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imglorp
cies
Exactly. Make pollution (incl CO2) sooooo heavily taxed that we can lower the tax on other "more wholesome" things (like income from labor and housing).
And the market will solve this issue real fast.
Sadly the power structures in place prevent creative thought, as those milking the cows of the status quo prevent change.
kansface
If we did that, we’d merely outsource all carbon heavy industries to where they’d inevitably pollute way more. You could try to do a carbon VAT I suppose - sounds tricky in practice because there is no market price discovery equivalent for emitted carbon (before/after manufacture), and taxation before markets was a dumpster fire mess.
cies
Then we tax pollution imports at the border :) Because, as you point out well, this is not a matter of national interest: this is a world wide problem.
We have all types of tax already in place, we just need to emphasize.
If we dont the run for profit will make human life unbearable in many places.
kansface
Not that I disagree per se, but there is no way of verifying the co2 emissions that goes into making anything from any foreign country ... even approximately.
Edit, meant to reply below
worldofmatthew
It would also have a worse effect on the poorest.
lukifer
The concept of a Pigovian tax [0] on externalities is to dissuade anti-social behavior by assigning it a price, while giving the proceeds right back to citizens as a universal dividend. It would actually function as a progressive tax, with the poorest collecting more than they pay in, and is heavily favored by economists [1].
gruez
That's true of most consumption taxes, but this can be offset by giving a fixed tax credit to everyone. eg. if the median person is expected to pay $1000/yr in carbon taxes, then give them a yearly check for $1000 so it doesn't cost them extra. If they can reduce carbon on top of that, great! It's free money for them.
endymi0n
The German CO2 as currently implemented gives back the credits via the electricity bill (essentially lowering the high taxes there, but could also be a credit).
While not perfect, it strikes me as a rather great „90%“ solution since it gives back the tax in roughly the same proportion as energy use and cost (single/couple/family), so it‘s pretty fair to the poor as well.
andruby
Besides lowering income tax, what else could help offset this?
clairity
> ‘...that we can lower the tax on other "more wholesome" things (like income from labor and housing)’
we don’t necessarily need lower income taxes across the board, but rather a sharp, smooth sigmoidal tax rate curve with the inflection point at the median income. and an end to deductions and carveouts like the lower capital gains tax. that one change would fix a lot of incentive problems in the fiscal system.
edit: i should add that we likely don’t need to lower taxes on housing either, as it won’t make a dent in getting more people housed where they want. what we need to lower are the barriers to development, like restrictive zoning, overly specified building codes, and arduous permitting and review processes.
bko
Mining bitcoin is a terrible way to speculate on the price of Bitcoin. Why not just buy/short it directly?
bamboozled
Is it really true that Bitcoin mining is such a huge source of emissions ?
xiphias2
It is, but what people omit is that the energy is protecting the 14th largest currency in the world.
For fiat currencies military is providing protrction of that value with other things, so it's quite hard to compare the enrrgy needed by other countries to protect their currency (Marco Polo was a great Netflix series showing what happens to a currency when the military is defeated).
fighterpilot
Capitalism/trade is generally morally good for all consenting stakeholders (with a few exceptions such as taking advantage of addictions) and morally ambivalent for everyone else.
That ambivalence for parties outside of the consenting exchange can lead to negative or positive externalities.
Ideally these negative externalities are banned (if they're too extreme, such as with lead pollution) or taxed.
I wish more adults understood the above. Capitalism isn't always an unadulterated good (for people outside of the exchange) but it mostly is positive-sum good for people within the exchange, and we need government to implement taxes that prevent the former and otherwise mostly stay out of the way for the latter.
frzj
> Capitalism/trade is generally morally good for all consenting stakeholders (with a few exceptions such as taking advantage of addictions) and morally ambivalent for everyone else. It is so because morality is the affirmitation of societal norms.
> I wish more adults understood the above. Capitalism isn't always an unadulterated good (for people outside of the exchange) but it mostly is positive-sum good for people within the exchange, and we need government to implement taxes that prevent the former and otherwise mostly stay out of the way for the latter.
