Sunday, 15 January 2017

Reforming Britain’s Tax System Rory Meakin



Reforming Britain’s Tax System

RORY MEAKIN
6 JANUARY 2017
INSTITUTE OF ECONOMIC AFFAIRS > BLOG > POLICIES > ECONOMIC THEORY
Most of us believe that some tax is required to fund government spending and some taxes are better than others. Given this starting point, how might economists weigh up whether a tax system is a ‘good’ system or a ‘bad’ system? In this article we look at the principles which underlie a good tax system, what taxes emerge from those principles (and which existing taxes would not), and what implications the implementation of such a system would have across income groups.

Principles

The principles on which a tax system should be based were laid out by Adam Smith in 1776 and have largely stood the test of time. They are: certainty, proportionality, convenience and efficiency. In summary, taxes should be known in advance, levied in proportion to ability to pay, payable in a convenient manner and inexpensive to administer.

These principles are sound, but further insight has been gained subsequently by economists including Gregory Mankiw and Sir James Mirrlees. Using their ideas, we can propose reformulating Smith’s lessons as follows:

Taxes should be as transparent as possible, a core component of which is certainty.

Taxes should be as neutral as possible, thus applying the same tax at the same rate to different activities wherever possible.

Marginal tax rates should be as low as possible, except for taxes designed to ensure people pay for ‘externalities’ caused by their behaviour.


Simplifying the UK tax system

How would applying these principles change the UK’s current tax system? Firstly, it would be radically simplified to maximise transparency and neutrality. So there would only be a single income tax, at a single rate, on all income types, however received. Corporation tax, national insurance and capital gains tax are all, fundamentally, variations of income tax and should all be abolished. Distributed profits (such as dividends) should be taxed like any other income. National insurance is effectively a duplicate income tax has no useful distinct function. And capital gains often arise from investors anticipating increases in the income an asset will produce and that will be taxed in the future – therefore capital gains tax is normally a double tax and should also be abolished.

Inheritances can be viewed as a transfer of income from one person to another. However, the income that is transferred has already been subject to income tax and should not be taxed again.

Transaction taxes such as stamp duty on shares and property depress values, gum up markets and lead to assets and houses being not being held by those who value them most. They should be abolished, along with business rates, which arbitrarily pushes business into unnecessarily cramped use of property.

So-called ‘Pigouvian taxes’, whereby we try to tax activities that lead to social costs that are higher than private costs or ‘externalities’ generally fail to stand up to the scrutiny – certainly if we consider those taxes which actually exist in the UK system such as taxes on alcohol and tobacco. Even in the context of socialised healthcare financing, the costs incurred by others associated with alcohol and tobacco are too weakly correlated to individual consumption to be useful. As a result, the relevant duties effectively operate as arbitrary and distortive ‘sin taxes’, reducing welfare and falling disproportionately on the poor. They should be abolished entirely.

Because wealth is normally so mobile, wealth taxes are particularly damaging. They should be avoided. An exception is a tax on the value of land which is attributable to solely to its location – a location value land tax. A property’s location value is the amount it would be worth if the land were found in a state of wilderness but the state of all other properties remained as they were. Taxing this value alone ought not to disincentivise landowners from improving land by clearing it or building structures and it has long been promoted by economists. A good tax system should therefore introduce such a tax in a phased manner, to account for the unfairness imposed on those who have previously bought land in good faith. This should replace a range of other taxes including council tax.[1] There should also be some further reforms to property taxes. These are discussed in part three of Tax, Government Spending and Economic Growth, published by the Institute of Economic Affairs.

Various other fiddly, opaque or distortionary taxes should also be abolished, such as air passenger duty, the television licence and the climate change levy.

Some taxes to be reformed

Consumption should be taxed with a broad consumption tax, probably a value added tax (VAT), as at present. VAT should apply universally to all consumption with no exemptions or reduced rates unlike currently where there are wide-ranging exemptions.

Although it has been suggested that existing Pigouvian taxes should be removed, there is one area where they could be retained but at a lower level – that is in the case of externalities caused by carbon emissions and other pollutants. Here, a single carbon tax would be the best way to ensure emitters cover the costs to others of their emissions. In addition, limited local fuel duties could be used to cover the cost to others of congestion, the impact on the local environment of car use and the cost of road building and maintenance. Current fuel duty rates are set at least twice as high as a reasonable estimate of the level necessary to deal with the externalities caused by cars (including reasonable estimates for the social cost of carbon emissions) and the rate should fall accordingly. Vehicle excise duty performs no useful function in most cases and should be restricted to particularly heavy vehicles which damage roads disproportionately compared with their fuel usage.

