Category Archives: Hertie School of Governance

Low-Carbon Tech, an Infant Industry in Need of Protection

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How to react to global warming? How do wean ourselves off that harmful oil – and still prosper?

I maintained that we’d better be safe with Sinn‘s fears of a Green Paradox than sorry without him, notwithstanding the uncertainties of his argument.

Economist Hans-Werner Sinn is no easy read for a green German: he pretty much pulls german and European green policy into pieces. Much of his critique is plausible, if unsettling: without international cooperation, much of our unilateral efforts may be in vain.

But there’s one thing where I wholeheartedly disagree with Sinn: low-carbon technology, for the time being, does indeed require subsidies.

Renewables / via Flickr, originally uploaded by Chad Johnson

Renewables / via Flickr, originally uploaded by Chad Johnson

Yes, it may be hard for states to pick winners, but low-carbon technology still needs infant industry incubation, if it is to sustain us in the near future.

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The Copenhagen Game

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The Big Ask is on: These days, the leaders of the world convene in Copenhagen for the 15th time to address that “greatest and widest ranging market failure ever seen“: Climate Change.

Will they ward off that Tragedy of the Commons of our time? We don’t know.

They are playing games in Copenhagen. Not of the entertaining kind, but of the intricately interdependent kind.

The Green Paradox is one of those intricacies: are we reckoning without our fossil-fuel supplying hosts? What are their stakes?

Let’s get the rules straight. Then let’s see what we can do to improve our collective odds for a cooler planet.

And while we’re at it, let’s level out this playing field.

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The Perfect Tax

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Have you met the perfect tax?

The duty that is both elegant, and fair. The regime that lets our economies grow, and have everyone partake in its fruits. The excise that reconciles efficiency with equity. The set of rules that raises the revenue for a potent polity, and, at the same time, curbs wasteful decadence, to form that more perfect union.

If you haven’t met the perfect tax, let me introduce you: the postpaid progressive consumption tax.

The secret of the perfect tax? It burdens that behavior which is truly wasteful and undesirable: excessive consumption. It leaves all other economic activities unaffected.

Together with a negative income-tax for poor income earners and, possibly, a wealth tax to avoid boundless capital accumulation, it can replace all other redistributive taxes, both on individuals and corporations. Read on for more.

Children's coats, starting at $340. Via flickr, originally uploaded by permanently scatterbrained
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Setting the Goalposts Right

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What do we want from policy analysis?
This question recently came up in a discussion on new EU member state policy on poverty and social exclusion.
It’s not a simple question. And it depends an awful lot on what we accept as given.
In many discussions on EU enlargement and related social and tax policy reform, as in the broader context of liberalization, I think we too readily accept as inevitable a (mis)configuration of the international political economy which really is of our own choosing.
Let’s think this over. Read on for more.

Foggy Goalposts, originally uploaded by Boocal.

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Uncertainty and Responsibility in Climate Change: A Case for Alarmism and New Risk Management

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I was recently tasked to prepare a presentation on the political economy questions of climate change: How expensive is saving the climate? And who should shoulder the costs?

As I prepared the presentation for Dr. Mildner’s “States & Markets” seminar, it occurred to me that to answer these questions, we first have to understand the risks and uncertainties of climate change. The real questions, I thought were then different ones:

  • How do we manage risk, and respond to uncertainty?
  • How do we treat extreme low probability and high consequence events?
  • How do we respond to asymmetric risks?

The more I learned about current risk modeling of the climatic and economic impacts of global warming, the more worried I became. I realized, that climate change (as, incidentally, lessons learned from the financial crisis), requires us to rethink how we manage systemic, interdependent, asymmetric and extreme risks as well as uncertainty.

“Act Now!”

(Friends of the Earth International / The Big Ask)

I agree, we need to act now, and we need to ask strongly.

Yes, this video simplifies. Yes, it dramatizes. And Yes, it scares us.

And it should. For when everything is at stake, alarmism is not irrational, it becomes a moral imperative and different risk management is necessary.
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