Your argument goes the way that lousing each other is beneficial to all if there are strict rules and punishment for those that don't louse back, instead of simply washing yourself or seeking other ways to delouse oneself. I'm well off and thanks to wide diversification of assets my future descendants will have all the time in the world to wonder why people still equate labor and property.
lukifer
"Capitalism" is not merely a short-hand for "trade"; it's also a theory of capital. And its shortcomings are numerous: not only the ones you describe (externalities, exploitation of addictive behavior), but also game-theoretic races to the bottom, rent-seeking behavior, conflating capital with land [0], zero-sum positional goods, quasi-sociopathic corporations, the list goes on.
Your core point is a good one: trade tends to be mutually beneficial, and good policies of ownership design [1] incentivize net-positive wealth creation. But there's a lot of good and bad ideas (and ideology) wrapped up in "capitalism" as such; it's worth teasing them all apart independently rather than the simple "Capitalism: Y/N" stances that pervade the discourse. I'm frankly ready to banish the words "capitalism" and "socialism" from our vocabulary entirely; they're simply not helpful.
[0] https://astralcodexten.substack.com/p/your-book-review-progr...
[1] https://www.penguinrandomhouse.com/books/601899/mine-by-mich...
fighterpilot
You're right about the capitalism/trade distinction and it was a mistake to group them together. My post was pertaining more to trade than capitalism proper.
"its shortcomings are numerous:"
Take positional goods. If there's no negative externalities, how is that bad? If person A wants to give lots of money to person B for a diamond, that has zero negative impact on me. Person A is presumably happier and person B is presumably happier (otherwise they wouldn't have traded). Nobody is losing in a nontrivial way here. You could maybe argue that a society with status strata is undesirable, but it's a bit of a stretch to lay the blame for that on capitalism, diamonds (or family pedigree or whatever) would be a status marker irrespective.
Take quasi-sociopathic companies. Yes, they're amoral and generally will do anything for profit, but this is mostly a point about externalities. A chemicals company will treat their customers extremely well but will dump in the river because those impacted aren't their customers. There's examples of businesses treating their customers atrociously (e.g lead spiking of turmeric, not doing safety recalls, etc), but these are exceptions and aren't the rule, brand equity all the way through the supply chain incentivizes the opposite in general. Every business I patronage treats me like royalty and it's no coincidence.
Regarding races to the bottom, do you mean things like the zero sum competion for speed among HFT firms? Isn't this waste just an inevitable byproduct of competition? As an industry, they've largely successfully automated away expensive human market makers, despite this zero sum waste that comes from that competition. It's not efficient to have 5 supermarket chains with 5 legal department and 5 HR departments, but we accept that we need that waste for competiton to function.
Regarding rent seeking, that's fairly broad and it'd be better to discuss specifics.
shrubble
Notice that there is nothing 'democratic' about this. It is large players in the economy who have unparalleled power in the market, unilaterally making a decision.
adrianN
At least it's an improvement over the usual way it works where big players with unparalleled power in the market don't care about the future and unilaterally decide that we should pollute for another decade or two.
minikites
Government policies would be better than both of these options. The only reason that it "usually" works that way is because of the persistent effort of conservatives to paint government as ineffective at best and harmful at worst, when in reality democratic government is the best way we have to solve problems that require society-level intervention and coordination.
wombat-man
Well, unfortunately it doesn't seem like we're willing or able to make these decisions in the US. We as a country don't seem to be able to get everyone on the same page on these matters. There are just too many people who either don't believe the problem is serious or they do not care.
adrianN
I'm relatively sure that there is not a single country on the planet with a climate policy that is compatible with the 1.5° goal. Maybe some island nation or so? I think you're oversimplifying if you're just blaming the US flavor of conservatives.
pjc50
That's not unusual. What is unusual is that they're using their central market power to make things better, not worse, in terms of externalities.
