TCS Daily


This Year's Dumbest Political Idea....

By Joshua Livestro - July 26, 2006 12:00 AM

We're only halfway through 2006, but the winner of this year's prize for the dumbest political idea can already be announced. Its originator is the British environment minister, David Miliband, who in a recent speech to the British Audit Commission suggested introducing state-enforced limits on individual carbon emission. "Imagine a country," he said, "where carbon becomes a new currency. We carry bank cards that store both pounds and carbon points. When we buy electricity, gas and fuel, we use our carbon points, as well as pounds. To help reduce carbon emissions, the government would set limits on the amount of carbon that could be used."

It's a deceptively simple idea. Everyone would be allocated an identical annual carbon allowance, stored as points on an electronic swipe-card. Points would be deducted for every purchase of non-renewable energy. People who did not use their full allocation, such as people who do not own a car, would be able to sell their surplus carbon points into a central bank. High energy users could then buy them - motorists who used their allocation would still be able to buy petrol, with the carbon points drawn from the bank and the cost added to their fuel bills. To reduce total UK emissions, the overall number of points would shrink each year.

Miliband's proposal is a transparent attempt to boost Labour's green credentials: Look at how draconian we're willing to be on behalf of Mother Earth. Beyond that, it's apparently also meant as a return to old-fashioned class warfare. Instead of bleeding the rich dry, Labour will force them to drive smaller cars and book bicycling holidays in the local caravan park. That, at least, is what I gather from Miliband's remarks in a Channel Four television interview. "It is not the poor who are the biggest emitters of carbon," he said. "It is not the poor who have the biggest cars or the biggest holidays or the most aeroplane flights or the most energy-inefficient usage." According to the Reverend Miliband, the wages of sin are global warming, and the only way we can redeem ourselves is by embracing an anti-consumerist lifestyle.

There's only one problem with this idea: it wouldn't work. Worse than that, it would result in an administrative disaster the likes of which we haven't seen since the catastrophic experiments with wage and price controls in the early 1970s. Miliband, apparently Labour's leading intellectual, would do well to read up on the history of that decade (on that subject, I can recommend Steven Hayward's excellent The Age of Reagan: the fall of the old liberal order, 1964 - 1980, or perhaps David Frum's highly enjoyable How We Got Here: the 70's, the decade that brought you modern life - for better or worse). In it, he would find the perfect arguments against his own harebrained scheme.

As a presidential candidate, Richard Nixon had dismissed price controls as impractical. Once in office, he chose to forget the arguments against such measures, for the sake of political expedience. The post-1971 measures clearly showed that President Nixon should have heeded the advice of candidate Nixon. Contrary to Keynesian expectations - but in line with predictions by Milton Friedman, who warned Nixon at the time that he "had a tiger by the tail" - inflation shot through the roof and the program turned out to be an administrative nightmare. What started with three sheets of paper setting out the basics of the program, soon turned into thousands of pages of highly specific regulations covering every single product and profession. A myriad of agencies were created to enforce the unenforceable. The net effect of Nixon's initiative was that it turned ordinary, law-abiding citizens into habitual lawbreakers, and Republican administration officials into quasi-communists. One of them even called for 1984-style snooping on your fellow citizens, suggesting that "the citizen's role in this program is to rat on his neighbor if his neighbor violates the controls".

Like the old price control policies, Miliband's carbon emission idea is based on two important fallacies. The first is the idea that government is somehow best placed to determine the required individual carbon emission levels. Miliband's remarks seem to suggest he wants one single maximum emission level for everyone. But that would obviously never work. Country folk need their cars more than city slickers, old people use more heating than young people. A program that doesn't take such basic facts into account isn't worth the paper it's written on. But to design a system tailored to individual requirements - and the fact that such requirements change over time - would mean an absolutely maddening bureaucracy. Once launched, it would require an army of civil servants to answer the many practical questions that would arise. What if I have a sickly elderly relative who lives in the next town? She requires a bit of extra care, a few extra visits a week perhaps. This being Britain, using public transport is not an option. I would be penalized for providing such care if making these visits by car meant I would exceed my carbon emission limit. Could I get an additional carer's carbon allowance? What if I want to start out on my own as a traveling salesman? I could never do that without additional carbon emission rights. Would I be entitled to a special starter's carbon credit? Or does this legislation mean that no one will be able to start a traveling sales business ever again?

The second fallacy is the idea that government would be able to enforce the scheme. People will look for ways around the scheme, and the experience from the 1970s suggests that they will find them. Faced with price controls, companies simply re-branded existing products, creating "new" products that fell outside the control system. Wage controls were circumvented by creating new job descriptions which justified different pay scales. In cases where individuals aren't able to come up with clever legal solutions, they will simply look for such solutions on the black market. Expect a lively trade in fake carbon emission cards, as well as an explosion in the number of illegal petrol pumps. And who's to blame if a petrol station employee "accidentally" forgets to ask for a customer's swipe card?

It is of course possible that Miliband will see the error of his ways, and bin this idiotic idea before it ever reaches the cabinet table. He wouldn't be the first politician ever to use a speech to float a completely impractical idea for the sole purpose of boosting his street cred with the pressure groups that form his department's political constituency. It gives me an interesting new idea. Perhaps politicians should be set personal quotas for respiration-related carbon emission, or as my grandmother used to call it: hot air. It probably wouldn't work any better than Miliband's own emission scheme, of course. But it might just save us from having to listen to similar dumb ideas in future.

Joshua Livestro is a TCS Daily contributor.

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