George Shultz Calls For GOP Climate Insurance Policy

by Guest Contributor

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Originally published on Future 500
by Bill Shireman, President and CEO of Future 500

Former Secretary of State George Shultz proposed that the U.S. adopt a “Climate Insurance Policy” to simultaneously bolster the economy and reduce the risk of global warming.

In a recent interview with reporters, Shultz suggested that Republican leaders follow a Reagan-era strategy that would drive innovation while also cutting carbon emissions.

Shultz’s approach would also deliver a political benefit to the Republican Party, which is struggling to redefine itself after losing two national elections to Democrats, and failing to capture a majority in the Senate, as most analysts had expected.

His plan would emulate the GOP’s leadership on ozone protection during the Reagan administration, which resulted in a “no regrets” approach that was beneficial to the economy, whether or not ozone science was borne out.

“There were ozone skeptics back then, just as there are climate skeptics now,” said Shultz. “But we all agreed that, if what some scientists feared were to happen, it would be disastrous. So we took out an insurance policy.” The Montreal Protocol quickly led to innovations that vastly reduced ozone depleting substances. “In retrospect, the non-skeptics turned out to be right, and the Montreal Protocol came around just in time.”

On climate, Shultz’s policy preference combines sound policy with deft political strategy. It would tend to reduce federal tax and spending levels over time, by shifting taxes from forms of prosperity that tend to go up, to forms of pollution that tend to go down.

Tax cuts or dividends would reduce taxes on income, profits, savings, or payroll under the proposal. The difference would be made up by a price on carbon or other pollutants. While the switch would start off revenue neutral, shifting taxes to pollution would lead to gradual reductions over time.

Carbon emission rates generally decline about 1% each year. A tax shift to carbon would drive an average annual tax cut of at least that amount, reversing historic trends.

The tax swap is supported by conservative economists, including Greg Mankiw of Harvard, Kevin Hassett of American Enterprise Institute, Luigi Zingales of the University of Chicago, and Arthur Laffer, father of the supply side economic theories associated with President Reagan.

Retailers and consumer product companies would also benefit. This puts more money in the pockets of WalMart moms. Prices for energy would go up just as much, but consumers could choose whether to use their dividends to buy the same amount of energy, and come out even, or shift their spending elsewhere, and save.

Economically, many economists believe the shift would help increase jobs, income, technology and innovation. It would smooth the transition toward natural gas and renewables, and away from coal. The dividend approach would also enable a higher share of tax cuts to go to coal states, where that sector’s decline has been steady.

Despite its economic and environmental benefits, selling a tax swap in the GOP won’t be easy. Carbon, unfortunately, has become an ideological litmus test on both the left and right. The hard left uses it to advocate economy-wide regulation – and the hard right resists the science because they fear the regulations the hard left thinks are needed.

The problem is, with no alternatives proposed, the regulatory approach is the only option offered.

Some GOP strategists argue that by offering a market-based solution on the climate issue, the party would lose a wedge issue that can mobilize the base against the Democrats. But as a lifelong Republican, I disagree. This is a one-time opportunity to achieve a long-term GOP priority: to drive taxes down and growth up. Why would we not take that?

More attractive than a carbon-focused approach might be a pollution tax shift that covers a “market basket” of contaminants, rather than just carbon. Unlike other taxes, pollution taxes are supported by a plurality of GOP voters.

According to Shultz, even if some GOP lawmakers remained skeptical, the party would seize the issue from Democrats, and regain its historical conservation leadership. “All of the most important federal environmental actions were taken by Republican presidents,” Shultz said.

The new GOP approach would appeal to young voters, including conservatives, who reject the idea that to grow the economy you have to damage the environment. This is not the coal age. This is three generations into the information economy. Environmental protection is fully compatible with economic growth. It’s expected – it’s assumed.

When forced to choose between the economy and environment, young voters split about evenly, giving a slight edge to the environment. A March 2013 Gallup survey of American adults showed more 18- to 29-year-olds saying environmental protection should take priority (49%) than those saying economic growth should take priority (45%).

Yet in terms of urgency, the economy needs help right now. People need jobs to put food on the table today. They need the environment to live for the long term. So 45% want political leaders focused on the economy as their top priority, while only 8% want them focused first on climate change, according to polls by the Conservative Republican National Committee (CRNC).

Republican climate “skeptics” use that data to argue that young voters don’t care much about the environment. Yet a majority of young conservatives under age 35 – some 30% of whom doubt climate change is real – still favor action on climate. They are simply not convinced government action will work.

But if nothing else is on the table, they favor government action. About 80% of voters under 35 support “President Obama’s climate change plan” – even though most have no idea what’s in that plan. But they favor action. If the GOP doesn’t offer an action plan, they won’t expend a lot of effort to figure out a better approach – they will take what’s on the table that the Democrats set.

