The Quiet Road

Peak oil used to be the preoccupation of a small minority, but a parliamentary group has been set up to follow the issue and an increasing number of industrialists have begun to worry about it.

The Guardian | Energy minister will hold summit to calm rising fears over peak oil

Seems to me that peak oil is still the preoccupation of a small minority. Parliamentary groups and warnings from Richard Branson notwithstanding. I’ve been banging on about peak oil for the best part of 15 years, for instance, and while it’s true that more people are now aware of the issue than was the case when I first encountered it, the number who believe it’s serious enough to warrant effective action remains negligible.

I’ve no doubt, for instance, were there a magic wand which could “solve the problem” of peak oil with no economic or social impact, those in power would be queuing to wave it. Unfortunately, so long as any solution requires accepting significant consequences for how we run things, the problem will be ignored. Eventually of course, it won’t be ignored any longer and it’ll be too late to solve… the consequences of peak oil will play out destructively, and those of us in a position to say “I told you so” will find no satisfaction in doing so.

Lord Hunt, the British Minister for Energy is starting to take note of the peak oil problem. See… it’s no longer activists and academics raising concerns, it’s industrialists. This is a far more important constituency to the modern politician, and one that warrants “private and behind-doors talks at the Energy Institute”. When a bunch of fuddy-duddy intellectuals and long-haired activists demand the attention of an elected minister, they are obviously being quite naive. When it’s “executives from Virgin, Arup, Stagecoach, Scottish and Southern Energy, and Solar Century as well as other industrialists” though? Well, then the doors of the Energy Institute get flung open and “Hunt and a range of energy-policy civil servants” attend to the concerns of those they represent.

Bizarrely, the Energy Minister is still — 15 years after it’s been completely discredited — trying to calm fears with references to the BP Statistical Review of Energy.

I know I’ve covered this before, but I’d like to revisit it. Try to clear it up once and for all. That way we can move past the “BP mirage” (for that’s what it is; a mirage) and start dealing with peak oil in a reality-based fashion.

Each year BP collate global energy numbers into the BP Statistical Review of World Energy. On the surface, it’s an impressively comprehensive document that covers energy production, consumption and reserves in all sectors. Unfortunately, on the subject of oil reserves at least (I’ve not spent much time researching the validity of what it has to say about nuclear, coal or any other energy resource), it’s fundamentally flawed. Broken beyond all recognition. Worse than useless. So anyone who uses BP’s numbers on oil — other than as a cautionary example — is making a terrible error.

Someone in Lord Hunt’s position should bloody well be aware of that.

For those who seek evidence of the inaccuracy of BP’s Statistical Review (with regards to oil reserves), I suggest downloading the “Historical Data” stats (1.6MB MS-Excel Workbook). On the ‘contents’ page click “Oil: Proved reserves – barrels (from 1980)” and examine the numbers carefully. It won’t take you long to discover some extremely odd things. But to save you some time, let me point you towards a couple of oddities which highlight the two primary reasons why the data is worthless. It’s not often a data-set is quite so self-evidently worthless.

The first thing to check is the reported reserves for the United Arab Emirates (UAE). Back in 1980, the UAE is listed as possessing 30.4 billion barrels of proven crude oil reserves. This meant they had the sixth largest reserves of oil on the planet. For the next five years this number didn’t change much. It fluctuated around the 32 billion barrel mark and in 1985 stood at 33 billion barrels. All of which, it can be argued, is fair enough. It suggests that the oil industry in the UAE was working hard to ensure that — each year — they were discovering slightly more than they produced.

Then, however, something remarkable happened. According to BP, in 1986 the UAE had proven reserves of 97.2 billion barrels. This is close to a threefold increase in a single year. Vitally, and I cannot stress this enough, the increase was not a result of a monster new field being discovered. Rather, it was a result of OPEC’s decision to change their quota system. In the mid-1980s OPEC decided that member states would have their production quotas set based upon proven reserves. The more oil you had, the more you were allowed to produce and sell.

