO2?

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Calculations by the Carbon Tax Center suggest that the worldwide economic contraction from steps being taken to slow the spread of deadly COVID-19 could halve this year’s rise in the atmosphere’s carbon dioxide concentration.

The last time average atmospheric CO2 rose less than 1 ppm was 1993. Could 2020 do likewise? (Graph is from “Our World in Data” website mentioned and linked to below.)

This finding is largely illustrative and encased in caveats. First, the average CO2 level wouldn’t actually fall; rather the business-as-usual annual rise of around two ppm would be trimmed to just one. And for that to happen, the slowdowns in travel, industrial production, goods movement and commercial activity, and the accompanying reductions in use of fossil fuels and carbon emissions, would have to be steep and prolonged, as our calculations show below.

The most critical caveat, of course, is the widespread deaths and massive dislocations bound up with these events. Megadeaths and cataclysmic job losses are not anyone’s preferred path for slowing climate change. Nevertheless, the calculations provided here may be instructive.

U.S. Reductions
Federal bean-counters divide U.S. energy use into four categories: Industrial, Transportation, Commercial, Residential. We assume that the first three contract by 50 percent as factory production tumbles, aviation evaporates, commuting recedes, recreational travel dissipates, and offices, stores and performance spaces remain empty. (April 2 addendum: U.S. gasoline demand for the week ending March 27, before the economy fully shut down in all 50 states, was 27 percent less than in the same year-earlier week, according to Energy Information Administration data.) We assume that residential energy use, which currently is around a fifth of the total, rises by 10 percent due to enforced home-stays.

These assumptions add up to a 37 percent shrinkage in U.S. energy use measured in Btu’s. The fall in carbon emissions might be a bit greater since carbon-free energy sources — nuclear power, wind turbines and solar panels — would keep humming while dirtier coal and petroleum bore the brunt of the cutbacks. We’ll watch to see how other modelers handle the complex calculations.

See table below for bar details.

Rest of World
U.S. carbon emissions now (2017) account for only 15 percent of the world’s total. To baseline the rest of the world’s CO2 we turn to the superb data compilations and visualizations assembled under the aegis of “Our World in Data.” Analysts Hannah Roser and Max Ritchie divide the globe into nine regions, plus International Transport (largely long-distance shipping and aviation).

We assigned various percentage reductions to each region as shown in the graph at right, starting with our U.S. figure of 37% derived above. Other reductions range from highs of 40% (International Transport) and 30% (European Union) to lows of 10% (Africa) and 15% (most of Asia; also Latin America). The worldwide average — again, this is speculative calculating — is 21%.

We again stress that these are guesses and are skewed to the high side; as dire as things are, it still seems unlikely that fossil-fuel burning and consequent carbon emissions will fall this steeply. Moreover, deep contractions probably won’t be sustained for a full year.

Translating CO2 emissions to CO2 levels 
The numbers are largely illustrative and we’ve pushed them hard. Summing the reductions shown in the graph, they imply that 2020 emissions conceivably could fall short of the 2017 baseline or “default” value by 7 to 8 billion metric tons (gigatonnes).

Tabular version of bar graph above.

The redoubtable “Skeptical Science” brief, Comparing CO2 emissions to CO2 levels, tells us that each 7.8 gigatonnes of emitted carbon dioxide adds 1 part per million to atmospheric concentrations of CO2. Equivalently, reducing emissions by 7-8 gigatonnes — whether absolutely or relative to a baseline trajectory — averts a 1 ppm rise in atmospheric CO2.

Keep in mind that this would constitute a permanent drop. Atmospheric concentrations of CO2 would be 1 part per million less than otherwise not only at the end of 2020 but at the end of 2021, 2022 and every year going forward. The boon to climate and humanity, though slight (considering that the world has overshot the postulated 350 ppm maximum safe level by more than 50 ppm), would be indelible.