Impact of a reformed tax system

Reform of tax systems is often avoided on the ground that it creates winners and losers and the losers scream more loudly than the winners. Of course, if the overall tax burden is reduced, the discussion then becomes one of who wins the most – in other words, what are the distributional consequences of the change? It is often assumed that any reduction in taxes must disproportionately benefit the better off. However, a change of the kind of tax proposed has been modelled and this is found not to be the case.

It was assumed that there would be a 15 per cent single income tax above a personal allowance of £10,000; a 12.5 per cent VAT, including on both residential rental property and the rental value of owner-occupied property, and a location value tax aimed at capturing 75 per cent of the location value of land.

The impact on households would be largely progressive due to the substantial cuts in highly regressive sin taxes and the reform of property tax. The biggest winners would be households in the bottom three income deciles, gaining tax cuts worth 26, 19 and 17 per cent of gross household income, continuing to fall to 7 per cent at the fourth richest decile. The richest two deciles would enjoy tax cuts worth 13 per cent of gross income.

Conclusion

Tax need not be nearly as complex and incoherent as the UK system currently is. There are some sound economic principles that have, in recent years, been forgotten by politicians. Also, the poor pay more taxes than they think and a reduction in the tax burden in the context of a reformed system may well help the poor more than the rich.

My comment ---

Congratulations on establishing that taxation and revenue raising needs a complete overhaul, its failure in so many areas:-
Fairly apportion tax raising from all sectors of society in afair and equitable means
Raise taxes from environmentally damaging activities and resource use
Promote economic activity across all sections of society
Promote empowerment to all social groups through their purchasing power

You also say that most areas of taxation needs to be overhauled and pick out a carbon tax as the one Pigouvian tax that should remain, but really carbon is not the only polluter or damaging agent on the planet , it is the over and misuse of all Natural Resources and indeed I suggest that the whole taxation should be based on this alone  with the scrapping of all other taxes as Meakin almost suggests.

This new Natural Resource Tax ,NRT, whereby all Natural resources are taxed according to the damage their use causes the planets ecosystems from minerals , fossil fuels, land  water and air should all come under the same umbrella thereby simplifying the whole process and removing the personal income taxes and making everyone without exception equally responsible for the actual and potential damage of all their purchases of goods and services throughout the whole economic chain of industrial activity.

This should also be combined with a overhaul of all welfare services from health, pensions and benefits, with the addition of a Universal Basic Income, UBI, which would help fund the services, and make individuals more accountable for their own wellbeing.

Finally a death tax to prevent excessive transference of wealth from generation to generation which distorts social functions of society. and prevents lockup of monies , rather than recycling funds within the economy and reducing the need for QA and ever higher rates of GDP. Smart growth is needed not greedy growth.

Beyond Nudging

Its great to see you recognising that human behaviour changes according to the economic environment people live within, I gained real experience of this by employing migrants on my farm and tried various ways of payments systems to encourage a better work ethic, and found that as long as employees have control in their pay by the effort put in , then there is almost limitless work can be achieved with huge satisfaction on behalf of the employee and greatly reduced management by the employer, so a win win situation, The the employer must however, have no problem on the level of earnings of those with the highest potential, often the high flyers can earn up to 4X the slowest . It also helps when the employees are incentivised with a target of buying a house , getting married , buying a car etc , this sets real ambition and drives individuals to considerable heights. 

To the employer there is also so much to be gained , less supervision , more productivity, reliability of employees turning up for work, better communications  due to understanding job specifications, and achieving time and cost targets. 

So when I read this as an active environmentalist who has been proposing a radical change in the economic and fiscal models , it came apparent that to achieve the desired outcome , any change must incorporate a natural incentive for everyone , and be seen to be fair and equal to all. 

