One of my New Year’s resolutions is to blog more about the general lameness of the economics profession when it comes to energy and climate issues. (Note to self: How about losing a few pounds?)
I was in the midst of putting this resolution off for a few weeks when I saw a quote by Robert Stavins that seemed to sum up the value-subtracted that economists bring to the world.
In an otherwise excellent New Yorker article on Van Jones’ efforts to push a green jobs agenda, which I will blog on separately, Elizabeth Kolbert feels compelled to “balance” Jones with some people who don’t think it’s a good idea to simultaneously address the climate problem and the poverty/jobs problem. Who else could a respectable journalist turn to than an economist, a profession that arguably has cost the country and the world more jobs than any other?
Indeed, I remember Bill Clinton opining at a Georgetown conference in 1997 on why he ignored the advice of Administration economists, like Larry Summers, who urged him not to adopt a serious greenhouse gas emissions target at Kyoto. Clinton said his economic team had assured him that his balanced budget plan would be a job killer, so he pretty much took everything they said from that point on it with a grain of salt. But I digress.
Kolbert manages to elicit this amazing response from one of our leading economists:
When I presented Jones’s arguments to Robert Stavins, a professor of business and government at Harvard who studies the economics of environmental regulation, he offered the following analogy: “Let’s say I want to have a dinner party. It’s important that I cook dinner, and I’d also like to take a shower before the guests arrive. You might think, Well, it would be really efficient for me to cook dinner in the shower. But it turns out that if I try that I’m not going to get very clean and it’s not going to be a very good dinner. And that is an illustration of the fact that it is not always best to try to address two challenges with what in the policy world we call a single-policy instrument.”
In short, whatever we do to address climate must not attempt to create jobs. And whatever we do to create jobs should make no effort whatsoever to get off our self-destructively unsustainable economic path. That would not be a Pareto optimum, I guess.
Seriously, Dr. Stavins, just because you haven’t figured out how to walk and chew gum at the same time, doesn’t mean nobody else can.
(Note to Dr. Stavins: Just for the record, the efficient way to cook dinner is with Energy Star appliances (or perhaps a solar stove in some developing countries), and the efficient (and green-job-creating way) to take a shower is with a solar hot water heater (and heat exchanger connected to the shower drain to preheat the water going into the hot water heater). If you were like my old boss Amory Lovins, you could also capture the waste heat from the stove and use that, too. And while we’re at it, why don’t we make the whole damn house super-efficient.)
(Note to future dinner guests of Dr. Stavins: Instead of bringing him some wine, I’m gonna suggest a nice bottle of cologne or a little deodorant. He’ll know what to do with it.)
And much as I love Kolbert’s writing, especially her terrific climate book, Field Notes from a Catastrophe, the paragraph right before the Stavins quote is not one of her best gems:
Meanwhile, the basic premise of Jones’s appeal—that combatting global warming is a good way to lift people out of poverty — is very much open to debate. Economists generally agree that the key to addressing climate change is to raise the cost of burning fossil fuels, either directly, through a carbon tax, or indirectly, through a cap-and-trade program. Low-income families are the ones that would be hardest hit by such a cost increase. They could be compensated through some kind of rebate, or a cut in other taxes; it’s been proposed, for example, that revenues from a carbon tax could be used to reduce the payroll tax. But it’s not at all clear that the number of jobs created by, say, an expanding solar industry would be greater than the number lost through, say, a shrinking coal-mining industry. Nor is it clear that a green economy would be any better at providing work for the chronically unemployed than our present, “gray” economy has been.
Uhh, Elizabeth, every major climate proposal rebates money back to low-income people. And you, of all people, should understand the flawed assumptions in that paragraph. After all, the semi-famous last sentence of your book reads:
It may seem impossible to imagine that a technologically advanced society could choose, in essence, to destroy itself, but that is what we are now in the process of doing.
The issue is most certainly not whether “combatting global warming is a good way to lift people out of poverty.” The issue is that we have no choice as a society but to combat global warming in order to avoid destroying ourselves.
The only question is whether we are going to adopt the rigid one-thing-at-a-time single policy instruments of neoclassical economists, in which higher energy prices are the only solution and thus economic pain and hardship is inevitable, or are we going to adopt intelligent “technology-advanced” policies that simultaneously reduce emissions and create jobs?
The coal mining jobs may be unsavable—thanks to conservatives and the coal industry both of whom rely on traditional economists. But the planet must be saved, and the lost fossil-fuel jobs can be replaced by green jobs—again, if we’re smart.
As an aside, our trade deficit in oil in the next decade is likely to be several trillion dollars. Somehow I think that spending that money on made-in-America efficient vehicles and alternative fuels will generate a lot more jobs than handing our money over to foreign oil tycoons, but then again I only did a concentration in economics at M.I.T., and I certainly remember arguing at DOE with administration economists who assured me that trade deficits were not at all bad things.
I know it is hopeless ask the media and policymakers to stop listening to economists, but if anyone can tell me of any intelligent thing a major economist has recently said on energy or climate other than Weitzman, I’ll cook them a soggy dinner.
All kidding aside, I think the economics profession’s misunderstanding of climate science and its misapplication of cost-benefit analysis are among the biggest impediments to serious and intelligent efforts to avoid humanity’s self-destruction. I will lay that out in future posts.
This post was created for ClimateProgress.org, a project of the Center for American Progress Action Fund.
The jobs are in the trees
[UPDATED] While the big cats cower, time to build robust food economies
Comments
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CKA in Red State USA Posted 1:43 pm
09 Jan 2009
True, the coal industry, through its paranoia and ineptness in identifying ways to counter coal's opposition, have cost the industry. Badly.
But coal has been and actively remains demonized by so-called environmentalists, much the same way, if not worse, than nuclear energy was a few decades ago.
Certainly, the Democrat Party agenda also has targeted coal for extinction. Harry Reid is one vocal example.
