JAMES HANSEN MEETS HENRY GEORGE
Like many others, I feel that some sort of economic and/or ecological collapse is coming. What will it be like? What would we have to do to avoid it it? I’ve tried to imagine ways we might avoid or at least, mitigate it.
This is the biggest problem we’ve ever faced: climate change and a transition away from fossil fuels. James Hansen has proposed two solutions: 1) zero-carbon nuclear energy and 2) a carbon tax with citizen’s dividend. The carbon tax will use market forces to promote a multitude of actions to reduce emissions and find alternatives. The citizen’s dividend will return the tax money directly to the people who are affected by the tax
I suggest that by adding the ideas of Henry George to expand the carbon tax to tax the use of all natural resources and expand the citizens dividend to a Universal Basic Income, we can mitigate the climate problems and reduce other problems as well, such as global poverty and economic inequality. We can all become wealthy if we don’t allow private interests to steal our increasing productivity.
As we come out of the pandemic, we face a crisis of a globally warming climate. Droughts, storms and floods become more extreme as the atmosphere warms and contains more water vapor. Some areas become too hot to be inhabited. Ice sheets melt, raising sea levels and flooding coastal cities. Permafrost melts and releases methane, further warming the climate.
These problems are caused by our increasingly massive burning of fossil fuels and emissions of carbon dioxide. It will be nearly impossible to stop burning fossil fuels and reach zero-carbon by 2050 but fossil fuels are hitting other limits, such as air and water pollution, reliability, declining availability and increasing cost. Many people are worried that these limits will end growth and lead to economic and ecological collapse.
Compounding the climate/fossil fuels problem are continuing global economic inequality and poverty. Our Capitalist economics has provided amazing economic growth but the elites have sucked up most of the productivity gains and become extremely wealthy. Eight people now own as much wealth as the poorest half of humanity. Concentrating so much power in so few hands has often led to bad decisions, violence or revolution. Meanwhile, most people globally struggle in energy poverty to live or even survive. Even in developed countries, many people are homeless.
Although the future looks bleak and an economic or ecological collapse seems inevitable, I like to imagine how we can take these problems as an opportunity to change our economies, mitigate the most extreme climate effects and reduce poverty and economic inequality. We don’t need to abandon Capitalism; we can save it if we:
- Provide low-cost, zero-carbon electricity to everyone,
- Tax the use of all natural resources, and
- Distribute the tax revenue equally to everyone.
ELECTRICITY FOR EVERYONE
We must continue to electrify our economies as much as possible. Hook everyone to the grid so that we all can keep warm with heat pumps, cool with air conditioners and power all our appliances. For example, efficient induction cook stoves reduce indoor air pollution and electrified transport reduces outdoor air pollution, two major causes of mortality.
So how to generate the immense qualities of zero-carbon electricity needed to replace fossil fuels? Many people think the answer is renewables: solar, wind, and batteries. But these sources are weak, diffuse, unreliable and have low Energy Return On Energy Invested, EROEI, values. They require unreasonably large amounts of land and materials, resulting in large environmental impacts. Solar panels work well in small, off-grid locations but can not be scaled up to power an economy.
Big batteries such as one recently installed in California are designed to carry the load for four hours, not for foggy, dark days and winter weeks or “wind droughts”.
Other possibilities are hydro and geothermal power. But these are available only at certain locations. We have already dammed many of the best hydro locations and we are now removing dams as we recognize their huge environmental impacts: flooding valuable land, blocking fish migrations and sediment flows, catastrophic failures, etc.
Many people argue that renewables are cheap and getting cheaper. This idea is based on Levelized Cost of Energy, LCOE, analyses which do not include the large hidden costs of intermittency. A basic problem with renewables is that although breezes and sun beams are free, it’s very expensive to collect, concentrate and buffer diffuse, unreliable, intermittent energy to make 24/7/365 reliable electricity. Electricity gets more expensive and the grid becomes more unstable as more renewables are added. Even if the generation was free, the electricity would still be expensive.
Over the last few years, I have been pushing back against the idea that renewables are good for the environment. In 2019 I published, “Why Renewables Can’t Save the Planet,” which was the most-read article of the year at Quillette, and gave a TEDx talk by the same name, which today has…
The only possible sources of huge amounts of reliable, zero-carbon energy are nuclear fission and fusion. At present, there are about 440 operating nuclear plants, providing about 10 percent of the world’s electricity. These plants provide reliable, low-cost, base-load power and with proper maintenance, they can run for 80 years or longer. Since nuclear fuels are extremely energy dense, nuclear power plants require relatively little land and materials and have minimal environmental impacts. Moreover, nuclear fuel costs are low, steady and predictable.
