On the latest episode of the Giving Ventures podcast, DonorsTrust Vice President Peter Lipsett talks with Rod Richardson, co-chair of the Climate & Freedom International Coalition and president of the Grace Richardson Foundation; Lord Daniel Hannan, former member of European Parliament, founding president of the Institute for Free Trade and a peer in the House of Lords; and Diego Sánchez de la Cruz, research coordinator at Instituto Juan de Mariana in Madrid. The three discuss ways free markets throughout the world can hasten adoption of clean-energy alternatives.
Richardson: Swap Bad Climate Policy for Free-Market Fixes
As co-founder and co-chair of the Climate & Freedom International Coalition, Richardson between 2016 and 2020 gathered a list of proposals from expert working groups on ways free trade, competition and supply-side taxes, among other things, could “address a global negative externality” like so-called climate change.
“All these different ideas most recently came together at three workshops last year and one this year that were hosted by the Austrian Economics Center and Students for Liberty and pulled together groups from the newly formed Climate & Freedom International Coalition.”
The result? A nine-page “Climate and Freedom Accord” that details the specific policy proposals that would help hasten the adoption of cleaner sources of energy, including a “top-line” proposal to eliminate policies like ethanol subsidies that are backfiring.
Richardson: ‘Massively Expensive Subsidies’ Doing Nothing for Climate
Richardson says many of the interventions the United States and other nations use to combat climate change are harmful and don’t achieve what they were intended to achieve. Case in point? Ethanol subsidies, which give companies a tax credit in exchange for blending ethanol with gas.
“You have to realize that, first of all, conventional climate policy is really failing on its own terms, says Richardson. “You see in the United States that many of these massively expensive subsidies are doing nothing for decarbonization — for instance, the ethanol subsidy.”
More specifically, says Richardson, the de-regulatory climate accord he and his colleagues compiled mimics many of the strategies the Reagan administration used to combat stagflation and encourage productivity in the natural-gas, telecom and transportation sectors.
Richardson: Free Markets Encourage Decarbonization
Key to successfully encouraging prosperity and decarbonization is adopting a low tax rate on goods and services, says Richardson. This way, businessmen and women are encouraged to invest in new equipment, hire more people and ultimately, deliver a better product.
“The basic strategy? Open up markets, create opportunities and then fund that with supply-side tax cuts. What you’re basically doing — you’re bringing down the costs for all kinds of new investment, and when you bring down the cost for new investment, what you’re doing is you’re speeding up the process of replacing old, dirty equipment with new, cleaner, more efficient equipment. So, it’s basically a decarbonizing process.”
The climate accord, he says, takes those ideas and applies them on a global scale by encouraging nations to overturn bad climate policy and replace it with free trade, competition, stronger private-property rights, private conservation frameworks and low pro-growth business taxes.
Richardson’s Father Inspired the Climate and Freedom Accord
The roots of Richardson’s idea for the free-market climate accord go back to his dad’s philosophy on philanthropy — back when his father worked at the Smith Richardson Foundation, famous for championing the ideas that made Reagan a household name.
“Smith Richardson was one of the large foundations that, in the late 19060s and ‘70s, was busy funding and pioneering all of the new ideas that would become the Reagan revolution. And all of those ideas came from a philosophy of philanthropy that said, ‘Always address the issues of the day with a better free-market solution.’”