General ignorance may also fatally damage the coal industry. Those who oppose it seem not to understand or want to understand the nature and timing of technology development, then commercialization, of the level and types of technologies in the mix that will better serve us all.
Nor do I think that those same people understand or care to understand the concept of lifecycle costs of technology options.
Were that the case, many glitzy options today would not go much further. Comes to mind immediately corn-to-ethanol programs.
As for those solar panels?
If you do a lifecycle/cradle-to-grave, including waste disposal, analysis--one that considers all environmetal (traditional air, land and water pollutants, as well as GHGs, etc.) and energy and economic costs--with their production, you might even find that they may not be as much of an attractive alternative as thought.
Even the so-called energy-efficient vehicles might be less attractive, especially unless their costs become compatible to more people's pocketbooks.
As for alternative fuels?
There is real promise in biomass. There is even promise in wind, though the loss of views remains strong obstacle to wind farms in certain places.
But back to coal?
Right now, coal-fired electricity accounts for about 50 percent of the domestic energy supply.
It will not be an overnight--decade or two--replacement of that, regardless of how much wishful thinking and prognosticating occurs.
In fact, wisdom would suggest that coal, in some form, should remain part of the country's, even globe's, energy mix.
Of course, we speak here about the U.S., while in China, expectations are that coal use for electricity generation will increase by 30 percent, by 2015 or so, to account for their industrial growth.
Given their growth and what appears to be bringing a major coal-fired electricity generator online weekly or so, globally, those emissions present serious problems.
Domestically, I agree that higher energy prices and their associated pain are rigid and, at least to me and many others I know, not preferable or acceptable.
One last thing: It's a great academic exercise to believe that coal-based jobs can be replaced by "green jobs." Put boots on the ground in the coal-mining regions of America, though, and you will find an entirely different view.
Maybe the balance sheet shows West Virginia and its economy erased, or parts of other states similarly affected, while "green jobs" elsewhere crop up. That, though, does and will not address the suffering and real pain on that microeconomic or regionally economic level.
And there will be much economic pain for those directly and indirectly affected in those mining regions.
I hope the policy makers and implementers will consider these less-than-macro-level issues.
Personally, however, I don't hold much hope that they will.
They will simply mumble something about jobs dislocation, too bad this had to happen, whatever--and then congratulate themselves.
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amazingdrx Posted 3:41 pm
09 Jan 2009
"Seinfeld" put the lie to this one, actually Larry David probably wrote the sequence where Kramer cooks dinner in the shower.
Seriously, it is nice to see someone else finally noticed some of the weaknesses exhibited by economists. Thanks Joe. I have been on my own on this front for quite some time here.
Jason never did admit that "free" market theory was flawed, he instead proposed a name change to "market based economy". Where did he dissapear to anyway, hehey.
I bet he is still preaching to his students, the Reagan revolution religion. Amen...and amen.
http://amazngdrx.blogharbor.com/blog John Schneider, Northern Wisconsin
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GreenMom Posted 3:51 pm
09 Jan 2009
I'm looking forward to your future posts on economists and climate change, because you've nailed it - and can express it in a way that my job prevents me from doing.
Economics in the regulatory world is frustratingly narrowly focused...costs and benefits are so narrowly construed as to render the economic analyses worthless sideshows to the real policy that needs to be enacted.
There are a few people trying to broaden the view, but they are counterbalanced by the green lampshade set, for whom the purity of analysis trumps any effort to characterize the innovation that is waiting to happen.
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Bob Wallace Posted 4:04 pm
09 Jan 2009
Someone's ox is going to get a good goring.
Should it be some miners in coal country who can be retrained to work wind farms, etc. or the rest of the world's population (including those miners and their families)?
Pick your victims....
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Bob Wallace Posted 4:13 pm
09 Jan 2009
Is it not possible that some/many economists, being strong conservatives/libertarians are in deep denial about the possibility of climate change and the resulting extreme high cost?
Being true believers in everything anti-Gore might leave them doing un-pure analysis which then would lead to faulty conclusions.
Simple decision making theory, when it encounters an outcome so incredibly significant as what global climate change could produce, factors in an even small probability and yields a decision on the side of prudence.
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spaceshaper Posted 12:38 am
10 Jan 2009
Then, the reasoning goes, if economics boils down to a matter of (however well-informed) opinion, why not the "other" sciences too? Statistically-based disciplines like climate science and the study of the archaeological and paleological record would be particularly vulnerable to this analogy, hence the credibility given to AGW denial and creationism.
The true meaning of life is to plant trees, under whose shade you do not expect to sit.
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Bob Wallace Posted 12:51 am
10 Jan 2009
But then there is behavioral economics and game theory which take many of the issues under study into a controlled lab setting.
And I think this has about zip to do with climate change denial. That's just another dodge thrown up by people who want to avoid admitting that they're screwing things up with their FUD.
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Pompey Road Posted 12:59 am
10 Jan 2009
The theme or attitude I am picking up from this blog is that the miners are all expendable and just dump them for the greater cause. That is the same mentality the coal corporations and local and state government had for years. If you approach the situation with this attitude you will drive the coal producing states and workers into the arms of the coal corporations and firmly on their side.
How about coming up with some alternative energy jobs that pay a decent wage first before you throw the miners onto the slag heap of society. The timber in most places is on its third or fourth cut in Appalachia. Wood ethanol and biomass fuels, hydro and geothermal energy production is feasible and viable. Solar is an option because if you are not in a deep hollow we still get a few hours sun a day. If you make some advances in battery or solar cell technology and production, how about building some of the plants in Appalachia instead of out sourcing the jobs to China. When it comes to miners having to quit eating in order for you to breathe clean air we will mine coal. We have to breathe the coal dust from the mining and the dust from the haul roads so we are used to breathing contaminated air. The underground temperature is a constant 55 degrees underground so while you are sweltering above ground due to global warming we will be mining the coal that causes it in air conditioned comfort.