The failure of the GOP so far to offer a climate policy of its own makes a big government approach a self-fulfilling prophecy. GOP leaders rightly worry that a Democrat-led climate policy will lead to more regulations, higher costs, and higher taxes. Strategic Republicans could seize the high ground on the issue, and offer a no-regrets alternative that’s good for the economy and provides insurance against the risk of climate change.

Bill Shireman is the coauthor of upcoming book “Engaging Outraged Stakeholders: How-to Guide for Uniting the Left, Right, Capitalists, and Activists” and president and CEO of the Future 500. He is also coauthor of the book “What We Learned in the Rainforest: Business Lessons from Nature“.

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This article, George Shultz Calls For GOP “Climate Insurance Policy”, is syndicated from Clean Technica and is posted here with permission.

About the Author

Guest Contributor is many, many people all at once. In other words, we publish a number of guest posts from experts in a large variety of fields. This is our contributor account for those special people. 😀

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Bleeding Europe — MY COMMENT

by John Brian Shannon

In one of Paul Krugman’s latest blogs (which are always great reads) entitled “Bleeding Europe” our favorite Professor takes the side of all the Eurozone nations — except for the one that has to pay the bills — Germany!

Which is fine, because those countries have been beaten up by everyone including, well, everyone. They need as many powerful voices on their side as possible, so that they can continue to run huge deficits forever — and have Germany foot the bill.

And, why not? It’s all Germany’s fault for WWI and WWII, isn’t it? Ergo, they are punishing Germany and it feels good!

The fact is, that all of the people who started both wars are long dead, as are most of the brave soldiers who were told to fight brother Europeans because the politicians of the day on both sides couldn’t get their diplomatic acts together.

But it’s a great relationship while it lasts, isn’t it? Spend like drunken sailors and have Germany’s grand-kids pay for it and if they so much as dare to hint this is a bad deal, then browbeat them with WWII-era propaganda until they stop.

It is not a sustainable relationship — even for the Germany-haters. Why? Because the combined debts and deficits of southern Eurozone nations are so large, soon even Germany won’t be able to cover the losses at the casino and they will all sink into the economic abyss together. (Then it will be; “Hey, South Korea, wanna buy the Eurozone, cheap? Their assets are mortgaged to 200% of their value, but maybe you could kick-start it.”)

It is not a sustainable relationship for 21st-century German taxpayers either, all of whom have nothing to do with WWI or WWII by the way, and are tired of paying for the neighbour’s “no wine is good enough for us” trips to the casino!

But in the end, all of this will come to a crashing halt when German voters have had enough of footing the bill for spendthrift nations who badmouth Germany at every opportunity.

And then watch what happens. Not only will the good ole days of eat, drink and be merry on Germany’s tab be well and truly OVER, the credit-ratings agencies themselves will dictate what kind of budgets countries like Greece are allowed to run. A sudden transition to balanced-budgets would be quite the shocker! If you happen to be visiting southern Europe when that happens — be sure to duck.

I think German Chancellor Angela Merkel is the smartest woman on the planet. For now, she is paying their way, biding her time, no doubt biting her tongue and just waiting for the almost inevitable day that the credit-rating agencies finally take control of overspending Eurozone member-state economies.

If and when that happens she will suddenly be recast as the sweet and gentle fairy-godmother of Europe who convinced her countrymen and women to pay the bills for her free-spending southern neighbours for as long as humanly possible. Sie haben meine Bewunderung, große Dame!

JOHN BRIAN SHANNON

To follow John Brian Shannon on social media – place a check-mark beside your choice of Facebook, Twitter or LinkedIn: FullyFollowMe/johnbrianshannon

Excerpts from the Center for American Progress Fact Sheet/Regional Energy, National Solutions

by John Brian Shannon

“Developing just 54 gigawatts of offshore wind in Atlantic waters would generate $200 billion in economic activity and create 43,000 permanent, well-paid technical jobs, in addition to displacing the annual output of 52 coal-fired power plants.” — Center for American Progress – Fact Sheet/Regional Energy, National Solutions

I have selected excerpts from this report, which you can read below. I suggest you read or download the entire report in PDF form, click here:

Excerpts from the Southeast: Energy efficiency and smart grid

The Southeast, a region historically dependent on fossil fuels, has become a leader in the emerging field of smart-grid technology—which is at the center of the impending wholesale modernization of our electric infrastructure. An enhanced commitment to regional smart-grid innovation, manufacturing, and deployment, coupled with a robust plan to address the region’s traditional energy efficiency shortfall, point to an economic and environmental boon. — Center for American Progress – Fact Sheet/Regional Energy, National Solutions