We hope in future posts to explore how much of the current reduction in CO2 might be negated by economic “bounceback” (short answer: not much); and, more importantly, how the economic and social upheavals from the coronavirus crisis might open up political pathways leading to decisive, longer-term action to bring down carbon emissions without widespread suffering.

Addendum, April 11: See our new post today, CO2 emissions will shrink this year. How much?, for a discussion of parallel but different projections of worldwide 2020 CO2 contractions from Carbon Brief.

Bill de Blasio, Climate Troll

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[NB: A longer version of this post was published on March 13, 2020 in Counterpunch.]

Prologue

The tweets above, from a bicycle commuter and a local journalist, are New York City Mayor Bill de Blasio in a nutshell. Even as he was encouraging coronavirus-concerned commuters to cycle to work, he not only failed to carve out special lanes on streets and bridges, he also stood by while NYPD conducted its customary cyclist-summonsing traps as if nothing had changed.

Ditto on the climate crisis. For two years running de Blasio has made a show of divesting from and suing fossil fuel companies, winning him the allegiance of the climate vanguard. Yet throughout his mayoralty he has doggedly rejected mounting pleas to “break car culture” in the very place where his authority matters. His administration consistently gives drivers a free pass to contribute to rising global temperatures even as their driving repeatedly puts other New Yorkers at risk.

I have a foot in both the climate camp and New York’s “livable-streets” camp. I’ve fought fossil fuel use for almost half a century and currently head the militant pro-climate Carbon Tax Center. Locally, I’ve been an architect of congestion pricing, a bicycling activist and a direct-action campaigner for pedestrians’ rights. The juxtaposition of de Blasio’s climate calls-to-arms with his pro-driving policies is head-spinning.

Is it worth calling out a lame-duck mayor’s complicity in car culture? Yes. New York retains an outsize influence on urban policy and culture. Actions here to de-emphasize automobiles could reverberate globally and help shrink burgeoning transportation emissions. Moreover, de Blasio recently returned to the national stage, stumping for Bernie Sanders. Before his self-proclaimed myth as climate mayor goes national, we should scrutinize his record.

De Blasio is M.I.A. on breaking car culture

Public interest in transit and traffic in New York City blossomed over the past decade. Ideas and activism abound. De Blasio remains oblivious.

Take congestion pricing. For years the mayor’s answer to proposals to toll drivers entering Manhattan was ginned-up sob stories about having to pay $12 to drive to $500 doctor visits. He got on board only after his hand was forced by the governor.

Or “Fair Fares,” the progressive brainchild of having city government pick up half of the cost of poor families’ Metrocards. De Blasio brushed it off until City Council activists attained a veto-proof majority. When it passed, City Hall slow-rolled the implementation.

Busways? Transit buses have hemorrhaged ridership for years, largely because mounting car and truck traffic has brought them nearly to a standstill. After de Blasio agreed to let transportation officials pilot car restrictions on one crosstown route, speeds and usage shot up. Yet the mayor hasn’t committed to replicating it elsewhere.

The story repeats on almost every transportation front. The mayor stood by as Uber and other ride-hailing services muscled into the Manhattan taxi franchise, bankrupting thousands of cab drivers, worsening traffic and undermining mass transit. He let free-parking pleaders delay bicycle lanes even as biking fatalities hit a 20-year high. And de Blasio’s signature “Vision Zero” traffic-safety initiative is undermined daily by his denial of NYPD’s entrenched pro-driver bias. Police issued more summonses to bicycle riders than truck drivers last year. Unsurprisingly, pedestrian fatalities, many under the wheels of trucks, are on the rise.

The twin threads running through this account are passivity and fatalism. In de Blasio’s New York, everyone is a driver and every car and truck trip is sacrosanct.

Confronting Big Oil has delivered little

The mayor’s bold words on climate haven’t yielded much. On divestment, it took city officials two years simply to select advisers “to evaluate options and recommend actions.” The city’s lawsuit seeking to hold oil and gas companies liable for climate change harms was dismissed in federal district court, for pre-emption.

