Meanwhile, over at TVHE, Matt is so moved by the temerity of the (NZ) Green party and their attempt to address the distributional issues of Pigouvian taxes that he utters the following cri de coeur:
We need a Green party that actually concentrates on environmental issues. This is my main problem with the Green party – they just use it for marketing instead of actually looking at the efficient allocation of our scarce capital stock. This saddens me.
Issues of property rights, free rider problems, externalities, and a general willingness to discuss policy regarding these issues should be the focus of a Green party – it shouldn’t be Greenwash to sell a socialist agenda.
While it’s rousing to see such passion from a man of reason, it’s hard not to feel a little sorry for the Greens here. When they advance environmental policy, the Right decry them as Enviro-Nazi’s who would happily put the welfare of polar bears before people. On the other hand, when the Greens show any attention to social policy their are decried as pinkos in disguise.
Heaven forfend that there might actually be a coherent policy behind their thinking. One which values the environment because of its role in contributing to human welfare. And one which advances social policy for the same reason.
Over to Kermit:
Waylaid Dialectic 
Hi,
“Meanwhile, over at TVHE, Matt is so moved by the temerity of the (NZ) Green party and their attempt to address the distributional issues of Pigouvian taxes”
That is not what the policy is doing though, I have no problem with policy that attempt to compensate for the income effect from Pigouvian taxes.
I was upset as the policy appeared to be redistribution “dressed up as” environmental policy. It smacked of marketing at the expensive of the effectiveness of policy.
“Heaven forfend that there might actually be a coherent policy behind their thinking.”
That was the kicker – there wasn’t. As I said in my post, if the goal was redistribution this is a poor way of doing it. If the goal was environmental this policy either INCREASES consumption or leaves it unchanged. If it was a mix, then any mix of two failures will still be a failure.
I have no problem with redistribution, I just want the issue to be treated transparently. This was the issue I had with the Green party here – they were pushing a policy which was nonsense just because it was easier to market as a “Green policy”.
And secondly when society has shown a preference for less redistribution than the Green party is advocating, it indicates to me that it might be nice to have a party who was realistic about the environment without such forceful policies on redistribution.
Comment by Matt Nolan — May 24, 2010 @ 10:17 am
BTW, its great to see you back. I’ve put your blog under “New Zealand economics” on my blogroll – just tell me if you’d prefer it to sit in some other category (such as macro, or just straight NZ).
Comment by Matt Nolan — May 24, 2010 @ 10:25 am
Hiya Matt – wow you move fast. Within 12 mins of posting. 🙂
Anyhow, thanks for your comments, I gotta get to work now but will reply in detail later today.
Cheers
Terence
Comment by terence — May 24, 2010 @ 10:27 am
Thanks. Good to be back and thanks for the link. Unless you have a category for ‘Random Ranters’, NZ econ is as good as any 🙂
I’ll reciprocally link later today.
Hope all is well with you.
Comment by terence — May 24, 2010 @ 10:39 am
Ok – in lunch break so…
My reading of the Green’s policy (based only on your post and some of the comments in the comments section following it) is that they Greens wish to increase energy prices so as to internalise the externalities associated with energy production (and to provide incentives for efficiency). However, they are aware that significantly higher energy costs would lead to suffering amongst the least well off. Hence a two tier structure.
If my understanding is correct, this is not redistributionism its simply a Pigovian (sp?) tax implemented in a manner consistent with an awareness of the distributional issues of such taxes.
Even if I’m righ,t one might legitimately argue that the issue of distribution would best be dealt with through taxes and transfers. Fair enough. Although, highly progressive income tax structures (which I generally support) aren’t free of problems of their own. Moreover, there are I think, issues of political economy associated with implementing them.
If the goal was environmental this policy either INCREASES consumption or leaves it unchanged. But this claim hinges on the assumption that the increase in power prices for the non-poor population will not more than offset the reduced rate for the poor.
And secondly when society has shown a preference for less redistribution than the Green party is advocating, it indicates to me that it might be nice to have a party who was realistic about the environment without such forceful policies on redistribution.
Has it? Remember political party vote shares are based around bundles of policies and perceptions, not just any one particular policy objective. I personally doubt that National were swept into power as a direct result of their commitment to a flatter tax system.
Also, at an ethical level, being popular isn’t the same as being right. The Greens may be making a tactical error (or they may not) but if their policies are optimal (albeit unpopular) then so be it. They’d get my vote.
Comment by terence — May 24, 2010 @ 1:14 pm