Money Must Accurarely Measure Values
By Lionel Anet
25 May, 2011
Countercurrents.org
The information money is giving us when we exchange it, is presently grossly inaccurate; instead of giving us a factual account of the effect, to the planet, of economic activities, it magnifies our illusions. It may not be possible to be sustainable unless money accurately measures the cost of our lifestyle.
Global warming is very likely responsible for the intensity of the floods we have witnessed in Australia and around the world, in addition we had the droughts, heat waves coupled with fires and the unusual heavy snowfalls. They all point to global warming, which is as the climate scientist predicted about three decades ago. This, we have with less than 1degree hotter than pre-industrial times. What will happen when we go above 2 degrees? What can we do and can the market help us?
There’s some major problem with money, one is the way it comes into being, which accounts for the instability and unfairness, and two, what money doesn’t account for, and therefore money gives a faulty account of the cost of goods and services. The role that money takes is of great importance because money is the metric we use to measures the cost of goods and services in the market place. The misleading information plays a major part in global warming, depleting resources, the destruction of the ecosystem, and unemployment. Money can play a foremost part in changing course from a destructive, violent, and unsustainable one to a positive, sustainable, and peaceful one.
Money is only a metric and therefore has no limits; it enables people to carry out complex relationships with those they don’t know. That is, it’s not essential to do business with people you know and trust. To put it in another way, the less personal trust there is the more important money becomes. Therefore, the more trust there is in communities and between communities the less important money turns out to be and the better social life can be. This is an import question of social quality in our interactions with one another. Money is at present used almost exclusively to evaluate most situations, but how well does it do that and does it give communities a true idea of how or where we must place our efforts? For individuals it’s even more difficult to be responsible consumers as the price charged has little to do with the cost that present and future communities have to pay.
What we can do?
The problem is that money doesn’t represent a stable form of security and sustainability for individuals. To do that, world communities must put a price on all resources, in particular the non-renewable ones and those that pollute and endanger life. Money must reflect the true cost of our economic activities of today, as it will affect our future. We can start to achieve a sustainable life by reallocating taxes in the following way. Those are my thoughts on how to avoid the looming tragedy and start on that change.
For money to be of value as a measure, it must accurately measure values.
We must connect the economy to people’s needs, the ecosystem, and the planet instead of connecting it to its economic theories. As money is, the market’s measuring unit it’s vital that it measures as consistently and accurately as possible all aspect of the economy, how much it’s depleting non-renewable resources and destroying the ecosystem. The depletion of our natural assets must be accounted in the cost of all activities, as well as the pollution, climate change and degrading environment not to mention the multitude that suffers from the power of big money. Of course, money is limited and can’t measure the importance of relationships, quality of life, or our safety; nevertheless, it must give as an accurate measure of the total and continuing cost of a particular way of life for the sake of all people including future generations.
The cost of faulty accounting will be born by our children
Today’s unaccounted cost is the destruction of the environment and the loss of most of the ecosystem and of the easily procured minerals, the most important, vital, and destructive being coal and oil. That cost, will be borne by the young and the ones not born yet, as they will be suffering with a possible obliteration from middle of this century. The depletion of resources and the cost of the pollution from the use of those resources aren’t included in the price charged for products and services sold to customers, as we mainly include only the cost of extracting, transporting, and their financial expenses. It’s likely that the supply of oil will now gradually diminish with an increasing demand for it, this will be devastating for world food, as food production, and distribution is link to oil.
Countries use GDP to evaluate how well their economy is doing. We know that the information, which is the volume of money exchanged within a country, economist entered in the GDP as positive, even if they are negative. That’s repairs of breakdown, and natural disasters are negative. As well, money is the unit of measures used for the GDP. This is a double whammy of errors.
The affluent life style achieved in the industrialised world in the last 60 years, we attained by drawing on the planet assets, an asset that doesn’t belong to any one, but we use them as if they belong exclusively to our generation. We have decided in the main those who have “bagged” them first and payed a royalty on it own them. Fossil fuels are the planet’s most important mineral we use to power the economy, we have burned most of the easily accessible one, and the valuable chemical components of that fossil are lost forever and are now polluting and warming the planet. We can’t reconstitute burned fuels; hence, they end up in the atmosphere and oceans where they can stay for centuries changing the climate and the pH of the ocean. Regardless of some of our affluent first world life style, we all suffer from the damage done to the biosphere, the release of harmful chemicals, and the loss of earth’s valuable resources, this is regardless if we have had any benefit from there use. We only accounted for the benefit, but if as well, we factored in the loss of those assets and the pollution their use has produced we would be able to plan a different future. It should give hope for our children instead of hardship and despair. Because of where the tax are collected, money gives an illusion of continuing progress but the reality is a looming disaster, which we can avert by reallocating taxes from labour to asset draining and polluting activities.