Which reveals a rather surprising fact about the BP Statistical Energy Review… it is not compiled by BP surveyors and petroleum geologists. It is merely the collation of information submitted by national agencies. So, next year should the UAE claim to have once again trebled their reserves overnight despite little or no new discoveries, BP will calmly tell us that we now have 50 years until supply constraints.

I don’t suggest BP is in the wrong for producing these numbers. They are merely collating the claims being made by national governments (and they don’t hide this fact) However, anyone… Lord Hunt, I’m looking at you… who paints these numbers as something other than political and economic artefacts, most certainly is in the wrong.

Cast an eye over the other OPEC numbers during the mid-1980s and you’ll discover a similar pattern. Iran’s proven reserves jump 50% in one year. Iraq staggers their rise over a handful of years, but still see a 200% rise between 1982 and 1986. Kuwait jumps from 67 billion to 92.7 billion in one year. Saudi Arabia from 169.6 to 255 billion in one year. Venezuela from 28 to 54.5 billion in one year.

All of these increases are unverified, and all occurred roughly around the time OPEC began financially rewarding members based upon proven reserves.

The second oddity I’d like to point out is related to the first, in that it is a result of incentives to maximise reserve claims. It centres around the large number of petroleum exporters who claim unchanged reserves over a period of many years. Either they are asserting that production has no bearing on proven reserves (if I take a quantity of liquid from a full bottle, it remains full) or else they are claiming to have, quite incredibly, discovered annually precisely the same quantity of new oil as they pumped. For decades on end.

The UAE, who leapt from 33 billion to 97.2 billion barrels in 1986, then rose to 98.1 billion barrels in 1987. At which point apparently, new discoveries began to precisely mirror production. In 1988 they again reported 98.1 billion barrels of proven reserves despite pumping and exporting almost 1.6 billion barrels in 1987. The same goes for 1989, 1990, 1991… in fact this continues until 1996 when there’s a reported drop of 0.3 billion to 97.8 billion barrels. Each year since then they have reported no change in reserves. In 2008, the UAE still claimed to be sitting on 97.8 billion barrels of proven reserves.

This pattern is repeated — almost without exception — throughout the Middle East.

In 1987, according to BP, Iraq was sitting on 100 billion barrels. This remained unchanged for 8 years. Then in 1996 it rose to 112 billion. In 1997 it was 112.5 billion where it remained until the year 2000 when it saw a minor increase to 115 billion which is apparently where it has remained ever since. For the 11 years between 1991 and 2002 Kuwait’s reserves remained unchanged at a reported 96.5 billion barrels of oil.

I could go on. And if you think I’m cherry-picking the most damning data, just download the spreadsheet and see for yourself. Also, compare and contrast with non-OPEC countries like Norway who operate more transparent reserve-accounting systems. In those cases you’ll see both reserves and production gradually rise, plateau and fall off. Significantly, in those cases you’ll also note the smaller quantities involved (it’s the people with the vast majority of the oil who are least open about how much they have left).

I don’t know exactly when we’ll see serious oil supply shortfalls, but the consensus of opinion among those who don’t accept the BP data is that it will happen this side of 2020. Potentially a long way this side. Unfortunately, whatever The Guardian might have to say, those people are still very much in a minority. The majority view is expressed by the BP data set… the view that despite the massive incentives to do otherwise, the oil-producing nations are accurately reporting their reserves and that those reserves have not been noticeably reduced by two decades of production.

Top US officials, including Secretary of State Hillary Clinton, have been calling for the military to go after the militants in these regions.

All this comes at a time when Pakistan’s government is already under a great deal of domestic criticism.

This is mainly due to increased missile strikes by the US targeting Taliban and al-Qaeda leaders in the tribal areas.

These have turned a sometimes ambivalent tribal population against the Pakistan military.

Analysts say the tribesmen see the strikes, which have claimed more lives of civilians than of militants, as contiguous with the military operation.

