The following is a reply to a post by Michael Tobis entitled "Should economics rule?"
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Well, I take it that Michael means to suggest that someone out there -- in this case, me -- would contend that economic analysis should dictate climate policy. I do not hold that opinion. For a brief defense of my position, see my post on the matter at the Cato Institute website. By the way, even a lot of scientists held in high esteem by the Grist crowd would have little complaint with my argument that scientists are in no position as scientists to dictate public policy. See, for instance, these comments by Prof. Mike Hulme, founding director of the Tyndall Centre for Climate Change Research.
"Is one a Marxist or even a Stalinist for pointing out that economists are not, themselves, necessarily right about everything?"
I don't know quite what that means. No one among us -- no matter what their academic training -- is "right" about everything ... so far as I know. The consensus beliefs within any academic discipline are unlikely to represent the last and final truth on every subject within that field, given the limitations of human knowledge. So I agree with Michael but am not aware of anyone serious who would not.
"Economists, meanwhile, claim to have the key to rationality."
I don't know of a single economist who claims that their discipline is intrinsically more "rational" than any other. I don't even know what that would mean exactly. A more crisply stated proposition is that many (most?) economists think of themselves as empiricists. They distrust disciplines that do not empirically test their hypotheses in any meaningful way. Likewise, they distrust arguments that cannot be tested and disproved (which means that the argument in question is actually religious in nature). In that regard, they are much like scientists and think of themselves in the same way.
An important (albeit minority) exception is the so-called Austrian school of economics, which contends that economic cause and effect is so difficult to isolate that the empiricism embraced by most modern-day economists is a practical fantasy. The Chicago school of economics (the bastion of what most people are referring to when they refer to "neo-classical economics") would beg to differ. And in case you are curious, there are both "Austrians" and "Chicago-ites" here at Cato.
"Their claim is based in their own definition of their field, which is about 'how people collectively make decisions', but they proceed very quickly from there to the marketplace via a number of dubious assumptions."
Not so. Most economists would define their field as the study of human action. Individual human action is as relevant to economics as collective human action. Now, economists has traditionally concentrated on human action in the realm of commercial interests, but there is a growing field of economics that examines human action outside of the commercial realm. For instance, Nobel prizes have been handed out to economists who specialize in the study of human action in public settings (the so-called "public choice" school of economics).
"The marketplace is real enough, and the fact that it affects the decisions we make is inescapable, but that doesn't prove a claim that economics is uniquely placed to resolve our differences."
First, let's make clear what this thing called "the marketplace" actually is. "The marketplace" is simply jargon for that theoretical realm where people voluntarily exchange goods and services. Sure, voluntary exchanges between A and B might under certain circumstances affect the decisions of C, but more to the point, it's the place where many of our individual decisions to act are carried out. Hence, to be against something called "the market" is to be against the voluntary exchange of goods and services. I doubt that's what most people mean when they rail against "the marketplace," which means a bit more precision is necessary before I can figure out exactly what complaints are being made.
Now, what does it mean to say that "economics is [or is not] uniquely placed to resolve our differences"? Beats me. The field of economics is not primarily charged with "resolving our differences." It simply represents the study of human action and some (but of course, not all) human action is about resolving differences. Some economists volunteer to lend a helping hand when it comes to human conflict. Others are content to simply explain the conflict without any attempt at proposing remedies (think Steven Levitt's Freakonomics).
"A claim in more desperate need of challenging I cannot imagine -- yet on it goes, essentially unchallenged in circles of power."
If by this Michael means that people who study human action are in no position to assist in an undertaking that might reduce the friction between people who are pursuing different and contradictory ends, then I could not disagree more. Economists have offered a large inventory of ideas that would allow people to pursue their own ends without doing undue harm to others. I suspect, however, that Michael does not mean precisely that, but what he means is unclear to me.
"A crucial problem is the idea that the purpose of our society is to maximize 'growth.'"
I was unaware that society had a purpose, much less that its purpose was to maximize growth. All "society" is is the aggregation of a certain subset of people. A certain subset of people in the United States is engaged in the activity of maximizing revenue. Other subsets are engaged in other interests, other activities, and the pursuit of other ends. Economists, by they way, refer to this activity as "maximizing utility." And to complicate matters, most of us are involved in different societies that simultaneously pursue different ends. Aggregating those millions upon millions of distinct "societies" into something called "our society" is analytically so problematic that it probably isn't worth the effort.
What Michael means to say, I suspect, is that "the purpose of our government and of our economic institutions is to maximize growth." That may be an accurate description of the status quo, but I don't believe it's true. If the purpose of our society is to maximize growth, for instance, how does one explain the war in Iraq, which does not by any stretch of the imagination "maximize [economic] growth."
For what it is worth, I do not believe -- nor do most of my colleagues at the Cato Institute believe -- that the purpose of government ought to be the maximization of economic growth. We believe that the purpose of government is to secure individual rights and to protect liberty. Likewise, we believe that the purpose of economic institutions is to allow people to freely exchange their private goods and services in whatever manner they like.
"Is infinite growth of some meaningful quantity possible in a finite space? No scientist is inclined to think so, but economists habitually make this claim without bothering to defend it with anything but, 'I'm, an economist and I say so', or perhaps more thoughtfully, 'hey, it's worked until now'."
Strictly speaking, no economist would contend that "infinite growth of some meaningful quantity [is] possible in a finite space." If nothing else, infinite means forever, and someday, the universe will likely either collapse upon us or thin out to such an extent that life will cease to exist. So no, infinite [human economic] growth not possible. Michael probably meant something else by this, but to know whether an economist would agree or disagree with Michael's proposition requires us to be a bit more precise about what time period we're looking at and what our definition of "finite space" might be.
"Such ideas were good approximations in the past. Once the finite nature of our world comes into play they become very bad approximations. You know, the gods of Easter Island smiled on its people 'until now' for a long time, until they didn't."
The widely held belief that the people of Easter Island were devastated by a natural resource crash induced by economic institutions that did not recognize the natural limits to economic growth has recently been shown to be thoroughly incorrect. For instance, see this study from Prof. Terry Hunt, published this year in the Journal of Archeological Science.
"The presumption of growth is so pervasive that great swaths of economic theory simply fail to make any sense if a negative growth rate occurs. What, for instance, does a negative discount rate portend?"
The interesting thing about human history is that, for most of it, economic growth did not occur in any meaningful sense. For over millennia, life expectancy, real wealth, and almost every useful metric of human wellbeing changed nary at all. Then along came the industrial revolution and everything changed radically.
Michael's contention that economic theory cannot make sense of negative growth rates is to contend that economists can't make sense of recessions or depressions. That is demonstrably not true. Making sense of the 1932 depression is what won Milton Friedman a Nobel Prize, to pick just one example off the top of my head. Nor are economists at a loss to explain no-growth periods of long durations. Adam Smith's The Wealth of Nations was written before the Industrial Revolution took off. The book was all about wealth creation; why it occurred and why it didn't. He had no trouble "making sense" of the latter.
