So, COP-26 is nearly over and we can all stop worrying about the impending heat death of the planet for another year. Various countries have promised to do even more than they were already not doing, while U.S. congresspeople will presumably veto whatever inadequate measures Joe Biden signs up to anyway, because preventing the destruction of the planet will cost some of their constituents money. It’s been an exhausting few weeks, so hopefully, all of the fossil fuel lobbyists will be given a nice holiday after all of their exertions making sure nothing substantive gets done.
Yesterday I was chatting with a friend who’s employed by a company trying to calculate the carbon footprints of supply chains (this, it turns out, is COMPLICATED), and he was explaining how hard it is to pin particular emissions to particular countries. If Canada buys American cars made from Chinese steel made from Australian iron ore, who’s to blame for the carbon dioxide?
So, I wondered, does it make sense to think about emissions on a per-country basis anyway. Within countries different citizens emit wildly differing amounts of greenhouse gases, so why should they invariably be addressed together? For example: my great-uncle is British, as is Richard Branson. My great-uncle hasn’t left his small town in West Wales in a decade; Richard Branson runs an airline, owns a tax haven; and recently went on an utterly pointless round-trip into space. Are they really equally to blame for the 550 million tonnes of CO2 emitted by Britain each year?
Fortunately, I’m not the only person who’s been thinking about this.
- “At the global level, the top 10 percent of global emitters (771 million individuals) emit on average 31 tonnes of CO2 per person per year and are responsible for about 48 percent of global CO2 emissions. The bottom 50 percent (3.8 billion individuals) emit on average 1.6 tonnes and are responsible for close to 12 percent of all emissions in 2019. The global top 1 percent emit on average 110 tonnes and contribute to 17 percent of all emissions in a year,” wrote Lucas Chancel of the World Inequality Lab in this paper.
In many Western countries, it turns out that the poorest half of the population is already emitting at the levels required to hit 2030 climate targets, so they’re already doing the right thing (I could say everyone should be like my great-uncle, but I’m pretty sure the world couldn’t take that degree of eccentricity…). So, if the problem comes from the wealthiest half, then the solution must be found there too.
- “Carbon inequality is extreme, both globally and within most countries. If the 1.5⁰C goal is to be kept alive, then carbon emissions must be cut far faster than currently proposed. But critically, these efforts must go hand-in-hand with measures to cut pervasive inequality and ensure that the world’s richest citizens – wherever they live – lead the way,” concluded this paper written for Oxfam.
So, what can we do about this? The problem is that, if the United States threw itself into tackling climate change by forcing its richest citizens to reduce their emissions (before you write in: this is a hypothetical suggestion, not a prediction. Obviously) to the level of its poorest citizens, that would still not stop the problem if the Chinese and the Europeans did not match its commitment. Everyone has to act together, which is why the COPs exist. However, no matter how many meetings are held, as with tackling offshore-enabled tax evasion and kleptocracy, this is one of those “tragedy of the commons” type situations, where individuals will always have an incentive to take more than their fair share. However, that is not a reason to do nothing. If everyone’s yard is full of trash, and rats are breeding uncontrollably all down the street, you should still clear out your yard.
So, what to do? There are lots of ideas out there for how to stop the oligarchs from ruining the planet, among which my favorite is to stop them flying all the time with a frequent flyer levy. Under the plan, if you fly once or twice in a year, you’ll notice no difference. If you fly 40 times, however, you will, and the tax needs to keep going up until you get the message that you need to stop. As for space tourism, which is perhaps the single most wasteful activity ever invented, it emits 100 times more carbon dioxide per passenger than ordinary flights, and should be taxed accordingly. Or banned. Or punished with a prison term. They’d all be fine with me.
In short: the atmosphere belongs to everyone, and climate change affects everyone, so oligarchs shouldn’t get a free pass to stink it up.
- “The extreme difference between the expected carbon footprints of a small minority of the world’s population in 2030 and the global average level needed to keep the Paris Agreement’s 1.5⁰C goal alive is not tenable. Maintaining such high carbon footprints among the world’s richest people either requires far deeper emissions cuts by the rest of the world’s population, or it entails global heating in excess of 1.5⁰C above pre-industrial levels. There is no other alternative,” concludes the report prepared for Oxfam.
There is only so much carbon dioxide the atmosphere can take (about 300 billion more tonnes, if we want to restrict warming to one and a half degrees, which we really need to if the planet is to remain largely inhabitable), and the usual “make the pie bigger” argument against enforced equality therefore does not apply. The pie cannot be made bigger unless we want our grandchildren to be extras in a real-life sequel to Mad Max.
I know lots of the people who read this newsletter disagree with the idea of higher taxes on the rich, and they email me to say that such taxes would discourage wealth creation, etc. I can see their point of view, though I don’t agree with it.
However, I cannot see how anyone could reasonably disagree with the idea of forcing the rich to cut their emissions. If you do disagree with it though, please write in and tell me why, and I’ll feature your objections next week.