To this end I have been trying to have a far more round holistic approach to the present crisis we see ourselves in, by including all major problem together, not as individual problems

1 Global personal debt problems 
2 Unfair distribution of wealth
3 Gross tax evasion , avoidance and fraud
3 Distorted taxation systems that reward the wealthy dis-proportionally, compared to the salaried and waged.
4 No real payment for the use and consumption of all Natural Resources
5 No recognition of the scale  pollution has on health and on Nature in fiscal terms 
6 Endless growth is non sustainable ?
7 No empowerment of the individual ,businesses to do the right thing naturally 
8 Poor control over endless waste through bad design and poor education , food waste, poor house design , road layouts etc etc 
9 The list goes on ......and on 

All these have had small incremental changes specifically designed for each case but there has been no overall fundamental look and the best ways from an economic and behaviourally aspect for a long time. There has been great advancements in technology and it has been thought this alone would get us out of the problems we are causing by technology. 

I believe we have to create a new system of thing driven by a new economic model , by empowering everyone equally with potential and targets of doing so much better than now. 

Given the tools everyone has far more unleashed potential if only they were given more financial freedom, it should not only be the preserve of the upper class and financially well to have the possibility of exciting creativity, it should be available to all in a fully inclusive society. 
We have the tools for real change, computers, educated people, resources in abundance , What is lacking is the drive by all to one aim, not necessarily direct but indirect through all the goods and services we buy and consume daily. 

It is this subliminal change in how we buy and what we buy, that will be the change that we need to revolutionise the whole way we see ourselves on the planet.  


My aim is to get governments to scrap all existing taxes , as they are often unfair and distorting, and replace with a new Natural Resource Tax , collected as close to source as possible. This NRT would be based on the damage caused to the planets ecosystems and all life on the earth and sufficient funds raised to replace all the revenue required by governments for their expenditure needs. 

Also, a Universal Basic Income wold become and integral part of the fundamental change as also would be a death tax to prevent vast accumulated wealth being hived away from the economy, and so maintain a steady money flow without the need of high GDP growth that is such a problem in today's economy. 

I cant find any modelling that has been done with this combined approach , but combined with real understanding of how human behaviour works  I am sure this could well be the win win model we are looking for. 


Greed as we have at present and a selfishness that often goes alongside   although tempered with a little philanthropy , does nothing to tackle the real problems which could often be solved by individuals collectively at a local level if the financial incentives were there in an on-going process. 
By Taxing the bad resources heavily . it would then send a whole new signal to how we design, manufacture, process, transport, advertise, market and finally consume all goods and services, to everyone equally and indeed it would redirect the consumer in being in charge of what is made, based on the real value all Natural Resources are to mankind  and all of Earths life. 

Katherine , I think what you are exploring is the most important topic of the day , but needs to be linked with a whole new way of valuing life and the planets finite resources. 

Thursday, 5 January 2017

Rambles on Capitalism and Climate Change



Rambles on Capitalism and Climate Change


Leave fossil fuels in the ground , Its not just fossil fuels that need to be controlled and consumption reduced , Only by taxing all Natural Resources at source so this will ensure that any fossil fuels extracted would attract huge taxes and also for land use for building and agriculture would be taxed also according to the loss of the natural state. All money is a store of potential energy , and by spending it releases that energy in the form of conversion from raw materials to finished goods . By taxing at source of the emissions and eco-damage of ecosystems would if it replaced all existing taxes educate everyone through the purchases they make just by how damaging . The difference between extraction and climate change is that extraction and refining oil make big profits for the country and individuals, whilst climate change is a cost to governments and individuals so no action is really taken. Take money out of politics in elections, and lobbying, as this the biggest threat to democracy. Controls have been removed and let unbridled capitalism has been unleashed and true democracy been taken over by a fascism of the state as was crystallised by President Roosevelt in his speech to the nation in 1938 . http://www.presidency.ucsb.edu/ws/?pid=15637 . GDP is a record of money spent , it is a representation of all the Natural Resources spent to make goods and services, GDP should be seen as a failure not a success of sustainability , and negative GDP and SMART developments should be seen as success. Economic growth destroys humanity through greed and creating rich poor divide. Anyone can become a millionaire , only you have to be a bastard and walk over everyone and abuse all Natural Resources. We are on the treadmill of work is needed to provide goods that are not needed and we then need more and then have to work harder to provide more more. Now we have robots which provide even more and now beginning to provide less work, now we need more wellness and time to enjoy , perhaps Universal Basic Income is a part answer to encourage everyone to appreciate how to live and to use all goods and services with respect and longevity AS the Red Indians of the US appreciated the reverence of nature and not to use any more than was essential and try to encourage regeneration and reuse of the resources used. The education of nature in the way it can help us all in life is essential to our wellbeing and the foundation of all religions and encourages all to love and embrace for the common good and wellbeing . Promises of action and ever economic growth is causing society to be ever more divisive and fearful they can do little to change the status quo, A State of fear is being maintained by the ever increasing rich poor divide, and ineptitude by the public as they see politicians being further from them than ever and not listening as has been seen by the recent Trump campaign and Brexit and even further anger from the Arab Spring caused by the huge wealth divide in particular. Land reform is needed to combat the massive misuse of it and over valuation, land that is respected for what it is for the ecosystems and how we all can benefit from its sustainable use without it distorting the long term economic policies to provide housing, food , pleasure and without disrupting Nature and all its benefits to ecosystems, environment and climate. Land being a Natural Resource should be taxed in a similar way as Fossil energy and we have to learn to pay for the damage we cause in using it I believe it is all a matter of economics , man invented it and it controls everything we do, , so if we are to have any real change to prevent ecocide on all levels, then we have to learn to place the right price on all the damaging aspects of our life on earth, It is respect and reverence, dignity and love of all the natural world and if we learn to do this then Nature will look after us,

