Bank capital requirements based on credit risk serves no purpose, based on fighting climate change does.

Sir, Ben Caldecott writes: “The UN’s Sustainable Development Goals and the Paris climate change agreement will be unattainable unless banks finance solutions to these massive social and environmental challenges.” “Banks need a better climate change strategy” July 1st.

The current risk weighted capital requirements for banks are idiotic since these are based on the assumption that what is perceived as risky is more dangerous to our bank systems than what is perceived as safe. But these are also totally purposeless. I do not really favor this type of distortion but there’s no question banks would serve a better purpose if their capital requirements were based, not on credit ratings, but on Sustainable Development Goal ratings.

Obviously such capital requirements would automatically generate “loans that charge lower interest rates to borrowers who meet or outperform sustainability targets” just as the current ones generates lower interest rates to the sovereign and “the safe”, all paid by less and more expensive credit to “the risky”

Of course it would be of utmost importance in that case that the SDG rating agencies are not captured by any of the climate change fight profiteers that abound.

That said, before any climate change fight initiative, including the Paris agreement, what would be most effective is a high carbon tax, with all its revenues shared out equally to all citizens. Why has that not been implemented yet? The simple answer is that because for states that lives on cronyism that is of absolutely no interest.

Sir, if the world is to have a chance to afford successfully fighting climate change, or at least afford to mitigate some of its worst effects, we have to circle all our wagons in an effort to keep out of it all those who are just out to make monetary or political profits.

http://ourpiedaterre.blogspot.com/2015/04/my-proposal-for-this-earth-day-2015.html

@PerKurowski

To have Green bonds really take off, the market signals must better assure the Green projects’ profitability.

Sir, Siddarth Shrikanth writes:“Estimates suggest that a mere 5 to 10 per cent of green-bond proceeds have gone towards funding biodiversity conservation projects, as the vast majority flows in to energy, buildings and transport”. “Green bond issuance leaves the planet’s wildlife behind” June 22.

The explanation to that is that it is obviously easier to construct a credible scenario for the investors’ to recover their investments, something that, no matter how good Green bonds investors’ intentions are, most of them want to do.

So, if we really want “Green bonds” to take off, these must be supported with strong market signals that helps the Green projects to be profitable, bettering the chances of the bonds being repaid.

In that sense, except from perhaps except it from all taxes, I have no clue as to what could be done with “blue bond” aimed at supporting sustainable fisheries. What I do know though is that, very high carbon taxes, with all its revenues being distributed equally back to the citizens, would signify a huge boost for the biggest majority of Green bonds.

What stands in our way in that respect, are the Green-fight and the redistribution profiteers refusal to give up one cent of their desired franchise value.

Sir, I say it again and again, if we are not able to keep the climate change fight profiteers away, we won’t be able to afford the fight against climate change. Hell, we will not even afford to mitigate some of its consequences.

@PerKurowski

A Universal Basic Income deserves to be implemented fast but carefully, little by little.

Sir, Lex writes:“Either the Universal Basic Income (UBI) has to be unrealistically low or the tax rate to finance it is unacceptably high. Suppose the US provided its 327m inhabitants with $10,000 a year. That would be less than the 2018 official poverty threshold of $13,064. But it would cost 96 per cent of this year’s federal tax take.”“{Universal basic income: } money for nothing” May 20.

Let’s face it, the UBI, being an unconditional payment, eats into the franchise value of the redistribution profiteers, and so there are many out there wanting it never to be launched or, if it is, to be unsustainable. The usual way to sabotage it, is precisely arguing that if it is too small it does not solve anything, or if it is too large, it is fiscally unsustainable.

In my mind UBI, the basing building block for the decent and worthy unemployments we need before social order starts to break down, and therefore such an immensely valuable social experiment, deserves to start small, but fast, and grow, slowly, to where the future will and can take it. 

The tricks for a successful launch of a Universal Basic Income are:

1. That it helps all to get out of bed but that it never is so big so as to allow anyone to stay in bed. In other words that it is a stepping stool that helps everyone to reach up to whatever there is in the real economy.