AnthonyMouse
This feels like a PR play though. Banks aren't the most competitive market in the country but the idea that 100% of banks will stop doing business with a multi-billion dollar industry has to be a conceit.
Oil companies have a ton of money. "Start their own bank" money, if it came to that. There's no way this actually works against them. This kind of thing only works against marginalized people.
So what it's meant to do is normalize the tactic. The banks are doing this against evil oil companies, and screw those guys amiright? Show everybody that our benevolent overlords are doing this for our own good.
Then they come after others, actually marginalized groups without "start your own bank" money, and anybody who objects to that but not this is a hypocrite doing battle with existing precedent.
pjc50
> they come after others, actually marginalized groups without "start your own bank" money
But .. this already happens, and has for some time, and nobody defending that makes reference to climate disinvestment?
Analemma_
There was nothing democratic about the rise of the fossil fuel industry in the first place. Wanting "democracy" in the other direction is an asymmetrical demand with no justification.
minikites
This is the result of 40+ years of conservative propaganda harping on how "government is the problem" and "government is bloated and their involvement makes everything worse" so now corporations are the only ones left with power and trust to address large scale issues. I'd personally rather see society-scale issues handled by government instead of Facebook and Goldman Sachs, but it seems like most of my countrymen in the USA disagree.
cies
Sadly I noticed this too. I see this as a testimony to defunct democracies, that are heavily in the pockets of those making big money off pollution.
dfxm12
It's not democracy, but it is capitalism. You know, the adage, "vote with you wallet". The bigger your wallet, the more say you have.
thinkcontext
Its investors communicating their allocation criteria to banks that they invest. It has nothing to do with democracy, its simple capitalism.
optimiz3
Banks shouldn't be put in the position of public policy making. If society thinks certain activities are desired/undesired, this can be accomplished via taxes and regulations. Financial cancel culture is a road to hell laid with good intentions.
MereInterest
Except then people come out of the woodwork to say that government shouldn't be legislating morals, and that if it's really an issue investors would avoid investing in funds they find immoral. Which is exactly what's happening here.
throwaway0a5e
Why is that a problem?
If there's not sufficient voter support for legislating morals then democracies shouldn't be legislating morals. The voters should get what they want even if it's stupid.
MereInterest
I wasn't trying to imply that there was. More that any push toward long-term stability gets a ridiculous amount of pushback on the methods. If it is done through legislation, the free-market libertarians come out in droves to say "No! Let the market decide!" If it is done through market forces, the free-market libertarians come out in droves to say "No! The market should be amoral and profit-oriented! Let legislation decide!"
I recognize that these may be entirely separate subsets of free-market libertarians, but it's enough to make me grow frustrated at the entire group.
bradleyjg
The right answers are leaf nodes—-either voters or consumers. If consumers act, intermediary institutions like banks will naturally follow. Ditto if the laws change.
nullspace
I think it’s kinda weird that you exclude investors out of the leaf node, which is what is happening here.
fakedang
Except in this case, consumers can't act. Can consumers vote with their wallets to prevent using technologies that are excessively polluting, say a necessary chemical which they use only indirectly, one that has a polluting manufacturing process? Can poorer car buyers opt for any thing cheaper than the currently available options? Or rather, because there are no options available for them, should they simply not use cars instead of using the polluting gasoline cars?
triceratops
Consumers and investors are free to find different banks if they disagree with these policies. These banks believe this is what their customers actually want them to do.
burkaman
How is this different than a bank denying a loan to someone with bad credit? Giving money to polluters is financially risky, because they destabilize the economy and shrink your customer pool.
eloff
Because they don't have bad credit. This is more similar to how some banks reuse service to pornstars. If banks are making decisions for non financial reasons that seems problematic to me.
If they really see it as a risky investment, that's fine.
burkaman
I can only find news articles about this, not a release from IIGCC itself, but financial risk is clearly at least part of their rationale:
> Bruce Duguid, head of stewardship at Federated Hermes’ EOS division, said there was a need for “dramatic shifts” in bank financing in order to meet the Paris goals and “avoid the looming systemic risk of a ‘carbon crunch’ hitting their balance sheets”.
