Winner of the New Statesman SPERI Prize in Political Economy 2016

Tuesday, 3 February 2015

The Conservatives follow the Republicans on climate change

In a post last weekend where I was very critical of George Monbiot for suggesting that those on the left should no longer vote tactically to prevent a Conservative government, I prefaced my remarks by saying that his journalism consistently told me more than most others. Some comments poured scorn on that remark. So let me give you an example.

In an earlier article, George Monbiot noted a part of the innocently titled ‘Infrastructure Bill’ currently going through parliament. Section (36, p39) is headed ‘Maximising economic recovery of UK petroleum’. Its principle objective is to do just that. Now it does not take a climate scientist to realise that trying to restrict our use of fossil fuels to avoid climate change requires leaving quite a lot of them in the ground. So this bill suggests that whatever the UK government says about climate change, the UK contribution in terms of limiting extraction of oil will be exactly zero. It is so important that we extract every last economical drop that we need legislation to guarantee it! I wonder who ‘we’ is in this case?

Over a year ago I wrote a post entitled “Will the UK Conservatives become like the Republican Party?” It included this paragraph.

I would argue that attitudes to climate change represent an acid test of whether ideology has overtaken evidence in parties of the right. The UK in particular appears to be at a critical point in this respect. While the official Conservative line recognises the importance of trying to deal with man-made climate change, a significant proportion of Conservative MPs are now promoting climate change denial. Deniers are given wide coverage (and often support) in the largely right wing UK press, and perhaps as a result the UK Chancellor, George Osborne, has been quite antagonistic towards ‘green’ policies.

With this legislation that line has clearly been crossed. 

The Conservatives know that in the UK a great many people regard the US Republican Party as slightly mad. So they will never come out and say they intend to do nothing about climate change. In fact they will say exactly the opposite. But legislation speaks louder than words. It has been apparent for some time that George Osborne has no time for any of this green nonsense. Now it is official, in legislation going through parliament.

We therefore need to ask in what other ways will the Conservatives follow the Republicans. 
The Republican congress has already mapped out its strategy for unwinding many of the controls on Wall Street implemented after the financial crisis. If the Conservatives win in 2015, given who provides [1] a large amount of their funding, do we really think the same thing will not happen here? Not all at once, but quietly by slipping in the odd bit of legislation here and there. In a similar manner to including a commitment to extract all the UK’s oil in an infrastructure bill.

[1] From this link note the summer party guest list at £1000 a ticket, and who is number 4 in the list. Now you know who 'we' is when it comes to this part of the UK infrastructure bill.      

41 comments:

  1. Extreme consequences of non-tactical voting: Al Gore vs. George Bush: without the votes for Ralph Nader, would there have been a war in Iraq and all the rest?

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    1. Probably not. The Repubs go after backwards oil-producing countries. The Dems seem to enjoy pulling the chains of nuclear superpowers. Much preferred , indeed :

      "Russian banker warns west over Swift"

      http://www.ft.com/intl/cms/s/0/7020c50c-a30a-11e4-9c06-00144feab7de.html#axzz3QkE30VPu

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  2. The Tories still need an extra dose of nastiness to become Republicans. But UKIP might provide the incentive for that.

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  3. Welcome to hell

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  4. Really, this is getting silly now. The text of the Bill is here (Bills have clauses, not sections)


    http://www.publications.parliament.uk/pa/bills/cbill/2014-2015/0124/cbill_2014-20150124_en_5.htm#pt5-pb3-l1g36

    it really just requires the Sec of State to come up with a strategy for co-ordinating licencees, operators etc to enable the industry to recover. (Which with oil at $54 a barrel is an issue).

    It is actually unenforceable, just as is the Climate Change Act, another pointless piece of symbolism. We'll have a strategy document and hear no more of it. A Big Deal it is not.

    Far far more significant than this piece of trivia is what happens in relation to tax.

    To claim it 'proves' that the Tories are like the Republicans shows a distinct lack of judgement.

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  5. Thought you might like to see what US retail investors are reading. Sounds familiar, finally.
    http://www.marketwatch.com/story/what-the-market-hacks-fail-to-grasp-about-anemic-growth-2015-02-02

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  6. These posts are becoming more partisan as the election approaches

    I think its reasonable to conclude that preventing too much climate change means we cannot afford to burn all of the worlds oil. The recent drop in the oil price may well signal that the Saudi's have concluded that if anyone's oil is to be burnt its theirs.

    The infrastructure bill may well have the effect of increasing the UK's share of the oil that will be produced and burnt.

