My good friend Chris Berg is getting soft in his old age. Yesterday as part of an otherwise good piece on internet fact checking he made this comment*:
Did Julia Gillard lie about the carbon tax on 16 August 2010? Well, yes. And no.
She probably thought she wouldn’t introduce a “carbon tax” in the next term of government. But that didn’t mean she wouldn’t introduce an emissions trading scheme. And what we call a carbon tax in 2012 is actually the latter with an initial fixed price.
Yet free market economists have long insisted that, contrary to popular wisdom, there’s not a big conceptual difference between a tax and a trading scheme. They both price carbon. A tax could be described as a “market mechanism” too.
The point is these are terms of art, not science.
So let’s remind ourselves what Gillard said:
Okay – so how does Gillard explain the 2010 ALP election policy on climate change – summarised by the ABC?
Note the very first item:
Commitment to market based emission reduction scheme, but not before 2012 to reduce emissions by between 5-15 per cent
Looks to me that the ALP implemented exactly what they promised in their stated policy. So Gillard staring down the camera and saying there will be no carbon tax under a government I lead is a lie. Pure and simple.
The problem is that Chris is trying to be even handed – politicians are not all that different from each other and face similar incentives and so behave in similar ways. It is true that many promises have to be broken as circumstances change and most politicians do the best they can under difficult circumstances. But I can’t see Gillard’s carbon tax statement in that context. Alternatively one could argue that she told a necessary lie, a noble lie. On that issue we can argue the toss. That, however, is an entirely different argument.
* Yes – I am enjoying the irony that I am fact-checking Chris’ piece on fact-checking.
Update: In his defence Chris claims that he is channelling my good self (well actually he didn’t use those precise words):
The emissions trading scheme (ETS) is advertised as being a “market solution to a market problem”. This is a clever piece of rhetoric that has long escaped scrutiny. Many economists support the notion of emission trading on the basis that it is “market based”.
Many policymakers like the market analogy because it allows them to sidestep the most obvious solution to anthropogenic (man-made) global warming (AGW) – taxation.
ETS proponents, however, are likely to argue that market solutions are preferable to government intervention. But this market solution is just government intervention in a different format. Markets emerge through human action, not human design.
Chris argues that Gillard can rely on the type of argument that I had outlined in that op-ed. I’m still not convinced. In the debate about policy solutions to global warming an ETS and a tax are both “market” based solutions. The Coalition ‘direct action’ plan is a non-market solution (the best anyone can say about this policy is that the coalition doesn’t plan to spend very much). One of the points I was making in that piece is the misleading use of terminology in the debate.
I have put “market” in scare quotes above because an ETS is an artificial market.