Finally, it's no trick to understand the implications of a negative discount rate. On a personal level, it means that you value goods and services in the future more than you value them at present. Few people really embrace negative discount rates, however, which is why they are not a matter of great interest to economists. It would imply, for instance, that you should save every penny you make once your most vital needs related to food, shelter, and personal activities are met. I don't know of anyone who has ever lived in that manner.
"Perhaps it's because much of the theory breaks down under economic decline that the presumption of growth pervades everything economists do. Even the Stern report, which is based on enough understanding of our circumstances to see that unconstrained carbon emissions are to be avoided, has to torture economics a bit to come up with the result."
I agree with your take on the Stern Report.
"More striking, though, Stern speaks of the consequences of failure in terms of 'slowed growth' and not of actual, you know, catastrophe. Well, the cockroaches and jellyfish won't consider it a period of absolute decline, I guess ..."
Depends how you define "catastrophe." You are correct, though, that even the Stern Report finds that consequences of climate change will not have near the impact on society that many people here at Grist probably fear.
For instance, the A1F1 scenario of society through 2085 employed by the IPCC is akin to the "nightmare scenario" from an environmentalist's standpoint. That is, it assumes for the sake of analysis that a "business as usual" world (that is, one in which climate change occurs but government does little about it) will yield breakneck economic growth, rapid technological change, and extremely high fossil fuel use. As a consequence, CO2 concentrations in 2085 will be at 810 parts per million, global temperatures will have risen by 4 degrees C, and sea levels will have increased by 34 centimeters. Yet even so, computer runs based on work from Dr. Martin Parry, the lead author of the most recent IPCC Working Group on climate change impacts (that is, Working Group II), find that even under this scenario:
- the global population at risk from hunger will decline from 15-17% in 1990 to 1.7% in 2085;
- the global population at risk from water stress will decline from 26% to 21%;
- the global population at risk from coastal flooding will change from 0.2% to somewhere between 0.1% - 0.6%;
- the amount of land necessary to meet future agricultural demand will decline by more than half;
- net GDP per capita in developing countries will grow from $875 to $43,000, while net GDP per capita in developed countries will grow from $14,500 to $69,500; and
- total human mortality from hunger, malaria, and coastal flooding will decline from 4.4 million to 2.3 million.
That ought to be good news, but alas -- many seem inclined to shoot the messenger.
"The whole growth thing becomes a toxic addiction. The only path to a soft landing is down; we in the overheated economies need to learn not just to cope with decline but to celebrate it. We need not just an ideology but a formal theory that can not only cope with reduced per capita impact but can target it."
As the above analyses suggest, a net decline in wealth or personal well-being is not by any means inevitable if the IPCC is correct about the future. Regardless, if the environmental movement were to enthusiastically embrace an ideology of decline, it would become irrelevant to American politics rather quickly, which is why I don't believe such an agenda will ever surface from politically meaningful parties -- regardless of its merit.
"Decline isn't bad news in an airplane. Decline is about reaching your destination. Perhaps there is some level of economic activity beyond which life gets worse? Perhaps in some countries we have already passed that point? Could the time where we'd all be better off with a gradual decline have arrived?
This sentiment was once quite popular. A significant chunk of The Wealth of Nations was spent arguing against the widespread belief at the time -- held then primarily by social and economic elites in England -- that improvements in per capita income among the lower classes was a bad thing.
"How much attention should we pay to the folks who say we should keep climbing, that there's no way we can run out of fuel, that we'll think of something?"
Ask the authors of the Club of Rome reports. Or Dennis and Donnella Meadows. Or Paul Ehrlich. They -- and many, many others -- spent much of their careers arguing that scarcity would soon doom economic growth, even going so far as projecting actual dates for decline events. They have been proven wrong time and time again and have actually lost concrete bets with those holding the opposite opinion. Now, that's not to say that past will always prove to be prologue (that is, the boy who cried "wolf!" was eventually correct in the parable), but it is to say that anyone who does not treat "Book of Revelation" predictions about the future lest we stop our sinning ways with some degree of skepticism has been living under an ideological rock.
"I think the soft landing is still within our grasp. The longer we treat the people who call themselves economists as a priesthood above criticism rather than as a human subculture with serious dysfunctions, the bumpier the best landing we can achieve gets."
No one should treat anyone as above criticism -- or beyond critical examination. The contention that economists represent a human subculture with serious dysfunctions, however, begs for elaboration.
"Climate change is just a symptom, though an increasingly salient one. I suggest that the core problem lies in our collective failure to consider what human decency means and to use that understanding to manage what money means. We don't have to listen to people who get that backwards."
I translate Michael's contention this way: "Human decency means doing something about global warming. Human decency demands that we hold little regard for personal wealth. Don't listen to anyone who fails to embrace the above." Well, as my post at the Cato website notes, I agree with Michael that economists armed with cost-benefit calculations cannot and should not dictate public policy. But I reject the idea that morality dictates greenhouse gas emission controls given our current state of knowledge. If you take the literature regarding the impact of climate change on human beings seriously, then you can make a very strong argument that more people are harmed than helped by significant greenhouse gas emission controls and that "human decency" dictates resisting the "act now" agenda.
In short, appeals to morality will not take you as far as you might think in this debate. I suspect that most people on both sides of this discussion are reasonably moral and ethical people. We simply disagree about the facts at hand and have different values about subjective matters where no right or wrong answer exists. Black and white morality plays are of course more comforting for many, but so is a belief in Santa Claus.
Comments
View as Flat
tidal Posted 7:10 am
12 Dec 2007
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trock Posted 7:11 am
12 Dec 2007
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odograph Posted 7:15 am
12 Dec 2007
In another place you wrote:
I am all for internalizing negative environmental externalities. So are most economists. But their work on this area suggests that the negative externalities associated with greenhouse gas emissions are probably no more than $2 per metric ton - not enough to justify more than, say, a 2 cent increase in gasoline costs. For a review of the literature on that matter, see a recent academic survey by Richard Tol: [link]
At that link I found the summary:
One hundred and three estimates of the marginal damage costs of carbon dioxide emissions were gathered from 28 published studies and combined to form a probability density function. The uncertainty is strongly right-skewed. If all studies are combined, the mode is $2/tC, the median $14/tC, the mean $93/tC, and the 95 percentile $350/tC. Studies with a lower discount rate have higher estimates and much greater uncertainties.
After wiki-ing "mode" ... I had to wonder why you chose that as your answer, rather than the mean or median?
I'd think in any widely distributed cost estimate the mode will be too low.
And thanks for joining the discussion.
