Here is an Easy Fix

TheTimes reports a rather mindblowing story this morning on the death of local food.

Cod caught off Norway is shipped to China to be turned into filets, then shipped back to Norway for sale. Argentine lemons fill supermarket shelves on the Citrus Coast of Spain, as local lemons rot on the ground.

One of the problems stems from a law passed in 1944, in the middle of a war.

Under a little-known international treaty called the Convention on International Civil Aviation, signed in Chicago in 1944 to help the fledgling airline industry, fuel for international travel and transport of goods, including food, is exempt from taxes, unlike trucks, cars and buses. There is also no tax on fuel used by ocean freighters.

Until we start taxing aviation and shipping fuel, this ridiculous market distortion will continue. Because we do not factor the externalities of shipping food all over the world, the local farmer gets screwed and the carbon footprint of all our food increases. 

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0 Responses to Here is an Easy Fix

  1. Morgan Warstler says:

    Agreed. But man is it going to be painful to watch. And that raises a crucial point: getting over the market aberration caused by historical government regulation of the market, is not a good case for more government regulation. We don’t need new government programs to solve for the new costs of food. We have to let the market bring us back to equilibrium.

  2. Mark Maglio says:

    I suppose my main concern is the economic consequences of just the US deciding on it’s own to tax shipping fuel… I’m no economist so I’m not sure what form that would take.

    Would we simply add a tariff to goods shipped with untaxed fuel? Works for me, as long as we take into account the fact that the tariff is going to end up as a regressive sales tax on consumer goods (most of which have some portion produced abroad.)

    Anyway I slice it, this doesn’t seem like quite as easy a fix as you make it out to be, Jon. It seems inherently awful and bizarre that so much food travels so much, but it’s driven by consumers wanting cheap food (which of course isn’t very cheap at all.)

  3. Quiz says:

    I can’t believe the fish epidemic that is hitting the market the past few years. It makes me wonder if people have been selling falsified fish for years and now its just getting light shed upon it.

  4. Jason Dragon says:

    Well this reminds me of a really bad stat I heard the other day. 60% of all containers that leave the United States leave empty. While at the same time people are starving all over the world, and at the same time our government is paying farmers not to grow grain on 20% of the farmland in the US to protect prices. It is so stupid.

    Jason Dragon

  5. Pete Wolf says:

    This is a really major problem and I’m very glad you picked up on it Jon. As I’ve said before, I think there’s good reason to endorse some form of localism with regard to these issues, and instigating tax on airline and shipping fuel is a good start toward that (though it shouldn’t be where we stop either).

    Another example of the kind of silly situations this gets us into is the way many countries both export and import the same goods between each other, sometimes in pretty much equal amounts, making for a lot of wasted effort (not to mention oil use and carbon emissions). To take some clips from the UK’s New Economics Foundation report on sustainability in the UK:-

    “In 2004, the UK exported 1,500 tonnes of fresh potatoes to Germany, and imported 1,500 tonnes of the same product from the same country.

    Imported 465 tonnes of gingerbread, but exported 460 tonnes of the same produce.

    Sent 10,200 tonnes of milk and cream to France, yet imported 9,900 tonnes of the dairy goods from France.”

    This is not ‘the market’ producing the most efficient distribution of goods.


    Morgan – As an aside, isn’t this existing kind of intervention (a tax break to encourage international trade) very much like your proposed green tax breaks? I’m not for the fuel tax break, and I’m not against your green tax breaks, but it seems that what you count as excessive government intervention in the marketplace is a bit variable at times. This would be okay if your arguments were targeted at specific government measures on a case by case basis, but they tend to fall back on a claim about ‘government regulation’ in general, as evidenced above.

    I suppose the question is, what makes one tax break good another bad, OTHER than their SPECIFIC effects on the market. What makes a government regulation good or bad in principle? Or must they all be debated on the basis of their specific merit?

    We can all accept the truism that government should do no more than it NEEDS to (as a limitation on this, it must also do no more than it CAN), but this doesn’t answer the question of what it is it needs to do (or what it can do for that matter). This second question is what we inevitably must argue over.

    I suspect what you’d like to claim is that the government isn’t CAPABLE of regulating the market to produce a positive effect, and therefore the question of whether it SHOULD do it is moot. If this is the general principle however, I want to know what this rules out in principle, and what it doesn’t.

    You can’t argue from a claim about a failure of policy that you accept can only be assessed on its SPECIFIC merits (the fuel tax break) to a claim about the GENERAL inadequacy of all such policies.

  6. Morgan Warstler says:

    Pete, I’m a peak oiler. That said, if I could wave my magic wand and this democracy-economy we have for a single flat sales tax/balanced budget amendment I would. Even if that means forgoing the good intention policy (can’t promise the results) of letting people write off failed investments.

    Since we can’t wave a magic wand, and I think we have a oil crisis coming worth fighting a war over, so both ending ag-subsidies (watching people starve) and doing tax policy (watching folks get rich) strikes me as inevitable.

    So yes, I do believe the government isn’t capable of regulating the market, so both “should” and “ought” is moot. But it’s going to happen, and I’m not tilting at windmills.

  7. Jon Taplin says:

    Mark Maglio- The way to do this would be to revoke the 1944 convention world wide.

    Pete Wolf- As far as I can see taxes should be use to factor in the cost of externalities that are left out in the burning of carbon based fuels. Pollution, Health Care, reliance on Petro-states, etc.