Monday, 12 December 2016

Planet earths Connectivity with nature, MONEY and how to use it!

David Attenborough's Planet Earth 2 summary at the end of series "connectivity has been lost between man and nature, it is up to us to remedy it!"

This is a profound observation and forward thinking objective which everyone should embrace.
It is indeed the empowerment of the individual by reconnecting with nature that will be the solution to the problem we have upon the planet.

Money is the link, money is the embodiment of energy and power, by spending it we release the huge devastation of the planets resources with all the pent up energy and power that money provides.

It is with this in mind that we have to directly link money with the damage it causes when spent, some talk of a Carbon Tax  which may go some way for CO2 levels but what about methane, vast tracks of unusable land due to urban developments, often on the best land we have left.

Its time to tax not just carbon , but ALL natural resources that we use,waste and abuse.

A revolution in taxation , by replacing ALL existing tax's with a single NATURAL RESOURCE TAX, based on the actual and potential damage those resource cause when used and consumed.

If NRT is collected as near to source as possible then it would also help tax fraud, evasion and avoidance, as everyone would have to pay it regardless of who they are.

You and me , the final consumer would then be the decider, by the price we pay for those goods and services and would fundamentally change the way we think and implement actions that affect all the products we consume.

Action will be the decider, what and when!

David Dunn

Wednesday, 12 October 2016

Taxation as a means of environmental and climate change control

Taxation as a means of environmental and climate change control 

There is a need for a more vigorous reform of taxation that may affect consumer behaviour in consumption habits and welfare.

To this end I have been looking at lots of various options from carbon taxes pollution taxes, welfare systems and come to the conclusion that most fail in the long term as they do not address the fact that we are fundamentally consuming to much at all levels of the chain, from manufacture through to consumption and along with that the waste that occurs at all levels also, and not forgetting overall damage caused by all this activity. 

So the proposal I suggest is relatively simple , but obviously not in the detail as any change is always bedevilled with the detail. so in broad terms only I suggest three fundamental changes. 

1 Scrap all existing taxes and replace with a Natural Resource Tax, NRT, collected as near to source as possible , like oil at the well head, coal at the mine , aggregates  at the quarry , land at the land owner, water by those who extract or use it  like the utilities and fisherman and those who put waste into the water chain, and for air by those who directly pollute , but this may be part of the tax , say on oil or coal , otherwise there is a double tax being applied. The amount of tax collected would meet the whole budget of the state to include security,education health , welfare infrastructure  etc, and possible debt reduction.  This tax then is not avoided, by anyone and would be paid direct to the state. The NRT would be based on the actual and potential damage these resources do to the planets eco and life support systems.

2 Raise a death tax without loopholes to stop excessive personal wealth being transferred from generation to the next generation, with the aim of reducing the rich poor divide.

3 As part of taxation reform and therefore making the consumer at all levels of the chain responsible for change, by the products they consume and use, they effect the levels of damage and pollution to the planets ecosystems, I believe we have to empower the individual to promote their own well being and health by introducing a Basic Income , which would provide for Pension, Health and Benefits, which would then controlled by the individual and not by the state.  This Basic Income awarded to all citizens of the state is in recognition of the changing world we all live in and it is not always the individuals fault that they have not the power to obtain work and be a useful citizen within the community, The fast changes in technology and shifts of production globally now has huge effects on the employment possibilities in any area, and unless there is a real shift in the way work is allocated there will always be a huge divide  like in Chicago  and Brexit happening in the UK and generally between the rich and poor. This basic income will help to overcome the worse effects.