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Jon Rynn Posted 7:17 am
12 Dec 2007
Scientists should absolutely get involved in debates about what to do about global warming. They are on the leading edge of understanding what is happening; and there is quite a diversity of opinion about what may happen. Scientists like James Hansen who publicly argue for certain policies are critical to moving toward global warming mitigation. Further, since their understanding of what may happen is the best we have, in some ways they are in a better position to judge what to do about it than economists, who are generally trained in mathematics, not the sciences involved with climate change. Which leads to
Engineers, particularly civil engineers, are in a much better position than economists to discuss what the costs and mitigation strategies of global warming may be, because they understand much better than economists the dynamics of how flooding and drought, etc. can affect infrastructure
Since there is a large diversity of opinion among scientists, I'll stick my neck out and say that IPCC estimates of what impact global warming will have are only one of many, and on the conservative side -- the recent models did not seriously consider melting ice, for instance. Many other scientists are very worried about positive feedback effects, and see that the "progress" of global warming is much faster than any models.
Meadows et al. did not claim that we would soon run out of everything. They clearly show that by the mid of the 21st century -- depending on one of their many models, but that point seems the most common among them -- many resources would peak. They argue that they've been saying that the whole time, and that their models have been working quite well, but we didn't immediately run out of everything so everyone jumped up and down and said "see! see! they're wrong!". As far as Ehrlich losing his bet, yes, that was a dumb bet, but that doesn't mean he's not wrong in the long-run -- and plenty of cornucopian claims have been proven wrong as well. So I have a question for you: are you aware of any economic models that assume that there are limits to natural resources? which leads to
Is it the conventional wisdom at this point that 3% growth rates will continue through to 2100? Does anyone even try to justify that? This is more of a information question, because it means that some serious work needs to be done to at least show that there is a high probability that we will have some serious resource problems in the future.
So basically, it looks to me as though you are still maintaining that global warming will not cause a very large impact. Is this, as far as you know, also conventional wisdom in the economics community? Or within a particular school? Or has it not really been considered?
Thanks for your input.
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stevenearlsalmony Posted 7:26 am
12 Dec 2007
Steven Earl Salmony
AWAREness Campaign on The Human Population, established 2001
http://sustainabilitysoutheast.org/
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odograph Posted 7:30 am
12 Dec 2007
(Being a chemist though, I can take the snug position that there is only one, possibly, purer science out there.)
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Michael Tobis Posted 7:44 am
12 Dec 2007
scientists are in no position to intelligently guide public policy on climate change. Scientists can lay out scenarios, but it is up to economists to weigh the costs and benefits and many of them say the costs of cutting emissions are higher than the benefits.
Let my address the nastiest of the herrings, though.
I think like polar bears, Easter Island provides a very powerful image, and so you will find those who start from defending a position rather than from thinking about our circumstance eager to deflect attention from the main issues at hand. So let me quote directly from the author of the referenced study about Easter Island (Rapa Nui):
"I got those results back and I was sceptical," says Hunt. "I thought, something's wrong with these." When repeated samples yielded the same date, he and Lipo re-examined the existing evidence. After throwing out any studies that lacked replicate samples or had other methodological problems, the 11 studies that remained all pointed to the same date - roughly 1200 AD.
Such a late arrival date means that the new inhabitants of Easter Island must have begun hacking down trees almost immediately, building the gigantic monuments and stone heads that make the island so distinctive, says Hunt.
And the new civilisation's ecological footprint must have been heavy from the start. "There isn't a period of ecological stability. There was almost immediate impact," says Hunt. "It isn't a two-part story any more. There's really just one chapter."
This may amount to an interesting controversy among archaeologists, but it hardly changes the moral of the story.
For now, I close with this. While I wish I could share in Taylor's optimism I take little solace in predictions of the number of dollars I can expect to spend in the future further-dimished world.
mt
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stevenearlsalmony Posted 7:49 am
12 Dec 2007
It is the "students of 'human' nature only" (e.g., economists and demographers) that I am trying to distinguish by suggesting these investigators are not scientists.
Steve
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odograph Posted 7:56 am
12 Dec 2007
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Jim Manzi Posted 7:59 am
12 Dec 2007
Rather than wade in on this, let me try to make a few quick points:
Here's why you see people from "the other side" here: you won the debate about the existence of the problem. There are no reasonable "sides" on this question anymore.
Economists can be pretty obnoxious in their jargon-laden talk that often serves to hide assumptions, rather than do what jargon is supposed to do, namely focus on critical issues. (Interestingly, as per the previous very funny comment, this is never true - in anything I've read by them, which is a lot - of either Friedman or Hayek.)
Economics is not science.
It is very seductive, having been proven right about the fact of the threat to believe that all opposition to your views on what to do about this is ill-founded.
Careful consideration of the costs vs. benefits of trying to address this problem is a worthwhile process.
Apocalyptic rhetoric about AGW is not justified by science, and in the end, is likely to be counter-productive.
If somebody can't explain their position on the costs and benefits of various proposals in clear English sentences that don't include terms like "partial equilibrium", they don't know what they're talking about.
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Sam Wells Posted 8:11 am
12 Dec 2007
Grandfather units, clean them up using best available retrofit technology (BART)
Permits for today would use reasonably available control technology that might exclude coal gasification and sequestering (RACT)
Permits for the future might be required to use lowest achievable emission rate, regardless of cost (LAER)
I hope such a stratified vision for how CO2 reductions would be implemented is useful.
The U.S. Congress needs to stop dinking with energy standards and revise the Clean Air Act to include CO2, CH4, and N20, and to require the EPA to implement those standards within two years.
Now.
-sammie
Onward through the fog
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stevenearlsalmony Posted 8:23 am
12 Dec 2007
What I am trying to simply point out is the way economists and demographers, for example, do not appear to acknowledge "human" beings as creatures existing within the natural order of living things. Second, and as important, these investigators appear to view "human" beings as existing somehow, inexplicably and apparently preternaturally, outside the bounds of the practical requirements of the biophysical world to which non-human beings are known to be subject.
Thanks to both of you for a remarkable and, for me, uncommon discussion.
Sincerely,
Steve
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odograph Posted 8:45 am
12 Dec 2007
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Michael Tobis Posted 9:11 am
12 Dec 2007
I don't agree with everything he says, but I agree completely with six of his seven points.
I am not sure whether AGW is into apocalyptic territory, but I do think we have a carrying capacity problem of which AGW is an aspect. Accordingly, minimizing the risk of a (likely horribly destructive) population crash is the central issue of sane governance for the foreseeable future.
We do have to weigh costs and benefits, but not only do I doubt that economists are uniquely qualified to manage this discussion, I suspect they are uniquely disqualified! This strange circumstance results from the fact that the present problems violate the assumptions on which their intellectual edifice is built.
mt
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tidal Posted 9:33 am
12 Dec 2007
But I do have problems with "economics-as-usual", when it steps beyond behavioural prescriptions and pretends that it is somehow effectively modelling the world.
I.e. The basic thrust of Jerry's original article, which is subtitled "World to Scientists: Zip It!", which then goes on to declare economists pre-eminence in determining the economic costs and benefits. And comments like this from Robert Solow "If it is very easy to substitute other factors for natural resources, then there is, in principle, no problem. The world can, in effect, get along without natural resources.", or Julian Simon "Similarly, the quantity of copper that will ever be available to us is not finite... given the problem of the economic definition of "copper," the possibility of creating copper or its economic equivalent from other materials, and thus the lack of boundaries to the sources from which copper might be drawn."