    To step from that to argue that the conservatives are the republican party in disguise and banking regulation is next on the list after climate change has been dismissed seems a step to far to me.

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  7. I’m not convinced that the proposed legislation is as symbolic or trivial as Hugo suggests.

    The provisions introduced by Clause 9 require the Secretary of State to produce a strategy for enabling the objective of maximising the economic recovery of UK petroleum. Further, the Secretary of State must generally act in accordance with that strategy. And any holder of a petroleum licence must likewise act in accordance with the current strategy or strategies when planning and carrying out activities as the licence holder. So a clear presumption that everyone involved should look to maximise recovery.

    It also gives the Secretary of State wide power to make regulations to “amend, repeal, revoke or otherwise modify the application of any enactment” in connection with any provision made by or under Part 5 (i.e. the legislation being introduced in Clause 9).

    So the Secretary of State is required to produce a strategy and broadly to facilitate it and has power to amend other legislation to achieve that. This is creating a framework that could be used by producers to get blockages removed.

    What happens when an oil company decides that something the government does is interfering with the maximisation objective and goes for judicial review of that interference?

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    1. (i) He doesn't get power to amend legislation. You can't pass an Act of Parliament which says "and the Sec of State is hereby authorised to change other Acts of Parliament". To change Acts of Parliament you need other Acts of Parliament.

      What happens when JR is sought? That seems very unlikely to me, but the answer is they'll almost certainly be told by the court to go away. What and how the best way of co-ordinating these people into saving this industry where the costs of extraction are far higher than 20 years ago and when the oil price has collapsed seems to me to be a matter of judgment. It isn't a matter susceptible to judicial challenge.

      This is an attempt by the government to look like they are doing something in the face of the loss of one of the UK's most lucrative moneyspinners (one of the reasons why our productivity figures have been so dire is that the two most productive sectors - oil and finance- are the two that have shrunk).

      (ii) Monbiot is serious and intelligent. He is a good journalist, almost the only decent one on the Graun. He is always worth reading.

      He is also paranoid and lacking in judgement.

      So, he has constantly campaigned about TTIP alleging that the EU is carrying it forward in secret (when all the documents are online, and they have a twitter feed to inform the world of any developments). He thinks the judicial system to enforce it is the most outrageous violation of national sovereignty, when it operates in the same way as all other pan-nation courts in public international law

      eg http://www.monbiot.com/2015/01/13/trade-secrets/

      He believes that the right are just less intelligent which is why they disagree

      http://www.theguardian.com/commentisfree/2012/feb/06/right-stupidity-spreads-enabled-polite-left

      he is also the 'genius' behind this

      http://www.arrestblair.org/

      His willingness to believe the worst of those who disagree were what led him to tweet false rumours about Lord McAlpine. His apology was fulsome and much to his credit

      http://www.monbiot.com/2012/11/10/lord-mcalpine-an-abject-apology/

      I am unsurprised that our host likes him so much.

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    2. Hugo

      Clause 9 gives the Secretary of State the ability to introduce statutory instruments that amend primary legislation. Specifically, the Secretary of State has power, by regulation, to:

      “…amend, repeal, revoke or otherwise modify the application of any enactment…”

      Such statutory Instruments allow the provisions of an Act of Parliament to be altered without Parliament having to pass a new Act.

      You either know that, in which case you're living-down to your nom de plume, or you don't, in which case perhaps you should hold back from commenting on what the bill would permit.
      Roy

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    3. That is what is called a 'Henry VIII' clause.

      They don't actually work. That was my point.

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    4. What doesn't work? Statutory Instruments? Of course they work! Even Henry VIII clauses.
      Roy

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    5. Statutory Instruments work. Henry VIII clauses don't.

      If an Act of Parliament passes saying 'SpinningHugo hereby has power to overturn any Act of Parliament he likes' that doesn't work. Only an Act of Parliament can amend an Act of Parliament even if Parliament purports to say anything different.

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    6. Hugo

      A Statutory Instrument can/does amend an Act of Parliament. Even this short time into 2015 we are up to over 80. Here is one example:

      http://www.legislation.gov.uk/uksi/2015/60/pdfs/uksi_20150060_en.pdf

      This one directly amends CAA 2001 and Parliament has not had to pass a new act. And that is exactly the sort of regulation making power given to the SofS in the Infrastructure Bill.

      In fact, just to save you some time googling, here's a link to a list of SIs going going through the process as at last Friday:

      http://www.publications.parliament.uk/pa/cm/cmsilist/section-c.htm

      They are used a very great deal.

