Abbott and the Economists

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At a high profile economics conference hosted by the Melbourne Institute, Tony Abbott said the following when speaking about his climate change policy:

Speaking at the The Australian-Melbourne Institute Growth Challenge conference in Melbourne, Mr Abbott said economists should not be taken in by Labor’s use of the term “market-based mechanisms’’.

“It may well be, as you say, that most Australian economists think that the carbon tax or emissions trading scheme is the way to go,’’ he said.

“Maybe that’s a comment on the quality of our economists.’’

Actually, the Australian did not complete the sentence which ended “rather than on the merits of the argument.”

Now I know what you are thinking. You are thinking that I should just let this go. You are thinking that it was actually Australian economists who educated Labor on the value of “market-based mechanisms” to control climate change. That when we did so, we had the overwhelming support of the Liberal party. And so it is hardly the case that Labor is duping economists.

And I know you are thinking that I had it right a year or so ago when I cast the Opposition leader as a market-hater. Why would I need to say such things again?

And surely it goes without saying that in the choice of a carbon price rather than direct action there is not one single economist in Australia who has advocated direct action. I mean we know Tony Abbott knows that and what conclusion he draws from it.

And I know what you are thinking, if you read Abbott’s full speech it really is a broadside against government creation of a market and the notion that it just can’t be done because ‘you can’t sell air.’ And I know that you are thinking that he doesn’t understand that a carbon permit is just a financial instrument or that measuring emissions for the purpose of taxation is just as hard an accounting exercise as measuring firm profit for company tax. And that we would draw the conclusion that he wants to give up entirely on these government facilitated markets too.

Yes, you are thinking all of those things as you read this post and that I, for one, should just let it go.

But I just can’t so I’m going to say it. Wait for it. OK, here it is.

It may well be that the Opposition leader truly thinks that direct action is the way to go.

So maybe that’s a comment on the quality of our Opposition leaders.

15 Responses to "Abbott and the Economists"
  1. The scary thing about Abbott is his effective. If as it increasingly looks likely the Libs are going to form the next government they may very well become more sensible but if not then it’s going to be a waste of three years.

  2. But seriously Tony Abbott is the thought leader for a substantial sector of the Australian population. His position is not a technical or expert opinion, but it is persuasive to those who rely on his judgment, experience and common-sense. He has the backing of his party, and will likely go to the next election with the same rhetoric. Style over substance maybe, but unless the MPs are persuaded by an insider (Andreas Kloppers, Twiggy Forrest, who have a lot of $$$ to lose, don’t even talk about Alcoa, or the coal power station owners), then we will all just have to see how this little machination plays out. God help us all…

  3. Abbott actually made some very decent arguments. You spent about 300 words saying nothing.

  4. @Matt C: I have only read the linked article, and not the original speech, so I may have missed something, but Abbott has not made any decent arguments regarding a cap-and-trade scheme or a carbon tax.
    His arguments, if we gave him the benefit of the doubt in a few places, could be formulated into a sensible crituque of baseline-and-credit schemes. But Australia is not planning on implementing a baseline-and-credit scheme so his points are irrelevent.
    A cap-and-trade scheme does not involve the trading of emissions reductions, but the trading of rights to pollute. They are very different beasts, and I don’t think Abbott realises that there is a difference.

  5. I think Abbott is really saying, in dog-whistle style, that he will do nothing on mitigation of emissions. $3.2b over 4 years (under the direct action plan) is not a great deal of cash and will probably end up being effectively less through assigning funds to existing programs, stealthy cuts to other environmental programs, and maybe even failure to distribute all the funds. But he can’t explicitly say that his policy is to do nothing, even if he thinks it is in Australia’s national interest to do nothing, because it looks plain immoral. So that leaves him with economically incoherent arguments and historical revisionism (but also gives him the popular vote)

  6. Just makes me pine all the more for Turnbull.  My sources tell me that when he was environment minister he was very engaged, literate and numerate on the ETS modelling being done back in 2007.

  7. I just love how these people can say the rise in prices will have no effect on behaviour yet at the same time say industries will leave Australia.

    It is intersting that some of the silliest nonsense along this line comes from Catallaxy which purports to support the market.

  8. I just love how Gillard can say the rise in prices will change behaviour yet at the same time say that carbon producing industries will not lose jobs.

  9. @glen: These assertions depend on the point of reference. Behaviour will change and emissions will be reduced relative to business as usual. There will be job losses for some industries, relative to business as usual. But there will not be (in the short to medium term, for almost all industries in almost all of the modelling exercises) job losses relative to current employment levels.

  10. I am always interested in hearing about Economist, as it’s my favorite subject while another massive benefit is that I am working with world class business like Forex trading, so that is seriously profitable while having highly rated company like OctaFX is even more helpful with their low spread of 0.2 pips for all major pairs and even have daily market updates that keeps me around of what’s happening around the globe and allow me to trade very easily in all situations.

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