Global governance without centralized control

A challenge of our time: How to create an auction of carbon extraction permits (e.g.) without a centralized authority running the auction. Democratic principles say the people at large shall determine what limits on overall environmental impacts of various kinds are permissible. A system of random polls can substitute for an impossible system wherein every person is asked how much carbon extraction each year (and how much of every other kind of impact) they think is acceptable.

Starting from a few assumptions: Corporations will function within the limits endorsed by the people; The right of the people to define limits to various kinds of impact implies that corporations at large must know what limits the people will consent to. When industries want to use more of a publicly-owned resource (something made by natural processes, not human effort), they should pay more to the people. The amount paid functions as a lever that the people can use to adjust how much effort is put by industry toward reducing a particular kind of environmental impact. A system of surveys will show to what extent carbon extraction / emission, and to what extent every other kind of human activity that would otherwise be carried to excess, should be limited.)

If we agree that humans have a shared right to set limits to impacts of various kinds, then an economic actor who wants to extract carbon should be expected to determine whether the amount of carbon currently being extracted is or is not already at the limit defined as permissible by average opinion. Assume that, in the absence of any emission fee, the amount of carbon that the sum of all prospective users want to emit (extract) exceeds what a random poll indicates is a permissible amount for the year.

Each prospective user of fossil carbon (each prospective extractor of the buried resource) could publish what they deem to be an appropriate extraction fee per kg of carbon, given expected demand for the resource in relation to the supply that the people at large are willing to permit (as indicated by the random poll). This is a thought experiment: If all prospective users happen to guess (on average) that a $1/kg fee would result in overall demand that is sufficiently low so as to bring overall carbon extraction and emissions into line with what average opinion says is OK (according to the random polls of the population), then the community of users could publicly declare their intent regarding how much carbon extraction permits they intend to buy for the year at $1/kg.

If all prospective extractors of fossil fuels indicate in a public ledger how many carbon extraction permits they expect to buy at the $1/kg price, this group of all prospective buyers of carbon-extraction permits may notice that the total number of permits that would be purchased at that price is still higher than what average opinion says is acceptable. A continued mismatch between supply and demand would indicate that the earlier guess (that a price of $1/kg would be sufficient) was not an accurate guess. The average estimate of the appropriate fee amount (the estimated 'market-clearing' price) was too low.

A reiteration of the process might have all prospective users (extractors) guessing (on average) that a price of $1.50/kg would cause enough prospective users to leave the market or reduce their participation enough to bring overall demand into alignment with what average opinion deems as permissible. With further iterations, the projected auction price will approach the price that a conventional auction of permits would bring. This auction operates through an iterative process rather than by relying on an auctioneer. The process can be automated so that it is not labor-intensive. (The process could be made more efficient if each publicly-declared estimate of a market-clearing price, and declared intention of how much a prospective user of a natural resource or service expects to purchase, is accompanied by an estimate of demand at a 10% higher and 10% lower price. An algorithm could calculate price elasticity and thereby increase the accuracy of each iteration of the process. A desired level of precision in price discovery could be attained in fewer steps.)

The random sample survey of the global population may be the most challenging part of this proposal. Many interested parties could cooperate to share the expense. Many groups would want to find out what public opinion is regarding various kinds of impacts on the environment. The economic actors in, for example, the fossil fuel industry could subscribe to the services of polling organizations that also gather data regarding people's opinions on other kinds of environmental impacts. Or they could conduct their own polls. If the polling process is transparent and well-documented, information gathered by any polltaker could be added to the overall totals.

In a free society, we can expect that anyone who is motivated to verify a public poll result will take their own survey. If they document the process and publish the results, their polling data would become part of the overall data set that would guide the actions of industry.

There is no need for a centralized authority to mange the system. Transparency is needed to enable trust that the process has integrity.

We need to respect PUBLIC property rights, too

Integration of Human Society and the Biosphere

@TallPhilosopher

8th way of thinking: Economics for the 21st Century

Our challenge is much like challenges that all previous societies have had to face: 
We must bring our society into accord with moral principles.

We have an unsustainable society. Prices are not giving us accurate information about costs. There is generally no fee (or only a nominal fee) proportional to pollution put or natural resources depleted, so what appears most profitable to industry and what appears most affordable to consumers is almost always an option that disregards environmental impacts.

If we take account of externalities (the hidden costs that skew business models and consumers' choices toward more harm) by charging fees when pollution is put or natural resources are depleted, businesses will have incentive to find manufacturing processes and business models that bring reduced impacts. There will be more interest in using recycled materials. Consumers will see lower prices for goods and services that were produced without causing great damage to the environment. Natural tendencies for corporations to attempt to increase profits and for consumers to compare prices will turn all economic actors toward a sustainable path. Corporate interests and societal interests will converge when prices more honestly represent costs.