2. That it starts small enough and grows little by little so as to guarantee its absolute revenue sustainability. It should never be an UBI for the current generation paid by future generations.

3. That its revenue sources should as much as possible be aligned with other social interests, like a carbon tax that helps fight climate change; or sources aligned with the new times, like taxes on robots, intellectual property and exploitation of citizens’ data.

Sir, the UBI should have as little as possible to do with government and politics, that because it should foremost be as a citizen to citizen’s affair.

PS. In countries blessed with high natural resource revenues, these should feed a much larger UBI, but that is because of the importance of reducing the concentration, in the hands of a centralized government, of income that does not come from taxes paid by citizens.

@PerKurowski

Yes we sure need a carbon tax, but its revenues, should be shared out equally to all

Sir, Tim Harford writes: “The exciting thing about the Green New Deal is that it has serious political momentum focused at addressing climate change.” “Why the world urgently needs a carbon tax” April 13.

No! That “Green New Deal” “vague, and [with] grand aims [to] win… support than [with] hard practicalities”, far from being exciting is scary. As Harford thinks, “climate change is far too important a challenge to entrust to oil companies” I am sure that “climate change is far too important a challenge” to entrust its spending decisions of the fight against it, to some few who might be pursuing a different objective.

As I’ve said over and over again, the more you are concerned about climate change, the more you should be concerned with keeping the climate-change-fight profiteers as far away as possible.

Harford writes: “A lump-sum subsidy can encourage the uptake of electric cars — but a carbon tax will also reward those who cycle instead of driving.” Sir, I just ask, would the rewards for cycling not become so much real, if all carbon tax revenues were shared out equally to all?

PS. Harford mentions “a carbon permit auction” as a “close sibling” to a carbon tax. Not so. A carbon permit auction is nothing but a new type of those indulgences that were sold by the Catholic Church in order to permit sinning. It is a twist of history to see that Martin Luther’s Protestant Germany is one that now most supports such indulgences.

@PerKurowski

One country, setting the example of a very high carbon tax, and sharing out all its revenues equally among all its citizens, would be a real game changer, in so many ways.

Sir you correctly argue, “Time is running out for us to halt dangerous rises in temperature…this is no longer a scientific or technological challenge, it is far more a political and social one.”, “How to rescue the global climate change agenda” December 27.

But when you hold “The depressing reality about climate change is that we could solve the problem, at manageable cost” that is not necessarily so. Sir, let’s face it, the truth is that there are way too many whose real interest, more than solving the challenges of climate-change, is to profit from the process, whether financially or politically, whether they are aware of it or not.

I’m as concern as anyone with the problem but in my case I really did not mind so much president Trump’s blindness, since I have always thought of the Paris agreement in terms of being just an interesting photo-op that would serve as a very dangerous pacifier.

So to align political and social incentives; to allow the market signaling how the problems should be best tackled; and to keep costly profiteering out of the process, I have for years thought the best alternative is a very high carbon/pollution tax which revenues are shared out in their totality equally among all citizens.

Why does that idea not meet more interest? The answer is clearly that the redistribution profiteers see that route as one that could very dangerously affect the value of their franchise, since there could be pressure for the revenues to be redistributed to all, a sort of unconditional variable basic income, should also for instance include all income generated by any existing gas/petrol taxes.

Our planet that I often refer to as our pied-à-terre needs a champion that decides to go down this route to set an example to follow. My grandchildren are Canadian so I would love Canada showing the way.

PS. This is exactly what I proposed how Mexico City should tackle its serious pollution problems in a letter you kindly published in May 2016.

@PerKurowski

It suffices for one single nation to set a high tax on carbon emissions and share out its revenues among all its citizens, to really begin saving our pied-a-terre.

Sir, Martin Wolf, whether it is true or not, is absolutely correct calling out: “It is five minutes to midnight on climate change”. We have no right to ignore that threat, even if its possibilities were low. “Inaction over climate change is shameful” October 23.

Wolf asks and answers: “So what needs to change? Net global CO2, methane and nitrous oxide emissions would need to fall to zero” though he also observes. “This is very unlikely to happen. That is no longer because it is technically impossible. It is because it is politically painful.”

