This Australian Climate Change Protester's Economic Chart Is 'A Bit Arrogant, But Totally Correct'

Carbon price chartImage: Reddit

It’s probably safe to say this wouldn’t make it to a Buzzfeed list of the dumbest protest signs.

One of the people at yesterday’s climate change rally in Melbourne brought the chart pictured above, that outlines the effect of a carbon pricing mechanism.

We’ve identified the bearer as Melbourne-based economist Martin Jones. He’s used the placard before but the photo, taken yesterday, was posted on Reddit by user OptimalCynic where it’s sparked some debate today.

Regardless of the politics, is it sound economics?

One economist from a major financial institution examined the chart and confirmed that although the protester is “perhaps a bit arrogant in his way of stating it”, the model is correct.

The chart explains that there can be interventions to increase the price of a pollution-causing product, and despite providing compensation to neutralise any cost impact to households, people will still seek out alternatives.

Australia’s carbon pricing scheme, which the Coalition government plans to dismantle under a bill introduce next week, included a multi-billion-dollar compensation package of tax cuts and cash payments for households to offset the increased consumer prices, mainly for energy.

Opponents characterised the scheme as a massive exercise in wealth redistribution that increased living costs across the population for a limited impact on the environment.

“The negative view of the compensation package would be, ‘What’s the point of raising the price and giving the money back?'” said our economist.

However, the increase in the price would prompt affected customers to go into the market looking for a non-polluting alternative, even though their real income had not changed.

“The detractors [of the carbon pricing scheme] never really understood the compensation effect,” the source said. “The signalling mechanism is the same”, with or without the compensation.

It could be summarised as: if you’re looking to get people to do less of something, increase the price of it, and even with compensation to offset the price rise, and you’ll get people to turn to alternatives.

Even if the chart is correct, there’s one problem: the behaviour change triggered by the price increase takes time to kick in.

Get a brain! Morans

Try sticking that chart in front of someone who just got a power bill that was 20% higher than the last one and see if they’ll take the time to digest it.

This is where political reality overwhelms economic theory.

You start to wonder if the stars of Buzzfeed’s dumb sign lists, like the guy on the right, might connect more directly with people.

Would you prefer more charts at protests? Let us know in the comments.

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