BBC News | Why Pakistan will not mount new attacks on militants

I was imagining a scenario where the roles were reversed back on September 11th 2001. How different everything would be. If an extremist group of fundamentalist Christians had crashed a cargo plane full of explosives into The Great Mosque in Mecca. And now, almost a decade on, unmanned drones adorned with Islam’s Crescent Moon are levelling homes in Texas and Utah. Sometimes, killing sympathisers and extremists. More often, killing regular American families.

Embracing the insanity of their predecessor

Can you imagine how much pressure the world would need to put on the US government to make them turn a blind eye to this bombing campaign? Which is exactly what America expects of the Pakistani authorities.

And would the people of America see these raids as justified? Or would they instead swear bloody vengeance on the perpetrators, and view the complicity of their own government as the most despicable betrayal in American history?

Expecting the government of Pakistan to accept the regular killing of innocent civilians — people whose interests they are supposed to represent — by a foreign military. Even when that killing is done in error…

It’s unreasonable. And it is a demonstration, among many, of the psychotic nature of The War Against Terror and of modern politics in general.

It’s not part of my brief to go, I’m quite satisfied with what I hear and what I see on video with the standards of the factories. It’s the job of the buyers and the ethical trade team to visit the factories.

Breege O’Donoghue, Director of marketing and human resources, Primark

That’s how we do it. How we keep it all going. A clothing retailer. A supermarket. A chain of petrol stations. A million other things. That chain of insulation. Our delegation of consequence and responsibility. The essential disconnect.

Official second draft of the new Tory campaign poster

Make your own poster here (via Chicken Yoghurt).

Official first draft of the new Tory campaign poster

Make your own poster here (via Chicken Yoghurt).

Everyone who knows me is aware that I can be rather evangelical about the work of Gregory Bateson, and in particular about his collected essays, Steps to an Ecology of Mind. There are two reasons for this unabashed proselytizing.

Firstly, from a purely personal standpoint, when I first began to get my head around his work it was an incredibly satisfying experience. While I was certainly learning plenty of new ideas, much of it felt more like I was having long-held suspicions confirmed. A thousand things I’d been thinking about and grappling with — for the best part of 20 years — up until Bateson, they’d been like so many fragments of paper… each hinting at something beyond it, but something still unconscious and inaccessible. Steps to an Ecology of Mind didn’t tell me what it was. It just showed me that I didn’t have a random bunch of paper fragments; I had an unsolved jigsaw.

Gregory Bateson

The picture is almost always a little bigger than you imagine.

The second reason I spend so much time banging on about Bateson’s ideas is because I think they are incredibly important. I believe we are facing an imminent crisis arising from the unsustainable nature of our civilisation. Not only does Bateson offer us an incisive explanation of this crisis, he provides a perspective on it that I believe is invaluable should we wish to deal with it effectively.

Having said that, I often suspect I detect a tone in some of Bateson’s work that suggests he didn’t think we had a hope in hell of dealing with this crisis effectively. Not because we don’t have the necessary tools or wherewithal. But because we don’t have the vision. Our epistemology is savagely flawed.

I think my, shall we say… “Batesonian proselytizing” is an attempt to share that realisation. Or at least suggest to others that it’s there to be shared. Of course, when I thrust a copy of Steps to an Ecology of Mind into someone’s hand, I’m immediately forced to launch into a lengthy explanation of how to read the book. It’s not Finnegans Wake or anything, but nor is it the easiest text to get into. And it’s very easy to get discouraged. I started reading it three times before it finally clicked with me. Though it’s worth pointing out that I never once considered not reading it after that first abortive attempt. You only need to spend an hour or so browsing Steps to an Ecology of Mind to know that there’s something valuable there.

