You are subscribed as | Unsubscribe | View online version | Forward to a friend

Insights 20: 10 June 2022
The Australian: Oliver Hartwich on the politics of Three Waters
Podcast: Bryce Wilkinson on the global economy and fears of a major recession
Newsroom: Eric Crampton on why Working for Families is a mess that can’t be cleaned up

Pricing agricultural emissions
Dr Eric Crampton | Chief Economist |
A lot of problems have no good solutions – just ones that are bad in different ways.

Pricing greenhouse gas emissions in agriculture is important, and every way of doing it is going to have problems.

This week, the agricultural sector put up its proposed solution. It has problems. But it is worth looking at the thorny mess that it has to deal with.

In a better world, every country would price all greenhouse gas emissions – whether industrial or agricultural.

Every pricing regime brings risk of ‘leakage’ – that companies simply shift high-emission production to places where emissions are not priced.

The Emissions Trading Scheme provides free carbon credits to businesses in industries with substantial leakage risk. So long as companies can profit by reducing their emissions and selling off their allocated credits, they have a strong incentive to reduce their emissions. If their emissions increase above their free allocation, they must buy carbon credits like everyone else, and face a price that’s now close to $80 per tonne emitted.

This kind of allocation regime reduces the risk of carbon leakage while maintaining incentives to reduce emissions. There are ways of improving on how New Zealand does it, but the basic principle is sound.

Leakage risk is particularly high in agriculture. Nobody else puts a price on agricultural emissions. If emissions pricing results in fewer cows and sheep on New Zealand pastures, and more in feedlots overseas instead, global emissions could wind up going up rather than down. And the climate doesn’t care where a cow burps.

So any good system needs a way of dealing with leakage.

It also has to recognise that short-lived gases like methane need to be treated differently from long-term gases like carbon dioxide.

The sector’s proposal to handle the problem with a very low price on methane does not seem like a first-best or even a second-best.

Alternatives might have applied a higher methane fee while providing rebates for products exported to places where the competition does not face a methane price. A scheme could be designed to maintain incentives to reduce emissions – but it would not be simple.

But it gets a price on methane, which is a start. And neither the first-best nor the second-best should be the enemy of that which can practicably be implemented now, with a few more minor improvements.

It is a start. And a start can be a good thing when nobody else has yet even tried.

Health “reform” – this week’s step towards a more racially-divisive future
Dr Bryce Wilkinson | Senior Fellow |
A race-neutral approach to government health (and welfare) spending would give the same treatment to people in the same circumstances. It would ignore irrelevant matters such as race, ethnicity, religion, gender, or creed. Horizontal equity requires no less.

The government seeks instead to discriminate between people by assigning them to groups and treating some groups as a ‘priority’ population.

Its undemocratic juggernaut to divide New Zealanders on ethnic grounds took another step this week with the 3rd reading of the Pae Ora (Healthy Futures) Bill. That the Governor-General will assent is a given.

The Bill divides New Zealanders into two groups – those whose access to health services will presumably be determined by the new Māori Health Authority, and everyone else.

Astonishingly, section 59 of the Bill prevents the Minister from giving any non-partisan direction to the Māori Health Authority. The Minister may only give a direction that “relates to improving equity of access and outcomes for Māori”. And who will be the judge of that?

Government health bodies are to be Treaty savvy. They must understand Mātauranga Māori and “Māori perspectives of services”. Who will determine that? The Minister’s new Hauroa Māori Health Advisory Committee has pole position.

The Bill requires the system to strive “to eliminate health disparities, particularly for Māori”. This focus over-rides individual needs. It ignores individual variability within and across groups.  It risks violating horizontal equity by favouring well-off Māori relative to worse off non-Māori.

Who is to distinguish Māori from non-Māori, and on what basis? The Bill is silent on this.

Moreover, no amount of spending on health care can eliminate health outcome disparities. Other factors such as lifestyle choices and socio-economic disparities are too important.

The inevitable ongoing failure to achieve elimination invites the new Māori Health Authority to call annually for ever-more funding per capita. Others will call ‘inadequate’ funding ‘racist’.

Such unsavoury assertions distract from the real issue – achieving better outcomes for those who are most struggling to provide for themselves, regardless of group politics.

Overall, the Bill presumes Wellington knows best. The Minister must impose a Charter, strategies, plans and directions for the entire public-funded health system. Every region will have a Wellington-imposed plan.

This is elitist. Wellington does not know best. People need choices, not plans.

Welcome to the machine
Dr Michael Johnston | Senior Fellow |
Our education system is becoming a bit like a gym in which people use robots to pump iron for them.

The trend began in the 1980s when hand-held calculators became cheap. According to a certain school of thought, there was no longer any point in teaching children arithmetic when calculators could do it for them. After all, calculator proponents argued, learning times tables, column addition and long division is boring. Not teaching arithmetic would leave more time to be creative.

In the late 1990s, as the internet blossomed, similar thinkers began to question the point of teaching knowledge. They wondered why students need to know anything themselves when they can always get their facts from the internet. If we stopped teaching knowledge, they mused, students would have more time to learn critical thinking.

In this era of ever-advancing information technology, we might wonder what the next step will be. Surely text-to-voice software makes reading redundant. And now that the quality of voice-to-text software is so high, perhaps we could stop teaching children to write as well. Then they could spend more school time working on their wellbeing.

The trend towards outsourcing life to machines is not confined to the education system. During the COVID pandemic, people got used to working from home and interacting with their colleagues on Zoom.

In a few short years, high-quality virtual reality headsets will be cheap enough for just about everyone to afford.  Then we might start to wonder why we’d travel to see the Colosseum, the Great Wall of China or the Daintree rainforest when we could enjoy these spectacles from our living rooms, with none of the hassle or expense of international travel.

In 1909, ninety years before home internet became commonplace, English novelist E.M. Forster published a short story called The Machine Stops. The story is set in a future in which human beings live in small underground apartments. They rarely meet in person, instead communicating via screens. All of their bodily and cultural needs are catered for by a vast machine. No doubt you can tell how the story ends from its title.

When it comes to prophetic science fiction, The Machine Stops tops even Jules Verne.

If skills like reading and arithmetic are not learned, creativity is stunted and well-being is compromised. Without knowledge, critical thinking is empty. If young people cease to learn disciplines like history and science, cultural and technological innovation will gradually grind to a halt. Or maybe we’ll just outsource those things to machines as well.

On The Record

Initiative Activities:   
All Things Considered
Copyright © 2024 The New Zealand Initiative, All Rights Reserved

Unsubscribe me please

Brought to you by outreachcrm