I would prefer we shut down every coal mining operation in the country and switch to clean alternative sources. I would prefer we stop a process that is destroying Appalachia with the Mountain Top Removal method and leaving us an abundance of toxic coal slurry or sludge ponds. You are naïve to believe you can wipe out billions of dollars of coal infrastructure and the only way the workers in Appalachia have to make a living wage without offering a viable alternative. Especially when over 50% of the country's power generation depends on it.
You can write all the death to coal hate papers you want and tout your willingness to throw all that depend on that industry into the ranks of the unemployed or abject poverty. Most of you are typing on a computer powered by coal generated electricity and are as unrealistic as you are hypocritical. Most would know that we are not only talking just miners but all the people that process and transport coal. You are talking rail and the trucking industry and including the power generation jobs and infrastructure . There are thousands of support jobs at risk if the industry is destroyed also. If it's only a hand full of miners that is the albatross around our neck then classifying them as expendable might seem more palatable.
Work the problem, work toward finding the viable alternative to coal and quit taking the intellectual lazy position of just destroying the coal industry and the people that depend on it without regard for the people you are talking about. Green manufacturing and infrastructure jobs "if you build it they will come"
Get off your sanctimonious tree hugging asses and take a constructive realistic approach to fixing the problem. You have to be intellectually challenged to just say dump coal without providing an alternative or without any regard to the thousands of people who's existence depends on that industry.
I hate coal in all its forms and what it has done to my region and is doing to the planet at large. However I am not stupid enough to believe the country will just reject coal overnight without an alternative fuel source for power generation. Especially in the dire economic situation we currently find ourselves in.
The eons of time and nature was good to us down here. It was not until we become civilized that destroying our habitat become fathomable or fashionable.
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practicalpolitik Posted 2:08 am
10 Jan 2009
This will happen because the capacity of solar, wind, and other renewable sources of energy simply cannot replace what coal and other fossil fuels gives us today. Nuclear energy is an incredible resource that is beyond coal, natural gas, and oil in cleanliness but has been completely demonized by the environmental movement. It is a viable bridge to renewable sources I think.
But a move to green energy this very moment is ridiculous. The technology simply is not there. Once it is, great, we'll do it. My family lives in California and smog in the Central Valley is no fun. But I'm aware enough to know if we rid ourselves of coal, the internal combustion engine, and other sources of pollution and greenhouse gases the country would crash to a halt which would do even more harm to the environmental movement.
I consider myself energy conscious in the economic way: if it saves money and I can afford it, I'm interested. At my law office I have been replacing the incandescent light bulbs with compact florescent bulbs for the money savings despite the mercury contained therein. A small step but one that interests everyone.
Once the technology is there the economists will embrace it. Why? It'll save them money and give jobs. Replacing light bulbs with more energy efficient ones is one early step as is more efficient engines in cars. But until the capacity is there why make a wholesale switch which will ultimately slow down the move to "green" energy?
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hapa Posted 2:24 am
10 Jan 2009
here's the program to replace coal in under 20 years
use no energy where comfortable
use energy better when you do
use clean energy
holding the future hostage may or may not be a good way to ensure job replacement. unfortunately with the particular 'holes who run north america at the moment, every change is the right time to reduce labor costs, and there's nothing anyone in this forum can promise different, for sure. the powers-that-be are rotten people.
however. you missed a big one. the "green jobs" thing means
retrofitting or replacing most of the buildings in america.
rebuilding the electric grid.
repairing watersheds.
going very heavy into recycling and reselling.
building up to switching truck freight to rail.
building up mass transit.
retrofitting or replacing any cars and trucks that people still want after that.
reworking our food production and distribution.
and more. it's a very long to-do list with lots of work. part of the reason people don't talk about what happens after coal and industrial-scale consumption is they're terrified at how much work it will be because THEY don't think THE COUNTRY is tough enough to roll up its sleeves on such a big project. so far, so true: ostriches instead of heroes.
but let me tell you something about who gets jobs. in soviet russia, you were guaranteed work, to a point. in china today they are trying to meet that standard in a more capitalist way, with very risky results.
in pretty much any other economy, works goes either where it's needed, where there's experience, or where there's a good price. if you get work without one of those three, you aren't guaranteed you'll keep it. nobody honest CAN make that guarantee.
on the flipside, not switching from coal and oil and gas has big cost problems separate from climate and ecology that also probably mean major job loss. you want to yell into the holes that the planet isn't working hard enough to make fossil fuel cheap to dig out? that's who's lazy.
the current downturn will get worse and what comes after it will be no land of milk and honey. we left too much to the last minute. but there's PLENTY of work to go around and the vast majority of greens want that work to be done here, by those who want it, not in china, canada, or mexico.
but you have to want it. nobody can win those jobs for you without your help. if you don't want it, you probably won't get it.
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hapa Posted 2:40 am
10 Jan 2009
going green: not optional. we are in trouble.
nuclear: not a bridge. in 20 years we'd have our work cut out just keeping up with replacing today's nukes that are going out of service. and if you think they're affordable to build, i have an atomic-powered bridge to sell you.
after moving current dirty investment over to clean and spending some of the military make-work money on buying us real security, the remaining out-of-pocket costs aren't much.
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Jon Rynn Posted 3:29 am
10 Jan 2009
So the example Joe gives is set up to attempt to find two local optimal points -- taking a shower and cooking a dinner. Neoclassical economics is incapable of determining the optima for a complex system. So they do what any self-respecting profession would do -- they don't consider situations where there paradigm breaks down. Which means that they can't analyze or rather understand the holistic systems of global society interacting with a global environment.
I hope that Joe soon turns from tearing up neoclassical economics, which is always fun to do, to putting forth an alternative economic paradigm. The most obvious right now is ecological economics, as for instance put forward by Herman Daly.