For political reasons, some reactors in Germany and the US are unwisely being closed. When the reactors are closed, electricity rates rise and they are not replaced by renewables but by increased burning of fossil fuels with greater carbon emissions and no compensating increase in nuclear safety.
So the first, most obvious thing we should do to mitigate climate change is keep the existing nuclear power plants operating. Japan may soon start reopening its nuclear plants that have been closed since the Fukushima tsunami in 2011.
Second, we should start a global carbon tax to use market forces to reduce carbon emissions and to encourage development of alternative fuels. The tax would increase annually to become increasingly effective. Adjustments would be made to compensate for carbon emissions movements across borders in materials and products.
The revenue from the carbon tax would be a citizen’s dividend, paid directly and equally to everyone globally. The citizen’s dividend for a family would start at only a few tens of dollars per month and rise to a few hundreds of dollars per month. These amounts may seem small to rich westerners but will eliminate poverty for the many people globally who live on only a few dollars per day. Dividends would be paid via a debit card or automatically deposited into a bank or cell phone account. Facial recognition or other digital techniques can protect against fraud and duplicate accounts.
James Hansen has written an excellent book, “Storms of my Grandchildren” that describes the carbon tax and citizen’s dividend and how it might work in practice.
ABUNDANT NUCLEAR POWER
Next, start the hard part: building thousands of nuclear power plants to reduce burning of fossil fuels. Our present pressurized water reactors, however, are too big, too complex, too expensive and take too long to build. So most future reactors will be smaller, simpler, safer, cheaper and more efficient than present reactors. Many companies are now developing these new systems, some based on old designs, dating back 60 years but abandoned for military reasons. They can have EROEI values in the thousands.
Small reactors will be located near demand centers for short transmission lines and provide base-load power to stabilize grids with many renewables. Some reactors will replace coal burners in existing coal-fired power plants to use existing infrastructure. Other reactors will be built on barges and towed to coastal locations.
Small reactors can also be used in factories to provide reliable, high temperature heat for industrial processes such as aluminum, cement and steel production or pyrolysis recycling of plastics. Low-temperature waste heat can desalt brackish or sea water or heat nearby buildings or greenhouses and thus not be wasted.
Can we build enough reactors and electrify everything fast enough to reach net-zero carbon by 2050 and avoid the most extreme climate effects? Maybe; we just need the political will to do so. We built Liberty ships faster than one a day in World War II; we can do it again.
LAND VALUE TAX
At this point, this proposal is similar to James Hansen’s proposed carbon tax and citizen’s dividend.
The carbon tax and dividend is an excellent proposal and I hope we can adopt it. But we can go much farther. Humane Capitalism; not our greedy, gritty Capitalism. If we expand the carbon tax to tax the use of other natural resources, especially land, we can mitigate climate change, economic inequality, poverty and many other problems. This is an old idea, dating back to Thomas Paine in “Agrarian Justice” in 1797 and popularized by Henry George in “Progress and Poverty” in 1879. This is commonly called a Land Value Tax where the term “land” means land and all the resources associated with it.
The basic idea of LVT is that no one can truly own a bit of air, water or land; we all own the earth and its resources in common and when a user uses a bit of resources, he owes a rent for it. The rent is the wealth produced by the bit of resources and is paid to the rightful owners of the resources, that is, to everyone else, an expanded citizen’s dividend, a Universal Basic Income. LVT is thus a compromise between Capitalism’s privatization and Socialism’s nationalization of resources.
Imagine a giant corporation that owns the earth. We each receive a share in the corporation when we’re born and we own the corporation jointly. Shares expire when we die so they can’t be inherited or accumulated. We are customers of the corporation when we use land or other resources. The more resources or the more valuable the resources we use, the more we pay. As shareholders in the corporation, we receive equal dividends from the corporation.
LVT has many benefits. A major effect would be to reduce land values and thus promote home ownership and reduce homelessness. It would reduce land speculation, a major cause of high land prices, economic inequality and boom/bust economic cycles. Since LVT taxes only land, not buildings, it encourages property owners to improve their buildings to get a higher return as they pay the same rate whither a building is improved, decayed or vacant. By promoting efficient use of land, LVL reduces sprawl and urban costs, making cities more compact, walkable and better able to support public transit. LVT is efficient to collect and resistant to fraud as land ownership is known although it is often obscured, even in countries like the UK. Unlike other taxes, LVT does not distort the economy since the amount of land is fixed, land is economically inelastic and taxing it does not affect the supply. LVT has been called a “Single Tax” as it could replace less efficient, less fair, less fraud-resistant taxes, such as on incomes and sales. Many economists consider LVT the most fair tax.
