Eslake, of course. I should have checked. Mea culpa.

Saul
I see you've alterered you view from

"majority of Australian economists favor a ‘market-based’ solution"

to

'... 80% of Australian economists ... think that 'price-based mechanisms – taxes, subsidies or an emissions trading scheme – as opposed to direct action, are the more appropriate mechanisms for cutting greenhouse gas emissions'.

That's much more accurate.

But I think another question should also have been asked.

Do you think price-based mechanisms should be imposed by Government and the value determined by regulation or should the market decide both implementation and price?

If those stats show a majority of economists and you support Government implementation then Tony Abbott will look even more accurate with his comments last month about Australian economists.

I think I know how he as a conservative/liberal, non socialist economist would answer.

In response to "imajulianutter",

1) I don't think the difference between the quotes you've taken from this article and my previous one is as material as you make out. The latter is simply from the results of a survey of Australian economists which wasn't available when I wrote the first article.

2) As I said in the first of these two articles about climate change policy, if it's accepted that climate change is a problem which warrants some form of government intervention (and I acknowledge, as other posters in this thread have pointed out, that neither proposition is universally accepted - and I am not critical of anyone for sincerely holding a contrary position) then most economists (me included) would say that a government which favours intervention using a market- (or price-based) mechanism has to choose between setting the quantity of emissions to be allowed and allowing the market to find the price on emissions consistent with that outcome (which is what an ETS seeks to do), or setting the price of emissions and allowing the market to determine the level of emissions compatible with that price (which is what a 'carbon tax' seeks to do).

'Direct action' involves the government setting both the price (at zero) and the quantity of emissions. It is the approach favoured by, for example, China (a Communist dictatorship). It is not favoured by any more than a small minority of economists. That, of itself, doesn't 'prove' that 'market-' or 'price-based approaches' are superior to 'direct action', and Ive never claimed that. All I've said is that it's why Tony Abbott struggles to find any support for his approach from Australian economists. That obviously doesn't bother him - and that's a choice he's entitled to make.

For Australia to go it alone on a price on carbon dioxide or an ETS is economic suicide.If we truely believe that the burning of fossil fuels is destroying the planet,then don't mine coal oil or gas and allow it to be sold off to China etc.No, the corporate elites want to accelerate the production of fossil fuels and charge us the consumer more to secure enormous profits for themeslves.

The ETS is just another dervivative scam like the selling of credit default swapes,collaterised debt obligations,or sub-prime mortgage scams that have milked your super funds dry.That money did not disappear,it ended up in the pockets of the fewer.So the scams continue under the guise of saving the planet.

Under an ETS,only those businesses who have the capital to buy Carbon Credits will be allowed to pollute, thus manufacture.There will be less competition thus much higher prices for us,the consumers.

That charlton Al Gore,who said he created the internet,will be laughing all the way to the banksters if this passes as ligitimate science and sound economic policy.It is a farce and an absolute lie!

Saul has a very good point, the ALP has a shocking record of implementation. There are a series of good ideas that have ended up being monuments to incompetence.

The pink batts and Building the Education Rort being prime examples of concepts with merit that ended up lining the pockets of shonky contractors at the taxpayer's expense and leaving little of value.

The concept of a carbon tax has some merit, but only if it matches an equivalent price of our major trading competitors, which according to the productivity report is in the order of $4 per ton.

Instead we have a economy wide tax that will levy nearly 400x the revenue per capita of the EU which we are supposedly trying to catch up.

I don't think there's any need to invoke the Red Menace, Mr Eslake: "It is the approach favoured by, for example, China (a Communist dictatorship)". I understand China is also quite keen on economic development, which is the approach favoured by, for example, the whole world.

I also understand that there are many regulations that don't rely on giving financial traders yet another baseless derivatives scheme. think, for example, of regulation around waste disposal. The price of garbage is set (at zero) and the business is responsible for the cost of disposal. Failure to comply with disposal regulations is punishable by hefty fines. Now, certainly there are "garbage traders", such as Pacific Waste, Simsmetal, etc, but they have to actually deal in the product - there are no "garbage futures", or "garbage credits". Businesses have developed and new industries have evolved to use the garbage as a feedstock for the production of other things. We call this recycling. It was an industry that didn't exist in any serious form 20 years ago and now it is a multi-billion dollar behemoth.

I pointed out earlier that greenhouse gases have some serious potential as feedstock for the production of fuel and polymers. It's not especially complex to produce methane from CO2 and it even releases energy that could be captured in the process. Methane is an excellent precursor to many processes. At present, all our plastics come from fossil fuel feedstock.

It seems to me that the truly laissez-faire approach would be to regulate to make greenhouse gases a noxious waste product and make businesses responsible for their removal from the waste stream. As good innovative capitalists, don't you think business would soon come up with a way to make real dollars out of that, by turning it into something that somebody wanted? Presumably the ETS is predicated on the idea that someone will do this, or there's no point in creating it at all.

Can you please explain why you favour the imposition of an artificial intermediating layer of financial derivatives traders in that process