It should not be! If only one nation went ahead and placed a big tax on carbon emissions, and shared out all resulting tax revenues equally, unconditionally, among all its citizens that would be a game changer… many would be politically pressured to jump aboard saving the planet that way.

Why does it not happen? Quite simply, the redistribution profiteers, those who profit from negotiating conditions, won’t touch with a ten feet pole an unconditional pay like this, less it spreads to other areas of their franchise, for instance by means of a Universal Basic Income.

Do I know? I come from Venezuela where nothing similar to its current tragedy would have happened had its oil revenues been shared out equally to all Venezuelans, and yet that possibility is rarely mentioned by the opposition, because there’s always an infinite pool of aspirants to be the next redistributors on turn.

Paris Accord? To me it was just a great photo-op for redistribution and fight against climate change profiteers that would do little to improve the chances for my grandchildren to live better.

More than a year ago the Climate Leadership Council proposed a carbon tax along the lines of what I describe here… seemingly they were silenced!

PS. For Mexico City, to combat pollution, I proposed just that..

@PerKurowski

What’s the safest way to fight climate change: by centralized planning or through the market?

Sir, Tim Harford writes: We should do more to encourage innovation that attacks the climate change problem… The most obvious first step (among several worth trying) is a stiff tax on carbon dioxide emissions” “Let’s innovate a way out of our climate crisis” October 13.

I agree 100% with that. The real question though is what is to be done with the revenues of such stiff tax? There are different options. 

The first to allow governments to manage these, setting it up for good results, but also a quite likely having it much captured by the war-on-climate-change profiteers. 

The second to share out these revenues equally among all citizens, like by helping to fund a Universal Basic Income, and so that it is the market that will take the decisions on what’s to be done.

Of course there are also pseudo market solutions, like those carbon emission permits trading that handed over to speculators, a market in non-transparent carbon emission indulgences.

Sir, I am totally for the sharing out all those tax revenues among the citizens option. That would minimize the distortions, and align everyone’s incentives in the fights against climate change and poverty.

PS. In May 2016 you published a letter I wrote on how to fight the pollution in Mexico City, which was based on these arguments.

http://ourpiedaterre.blogspot.com

@PerKurowski

An all out war against inequality would be extremely harmful to us all.

Sir, Tim O’Reilly writes: “Clayton Christensen’s, “law of conservation of attractive profits” holds that once one thing becomes commoditised, something else becomes valuable.” And that “Hal Varian, Google’s chief economist, noted that ‘if you want to understand the future, just look at what rich people do today’. “People power, not robots, will overcome our challenges” October 20.

But I ask, does that not require a strong supply of rich and unequally wealthy, in order to power that demand for the new, that which majorities never generate? And, if so, does that not put a dent on the argument of: “the fundamental question of our economy today is not how to incentivise productivity, but how to distribute its benefits”?

Sir from this perspective the current all out war against inequality could be extremely harmful for all. For instance, as I have, unanswered, often tweeted to Mr. Thomas Piketty “Visit the Museum of Louvre in your Paris and try to figure out how much of it would have existed, had it not been for extreme inequality.”

And O’Reilly, as a source of jobs refers to that “there is the looming spectre of climate change”. Indeed but who is going to pay for the fight against it? If government takes on debts to fight climate change, who will volunteer to repay those debts tomorrow, whether we are successful or not? No one!

That is why I have argued so much in favor of creating a whole new generation of social incentives, which could help get the world to work in the same direction on at least some important issues.

For instance, if there was a huge carbon tax, which revenues did not go to the redistribution profiteers but were shared out equally among all citizens, then we could link up the fight against climate change with the fight against inequality, without affecting the remaining societal incentive structure… that which helps to create the inequality we need.

PS. And please never forget, just in case there will not be enough jobs tomorrow, to think about how we can create decent and worthy unemployments.

