Grattan Institute has another failed attempt at painting itself pro-market

The Grattan Institute has let fly a further salvo in its protestations of belief in capitalism and the free market. Its accusation that Tim Wilson and the IPA were grossly inconsistent in rejecting the cap and trade system of carbon emission rights (the ETS) was smartly dealt with by Tim, and utterly demolished by Terry McCrann.

Its energy spokesman, Tony Wood has said that rejecting the ETS is only logical if one rejects the story of human induced global warming. As an Al Gore trained climate alarmist Mr Wood clearly doesn’t support that position.

The Grattan Institute’s faith in markets is massively inconsistent.

Their reports on energy are laced with proposals to use some forms of market incentives or taxes interspersed with finger-wagging about market failure. In, “No easy choices: which way to Australia’s energy future?”, they pontificate “Thus there is “market failure” whenever a private actor does not take on socially desirable costs because they won’t result in commercial returns”.

This ideology leads them to supplement their depicted market approach with a host of other policies. Thus they argue, “The carbon pricing scheme, while a good start, is not enough.” You see those pesky financiers seem to want premium returns for risky ventures even though the deities involved in policy advice know that the returns are in the bag. And “first movers” may not be sufficiently rewarded. So, among other actions, “government should support demonstration plants of any technology sufficiently developed that commercial application is within sight”. But to the leftist institute, this seems to square with notion of market mechanisms in spite of some right wing libertarians unkindly suggesting they are winner-picking measures.

In some areas, like solar energy, the costs are amplified, according the Grattan Institute, by a lack of network connections and low skills in designing large scale solar facilities within Australia. So the answer is for the government to provide these – again a subsidy disguised as some measure of levelling the playing field.

And they also forcefully argue against market solutions, with the statement.

“A long-standing body of research literature shows that consumers and businesses systemically make poor decisions about energy efficiency and miss opportunities to save money.”

So market mechanisms must be supplemented by other regulations that replace the ignorance of consumers about what comprise their best interest with the wisdom of bureaucrats better able to gauge that interest!

This is supposedly compounded by occasions when the purchaser is not buying on her own behalf, as is said to be the case with a tenant and landlord. Unfortunately the Institute fails to mention other multitudinous cases when a seller or renter is taking decisions on behalf of the user. If the energy saving breaks down with a landlord-tenant situation, it surely also fails where car hiring is concerned and it is problematic in all purchase from bread to houses where suppliers are taking the vast bulk of decisions on composition for the consumer.

The Grattan Institute does not seem to realise that in supplementing the market solutions they are distorting them and wrecking the efficiency that market based measures like a single price or a tradeable right allow to evolve. If an ETS is in place for emissions but one means of fulfilling the demand is through wind power which already receives a 200 per cent subsidy, we have a massive distortion. We have another distortion if the government also decides to subsidise the transmission of wind generated power with lines that the generators don’t pay for. And further distortions are in place if governments give additional subsidies for long life light bulbs, or force (rather than encourage through the universal price) energy savings standards on new housing.

The legion of exclusions to the Grattan Institute’s preference to market solutions would lead a cynic to believe that they see no merits in market solutions, only in promoting them selectively to support their pre-determined policy preferences!

Above all, the Grattan Institute’s market based approach concerns Australia’s carbon emission policies. Of course, if carbon emissions impose costs this is a problem for the world. The solution cannot be left to a single country, still less one that contributes just 1.4 per cent of the total emissions.

It might be said, and doubtless this has featured in the Grattan team’s rhetoric, that if one country takes the lead all will follow. Such hollowman dictums never had any credibility when the Grattan’s financier, the Rudd and Brumby Governments were first espousing them. History has undermined their credibility empirically. Only one rather sick jurisdiction, the EU, continues to persist with anything but token abatement measures, and as we have seen the EU “market” price is less than a quarter that which the present government imposed on Australia.