This is, of course, then extended to the entire classical economic theory which, a priori, does not account for physical throughputs, just capital, labour and technology. Innovation and substitutability are somehow able to abstract resources, ecosystem services and waste sinks right out of consideration (or, in the case of Mr. Simon, suggest that alchemy is now possible - we will "create" copper somehow!).
It is when economics is stepping away from behavioural prescriptions, and into such models about "how the real world works", that it simply is a failed description. (The very idea that we could "substitute" human capital for, say, the ozone layer, beggars belief.)
Economics does, typically after the fact or late in the game, try to retrofit its model so has to impose costs on externalities. But the model itself still does not attempt to explicitly incorporate resource use, etc., into the model.
Nonetheless, the evidence that it "should" be doing so is piling up - fishery collapses, ozone depletion, GHG build-up, etc. These ecological dilemmas seem to be a systemic output from the "economics-as-usual" model. After acid rain, mercury, etc., does anyone actually think that GHG's are going to be the "last" externality that we'll need to account for? Maybe we should check the descriptive elements of the model a bit, or see whether we are missing some parameters? Hmmm?
And who might have some insights for the economists on how our material transformations, etc., interact with the world around us? Scientists, perchance? If not scientists, who?
Back to Jim Manzi's points 5&7, about clear articulations of cost&benefits... well, yeah, I agree. Let's start, for instance with Jerry's rosy A1F1 scenario above.
If I am reading from the same literature I think he is, there is also a B1 scenario which would limit emissions so that the temperature increase in 2085 would be only 2.1C, instead of the 4.0C that A1F1 produces... The difference in "net GDP per capita for developed countries"? $69,500 for A1F1 as Jerry claims, and $65,737 for B1. This despite the fact that "gross" GDP grew by a factor of ~ 7.4x from 1990-2100 under A1F1, but "only" 5.0x for B1... but by 2100 under A1F1, almost 40% of gross GDP is now going to pay for climate change adaptation on an annual basis, thereby cutting the "net" GDP basically back to the B1 scenario...
Leaving aside the wisdom of "preferring" an economy where 40% of its productive efforts is directed toward taming climate, or the bizarre
"precision" of these forecasts, is it even reasonable to try to trade-off an extra 5% net benefit a century from now for a much less certain, riskier environmental outcome? Apparently so, because it says so just upthread!
And again, this gets me back to the point about an abstract model that does not account for physical throughput... Anyway, I gotta go... I am very much enjoying the exchanges the last few days.
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Sam Wells Posted 11:15 am
12 Dec 2007
Onward through the fog
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markbahner Posted 11:15 am
12 Dec 2007
Let's get a little more specific. The current world per-capita GDP (purchasing power parity) is approximately $10,000 (see Wikipedia).
Who thinks the world per-capita GDP can reach the following values (year 2007 dollars): $20,000? $50,000? $100,000? $500,000?
Mark Bahner
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Ron Steenblik Posted 11:43 am
12 Dec 2007
An area in which scientists' input is vital, for example, is in establishing fishing quotas. In many areas of the world, fishery biologists have a formal, legal role in advising what should the maximum allowable catch that would enable particular fisheries to continue on a sustainable basis. The actual setting of the quotas is always left to elected or appointed policy-makers, however. Unfortunately, these people routinely ignore the scientists' recommendations and opt for larger harvests -- mainly for what they consider to be economic reasons (the incomes of fishermen). But don't blame the fisheries economists: they usually, to a person, substantiate the advice of the fisheries biologists.
In the world of climate change, the decisions are not so easy, because they are not taken on an annual, but rather a multiple-year basis, and the options are less straight-forward. Climate scientists can certainly point to how much emissions need to be reduced to obtain a given reduction in atmospheric concentrations of greenhouse gases as of a particular future year (give or take a considerable margin of error), but they are usually not particularly versed in the art of policy making -- which, yes, requires a keen understanding of human behaviour, since it is humans that will be responding to whatever incentives and disincentives are created. (Rather, what we often get is: "Ban this! Mandate and subsidize that!")
It is through politicians being fed very simplistic arguments, ignorring the advice of (independent) economists, that has gotten us into the situation where we are today: where the flagship climate-mitgation policy of the United States and several other countries is ... agro-fuels.
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tidal Posted 1:41 pm
12 Dec 2007
It is time for the Swedes to give a prize in environmental economics. Not necessarily next year, or even the year after that. But things being what they are, such a prize is warranted as soon as possible, the better to govern debate on a most emotional topic.
Consciousness of burgeoning environmental problems grew rapidly in the late '60s. By 1970, James Tobin and William Nordhaus of Yale University were at work on the systematic accounting for natural resources dubbed "green accounting" ...
Under the circumstances, we need the clearest, deepest and most disinterested economic advice possible about the potential costs and benefits of global warming, and of the various policy responses that might retard the process...
Rapid reductions in greenhouse emissions right away? Or modest reductions at first, growing increasingly stringent over time?... But the Swedes should do the world a favor and award the economics prize to the environmental economists who have created the tools to talk meaningfully about taking precautionary action in uncertain circumstances, before the physical science can be nailed down.
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elbarto Posted 3:14 pm
12 Dec 2007
Case in point: The critically endangered greater striped toowit (for arguments sake) has one habitat left which just so happens to be atop a rich mineral deposit. It is economically rational to exploit the mineral deposit effectively killing the the last of the toowits. Toowits provide no economic or any other tangible benefits to humans.
To broaden that argument; economic rationalisation argues that we should not spend too much money on mitigating climate change because the cost is greater than the benefit. This argument almost certainly allows additional climate change to what would occur if by some miracle humanity embarked on a massively costly mission to clean up its act overnight.
The economically rational additional climate change will almost certainly condemn many more species to extinction than would the massive effort to mitigate.
It is economically responsible for humans to commit SPECICIDE.
I find this completely peverse.
Ultimately the entrenched economic model will fail as critical species interconnections collapse and the global ecosystem unravels.
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Michael Tobis Posted 3:22 pm
12 Dec 2007
Mr. Taylor calls me "Michael" as if we are friends, but in fact we seem to be deeply disagreed. Thus, use of the personal name is a subtle putdown, I think. That's Dr. Tobis to you, thanks.
I have long been at pains to state that I am in favor of capitalism and of corporations with the minimal necessary correction to the system, and I explicitly disavow Marxism in this piece. Yet I am here accused of being "against the market", which is nonsense. This is exactly the accusation of dangerous radicalism that I am trying to avoid. I just want permission to think about these things rationally without accusations of subversion being flung. Apparently this is not allowed.
The poor innocent Cato Institute Fellow has no attachment to the growth ethic but merely wants to protect "freedom", a classic short-circuit device if ever there was one. Does this imply that to oppose Cato's positions is to oppose "freedom"?
