Friday, May 2, 2014

Carbon Dioxide Levels Unsustainably High

Can we imagine a different future?

Bloomberg is out today with this article

These are not the world records humanity wants to be setting.

The current policy towards reducing emissions is failing. It is time to completely rethink the policy response to environmental pollution. There are several policy points that we feel are missing from the dialog.

1. Monetary policy affects the environment. There’s never any discussion about this but if we run ever larger credit bubbles, such as right now, then we misallocate ever larger amounts of natural resources. Addressing the environmental damage and other economic damage created by artificial credit cycles must be addressed.

2. Fiscal policy is not being employed properly to address carbon emissions. The idea of a carbon tax needs to be tossed out. Carbon credits and carbon taxes and clumsy instruments that do little to solve the problem. An easier method would be to move to a consumption tax nationwide. Ditch the income, cap gains, corp tax, etc. Create a flat consumption (sales) tax at say 25% on all retail goods. Any retail good that is certified cradle-to-cradle i.e. sustainable, is exempt from charging consumers the sales tax. This tax system has several great features to it including incentivizing people to save rather than consume which is the opposite of our current tax system and incentivizing both consumer and producer to focus on reducing their environmental footprint.

3. Give the environment legal representation. New Zealand has done this and its worthy of a closer look. Creating environmental rights is important because our laws are designed to treat mankind as completely independent of our planet when in fact we could not survive without it.

4. Change accounting standards. What we treat as assets on many corporate balance sheets are actually liabilities. While we strongly believe in the value of property rights we should not ignore our basic obligations of stewardship. If a mining company has a $2B copper mine on its balance sheet we would argue that becomes a liability each time they dig into the earth. Where is the cost of replacing the land and environment destroyed in the process of mining calculated? We need to make this transparent and easy to assess.

There are simple things we can do to make our world brighter and we believe that there is a great shift taking place drawing more of the right people towards implementing creative solutions. Let’s build a future free of fossil fuel use and environmental degradation.

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