Taxing land values is an old idea which has long been obscured by landowners who have hired lawyers, lobbyists and politicians to shift taxes to other sources, such as workers and sales. The power of LVT is illustrated by an ancestor of the Monopoly game. This game had two alternate sets of rules:
- One player gets extremely wealthy, others bankrupt.
- All players pay an LVT and they all get wealthy. No one gets extremely wealthy. The game ends when the poorest player has twice what he started with.
Moving to LVT would be a major shift as it might reduce land values as much as half. This would be particularly dramatic in areas of rampant land speculation and artificially low property taxes such as coastal California. LVT could be phased in by splitting property taxes to tax land at a higher rate than buildings. After several years, property taxes would be only on land. At the same time, income, sales and other unfair taxes would be reduced. Tax codes would be greatly simplified and tax evasion and fraud reduced.
Depending on the tax rate, LVT has potential to raise large amounts of money, as much as half of GDP! This is money that is now being privatized and greatly increasing economic inequality. It could fund governments, pay for all the nuclear reactors, electrify our economies and mitigate climate warming. All public expenses could be funded out of land rent is the old ideal of government without taxation.
Taxing land value at a high rate, say 4 or 5 percent, would reduce land prices, enabling more people to buy houses, reduce homelessness and tend to restore the commons. As land prices drop, land monopolies would disappear and land usage would be allocated solely on the rental value of the land. Land speculation would disappear, reducing boom/bust economic cycles.
LVT is also known as Annual Ground Rent as it’s really a rent, not a tax. Scotland is proposing an AGR that might cut rents in half, greatly benefitting the public and reducing homelessness. The AGR revenue would be spent by the government rather than a UBI, however, and would allow the government to favor special interests. Distributing the revenues directly to the public would be more equitable.
The LVT revenue would expand the citizen’s carbon dividend to support Universal Basic Income programs. UBI is not welfare but each citizen’s share of the expanding global economic productivity. How big should the UBI dividend be? I think at least half of a nation’s poverty level. The payments should provide a floor under other incomes as workers are replaced by automation but not so high as to discourage working. Military budgets should be reduced to support expanded UBi payments.
As UBI programs raise incomes to eliminate poverty and make everyone wealthy, birth rates everywhere will fall below replacement levels of 2.1 children per woman, allowing the global population to peak and begin to decline.
NATURAL RESOURCES TAX
Finally, expand the LVT to tax use of all natural resources; not only air and land but all resources, including rivers, lakes, forests, aquifers, wild animals, ocean fisheries, radio spectrum, and geostationary satellite orbits. These additional revenues could be
dedicated to global ecology improvement projects.
The resource taxes will promote efficient use of resources. We will recycle much more than now, reducing our demand for materials and continuing the slow processes of decoupling economic and physical growth rates. We will continue to move to cities with more of the countryside “rewilded” as open space and parks. Wasteful agricultural products like ethanol fuels will disappear with the electrification of transportation.
We can fix many of the problems of our global Capitalist economic system if we take advantage of the transition from fossil fuels as an opportunity to make our economy fairer. With the combination of virtually unlimited low-cost nuclear power, a tax on the use of all natural resources and equal distribution of benefits, we can reduce burning of fossil fuels, reduce economic inequality and poverty, reduce air pollution, improve cities and promote recycling of materials. Together with other programs such as reforestation and regenerative agriculture, zero-carbon nuclear power can help us reach net-zero carbon emissions by 2050 and mitigate extreme climate change.
CAN WE ACTUALLY DO IT?
There will be many problems in implementing this proposal including the difficulty of getting international agreement on taxes and widespread lack of understanding of the Single Tax and trust in nuclear power. Because of three recent events, however, I think it’s possible to reach agreement. First, we somehow were able to agree to a global minimum corporate tax rate of 15%. Second, rapidly increasing gas prices and lack of reliable winds over Europe have convinced many people of the need for reliable, low-cost electricity. Third and most important, all of us are increasingly realizing that we must transition away from fossil fuels as rapidly as possible to avoid increasingly dramatic changes in our climate.
Fortunately, we are already shifting toward these ideas.
Douglas R McLain, PhD Oceanography
Retired NOAA Oceanographer
Pacific Grove, CA