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Viv Forbes: No Carbon Tax

Heartland Institute: “CO2 does not drive temperature”

Following Heartland Institute’s 2008 International Conference on Climate Change, Viv Forbes of the Australian Carbon Sense Coalition recommended …

… ceasing to mandate market shares for any particular energy source, and abolishing all discriminatory energy taxes and subsidies and all limits, caps and taxes on harmless emissions of CO2.

Australian free market analyst, Gerard Jackson, a harsh critic of Carbon Tax (which he claims is “a direct tax on capital”) had been invited to attend the conference but couldn’t make it due to health problems.

Over the last few weeks, Gerard Jackson has written 3 articles highly critical of John Humphreys‘ paper, Exploring a Carbon Tax for Australia (published as a policy monograph by the Sydney-based Centre for Independent Studies, founded by Greg Lindsay.)

Greg Lindsay AO Centre for Independent Studies publisher of Exploring a Carbon Tax for Australia by John Humphreys
Greg Lindsay AO, Centre for Independent Studies

John Humphreys argues that a Carbon Tax can be implemented and result in “no economic costs” provided all the tax revenue collected is used (for instance) to reduce income tax or raise the taxable threshold or substitute fuel taxes. Also, that a Carbon Tax will “make alternative energies relatively more competitive.”

Gerard Jackson, applying strict Austrian Capital Theory analysis, argues that a “no economic costs” outcome is impossible because, unlike the proposed offsets and swaps, “a carbon tax is a direct tax on capital and … capital structure and the process of capital accumulation …”, and would (among other things) tend to drive manufacturers and investors out of the carbon/capital taxing country by destroying its comparative advantage.

This debate has been quite heated and the exchanges between both parties (and their supporters) have included a surprising (and distracting) amount of creative insult-flinging.

I was particularly taken aback to read RMIT Professor Sinclair Davidson, publicly refer to Gerard Jackson’s article(s) as a “rant“.

In any case, frankly, I’m glad to see this most important issue is being thrashed out in all its vituperative splendour.

My personal position is that I consider Gerard Jackson’s economic arguments against the Carbon Tax proposal to be correct, and John Humphreys’ to be wrong. But I’d like to bang both their heads together sometimes.

Returning to Viv Forbes, here are the conclusions from the Conference:

  • There is no doubt that the earth is in a warming phase, and has been in this phase for some 300 years. Warming started after the frigid years of the Little Ice Age, and has continued, in waves, ever since.
  • There is no doubt that the short warm eras in earth’s history have proved very beneficial for life on earth as evidenced by the rising population, increased prosperity, increased life span, increased food production and the flourishing of art and architecture that has accompanied every one of the recent warm eras. Ice Ages, not Warm Ages, are the big threats to life on earth.
  • There is considerable uncertainty about the future trends in earth’s temperature. However, there is close correlation between past temperature trends and variations in solar output and planetary cycles, and these indicate that the current warming is likely to end, no matter what man does, maybe within decades. The cooling may have already started.
  • It is very clear that carbon dioxide levels in the atmosphere have risen, but close study of the correlations between CO2 and temperature shows that it is far more likely that temperature changes trigger changes in CO2 levels. Past records also show that current levels of CO2 in the atmosphere are neither unusual nor concerning.
  • There are no credible claims or evidence from any quarter that current or projected levels of CO2 in the atmosphere pose any other threat to human, animal or plant life on earth. CO2 is not a contributor to air pollution; in fact it is a precious plant food on which all life on earth depends.
  • Man’s activities contribute less than 5% of total emissions into the atmosphere, and this addition has had only minor effect (probably undetectable) on the rising temperature trend.
  • There is good evidence that oceans, volcanoes and other natural sources expel large but variable quantities of CO2 into the atmosphere. Oceans expel CO2 as they warm and absorb it as they cool.
  • It is agreed in all quarters that the computerised General Circulation Models utilised heavily by the IPCC to produce their warming alarms have no proven ability to forecast climate even one year in advance, let alone the 50 or more years that some people have quoted.
  • It is a fact that CO2 and the other atmospheric gases provide an insulating blanket to the earth, keeping surface temperature higher than it would otherwise be. However, science is agreed that CO2’s warming potential is almost exhausted, and even if current levels of CO2 doubled, it would not on its own cause alarming global warming. There is nothing to fear from CO2 induced warming.
  • The large positive warming feedbacks assumed by the IPCC are quite likely to be much smaller or even negative. Recent work is showing that the earth has a huge capacity to distribute and dissipate heat via winds, ocean currents, evaporation, precipitation and radiation to space. There is a large degree of self regulation in the natural global temperature controllers.

PS: Remember to enter The Great Carbon Footprint Competition. 🙂

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  1. John Humphreys

    Several points (that I hope will escape the censor).

    A potential reason why Sinclair, myself and other free-market economists referred to Gerry’s posts as “rants” is that they spend a lot of time attacking me without accurately considering what I wrote. Plenty of people have disagreed me in a much more civil way that Gerry did.

    Second, to say that a revenue-neutral carbon tax MUST be welfare negative is to say that a carbon tax is worse than every tax that currently exists. That is possible. But it’s a very bold statement. And neither Gerry (nor you) provide evidence for this bold statement. Directly addressing this issue, the Australian Libertarian Society blog ran a survey a while ago asking “which tax is the worst tax”.


    The winner was income tax (34%), followed by tariffs (14%) and payroll tax (13%) and death tax (7%). Only 3% said carbon tax. Of course, that’s not scientific… but I challenge you to consider the question yourself.

    Gerry is correct that a carbon tax will effect the capital structure of the economy, and this is bad. But ALL tax effects the capital structure of the economy.

    My third point relates to the dot points you mention. I have sympathy with many of those arguments. However it’s worth remembering the difference between a skeptic and a denialist. A skeptic would say “hey… wait a second… I’m not sure about this… let’s not jump to conclusions”. In contrast, a denialist would simply say “no… I’m absolutely sure that it’s all wrong”. I’m a skeptic. I’m not a denialist.

    At the moment it is unclear how much of the recent (ie since 1970s) warming has been caused by humans. I don’t think it’s possible to say that the feedback mechanisms are “quite likely” to be anything. We just don’t know yet. I think some warm-mongers are overstating their confidence of disaster… but some denalists are overstating their confidence of benign change. I simply don’t think we have enough information yet. Let’s be a bit more patient… have some faith in the progress of science… and wait to see what happens next.

    A fourth point… I’m not sure why Greg Lindsay keeps getting dragged into this. He didn’t ask me to write the paper and as far as I know he doesn’t agree with it. I’m a libertarian who has published with CIS before, offering the most free-market alternative for AGW-action. It’s a very appropriate thing to be published. It was very inappropriate for Gerry to keep attacking Greg over this issue.

    Finally, I’m happy to have a truce with Gerry. It is a fact that he has published [incorrect statements about me] but I’m the forgiving sort. Indeed, to show my good will, I will here offer Gerry the opportunity to write a series of posts on the ALS blog about Austrian economic theory. They can be sent to my e-mail address: [ … ]



    Part of sentence replaced, as shown within [square brackets] – considered it to be inferring motive or character of other party.

    Email address snipped.


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    Replying to John Humphreys

    Several points (that I hope will escape the censor).

    To blog visitors: John is referring to the “strict” moderation of posts which I implemented in an earlier post.

    I’m clarifying this because there is discussion, from time to time on the PRODOS Blog about actual government censorship of free speech. John is not referring to that sort of “censorship”.

    A potential reason why Sinclair, myself and other free-market economists referred to Gerry

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