If we take random surveys and ask whether particular kinds of impact on the environment are being held to acceptable limits, we could increase the fees charged for any impacts that exceed what most people think should be allowed.

We can adjust fees according to what random polls suggest is necessary. Alternatively, we could issue a number of permits to match average opinion. The permits, sold at auction, would perform the same function as an adjustable fee.

This policy of bringing information about costs to the environment into the economy (in the form of a fee or permit price) would mean that prices of most products would rise. The policy will be fair (it will not further disadvantage those who are less well-off) if proceeds from permit sales or fees are shared to all people. The money collected would be a monetary representation of the value to the economy of natural resources. This is wealth not created through the effort of any person. It is the birthright of all. It should be shared.

Who owns the view of the stars? We all do. If some people choose to put outdoor lighting and thereby cause others to not be able to enjoy the benefit of that which, by right, belongs to all, then payment of a fee, with proceeds shared to all, will effectively compensate those who are left with diminished ability to enjoy natural beauty. (Some people may use this money to fund occasional trips to places far from city lights. Others may use it to offset some of the additional cost / inconvenience of living far from the city. Others still may take the compensation in another form entirely, such as by going to cinema.) The system of fees, tied to the results of random surveys, ensures that the lost value in the form of natural beauty does not exceed what most people think should be allowed.

A team of scientists estimated the value of natural resources and services at more than $120 trillion per year. (Robert Costanza, et al; Nature; 2014) Whether this number reflects the total of all pollution fees and resource depletion fees that might be paid by industry, or whether it is an over-estimate by a factor of two, we might expect that charging fees proportional to impacts, then sharing fee proceeds to all people, would result in a Universal Basic Income, a natural wealth stipend, of about $50 per day for every person on Earth.

Some portion of the (monetary representation of) natural wealth that is the natural inheritance of the younger members of society might be used to fund schools, public parks, museums, public health programs, etc., that society must provide to ensure a healthy environment for the growth of children. Some remainder might be put into trust, to be claimed when youth reach an age when they are able to make decisions about how best to invest in their future. (They may use the money to pay for college or for apprentice programs in trades. They may use it to invest in a business venture, or to save for future needs. Perhaps a portion of the funds held in trust might be drawn on by students in primary schools who want to enhance their education with additional field trips or other costly but worthwhile activities)

What portion of the younger generations' share of natural wealth should be invested in public programs and services, and what portion should be held in trust, can be decide by a random poll.

What the appropriate age might be to begin receiving a natural wealth stipend could be decided by another random poll. Some people may say that, upon reaching the age of 16 years, a person should start receiving all of their natural wealth stipend. Others might say this should begin at 20 years of age. Some people may prefer a gradual introduction between 15 and 20 years. We could take the average of views so that the actual policy will be close to what the largest number of people think is about right.

Just as we might use a random survey to decide where pollution fees should be raised or lowered, we could also survey to learn where people think public funds should be spent. We might decide (average opinion might indicate) that ~half of all proceeds from environmental impact fees should be used to fund public programs. Conventional taxes could be reduced or eliminated accordingly.

If all citizens could decide how to spend their per capita slice of the public budget, no person would be forced to support a program or service to which they had a conscientious objection. Any program that half of all people agree serves the public interest would quality to receive public funds. But if a citizen were to put 75% of their share of public funds to programs that 75% of people agree serve the public interest, that might be a reason to allow them greater latitude in deciding how to spend the remaining 25% of the funds. (The requirement then might be that 25% of citizens agree that the public interest is served by a program for that program to qualify.)

If human beings have a shared right to decide limits to various kinds of impacts on the environment, this right must be manifest in reality. Impacts should match what people say they should be. If we have a shared right to benefit from natural wealth, the right must be embodied in practice. Moral principles cannot be mere figments of our imagination or words on a page. They must be acted out.

Sharing (a monetary representation of) natural wealth will mean that our shared right to benefit is embodied in practice.

Producing the monetary representation will involve charging fees proportional to impacts on the environment. This is a simple, direct mechanism for making prices honest (accounting for externalities). We must make prices honest to embody truth in the functioning of the economy, and to align corporate interests with societal interests. Market prices must embody truth in order to cause every consumer's tendency to compare prices to turn their buying choices toward sustainable practices.

When we embody moral principles in the functioning of our political-economic system, we will make a healthy society. We will make a sustainable and more just society.

Human society as brain for the planet ... IF we embody moral principle

@TallPhilosopher

Should a natural wealth stipend go to all people?

Even to the wealthy?

A lot of people with high incomes or much wealth give to worthy causes out of a sense of civic duty.