Earlier today, I was listening to a talk Bateson gave in 1971 on the subject of The Sacred. It’s labelled “a lecture on Consciousness and Psychopathology” though his rambling, conversational style definitely puts it under the category “talk” rather than “lecture”. About halfway through, he muses:

There are things, you know, that people do… that just give one the shivers. They will put the potted plants on the radiator… and this is just bad biology. And I guess “bad biology” is, in the end, bad Buddhism… bad Zen… and an assault on The Sacred. And that, really, is what we’re trying to do; defend The Sacred from being put on the radiator in this sort of way.

Gregory Bateson | 1971 lecture on consciousness and psychopathology

This simple metaphor (much of the talk is about the necessity of bridging the gap between the metaphorical and the literal) sums up the challenge facing humanity today. It’s the very heart of Colin Tudge’s argument in the essential So Shall We Reap, for instance. It’s at the heart of the Climate Change debate and almost all environmental activism.

If you’ve got an hour and a half to spare, why not download and listen to the talk. It barely scratches the surface of Bateson’s work, and like his books can be a little opaque in places (in the sense that he’s discussing complex subjects that are by their nature rather difficult to discuss and often inhabit that fuzzy area where language has trouble finding a firm grip). Nonetheless it’s filled with wisdom, warmth, humour and genuine insight. And there’s not much about which that can be said.

Gregory Bateson: 1971 lecture on consciousness and psychopathology (Part 1) | (Part 2)

It’s been over for a few weeks now, and the general consensus seems to be that the Copenhagen Climate Change Summit achieved nothing worthwhile. In fact, the view that the summit actively damaged efforts to combat anthropogenic climate change seems more plausible than the idea that it helped in any way.

In an attempt to save face, a few Western governments have claimed limited success for the summit… the UK wheeled out John Prescott to insist that “some progress” had been made, while the Irish environment minister described it as “underwhelming” (both of which fall a long way short of an accurate assessment). Having spent a year preparing for a ten day summit which failed to achieve a single thing of real value, it was obviously rather impolitic to use phrases like “abject failure”, “sheer incompetence” or “couldn’t organise a piss up in a brewery”.

Environmental writers are split on who was primarily responsible for torpedoing the summit. Some blame China, others blame the USA. It seems rather obvious to me though, that neither the Chinese nor the US governments actually wanted an agreement that would do anything to limit their economic activity. So they were both happy for the summit to fail by being seen to disagree.

See, it’s really quite simple. Any nation or government that genuinely feels combating Climate Change by limiting emissions is more important than economic growth (hint: it is) would simply announce unilateral cuts and wait for the rest of the world to catch up. They go down in history as The Good Guys, and they get a head start on the rest of the planet when it comes to coping with peak oil. That no major industrial nation is doing this (hint: they’re not, carbon trading and PR campaigns notwithstanding) tells us that either (a) our governments don’t consider Climate Change to be as big a threat as a planned reduction in economic activity, which means they are idiots; or (b) they do consider it a bigger threat but don’t think they can sell it to their population, which means they are crap at their job.

Either way, why the hell do we put up with them?

The sheer magnitude of Copenhagen’s failure was brought home to me earlier this week by a headline over at the BBC. Copenhagen climate deal ‘satisfies’ Saudi Arabia, it read. That the world’s largest producer of crude oil is happy with the outcome of the summit pretty much tells you everything you need to know about it. Ultimately our failure to deal with Climate Change — which is what Copenhagen will long represent — is as perfect an example of our inability to live sustainably as can be imagined.

A message was recently sent to an online group of which I’m a member. Dealing with numerous issues, the group has expanded beyond merely “energy resources” and now tends to cover the broader issue of sustainability. Recently one member (Pedro from Madrid) suggested — quite correctly in many ways — that the problem is “technology”. He writes:

… I am very much in line with Einstein, when he said “We can not solve problems by using the same kind of thinking we used when we created them.” And it is clear that something went wrong, specially since we developed machines (technology) and started massive exploitation of cumulated fuel resources from the lithosphere. We should not expect that using technology “wisely” we are going to solve anything. Better use our brain to change the paradigm. That way of living is over, whether we like it or not.