The Grattan Institute has purloined $30 million from the taxpayer to promote its wolf-in-sheep’s-clothing of increased regulation posing as less. The money has clear negative value-added and it should be handed back.

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9 Responses to Grattan Institute has another failed attempt at painting itself pro-market

  1. Bruce of Newcastle

    The Grattan Institute would probably think a protection racket is a free market too. The ETS is nearest to a mafia racket since:

    1. You are forced to buy something of no value
    2. If you don’t buy it they close you down
    3. The mafia reaps shedloads of money
    4. As a result people abandon their businesses and move elsewhere, like China.

    On top of all of this very few people reject AGW. We just say that the empirical data shows that CAGW is precluded. And if the Grattan Institute can’t even get this right then they are not worth the money I as a taxpayer am paying them. Privatise them.

    (Should Mr Wood be reading this, I suggest he have a look at two articles which came out today:

    Veteran German Meteorologist … Sees Only 0.5°C Of Warming For CO2-Doubling

    New paper finds global warming since the Little Ice Age explained by natural processes, not man-made CO2

    These explain why CAGW cannot happen. At 0.5 C/doubling we cannot put enough CO2 into the atmosphere to make much difference. And the sun and the oceans caused most warming last century.)

  2. H B Bear

    C’mon Alan surely there can’t be any doubt about the Grattan Institute? Let’s go to this mornings Green Left Weekly Radio Hour (Early Edition) formerly known as AM,

    ANNIE GUEST: The scope of such privatisation would break new ground, according to a former secretary of the Commonwealth Health Department professor Stephen Duckett who is now with the independent think tank, the Grattan Institute.

    Told ya.

  3. MT Isa Miner

    Yeah, well, Norton has a good brain for numbers and writes so people can understand . What he said when he wrote on his blog was worth reading, I haven’ been there a for a longish bit so I don’t know what is going on.

  4. Art Vandelay

    Of course, if carbon emissions impose costs this is a problem for the world. The solution cannot be left to a single country, still less one that contributes just 1.4 per cent of the total emissions.

    Even if every country in the world was to take action to reduce emissions, all (sensible) cost-benefit analyses demonstrate that the costs of the policy far outweigh the benefits. Perhaps the Grattan Institute doesn’t understand or support evidence-based policy?

  5. Snoopy

    So an ‘institute’, overwhelmingly funded by taxpayers, named after a socialist, feminist, journalist doesn’t understand what a market is. I’m shocked!

  6. struth

    Isn’t it typical.
    You know exactly what the IPA stands for and they make no bones about it.
    Grattan institute………….taxpayer funded think tank and,….choke!?* er um independent.
    Me thinks the word oxymoron will come up sooner or later.

  7. egg_

    As the only natural form of solid carbon is organic, the Green undead zombie party and fellow travellers propose a tax on life (and our currently best energy source: organic ‘fossil fuels’) – no surprises there.

  8. wal1957

    It seems to my old brain that until Governments spend equal amounts of money on research to DISPROVE ‘climate change’ or ‘global warming’ or whatever the buzz word is these days, that we, the nonbelievers, will always have doubts.
    I have always had a problem when a company (Goverment), spends money on “research” to prove something that the company (goverment) is saying. It is much easier to do research to “prove” you are right, because your goals are just that…to prove that you are correct, NOT to find the TRUTH!

    This whole “global warming” caper has been badly handled from the start. As soon as “medicine men” see an opportunity to get rich, they go for it, and as long as they fool a certain number of the population they get very well compensated.

    A ‘scare campaign’ will always have its’ followers, mainly because they are after a cause to believe in.
    Anyone who seriously believes that since the start of the industrialised age that man has been able to so pollute the atmosphere to cause a serious effect on the climate is not thinking straight.

    The earth is how many 100’s of millions of years old…? and the industrial age began when…?

  9. manalive

    Gattan Institute: Baptists? Bootleggers? probably Baptist Bootleggers.

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