• The Southeast boasts more firms across the high-tech smart-grid value chain than any other region. Continuing to lead this transition offers the opportunity to create jobs across a range of skill-levels and fields; to diversify existing companies and to build new ones; to improve quality of life by connecting home, utility, renewable, and vehicle technology; and to reap the environmental and cost-saving benefits of using our resources more efficiently. — Center for American Progress – Fact Sheet/Regional Energy, National Solutions

• At the same time, addressing the region’s serious shortfall in implementing conventional energy efficiency policies provides a tremendous and complementary economic and environmental opportunity. A study by Georgia Tech and Duke University showed the potential to cut energy use across the region by 16 percent in 2030. This would result in annual consumer savings of $71 billion and lead to the creation of 520,000 jobs by 2030. — Center for American Progress – Fact Sheet/Regional Energy, National Solutions

Excerpts from the Midwest: Advanced Vehicles

The auto industry revival that is taking place in the Midwest is proof that states and the nation prosper when we make energy choices that take the American people, our economy, and our outdoor heritage forward together. Having recovered from near bankruptcy less than three years ago, the auto industry is now profitable, sales are rebounding, and fuel-economy projections have exceeded expectations. — Center for American Progress – Fact Sheet/Regional Energy, National Solutions

In addition to revitalizing American manufacturing, the deep oil savings from vehicles being built now under strong new fuel-economy standards will mean net savings to consumers of more than $54 billion a year in 2030 and will add 570,000 jobs to the economy. — Center for American Progress – Fact Sheet/Regional Energy, National Solutions

Excerpts from Mountain West: Wind and solar development and distribution

The Mountain West is experiencing firsthand the economic and environmental benefits of transitioning to low-carbon energy sources. Continuing this shift will be critical—the West is already experiencing serious damage from climate change and would face an even grimmer future if the nation turns its back on clean renewable energy in favor of a continued reliance on dirty fuels. — Center for American Progress – Fact Sheet/Regional Energy, National Solutions

• The West boasts nearly unlimited renewable energy resources—particularly wind, solar, and geothermal—that promise a brighter economic future than is possible with fossil fuels. The National Renewable Energy Laboratory identified 11,788 megawatts of nonhydro renewable energy projects either under construction or in advanced development in the region. Using the Electric Power Research Institute’s estimates of jobs per megawatt, these projects represent 71,872 jobs. — Center for American Progress – Fact Sheet/Regional Energy, National Solutions

Excerpt from the Pacific Coast: Solar power innovation and installation

The Pacific Coast and the adjoining western states are referred to as the “sun belt” for a reason. Capitalizing on that abundant solar resource is paying huge dividends for the region—providing jobs, spurring new industries, and spawning new innovative technologies. Abundant resources and aggressive renewable energy standards, including incentives for both utility-scale and small-scale rooftop solar, position the region to build on its current status as a national leader in solar energy installation and generation. — Center for American Progress – Fact Sheet/Regional Energy, National Solutions

• The solar industry in California has experienced significant growth over the past 15 years. Since 1995 the number of solar businesses grew by 171 percent, and total employment jumped by 166 percent. As a point of comparison, the total number of California businesses has grown by 70 percent, and employment has increased by 12 percent. — Center for American Progress – Fact Sheet/Regional Energy, National Solutions

To read or download the entire report in PDF form, click here.

King Ludd is Still Dead — MY COMMENT

by John Brian Shannon

Please read “King Ludd is Still Dead” by Kenneth Rogoff — at Project Syndicate.org.

Professor Rogoff’s excellent article has outlined the way our modern economic systems work and his statement succinctly describes the need for change to our present paradigm;

“…and the great economist Wassily Leontief worried that the pace of modern technological change is so rapid that many workers, unable to adjust, will simply become obsolete…”

Workers do become obsolete and must then train for other jobs. Which is VERY inefficient from the national economy standpoint. Not to mention lowering the quality of life for that worker and the family that worker supports.

I believe it is in our best national interest to enhance the ability of skilled workers to continue in their chosen career — rather then having their careers suddenly ended by the economic whims of a local marketplace.

Which is why economists everywhere should be proactively calling for the freedom of movement for skilled labour and semi-skilled labour to match local market demands all over the planet.

For just one telling example, take the people who work in high steel. These are the people who build skyscrapers, communications towers and bridges. These are highly skilled workers and it would be a shame for them to become unemployed, or under-employed on account of local conditions.

Such workers add to the knowledge base of a nation and for them to enter training programs to become bus drivers, painters, or insurance salesmen, is deplorable.