Pedro from Madrid | Post on [energyresources] mailing list

Now, that particular Einstein line is often wheeled out in discussions about sustainability and technology. As someone who has spent quite a bit of time studying Einstein’s work, and has a great deal of respect for him both as a scientist and a philosopher, I’m the first to acknowledge that there’s a great truth within that quotation. However, I think it’s somewhat unlikely that he would have agreed with the conclusions that Pedro has drawn from his words. Certainly he wrote “It has become appallingly obvious that our technology has exceeded our humanity” but he was also realistic about the likelihood of reversing this trend (at least without total collapse).

And such a total collapse (what’s known in sustainability circles as a “die-off”) was obviously unthinkable to Einstein. He wrote:

I recently discussed with an intelligent and well-disposed man the threat of another war, which in my opinion would seriously endanger the existence of mankind […] Thereupon my visitor, very calmly and coolly, said to me: “Why are you so deeply opposed to the disappearance of the human race?”

I am sure that as little as a century ago no one would have so lightly made a statement of this kind. It is the statement of a man who has striven in vain to attain an equilibrium within himself and has more or less lost hope of succeeding. It is the expression of a painful solitude and isolation from which so many people are suffering in these days. What is the cause? Is there a way out?

Albert Einstein | Why Socialism?

Then later in that same essay, he writes

If we ask ourselves how the structure of society and the cultural attitude of man should be changed […] we should constantly be conscious of the fact that there are certain conditions which we are unable to modify. […] technological and demographic developments of the last few centuries have created conditions which are here to stay. In relatively densely settled populations with the goods which are indispensable to their continued existence, an extreme division of labor and a highly-centralized productive apparatus are absolutely necessary. The time—which, looking back, seems so idyllic—is gone forever when individuals or relatively small groups could be completely self-sufficient. It is only a slight exaggeration to say that mankind constitutes even now a planetary community of production and consumption.

Ibid.

Humanity clearly cannot continue along the same road we’ve been on for the past few centuries. We made a wrong turn at industrialisation (arguably even earlier; when we decided to take up agriculture) and desperately need to correct our course. But undoing the past is not an option. We can’t simply backtrack… return to pre-industrial pastoralism. Or return even further to a hunter-gatherer existence. I hardly need to explain why such options are unavailable to us. Perhaps if the planet got six and a half billion people lighter, such a course of action may be thinkable? But even then, it’s likely we’d just start the same process again.

Technology is a genie that won’t go back in the bottle. Are we to abandon electricity? What about the wheel? The plough? Sharp edges and lighting the dark places? Do we get rid of fire-making?

We’re tool-users, so the only option is to use technology more wisely. Perhaps Pedro is correct and this won’t “solve our problems”. Indeed, I’m rather sceptical that it will. But just like Einstein, I don’t see despair as an option. We should be seeking “a way out” of the mess we’ve created, even if the odds are stacked heavily against us.

Let’s consider two hypothetical scenarios. One: some kind of “technological wisdom” allowing us to harness some of our tools and ingenuity and reduce our collective impact on our ecology to sustainable levels. Two: sustainability through a wholesale abandonment of technological progress.

While Scenario One has — in my view — a miniscule chance of success, Scenario Two is simply a non-starter. To pursue the second at the expense of the first (which is the only way to pursue it) is to succumb to despair. To admit defeat.

The major problems we face are not technical per se. Realistically the world has enough engineers to deal with whatever technical challenges we do face. Rather, the problems that need to be urgently addressed involve how we, as a culture, view the world and behave within it. They are essentially problems of group psychodynamics (yes, yes, I know I sound like a broken record, but I wouldn’t have spent the past few years studying the subject if I didn’t think it was important).

The unfortunate reality is that we cannot go back. Certainly if we continue along our present destructive course we may well end up, greatly reduced in number, living in a world that resembles the past in some ways… an end to mass production, feudal political structures, and yes; a dramatic reduction in available technology. But so long as there’s still a handful of humans in this world, some of them will be sharpening sticks and lighting fires.