I've also argued that the economy is an ecosystem. In other words, as opposed to the model used by neoclassical economists, each part of the economy has a function; each part has varying power; each can interact in complex positive and negative feedbacks among themselves; and the economy must be seen as a holistic system (I elaborate on this is a series called "Extreme Makeover, Global Edition", as well as part 2 and part 3).
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Pompey Road Posted 3:58 am
10 Jan 2009
I believe that Obama's recovery program that deals with infrastructure especially a more efficient power grid and energy conservation projects will produce sustainable jobs with the real effect of reducing our energy demands. I feel a full 20% reduction in energy demand is obtainable over the next twenty years and it will be the most cost effective action we can take to reduce energy consumption and create some of the 3 million jobs he talks about. I feel new green manufacturing jobs will be created by technical advances in solar and battery technology. Demands can be created and the timing has never been better.
I may have misunderstood the remarks that I felt were callous about the miners losing their jobs and only having to be retrained for some other line of work. That part of the post was framed to only cover the miners who are but a small percentage of the people employed in and around the coal industry. No need to repeat the peripheral industry and employment that makes up the total mining picture.
I will add the states that depend on coal severance tax, coal corporation tax, taxes on coal reserves plus the taxes paid by the citizens employed in the coal industry is significant and part of the overall coal economy. Not to mention that every one in the coal industry that loses that job becomes an unfunded liability to the state instead of a tax contributor. These states are heavily influence by state legislatures from the coal counties who remind the powers that be of the money coal contributes to the states coffers. The coal states representatives promote and defend coal at the national level and yes even representatives from some of the Northeastern States defend and support coal.
Almost all of the coal interest in Kentucky and West Virginia is owned by out of state corporations and interest. The energy market is about the only sector solvent right now and Wall Street is involved in every energy sector. When George Bush penned his midnight regulations to weaken the clean water act to insure the practice of Mountain Top Removal I doubt if the influence come from a state lobbyist. The portion of the economy and markets that involves coal is what I am getting at. It is just more than the handful of men who actually mine the coal. If it were I would grudgingly agree with the poster they will just have to find another line of work and we will need to retrain them to sooth our conscious.
Point being when attacking coal we need to look at the whole of the coal based sector that will include not only the Coal Corporations, the coal producing states and their economy, Wall Street the real mover and shaker in the coal economy, plus all the federal departments and employee's who regulate the coal industry.
Some environmentalist who like me never look at a mutual fund would probably be shocked or embarrassed to know they are probably invested in coal. It is just an over simplification to think only a few miners will be effected if we took out the coal industry without coming up with something viable to replace it with. It is to simplistic to think you can unravel a multi billion dollar sector with its tentacles in multi layers of state, federal and Markets in a short period of time. The real over simplification for me was just reducing it down to a few expendable miners being the only casualties in a switch to alternative energy sources.
I am not totally pessimistic. The free market thrives on a demand being created and we will meet the technological challenges of creating the green engineering and manufacturing base needed to fill this demand. Coal I feel will become so cost prohibitive because of environmental and market concerns we will see it's demise. I feel that energy conservation short term is the most cost effective job creating act we can take and I am strongly behind this portion of the recovery plan. The mass transit and infrastructure job creating projects to me are just icing on the cake.
I will reiterate the over simplistic targeting of just one portion of the coal sector when attacking coal is short sighted. Coal will have to be attacked at every level. Corporate, state, federal and especially the market sector not just the worker. Create the demand for viable alternative energy sources and the market will dismantle the coal infrastructure over time as it creates new alternative energy jobs and markets to replace it with. I do not know if we can go cold turkey and do it in twenty years. I do know that targeting the bottom rung of the ladder "the miners is nonproductive and ineffectual'
The eons of time and nature was good to us down here. It was not until we become civilized that destroying our habitat become fathomable or fashionable.
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Jon Rynn Posted 4:14 am
10 Jan 2009
From what I understand from listening to Jim Webb, and my own off-the-cuff thoughts, Appalachia has been "passed by", and there must be some way to "bring it in". It's sort of amazing that, with all of that coal, it didn't become an industrial center -- apparently the coal was shipped to the Midwest and Northeast.
I have to say, the one time we took a train through West Virginia I saw some pretty big wind turbines. So it may be that green industry -- which may be the only kind of industry that will be expanding -- should have Appalachia as one of it's primary sites. That way, the pressure decreases to keep the coal miners at work, since they can (hopefully) simply walk out of the mine and into the factory. At least, that would be the ideal.
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Pangolin Posted 4:20 am
10 Jan 2009
The majority of us, separated from our monthly earned income stream, would quickly vanish into the ranks of the homeless all our wealth dissolved. Those with so-called "independent wealth" are the ones making the financial decisions.
What they have decided is that we will continue to attempt to funnel the majority of surplus value to about 5% of the people in preference ot using that to tackle global warming, poverty, environmental damage, health care or any other stagnant problem you would care to name.
There IS plenty of work. It's just too bad that the wealth is bypassing that legitimate work in order to build golf courses, cruise ships and new mansions in places like Jackson Hole, the Hamptons and Cape Cod.
We don't get to play "save the planet" without re-distributing wealth. In spite of what the economist say, there is only a limited planet with limited resources to go around. It's pretty easy to find out where the resource stream that isnt' providing primary food, shelter, clothing and health care is. It's buying third cars, second, third and fourth (vacant) houses, vacant farmland used as "ranches," and jet flights to everywhere for a small number of frequent travelers.
The economists are twisting into knots trying to prevent that wealth from being put to work for the greater good. It's what they're paid to do.
Put the Carbon Back
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Jon Rynn Posted 4:48 am
10 Jan 2009
Let's say we could come up with a global plan to save the planet and not decrease the wealth of the wealthiest. even then, the problem would be that they would be less powerful relatively because the rest of humanity would be wealthier than now. So that would probably translate to less power for the "power elite". In other words, a larger and richer middle class leads to less power for the power elite, and looked at another way, the power elite become more powerful the poorer the middle class becomes, a point that Thom Hartmann regularly makes.
