Joseph Stiglitz probably can’t be called a babe, he’s too hairy, too old and much too wise. But to me he’s an intellectual babe, and hearing him speak at the ANU this week was as rewarding as I expected it to be.
The Canberra Times article said the audience, which must have been at least 1000, included many top policy officials, academics, and pollies. I sure hope they were listening and taking heed, because his pleasant, gently humourous discussion of the GFC both reinforced and extended received wisdom on the topic.
As a reminder, Stiglitz is a double Nobel Prize winner, former head of the World Bank, and now a Columbia prof. He also co-authored a book on the 3 trillion dollar war in Iraq.
But it was a question at the end that resonated most with the crowd of insiders, and we joined in the big clap at his answer: he was asked how long Australia could continue to be properous if we depend on exports of coal, and how this might be affected by climate change.
He said what we all know deeply: that the underpricing of risk in the GFC was much less than the underpricing of natural resources. Therefore a price on carbon is a ‘no brainer’.
He advocated taxing bad things, as incentives are the one thing economists agree are important. Taxing good things just doesn’t send the right messages.
From this perspective, higher oil prices, which are coming, quicker than you will want, are a good incentive, as burning oil is bad and preserving it for more important products than driving cars needs to be incentivised.
Obvious conclusions to draw are that a) light rail right down our east coast is both necessary, critical, and affordable (from a future perspective) and b) carbon taxes are the only sensible way to go, because as Stiglitz responded, the earlier you get used to the pain of taxing coal the easier it will be to adapt, and besides, it raises revenue for alternatives. (double duh!), and c) basing our economy on endless growth and consumption is insanely suicidal.
Today Russia burns, Pakistan soaks, wheat crops fail. Are we really so arrogant to believe our turn won’t come, and that we don’t need to change our addictions?