Undated photo. Courtesy NYC.gov

But a municipal climate strategy built on attacking Big Oil has a graver defect: Neither divestment nor litigation materially alters the systems of demand and supply that generate the carbon emissions that are wrecking the climate.

To be sure, divestment campaigns and demands to hold fossil fuel companies liable are contributing mightily to movement-building and elevating climate change politically. Because of these campaigns, climate advocacy has been surging, which promises big policy dividends down the road.

But it’s also true that even if fossil fuel stocks are dumped from city pension portfolios, every drop of drivers’ demand for fossil fuel will still be met at the gas pump.

From a carbon standpoint, divestment, litigation and general saber-rattling against Big Oil are essentially performative acts. Payoffs will take decades to appear. Yet de Blasio holds the reins over a multiplicity of policies that determine how much New Yorkers drive and, thus, how much gasoline they burn. He simply chooses not to wield them.

Why is “breaking car culture” anathema to de Blasio?

What accounts for de Blasio’s disinterest in reducing automobile use in New York City? For one thing, he appears genuinely terrified of yoking the NYPD to any action that might appear anti-car or anti-driver. But the roots of the mayor’s reticence lie deeper: De Blasio lives inside a windshield world.

Questioned not long ago about possibly converting “free” parking on residential streets to metered parking, de Blasio said:

“If we’re going to tell people they can’t park on their street, no, that does not ring true to me. If you go so far as telling people they can’t park on their street, no, I’m not there.”

Yet the idea put to the mayor wasn’t to ban street parking but to charge for it — which could make parking easier for most by inducing a fraction of residents to stop storing cars on the street.

The same reflexive identification with a traditional conception of driving underlies de Blasio’s gut-level resistance to nearly every proposal to alter the city’s streetscapes so New Yorkers can safely and easily get around without a car.

As one City Hall reporter put it, “De Blasio is a driver. He’s also a very affluent man who views himself as an average middle class guy. So he genuinely believes ‘Oh this [congestion pricing] is going to hurt lots of regular Joes’ without examining any data behind that belief.”

Yet congestion pricing alone will cut New York City’s CO2 pollution by nearly a million metric tons a year, an amount nearly triple the drop in New York’s car and truck emissions from 2005 to 2017 (which came about only because federal mileage standards — pre-Trump — made new cars less inefficient).

And those million tons are just congestion pricing’s down payment for climate. As I wrote two years ago, when the mayor was still badmouthing the idea:

Congestion charging’s true climate payoff is in the households, jobs, and activities that will locate or remain in the city, rather than fleeing to the new exurban ring or the Sunbelt, which have carbon footprints many times larger than New York’s.

Is climate posturing de Blasio’s way to avoid reckoning with NYC’s car culture?

Notably absent from the livable-streets movement are most self-described climate activists — groups like Bill McKibben’s 350.org or Food and Water Watch. This prompts the question: are plaudits from climate leaders letting the mayor deflect efforts to downscale the primacy of cars and make the streets not just safer but more sustainable?

Make no mistake: the climate vanguard’s embrace of the mayor is powerful. Just last month, McKibben posted on Twitter:

Emphasis added: The fossil-fuel age is now officially in its twilight in the world’s financial and diplomatic capital.

To learn how the cyclist came to be crushed by the minivan, click on the link under “hellscape of cars and trucks” at left.

New Yorkers by the thousands have organized for years to win better subways, safe bicycling and vital public spaces — both for their own sakes and because they enable a city with fewer cars. While McKibben talks airily about stopping new fossil fuel infrastructure, we confront that infrastructure’s present manifestation daily in our city’s hellscape of cars and trucks.

Livable-streets advocates are counting down the 22 months left in de Blasio’s second and final term. We’re weary of his inane climate pronouncements and his cluelessness about what being a climate mayor really means. We yearn to be free of the spectacle of a mayor pontificating about Greta Thunberg while refusing to use mass transit.

