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Our future, our universe, and other weighty topics


Tuesday, April 1, 2014

3 Ways We Are Financing Our Own Ruin

The United Nations is out with a new report emphasizing the future perils from global warming. The report mentions problems being created right now by global warming: increased wildfires in North America, decreased food production in South America, and increased risk of diseases in Africa. The report highlights the many risks we will face in the future because of global warming. Among those risks are the risks that droughts will cause a huge portion of the United States to become a dry “dust bowl” before the end of the century, like the Dust Bowl of the 1930's.

Dust Bowl
Rusting silos in a Kansas "Dust Bowl" of 2085 A.D.

Secretary of State John Kerry made a statement emphasizing the dangers discussed in the report. "There are those who say we can't afford to act. But waiting is truly unaffordable. The costs of inaction are catastrophic," Kerry said.

Sounds like our government is going to seriously tackle the global warming problem, right? No. The truth is that in three huge ways our government is helping to finance our own environmental ruin. Let me list these ways.

Way Number 1: The Subsidizing of Heavy Auto Use

A significant fraction of global warming is caused by auto pollution, and the government exacerbates that type of pollution by heavily subsidizing auto use, as if it wanted us all to drive more.

Norman Myers and Jennifer Kent are the authors of the book Perverse Subsidies: How Tax Dollars Can Undercut the Environment and the Economy. They say that “the US car culture is supported by myriad direct subsidies,” and start out by listing various subsidies amounting to about 15 billion dollars a year. Then the authors considers the cost of road-building, road maintenance, bridge building, and bridge maintenance. This has a cost as high as 135 billion dollars a year. A part of this is directly paid by auto owners, in the form of highway tolls and bridge tolls; but most of it is paid by general taxes paid even by people who don't drive.

The authors also consider the cost of the roughly 3.5 million auto injuries and 40,000 auto fatalities that occur each year. The cost of that ranges between 33 billion and 360 billion, a large fraction of which is paid even by non-drivers. This is because a huge fraction of the people who are injured in auto accidents are covered by tax-funded health insurance programs such as Medicaid and Medicare (or other health insurance programs partially supported by tax dollars). There are also many thousands of people who get respiratory diseases from auto pollution, and many of them have their treatment covered by government healthcare programs.

Adding up the total cost of all subsidies for the US car culture, Myers and Kent reach an estimate of about 695 billion dollars per year.

Way Number 2: The Subsidizing of Meat Eating

A huge fraction of global warming is caused by all the agricultural overhead needed to support meat eating. A recent report estimates that by 2050 half of all agricultural emissions of global warming pollution will be due to the raising of beef and lamb – even though such food will amount to only 3 percent of human calorie intake. Cattle also make a huge contribution to global warming by emitting methane, which is a global warming pollutant much worse than carbon dioxide.

In the United States, meat eating is heavily subsidized. You do not pay the real cost of meat when you go to McDonald's and shell out a few dollars for a Big Mac. Of the roughly 200 billion dollars spent to subsidize agriculture between 1995 and 2010, two thirds of it went to crops used for animal feed or tobacco or cotton. Only 50 billion dollars went to support the growing of crops directly eaten by humans.

We also subsidize meat eating indirectly, by means of government funding of health insurance that very often goes to pay for diseases that are worsened by meat eating, diseases such as coronary heart disease and diabetes.

Way Number 3: The Subsidizing of Extravagant Houses

A significant fraction of global warming is caused by people who live large, and buy and maintain large houses. Newly built large houses have an extremely high environmental cost. Even when you buy a large house from someone else, you end up committing yourself to high energy expenditures for heating and cooling.

Our government worsens the environmental cost of living large by continuing policies that encourage people to buy big houses. The main example is the mortgage tax deduction, which encourages many people to buy bigger houses than they would normally buy.

A Tax Policy for Minimizing Global Warming Pollution

How could we reverse these policies, and adopt a tax policy that would encourage people to live in a way that helps preserve the environment? The answer is simple: end the subsidies, and make people pay the true cost of habits that are putting our planet in peril.

For autos, we could add a large tax on each gallon of gasoline (along with some corresponding measure to cover electric car users). So that drivers end up paying the real cost of driving, you might see a price of 7 dollars a gallon or 10 dollars a gallon at the gas pump, with most of that being a tax that would pay for all the costs of car culture. In regard to meat eating, besides ending subsidies for the growing of animal feed, we should have a federal meat tax that makes people pay the true environmental price of eating meat. In regard to house buying, we should end the mortgage tax deduction, and also enact a federal tax on house sales that discourages extravagant living. Such a tax could be based on family size. For example, a family of 4 might pay no federal house-buying tax if they were buying a house for $325,000 in Vermont, but they might pay a significant tax if they bought a house for $500,000.

If such taxes placed an unfair burden on the lower and middle classes, they should be matched by raising other taxes on the rich. 
 
No doubt many will react very negatively to such ideas. Yesterday we had a very well-reasoned post on a major site, one entitled The Economic Case for Taxing Meat. The comments on the post were almost all extremely negative. Everybody's attitude seems to be: What? You want ME to sacrifice a little? God forbid!

If people in this country had taken that attitude during World War II, there would now be Nazi swastikas flying over all of our post offices.