@PerKurowski

Much more than the Paris Climate (photo-op) Agreement, our pied-à-terre needs revenue neutral carbon taxes

Sir, Martin Wolf writes: “In no area are global spillovers more significant and co-operation more vital than climate… The main obstacles to such action are three. First, specific economic interests, notably in the fossil fuel industry… Second, free-marketeers, who despise both governments and environmentalists, reject the science, because of its (to them) detestable policy implications. Third, few wish to…threaten their standard of living, for the sake of the future or people in poorer countries” “Climate change puts poorest nations at risk”

Not so fast! There are those of us who believe that the threat of climate change is so real that there is no need to convince us with the “people in poorer countries” argument. The best interests of our grandchildren suffice. And there are those of us that despise the idea that so much of the important sacrifices required could be dilapidated enriching governments and environmentalists. To mostly attribute “specific economic interests” to the fossil fuel industry is to be too biased.

Of course the poorer countries should be helped, but the brunch of the climate change war effort, needs to be carried out as much as possible by sending out strong market signals, letting the markets operate freely assigning resources; and aligning the incentives as best as possible.

For that I strongly believe that a huge carbon a tax, shared out entirely to the citizens, is what first should be happening. Let us for instance suppose that petrol (gas) was sold all over the world at Norway’s current price of about US$2.10 per liter (Venezuela would have to increase its prices US$2.09 per liter) and that 100% of what that tax produces, goes directly back to the citizens.

Then we would fight climate change and inequality at the same time; which would be great since as Martin Wolf rightly holds: “The linked challenges of climate and development will shape humanity’s future.”

Sir, nothing in the Paris Climate (photo-op) Agreement seems to me remotely as powerful and effective as revenue neutral carbon taxes.

Similar to what I proposed for Mexico City

http://ourpiedaterre.blogspot.com

@PerKurowski

An adequate carbon tax has little to do with costs and much to do with the elasticity of the demand for carbon

Sir, Dr Robin Russel-Jones opines that a revenue neutral carbon tax will not work because of difficulties in “reaching agreement on the level of taxation.” "Support for carbon tax: let’s not get too excited", June 29 

The “market price for carbon credits of less than €10 per tonne of carbon dioxide… provides little incentive for businesses to control their emissions or invest in renewables” and “a carbon price of $166 per tonne of CO2…[based] on “societal costs generated by the burning of fossil fuels, calculated by the IMF… would put fossil fuels out of business”

No, the adequate level of carbon tax will depend on the elasticity of the carbon demand… and the only way to find that one out is by taxing. Put whatever carbon tax like for instance $40 per ton and see what happens. 

Dr. Russel-Jones, Chair of Help Rescue the Planet writes: “there is no reason to think that a business group in which fossil fuel interests are well represented will come any closer to solving the above conundrum than the UN has.”

Yet some of us also argue that there is no reason to think that those profiting from the business of protecting the environment would do so either.

That is why we need the carbon tax that pays out all revenues to the citizens. That aligns the incentives for the fight against inequality with those for protecting the environment, by means of market signals, and so without any hanky panky!

@PerKurowski

President Trump, remember Einstein’s “No problem can be solved from the same level of consciousness that created it”

Sir, Martin Wolf, in these moments of so much radical uncertainty, recommends Donald Trump to follow one don’t-rock-the-boat strategy. “Janet Yellen, and the Fed’s inflation target, should both stay” June 19. I wish I could be such an optimist to believe that would do.

If I were Trump I would like the Fed to think about how it could help to create sustainable jobs, not some kicking-the-can-down-the-road financed jobs; and about what to do with the unemployed, if they fail to reach the previous goal.

The current risk adverse bank regulations risk banks building up too large exposures to what’s perceived as safe against too little capital; and hinders the efficient allocation of credit to the real economy. So that just must go… completely!

Why should not Janet Yellen be able to do this? Well as Einstein once said: “No problem can be solved from the same level of consciousness that created it”

http://subprimeregulations.blogspot.com/2016/12/must-one-go-on-hunger-strike-to-have.html

And the structural unemployment that threatens social cohesion must be forcefully attacked before social cohesion breaks down. After, it is quite too late, as we all can see has been happening in Venezuela.