Notwithstanding the claim to be agnostic about growth, there's an explicit claim that the advanced economies will quintuple in "income", based on computer runs "based on" work by IPCC WGII lead author. What that 65K per capita could possibly mean escapes me, since we are running out of room to be wealthy. Perhaps it means that the same amount of real estate will be in existence but it will cost five times as much to own some of it. Perhaps we will need to pay for breathable air. That would stimulate the economy! Again, this waving around of large dollar amounts seems inclined to short-circuit discussion. Am I actually opposed to things getting better? No, I am opposed to things getting worse, and I am unconvinced that money measures the things that will matter in the future. This is exactly the question I am trying to raise.
Throwing Iraq into the conversation certainly isn't a good way to advance reasoned disocurse. It is guaranteed not to bring out the best in a reasonable person. It took me some time to calm down about that particularly nasty herring. How that let's-generously-call-it-a-terrible-mistake got crammed down the throats of a frantic and distracted public is a bleeding mess of an issue that I would rather leave on somebody else's turf. Leave me out of it please.
Most important, there is a reasonable sounding claim that "nobody is above criticism" without the slightest attention to actually defending the original question. That question is on what basis he asserts that conventional economics has any useful bearing on the question of our long-term sustainability, or to use the more right-friendly word, our long term security, never mind primacy. What he presents instead is a mess of distractions and misdirections. See Mamet's Law.
PS - I would like to be a Senior Fellow myself, but at a think tank that actually, you know, likes to think about stuff. Is there such a thing? Any advice on the matter would be most welcome.
As it stands, it's sort of an unfair battle since Taylor is paid and I'm foolishly and obsessively volunteering.
As is usual in such discussions I am forced to leave the last word to my opponent, unless he is actually willing to take up the topics at hand.
mt
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Colin Wright Posted 4:54 pm
12 Dec 2007
that at least to me, the Stern Report summary hardly paints a rosy picnic for our future:
The investment that takes place in the next 10-20 years will have a profound effect on the climate in the second half of this century and in the next. Our actions now and over the coming decades could create risks of major disruption to economic and social activity, on a scale similar to those associated with the great wars and the economic depression of the first half of the 20th century. And it will be difficult or impossible to reverse these changes.(my emphasis.)
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wiscidea Posted 10:21 pm
12 Dec 2007
Science provides information, looks at cause and effect, explains natural processes, provides an estimate of how our actions might affect other organisms, et cetera.
Economics can take this information and determine the most efficient means of maximizing human comfort and minimizing harm to the rest of the natural world.
Neither sciene nor economics should determine the actual policies followed. It should be up to voters to detemine what they want, how long they can wait, whether short-term or long-term costs are most important, what they are willing to sacrifice, et cetera.
My primary objections to economics are the tendencies to (1) look at economic activity in terms of averages -- I'm sure I'm using the wrong term here, but hope you will understand -- rather than looking at how trends affect individuals, (2) assigning positive economic value to activities like medical treatment of individuals exposed to industrial chemicals or cleaning up oil spills, and (3) not internalizing ALL costs. I think that's it.
It just doesn't make sense to say all is well because stock values are rising or GM's profits are up -- even though they might have just fired a bunch of workers! All is well when people earn enough income to own a modest home, feed and clothe themselves, have access to health care, send their children to school, and eventually retire between 60 and 70. Economics would make more sense and provide more useful information if they could come up with better indicators of economic health, PERSUADE BUSINESS TO PURSUE BETTER POLICIES, AND PERSUADE THE MEDIA TO COVER THE BETTER INDICATORS.
So... perhaps it is up to science to provide BETTER information for economists to work with. And it is up to both scientists and economists to better educate people so they have as much information as possible for making informed decisions. I'm generally quite cynical, but I still believe -- as Thomas Paine said -- that a large number of informed citizens will generally make the right decision.
There is a severe shortage of informed citizens at the moment, and creating an imaginary conflict between science and economics will only confuse them more.
http://ffrf.org/day/
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wiscidea Posted 10:34 pm
12 Dec 2007
I read Jared Diamond's "Collapse" quite some time ago, but if I remember correctly, the folks on Easter Island suffered because they chose to invest their resources in constructing religious monuments rather than feeding themselves.
Something about a competion between different groups -- the island was divided into pie-shaped territories so each group would have access to upland forest, agricultural land, and shoreline -- to see who could build the largest statues.
They had to cut down trees to accomplish this, which resulted in: severe erosion, drought, degradation of their agricultural land, loss of plant and animal species they relied on, lack of trees for building houses, lack of trees large enough for building canoes, and elimination of their ability to use canoes for fishing or evne escaping the hell they created for themselves. Large numbers of people starved, surrounded by sea life they could not collect for food. The most frightening part of this, described by Jared Diamond, is that Easter Island is an example of the hazards of "creeping normalcy". Each generation probably thought all was well and the surivors encountered by Europeans thought their island was alway devoid of large trees...
Science and economics must cooperate to make sure that human civilization -- globally -- is not terminated by "creeping normalcy".
http://ffrf.org/day/
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Ron Steenblik Posted 11:04 pm
12 Dec 2007
There is a severe shortage of informed citizens at the moment, and creating an imaginary conflict between science and economics will only confuse them more.
Amen. For once I am in 100% agreement with you.
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Michael Tobis Posted 12:35 am
13 Dec 2007
That said I remain unconvinced that mainstream economic theory applies to the big questions of sustainability at all. It's just questioning economics, that's all.
I'm all for getting along, but I think it's fair to determine that someone is making sense before taking their advice at face value. I was unconvinced about mainstream economics when I wrote the article and I'm unconvinced now.
I'm struck by the lack of efforts to actually articulate a defense of their position in the present conversation.
Saying it's bad to be confrontational misses the point. This way to test and improve ideas is to question them, not to make some sort of turf trade. Are some of you folks suggesting that I agree to believe in economics if they believe in climatology? This to me is not an a very useful way of constituting beliefs.
I don't think we climatologists should be offended by people's doubts about our conclusions, and I don't think economists should be offended either by mine. Genuine skepticism should be treated as valuable.
Climatology which emerged from a harmless scientific backwater is ill-prepared for this, to be sure. Economics, however, seems well-defended. Alas this defense seem not so much a system of ideas and evidence but as bluster, arguments from authority and even intimidation.
We aren't discussing the structure of society here, we are discussing models of that structure.
I'm proposing nothing more than re-evaluating and extending our models to deal with newly relevant conditions. Is that really so out of line?
mt
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odograph Posted 12:42 am
13 Dec 2007
Noise since then has tended toward uninformed rants against an extreme strawman (there are those who deny "externalities" but they are hardly "mainstream.")
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tidal Posted 1:27 am
13 Dec 2007
Fine. Thanks. Good. Let's use those prescriptions. I am all for that contribution from mainstream economics. Who wouldn't be?
The problem is that we keep (reluctantly) bolting these "solutions" onto a vehicle that seems to be systemically producing ever more "externalities" that need to be dealt with - often alarmingly late in the game (SO2, CFC's, overfishing, etc.).
What's next? Nitrogen tax anyone? At least we will presumably have the "dance" well-rehearsed by then!
