Policy Effects [Tax Evasion & Biofuels]


#1

I’m not sure if this is the correct place to post this, but here goes:

As things stand, the biofuels subsidies policy reduces oil demand, and makes environmentalists, motorists and farmers happy. That farmers are happy about such a policy is undoubtedly correct, and motorists might be too, but the rest of the effects are somewhat questionable. Environmentalists don’t like them too much, and given that modern mechanised agriculture consumes a lot of fossil fuels (not just to power the machinery - natural gas goes into the fertiliser… a lot of natural gas), it is not obvious that biofuels significantly reduce fossil fuel demand (AFAIK, it has yet to be seen whether it is possible to connect the input to the output on the corn ethanol process and get a net energy output).

Finally, it should be noted that socialists aren’t too happy about biofuels either, because they drive up food prices, which leads to increased inequality (in game terms a negative modifier to equality and a negative modifier to socialist satisfaction).

This discussion applies only to first-generation biofuels, of course. But second-generation biofuels work on a quite different technological and political dynamic (no gravy train for the farmers, for instance), and so probably belong in the more generalised green energy subsidies policy.

Second, the tax evasion problem: As things stand, the only way to make this go away is to cut the taxes that causes it to happen. I think it should also be connected to the level of (organised) crime and to the level of deregulation of the financial system - because coming down hard on the “grey” parts of the financial system and the grey economy in general is a pretty effective real-world way to prevent tax evasion.

And I personally like the idea of putting tax cheats behind bars better than I like the idea of accommodating them. Perhaps a “tax evasion bureaux” policy would be applicable, along the same lines as the welfare fraud department policy?

  • Jake

#2

Biofuels are complex because was sugar cane waste can be converted into ethanol and produces the effects similar to those shown. However, palm oil biofuels, grown in deforested indonesan rainforest does worst than what you said. In reality, its not what you do, but how you do it, which this game is sadly bad at.


#3

I’d quarrel with the sugar cane waste products being harmless - the principal source of sugar-cane biofuels is Brazilian slash-and-burn monoculture plantations. Which have an atrocious environmental track record on everything from forest management to GHG emissions.

But the point on “how you do it” is well taken, and yes, that does seem to be the main weakness of an otherwise impressive simulation.

  • Jake

#4

Fair point, Really good biofuels would be waste from sustainable areas. However, not many of these are commercailly used, yet. Sugar cane is much better than other bio-fuels like palm oil, soya, maize, because the crops were being grown anyway. I heard that palm oil has a 400 year environmental negative impact before the CO2 saving conters it. This means its many times worse than convensional oil in our lifetimes.
Ahh well, at least we have a realistic petrolium substitute, which we will(almost certainly) need in the future.


#5

In gameplay terms its important to avoid a fraud department policy being a ‘no-brainer’ with no gameplay downside. I think the best way to handle this would be to have it dependent (if I can work out how to do this) on the effectiveness of some of the privacy-destroying policies. For example, a national identity card and database would potentially make cutting fraud easier, so that could be used as a pre-requisite for an effective fraud prevention and tax-evasion prevention policy, with the obvious downside that it would upset liberals.
I can’t see an effective way to clamp down on tax evasion that doesnt involve either a culture of reporting on your neighbours (how can government encourage that) or technical methods like surveilance.
Thoughts?


#6

Not for the kind of quantities we’re using today.

The photosynthetic ceiling is ~ 2 % of incoming solar radiation. Convertion into oil or oil-like substances will knock another factor of three to ten off that figure. Land constitutes approximately 2/3 of the global surface area. Total solar radiation on the Earth is around 10^5 TW. Taking sustainable harvesting of biomass from the oceans to be negligible on our energy balance sheet (but ignoring the fact that land area is distributed unevenly in such a way as to reduce total solar irradiance over land area considerably), that makes the photosynthetic ceiling of the planet somewhere around 10^2 TW, give or take half an order of magnitude. Current total global energy consumption is on the order of 10 TW, meaning that energy crops alone would take up around 10 % of the surface of the planet. Obviously, the parts of the planet that’re covered by mountains, deserts or other inhospitable topographies would not make very good fuel crop locations. So bye bye rainforest. And bye bye tundra, taiga, plains, river deltas, etc. [All data cited is from Wikipedia.]

Oh, and that assumes ideal growing conditions, which is to say that we’ll need a lot of fertiliser - which is today mostly make from natural gas… Furthermore, this is a theoretical upper limit. Actual milage may vary considerably, but it will always be lower (i.e. total fuel crop land area will always be higher).