I think it's best to proceed without worrying about the power elite, and instead envision a sustainable society, educate the public, and see what happens.
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Bob Wallace Posted 12:59 pm
10 Jan 2009
Let's face it, there just aren't a lot of possibilities for good jobs when you get into areas where the ground isn't very level and transportation in and out is difficult.
I live in a similar area of California now. It's hard to run a modest sized business here. What we see is creative people start businesses, grow them up to where they have a national market, and then they are forced to relocate closer to larger markets and highway/rail systems.
Those same problems are always going to make life in Appalachia difficult. And just like where I live, people love their land, their communities, and don't want to live.
But, let's be real. If the climate scientists are correct (which I believe) we must stop burning coal. We have no option.
So, what to do for people in the coal areas?
Offer generous resettlement assistance to those who would agree to leave.
Help set up resort/vacation facilities for city people who would like to enjoy the beauty of the mountains.
Come up with a subsidized crop/product as was done with tobacco when I was growing up.
Use the varied elevation (and abandoned mines) to create pump-up storage.
Build wind farms even if the sites are not as productive as others.
All of the above is a sort of welfare, but a "work for" type. We should spend some public money cushioning the blow to the coal workers, but we must quit extracting and burning coal.
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JMG Posted 2:37 pm
10 Jan 2009
Meanwhile, now that establishment enviros are watching their 401ks crater and suddenly are ready to notice that the cult of the economists has been A Bad Thing, Dmitry Orlov has a pungent paragraph on these pompous prognosticators of piffle:
And then there are the additional problems of poor advice and lack of authority. To build support for his plans, Mr. Obama must rely on the consensus advice of mainstream American economists. These astrologers to the wealthy, with their fancy astrolabes they call "models," may be popular during flush times, in spite of the feeble predictive abilities of their "science," but they start to seem downright foolish and feckless once the economy starts to implode. Still, these pseudo-scientists, with their pseudo-Nobel prizes and their tenured faculty positions, are quite entrenched, and will be difficult to dismiss, because the fiction they spin is so much more cheerful than the physical reality it is designed to obscure.
read the rest of a lengthy and excellent essay at http://is.gd/fifN
The 5% Project
Let's live on the planet as if we intend to stay.
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liberalnun Posted 3:29 pm
10 Jan 2009
That having been said, I see many in the economic profession as being at the forefront of promoting real action. Many respected economists, including Robert Stern, have done studies showing that timely action on climate change will be very beneficial to our country's economic interests - something that even business-oriented Democrats don't seem to understand.
But just as importantly, economists can advise environmentalists how to craft policy that works. We can tell you why carbon taxes will be more effective than technology subsidies and why costs should be imposed on the consumer end and not on the producer end. And we can tell you what you can promise and what you can't promise to the public.
In that vein, I think Stavins's and Kolbert's comments were quite fair. Note that Stavins did not say that we shouldn't address climate or that we shouldn't address poverty - he said that trying to artificially link the two might not be in anyone's favor. This is a valid point. In order to really deal with climate change, we need to get people to stop using so much energy, stop eating so much meat and processed food, etcetera. These are things which will be onerous to a lot of people, including the working class, and which cannot necessarily be accomplished in ways that benefit our economy in the short term. While green spending might produce jobs in the short run, as public spending is generally thought to help with recessions, it will not by itself lower the unemployment rate in the long run, and it is debatable what costs real climate change action will impose on the economy. Most people here and elsewhere, me included, care deeply about both jobs and the environment - but unfortunately, there are tradeoffs, and miracles can't be produced. The best we in the economics profession can do is try to minimize these tradeoffs and stop climate change in the best way possible.
For that reason, I think it is dangerous to promise the public "green jobs" as an enticement to accept action on global warming - it will produce a backlash against environmentalism if climate change measures end up imposing major costs on the economy. There is, however, a way to link climate and the economy in an honest way: present climate action as a small short-run cost in order to insure against the likely large cost of climate change in the future. Demand temporary sacrifices for no reason other than that the environment is essential to our future success as a civilization. Of course, the poor don't really have a lot of room to sacrifice, so they need to be compensated under any climate scheme. And of course, we should try to improve the lot of the poor in general. But we should not promise overall economic gains from environmental action, because we might not be able to deliver on that promise.
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Gar Lipow Posted 3:47 pm
10 Jan 2009
n order to really deal with climate change, we need to get people to stop using so much energy, stop eating so much meat and processed food, etcetera. These are things which will be onerous to a lot of people, including the working class, and which cannot necessarily be accomplished in ways that benefit our economy in the short term. While green spending might produce jobs in the short run, as public spending is generally thought to help with recessions, it will not by itself lower the unemployment rate in the long run, and it is debatable what costs real climate change action will impose on the economy. Most people here and elsewhere, me included, care deeply about both jobs and the environment - but unfortunately, there are tradeoffs, and miracles can't be produced.
I suppose the use of the word "necessarily" gives you some weasel room, but I have spent a great of effort documenting that we can phase out emissions in ways that benefit the economy in the short run. There are three causes:
Savings from more efficient energy use can pay most or all of the cost of more expensive sources: solar or wind electricity and other renewables. (Or nuclear electricity as some, but not me, insist.)
Any remaining difference would be made up by short term positive externalities, some of which could be capture via taxes to return to the people who otherwise would be hurt.
I would add that the first reaction of a lot of economist is to express skepticism, because 1 means that, in the words of Amory Lovins "businesses leave thousand dollar bills on the factory floor". I invite you look over my literature reviews on elasticity to see that economists who have studied this in depth have concluded that exactly that happens. Among energy economists doing bottom up studies, at this point I'd argue there is a consense for low elasticity. Among top down econometric studies opinion is more divided, but even there I think you will find the weight of evidence for low elasticity. And when bottom up and top down studies conflict, most economists will agree that the bottom up examinations are the ones to believe. At least in a case like energy where solid bottom up data is available.
