Very interesting – Australia’s PM Gillard on Carbon Pricing

From http://grogsgamut.blogspot.com/2011/03/on-qt-well-that-was-expected.html

Ms GILLARD–Let me explain in detail our mechanism for pricing carbon. The first proposition is an incredibly simple one. At the moment carbon pollution can be released into the atmosphere for free. There is no disincentive for doing that. We will put a price on carbon, a price on every unit of carbon pollution. It will be paid for by businesses and as a result, because our business community is smart and adaptable and innovative, they will work out ways of pursuing their business and generating less carbon pollution. They will work out ways of making sure they pay less of a price when carbon is priced.

Then they will enter into contracts, they will make investments on the basis of understanding the rules and understanding that carbon will be priced. And as they go about making those transitions, innovating, making the new investments of the future, we will work with those businesses in transition to a clean economy.

Having priced carbon and seen that innovation, yes, there will be pricing impacts; that is absolutely right. That is the whole point: to make goods that are generated with more carbon pollution relatively more expensive than goods that are generated with less carbon pollution. But because we are a Labor government this will be done in a fair way. We will assist households as we transition with this new carbon price.

What that means is that people will walk into a shop with money in their pocket, the government having provided them with assistance. They will see the price signals on the shelves in front of them—things with less pollution, less expensive; things with more pollution, more expensive—and they too will adapt and change. They will choose the lower pollution products, which is exactly what we want them to do. Between the business investment and innovation, between households who have been assisted in a fair way by a Labor government responding to price signals, we will see a transition to a cleaner economy, to a low-pollution economy.

At least they’re using market forces in a way that is consistent with capitalism.  The consumers won’t change their decision making until their options have changed.  I think this more accurately represents a truthful picture of change than the models where consumers have to, en masse, change their desires and shout them loudly enough to be heard in the cloistered offices of the company heads.

Capitalism’s weakest point is in the idea that people won’t accept a range of products that almost meet their needs.  We go to a store and look at our options.  And we buy one of those options.  If an entire industry slowly, secretly reduces quality for higher profits, we continue choosing between the products in front of us.

In the case of our politicians, they’re such ass kissers that they shrink from using the tenets of capitalism, the very economic system they hold up proudly as the best.  They don’t want to tell anyone that prices will go up.  They want to tell people that the companies have been shamed or overseen or fined into compliance with regulations, but they don’t want to state the truth.

Getting rid of our dependence on fossil fuels – in all industries, not just power generation – requires that we as consumers make new decisions between new products and new prices.  Will price increases be padded, will they hide yet more corporate profit as they cry necessity?  Of course – that’s the nature of the game.

Short of giving up on capitalism (my vote), we need to understand how it works and accept that, in every single case, we will pay for what we want.

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