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Guilt trip them into free trade

  • Published at 11:56 pm September 23rd, 2017
Guilt trip them into free trade
Saleemul Huq has been telling us in these pages how we all really need to make a breakthrough on this climate change business. Others have been pumping out those emissions over the decades and centuries, this is and will cause substantial damage -- time to make them pay. Huq is the director of the International Centre for Climate Change and Development at the Independent University in Bangladesh and as such we should of course defer to his expertise. Or at least, examine it -- and there are a couple of problems with what’s being said. The most important of these problems being that whatever is said in Paris, or Bonn, among people who already broadly agree with each other -- there simply isn’t going to be any flood of compensation money arriving. Losses and damages just aren’t going to be paid for, sorry, but that’s reality. It’s better therefore to not waste time and energy pursuing that, instead we should be leveraging the residual guilt that might be felt by some into gaining something that can be achieved. Say, preferential trade access so that Bangladesh can become rich by itself rather than looking for transfers. There are two fundamental points to make here. The first being that Huq, as is common in this field, identifies countries and companies as the people who emit – and who, therefore, should be paying compensation. This is a category error, similar to the one that people make about trade. We do, all, as shorthand say that Bangladesh trades with Britain but this is not so, countries do not trade with each other. I am indeed a Briton and I am wearing a shirt made in Bangladesh as I type (I checked!) and yet it is not true that this is a result of “Bangladesh” trading with “Britain.” Rather, some individual, perhaps a group of individuals under the banner of some part or other of the BGMEA, in Bangladesh traded through some network of intermediaries with me, someone in Britain.
It really doesn’t matter what international meetings of the great and the good tell themselves should happen – people just aren’t going to pay these sorts of sums in damages
The shirt moved one way, the money the other, through those various stages, but at no point was any government nor country directing matters. It is individuals, perhaps indeed individuals banding together as companies, which trade with each other, not countries. To claim that countries emit is to make the same category error. Britain, or the United States, does not make carbon or any other kind of emissions. The people in those places might, this is true, in fact it is true that they do. But the people and the country are not the same thing. To insist that they are is to be very much more statist than the world actually is. There is a subset to this problem too. If it is the people emitting then it is the people who should be paying whatever damages are being claimed. Say that the average US lifestyle involves 20 tonnes a year of emissions. That’s not right but it’s about so. We also know what those damages will be from the Stern Review -- $80 per tonne CO2-e. Thus, the claim is that each American should be paying out $1,600 a year in damages -- and that simply is not going to happen. We cannot just charge it to their government either, as the government has no money, it only has what it can take in tax from the populace. And it simply is never going to be true that Americans will pay some $500 billion a year (300 odd million people at $1,600 a year) to foreigners. It might, just about, be true that they will agree to pay a carbon tax of that amount, the revenue raised to be used to reduce their other taxes. And as the Stern Review points out, that does solve our climate change problem. But no, they just will not, whatever all right thinking people tell them, pay that amount in costs and damages. Won’t happen. Not even worth dreaming that it will. The idea that fossil fuel companies should be the ones paying is even less sensible. For of course, it’s not the companies which have been making the emissions. Sure, I might buy my petrol from BP but it’s still me driving the car, still me making the emissions, not BP. Again we might righteously demand that I should be paying more in a carbon tax in order to change my behaviour -- and I’ve been arguing for that for a decade now. But it’s not the company, still not, responsible for the emissions, the tax nor the damages. This problem then running again into the political impossibility of getting rich world consumers to be sending these sorts of sums of money out of their own countries. Please do note that this isn’t an argument about moral rights nor even justice. It’s simply one of practicality. It really doesn’t matter what international meetings of the great and the good tell themselves should happen -- people just aren’t going to pay these sorts of sums in damages, it ain’t gonna happen. Which leads us to what we should be doing instead, something beneficial and also usefully possible. The answer being that we can most certainly play upon the guilt of people about this even if we cannot squeeze the money out of them. It would be beneficial to Bangladesh to be able to export to the rich countries without any tariff barriers for example. As is true of some places right now. Thus, we might say give us free trade because what about those climate change damages? For that’s something that has a chance of working, demanding money is one of those things which just won’t.   Tim Worstall is a Senior Fellow at the Adam Smith Institute in London.
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