SLEAZE
One of the really important things about climate change is that we mustn’t get distracted from it by issues that oligarchs would prefer us to discuss (suppose they gave a culture war, and nobody came?). So I was a bit torn by the fact that much British political debate last week was taken up by a distinctly sordid scandal (as explained here). It wasn’t as important as climate change, because few things are, but it did threaten the rules to keep money out of politics, which is important if we want to have a political system that is capable of tackling climate change.
The British system whereby members of parliament police themselves, but also involve outside observers, was widely respected, but had the unfortunate side effect (for some MPs) of stopping them from earning as much money as they wanted from corporations. Like many things in Britain – Boris Johnson vs Donald Trump; Richard Branson vs Jeff Bezos; GBNews vs Fox News – the resulting kerfuffle all felt like a lower-budget version of what happens in the United States, but it was still a big deal.
- “Boris Johnson’s government has pulled back, slightly, from its threat to replace the independent anti-sleaze watchdog with a panel dominated by Tory MPs. And while Paterson may have since stepped down as an MP, the question remains: is the UK a state captured by vested interests?” asked Liz David-Barrett, a professor at the Centre for the Study of Corruption, at the University of Sussex.
State capture is an interesting and alarming concept, which goes beyond traditional ideas of corruption, and looks at the state as a whole. If the rules have been crafted to benefit particular groups in society, then you don’t have to break them to get ahead.
- “We tend to associate state capture with post-Soviet and post-colonial transitions. Think oligarchs in Russia and oil barons in Nigeria. But more recently, we’ve seen a new form of capture emerge in more mature democracies – and some worrying signs of it in the UK.”
Fortunately, after Johnson’s attempt to scrap the existing system of checking up on how MPs behave was met with a storm of public and media outrage, he abandoned it, but it was still remarkable that he tried. The answer, to quote Alastor “Mad Eye” Moody is, Constant Vigilance (when I read the Harry Potter books to my kids, I always found this line worked best in a Belfast accent), until we get a prime minister willing to accept that rules apply to politicians, as well as to everyone else.
DOMINICA
There are many lovely islands in the Caribbean, but probably my favorite is Dominica. It is a former British colony which is either the most northerly Windward Island, or the most southerly Leeward Island, depending on who you’re talking to; and it’s not to be confused with the Dominican Republican, which is the bit of Hispaniola that isn’t Haiti.
Dominica is utterly gorgeous, but very poor. Its steeply forested slopes have prevented it from building a fully-fledged international airport, which means it’s missed out on the development that tourism has brought to many of its neighbors. It has therefore sought to bring in cash in other ways.
Dominica was an early passport vendor (second only to the ever-entrepreneurial St Kitts and Nevis), and made a decent income for years as a good option for those who liked their passports cheap. It has also sought to copy some of its neighbors’ ideas and to bring in income by selling anonymous “International Business Companies”, which could mask foreigners’ identities.
Again, it never managed to outcompete more established offshore centers: either at the bottom of the market, like Nevis; or at the relatively prestigious end, like the British Virgin Islands. But its IBCs have still found time to feature in a surprising number of scandals, normally as the nominal partners in a UK-registered limited partnership used for laundering money out of the former USSR. Fully 12 percent of corporate partners used in the particularly-suspicious “Scottish Limited Partnerships” were registered on the island.
Anyway, no more. Dominica has abolished the International Business Company, and is getting out of the game. The revenue wasn’t worth the risks, it seems.
- “With very little economic return, the IBCs have exposed Dominica to operational, reputational and regulatory risks,” Foreign Minister Kenneth Darroux told parliament earlier this year.
Thanks to pressure from wealthy countries, many traditional tax havens have been forced to rein in some of their more egregious practices. This is great news and should encourage us to keep highlighting how such companies are abused, in the hope other countries will decide they no longer want the bad reputation that comes with them. The main thing to remember, however, is that the worst offenders are members of the European Union, the United States and the U.K., and if we really want to change the world, that’s where we need to see reforms.
WHAT I’M READING
I’d like to tell you that I’ve been reading important economics texts this week, but instead I’ve been obsessively reading books in the Bernie Gunther series of “Berlin Noir” detective novels, by Philip Kerr. I’ve been looking for something to take the place of Ian Rankin novels in my life (since I read them all), and I’m delighted that these are ticking all the right boxes. The weekend’s read was A Quiet Flame, in which Gunther – a Berlin cop on the run in Juan and Evita Peron’s Argentina in 1950 because he’s falsely accused of being a Nazi – gets mixed up in attempts to gain control of illicit gold hidden by war criminals.
- “For the Perons, the question is this: how to get their hands on it. To exercise control of the Zurich accounts requires the physical presence in Switzerland of at least one of those bankers, accompanied by the signed letters of the other two. But which one of them can be trusted to go?”
Kleptocracy was such a hassle in those days, it’s a wonder that anyone bothered. Things are so much more civilized nowadays.