Abandoning technology is a pipe dream. Instead we need to use it more wisely (and likely, more sparingly). Einstein also wrote that technological progress was “like an axe in the hands of a pathological criminal”. It seems beyond obvious that the long-term solution to such a situation is not to convince the guy to drop the axe for a while. The solution is to successfully treat the pathology.

I’ve been reading a lot lately about something that appears to be getting little or no media coverage… namely the fact that last year saw some of the lowest crop yields in recent history. And that’s on a global scale. US yields in most staples fell dramatically, as did — from what we can tell, given the lack of transparency involved — yields in China.

South America and Europe were slightly down on expectations while Africa and Asia turned out well below predicted numbers. And Australia had a disastrous year. It’s worth noting that this covers both northern and southern hemispheres.

Now, it seems to me that these reductions in harvests across the entire globe may well be connected in some way to Climate Change (both in terms of the weather affecting crops and in terms of one of the half-arsed solutions we’ve pursued; agrofuels). But I don’t want to get into that particular argument right now, so let’s say for the sake of discussion that the low yields are entirely unconnected with global warming. The point is that whatever the cause, it has happened.

We all know that historically speaking, famine is (by and large) a product of inequitable distribution rather than actual shortages. “It’s politics rather than reality”, as a friend of mine used to say. And it’s probably true to suggest that the world would not face famine this year if every resident of the wealthy nations ate only what they genuinely needed, wasted little and allowed the surplus to be consumed by the world’s poor.

But that’s not very likely. Because the nature of food shortages, indeed the nature of food (the annual — occasionally bi-annual — production cycle coupled with the disparity between the length of time required to produce food; months; and the length of time we can go without the stuff before severe problems manifest; days) means that we tend not to become aware of the problem until it’s too late to deal with it. It’s little consolation to a hungry person in June that there may be enough wheat to make bread in September.

The indications from the articles I’ve been reading are that there will be widespread food shortages in 2010. I’ve been following this story as it developed (a long way below the mainstream media radar) throughout the last few months, and an excellent summation of the situation has recently been published here: 2010 Food Crisis for Dummies. I recommend you read it.

Yesterday over in London the New Labour government delivered a “pre-budget report”. This is essentially a way to test the reaction of the electorate to the contents of the budget without going through the hassle of leaking stuff through journalists. And despite the fact that opposition parties are wailing and gnashing their teeth based on claims that they’d make a 5% adjustment here and 4.2% adjustment there, there was ultimately little of note in Chancellor Darling’s speech. Aside from the one-off 50% windfall tax on bank bonuses, there will be little in the next UK budget that can be considered radical in any way (and, being a “one off”, that 50% tax isn’t even all that radical and will probably be avoided by many by deferring their bonus until next year… given that plenty of the recipients can afford to do so).

On the other hand, there was some genuinely tough decisions made here in Ireland yesterday as our own Finance Minister (Brian Lenihan) delivered our third unpopular budget of the year, building upon the tax rises and spending cuts already seen in 2009.

Predictably, the budget has met with a polarised response. Those on the left have roundly condemned it, while those on the right have lauded it (including the British conservatives, whose support always makes me suspicious of a thing). Equally predictably, such blanket condemnation / praise simplifies the issues involved to the point of meaninglessness. The economic mess that Ireland finds itself in right now is serious and it’s complex, and while I’m certainly not going to cut the government any slack — they’ve spent the past decade steering us up this creek after all — there is merit to some of Lenihan’s strategy.

The first thing to point out is that Ireland is a small nation. Our population is roughly the same as Greater Manchester, so our tax base is limited. The second thing to point out is that we are in serious debt. This is a direct result of the policies of the current government who oversaw the greatest period of prosperity in the history of the nation but failed to use it as an opportunity to safeguard the future. When George Osborne, the British Shadow Chancellor, hailed Ireland in 2006 as “as a shining example of the art of the possible in economic policy-making”, it was this short-sighted short-termism he was celebrating. Given that the British appear ready to hand the purse-strings to Osborne early next year, it seems they are unwilling or unable to learn from the mistakes of others. And the third vital point to make is that we are not in charge of our currency.

