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Public policy! Front and center!

For citizens to ecologize, governments need not favor efficiency - just stop favoring waste. The state grants subsidies and tax breaks to businesses who convert creation into production. Going beyond the call of duty, the state excuses their routine pollution. Without even trying to favor consumption over conservation; the state's taxes do. To top it off, society's custom of privatizing natural rent keeps producers and consumers grounded in old, slothful ways. By rewarding waste, we penalize efficiency. On this tilted playing field, one with the lumps of subsidies and the tilts of taxes, technologies lean and clean have a hard time competing.

Here's how subsidies, license, taxes, and rent-retention impact extraction, agriculture, transportation, and energy.

1, Subsidies.

    * Government logging roads and way under-market leases favor miners and loggers, not selective harvesters and recyclers.
    * Price supports and limited liability prop up mechani-chemical agri-business, not organic gardening.
    * Freeways, overly wide streets, and free chastisement of overseas suppliers that everyone pays for, not just drivers, pave the way for car dependency, not an integrated use bikes and buses.
    * Cost-plus contracts and the use of tax-free bonds, forcing other taxpayers to make up the difference, benefit power utilities, not solar converters.

Sometimes government subsidizes the alternatives a bit, yet it's hard to know which ones to fund. A solar steam generator may be the most promising idea one day while photovoltaics are the next. A handout shields new industry from the forces that compel efficient growth.

2, License (the state fails to charge for "externalities").

    * The price of raw materials does not include the loss of habitat, other species, sources of new medicines, etc.
    * The price of processed food does not include losses of soil fertility, bio-diversity, collapsed aquifers, poisoned ponds, etc.
    * The price of gasoline does not include the losses from smog - damage to crops, lungs, buildings, etc.
    * The price of AC electricity does not include losses from acid rain, nuclear radiation, inundated valleys, strip-mined meadows, etc.
When the state fails to uphold one's right to a healthy environment, companies that don't impose on nature are not benefited at all but lose a competitive advantage.

3, Taxes.

    * The tax on sales complicates starting up a business, such as a store to sell ap-tech so every home can be an eco-home. One must do extra bookkeeping or hire an accountant. Being sneakily regressive, the tax nibbles away at would-be customers' discretionary income.
    * The tax on income makes labor more expensive, especially at the margin, where youths entering the workforce seek jobs in recycling, reforestation, organic agriculture, and deconstruction (what better outlet for male adolescent energy). Having to pay wages plus taxes on income and for social security, bosses employ fewer workers.
    * The tax on income makes capital less remunerative, so a blue chip stock, not quite so visionary, becomes more attractive than a risky new start-up trying to make money doing good. A hybrid electric car or a fuel-cell light enough to power buses and trucks begs for funds while a GM doesn't.
    * The tax on property makes improvements to buildings more expensive year after year. For example, when homeowners add solar panels, they increase the value of their structure, so the municipality taxes them more, discouraging some owners from making ecological improvements.

While states exempt some ap-tech, exemptions shift tax burden elsewhere, where new firms pay it indirectly.

4, Rent retention (privatizing publicly-generated land values).

    * Getting to keep rent makes extracting virgin materials extra remunerative; recycling used materials, wherein rent does not even exist, has no such gratis profit.
    * Farm owners, by retaining rent, use land as collateral to qualify for loans to buy big-ticket combines and irrigators. Retained rent also raises the price of land, precluding poorer farmers who might try the less expensive organic methods.
    * Not having to pay the rent to their community, owners awaiting a higher future return under-use prime sites, forcing development outward. Sprawl requires cars, displacing buses, bikes, and people.
    * By taxing, rather than living off rent, governments can afford to lose land to a dam or its value to a nuclear power plant. Clean energy, on the other hand, would not depress land values, the proper source of public funds.

Together, subsidies, license, taxes, and privatized rent make the wrong way cheaper than the right. Businesses that waste - mechani-chemical agri-business, virgin extraction, fossil fuels, and car manufacture - benefit. Businesses that don't waste - organic gardening, recycling, solar power, and mass transit - don't benefit. High-input businesses can undercut low-input businesses. Efficiency looks expensive while waste looks like a bargain. Lower prices win over most customers and investors. As long as the economy is rigged against the eco-system, guess which one is going to continue to go downhill?


Jeffery J. SMITH, president of the Geonomy Society, publishes The Geonomist and organizes events in and tours to places considering reform of taxes and subsidies.; 5209 SE 28th Avenue, Portland, Oregon 97202-4506 USA; 503/235-6679


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