But mostly we long for, and are resolved to elect, a mayor who at long last understands that breaking car culture lies at the heart of urban climate action.

Australia’s Brief, Shining Carbon Tax

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I was there to catch a man
I thought I had him by the hand
I only had him by the glove
The War on Drugs, I Was There, 2011

Australia, engulfed in flames, choking in smoke, a billion animals perished, once had a powerful climate solution by the hand: a carbon tax. The nationwide tax on fossil fuels was in effect for just two years, but what an impact it had, helping the country cut its carbon emissions while economic activity climbed unimpeded. During the carbon tax’s middle year, 2013, Australia’s CO2 to GDP ratio had its sharpest drop ever (see graph below).

Lake Conjola in New South Wales on the last day of 2019. Photo by Matthew Abbott, courtesy NY Times.

Australia stands apart, then, not just in the magnitude of its climate-charged horror but in deploying a climate-change antidote, only to lose it to a right-wing, coal-financed backlash. Not even Trump’s dismantling of the Obama pro-climate Clean Power Plan and auto-mileage standards, unsettling as it has been, stands out as cruelly as Australia’s renunciation of its carbon tax.

Unwanted child, stepchild, bastard child … Australia’s carbon tax was all of that. It took effect on July 1, 2012, the keystone of a deal between the Labor Party headed by incoming prime minister Julia Gillard and the pro-carbon tax Green Party, whose votes Labor needed to attain a majority.

As Australian journalist Julia Baird noted in a 2014 NY Times op-ed, Gillard’s earlier pledge to not tax carbon emissions and her “perceived lack of conviction in the policy itself” damaged the tax’s credibility and her own viability. The subsequent electoral victory of a “Liberal” (read: right-wing) government committed to repealing the tax led to its rescission on July 17, 2014.

Yet the tax appears to have performed brilliantly. With just two years of data, we can’t draw sweeping conclusions. Nevertheless, we have these ineluctable facts about the 24 months in which Australia taxed carbon emissions from all major sources except petrol-fueled transport:

  • CO2 emissions from burning fossil fuels in Australia fell 2.4 percent in 2013 and 1.1 percent in 2014 — the two steepest year-on-year declines since 1990, when modern record-keeping began.
  • Emissions in 2014 were 14 million metric tons less than in 2012. The decline was powered by a 19 million metric ton drop in the electricity sector, which is highly carbon-intensive and thus the most responsive to carbon pricing. (Increases in mining and manufacturing emissions somewhat offset that downturn.)
  • Economic activity was unaffected by the carbon tax, as indicated by the minimal difference between the 3.01% average annual rise in GDP for the years 2012, 2013 and 2014 vs. the 3.07% average rise for the remainder of the 1990-2017 period for which we had data.

As each day brings new stories of suffering from the terrifying temperatures (including a continent-wide average 107.4ᵒF on Dec. 18) supercharged by climate change, we can only speculate what might have turned out differently if the country hadn’t abolished its carbon tax in 2014.

Calculations by author, from data posted by Australian Greenhouse Emissions Information System, Department of the Environment and Energy. CO2 figures include all sectors except Agriculture, Forestry & Fishing. GDP data are from World Bank and in constant US dollars.

For one thing, the 18 million metric ton rise in nationwide emissions since 2014 (to 2017, the last year for which the government has issued data) might have been averted if the carbon price signal had stayed in place. Emissions might even have shrunk if the tax had risen from its roughly $20 per ton level — and if the national government had embarked on a New Deal-style project to harvest the country’s vast solar and wind resources.

Even more, Australia’s action might have rippled through the world. The example of a proudly macho and avowedly hedonistic society explicitly pricing its carbon emissions could have turned heads, particularly in the United States, with its many cultural resemblances to Down Under. The fantasy of a land that produced Mad Max and Crocodile Dundee serving as a global role model for carbon taxing and reduction is delicious, though alas, no more than that.

