Combating climate change: rules or markets?
Combating climate change: rules or markets?

Climate change is beyond debate. That the Earth's climate is changing, that these changes have been caused by human behaviour, and that we need to take urgent action in order to combat these changes, are all facts, and cannot and should not be debated. What can, and should, be debated is the question of what is the most effective action to take against climate change.

Which works better? Forcing people to change their behaviour by passing laws? Or encouraging them to change their behaviour by using incentives and disincentives? Regulation or the market?

To take one example. Electric cars produce fewer emissions than petrol cars. So, a good way to respond to climate change is to work towards ultimately replacing petrol cars with electric cars. Here are some ways this could be achieved:

A Make a law against petrol cars.

B Make a law against petrol cars, but pay all owners of petrol cars compensation for scrapping them, perhaps with a bit extra to make up for the inconvenience.

C Keep petrol cars legal, but tax them very heavily so they are more expensive.

D Keep petrol cars legal, but subsidise electric cars from taxes, making them much cheaper than petrol cars.

Each approach has its advantages and disadvantages.

A deals with the problem very thoroughly and very immediately. However, it would be hard to win popular support for it. This lack of support would make it hard to enforce, and might open the door to widespread law-breaking. Also, poor people in remote regions who depend on their vehicles and cannot afford to buy an electric car would suffer far more than people in cities with good public transport, and wealthy people who can afford to buy electric cars.

B would make the measure slightly less unpopular, and would mitigate some of the harm done to people who genuinely depend on cars. However, it would be expensive, and would divert a lot of resources which arguably could be better used elsewhere.

C would be more popular and easier to enforce. It would also be less expensive, and would actually raise money for the state, which might be spent on other things. However, it would advantage wealthy people who could afford the taxes, and disadvantage poor people who couldn't. The hedge fund manager gets to carry on driving her Range Rover when she's shopping in Chelsea, while the district nurse in the Scottish Highlands can't afford to visit his patients any more.

D would be the most popular. Petrolheads would lose nothing by hanging on to their gas guzzlers, while people who want to do the right thing would find it easier. However, the more popular the measure became, the more expensive it would be.

A and B are examples of straight regulation; that is, the state telling people what to do, with them having no choice in the matter. C and D use the market. That is, the state lets people choose what to do, but intervenes in the market - the exchange between people of goods and services - to influence people's actions. Regulation is simpler and more immediate, but sacrifices freedom; using the market protects freedom, but is also more risky and may produce less equal outcomes.

Motions that go with this topic

1. This house would tax meat
2. This house would tax air travel
3. This house would increase tax on aviation fuel
4. This house would restrict everyone to one long-haul flight a year.
5. This house would increase tax on petrol
6. This house would restrict everyone to a maximum of 5,000 miles driving a year.
7. This house would subsidise home insulation
8. This house would subsidise public transport.