The Oil Drum: Europe

Lucy Kellaway (and her alter ego Martin Lukes) are brilliant.  So is Martin Wolf.

The rest are a pretty mixed bag.

Tomkins makes a number of elementary mistakes.

First and foremost his suggestion that governments should not recycle green taxes to taxpayers, but spend them on public services.

I am a Liberal Democrat, who has voted for Tony Blair 3 times, so bear this in mind as I write this.

A (ballpark) estimate is that a £100 increase in government spending costs society £130 of total output.  Obviously the first part of government spending (health, education etc.) probably has a net positive influence on GDP, but after that, diminishing marginal returns sets in.  Much government spending has the net effect of redistributing the same income to different sets of pockets, and not always to the poorest pockets (the best way to help poor people is often simply to give them money).

To make green taxes politically acceptable to voters, and to guarantee the best possible outcome in terms of societal wealth, all green taxes should be directly recycled via lower taxation of other forms, or via some form of per capita citizen's credit (cleanest on libertarian principles).

Yes this will increase overall consumption.  But not by so much as to overcome the 'green' effect of green taxes.  And spending it on public services would also increase overall personal consumption (the wages and salaries of those who provide those services).

There are other things in the article I could niggle at.  He's not wrong that our consumption patterns will change (perhaps even fall).  But he obviously doesn't understand the economics of how that will take place.