Had Australia continued taxing carbon, British Columbia, the other English-speaking jurisdiction with an explicit carbon tax, wouldn’t have been dismissible as a unicorn. Carbon tax campaigners in, say, Washington state, whose voters considered but rejected a carbon tax in 2016, would have had more than one drum to pound.

Stark difference in CO2 emissions between three years in which Australia’s carbon tax was in effect and rest of 1991-2017.

It could be said, of course, that Australia’s rescission of its carbon tax is merely one of a number of missed opportunities around the world to tackle climate change by transparently pricing carbon emissions. In an alternative U.S., influential left-greens like Van Jones, Naomi Klein and Food & Water Watch might have backed that Washington carbon tax referendum — or, at least, not lent their voices to the opposition. Earlier, at the start of the Obama presidency in 2009, U.S. “big green” groups could have thrown their weight behind straight-up carbon taxing rather than try to muscle the convoluted, Wall Street-friendly Waxman-Markey cap-and-trade bill through Congress.

But Australia’s fateful choice is harder to bear. A country of 26 million people didn’t merely pass up a potential opening six years ago; it turned its back on an actual, promising beginning by bringing to power a confirmed climate denier, Tony Abbott, who axed the tax in 2014 and just a month ago, as his country was becoming a cauldron, complained to an Israeli radio audience that the world was “in the grip of a climate cult.”

When summer ebbs and the fires and smoke recede, Australians should consider how and why they disarmed themselves in the fight to stop climate change; and then make a new start by reinstating a policy that, in the brief time granted, appears to have worked wonders.

For more on Australia’s carbon tax history, click here (the Australia section of CTC’s “Where Carbon is Taxed” page).

How Our 2019 Reading Led Us to Broaden CTC’s Mission

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Among the gazillion articles, posts and books I read this year, three stand out.

Together, the three reads helped spark the Carbon Tax Center’s transformation from single-minded focus on carbon taxing and toward our new synthesis of taxing both carbon and inequality in support of a Green New Deal. As the year draws to a close, I want to share these pieces with CTC subscribers and visitors.

These shaped our thinking in 2019: Reporting on the ecological roots of the New Deal and the Gilets Jaunes protests, and a book on U.S. tax inequality.

Two of them, long-form journalism published in Harper’s magazine, plumbed the yellow vest protests in France and the ecological roots of Franklin Roosevelt’s New Deal. The third, a searing, book-length exposé of tax inequality in the United States, is already reverberating in the current presidential campaign.

1. A Play With No End: What the Gilets Jaunes Really Want, by Christopher Ketcham, Harper’s, August 2019

(Full disclosure: Christopher and I are longtime friends, close enough that I wrote a eulogy to his stepmother, who died last month, and for us to have had several long conversations about his Gilets Jaunes story as he was setting it to paper last spring.)

The Gilets Jaunes movement, named for the yellow vests that French motorists are required to keep on hand for emergencies, rocketed to public attention last December when their largely rural protests against fiscal austerity reached the capital.

Ketcham drew on his direct observations of three tumultuous yellow vest marches in Paris last winter, in which he talked with hundreds of protesters — working and unemployed people and pensioners whose lives have teetered as their communities have been hollowed out by deindustrialization and megastores. He discovered that the Gilets Jaunes weren’t, as the mainstream media insisted, protesting climate action; they were rising up against the yawning gap separating them from the super-rich, a gap widened by President Macron’s rescission of French wealth taxes just weeks before he pushed through a modest carbon levy that raised prices of gasoline and diesel fuel but left aviation fuel untouched.

“The new carbon tax — nine cents more per liter of diesel, four cents more per liter of gasoline — ­may have been the proximate cause that galvanized the Gilets,” Ketcham wrote, “but the worsening conditions of what the protesters called “l’injustice fiscale” [fiscal injustice] provided the powder for an explosion.”

Journalist Chris Ketcham on Paris’s Champs-Élysées. March 2019 photo by Agnes Dherbeys.