IF we charge fees proportional to environmental degradation, we will be measuring economic value of that which belongs to all. If this money is not shared equally but is instead withheld from people who are wealthy, the feeling among some people that they have already paid a debt to society by NOT receiving that stipend may reduce their willingness to voluntarily contribute to worthy causes. That could mean a decrease in benefits to those who are less well-off that far exceeds whatever savings may come from not sharing the natural wealth stipend equally. We will have lost a chance to see what interesting projects might be funded voluntarily to make the world better.

The bureaucratic apparatus that conducts audits and surveils what people earn to discern who is eligible to receive the stipend would cost some money. The money spent to support this bureaucratic function cannot be used for other purposes. Besides the unquantified cost described above, there is this bureaucratic cost to consider.

Beyond these practical concerns, an equal sharing of (a monetary representation of) natural wealth is required by basic moral precepts. No person made this wealth and no person has any more or less right to benefit from it than does any other person.

When we make prices honest, people who are wealthy will not be those who promote the interests of individuals only (by making products that people want to buy). They will be those who promote the interests of individuals AND the community by making products that people want to buy without causing excessive harm to the environment. Higher profits for industry will go to businesses that minimize pollution and depletion of resources. We will no longer associate high profits with harmful practices and anti-social behavior. Interests of corporations will be aligned with interests of the larger society.


Natural law requires respect of PUBLIC property rights, too

@TallPhilosopher

A message to the Churches:

Ancient texts tell us that truth is important.

Economists tell us that, when prices do not show true costs (because some costs are externalized, are not included on the profit and loss statement, due to the absence of any monetary cost incurred related to, for example, amount of pollution put), economic activity is skewed toward creation of more of that for which costs were externalized. More pollution is created because we do not charge appropriate fees to polluting industries.

We get more pollution and faster depletion of resources when prices do not show us the cost of harmful impacts on the environment.

Is truth important enough that we should insist on an economic system that tells us the truth about costs, including costs to the environment? If yes, who will say so? Who will say so in a public forum?

Who will ask economists what are the most efficient and fair proposals for taking account of economic externalities? (And what economist will answer?)

If we correct this defect in our economy that makes pollution and depletion of resources appear profitable to industry, we will promote sustainability. Profits of industry will align with societal interests and environmental health. Within the current (dishonest) system, pursuit of profit is at cross-purposes with pursuit of environmental health and the long-term stability of civilization.

If we charge fees proportional to how much pollution is put or natural resources are taken by industry in pursuit of profit, then share the proceeds of the fees to all people, we will have addressed the challenge of honest pricing AND we will be sharing (a monetary representation of) natural wealth to all people. No more poverty. Disparity of wealth will be a much smaller problem. We will have a more just society.

If we know that making an honest economy and sharing natural wealth would end poverty and promote sustainability, do we have a moral duty to do these things? 

Natural Law requires respect of PUBLIC property rights, too

To Journalists:

If truth is important, then prices that do not honestly represent costs are a problem. When industries put pollution or deplete natural resources, they often do so without incurring any legal obligation to pay a substantial fee proportional to the degradation of environmental quality or depletion of natural wealth. This means that they feel no strong incentive to try to reduce harmful impacts on the environment.

Economists call the shifting of costs (such as environmental costs) off of the Profit and Loss balance sheet "negative externalities". These are the harmful effects on the environment or society that do not show in prices.

When corporations do not face substantial environmental impact fees, business planners adopt business models and manufacturing processes that are more harmful to the environment.

Because prices do not show true costs, consumers do the wrong thing. We buy more of those things that harm the environment than what we would do if prices were honest.

Dishonest prices harm the interests of future generations and the larger community of life. They make UN-sustainable business models appear as the more profitable option.

If we account for externalities by charging appropriate fees, industries will try to reduce harmful impacts. Pursuit of profit will be synonymous with pursuit of sustainable business models. Corporate interests and societal interests will be aligned rather than at cross-purposes.

If journalists report environmental problems, climate instability or pollution disasters, they should report an efficient policy for resolving those problems (charge a fee proportional to emissions or resource depletion).

If fairness is important, then we should expect that industries will compensate the people when pollution is put or natural resources are depleted. Proceeds from pollution fees and from natural resource user-fees should be shared to all the world's people. Sharing (a monetary representation of) natural wealth would end poverty throughout the world.

If reporters tell us about poverty, social instability or disparity of wealth, they should mention a fair policy of sharing proceeds from environmental impact fees. We should understand that extreme poverty persists alongside opulence only because we fail to share natural wealth equally.

If environmental challenges and economic justice issues can both be resolved with one policy, then the issues are related. It doesn't serve the public interest to continue to report these as entirely separate issues.

A commitment to the moral values of honesty and fairness can resolve environmental challenges and economic justice challenges together. News reports should tell us so.

John Champagne

Systemic immorality - Are journalists culpable?

@TallPhilosopher