These three points — small tax base, large debt, no currency control — significantly limit the options for the Irish government in comparison with a nation like Britain. This is why we have little choice but to impose a series of painful budgets on the country. Having spent beyond our means for the past 10 years, it’s time to balance the books.

Incidentally, while membership of the Euro limits our options in certain ways, those who view this as an argument against the single currency are willfully ignoring the fact that our membership of the Euro probably protected the nation from bankruptcy and the banking sector from collapse last year. But that’s a discussion for another day.

Unemployment payments

Back with the budget, yesterday’s 4.1% cut in unemployment benefit effectively reduces the payments to the level they were about a year ago. Taken in tandem with the significant deflation Ireland is experiencing, our unemployed are still paid more than almost any other nation in the world. I’m not suggesting it’s a life of luxury being on the dole in Ireland — and those who claim it is are talking politicised nonsense — but it is a life above the breadline. Which is ultimately what our social welfare system is designed to provide. And I say that as a socialist.

That our nation of four million people, in significant debt, can nonetheless keep almost all of the 12.5% of us who are unemployed fed, housed and warm while still treating their illnesses and educating their children is to be applauded, not lambasted. Cutbacks will have to be made in already tight household budgets, certainly. But that’s what happens when the entire nation goes on a decade-long credit-fueled spending spree. An unemployed single parent in Ballymun may not have been responsible for that spending spree, but nor are they responsible for the creation of the welfare system. And the uncomfortable fact is that the large rises in dole and child benefit payments during the past few years represent a not-insignificant part of that spending spree.

Life is still better for the average unemployed Irish person than for the average unemployed American, Briton, Serb, Russian, Pole, Italian, Spaniard, Rwandan, Mexican or Greek. Yes, unemployed Scandanavians, Canadians and French probably have slightly higher standards of living — but we’re near the top of that particular table and should acknowledge that. Personally I figured that a 7-10% cut in welfare payments would have been possible without anyone going hungry or cold. That it’s been limited to 4.1% is as much political as it is economic (given the size of the unemployed voting bloc these days) and has meant cuts elsewhere that are — arguably — larger than is fair.

Public service pay cuts

And when I talk about unfair cuts, specifically, I’m talking about this. The public sector pay cuts represent the single largest spending cut in the budget and is being imposed upon workers who have already taken large pay cuts this year. It’s being met with satisfaction by the private sector and business leaders who seem to view it as somehow unjust that public sector workers have a modicum of job security. In reality, almost everyone in the public sector traded the opportunity to become wealthy for that job security. Business leaders can start complaining about public sector job security when they accept a government mandated pay cap. Until then, let me just point them towards Article 45 of our Constitution which makes it pretty clear that we’re a socialist nation at heart. I particularly like…

The State shall, in particular, direct its policy towards securing:
… ii. That the ownership and control of the material resources of the community may be so distributed amongst private individuals and the various classes as best to subserve the common good.

Excerpt from Article 45 of The Consitution of Ireland

And if you don’t like it, then I suggest moving to a country where wealth distribution isn’t enshrined in the constitution.

Part of this wealth distribution is our welfare system, our free health (means-tested, admittedly) and education. And part of it is the maintenance of a relatively large public sector in which jobs are secure.

And I’m not suggesting that public service workers should be immune from pay cuts. The money has to be found somewhere after all. But I don’t think it’s right that they should be bearing so much of the burden. Cut the welfare budget by another 4% and raise income tax by another 3%. Put up corporate tax by 2.5% (still giving us an extremely low rate). Whatever’s raised by those means should then be used to reduce the cuts experience by the public sector — who have already been hit hard this year.