My conversations with Ketcham helped me appreciate the taint of unjustness that has come to surround stand-alone carbon taxing. That a carbon tax can, in theory, be made income-progressive — something this site has trumpeted for a decade — dissolves into irrelevance so long as the ultra-wealthy can consume fossil fuels with impunity while dominating discourse about our dependence on them.

One passage in particular in Ketcham’s article points to a possible escape from this dilemma — a passage I helped him craft on the roof of my apartment building in lower Manhattan, under the thwack-thwack of helicopters whisking the richest of the 1% to their weekend redoubts:

The war of the Gilets Jaunes against the rich, in the age of climate change, is one driven by an understanding unique to protest movements in France: that the privilege to lord and the privilege to pollute are one and the same.

If that is so — if the privilege to pollute is indeed the privilege to lord — shouldn’t we seek to tax both carbon and the super-rich?

2. Where Our New World Begins: Politics, Power and the Green New Deal, by Kevin Baker, Harper’s, May 2019

If Ketcham’s story put the lie to the media image of the yellow vests as know-nothing French trumpistas, Baker’s article resuscitated the Depression-era New Deal as an ecological project, not just an employment-creating and wealth-creating one. Indeed, in Baker’s telling, the New Deal’s three elements of jobs, production and care for the land were so intertwined as to have been one and the same.

Baker’s article begins in two disaster areas: the pre-TVA, flood-prone, impoverished Tennessee Valley, and the mid-thirties mid-American Dust Bowl:

In their desperation, the people of the Tennessee Valley had begun to cut or burn down more and more of the area’s once copious forests every year, seeking to clear more marginal land for farming, to sell the timber, or simply to heat their homes and cook their meals. Deforestation only further drained the soil, and what little land they had kept slipping away.

And this, about the high plains of eastern Montana, Wyoming and Colorado, across Nebraska, Kansas, Oklahoma and Arkansas:

The dust storms were not merely blown dirt, frightening as that might seem, but entire weird weather systems marching across the land. The static electricity they generated made fire dance along barbed wire and shorted car ignitions. It electrocuted farm animals and those few crops the blowing dirt had not already smothered — literally blackening vegetables in the patches where they lay. The people in the paths of these storms huddled in the darkness, unable to see their hands before their faces for hours, choking — sometimes choking to death — on the “dust pneumonia” that scarred their lungs as badly as if they had contracted tuberculosis.

Baker reminds us that the dust storms were human-made. Nineteenth-century warnings from the likes of John Wesley Powell — Colorado Plateau explorer and founder of the U.S. Geological Survey — that large-scale farming of the dry lands “beyond the hundredth meridian” was unsustainable, were plowed under by propaganda from mercenary railroads and their government enablers:

Much as the Trump Administration and corporate America react today to the idea of climate change or anything else they don’t want to hear by making stuff up, the government and the railroads … promoted quack theories to serve their purposes. No water? Don’t worry: there was always “dry farming,” “dust mulching,” and the imperishable notion that “rain follows the plow”— or civilization in general.

Office of War Information poster, artist unknown, c1942-1945, courtesy Harper’s magazine.

Linking Trump and today’s corporate America to their rapacious forebears is a constant refrain in Baker’s article. Another is pearl-clutching by mainstream gatekeepers such as The New York Times’ editorial board, both in 1933, opposing FDR’s fast-tracking of TVA authorization and funding (“enactment of any such bill at this time would mark the ‘low’ of Congressional folly”) and in 2019, decrying the sweeping ambition of the Green New Deal resolution from Rep. Alexandria Ocasio-Cortez and Sen. Ed Markey (“the resolution wants not only to achieve a carbon-neutral energy system but also to transform the economy itself”).

To be fair, that 2019 Times editorial, The Green New Deal Is Better Than Our Climate Nightmare, offered some positives about the resolution. Yet The Times’ tunnel vision is on full display in the passage excerpted by Baker:

Read literally, the resolution wants not only to achieve a carbon-neutral energy system but also to transform the economy itself. As Mr. Markey can tell you from past experience, the first goal is going to be hard enough. Tackling climate change in a big way is in itself likely to be transformative. We should get on with it.