I believe this is a far more credible way forward with the use of carrots and sticks to achieve a result we all want. Also as the taxes are fewer and more comprehensive in the way they are collected, I believe the total tax take could be reduced compared to now  when all the aspects are taken into account, for example , easier accounting for business, reduced tax accountancy needed, Less ability to evade taxes at a personal level. Perhaps this wont work in the US but after the Apple and Trump etc  debacles over taxation then it might bring new vigour to the debate.

I appreciate that within the Natural Resources movement there is reticence to more taxes of this sort , but I believe if we are really to tackle Climate change and go anywhere near to meeting the Paris COP21 agreement to increased levels of CO2 to 1.5% then real fundamental change has to occur at all levels of the debate, not just directly on CO2 emission although the most important but all the other aspects from soil carbon levels, eating habits and methane controls etc. and based on the long term effects of all the processes used. 

This fundamental tax change will I believe have the ability to meet all the needs of the present and future generations  of this planet , not just for mankind but also for all the planets life  and ecosystems that supports it.  

Tuesday, 13 September 2016

Carbon Capture only delays the release of it into the atmosphere !

Carbon Capture only delays the release of it into the atmosphere !

Carbon capture will only delay the inevitable  of final release into the atmosphere by natural leakage or by accident.

Carbon capture gives us the chance to continue with the present pollution of the air we all breath , and  unless we capture all the pollutants from the stacks, we still will have other ill health pollutants that are released into the atmosphere.

Carbon Capture just leads us all into a false sense of security that we have and are doing the right thing, but in reality we are encouraging an even worse scenario , whereby we are still using fossil fuels and not doing anything serious about the long term problem nationally or globally.

By our actions we are also encouraging the Chinese, India  and others to continue with coal believing if its OK for the UK it must be OK for the rest of us. It also allows us to believe we have achieved a long lasting solution , and is distracting us all to do far more radical change , whilst we can afford it.

Mankind is fooling ourselves into doing something which is irreversible, that is continue burning and wasting energy on a huge scale, when in reality we should be concentrating on energy conservation at all levels. The more money in the economy the more energy is spent and the relationship is fixed, Money is the storage of energy and when spent energy is released in direct proportion to its amount.

To take control over energy use we must control our fiscal expenditure also. and it is in this area that most political will must be encouraged to change the systems of taxation especially that will yield the most favourable results.

ARE WE SERIOUS ABOUT CLIMATE CHANGE, ENVIRONMENTAL AND ECOSYSTEM  GENOCIDE?

WE all still crave for goods and services we are told we need through fancy packaging and advertising, which often do not meet our real expectation when unwrapped, we still reinvent the same things over and over again with little change in the goods themselves , certainly not in terms of longevity as most are unable to be repaired and most are not serviced once a new model is brought out.
What has to be done far more effectively is analysis that determines the what is best in the long term for the planet and not just the short term gain for mankind.



Tuesday, 26 July 2016

Clean energy won’t save us – only a new economic system can by Jason Hickel the guardian

 Clean energy won’t save us – only a new economic system can
Jason Hickel
It’s time to pour our creative energies into imagining a new global economy. Infinite growth is a dangerous illusion.
Earlier this year media outlets around the world announced that February had broken global temperature records by a shocking amount. March broke all the records too. In June, our screens were covered with surreal images of flooding in Paris, the Seine bursting its banks and flowing into the streets. In London, floods sent water pouring into the tube system right in the heart of Covent Garden. Roads in south-east London became rivers two metres deep.

With such extreme events becoming more commonplace, few deny climate change any longer. Finally, a consensus is crystallising around one all-important fact: fossil fuels are killing us. We need to switch to clean energy, and fast.

This growing awareness about the dangers of fossil fuels represents a crucial shift in our consciousness. But I can’t help but fear we’ve missed the point. As important as clean energy might be, the science is clear: it won’t save us from climate change.

What would we do with 100% clean energy? Exactly what we’re doing with fossil fuels
Let’s imagine, just for argument’s sake, that we are able to get off fossil fuels and switch to 100% clean energy. There is no question this would be a vital step in the right direction, but even this best-case scenario wouldn’t be enough to avert climate catastrophe.

