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Tuesday, 14 November

02:00

310 Additionality can be tricky to assess Pannell Discussions

Many environmental policies and programs pay public money to people or businesses (or give them tax breaks or discounts) to encourage them to adopt more environmentally friendly practices and behaviours. A seemingly common-sense rule for these sorts of programs is that we shouldnt pay people to do things that they were going to do anyway, without payment. But it can be quite a hard rule to apply in practice.

The idea that we shouldnt pay people to do things that they were going to do anyway goes under the name of additionality. (It is also related to the with-versus-without principle in Benefit: Cost Analysis, and the concept of market failure see PD272).

The idea behind additionality is that, when a program pays money to people to change their behaviours, the environmental benefits that result should be additional to the environmental benefits that would have occurred anyway, in the absence of the payments.

The reason this matters is that, if we are able to target payments to those behaviours that do result in additional environmental benefits, well end up with greater environmental benefits overall, compared to paying for non-additional benefits.

Some environmental programs do a terrible job of checking for additionality. As I noted in PD272, much of the money given to farmers in US agri-environmental programs is not additional. In Australia, the Direct Action program for climate change doesnt seem to consider additionality when selecting the winning bids in their reverse auctions.

So, environmental programs that allocate money to people or businesses should worry about additionality, but how? It can be harder than it sounds. Its all very well to say, only pay people if they would not have done it anyway, but how do we know what they would have done anyway?

Sometimes its reasonably easy. There are cases where we can be pretty confident that people would not have done the environmental action, and will not start doing it in future, without a payment or regulation. I suspect that most of the work on farms to fence off waterways to exclude livestock would not have happened without payments to cover the cost of fencing materials.

In the US, the Conservation Reserve Program pays farmers to remove agricultural land from production and plant environmentally beneficial species. This is probably mostly buying actions that lead to additional outcomes.

The nature of these additional activities is that they are things that are not normally done by farmers. This is largely because they cost the farmer money.

...

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Monday, 13 November

16:46

Some whataboutery from Tim Nicholls John Quiggin

Among the tools used to defend the indefensible, the most widely used is whataboutery. When faced with a criticism you cant answer, you point to something allegedly comparable done by someone supposed to be on the same side as your critic, and ask the critic what about

A recent example (Hat Tip Bill Wallace). Presented on ABC TV with my observation that his election promises represent an arithmetic impossibility, Tim Nicholls resorted to whataboutery, suggesting that I had gone easy on Anna Palaszczuk in regards to the use of transfers of debt between the general government sector, GBEs and public service superannuation. Oddly enough, Ill be covering this exact point in an article Im now writing for The Guardian. The relevant para

Labor has been able to improve the accounting performance of the general government sector by requiring public enterprises to make bigger contributions to the budget and by making transfers from the funds hypothecated to pay for public service superannation. This doesnt change the financial position of the public sector as a whole, but makes the budget sector look better. The relevant criteria is public sector net worth and net financial worth, which are unaffected by such manoeuvres. Fortunately, public sector net worth has never been a problem: the Queensland government had net worth of over $170 billion when the Costello Commission reported, a figure that is projected to exceed $200 billion by 2020.

Some broader responses:

* Whataboutery is a very weak defence in a clear-cut case like this. Even if I were an ALP hack (readers of this blog can judge for themselves), it wouldnt invalidate the point Im making

* I dont think Palaszczuk is open to the specific criticism Im making of Nicholls. She hasnt promised to cut taxes or improve the budget balance, and her election spending promises look to be the kind of thing that can be managed within the normal budget process

* Ive already been critical of both sides in this election campaign. My only published opinion piece was a criticism of Palaszczuks pro-Adani policy, which she has subsequently reversed (not claiming cause and effect here, of course). If Nicholls cares to put up an election platform that adds up and protects crucial services from cuts, Ill be the first to congratulate him.

A few more points:

1. The implied assumption in whataboutery is that people shouldnt comment on any issue unless they have a published position on every issue that might be remotely comparable. This obviously isnt feasible for someone writing in spare team, without a team of staffers and researchers to do the hard work.

2. It may be that Nicholls was...

16:11

Monday Message Board John Quiggin

Another Monday Message Board. Post comments on any topic. Civil discussion and no coarse language please. Side discussions and idees fixes to the sandpits, please.

16:00

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13:29

What matters about the Paradise Papers Bill Mitchell billy blog

A cursory glance at the Worlds leading tax havens illustrates the hypocrisy of politicians getting wound up about the revelations in the recently released Paradise Papers and the Panama Papers before them. Many of the havens are within the direct legislative jurisdiction of nations such as the US (which is itself a tax haven) and the UK, for example. And we should not forget that Luxembourg, Switzerland are key European homes of tax avoidance. Remember that the current President of the European Commission spent years in his previous role as Luxembourgs prime minister secretly blocking EU efforts to tackle tax avoidance by multinational corporations (Source) ably supported by the Netherlands, another nation engaged in the practice. If the politicians were truly worried about this issue they could do something about it directly with the stroke of a legislative pen. Britain could, for example, eliminate Jersey, the Isle of Man, and its Overseas Territories from this corporate scam. The US could do similarly. The EU could bring in new rules to stop Luxembourg. But they dont stop it, which tells you everything. But, the problem of tax avoidance and evasion is not fiscal. Progressives get stuck on that point. It is largely irrelevant. The real issues are inequality, power and macroeconomic stability. That is what this blog is about.

I covered my view on many of these issues in these blogs (among others):

1. Progressives should move on from a reliance on Robin Hood taxes (September 4, 2017).

2. Modern Monetary Theory and Value Capture (November 11, 2015).

3. Governments do not need the savings of the rich, nor their taxes! (August 15, 2015).

4. Off-shore tax havens be sure we define the issues correctly (July 23, 2012).

5. Robin Hood was a thief not a saviour (April 1, 2010).

The information in the Paradise Papers is shocking no doubt. But what shocks me and what seems to shock the average progressive (if their voices indicate their impressions) are somewhat different.

The idea that the savings and tax receipts of the rich are in some way important in order for governments to be able to provide high quality services, public infrastructure and jobs to advance the well-being of society is a very dangerous and misguided narrative for progressives to engage in.

Please read my blog ...

Sunday, 12 November

19:32

Weekend reads: must read articles from the past week Pete Wargent Daily Blog

Yes indeed, see here at Property Update.


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16:00

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