There is something wrong with "economics-as-usual" if it's solution is going to be to keep moving the vehicle in the same direction, ever faster, spewing out ever more negative issues to deal with. In a world of finite resources, finite waste sinks and finite regenerative capacity of ecologic services, an economic paradigm that abstracts those realities away with theoretical promises of substitutability, innovation and adaptation (and alchemy!) is deficient.
So, yes to the Pigou Club... Yes to the Montreal Protocol... Yes to SO2 cap&trade... Yes to fishing ITQ's... Thank economics and economists for their contribution to these successes... But don't think that their models of the "world" are "working"... although in the near-term, we've got to work with what is basically the only game in town...
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odograph Posted 2:18 am
13 Dec 2007
That's the role of science, right? To identify externalities?
The converse, to identify "sustainability," is the same thing, just viewed differently. Like those optical illusions, one is a silhouette of the other, or vice versa.
Put differently, and maybe this is the key for "economics haters," you can put any sustainability argument into the language of economic externalities.
You can use the language of market boosters to explain when the market alone is not enough.
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Jerry Taylor Posted 2:39 am
13 Dec 2007
First, I believe the $2 per ton (mode) estimate of environmental externalities that come from greenhouse gas emissions is probably more accurate than the $14 per ton median estimate and $93 per ton mean estimate found in the literature for reasons that are made clear in the text of Richard Tol's paper. If you go beyond the executive summary - to page 2069 and then through to the end - you will see why.
Second, there are plenty of economic models that have been constructed that impose constraints on resource availability. Economic models, after all, are simply chained if/then propositions, and there are hundreds of environmental economists out there - many of whom would feel quite at home here at Grist - who worry about resource availability and its impact on the economy. My experience has been that, when evaluating these models, if you accept the "ifs," the "thens" are perfectly defensible. Just, I might add, as it is climate models. The real debate is usually not over the calculations but over the assumptions.
Third, it is conventional wisdom with the economics profession that there will be continuing improvements in per capita GDP. I am not aware of any consensus on a 3% annual growth rate, however. Different economists assume different figures for the sake of calculation given the uncertainties involved.
Now, let's move beyond the questions to the more interesting comments.
The contention that economics is not science depends on how you define the latter term, which is not all that clear to me. For instance, if I study cheetahs for a living with a particular focus on how they interact with one another, and I have degrees in biology or some other related field, few would quibble with the claim that I am a scientist. If I study humans for a living in the subset of their activities that involve commercial interactions with other humans, how is that different in any functional way? Some economists, of course, are engaged in purely theoretical pursuits where proof or disproof is hard to come by. But so are a lot of physicists. That should not trigger scorn and dismissal.
Regardless, this is a semantic dispute of little import. Lots of disciplines do not qualify as science as some of you might define the term. It doesn't mean they're engaged in the functional equivalent of voodoo.
The argument that there are other scenarios of the future used by the IPCC that are of equal or greater interest than the A1F1 I cited is true ... sort of. I think the A1F1 scenario of the future was the most interesting for the purposes of this conversation because it yielded the greatest amount of warming, sea level rise, etc. - and seeing what society looks like under that scenario - better! - was quite striking to me.
But let's look at the B1 scenario that a poster cited above. It assumes the least amount of CO2 concentration in 2085 (527 parts per million), the least amount of temperature increase (2.1 degrees C), and the least amount of sea level rise (22 centimeters) of all the models considered. It also assumes the least amount of energy use and the most amount of energy efficiency. Here's what the world looks like in 2085 relative to 1990:
the population at risk from hunger declines from between 15-17% at present to 1.3%;
the population at risk from water stress increases from 26% to 28%;
the population at risk from coastal flooding increases from 0.2% to something between 0 and 0.5%;
the amount of cropland needed to feed the world drops from 11.6% of the global landmass to 7.8% of the same;
net per capita GDP in developing countries increases from $875 to $36,300 and from $14,500 to $65,700 in developed countries; and
total human mortality from hunger, malaria, and coastal flooding will decline from 4.4 million to 2.1 million.
Hence, it's unclear whether the "hottest" world is really worse off than the "coolest" world - at least as these scenarios are constructed. The hottest world is better than the cooler world on the 2nd, 3rd, and 4th metric. The coolest world is better than the hottest world on the 1st and last metric. It's about the same regarding the 3rd metric. But the differences between the two aren't that great even when one seems superior to the other. I find that quite interesting.
Regarding the resource scarcity discussion, let's think like scientists for a moment. The hypothesis at hand is that we're running out of resources. How might we test that hypothesis? Check to see whether resources are truly becoming scarcer. How do we do that? The best metric regarding relative scarcity is price. What happening to resource prices? After adjusting for inflation, resource prices trends - with only a very few exceptions - show declines (some quite dramatically), suggesting that resources aren't becoming more scarce. In fact, the evidence suggests that they are becoming more abundant!
So what does one make of this? Some of you seem to argue that things can become more scarce (relative to demand anyway) without the price for those things go up. Well, we're in the realm of economics now, and I doubt that you can find a single economist who would generally agree with that proposition. Common sense suggests otherwise.
Here's how most economists explain this bit of curious data. Resources are simply those assets that can be used profitably for human benefit. "Natural" resources, then, are a subset of the organic and inorganic material we think of as constituting the biological "environment," since not all of that material can be used profitably for human benefit. But what can be used productively by man changes with time, technology, and material demand. Waves, for example, are not harnessed for human benefit today and thus cannot really be thought of as a "natural resource." But the technology to harness the movement of waves as a means to generate energy certainly exists, and the day when the cost of doing so is lower than the cost of alternative energy sources is the day when waves become a "natural resource." Uranium, to cite another example, would not have been considered a resource a century ago but is most certainly thought of as such today. Petroleum was not an important resource 150 years ago but today is thought of as perhaps the most important resource to modern society. Thus, the "natural resource base" is itself a relative thing and its components vary greatly with time due to technology and material demand. We have been creating resources - not depleting them - because our ability to identify natural assets that can be used profitably for human benefit has increased over time.
Empirical examination provides ample support for this particular hypothesis. Economist Joseph Stiglitz in a classic study found that exogenous technological advances lead to long-run gains in per capita consumption in lesser developed countries under conditions of exponential population growth and limited, exhaustible stocks of natural resources (Joseph Stiglitz, "Growth and Exhaustible Natural Resources: Efficient and Optimal Growth Paths," Review of Economic Studies, Symposium on the Economics of Exhaustible Resources, 1974, pp. 123-38). Economist Edward Barbier found that even in a growing economy, technological change is resource augmenting (Edward Barbier, "Endogenous Growth and Natural Resource Scarcity," EEEM Discussion Paper 9601, Department of Environmental Economics and Environmental Management, University of York (U.K.), 1996).
In sum, belief in mineral resource depletion strikes me as something akin to religious belief. One has a very hard time marshalling evidence for it and a hard time avoiding all of the evidence against it, but belief in it from many quarters is completely unshakable.