What to do? A Universal Basic Income is one useful tool of many to handle that problem with; and the revenue neutral carbon tax, the carbon dividend, seems a good source to start feeding a UBI scheme that foremost must be financed with real money… that is of course unless you really want to go down the same road as Zimbabwe or Venezuela 

@PerKurowski

A revenue neutral carbon tax helps face climate change, inequality, structural unemployment (UBI) and promotes growth

Sir, Ed Crooks reports that “Eleven leading international companies… have joined a campaign backing a revenue-neutral carbon tax in the US, as a way of tackling the threat of climate change that “embodies the conservative principles of free markets and limited government”. “GM and Total among 11 multinationals to support US carbon tax campaign” June 21. 

And yesterday, George P. Shultz and Lawrence Summers also signed up completely on the idea. “The inevitable climate solution” Washington Post, June 20.

Indeed, as I have written to you many times before, a carbon tax which revenues are equally redistributed to all, “carbon dividends”, is the way of how to align the market signal that helps face the current environmental challenges, with the current concerns about inequality and lack of sustainable economic growth.

It also constitutes a fiscally sound way to begin funding the universal basic income the society so urgently needs in order to face growing structural unemployment, before social cohesion breaks down, as then it might be too late.

It follows the same principles as what I proposed in May 2016, in order to combat pollution in Mexico City, and that you surprisingly yet very kindly published.

So Sir, forget the Paris Climate Agreement lamentations, at least for a while. The Climate Leadership's Council proposed carbon dividends proposal carries a lot more green, social and economic punch.

Please, even if this could make Trump to become a greater green hero than Al Gore, swallow it, for the best of our young. If Washington Post seems to be able to do so, you could too. 

PS. A decade ago I protested the trading of carbon credits as being just indulgences issued in order to keep on committing environmental sins. But carbon-tax-dividends, is that not something like democratic climate change indulgences, applied to and shared by all?

@PerKurowski

Martin Wolf, if we are to save our pied-a-terre, that will not happen by pitting clean Obama against dirty Trump

Sir, I refer to Martin Wolf’s “Trump’s bad judgment on Paris” June 7. 

Wolf writes: “Above all, the earth is not just an arena. It is our shared home. It does not belong to one nation, even such a powerful one. Looking after the planet is the moral responsibility of all”. Precisely! I agree 100%!

But when Wolf suggests, “the remaining participants in the accord must… commission an analysis of how to deal with free riders. Everything must be considered, even sanctions.”, then I disagree, 100%.

That has clearly little to do with how to help our planet and all to do with furthering the ongoing polarization in the world, all to do with fighting it out in an “arena”.

Really, what does “free riders”, in a “non-binding” agreement, in which “no coercion was involved” mean? So if US had remained in the “framework” (because a framework is all the Paris Climate Agreement is), and not done anything, would that have been better?

I was like most against Trump (the US) pulling out of the accord, but, after it happened, I take it as the best thing that could have happened. At least now we will no longer be lulled into feeling more secure about our planet by something that might just be a dangerous illusion of a solution. Something that might just have been a huge political photo-op; and a congenial gathering of green subsidies distributors and customers. Now at least we all know better how little punch that Paris Accord really carried.

So, let’s take it from here. Let us inform the Americans that a revenue neutral carbon tax, like the one recently proposed by some republicans, might carry ten times as much environmental saving punch than the Paris Accord. Let’s inform Trump that if he helps to support a successful implementation of such plan he could become even a greater hero to the Greens than Al Gore… that he would have been touched by Abraham Lincolns’ “the better angels”.

Sir, I sincerely believe that the price signals of a carbon tax; with all its revenues distributed among citizens, instead of being redistributed by some few, is the best way to live up to our moral responsibility towards what I often lovingly refer to as our pied-a-terre. If Donald Trump helps that to come thru, I at least am more than willing to forgive most of his very much salon inappropriate behaviors.

PS. And really, what is a Paris Climate Agreement that was signed by a president but not put up for ratification by the US Congress? In 1920, it was the US Senate that said no to the League of Nations with a 49 to 35 vote.