It seems pretty straightforward that investing in something that violates a global UN agreement is not a financially sound decision.
triceratops
> If they really see it as a risky investment, that's fine.
Climate change threatens to devastate hundreds of millions of lives. It will disrupt the global economy for decades. So, yes, fossil fuels are a risky investment.
ForHackernews
What about refusing service to marijuana businesses? There's both a real and perceived regulatory and reputational risk in giving money to these types of companies.
throwaway0a5e
I think the banks are far more worried about medium term "the government de-facto prohibits the business your customer is engaged in and they go bankrupt en-mass" than long term climate driven macroeconomic problems.
burkaman
Agreed, should have mentioned that too, and these investors do seem to be focused on meeting Paris Agreement commitments.
elliekelly
I don’t disagree but money is speech and corporations are people so why wouldn’t banks and their investors flex their enormous spending power to influence public policy? Banks aren’t victims “put” in this position - they’re largely the beneficiaries of it.
belorn
On that note, society should really stop subsidizing fossil fueled power production. Any action that the financial industry do has limited power if government simply gives the biggest carbon emission players more money in order for them to continue emitting carbon in the name of stable and cheap energy.
mistrial9
there is a middle ground in the Western finance system -- willing participants declare themselves and band together with market positioning and customer information.
Agree here that soft-rules to exclude finance will cause a lot of negative results, expected and otherwise.
People that complain finance will not voluntarily comply are right, most finance activity specifically and actively "does not care" and this also must be exposed publicly. Sunlight is a strong disinfectant.
ps- per piketty [0] the finance system is currently self-perpetuating, no longer solely an expression of real value. Humans are proven dangerous, so, take care with "laws"
https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Ce...
Analemma_
Climate change from burning fossil fuels is also a road to hell laid with good intentions. Have you done the cost-benefit analysis on which is worse?
gremlinsinc
This is literally the path that capitalism laid out.
Either you're for or against the system. Capitalism's end game was not to be counted a citizen but to become the oligarchy. Congress has a lot of power but only what the people give them, well the people have lost most of their voice/power so now congress is fueled by the power that money can buy from the companies that fund them.
Thus it is we've entered late-stage capitalism. The federal government won't ever do anything about it as long as they're allowed to control congress by the wallet.
Short-term as myself a libertarian-socialist I see this as a positive - because the alternative is lots of death from climate change...
Long-term as a libertarian-socialist, I see this as a scary power grab by corporations. In some movies/shows/books you see companies that govern and have whole worlds and solar systems named after them.
When you take away regulations, when you move to allow companies total freedom to do whatever you want you have to be willing to take the consequences of whatever those freedoms bring, whether that's polluting the water supply or encouraging MLB to pull out of Georgia over voter rights.
You can't have your cake and eat it too!
Gadiguibou
I don't think that's really what's happening here.
Banks have been choosing who they fund and who they don't for a while and it hasn't really been decried so far. This only highlights that we live in a society that is both democratic AND capitalist: decision making power is distributed, on the one hand, "equally" to each citizen via voting rights, and, on the other hand, to whomever holds the most capital.
You could even argue that the proportion of the power that goes to capitalists is inversely proportional to the amount of state actions in the form of redistributive policies, market legislation, etc.
Once you take this into consideration, your initial observation doesn't reflect a new financial "cancel culture". Rather it reflects how much of the decision making power is now in the hands of capitalists in the US.
cortesoft
Matt Levine talks about this all the time in his column. These big institutional investors and index fund managers essentially “own the market”, meaning their profit and loss is determined by the entire market’s performance and not particular companies. Some people fear this will decrease competition (because if your biggest investor also is a big investor in your competitor, they might not want you to compete on price as much), but it also leads to big investors sometimes pushing for policies that help society as a whole in places where an investor in a few companies wouldn’t have the same incentive.