What Markey and AOC grasp, and, The Times may come to understand, though perhaps too late, is that, in Baker’s words, “We must address climate change, and we must transform the way our political and economic systems work in this country — just as we did during the Great Depression. There is no way to do one vital thing without doing the other.” While TVA, the Soil Conservation Service and many other New Deal initiatives were imperfect, as Baker notes, they pulled the land, and the country, together.

3. The Triumph of Injustice: How the Rich Dodge Taxes and How to Make Them Pay, by Emmanuel Saez & Gabriel Zucman.

Saez and Zucman may not have intended it, but their new book — our third and final 2019 read — goes a long way to fulfilling Kevin Baker’s commandment to simultaneously address climate change and transform America’s political and economic systems.

That’s a high compliment for any book, and a particularly startling one for a book whose nominal subject is taxation. But reading “The Triumph of Injustice” is a revelatory experience, making clear just how much has been and is being stolen from working- and middle-class Americans to bloat the already criminally swollen coffers of the super-wealthy.

Graphic from “The Triumph of Injustice” by Emmanuel Saez and Gabriel Zucman.

In 2018, for the first time in at least a century, and perhaps ever, Saez and Zucman report, billionaires — the 400 wealthiest U.S. families — paid lower tax rates than the working class, which the authors define as the bottom half of U.S. households. The respective 2018 tax rates were 23.0% for the billionaires and 24.2% for working class households. In 1960, Saez and Zucman’s graph informs us, the ratio of tax rates exceeded two-and-a-half to one (56.3% to 21.6%); even as recently as 1980, on the eve of Reagan’s ascent to the White House, the ratio was still close to two to one (47.2% to 25.7%).

These percentages are emblematic of American inequality. Plunging tax rates for those at the top of the income pyramid, engineered primarily through diminished taxation of capital (lower rates on capital gains and corporate income) have fueled what Saez and Zucman call “a snowball effect [whereby] wealth generates income, income that is easily saved at a high rate when capital taxes are low; this saving adds to the existing stock of wealth, which in turn generates more income, and so on.” The income pyramid grows ever steeper.

Snowballing is bidirectional. Burgeoning wealth at the top lets the super-rich buy heretofore unimagined political influence, not just through lobbying and campaign contributions but by creating and/or purchasing wealth-glorifying think tanks and media outlets. The result transcends ready-made votes in Congress and state legislatures to include an intellectual and cultural climate that valorizes the wealthy and stifles those who would counter the snowballing by taxing extreme wealth.

A signal achievement of “The Triumph of Injustice” is its painstaking construction of a century’s worth of tax incidence, not just at the federal level but state and municipal as well. The authors define eight or more tax categories — income, property, corporate, estate, wealth, payroll, consumption and health (the last encompasses payments for private and government health insurance) — and chart their “bite” for each income decile as well as for the top 1%, 0.1% and 0.01% and America’s 400 billionaires.

As if this tour de force weren’t enough, “The Triumph of Injustice” embeds its calculations and findings in a captivating narrative of American tax history from the colonial era through the Civil War, the Gilded Age, the New Deal, the postwar (and bipartisan) high marginal tax rate years, to Reagan’s tax renunciation (“Government is not the solution to our problem, government IS the problem”) and Trump’s tax “reform.” It’s illuminating and disturbing.

U.S. tax breakdown under Sen. Warren’s plan, per Saez & Zucman at taxjusticenow.org.

It wasn’t just tax erudition that vaulted Saez and Zucman to their status as architects of Sen. Elizabeth Warren’s and Sen. Bernie Sanders’ wealth tax plans. The likely clincher was their ability to calculate the revenue the Treasury stands to gain, year by year, through various permutations and combinations of raised taxes on capital (in the form of higher tax rate for capital gains, corporate income, and estates); and to explain how strong regulation backed by an aroused public could seal off the multiplicity of escape hatches from the higher taxes.