@PerKurowski

http://ourpiedaterre.blogspot.com

Our societal radar does not record sufficiently many crucial problems and less do we discuss their possible solutions

Sir, Gillian Tett refers to JD Vance’s “Hillbilly Elegy” April 28.

The author, having faced “a family and culture in crisis” and in order to “combat a culture of instability, irresponsibility, anger and pessimism, made worse by opioid addiction’ suggests, besides the reintroduction of [some] military service, giving extended family members easier adoption rights over troubled children, enabling people receiving housing vouchers to move beyond poverty-stricken ghettos, and, most crucially, encouraging business to work with schools and community colleges to reshape education for teenagers, with more mentoring and apprenticeships.”

Ms. Tett concludes, “These are profoundly sensible steps. But they are also notably not measures that are getting much attention from Trump, let alone from the Democrats. Therein lies the tragedy of America today.”

Absolutely, it is a tragedy, but not only of America. Too much is not recorded timely by our social radars, or if identified then becomes horribly distorted, most often by those who want to profit, monetary or political, from the solutions.

For example: The world is facing structural unemployment, among other by robots and automation becoming more and more efficient. But was that talked about during the last election? No! It was not as politically juicy as going after, or defending, immigrants. If it had been discussed the Mexican wall could have been a non-issue.

In such a jobless world, in order to remain viable societies, we would have to create decent and worthy unemployments, which would probably have to include some sort of universal basic income? But was that talked about during the last election? No!

Also, for our economies to be able to move forward we have to stop current insanely risk adverse bank regulations, that refinances up to the tilt the safer present and past, while refusing financing the riskier future. Is that distortion discussed? No way Jose! If you do they might not invite you to Davos.

Instead populists agitate for instance with realities such as some few billionaires holding more wealth than half of the world’s population…while conveniently ignoring how un-transferrable such wealth really is… or scream about all the “cash stashed away” as if that cash was cash.

To have a chance to leave something reasonably workable to our grandchildren, we need to dramatically realign many incentives and fight those who are marketing solutions only to profit on these. In that respect here follows some of my wishes:

That we are able to keep the fiscal income lean since that is the only way to guarantee the fiscal spending does not get mean.

That we fight tooth and nail against all redistribution profiteers. By for instance creating carbon taxes that helps to save the environment, but that have all its revenues shared directly, equally, among citizens.

That we develop guidelines that help us classify credits, and as a consequence debts, into legitimate or odious.

That we make the pension plans of academics of the universities entirely contingent on how it goes for their students. As a minimum their pension funds should hold all the education loans that were given out in order to pay their salaries.

And of course, please, we must get rid of the so useless and so dangerous risk weighted capital requirements for banks.

@PerKurowski

If President Trump makes unfit profit on his hotels, so might those who are in the business of opposing him.

Sir, Edward Luce’s “America’s monetiser-in-chief” of February 13, could easily end up being used by all those who by email and other means, ask us to give money to them so that they fight Trump on our behalf.

Currently too many are reminded of Irving Berlin’s song “Anything You Can Do” from the “Annie Get Your Gun” musical. The days open up with a: “Some say they can fight Trump, but I can do that better, I can fight Trump, better than all”, which is then followed by an ever increasing number of voices belting out their, “No you can't. Yes, I can. No, you can't. Yes, I can. No, you can't. Yes, I can, Yes, I can!”

Luce writes: “Even where Mr Trump has the highest motives, he will fail the Caesar’s wife test”. In what world does Luce think we are living? Do not failed Caesar’s wife tests surround us everywhere? Is political profiteering really so much different from business profiteering? Surely if Trump is caught in an act of extending an overt invitation to be corrupted, I am sure that the consequences for him and for the corrupter, will be much more severe than for all those politicians who daily mingle with their dedicated lobbyist.

Sir, I am not condoning any possible Trump shenanigans, and I will protest it as much as you, or even more than you, if and when any real evidence is presented. But, meanwhile, there is a vital need for staying focused on realities and not being distracted by anti-Trump populists or anti-Trump profiteers. 

First, as a Venezuelan still living the “Chavez” era, what Luce describes when preaching for the choir, means nothing in terms of eroding the popularity of a populist. Quite often the opposite happens.