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Gar Lipow Posted 3:48 pm
10 Jan 2009
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Pompey Road Posted 1:15 am
11 Jan 2009
I am from Appalachia ,6th generation and right in the middle of the Eastern Coal fields. I was born in a coal company house and my dad had to trade at a coal company store. I worked briefly in the mines myself but never got real comfortable with it, probably because my father died in an East Kentucky coal mine.
I am having a little problem with your suggestion of a buy out package or pay to have all of us relocated. We have already been through that. In the 50's and 60's we had the great exodus from the Appalachian coal fields to the industrial north in order to find employment. The mining industry for us has always a boom or bust cycle. When I was in High School the phrase was reading, riting and route 23. That was the northern section of route 23 that got you headed toward Detroit. We were never allowed to diversify, manufacturing plants were actually killed to insure a steady source of labor for the mines. This added to the overall poverty when the mines and coal mining in general became more mechanized and less labor intensive.
I would rather stay on the property that my ancestors have walked on for over 200 years and since I have become genetically predisposed to live in the mountains I would rather like to stay where I am. The auto industry is going bust in Michigan do you suggest we pay to have all the displaced auto workers relocated also. In fact their exodus has already began to the southern states with right to work laws and no Union. The auto industry has figured out how to dump their legacy cost.
You have been watching to many Grapes of Wrath re-runs. I am going to stay here as my people have for generations and slug it out with the coal corporations. It is still a beautiful place to live between the Mountain Top Removal strip jobs. I had the notion of staying here and try to save the land of my fathers from being destroyed. I really do quite well here and thoroughly enjoy being a thorn in the coal corporations side. That is my vocation and reason for getting up in the morning.
I have had to move before but usually I am back by the time the redbuds and the dogwood is in bloom. You can send me the money for the price of a ticket however. I could use a little vacation.
The eons of time and nature was good to us down here. It was not until we become civilized that destroying our habitat become fathomable or fashionable.
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Gar Lipow Posted 3:38 am
11 Jan 2009
Appalachia has a huge potential for renewable generation. There is no reason some of the new wind turbine manufacturing that will be needed should not be located there, as well as solar cell manufacturing and concentrating mirror manufacturing. For that matter we need to increase rail manufacturing, make new heat pumps, new solar heating panels (very different from electricity generating). That is far from a comprehensive list.
The key is that if we want to phase out coal quickly we need to ramp up the replacement industries just as quickly. We need to make sure to get the politics right so that this actually happens, and so that enough of the benefits from this ramp up are steered to Appalachia and in general to where workers in dirty industries would otherwise be displaced.
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nancyk Posted 4:48 am
11 Jan 2009
http://www.sciam.com/article.cfm?id=the-economist-has-no- ...
Note that agricultural economists are more enlightened with regard to limits to growth. However, Amory Lovins of the Rocky Mountain Institute, is a guru who has advised heads of state, and he likes to say, "Don't think economics. Think finance!" in terms of tools for supporting innovation and dissemination of green technologies, jobs, and thinking.
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Jon Rynn Posted 5:35 am
11 Jan 2009
There you have it, a succinct explanation of why the poor nations stay poor and the rich stay rich -- well, they're getting poor too. Ever since the British destroyed the Indian textile industry in the early nineteenth century so that they could export their inferior textiles to India, the road to underdevelopment has been paved with bad intentions. So I second Gar's suggestion -- build the factories, don't blow up the mountains.
liberalnun, I appreciate your pointing out that indeed, it may be the case that you can "localize" various economic problems and solve them separately, and that doing so may lead to a better outcome. However, there are also many times when that is not the case, and in particular that is where a "green jobs" outlook improves on neoclassical lines of thinking.
However, if there is a problem with a "green jobs" approach, it may be that it doesn't go far enough. Perhaps the entire economy needs to be green, even from a strictly "economic" point of view. After all, it's hard to create output if your state is under water or there is no water, or if you've used up all of your resources.
The question that Van Jones raises, in other words, leads to a larger question: are there economies of scale when tackling social/economic problems?
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Pangolin Posted 5:34 pm
11 Jan 2009
By all accounting practices I've heard about wind power produces far more energy than it requires to build and install modern turbines. Why is there even any consideration of doing something else until wind is built out? Once it reaches break even the economy that owns those turbines is in gravy whether we count that in guilder, yen or sheckels. The same energy cost vs income is true for concentrated solar power and to a lesser extent for photovoltaics. Energy exports will exceed inputs and nicely enough can be separated from the inputs by simply moving the panels.
The money issue is rather moot at that point. If the money flows contradict energy flows all the owners of the wind turbines and solar power stations have to do is flick the off switch until that gets sorted out. The Gazprom solution to energy finance issues.
So if Appalachia wants long-term sources of incomes they would be well served to site wind turbines on those hilltops in preference to removing the hills. The flat spots left by the coal industry could be used for concentrated solar power fields and the earth moving expertise used to create pumped storage reservoirs. One way or the other the coal industry is leaving town.
One thing we are sure of is that waving dollar bills at an oil well or a natural gas well-head will not produce more energy when the well is tapped out. The money itself has no value without an energy source to feed the monetary system. So if all these economists could please throw out their calculations as to how many dollars something will cost and look at the EROI equations we could get on with the real work of making the transition.
Put the Carbon Back
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Bob Wallace Posted 5:59 pm
11 Jan 2009
There in those beautiful hollers full of dogwood and redbud (and long ago fireflies) you've got even more problems than we do here on behind the Redwood Curtain. We've at least got the ability to ship by ocean. If we had anything to ship.
Well, since you ship out coal you could probably move raw materials for turbines in and finished unit out, that sort of thing. But can you really compete to large populations who are closer to source and market?
I'm very sorry for the people living there who depend on coal. But we can't keep them employed in the mines and keep the planet inhabitable. That's just the very difficult position we are in.