      Roy

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    7. And, by the way, I think it would be a good idea if Henry VIII clauses were made illegal. But, although very controversial, the courts have let them stand in the past.

      So, why introduce a new one now?

      Roy

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    8. No. A Statutory Instrument is secondary legislation. For it to alter the law it requires primary legislation. So, your example is an amendement to the Capital Allowances Act, but the relevant provision in the Act says

      "The Treasury may by order amend the amount from time to time specified in subsection (4)."

      Legislation does this all the time: allows for future change in the primary legislation itself.

      That is a world away from a Henry VIII clause that just allows the Sec of State to make law willy nilly.

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    9. Hugo

      Most "normal" SIs are indeed introduced under primary legislation that permits later changes to specific primary legislation without any new primary legislation being required to enable that change (as in the example I linked to). A "Henry VIII" clause does the same thing except that the primary legislation does not limit (or only limits a little) the items of primary legislation that may be amended. Apart from the scary (and non-statutory) name, it's the same process. Henry VIII clauses have been respected by the courts. So, the bill is giving the Secretary of State very wide powers to amend almost any legislation in order to pursue the maximisation objective, and an obligation to pursue the objective. Not in the original bill by the way but introduced as it progressed through the Lords. So the government thought it was a valuable addition. But you think it's just "pointless symbolism". You're possibly being naive.
      Roy

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  8. There is a difference between denying and ignoring. I suspect many Republican politicians don't necessarily deny climate change; they just don't care, and they put on an act to get the votes. (This doesn't help things, of course.) It seems to me that Tories are not the anti-science (anti-intelligence?) types that many of the right-wing (Republican) base, and enough of their representatives, have become. Partly, there is still a bit of elitism involved in the legitimacy of the political class: they are supposed to keep the popular passions & myths in check. (I recall some kind of joke about average Britons complaining about the political class coming from Oxbridge, but they continue to vote for Oxbridge grads anyway.) Elitism is more problematic in the US for various historical reasons, and one tension has always been between democracy (thus democratization of knowledge) and hierarchy (thus property ownership or scientific knowledge producing authority). Long story short, this suggests that the Tories are less likely to buy into climate change beyond a few insane people; instead,they just don't care. This also means that it might be easier to do business with them: find some way to align the desire to bring more profit to their masters, and they'll go along with it. (Note that this does not seem to fit into the typical IS-LM curve. Hello political science and such concepts as ideology, discourse, and political culture.)

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  9. This comment has been removed by the author.

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  10. Like Paul Krugman, SWL has become a political propagandist.

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    1. Like Paul Krugman, SWL is a firm believer in the insights we've gained in macroeconomics. When politicians choose to start ignoring those insights it's not surprising that economists find themselves having to take sides.

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    2. Andreas

      Andreas

      I wish that SWL applied the same level of rigour to his political analysis that brings to his macroeconomics.

      Delete
    3. "Like Paul Krugman, SWL is a firm believer in the insights we've gained in macroeconomics. When politicians choose to start ignoring those insights it's not surprising that economists find themselves having to take sides."

      That's a very long way of saying "yes".

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    4. Andreas:

      Keep the faith, boy!

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    5. I'm not sure when exactly speaking the truth became an act of political propaganda.

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    6. Andreas Paterson4 February 2015 at 06:51

      As you say, "SWL is a firm believer in the insights we've gained in macroeconomics."

      For instance that 4 % inflation is good without taking into account that inflation is a tax on the poor whereas the rich can escape it
      by investing in real assets.

      If you believe that is a real insight and not a value judgment (in favour of the rich) then keep up the faith - you're beyond help.

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    7. Equating 4% inflation with a tax on the poor is highly contentious. An emphasis on low inflation prioritises today's assets over tomorrow's, which only benefits the rich.

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    8. Your claims seem to be confusing several things here about what macroeconomics does and doesn't say. You also seem to be making a claim (about inflation being a tax on the poor) that is quite hard to substantiate.

      First off nothing in macro says that 4% is is the optimum rate of inflation, instead what we have is the idea of the zero lower bound. At the zero lower bound economic output is below it's potential, an economy that remains at the zero lower bound is potentially sacrificing huge amounts in lost economic output (accompanied by higher levels of unemployment). The 2% inflation target was thought to be sufficient to keep prices stable while also keeping us away from the ZLB, but given recent events there are some economists (such as Olivier Blanchard) who think a higher target might be more desirable.