The carbon tax

Predictably, I’m all for this one. The Greens may claim it as a victory, but I believe it’s more about Fianna Fáil looking for at least one new revenue stream that they can blame on somebody else. Doesn’t matter though; taxing fossil fuels is necessary and while this tax probably isn’t enough to produce significant reductions in their use, it’s a positive first step.

Transportation fuel prices have already been increased as a result, though home heating fuel is exempt until next spring (which is fair enough, as many low-income households will already have budgeted for their winter fuel, and any hike in home heating in the middle of December would run the risk of some going cold).

I think the car scrappage scheme (getting paid by the government to trade in your old car and buy a new one) is ultimately counter-productive. As an economic stimulus package I think it’s of dubious merit (we have no indigenous car manufacturing) and as a strategy to reduce emissions I think it’s extremely limited. The difference in emissions between an old car and a new one, after factoring in the carbon emitted by the car’s production and importation is unlikely to be worth the money being spent on the scheme. Far better to take that cash and invest it in renewable energy.

What I’d like to see, however, is a scrappage scheme that genuinely reduced carbon emissions. Citizen S proposed such a policy, and I think it would probably work. Essentially the government pays people to scrap their cars, but only if they agree not to buy another one for a given period of time. They’d voluntarily have their driving-licence suspended for (let’s say) two years; though they could return the scrappage fee should their circumstances change and they need to drive again.

The scrapped cars could be melted down and recycled as wind turbines.

Booze and fags and stuff

Strangely enough, the budget included a reduction in the rate of alcohol tax. The rationale behind this was to combat cross-border shopping. Large numbers of Irish people drive up north to buy cheaper booze (just as the British cross the channel for it). While there, they tend to spend money on other stuff as well and Lenihan sees this cross-border shopping as a significant drain on the treasury. I don’t know exactly how big a drain it is, but if — as he suggests — a reduction in alcohol tax will actually increase revenue by reducing cross-border traffic then it may make sense.

Domestic violence and addiction groups have complained that the reduction will have the effect of increasing alcohol consumption, and while that may be true, I suggest it’s probably quite marginal (much of the savings to be made on a pint or a short are being negated by pay cuts and tax increases).

Interestingly, the government decided not to increase the cost of tobacco products, claiming that doing so would be counter-productive as cigarette smuggling is already extremely prevalent and any further price increases would actually lower tax revenues from that source as yet more people sought out an illegal supply. I can’t comment on this as I don’t know how true that may be, but if it’s a fact that increasing cigarette tax would result in a decrease in revenue without substantially affecting the number of people smoking, then such an increase would indeed be silly. I don’t smoke tobacco any more so it’s all rather moot from my perspective.

But tobacco isn’t the only thing that can be smoked. One wonders how bad things would have to be before the Minister for Justice reforms drug policy and Lenihan announces a cannabis tax. Certainly such a move, if done sensitively and carefully, could be a boost to the treasury without creating any serious social problems. But I suspect the government doesn’t possess the sense, the bravery or the imagination to consider this idea.

In conclusion

Overall, I don’t think this budget was the disaster it’s being painted as by the Irish left. The public sector is being asked to bear an unfair proportion of the burden, and frankly that’s problematic. That said, this budget is unlikely to be the last round of belt-tightening that Ireland will face over the next year or so. Assuming the public sector has felt the worst of the cuts aimed at them (and I believe they probably have) then we’ll almost certainly see some kind of balance restored during the next budget. Welfare payments will come down by a smiliar amount to yesterday’s announcement, and taxes for corporations and high earners will surely rise by a few percentage points. The cannabis tax will doubtlessly remain a dream, though the carbon tax will surely rise slightly. We’ll also see a return to tobacco and alcohol increases (despite the rationale used this time round) given that we’re likely to still be in a deflationary situation by then and prices will have come down across the board.

Ultimately, Ireland needs to get back on its feet as soon as possible as I firmly believe we need to be investing heavily in renewable energy over the next ten years or so. And we can’t do that without first balancing the books. This budget, though imperfect and creating justifiable anger in the public sector, goes some way towards achieving that balance.