It’s futile of society to charge and tax employers for employing workers and tax employee for the money earned, when those businesses and workers are what sustain us all. This is trying to pull oneself up by ones bootstraps. Impossible without external energy, we got away with it by using fossil fuels, which has reached its peak and can’t keep us up much longer. The imposition of society’s expenses on the earnings of labour also inflicts a burden on the economy. That’s why the only way the economy can function without “excessive” unemployment is by perpetually growing, tragically, at present less than 5% unemployment brings on inflation in Australia. The Goods and Services Tax (GST) adds to that problem and furthermore that tax is grossly unfair as it inflicts a heavier burden on the poor, the unemployed, retiree, and parents of young children.
We need to charge rent for using land, water, and infrastructures but not for using labour. Taxes should be on profits of company’s investment, which are an un-worked income, as well, we need an increasing tax that will gradually end business that depletes resources and pollutes the environment. Businesses and governments can adjust to a gradual new cost structure, by using less energy and new materials. On the other hand, they will be able to use the cheaper labour to provide better service that would be a benefit to every one; also, it will improve small businesses viability. Communities will benefit by having local business and by been local it can save on the waste of transport. It’s not only the wasted fuel, carbon emissions, pollution especially from accidents that transport produces; it’s also the spread of pathogens and alien species.
How communities must be finance to be fair and to prosper?
Communities must finance themselves on those non-labour earned taxes: as stated previously tax on investments, the use of land, infrastructures, and minerals. This should provide education, health care, and local transport all free of charge to consumers. All those services involve a large component of labour but because of elimination of taxes and charges, the cost of employing the labour could be about half of what its today in Australia. There should be no need for communities to borrow money with interest paid to banks as the practical cost of creating money is nil; therefore, if a community need some infrastructure and the resources are available the money need not be a cost to the community. The only cost is the amount of work, the depletion of natural resources, and the effect on the environment. The other consideration is a matter of priority- judgment we all have to make.
Unless money gives a fairly accurate cost of producing goods and services, governments would have to interfere with the market in what would seemed to be prejudicial for some people, which would be a futile attempt to achieve the same result. As this would involve much bickering and fear of unfair outcomes like we experiencing with any of the trading schemes that results in an inability to agree and reduce our consumption.
A carbon tax may only marginally increase the price of oil in the situation we have today, when demand is outstripping supply. Oil prices will keep on going up regardless of a carbon tax, the difference is with a carbon tax the community can get a large part of the benefit from the extra price instead of corporations. A carbon tax in line with production and demand of oil so that the profit for the oil corporations stay proportional to the rest of business companies wouldn’t greatly affect the price of oil, as it would have gone up. It will mean the unconventional oil, which requires the most energy to extract and process will be uneconomical and abandon. As a carbon tax goes up, so our money will better express the real cost of our lifestyle and consumers will accommodate to the new situation without government regulations. This shift of a tax from labour to mainly carbon will give consumers, when buying products information that is more accurate. What’s more, the markets will decide. Even more important is we will leave the very dirty hydrocarbon in the ground instead of polluting and endangering future generations for very little if any benefit to society. That should be the starting price of a carbon tax but business must realise that it will increased to be prohibitively expensive to use as a fuel.
The way to deal with high-price of energy.
A carbon tax will increase the price of electricity particularly in Australia since we generate electricity mainly from coal-fired power station. To avoid the worst affect of that tax during the transition from the polluting high carbon emission to a clean no carbon electricity supply, we will need to change the method of payment. The price structure at present favours the big users, by reducing the price per unit, according to more stuff or service we buy. It’s a marvellous way of increasing sale but we already have taken and dumped too much. We must reverse that method of charging or we won’t survive. We should aspire to see that essential services should be free such as electricity, gas, and water up to a socially or survival quantity per person. Then as more is used, the starting price would be low, and increase per unit as usage increases. A higher petrol price can finance a free registration of vehicles and third party insurance of people and property. This would greatly reduce hardship where hardship would occur. It would also encourage careful use of resources and with money as a fair value of the cost of all we buy, life will be better but more important for future generations is, we’ll leave the planet fit to live.
Lionel Anet is a writer from Australia. [email protected]
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