Two final housekeeping matters. First, my engagement here does not signal that I implicitly believe that climate change is a significant problem. It simply means that I hold out the hope that reasoned exchange between me and all of you might prove useful and intellectually worthwhile. I actually like talking to the Left when I find myself in a serious and civil venue for it. Second, I meant no offense by referring to Dr. Tobis as "Michael." It was meant to signal friendly engagement - something I value.
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odograph Posted 2:50 am
13 Dec 2007
I guess my man-in-the-street boggle on this is that I think energy prices have risen more than would correspond to $2/ton in the last few (5?) years, with no decrease at all in CO2 emissions.
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odograph Posted 2:55 am
13 Dec 2007
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Jerry Taylor Posted 3:02 am
13 Dec 2007
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Jon Rynn Posted 3:07 am
13 Dec 2007
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Jerry Taylor Posted 3:13 am
13 Dec 2007
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odograph Posted 3:31 am
13 Dec 2007
For what it's worth, the other side of my man-in-the-street experience is that it's been trivially easy for me to slash my carbon footprint, while reducing my costs, and increasing my health and happiness.
I think pessimists (those who moan that "it'll cost us a trillion) just haven't tapped their own creativity. Heck, maybe some are even afraid to open that door marked "creativity" for fear of where it will lead.
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Jon Rynn Posted 4:25 am
13 Dec 2007
I guess my general question was, wouldn't it be better to simply direct government money to build whatever it would take to decrease carbon emissions, rather than mess around with carbon taxes and cap-and-trade policies. But I suppose that until you're convinced that it's that important, and you think market strategies wouldn't work -- which, knowing the thinking at Cato, would be quite an interesting situation -- then you probably wouldn't much like direct investment either.
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Jerry Taylor Posted 4:42 am
13 Dec 2007
But most preferable - in my opinion - is to do nothing. I hold that reducing greenhouse gas emissions will do more harm to human wellbeing than to live under a business as usual world given the current state of scientific knowledge. Since I've already gone into why that is elsewhere, I won't hit do so again here unless invited.
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Ron Steenblik Posted 5:10 am
13 Dec 2007
Wouldn't it be better to simply direct government money to build whatever it would take to decrease carbon emissions, rather than mess around with carbon taxes and cap-and-trade policies.
Given that there are hundreds of ways that carbon emissions can be reduced, could you please explain to us the process under which you envisage Big Brother the Government choosing among the different technologies, spending the money, and ensuring that both the contracts and the benefits alre allocated equitably?
The last time the Government attempted to intervene big in the energy area, for example, it wasted billions upon billions on synfuels.
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Jon Rynn Posted 5:37 am
13 Dec 2007
So, having said that, how does government "pick" technologies, which seems to be the word that keeps coming up. To some extent, it depends on how much of an emergency we think we're in. If it's a big enough emergency, we discuss it, lobby, interests fight, and solutions -- say, putting solar energy systems on every roof -- let's say the solar technology the government picked would not the best choice. Maybe it's the third-best choice. (Actually, you could avoid all that by just giving every building owner a voucher to buy solar from whomever the building owner wanted, so it wouldn't even be picking). But let's assume it was picking. Even then, if the emergency is bad enough, then even third-worse would be better than nothing.
There's another idea which has been burbling around in my head, which is part-way between "command-and-control", as Jerry calls it, and the market -- building a limited set of a particular, picked technology, say, solar thermal farms, again maybe not with the best technology for bad political reasons -- but at least it would give engineers and managers the confidence and experience they would need to want to try more in the future. I fear that one of the main reasons coal is preferred around the world is because engineers and managers are comfortable with it -- it's like the old idea that an IT manager would never get fired for picking IBM (or Microsoft now).
So, I'm not saying the process would be most efficient or optimal, but compared to the alternative, it might be better.
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Biodiversivist Posted 5:41 am
13 Dec 2007
Jon,
You want to use our government to do what it was never designed to do, kinda like using a ski boat to plow a field.
In the end, it all comes down to biodiversity. Poison Darts--Protecting the biodiversity of our world
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Jon Rynn Posted 5:55 am
13 Dec 2007
But in any case, the examples around the world are quite demonstrative, and Americans are people just like everybody else, so there is no reason we can't learn from others. Would there be dumb mistakes, screw ups, pork barrel? Sure, just like in the private sector. But it's better than the alternative, doing nothing (and I'm not saying instituting carbon taxes and cap-and-trade is not doing nothing, it's doing quite a bit, I just think that direct investment may be better, but that's obviously an unsubstantiated hypothesis at this point).
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Jon Rynn Posted 6:32 am
13 Dec 2007
In other words, it depended on the speed with which a country had to catch-up -- the most extreme case being the USSR, but the Koreans and Japanese also used various modes of intervention at various times in their history, as have others.
Similarly, if the speed with which we need to mitigate global warming is high, then that would indicate that the government would need to be more intimately involved in the economy. Of course, the reverse operates as well -- if we have a decent amount of time, the market can be relied on more.
The biggest danger, the way I see it, is that if the market-oriented solutions -- say carbon tax/cap-and-trade -- don't work, and we find ourselves in the midst of a series of horrible disasters, then the government could very well step in and basically be forced to virtually take over the entire economy. So -- and this may be a bit too abstract -- it might be better to have more government intervention now, because that will mean that much less government intervention will be required later.
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Jon Rynn Posted 6:44 am
13 Dec 2007
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Ron Steenblik Posted 8:26 am
13 Dec 2007
Let's assume, for argument's sake, that some crash program of investment (but why only investment?) is needed to reduce carbon emissions. I still don't see how that automatically leads to government command and control being the preferred option. The USSR, Korea and Japan were war-torn, semi-feudal societies at the time that they began their great leap forwards (if that term even can be applied to the USSR). The United States, with its highly developed capitalist system, and extensive and sophisticated physical and financial infrastructure (not to mention educated and skilled workforce), is a completely different kind of place. Its people and companies probably have more ideas, and can mobilize resources much more efficiently, than can the government.
You pooh-pooh market-oriented solutions like a carbon tax or a cap-and-trade, but the beauty of such policies is that each person, each economic agent, can decide best how he or she is going to economize in light of the policy. I shudder to think what boondoggles the U.S. Congress would think up if instead they were handed over a huge amount of the nation's treasure and asked to "solve" the climate problem. Are you worried about the influence of energy companies on policy makers now? (I hope so!) Just imagine their influence with a hugely expanded budget envelope.
Does that mean I see no role for government expenditure? Of course not. There is probably much more that could be done through increasing spending on R&D, for one.
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Jon Rynn Posted 8:37 am
13 Dec 2007
The US is busily dismantling its manufacturing sector -- there's a relevant article by Paul Craig Roberts over at Counterpunch.com today. So it may need a big push from government -- but government does not necessarily mean the Federal government, the Feds could provide the money but the localities could decide how to use it, within certain guidelines.
I also would prefer that, where possible, every economic agent make his or her choice, but some things like public transit need collective, democratic decisions. And again, individuals or groups could get renewable energy vouchers that they could use as they see fit. Government need not make the actual decisions, but governments might need to provide the capital, or some of the capital, because the private markets are not doing their job -- there is no rush to makeover the energy system or the transportation system.