Second, there are too many infinitely more important and urgent issues at hand. Just think of all those robots that compete with us humans for jobs without being burden with payroll taxes and similar handicaps. Just think of those regulatory gnomes distorting as they see fit, with their risk weighted capital requirements, the allocation of bank credit to the real economy.

Third, Trump represents a new wind in Washington, so let’s try to use it as much as we can. For instance the proposal by the Climate Leadership Council of imposing a carbon tax, which revenues would go directly to the citizens, is the best win-win possibility I have seen in many years. If that would be its price, I would gladly look the other way, if those horrendous anti America and anti economic plans of Trump Hotels to quintuple its outlets in America become reality.

PS. Hotel building needs financing, and bankers and investors, must consider the after 4 or 8 years profitability of the hotels.

PS. I have just received an email where someone indicates that after a review they have found that I have yet to donate the minimum $3 to fight Trump, and that I must hurry up. I wonder if someone keeps a list of the 10 largest anti-Trump-movement's profiteers?

@PerKurowski

To better help the environment and fight inequality, get rid of the profiteers, and give the citizens the incentives

Sir, after a price increase of 6.000% last year, gasoline is currently being sold a US$ 1 cent per liter in Venezuela, a country in which people are dying because of lack of food and medicines. Can you imagine how much better it would be to sell that gasoline at international prices, and perhaps even adding some carbon taxes to it, and then share out the new revenues obtained among all Venezuelans? I have been fighting for such a solution for soon two decades.

That is why I jump of joy reading Ed Crooks’ report about a proposal in the US for “a tax on carbon dioxide emissions, starting at $40 per tonne, with all the revenue recycled in dividends paid back to the public.” It is being introduced by the "Climate Leadership Council" “Republican grandees propose carbon tax” February 9.

In May 2016 you also kindly published a letter of mine in which I proposed something similar as a tool to fight pollution in Mexico. 

I pray the referred to proposal gets to be approved in the US. It would set up a great example for the world on how one can effectively align the fights against environmental damages and against inequality. It would serve as a great appetizer for a Universal Basic Income scheme.

That said we could reasonably assume that, since it reduces the value of their franchises, the usual green movements and redistribution profiteers will fight it tooth and nail.

PS. Venezuela’s domestic gasoline prices should in fact be considered a violation of economic human rights, but I have found little interest, for instance in OAS, for pursuing such matter.

@PerKurowski

The fiscal accounts of most nations seem to be out of whack. Universal Basic Income would help regain much order

Sir, I refer to Lawrence Summers’ “Trump’s misguided tax reform plans” December 5.

It reads quite, or even very correct, but as so many other recent writings by economists, it does not stimulate taking a strong position in favor or against, that because it is getting harder and harder to distinguish real economic prognosis from fake politically framed one.

Everywhere we look we get the feeling we have lost control over the fiscal accounts and government activities in general… no matter who is in charge. Since it is we citizens who at the end of the day are going to pay for whatever happens, it behooves us to urgently put some order to our government’s affairs. 

The most expeditious way for that could be to use a Universal Basic Income scheme to separate, as much as possible, redistribution, from the rest of government activities.

Doing so, by means of an all citizen to all citizens affair, we would be better able to understand what is going on, and presumably governments would thereafter be more elected on the basis of who offers the best in what should be a governments primary responsibilities to all, and not based on who offers the most to some.

Of course, to diminish the redistribution role of governments will be no easy affair. That is not only because redistribution profiteers will naturally fight back; but also because after so many years of being brought up on the need to cry for a larger share of the redistribution pot, voters have become more genetically disposed to be beggars of favors.

That said, if a UBI is used, we must make sure that it is funded with real money… no funny money, no debt.

It could be funded with savings in current redistribution costs, carbon taxes, payroll taxes on robots, driverless cars and similar human employment substitutes, or by special taxes on income and wealth.

That would provide stimulus for the economy, while at the same time allow all who want jobs to easier reach up to the growing gig economy.

PS. In resource rich countries, like Venezuela and Nigeria, it SHOULD primarily be funded by like the net oil revenues.

