You Want to Ration My What? (continued)

by Don Fitz

Q. Your new book, Any Way You Slice It: The Past, Present and Future of Rationing (The New Press, May, 2013), suggests that many people shudder in horror at the very thought of rationing. But have there been circumstances when people preferred rationing?

A. Yes. There is a chapter in the book on 20th century experiences in which people did and didn’t see rationing as necessary. During WWI, for example, we did not have formal rationing because the government had such a strong free market philosophy.

At the beginning of WWII the government was reluctant to ration very much; but there was a strong public demand for extending the limited rationing program to a wider range of goods. People wanted basic necessities that they were not getting.

There was very widespread support for gas rationing during the 1970s energy crisis, and Congress passed a standby rationing plan in 1980. But soon, oil began to flow from the middle east; so rationing was not put into effect.

Q. We usually think of rationing as something done only in emergencies. But in what way does rationing exist every day in a market economy?

A. Economics textbooks talk about “the rationing function of prices,” meaning that prices, along with people’s preferences, determine which goods and services go where. But preference—willingness to pay—is largely a function of ability to pay. Many are not able to buy certain goods. We can end up with very unfair distribution if price is only way to determine who gets what.

Q. Why might some people or segments of society like rationing more than do others?

A. This has both theoretical and practical answers. Economists have used mathematical models when they ask “Does price or formal rationing perform better in getting basic necessities to everyone?” The conclusion is that if a society has a high degree of income and wealth equality, and large differences in preferences for different goods, then a price system works better. But if there is high inequality, which is the situation almost everywhere today, explicit rationing is better at ensuring that people can meet their needs. In the long run, what is needed is a massive redistribution of economic power.

One of the chief factors for ensuring popularity of rationing during WWII was that rules applied to everyone. The press was fascinated with prosecutions of the rich and powerful for violations. The governor of Maryland lost his gas ration for indulging in pleasure driving. A ring of socialites in Detroit were caught buying cheese under table. Stories such as these gave people confidence that everyone had to play by the same rules.

Q. What are some of the items that have been rationed most often around the world?

A. Chapter 4 of Slice It goes through fossil fuel, water, food and medical care. Those are among the most frequently rationed necessities. But they differ in how easily they can be rationed.

Water is the most simple to ration; it’s being rationed somewhere in the world on any given day due to drought or interruption of supply. At the other end of the spectrum is medical care, which is rationed in very arbitrary and unfair ways. In the US, it is largely rationed by access to insurance coverage. A number of studies have shown that people with no or inadequate insurance receive less and lower quality medical care. Instead of discriminating against certain people, there should be discrimination against expensive, less effective procedures.

Cuba is a dramatic example where it is hard to see much harm by rationing. Everyone in Cuba has rationed, free neighborhood care. Cubans have a life expectancy equal to that of Americans and a slightly lower infant mortality rate.

Q. The really big issue is rationing CO2e (carbon dioxide equivalency). What does an “equal allotment of carbon” mean and how could it change into what you call a “two tier” system?

A. Proposals for rationing household CO2 emissions have originated mainly in the UK. They are all pretty similar in forms that they take: every adult would receive an equal share of carbon-emissions credits.

The national “budget” for emissions (and therefore each household’s quota) would decline year by year. The system is visualized as applying mainly to transportation and residential carbon emissions. Everyone would have a card they would use at the gas pump. They would swipe the carbon card, which would be like a credit card but would deduct credits from the driver’s carbon account. It would apply similarly when paying utility bills.

It is important to recognize that people have different requirements. Some live farther from work or live in old houses.

Carbon rationing systems might allow those with an excess of carbon credits to sell them into a carbon market and others to buy extra credits. This would increase flexibility but also introduce a new element of unfairness. It would allow the rich to buy their way out of any restraints. Better ideas for how to deal with problem exist. During WWII the economist Michal Kalecki suggested that people who cannot afford to use all of their ration credits could get extra income by selling unused credits back to the government (which would “retire” those credits) and not into the private market. This does not solve the problem of the low income person who needs larger quantities of gas or heating oil just to get by. But there are proposals for national campaigns to insulate homes and similar thoughts for transportation.

Q. What do you think would be the fairest way to ration CO2e?

A. I imagine it would be something similar to those British proposals. I would not like to see national markets in carbon credits, at least not as a permanent feature. It would not only create unfairness, but could be linked to those notoriously volatile international carbon trading markets. Its highly unfair aspects could not only let rich individuals buy their way out of restraints; rich countries could also buy their way out.

To emphasize what I said at the beginning, I do not see rationing as the initial tool to cure the climate crisis. First, there has to be a commitment nationally and internationally that there are ceilings on carbon emissions, with no “escape hatches” or “offsets.” Then, cities need to be restructured so that they are not car dependent, new transportation systems established, and houses retrofitted or rebuilt smaller and less energy dependent. All that requires a huge input of money, energy and time. It would be the equivalent of a war-time economy because a lot of resources would have to be diverted from the consumer economy into building a society that would be sustainable in the long run. In that situation, we would have to ration carbon emissions or the fuels and activities that generate them.

Q. How important is the concept of fairness in making rationing acceptable?

A. Fairness is one of the two fundamental purposes of rationing. The other is restraints or limits. A rationing system that is not fair is one that is not going to work. Research shows that people value fairness more highly than efficiency or wealth. The fact that we all put a high value on fairness has not translated into an economy that’s fair. If we do decide to have a fair economy, then explicit rationing will be a part of it.

Q. Most past rationing has occurred due to scarcity. How could the current “crisis of abundance” create a challenge for rationing CO2e?

A. This is the biggest question. We’re talking about a conscious decision to leave easily available fuel and other resources in the ground. Then we are talking about an economy very different from the one we have now. It is hard to think of any precedent for rationing in the face of abundance. This is why people get upset if you mention rationing. But the more basic and controversial idea is that of consciously putting a ceiling on extraction and the use of fossil fuels and other resources This is what is alien to current economic thinking.

If we get over this, then need for rationing would clearly be preferable to alternatives such as queuing or having fights at gas stations.

Don Fitz teaches Environmental Psychology at Washington University in St. Louis and produces Green Time TV. He can be reached at dfitz@wustl.edu