How Green Economics Could Transform Wales

Molly Scott CatoReader in Green Economics, Cardiff School of Management

Regeneration

How Green Economics Could Transform Wales

Nature is not a place to visit, it is homeGary Snyder

Four Questions

• Is energy efficiency enough?

• What is the role of land in a sustainable economy?

• What is the role of money in a sustainable economy?

• Should we create jobs or livelihoods?

Prosperity without Growth?

• Sustainable Development Commission suggested ‘flourishing within limits’

• So far there have been no attempts to categorise and measure different types of consumption and their social usefulness.

CO2 intensity of GDP across nations: 1980–2006

Carbon Intensities Now and Required to Meet 450 ppm Target

Who gains the benefit from land?• Henry George,

Progress and Poverty, 1880

• The ‘single tax’• Site-value tax or Land

Value Tax• At present we are

effectively renting land and labour overseas to provide for our needs

Structure of Land Value Tax

• Land Value Tax is levied on the annual rental value of each parcel of land

• Based on unimproved value, so not a tax on capital

• Need a baseline survey of the values of certain types of land and survey of land holding

Canons of good taxation practice

• Cheap to collect• Difficult to evade• Should fall lightly on production—sales and

employment taxes discourage economic activity– Discourages speculative land holding, e.g.

Olympic site in Stratford– Encourages active use of land

Reasons for taxing land• It is fixed• The proceeds of the

most valuable resource should be shared

• It leads to efficient use of land and means it is not left ‘idle’

Reduce the concentration of land ownershipCan work with planning system to influence land use

How might this work as policy?

• Could be a change to council taxes and local business rates

• Could be used as a planning windfall tax

• In conjunction with planning policy to build a sustainable, self-reliant economy

One Planet Development

• TAN 6: Welsh planning policy for the countryside

• ‘Development that through its low impact either enhances or does not significantly diminish environmental quality’

• OPDs should, ‘over a reasonable length of time (no more than five years) provide for the minimum needs of the inhabitants’ in terms of income, food, energy and waste assmiliation’

Land reform and food production• ‘A large majority of studies show that

smallholders in developing areas produce more per hectare than big farmers.

• The land reforms of the 1950s in Japan, Taiwan and South Korea were followed by rapid growth in farm output. So were land reforms in West Bengal, India, in 1969-84

• Professor Michael Lipton, ‘Smallholders can spearhead growth’, FT, 20 April 2010

Land Reform in Scotland

• ‘A comprehensive economic evaluation of the possible impact of moving to a land value taxation basis’

• Recommendation of the Land Reform Policy Group, 1999

• Glasgow is considering replacing Council Tax with a Land Value Tax

What Mervyn King Said

• ‘Unemployment is up, businesses have closed, and the direct and indirect costs to the taxpayer have resulted in fiscal deficits in several countries of over 10% of GDP – the largest peacetime deficits ever.’

• ‘Of all the many ways of organising banking, the worst is the one we have today.’

Projected borrowing(PSNB), 17 Dec. 2009

Projected borrowing(PSNB), 21 April 2010

97% of money is created as debt by banks: 95% of money transactions have no contact with real

goods Allows people to make a claim on future value

And what he didn’t say

• The lubrication of a fully functioning economy is the most basic role

• But it is incompatible with the role as a commodity in international speculation

The Crises are the Same Crisis Sustainability requires

equality Sustainability requires

financial stability, because debt-free money forces economic growth

Debt requires inequality, because of interest transferring money from poor to rich

A Balanced Economy

Odious Debt and Audit Committees

• Invented by the US in the 19th century to reject Spanish debts when it conquered Cuba

• Justification to reject Iraq's debts after the 2003 invasion

• In 2005 in Ecuador President Correa invented the idea of the national Audit Committee: 80% of loans rejected

• Greece and Ireland now have Audit Committees• http://topdocumentaryfilms.com/debtocracy/

The global trade system is insecure

• A system of energy intensity

• Extended supply chains reduce resilience

• Weakening of community bonds

Where are the world’s ports?

• ‘the origins of the cataclysm lay in the utopian endeavor of economic liberalism to set up a self-regulating market system’

• ‘previously to our time no economy has ever existed that, even in principle, was controlled by markets’

Challenging our preconceptions

Welfare and community• Side by side with family

housekeeping, there have been three principles of production and distribution:ReciprocityRedistributionMarket

• Prior to the market revolution, humanity’s economic relations were subordinate to the social. Now economic relations are now generally superior to social ones.

Important changes in welfare• Citizenship becomes the basis of entitlement• The individual would be the tax/benefits unit• The Citizen’s Income would not be withdrawn

as earnings and other income rises• The availability-for-work rule would be

abolished• Access to a Citizen’s Income would be easy and

unconditional

Citizens’ Income

• Automatic payments depending on need• Tax-free and without means• Income tax and employees’ national insurance

contributions would be merged into a new income tax

• The tax-free allowance would balance out the Citizens’ Income for higher earners

• ‘it is inherent in the methodology of economics to ignore man’s dependence on the natural world’.

• E. F. Schumacher

Schumacher Centenary

Find out more

www.greeneconomist.org

gaianeconomics.blogspot.com

Green Economics: AnIntroduction to Theory, Policy and Practice (Earthscan, 2009)

Environment and Economy(Routledge, 2011)