But this is what is happening all over America and other Western nations — and not just to the workers in high steel!

Rather than list all of the skilled occupations which face such calamities worldwide, (that would be most occupations which require skilled workers AND also suffer from the boom and bust economic cycle) suffice to say that many skilled workers can be laid off as a national economy tanks. What then?

Economists should be leading the charge in calling for an international treaty to guarantee and enhance the ability of skilled and semi-skilled labourers to go to where the work is, to live in that country with their immediate family until the project is completed, and then move on unhindered to the next project — wherever it may be in the world.

Most often, these workers will return to their home country when their own nations’ economy rebounds and they are again in demand at home.

Instead of staying in the U.S.A. and becoming bus drivers or shopping mall security guards, they will still be in top form — having kept their skills sharp in the interim and will have learned new techniques and practices from working in different jurisdictions around the planet. They will return with a sharp skill-set, positive experiences, they will be more rounded-out and their quality of life will have been enhanced.

This contributes more to the national knowledge base than allowing these people to drift into other employment, unemployment or under-employment during local economic slowdowns.

Economists should not be leading from behind on this, but should research and arrive at a common position which they should present to politicians and separately to the UN, in order to facilitate economic change for the better — change that will benefit all nations. If economists don’t impart this knowledge to political leaders, then who will?

Freedom of skilled labour to swiftly and easily move to where the work is — equals a more efficient world economy, better quality of life for those workers and their families and additional knowledge for the national skilled labour knowledge base.

John Brian Shannon

ABOUT JOHN BRIAN SHANNON

I write about green energy, sustainable development and economics. My blogs appear in the Arabian Gazette, EcoPoint, EnergyBoom, Huffington Post, United Nations Development Programme, WACSI — and other quality publications.

“It is important to assist all levels of government and the business community to find sustainable ways forward for industry and consumers.”

Green Energy blog: http://johnbrianshannon.com
Economics blog: https://jbsnews.wordpress.com
Twitter: @JBSCanada

Why African Resource Exporting Nations Need Tariffs

by John Brian Shannon

Many nations in Africa are presently experiencing a boom in resource exports. And that is truly wonderful news as exports of any kind contribute handsomely to national GDP and balance-of-trade figures. Not only that, millions of dollars of Foreign Direct Investment (FDI) often accompany resource exports.

For workers involved in the resource sector of a nation, it is unquestionably a positive development. Many other businesses and citizens at the periphery of the resource sector benefit too.

But does resource extraction benefit the rest of the society? It is heartening when one sector experiences strong growth – but when that rapid economic growth is limited to a small proportion of the population, tensions can become inflamed.

Joseph E. Stiglitz, Nobel laureate in economics and Professor at Columbia University has noted the problems inherent to resource-based economies in his recent and excellent article; “From Resource Curse to Blessing” which I urge you to read. Early into his piece, he says;

“On average, resource-rich countries have done even more poorly than countries without resources. They have grown more slowly, and with greater inequality – just the opposite of what one would expect.” — Stiglitz

Rather than develop the resource sector to the exclusion of all else and hope the rest of the society holds itself together — it would be prudent to tax all raw resources which are leaving the country.

In that case, comparatively few people will still make a good living directly from the oil (or other resource) company, while the rest of the country benefits in other ways from additional government spending on programs like improvements to national infrastructure, such as airports, highway systems, rail transportation and hospitals and schools on account of the tariff revenue.

When governments take in additional multi-millions of dollars from raw resource tariffs they will have additional money to improve services across the country.

The one thing governments shouldn’t do is add a tariff when resource prices are high! The major powers in the world will not let that happen as prices begin to skyrocket because that will add to uncertainty in the stock market and huge pressure will be brought to bear against any government attempting such a thing.

The time to add a small tariff is now, when prices are comparatively low and therefore, complaints will be few. Prices won’t drop much anytime soon. Due to the supply and demand equation they will be more often rising in the coming decades.

As we know, many African nations export significant amounts of unrefined oil, raw metals (ore and ingots), minerals or uncut and un-mounted gemstones. When African nations implement a 5% tariff on every exported tonne of resource — or barrel of oil — their economies will fire on all cylinders and with little complaint from rapidly growing and resource-hungry nations.

John Brian Shannon

ABOUT JOHN BRIAN SHANNON

I write about green energy, sustainable development and economics. My blogs appear in the Arabian Gazette, EcoPoint, EnergyBoom, Huffington Post, United Nations Development Programme, WACSI — and other quality publications.

“It is important to assist all levels of government and the business community to find sustainable ways forward for industry and consumers.”

Green Energy blog: http://johnbrianshannon.com
Economics blog: https://jbsnews.wordpress.com
Twitter: @JBSCanada