@PerKurowski

To make saving our pied-a-terre affordable, we need to keep the climate-change-fight profiteers at bay

Sir, I refer to Martin Wolf’s “Inconvenient truths and the risks of denial”, November 2.

I do not read scientific projections on global warming, it suffices me to see what harm is done to our delicate pied-a-terre to know its wrong and that it should stop. But I also know that could be a much costlier than needed process, if we are not able to keep the climate-change-fight profiteers at bay. And I also know that we would be much more effective in our efforts if we could engage other social causes in the quest, like that of decreasing inequality.

That is why I am all in favor of for instance very high carbon taxes, with all its revenues paid out to citizens by means of a Universal Basic Income. That would decrease carbon emissions, allow supplier of cleaner energy sources to compete more and, to top it up, help our economies by reviving demand.

Sir, all those incredible over 500 percent gas/petrol ad valorem taxes in Europe, would do much better placed in the pockets of European citizens, than managed by European bureaucrats, capturable by their own and other special interests.

@PerKurowski ©

When raising carbon taxes, let’s try to keep the war against climate-change and the redistribution profiteers at bay

While the crude oil price index fell from 100% in 1980 to 18% in 1998, the products price index on the consumer level increased in the UK in constant terms from 100% to 247%; a result of that taxes on petrol went from 85% added value in 1980 to a confiscatory 456% in 1998. And the tax increase, similarly applied in other European countries was predicated on environmental reasons… even though for instance Germany and Spain, were simultaneously subsidizing coal. And when consumer protested the increase of petrol prices the blame was laid on the sheiks.

And now Tim Harford argues for the need to “raise the price of carbon-dioxide emissions, using internationally coordinated taxes or their equivalent [because] such a tax would make renewable energy sources more attractive – as well as encouraging energy-efficient technologies and behaviour”, “Alternative energy’s power struggle” July 30. 

Sir, even though I come from an oil extracting nation, Venezuela, that is something with which I could agree, but only under two conditions.

First that all the taxes and subsidies in the energy sector need to be absolutely transparent so that there is no hanky-panky going on.

And second, so that this do not just enrich many of the war against climate-change profiteers, all those tax revenues should be distributed equally to all citizens by means of a variable universal basic income. The beauty of it all is that doing so, would equally help, somewhat, to keep the many redistribution profiteers at bay.

PS

Per Kurowski

“With a basic income, the numbers just do not add up” Do not add up for whom, for the redistribution profiteers?

Sir, John Kay writes: “With a basic income, the numbers just do not add up” June 1, and the first question that pops into my mind is, does not add up for whom?

For instance if in my country Venezuela, all net oil revenues were shared out using a “variable” Universal Basic Income scheme, it would definitely not add up to Maduro and friends, but it would sure add up a lot to most other citizens, especially to those poor who have only received a very small fraction of what should have been their per capita share of those revenues.

If we go the Universal Basic Income route, then we can also better separate the redistribution function from all government functions, bringing heightened transparency, and which clearly would add up to a chance for better governments.

I favor paying that Universal Basic Income to all citizens, with no question asked, as a Societal Dividend. It should be a citizen-to-citizen affair so that there is no need to thank any bureaucrat or politician for special favors.

And a UBI could signify a decent and worthy partial solution to that future structural life term unemployment of millions that we can already begin to detect.

How much should the amount be? Let each country explore what it can, and lets take it from there. There are better times and there are worse times; and you sure do not want to de-capitalize that society paying you dividends, much less put it in debt in order for those now to collect income from the future generations.

And let us not forget that the Universal Basic Income is in much re-injected into the real economy, which could help it to grow and generate jobs.  

And you could fund Universal Basic Income from different sources in ways that help to solve problems… like with carbon taxes, so as to align the incentives of the fight against climate change with the fight against inequality.

Kay ends writing: “Social welfare systems everywhere make use of both types of information — contingent and income-related — to balance cost and effectiveness. That is why they are, inevitably, complex” The truth is they are much more complex than need be, precisely because that’s the business of the redistribution profiteers.

@PerKurowski ©