COVID-19 is an example. An investor in a drug company might want that company to maximize their profit from making a COVID vaccine, but an index fund manager would be willing to sacrifice some profit for a faster vaccine distribution because the benefit to the economy as a whole (and thus their own total profit) would be greater than the lost profit from not maximizing vaccine profits.
Climate change is similar. Having index funds and other large fund managers owning the market means their fear of climate change damaging their long term profits is greater than their greed to make profit from one individual company causing environmental damage in pursuit of profit.
In some ways it is kinda interesting, since it is a way past the collective action problem that often prevents action on things like climate change. It is also scary, of course, for non-democratic institutions to have so much power.
baryphonic
> “The problem we face today is that too many banks are failing to consider climate harm when they make financing decisions, and too much money is being ploughed into carbon-intensive activities that we so desperately need to move away from,” said Natasha Landell-Mills, head of stewardship at UK asset manager Sarasin & Partners.
The question remains: how will you do activities like e.g. making steel in a "green" manner? Moving money around cannot alone answer that question; finance can only help by moving money toward new technology that can perform the jobs of the old, non-green tech. What are these investors willing to invest in to make the needed tech?
adrianN
Steel can use electricity for heat and hydrogen for reduction. There are some things where we don't know of good replacemets (e.g. concrete, aviation), but steel is not a good example.
In any case, if we get rid of fossil fuels everywhere where it's easy (electricity, heating, mobility except for flying), then we have a lot larger budget for figuring out how to do the things where it's not easy.
lumost
Many modern steel plants already use electric arc furnaces originally developed for aluminum manufacture in the 30s and 40s.
There is no inherent reason not to collocate steel plants with plentiful renewable energy. As energy is one of the primary input costs to steel manufacture, it should be practical to develop “peaker” plants which take advantage of the midday energy cost dips due to solar.
mistrial9
see Industrial Ecology https://en.wikipedia.org/wiki/Industrial_ecology
HDMI_Cable
I'm guessing initiatives like cap-and-trade programs or carbon offsets for heavy polluters could also be done.
gruez
But won't other investors step in and replace them? If a coal power plant can't raise capital from these guys, they'll get it from someone else instead. Failing that, they could offer slightly higher interest rates which will surely attract amoral investors.
edit: Fossil fuel divestment has ‘zero’ climate impact, says Bill Gates (ft.com) https://news.ycombinator.com/item?id=20998948
klyrs
The same logic applies to contract killing, doesn't it? If you can't find somebody to take the contract, you can just sweeten the pot until you reach somebody's price, right?
If banks decide to become moral investors and quit the game, the carbon fuel industry will be scrambling to replace about $1T/y in funding. Those shadier investors might be out there with higher interest rates, but I doubt they've got nearly as much to spend. So now carbon production is less profitable, and has less capitol to work with. That would be good.
But the cynic in me says that banks will agree to this, but move to an arms-length model.
gruez
>The same logic applies to contract killing, doesn't it?
...which is why it's illegal, rather than relying on individuals doing the right thing.
>If banks decide to become moral investors and quit the game, the carbon fuel industry will be scrambling to replace about $1T/y in funding
This only works if enough banks participate. If banks control 50T of capital, and 90% of banks pull out, but fossil fuels only need 1T of funding, then the fossil fuel industry wouldn't be capital constrained. Given the total size of the global capital market ($118T), I find this hard to achieve.
klyrs
As the biggest players leave, maintaining that level of investment will require the remaining players to concentrate their portfolios into an increasingly unpopular industry. Those investors will price that elevated risk into their offerings, and the result is lower profit margins for the carbon industry. I think this is fully in line with the goals of the movement to divest
LatteLazy
>The same logic applies to contract killing, doesn't it?
I don't think anyone expects the rate of contract killing to hit zero just because they personally don't do it...
thinkcontext
> If a coal power plant can't raise capital from these guys, they'll get it from someone else instead.