      It's not at all clear that theory of inflation being a tax on the poor is correct. Inflation occurs when aggregate demand outstrips aggregate supply causing prices to rise in order to dampen demand. For workers this is not a problem as the increased demand for labour would drive wages higher. There would naturally be an effect on assets but it's worth pointing out that most workers don't really have massive piles of cash that could be eroded by inflation. It's also worth pointing out that no asset is guaranteed to retain it's value all assets fluctuate in price to some degree.

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    9. Why, thank you, Andreas, for proving my point that your economic beliefs are faith-based and have little connection with economics as a (social) science or the reaities of life.

      Even thinking about it should convince you that inflation is equivalent to a sales tax. Actually, that is elementary economics: Look up inflation tax in Krugman's textbook "Economics". You also seem to have missed Thomas Piketty's remark in the Guardian that inflation is a tax on the poor. The incidence of that tax is heaviest on those that have to spend most on consumption: Workers with low to middling salaries,welfare recipients, pensioners - their income is only raised, if at all, with time lags during which they have to bear that tax.

      As for inflation being a defense against the zero lower bound (how often do we have one?), the answer was given by Pieter Praet in

      https://www.bis.org/review/r140528a.htm

      “Maintaining a high tax almost all the time just for the pleasure of cutting it in a rare occurrence (and even if that rare event is going to bring sufficiently severe consequences) does not seem to pass the test of optimal intertemporal allocation of policy action. The costs of high inflation are high. But the benefits of having high inflation as a hedge against a crisis are small …”

      Olivier Blanchard considers considers the benefits and costs of inflation and concludes that

      "the question remains whether these costs are outweighed by the potential benefits in terms of avoiding the zero interest rate bound."

      Think about it.

      This also goes for gastro George..


      .

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    10. You're really not doing yourself any favours here, you've cherry picked a quote from Olivier Blanchard as supporting your argument, but if you'd followed the debates, you'd know that it was Olivier Blanchard who floated the 4% inflation idea in the first place, he deliberately couched it in the cautious language you quote because it's a controversial argument and as Chief Economist of the IMF you have to tread carefully on these matters.

      I'm also not sure why you appeal to the BIS as some kind of authority, they have been consistently calling for rate rises for the last few years and been consistently wrong about it. Piketty, I have his book and his conclusions on the effect of inflation are nothing like as certain as you suggest.

      Finally, if you think about it inflation is nothing like a sales tax, a sales tax occurs on a per transaction basis so a higher volume of transactions means more tax, inflation on the other hand erodes values regardless of whether transactions occur or not.

      And one more thing, since you reached for Krugman in your magic bag of supporting arguments: "Basically, inflation redistributes wealth down the scale of both wealth and age, while deflation does the reverse."

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    11. Oh dear, Andreas.

      Continue like Macbeth.

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    12. As a poor person I would prefer 4% inflation and the excess of demand over supply (especially when it's over the supply of labour) that often is its cause than the graveyard that seems to follow trying to obtain zero inflation. The difficulty though may be that zero per cent inflation is not sought by the right for its own sake but because their chosen method for obtaining it is create or maintain high levels of real unemployment (i.e. high levels of competition for paid employment and a fear amongst those in work over the number of potential replacements for their job). It is this misuse of economic policy for political purposes that drive economists such SWL to illustrate the links between economic policy and political objectives. In an ideal world that form of sophistry would not occur and economic policy would equate to political objectives or at least where they deferred would be made clear.

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    13. Anonymous6 February 2015 at 14:19

      Why do Germany and Austria have full employment with low or negative inflation?

      Delete
  11. If climate change is so important, shouldn't continued austerity be a policy recommendation in order to reduce economic growth and therefore energy consumption and production?

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    1. No, there are far more effective and more targeted policies for tackling climate change.

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    2. Is not enacting this legislation one of these 'effective and more targeted policies'?

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  12. Slightly mad? Classic British understatement.

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  13. Slightly mad? Classic British understatement.

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    ReplyDelete
  15. ‘Maximising economic recovery of UK petroleum’ is unobjectionable so long as the economic calculation includes the harm done by the oxidation of that petroleum. The place to inject that considertion is probably at the oxidation stage, not the extraction or transportation (e.g. the US XL Pipeline) stage.

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  16. I am ever amazed at the faith in climate models despite repeated failure, and the hairshirts the pious are willing to don on their behalf despite those models saying even a total cessation of fossil fuel use by the OECD would at this point have little effect on global climate.

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