$5.3 Trillion On Government Fossil Fuel Subsidies? What Total And Utter Bilge!


If I play my Led Zeppelin Houses of the Holy too loud and the government hasn’t  charged me for the $1000 worth of lost sleep my neighbours claim it has cost them, does that mean the government has given me a $1000 “subsidy”? (H/T @sambowman)

You’d think the very notion absurd. And so would I. But not the Guardian, which has made this novel definition whereby an unacknowledged “negative externality” qualifies as a “subsidy” the subject of a massive front page splash. Nor the alleged economist Lord Stern who was given space to argue much the same thing on BBC Radio 4’s Today programme. Nor a formerly respectable institution called the International Monetary Fund (IMF), which has decided to throw its credibility to the wind with a bizarro headline announcement this week that the world’s fossil fuel industry is benefiting from global subsidies to the tune of $5.3 trillion.

$5.3 trillion. Imagine! That’s $5,300,000,000,000, which is more money than the human mind can possibly conceive. It’s also, I would suspect, a lot, lot, lot more than any of the world’s governments could afford to hand out in subsidies to an industry perfectly capable of looking after itself.

How then did the IMF reach that extraordinary figure?

Well, it would appear that it resorted to a tried and tested technique which has proved enduringly popular with the environmental movement. It’s called “plucking your figures from thin air”.

Here’s the giveaway passage from the Guardian‘s article:

The vast subsidy derives largely from polluters not paying the costs imposed on governments by the burning of coal, oil and gas. These include the harm caused to local populations by air pollution, and to people across the globe affected by the floods, droughts and storms being driven by climate change.

In other words,  the IMF doesn’t mean “subsidies” in the sense that most of us would understand: that is, handouts from the state to favoured institutions. It means “subsidies” in the sense of “vast, almost limitless taxes which the governments should have imposed but haven’t”.

The first, traditional definition is measurable: either the government is handing out the money or it isn’t. But the second one is almost entirely arbitrary and subjective and prone to exaggeration: hence that implausibly vast figure of $5.3 trillion.

Its purpose is political not economic. That is, in the run-up to the next IPCC conference in Paris this December, the Green Establishment needed a suitably large and terrifying figure with which to impress the world and its friends at the IMF very kindly provided it.

Expect to hear this random $5.3 trillion figure take on the status of immutable and established truth over the next weeks and months, in much the same way that equally dodgy factoid – the 97 per cent “consensus” – did. This is the problem: while the flaw with that $5.3 trillion “subsidy” claim is glaringly obvious to anyone with half a brain, that is not going to be how readers of the Guardian or viewers of and listeners to the BBC are going to respond.

The Guardian article has had more than 65,000 shares: that’s 65,000 people who are going to be relaying this figure authoritatively and confidently to their friends, secure in the knowledge that it can’t possibly be wrong because why would a responsible newspaper put a lie on its front page and why would an economic institution as world renowned as the IMF have produced such a figure if it weren’t accurate?

Same with the BBC. If you’re a regular at a site like this one – or Watts Up With That? or Bishop Hill or the GWPF or Climate Depot – you’ll be sufficiently well-briefed to know, for example, that Lord Stern was the author of a report which has been widely discredited by economists including IPCC author Richard Tol, that he’s very comfortably installed on the green gravy train (courtesy of an eco-obsessed hedgefund manager) and that his views on anything to do with climate change or the economics thereof are about as valid and useful as Ed Miliband’s on the future of the Labour party or Joey Essex’s on quantum physics.

But if you’re not – which, regrettably, means the bulk of the population – then when you’re listening to Today and you hear John Humphrys introduce an ennobled economist who used to work for the World Bank you quite naturally assume that what this fellow Lord Stern is saying must be true.

It’s a phenomenon known – and brilliantly analysed by Gustav Le Bon in his book The Crowd: A Study of the Popular Mind – as “prestige.” That is, the ignorant populace is naturally predisposed towards believing the views of perceived authority figures or institutions, be they the head of the Grantham Institute, or the International Monetary Fund or the Pope or even – heaven forfend – the BBC’s Environment Editor Roger Harrabin.

This is why, in the run up to Paris, we can expect to see many more authority figures being invoked in this way. They lost the scientific and argument long ago. All they have left to rely on know is public credulousness.

But public credulousness is never a good thing for any bad cause to rely on. Crowds have a nasty habit of changing their mind quite suddenly; and when they do, heads roll…



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