For coal in the US this process has now played itself out enough that there is no longer sufficient value to extract. All of the major players have gone through multiple rounds of bankruptcy where they have shed pension, retiree healthcare, environmental cleanup costs, etc. They are at the point where even the lowest bottom feeders will no longer bid for them. Take for example Blackjewel which was already a bottom feeder holding company for a number of consolidated assets, they went to liquidation because there was no value left.
https://www.courier-journal.com/story/news/2021/03/03/blackj...
Of course tax payers will be stuck with the healthcare, pension and cleanup bills, not to mention the underfunded Black Lung Fund and of course all the climate and pollution costs.
adrianN
Anything that makes investments into fossil fuels more expensive (i.e. higher interest rates), makes investment in carbon neutral technology more attractive.
thu2111
"Amoral" or just not convinced by the case made by climatologists for their predictions. Although many try to shut down all discussion of it, there are plenty of rational grounds for suspecting climate change related predictions are incorrect. People who believe that could invest in carbon-emitting industries without any cognitive dissonance or belief that they were being amoral, because they don't believe it's a big deal in the first place. That pushes the decision further downstream to the buyers of the power, and so on. It's a market based solution to making these decisions and weighing the evidence, which incorporates far more people and analysis power than a government department or political party can marshal. So this seems like fair game to me, or at least, preferable to the alternatives.
adrianN
Literally everyone would be more than happy to hear solid evidence that our climate predictions are wrong. The scientist publishing a solid paper with that conclusion would become a hero.
thu2111
It would be nice if that's the case, but do you really think a global community of academics would welcome a paper with open arms that destroyed their entire life's work and careers? Come on. Plenty of papers and analyses have been published showing many wrong predictions and it's had no impact on the field whatsoever.
undefined
Proven
And their point is...?
At some point - sooner rather than later - it becomes more profitable to lend to carbon emitters than deal with those busybodies.
dang-
Please don't use HN comments for posting low-quality jokes, even if (perhaps "especially if") they're considered acceptable/appropriate for other communities.
testfoobar
This is naive thinking about capital markets.
Like water, capital will always find its level.
FpUser
Great. Now we are going to count banks as the politicians. Who else is in line?
gremlinsinc
Well, we could always dismantle capitalism .. write it off as a failed experiment and try a more collectivism approach like non-statist socialism... aka libertarian socialism.
I find it funny though when people who fear socialism and communism so much and who consider themselves libertarians (as in the libertarian party of the USA - not left-libertarian) - start to tear down capitalism and claim they want smaller government, less oversight, less regulation on companies which would allow companies to become even MORE powerful, while at the same time crying foul when these companies push any agenda they don't approve of...as if they should have a say in what capitalists do with their own money/time/etc.
LatteLazy
The issue with one group withdrawing funding is that another group steps in to provide it. And they do so at a better rate for themselves. So the least ethical market participant makes the most profit.
I prefer the opposite strategy some funds have taken: investing and then pressuring boards to behave better.
toast0
If there's more profit for the lender who stays, there's an dollar cost for the industry, which should reduce industry activity as projects are started/continued or not based on dollar cost and expected dollar revenues.
This might not be the best way to increase dollar costs for the industry, but it is a way to do it.
LatteLazy
If capital costs go up 1%, that's a big boon for capital providers, especially in the days of zero interest rates. If capital costs go up one percent, that's a rounding error for the projects themselves...
adrianN
The fewer people willing to lend the more expensive money becomes. This can make some projects unprofitable.
LatteLazy
The Problem is that is a long long way off. If you need to borrow 100m USD for a new coal power station, and the total world debt market is about $24tn, you're only borrowing something like 4x10^-5%. So even if 99.999% of lenders decline your project on ecological grounds, you still have 20 times more funding available than you need.
triceratops
The fewer people there are that make money off fossil fuels, the less opposition there is to legislating fossil fuels. I think this is the right move.
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And then there's the bitcoin miners who bought a natural gas power plant. Speculation drives so many evils for short term gain to a very few beneficiaries, blinded to all future impacts to everyone else. If ever there was an argument for carbon tax, here it is.
https://www.archpaper.com/2021/04/greenidge-power-plant-mine...