Time to limit hot air debate

And given we have overcome scarcity - our obesity rate is one index, another is our high per capita ownership of DVDs, mobile phones etc - we could investigate the relationship between GDP and genuine wellbeing and happiness.

Economists in other countries are starting to publish fascinating results on this subject. To come to the real puzzle with Howard's proposal to price carbon, the question is how do you get a market to operate if there is not a scarce commodity to sell. Until you and I face a limit to the amount of carbon dioxide we can emit each year, and have to buy permits from our mates or others who happen to emit less, there will be no price.

Of course, setting an overall limit for the country and then dividing up parcels of it to all and sundry (or simply all major carbon-intensive industries) is not a task you would contemplate in an election year.

What is interesting to recall is that Australia was the first country in the world to apply a "cap and trade" policy - in tuna fishery. An overall limit was set on scientific grounds and this was then divided into small lots which could be sold.

The efficient operators bought permits from the less efficient and both the environmental goal of protecting the fish stocks and the economic goal of doing it profitably were met.