We can probably continue to run the parts of the petrochemical industry that produce plastics, chemicals, etc. Diesel-based ships will probably still be possible (at least for time-critical cargoes - I would not be too surprised to see a rennaisance of sailing ships within my lifetime for cargoes that are not time-critical). But the personal automobile is very much a feature (or a bug, if you will) of the late 20th century. And mass air travel on the RyanAir model is going bye bye.

Sure, there will be an invasion of privacy. Bank secrecy, to name just one thing, will probably have to go the way of the dodo, if you’re going to do something serious about cutting down on tax evasion. A central business database is also a very useful tool for clamping down on the kind of tax evasion that involves salaried labour.

It would also quite possibly give rise to capital flight, which can only really be countered by either a) a race to the bottom or b) capital controls, such as exit taxes. a) is obviously undesirable, and b) runs the risk of rubbing certain Very Important Parties (think the US dep. of Commerce and various transnational corporations) the wrong way.

Another - harder - way to combat tax evasion might be to convince the taxpayers that they’re getting value for their money - good schools and hospitals will make people more willing to pay taxes, because they know that the money is well spent. A bloated Mil-Ind complex and overspending on police and paramilitary forces (but also an overprevalence of crime on the other hand…) would make people less willing to pay taxes.

  • Jake

#7

In some ways I guess the latter can be achieved with public information films about public services, but this can easily backfire, because in a way its just government advertising and politicking.
There is no easy way to ensure people see their taxes are well spent, even if they are, because a heavily anti-tax media can completely skew the public perception of government the wrong way if it chooses to do so.
How many people in the UK or US have any idea how government spending is really broken down across different sectors (for example).


#8

True.

On the other hand, those countries that actually do have decent, reasonably universal public service provision see a greater political support for high taxes (which may or may not, of course, translate into actual tax payments…). Whereas the countries where service provision is poor or spotty, taxes are resented. So all in all, actually providing good, universal services is probably more effective than self-serving propaganda videos. I think that the universality is probably more important than the quality here, actually. If people know that their taxes go towards paying for the hospital they use, they’ll resent the taxes less than if they know that the hospital they pay their taxes to is only for poorer people than themselves. (So maybe high equality would have a negative effect on tax evasion? That would be a simple (simplistic?) measure that’d be easy to implement, and would reproduce the results of the hypothesis.)

Of course, separating cause and effect here is, to say the least, not easy. It’s possible (likely, actually) that a culture of solidarity and good governance promotes universal, high-quality services, and a culture of individualism and poor governance promotes wasteful, inadequate and highly stratified public services. So clearly the effect goes both ways.

  • Jake

#9

Maybe, tax evasion should be directly linked to overall popularity. Also, socialist freq/happiness will be linked?

When I said we will need a petrol substitute, I mainly meant plastics/chemicals. But it will be 20-30 years before oil is definately well in the past
About that sailing ship.
A new tech will be more like a computer controlled kite, which improves efficency by 20%.


#10

That’s true. But cheap oil is already a thing of the past.

  • Jake

#11

Sort of but not really because

  1. Oil prices are dropping
  2. Oil is actually really good value, its only we’ve been used to complaining it isn’t

#12

The interesting thing about oil prices currently is that they’re moving between a supply-driven and a demand-driven regime. Until fairly recently, oil prices were entirely supply-driven - that is, the price of oil was the marginal price of adding new supply. When we reached peak oil, earlier this decade, we temporarily moved into a demand-driven regime - a regime in which there is an absolute upper limit to supply, and the price will have to be high enough, not to justify adding new oil production - because that is essentially impossible - but to destroy existing demand; that is, to make people drive less, insulate their houses better to save heating oil, move off oil-fired power plants, etc. And the marginal price of demand destruction has proven to be rather a lot higher than the marginal price of supply creation used to be.

Because there is such a huge difference between the price needed to make it worthwhile to supply oil, while the oil is still in the ground, and the price needed to make it worthwhile to cut back on consumption, when there is no longer easily accessible oil, the price swings from even small changes in demand are potentially huge, as long as we are in the region around the instability. And right now, global aggregate demand is temporarily suppressed because The West™ is in a depression (of its own making, I might add, but that’s neither here nor there). And so we have temporarily swung back into the supply-driven regime.

So in that sense, oil is still “good value” - another way to look at it is that oil-producing countries have essentially been subsidising oil consumption to the tune of 75-120 US$ per barrel - they have made reserves of irreplacable natural resources available at a price that is ludicrously far below the value of those resources to consumers (nevermind the cost of externalities like GHG pollution).

But the very fact that we consider 60$ oil to be “cheap” shows that our mentality has already moved quite a bit in the right direction. Not so very long ago, 40$ oil was considered expensive.

  • Jake