Posted by Big Gav in economics
The SMH has an article by Ross Gittins on the overlap between the economy and the environment and the correct direction for the latest review of the Australian taxation system - Tax plan mustn't ignore nature's coming backlash.
As Ken Henry, the Secretary to the Treasury, beavers away on his blueprint for the reform of taxation over the next 25 years, he needs to keep in mind something that's not at the centre of the tax debate - ''environmental tax shifting''.
The trouble with economics is that its horizons are too narrow. Economists live in their own economic world, divorced from the natural environment and from the non-economic needs of the humans who inhabit the economy.
Though they're supposed to be in the business of predicting human behaviour, they haven't bothered - at least until recently - to keep up with the findings of psychology and sociology (partly because they can't get those findings into their equations).
And though the economy exists within the ecosystem, and is dependent on it, they haven't thought it necessary to keep up with ecology or study the ways the economy and ecosystem impinge on each other.
The economists' insularity wouldn't matter so much if they weren't so imperialistic, seeking to dominate the advice going to governments and leaving the public with the impression that the narrow concerns of economists should be given primacy over all else. ...
But the Henry report needs to go much wider. First, it should get rid of explicit subsidies to fossil fuel and other natural resource use (such as fuel tax breaks for farmers, concessional taxing of company cars, undercharging for logging crown forests and undercharging of trucks) and then move in on implicit subsidies to those environmentally damaging activities whose private costs don't reflect the social costs they impose on the community and its life-supporting ecosystem.
Now that would be a tax blueprint that could stay relevant for 25 years.