Why? Because the burning of fossil fuels only accounts for about 70% of all anthropogenic greenhouse gas emissions. The remaining 30% comes from a number of causes. Deforestation is a big one. So is industrial agriculture, which degrades the soils to the point where they leach CO2. Then there’s industrial livestock farming which produces 90m tonnes of methane per year and most of the world’s anthropogenic nitrous oxide. Both of these gases are vastly more potent than CO2 when it comes to global warming. Livestock farming alone contributes more to global warming than all the cars, trains, planes and ships in the world. Industrial production of cement, steel, and plastic forms another major source of greenhouse gases, and then there are our landfills, which pump out huge amounts of methane – 16% of the world’s total.

 Jeffrey’s Bay wind farm in South Africa
Facebook Twitter Pinterest
 Jeffrey’s Bay wind farm in South Africa. Photograph: Nic Bothma/EPA
When it comes to climate change, the problem is not just the type of energy we are using, it’s what we’re doing with it. What would we do with 100% clean energy? Exactly what we are doing with fossil fuels: raze more forests, build more meat farms, expand industrial agriculture, produce more cement, and fill more landfill sites, all of which will pump deadly amounts of greenhouse gas into the air. We will do these things because our economic system demands endless compound growth, and for some reason we have not thought to question this.

 Forget 'developing' poor countries, it's time to 'de-develop' rich countries
Jason Hickel
 Read more
Think of it this way. That 30% chunk of greenhouse gases that comes from non-fossil fuel sources isn’t static. It is adding more to the atmosphere each year. Scientists project that our tropical forests will be completely destroyed by 2050, releasing a 200bn tonne carbon bomb into the air. The world’s topsoils could be depleted within just 60 years, releasing more still. Emissions from the cement industry are growing at more than 9% per year. And our landfills are multiplying at an eye-watering pace: by 2100 we will be producing 11m tonnes of solid waste per day, three times more than we do now. Switching to clean energy will do nothing to slow this down.

If we keep growing at 3% a year, that means that every 20 years we need to double the size of the global economy
The climate movement made an enormous mistake. We focused all our attention on fossil fuels, when we should have been pointing to something much deeper: the basic logic of our economic operating system. After all, we’re only using fossil fuels in the first place to fuel the broader imperative of GDP growth.

The root problem is the fact that our economic system demands ever-increasing levels of extraction, production and consumption. Our politicians tell us that we need to keep the global economy growing at more than 3% each year – the minimum necessary for large firms to make aggregate profits. That means every 20 years we need to double the size of the global economy – double the cars, double the fishing, double the mining, double the McFlurries and double the iPads. And then double them again over the next 20 years from their already doubled state.

 Toy car factory in China
Facebook Twitter Pinterest
 Current projections show that by 2040 we will more than double the world’s shipping miles, air miles, and trucking miles. Photograph: Feature China/Barcroft Images
Our more optimistic pundits claim that technological innovations will help us to de-couple economic growth from material throughput. But sadly there is no evidence that this is happening. Global material extraction and consumption has grown by 94% since 1980, and is still going up. Current projections show that by 2040 we will more than double the world’s shipping miles, air miles, and trucking miles – along with all the material stuff that those vehicles transport – almost exactly in keeping with the rate of GDP growth.

 The pope v the UN: who will save the world first?
Jason Hickel, Martin Kirk, Joe Brewer
 Read more
Clean energy, important as it is, won’t save us from this nightmare. But rethinking our economic system might. GDP growth has been sold to us as the only way to create a better world. But we now have robust evidence that it doesn’t make us any happier, it doesn’t reduce poverty, and its “externalities” produce all sorts of social ills: debt, overwork, inequality, and climate change. We need to abandon GDP growth as our primary measure of progress, and we need to do this immediately – as part and parcel of the climate agreement that will be ratified in Morocco later this year.

It’s time to pour our creative power into imagining a new global economy – one that maximises human wellbeing while actively shrinking our ecological footprint. This is not an impossible task. A number of countries have already managed to achieve high levels of human development with very low levels of consumption. In fact Daniel O’Neill, an economist at the University of Leeds, has demonstrated that even material de-growth is not incompatible with high levels of human well-being.

Our focus on fossil fuels has lulled us into thinking we can continue with the status quo so long as we switch to clean energy, but this is a dangerously simplistic assumption. If we want to stave off the coming crisis, we need to confront its underlying cause.

Join our community of development professionals and humanitarians. Follow @GuardianGDP on Twitter.