Life has always been hard in those parts. My father and his eleven sisters and brothers grew up on a sorry-assed farm that could only be described as growing corn in a gully. They stayed only a step ahead of starvation. That's the sort of agriculture the land provides in much of the terrain.
So what is to be done? Relocate, welfare/make work jobs, be creative in a small scale, or starve.
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spaceshaper Posted 11:58 pm
11 Jan 2009
Strangely enough, the origins of neoclassical economics in mid-19th century physics were forgotten. Subsequent generations of mainstream economists accepted the claim that this theory is scientific. These curious developments explain why the mathematical theories used by mainstream economists are predicated on the following unscientific assumptions:
* The market system is a closed circular flow between production and consumption, with no inlets or outlets.
* Natural resources exist in a domain that is separate and distinct from a closed market system, and the economic value of these resources can be determined only by the dynamics that operate within this system.
* The costs of damage to the external natural environment by economic activities must be treated as costs that lie outside the closed market system or as costs that cannot be included in the pricing mechanisms that operate within the system.
* The external resources of nature are largely inexhaustible, and those that are not can be replaced by other resources or by technologies that minimize the use of the exhaustible resources or that rely on other resources.
* There are no biophysical limits to the growth of market systems.Comments, anyone? Those in the linked article whether by both economists or not seem to split fairly evenly between confirmation and denial of this perspective.
The true meaning of life is to plant trees, under whose shade you do not expect to sit.
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spaceshaper Posted 12:00 am
12 Jan 2009
The true meaning of life is to plant trees, under whose shade you do not expect to sit.
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Pompey Road Posted 2:04 pm
12 Jan 2009
We have hydro, geothermal, pulp wood for biofuel but more than that we have a well trained workforce. Modern mining equipment is complicated and the electronics, welding, and hydraulic skills needed to maintain them is not low tech anymore. The preparation plants and engineering people are highly trained. We have community colleges, tech schools and 4 year colleges. Get your mind off the pick and shovel mining that was done over 80 years ago.
The developments in battery technology and new solar cell and production development won't do this sick economy any good if we send the manufacturing to China. The wind infrastucture requires some fairly elaborate equipment. What ever is needed to be fabricated for the new alternative energy grid or any other alternative energy related equipment can be built in Appalachia and the shipping will be a damn site cheaper than from China.
Underground maintenance men go underground with laptops in a lot of mines now. The belt lines and pumping systems are computer controlled in large mines. The large preparation plants are run by a guy sitting at a computer and monitoring a bank of computer screens.
Even the heavy surface mining equipment maintenance people crawl up on the equipment with a laptop to do diagnostic work.
When Toyota placed a plant in Georgetown Ky. during a slump in the coal industry a lot of their maintenance people come from East Ky. They made the 3 hour drive down to the flat lands to maintain the robotic assembly lines for Toyota.
I know because I helped many of them cram for Toyota's test they were giving for the maintenance people.
If you can't get past the stigma and the stereotypical image of the Appalachian indigenous people take a look at some pictures of a continous mining machine with a coal miner operating it by remote control. Think about what it takes to maintain a compicated mix of electonic and hydraulic monsters in a very rugged environment. Just 3 hours down the road we build Camry's and toyota trucks.
It seems as if toyota found the infrastructure to accomodate their manufacturing. Mountain top Removal has created us enough flat land to fill the industrial needs of China. You talk roads, look at a map and rail is rail. Williamson W. Virginia rail yard is one of the largest in the East. Freight is being developed as I type.
We have the people, the infrastucture and the skills and training component. We also have the coal corporation lobby and small minded, short sighted individuals who don't know a damn thing about this region and still blog like they do.
The dogwood and the redbud are not just for our nostalgic reminising, they belong to the whole country and the mountains they grow on. A coal corporation should not have the right to deny future generations the habitat. Funny you mention firefly's, I did not see but one or two all summer. Something is killing them off also. I never caught a glimpse of a honey bee either. Couple of wild native bee's but they are about gone also. Hell it don't matter they are all just like the mountains and the people. They are all expendable. I will agree with you they have written this part of Appalachia off as expendable.
You never can tell though maybe the Japanese will save us. I don't sweat it for as the Hank Willaims Jr. song says, "a country boy can survive". I am comfortable here and will not have to move or can be budged.
I'll hang around here and take care of my mountain and document for posterity what happened to the rest.
The eons of time and nature was good to us down here. It was not until we become civilized that destroying our habitat become fathomable or fashionable.
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Bob Wallace Posted 2:14 pm
12 Jan 2009
Please don't read into me something that doesn't exist.
If Appalachia can reinvent itself into a place that provides good employment for its people, then hooray for it.
All I'm saying is that we've got to get off our jones for coal and if that costs jobs in Appalachia it costs jobs. We can't afford to destroy the planet just to keep the coal mines open.
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hapa Posted 2:57 pm
12 Jan 2009
this here be the time of unplanned obsolescence. transition-specific factories; prohibitive shipping fuel costs; a different dynamic. wartime without war.
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Bob Wallace Posted 3:49 pm
12 Jan 2009
--
One thing that I've been wondering about, blade manufacturing.
These things are huge. Absolutely huge.
Is anyone considering moving the factories rather than moving finished blades? If making blades is anything like laying up boat hulls, the big issue is a nice, big building, and not a lot of machinery.
Buildings can be prefab and movable. Move a blade plant to the wind farm and make the blades needed there, then take it apart and move to the next location.
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Pompey Road Posted 12:38 am
13 Jan 2009
I believe the main point you made that led to the discussion on the viability of an alternate economy in Appalachia to replace coal was the buy out and transplant remark. It was not an option when the North East lost steel. I don't remember anyone suggesting we buy out all the steel workers and transplant them somewhere else. The black unemployment rate for Afro American youth in New York city is still hovering around 50%. We don't mention an option of transplanting them for obvious reasons of racial overtones. Yet the stereotypical hillbilly can just be bought out and moved. We don't even want manufacturing in the western rocky mountains but the people in the area find segments of the economy acceptable to their quality of life and lifestyle.