  8. Morgan Warstler says:

    This is how painful it will be to watch:

    “The result is that big government accomplished at a stroke what the free market could never have done: They turned the food supply into a subsidiary of the energy industry. When you divert 28 percent of U.S. grain into fuel production, and when you artificially make its value as fuel higher than its value as food, why be surprised that you’ve suddenly got less to eat? Or, to be more precise, it’s not “you” who’s got less to eat but those starving peasants in distant lands you claim to care so much about.

    Heigh-ho. In the greater scheme of things, a few dead natives keeled over with distended bellies is a small price to pay for saving the planet, right? Except that turning food into fuel does nothing for the planet in the first place. That tree the U.S. Marines are raising on Iwo Jima was most-likely cut down to make way for an ethanol-producing corn field: Researchers at Princeton calculate that, to date, the “carbon debt” created by the bio-fuels arboricide will take 167 years to reverse.

    The bio-fuels debacle is global warm-mongering in a nutshell: The first victims of poseur environmentalism will always be developing countries. In order for you to put bio-fuel in your Prius and feel good about yourself for no reason, real actual people in faraway places have to starve to death.”


    Jon, do you believe in global warming enough to watch this starvation happen? Are you that sure about the science? No inanity about solving for the starvation, can you hold onto your global warming beliefs while knowing people are dying because of it?

    This is a real question, I’m not trying to moralize or tsk-tsk. I smell something bad around the corner, where the things get really ugly, and I don’t want you acting like it happened for some weird reason.

    For me this about our way of life, about buying the time to figure out how to survive without oil -when it runs out. So I support the war to achieve maximum oil production. Food prices have always been low because oil was cheap, so it is going to be ugly.

    But you don’t worry about oil being weaponized by states that hate us. You think we’re at maximum production now. So LOGICALLY, your support for bio-fuels, taxing shipping fuel means your support for this coming ugly starvation is based on:

    1. belief in global warming.
    2. not wanting to have a war.

  9. Jon Taplin says:

    Morgan- You know I think corn ethanol is a wank. It’s just one more Big Ag subsidy program.
    We should be pouring that subsidy money into wind, solar, better batteries for Hybrids so they get 100 MPG.

  10. Pete Wolf says:

    A short point, but just to repeat a point made elsewhere. Belief in global warming does not equate to support for biofuels. The problem and whatever solutions are proposed are entirely distinct.

  11. Morgan Warstler says:

    So, tax shipping fuel, don’t promote ethanol. I knew you didn’t like FFV too. My apologies.

    Pete, I don’t think they equate. I’m against ethanol / ag subsidies, but I want FFV as an alternative for market driven consumption. And I don’t buy global warming.

  12. Rachel says:

    Jon, one of the problems with “buy local” economics is that it’s actually not very carbon efficient. There was an article in the New Yorker a few months ago that highlighted the problem (I thought it was by Suroweicki, but I can’t find it online so I might be wrong).

    Container shipping is the most efficient form of transportation per kilowatt of power – and that’s one of the reasons shipping costs are so low. In most cases it’s more CO2 effective to import, say, Garlic from Peru into California than it is to put it on road or rail from Iowa. The greatest amount of energy used in the transportation of the garlic will actually be in driving home from the supermarket with it, although hopefully this can be offset by only shopping irregularly, or living in Manhattan and walking to the market instead.

    Obviously *really* local growing changes this economic argument somewhat, but since the structures of our cities are what they are, and we can’t all live in Manhattan or Paris, or with little vegetable patches in our back yards, in many ways we’re much better off (from a CO2 point of view) shipping the stuff from Peru than we would be buying from someone 200 miles away.

    The Times article is interesting, but it does take at face value the notion that all transport is equivalent.

    I agree that a tax on fossil fuels is a good step, but it will probably exacerbate the globalisation problem rather than reduce it.

  13. Ken Ballweg says:

    Be careful to try to trace back info on total carbon footprints, even when printed in a reputable source. People are still citing the “Dust to dust” report which “proved” that the total carbon footprint of a Hummer was less than a Prius.

    The alleged study was done by CNW Marketing Research, of Bandon, Oregon which is an insiders auto trade rag with an agenda of soothing it’s customers fears (at least in this case.) The “study” got lots of anti-global warming blog references, and took on a life from that and the newsworthy element of anti-green irony.

    Full article here,

    And here’s a summary of the article by Peter H. Gleick, May, 2007

    “The CNW Marketing Research, Inc.’s 2007 “Dust to Dust: The Energy Cost of New Vehicles From Concept to Disposal” caught the interest of the media and the public with its claim that a Hummer H3 SUV has a lower life-cycle energy cost than a Toyota Prius hybrid. Closer inspection suggests that the report’s conclusions rely on faulty methods of analysis, untenable assumptions, selective use and presentation of data, and a complete lack of peer review. Even the most cursory look reveals serious biases and flaws: the average Hummer H1 is assumed to travel 379,000 miles and last for 35 years, while the average Prius is assumed to last only 109,000 miles over less than 12 years. These selective and unsupported assumptions distort the final results. A quick re-analysis with peer-reviewed data leads to completely opposite conclusions: the life-cycle energy requirements of hybrids and smaller cars are far lower than Hummers and other large SUVs. CNW should either release its full report, including methods, assumptions, and data, or the public should ignore its conclusions. Unfortunately, “Dust to Dust” has already distorted the public debate.”

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