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Thursday 24 Aug 2017 | 13:51 | SYDNEY
Thursday 24 Aug 2017 | 13:51 | SYDNEY

Carbon pricing: Let the jury decide



30 May 2013 13:23

Nicholas Gruen is CEO of Lateral Economics, Chairman of the Australian Centre for Social Innovation, an entrepreneur involved in a number of internet startups, and a regular Fairfax columnist.

I concluded my previous post on climate change (cross-posted at Club Troppo) by asking rhetorically whether I was optimistic that we'll find our way through, and what measures might be taken to maximise our chances of a happy ending. So here goes. Firstly, some reasons for optimism.

The establishment of even a small carbon price (even if it's insufficient to reduce emissions as much as we'd like) is actually very worthwhile because it creates incentives for technology change that are substantially greater than the existing incentives to just economise on fossil fuels. There's often a surprisingly big difference in incentives between a bit and nothing, particularly in the long run as firms choose between existing technologies and consider investments in new technologies. And uncertainty about future carbon prices imparts option value to carbon abatement technology.

I also think that if US politics hadn't gone so toxic we would be a lot further down the track. I'm not expecting US politics to get less toxic in a hurry but I think over time, the votes are going to the centre (which is to the Democrats, on any reasonable reading), meaning that the Republicans may be forced to become less extreme. Huge progress has been possible on 'social' issues like gay marriage. So things may change quite fast at some stage, though exactly when is hard to anticipate.

Just as virtually no-one predicted the fall of the Berlin Wall, I don't know too many people who were predicting a year or so ago that even Republicans would come under political pressure on gay marriage. The pundits will keep getting paid for overconfidence in making predictions (studies suggest that if you want to convince people that you know what you're talking about, the most effective and easiest way to do so is to be overconfident rather than to actually know what you're talking about).

I think there's another important point to make about democratic politics and the culture of what I've called 'vox pop democracy'. The thing about climate change (and I think this is true of a whole suite of things) is the disparity between people's views in general and their views once subjected to various propaganda campaigns.

There was a strong majority of the Australian population in favour of taking action on climate change in 2007. But once our adversarial politics gets into this, the consensus falls apart. One of the major parties opposes what most experts and reasonable people think is worth doing. Instead, it's in the interests of the opposition to argue the opposite. After all, if it goes along, the government will generally get the credit for the leadership it's apparently showing. And if it goes along, how will the opposition get its view into the public consciousness? How will it put political pressure on the government?

It turns out that it's in the opposition's interest to oppose government policy even where most informed people think the government is right, perhaps even where most of the people think it's right. Whereupon the process of undermining community sentiment begins apace. On abstract and complex subjects, lots of effort can be expended emphasising uncertainties, nursing resentments, breaking the law to obtain emails and then using them to smear scientists' motivations etc. Who cares that careful investigation showed that these emails didn't illustrate what they were taken to illustrate? By then the caravan has moved on.

Other areas where there's been strong consensus based around expert opinion which have then been exploited by oppositions include tax reform of virtually every hue from the mining tax to CGT, FBT and GST reform.

Is there an antidote to all this? 'Popular opinion' is nothing more than what everyone thinks about something at a given time. But at any given time, most people don't know much about it. So their opinion doesn't count for much as far as making an informed decision. The trouble is, if one simply delegates the decision to an elite — as we do with monetary policy or judge-made law, for instance — there can be questions of democratic legitimacy. Of course if elites behave well, then things work out. And indeed people can be brought to support such elites, as most of us would defend the judiciary and monetary policy independence.

But we have one time-honoured institution in which we establish a special-purpose 'democratic' elite. A jury is a random selection of ordinary people who we ask to turn themselves into a cognitive elite regarding a particular matter — a legal case — with a view to their making a determination regarding the facts. This cuts through the weaknesses of 'vox pop democracy'. Such people have access to 'experts' and, in discussion with each other, they can make up their own minds. They have minimal incentives to do otherwise; their career does not depend on their decision.

Notice how seldom shock jocks claim that juries are out of touch or question their authority, for they are one of the most unimpeachably democratic institutions we have.

So I'd like to see this kind of deliberative democracy brought into the kinds of issues I've discussed above to at the very least influence democratic decision-making. I'd be happy to set up a carbon pricing system and then give some important role in managing the price to 150 Australians chosen by 'representative sortition' (random selection subject to representative quotas for ratios regarding age, location, gender etc).

For illustration's sake, one might establish an expert body to issue a report with recommendations in it; the citizen's assembly would then deliberate and decide what course of action to take. The body would be permanent, but each year a third of its members would be replaced. They'd be given the resources they need to consider the issues (access to experts, the Parliamentary Library and the time to deliberate) and then they'd decide on the carbon price.

This would be very disruptive of the worst pathologies of our current system, which give vested interests great power where the foundations of that power rest on the public's 'rational apathy' about getting informed (we can't all get to the bottom of all public issues to be responsible voters), vested interests' abilities to manipulate uninformed opinion and the careerism which prevents so many people of good conscience from supporting the right side because of allegiances to employers, political party or whatever (choices to give one's allegiance to such collectives are typically driven by motives of careerism).

Developing institutions of deliberative democracy such as the one outlined here is one of the few ways I can think of to give us a fighting change of developing the democratic resources to start disrupting tyranny of vox pop democracy and give our future a chance against the 24 second news cycle.

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