The need to get off coal is a given on this site and was not the main point you made that led us into this discussion. On new years eve CNN had a spot on a major rock group celebrating at the Pikeville civic center. We have some industry and a service and tech economy. If you look at this region at this point in time we are not in the depths of an economic recession to extent the rest of the country is. I do regret that is because of coal.
I am typing on a laptop from a wifi residence and could go down to the restaurant and do the same. We have cable, internet, cell, satellite, water mains to hook up to and most of the other services anyone else has. The main point is we have the people locally that keep them up. I know the manufacturing model has changed and micro and specific manufacturing is heavily dependant on rapid and cheap transportation. However the information, technical and service jobs that people take advantage of in the Catskills or the Rocky mountains are available and viable here plus adventure tourism. We are starting to take advantage of our white water rafting and are promoting trails that highlight historic sites. I don't mind mentioning the hiking and biking trails that have been developed but am hesitant to talk about a 13 county wide ATV trail in Mingo County West Virginia and the 14 or 15 county wide Kentucky ATV trail on an environmental site.
My main point still being when and if the alternative energy sector takes off we have the people available that are willing and able to switch from a coal based economy. I still believe the suggestion to buy out and transplant a people from their ancestral home land is an indication of how the nation looks at the region and the people as a whole. The remark may not have been purely ethnocentric because we are a mix of English, Scotts Irish and German with a smidgen of Italian and Afro American thrown in at the beginning of the last century to work the mines. We can not help being associated with an energy source that is not popular at this time. It was just the luck of the draw and chance and circumstance that placed us in the heart of the Eastern coal Fields. I am against coal as much as anyone on this site for myriad and diverse reasons but don't throw out the baby with the bath water.
We transplanted the Cherokee people that were located just a little south of us and history has not put the people who did it in a good light. Like I said before we train and educate a workforce for the entire country, they have been going to every region of the country looking for employment for the last two generations. They go Voluntarily and most do not come back, that fact in itself speaks volumes about the ability of the people to accept gainful employment and the training component already in place. Transplanting an entire region and economic specific workforce would not be accepted as politically correct unless of course you are talking about hillbillies and Appalachia who are further handicapped by their association with the coal industry.
I stand by my statement the suggestions was a stereotypical remark directed toward a people who have for generations have been trying to overcome the stigma of last century's yellow press. It is not within the scope of this little blog piece to list the specific groups one would not feel comfortable making this suggestion about. This in itself also speaks volumes about what the nation at large thinks about the people and the region.
The eons of time and nature was good to us down here. It was not until we become civilized that destroying our habitat become fathomable or fashionable.
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Pompey Road Posted 1:25 am
13 Jan 2009
I would sell my lofty crag and it does have a beautiful souther view but a GD mountain top removal and hollow fill dominates the northern exposure. It will be difficult to find a panoramic 360 in East Kentucky because of MTR. The really good precipices have already been taken by Coal Barons such as Don Blankenship for their mountain mansions. I know it is considered vulgar for the upper crust to discuss money but I doubt most of your bourgeoisie could afford this one.
The eons of time and nature was good to us down here. It was not until we become civilized that destroying our habitat become fathomable or fashionable.
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Pompey Road Posted 1:37 am
13 Jan 2009
The eons of time and nature was good to us down here. It was not until we become civilized that destroying our habitat become fathomable or fashionable.
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Pompey Road Posted 2:29 am
13 Jan 2009
It is no wonder people still make generalized statements about the region without having seen the area first hand. I would only ask that people take a realistic look at the overall area from Lexington, Kentucky on up through the Eastern Coal counties before writing the area off.
The eons of time and nature was good to us down here. It was not until we become civilized that destroying our habitat become fathomable or fashionable.
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liberalnun Posted 6:20 am
16 Jan 2009
Yes, I did use a weasel word on purpose, because I have read studies like the one that was done at UC Berkeley recently that say that at least the first ten to twenty five percent of reductions can be accomplished through energy efficiency and other measures that actually benefit the economy. But I've heard other figures that suggest that up to 2% of GDP might have to be sacrificed. So while I'm not going to say that environmentalism and jobs can't go hand in hand, I think it might be dangerous to sell environmentalism purely in terms of "green jobs" - because if it turns out we do have to suffer economic costs in order to prevent dangerous climate change, the public needs to understand why these costs are necessary in and of themselves, in order to prevent a backlash in public opinion.
You know, I'm having second thoughts, though. With this financial crisis, it could be that green jobs are the only way to sell the public on climate change at the moment.
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Gar Lipow Posted 8:35 am
16 Jan 2009
Perhaps from a human standpoint, lowered death and injury from air and water pollution is the greatest benefit.
But im terms of pure dollars, we need to consider improved productivity. A majority of economic activity in the rich nations takes place in climate conditioned buildings, and at least a substantial minority in poorer ones. And greening buildings boost productivity within them significantly. (Better air, sunlight, more control over artificial light levels, and more control over temperature.) . Similarly shifting freight from trucks to trains is again a productivity booster. Even industrial productivity improvements often involve stuff like improving processes to reduce scrappage, preventing overflows that waste water, but also cause halts to production and so on. So more net production per person hour. Similarly a lot of industrial energy saving techniques don't pay for themselves in energy saved, but do pay for themselves in reduced maintenance.
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Cantalopsical Posted 8:34 am
27 Jan 2009
Ahhh... but the rub is quite a rub. Severin's economic sensibilities are tickled by real-time pricing because it leads to a reduction in idle capacity i.e. less peak and more baseload means higher economic efficiency but in most of the US this means coal so your carbon intensity goes up.
I don't know how you get around that. You guys and your war on carbon have your hands full. I don't think you could set your sights much higher. Good luck...
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