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The Forum > Article Comments > Too much faith in the market > Comments

Too much faith in the market : Comments

By Sharon Beder, published 18/7/2008

Why do we put so much faith in the market to solve environmental problems?

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David Pope had a good cartoon in the Canberra Times a few days ago of a polar bear and penguin floating down a street full of water. The penguin says words to the effet that the new ETS will save them and the bear remarks that it's good to know stockbrokers will rescue the world.

I can't help but look at how the market has "saved" billions from starvation or undernourishment and think we are on our way to hell ina handcart. In fact te recent food price rises ahve wiped out the amrket gains of the last 20 years almost overnight.

The incease in prices for fuel and food will mean lower living standards for workers. This will impact on the economy. And while Australia's emissions may in the long term reduce, the market solutions based on price don't address falling living standards. They create them. Only putting the burden on the polluting industries and not allowing them to pass it on to consumers can do that, ie cut profits, not wages. Cetainly since the bosses have benefited from hudnreds of years of cost free polluting, the capitalist class globally should now pay recompense for the free lunch they have received since capitalism began.
Posted by Passy, Saturday, 19 July 2008 10:50:38 AM
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*Only putting the burden on the polluting industries and not allowing them to pass it on to consumers can do that, ie cut profits, not wages.*

Funnily enough Passy, when you go and look up the share registaries
of these companies, you find that nearly all the top 20 shareholders
are superannuation funds. In fact the 1 trillion $ held in super
funds on behalf of workers, is worth as much as the whole ASX combined.

So as workers in fact own most of these companies, in then end
it is they who will pay. Companies are there for the benefit of
people who own them
Posted by Yabby, Saturday, 19 July 2008 11:41:09 AM
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Free markets are great tools for delivering products and services efficiently, but the zeitgeist of free market fundamentalism which has gripped the west for the last few decades is inimical to a civil society.

As the father of economic theory, John Maynard Keynes, said, "Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone". Sounds like unfettered free trade in a nutshell.
Posted by Sancho, Saturday, 19 July 2008 1:23:37 PM
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One can say about the free market what Churchill allegedly said about democracy -- it is the worst way of achieving economic goals, except for all the other ways that have been tried. At least it is responsive to opinion change. Unlike ideologically-driven government policy, which has to put off its U-turns until the facts have sunk in to a sufficiently large segment of the population, the free market is very quick to detect and respond to inefficient and expensive wastage. It will be the market which takes the lead in killing off global warming hysteria, not government policy.
Posted by Jon J, Saturday, 19 July 2008 1:32:07 PM
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Sancho “As the father of economic theory, John Maynard Keynes,”

Economic theory is a bastard, father unknown.

His mother ain’t saying and any one who claims to know the Sire is a liar.

I concur with Jon J what is the nearest truth to market economics for some simple reasons

The ideal is a market where the numbers of buyers and sellers are so many that no one controls the ‘price’

The idea of different large corporations controlling price should be balanced by government regulation anti-competitive legislation through agencies like ACCC and trade agreements like GATT and its successors.

The idea that governments control the price is worse than leaving it in the hands of corporations, regulated by government; otherwise who is there to regulate the government?

Now emissions trading – has not worked in Europe – unlikely to work here but who will bear the cost – You and Me that is who.

Governments are appointed to reflect the will of the electorate. Governments are not there to shape the will of the electorate

Taxes are there to fund the legitimate work of government

If you have governments creating artificial costs through emissions trading imposts, they have moved from reflecting the will of the electorate and funding the legitimate works of government to shaping the will of the electorate through manipulation of an unnecessary tax impost.

The unrepresentative and politically motivated (GW and environmental opinions are political issues afterall) seeks to limit the electorates discretionary purchasing ability, through excessive taxation above and beyond the level of taxes needed to fund the legitimate works of government.

I have used a term for some months now which, I believe, adequately describes the result and the intent of carbon taxes and emissions trading.

Socialism by Stealth.

And similar to what Jon J said

Ultimately it comes to this, the market is imperfect but it is less imperfect than any other suggestions or proposals.

And fake taxes are no solution
Posted by Col Rouge, Saturday, 19 July 2008 2:39:45 PM
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Passy:
"Cetainly since the bosses have benefited from hudnreds of years of cost free polluting, the capitalist class globally should now pay recompense for the free lunch they have received since capitalism began."

As we (should) know, there is no such thing as a free lunch. While its true that industry has benefitted from polluting the atmosphere, so have we. You claim to be concerned about low living standards, but they would be much lower without electricity and coal exports.

There is only one legitimate way to make huge profits in the market place - supply goods and services that consumers desire. So when Tiger Woods makes millions or Pamela Anderson earns $500k for 3 days' 'work' or the CEO of a coal mining company earns millions, it is because we, the consumers, value what they produce. And so we, the consumers, have decided to trade off a polluted atmosphere for a higher standard of living.

Importantly, as our standard of living increases we will have more money to fix up the damage and prevent further damage while continuing to enjoy our prosperity. It is no coincidence that richer countries tend to have lower pollution than poorer countries.

As for the CPRS, it is not a market solution, it is govt intervention.

"in truth, the scheme is an administrative nightmare. This week launches a massive lobbying campaign in Canberra to save jobs, profits, win free permits and obtain financial relief. Special interest politics will be licensed on a frightening scale, the result of a huge government intervention in the economy sanctioned by climate change on policy grounds yet to be exactly defined."
- Paul Kelly
http://www.theaustralian.news.com.au/story/0,25197,24041647-7583,00.html

Like most govt interventions, the CPRS will inevitably fail.
[See how here: http://www.csmonitor.com/2008/0716/p09s02-coop.html]

So please, when this finally happens, don't blame the market!!

Col:
I agree with everything you say except "Socialism by Stealth". It is "Fascism by Stealth" - the difference being that socialism entails govt ownership of the means of production whereas fascism is govt control of the means of production.
Posted by bro, Saturday, 19 July 2008 6:10:03 PM
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