Somehow, “The Triumph of Injustice” delivers all this in just 200 pages. Even better, Saez and Zucman have posted their wealth and tax-incidence data on their website, taxjusticenow.org. The topper is their elegant, interactive page that lets you Make Your Own Tax Plan and see how the Warren and Sanders plans, or a plan of your own devise, can cut the holdings of the ultra-rich down to size and return American taxation to the relatively egalitarian shape it maintained from the New Deal through the Great Society.

Our Next Steps

At CTC, we are expanding our program around a new synthesis: a Green New Deal funded by taxes on extreme wealth — “taxing inequality,” you could say — and supported by a revenue-neutral carbon tax.

You can read more about this redirection here. We wish to emphasize that it is not an abandonment of carbon taxing. Far from it. Rather, we intend to situate carbon taxes in a broader framework that is suited to both the political dynamics and the climate emergency that will dominate the third decade of the 21st Century, and beyond.

A New Synthesis: Carbon Taxing, Wealth Taxing & A Green New Deal

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The Carbon Tax Center was founded in 2007 on the belief that the most direct path to decarbonize the world economy lay in enacting a robust U.S. carbon tax and replicating this policy across the globe.

A dozen years on, we are expanding our program around a new synthesis: a Green New Deal funded by taxes on extreme wealth — “taxing inequality,” you could say — and supported by a revenue-neutral carbon tax such as the fee-and-dividend approach espoused by Citizens Climate Lobby.

Illustration by Dan Bejar, from Harper’s magazine May 2019 cover story, “Where Our New World Begins: Politics, power and the Green New Deal.”

Here’s why: After decades of denialism by the right and antipathy from the left, we have reached a point where, standing alone, a carbon tax is too fraught politically and too weak economically to serve as the centerpiece of U.S. climate policy. We now believe that the path to decarbonizing the U.S. economy lies in a Green New Deal-inspired infrastructure and investment program funded by taxes on extreme wealth and supported by a carbon tax.

CTC envisions a three-part program to accomplish this:

  1. A Green New Deal plan investing $10 to $20 trillion over a 10-year period to develop the infrastructure, industrial capability, and consumer incentives to decarbonize the U.S. energy system within several decades.
  2. New taxes on extreme wealth and financial transactions, supplemented by increases in estate taxes, marginal income tax rates, capital gains and corporate taxes, to generate, from the wealthiest American households, the estimated $10 trillion or more needed to pay for the Green New Deal energy programs.
  3. A rising charge on carbon emissions from fossil fuels that supports the Green New Deal energy programs by shortening payback periods for green investment and embedding energy efficiency and conservation throughout American society.

 

Our Program Is Unique and Synergistic

Although others have advanced the three individual elements of our program, none have proposed them in combination. Our integrated treatment offers synergistic political and economic benefits:

  • Funding the Green New Deal through wealth taxes obviates the need to invest the carbon tax revenues, allowing the carbon tax to be revenue-neutral and thus more politically palatable.
  • Assigning the proceeds of the wealth tax to the Green New Deal – a program to preserve the climate and save society – undercuts the argument that confiscating the super-wealthy’s vast fortunes is purely retributive.
  • Tying the carbon tax to taxes on extreme wealth connects carbon taxing to its radical roots, making it more palatable to the left.
  • Taxing extreme wealth limits the ability of the super-wealthy to maintain their political contributions, think tanks and other channels of influence that are stifling not only climate action but other endeavors to reform politics and society.

This redirection is not an abandonment of carbon taxing. Far from it. Rather, we intend to situate carbon taxes in a broader framework that is suited to both the political dynamics and the climate emergency that will characterize the new decade, and beyond.

CO2-coin logo courtesy of Tommaso Sansone.Click here for a longer and more recent post outlining how we came to embrace this new synthesis.