Now, if carbon taxes/cap-and-trade can move private actors to "do the right thing", then great. Maybe it would help if the alternative of direct government investment was breathing down the business community's collective necks, they might jump to support carbon taxes/cap-and-trade a little faster.
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atreyger Posted 10:50 am
13 Dec 2007
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Ron Steenblik Posted 1:26 pm
13 Dec 2007
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Colin Wright Posted 4:42 pm
13 Dec 2007
How about "democracy"? One person, one vote, electing people who respond to people's needs and guard against corruption. This does happen! Think of social security and medicare as successful government programs. Where government is corrupt in the economic sphere I would lay at the feet of undue market influence.
Markets operate according to the principle one dollar, one vote, thereby distorting the effects of wealth and priviledge. They are also blind, unaccountable, and just as open to corruption as government.
While markets can bring jobs and lead to wealth creation for a few, they also lead to exaggerated class division and inequality. But governments can redistribute wealth, in effect making markets acceptable to the majority of people. However, it is only through the struggle of working people, particularly through labor organizing, that we have such things as weekends, vacations and the minimum wage. These benefits we take for granted were opposed, often violently, by the business class. A good place for the uninitiated to learn about our economic and social history is Howard Zinn's, People's History of the U.S.
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Ron Steenblik Posted 9:40 pm
13 Dec 2007
Jon Rynn seems to feel that the government instead should pick winners (as Congree just did in the draft Energy Bill?!!) and then invest massively in them. If that is his (and your) opinion of the best way forward, I respectfully disagree.
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LegumeSam Posted 11:35 pm
13 Dec 2007
This looks like the same old Republican song-and-dance -- blame "big government" as a diversion so that nothing gets done.
There may be "hundreds of ways" to reduce "carbon emissions," but only one of them is meaningful -- keep the oil and coal in the ground. So how's the sacred "free market" going to do that?
As Naomi Klein reported recently:
The idea that capitalism can save us from climate catastrophe has powerful appeal. It gives politicians an excuse to subsidize corporations rather than regulate them, and it neatly avoids a discussion about how the core market logic of endless growth landed us here in the first place.
The market, however, appears to have other ideas about how to meet the challenges of an increasingly disaster-prone world. According to Lloyd, despite all the government incentives, the really big money is turning away from clean energy technologies and banking instead on gadgets promising to seal wealthy countries and individuals into high-tech fortresses. Key growth areas in venture capitalism are private security firms selling surveillance gear and privatized emergency response. Put simply, in the world of venture capitalism, there has been a race going on between greens on the one hand and guns and garrisons on the other--and the guns are winning.
That's right -- that evil Big Government and the sacred "free market" are for the same solution -- fortresses! Are we, the tortured victims of this nonsense, supposed to be surprised that Good Cop and Bad Cop work for the same team?
http://ecosocialism.blogspot.com/
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Ron Steenblik Posted 11:47 pm
13 Dec 2007
By "hundreds of ways", I mean distributed decisions. In order to avoid paying a carbon tax, any individual might: (1) turn down the thermostat and put on a heavier sweater; (2) move closer to work or school; (3) buy a smaller car; (4) bicycle or walk mor often; (5) replace their lightbulbs with more-efficient ones; (6) turn off their lights more often; (7) invest in a solar water heater; (8) ... you get the picture.
If you guys are prepared to debate those sets of choices, I will. But if this is simply going to be a "The free market doesn't deal with pollution!" rant, leave me out of it.
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Sean Casten Posted 11:55 pm
13 Dec 2007
But both positions are, at core, based on a flawed economic theory. Namely, that capital is efficiently allocated. If it is, that means that any change from the status quo is associated with economic pain. The "environmentalist" position is that this pain pales in comparison to the environmental pain we will otherwise feel and is therefore worth the cost. The "economist" position is that - per Julian Simon's famous bets - the magic of markets always surprises and we shouldn't put too much stock in the gloomanddoomsters. (ergo, "scientists shouldn't make policy".)
But the underlying assumption is flawed - and the fact that both camps have opposite conclusions from the same underlying flawed assumption is irrelevant. It's like a debate about what kind of superpowers the magic elves in my closet have - stupid, except for the consequences of the time we spend wasting on the debate.
Consider: the biggest industry in the country isn't subject to market forces (the $650 BN electric industry) and is now one half as fuel efficient as it was in 1910. They haven't allocated capital efficiently since the (first) Roosevelt administration. Simply returning to 1910 efficiency levels would save $100 billion in fuel expense and lower greenhouse gas emissions by 20%. In other words, massive reductions in AGW threats and economic growth. Meanwhile, industrials who preferentially allocate capital towards their core activities have long starved their energy managers for capital, leaving massive opportunities for high-return, energy efficiency investments.
In other sectors, one finds that the subsidies to oil & gas vastly exceed the subsidies to any clean energy source, causing further distortion of capital efficiency which - if corrected - would cause substantial shifts towards cleaner alternatives.
Much of our environmental and energy policy has been compromised by this false fight between "economists" and "environmentalists", who end up causing undue pain to both camps since the only thing they agree on is that someone must lose. (Witness the Clean Air Act, which has been directly responsible for driving up energy costs AND increasing CO2 emissions.) I think the time has come to do better - and while I'm intrigued by the debate above, it's also grown rather tiresome. The more time we spend in academic magic elf debates is less time we have to focus on the real environmental and economic challenges of our day. Sustaining the debate isn't in the interests of either - but it will take more thoughtful approaches from both sides to break the logjam.
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stevenearlsalmony Posted 11:58 pm
13 Dec 2007
It appears the predominant culture in the world and its global economy has a pernicious, inadvertent impact on biodiversity. Would you agree that if our culture chooses to keep growing the global economy as we are doing now, then the future for global biodiversity will eventually be jeopardized, perhaps massively extirpated?
The current organization of the predominant culture and its planful expansion, one that results in the rampant economic globalization we see today, also appears to give rise to something else that is unintended, extremely unfortunate and potentially ruinous.
If you will, please examine how the grotesque hoarding of wealth by millions of people leaves billions of people in the family of humanity hungry.
For a fortunate few people with obscene riches to conspicuously consume limited resources, while millions of unlucky children go without adequate food to eat, is a structure worthy of modification in a timely fashion.
Inequity is sad enough; grotesque inequity will one day be intolerable, I suppose.
If our predominant culture chooses to modify the way the currently unbridled global economy grows and the way it distributes Earth's resources, then perhaps we will find reasonable and sensible ways to assure a good enough future for our children for the future of biodiversity.
I am assuming that we can all agree that the endlessly expanding scale of the global economy in a finite world with make-up and size of Earth will eventually, perhaps sooner rather than later, reach a point in human history when the leviathan-like global economy becomes patently unsustainable, resulting in some kind of unimaginable colossal wreckage.
Comments are welcome.
Sincerely,
Steve
Steven Earl Salmony, Ph.D., M.P.A.
AWAREness Campaign on The Human Population
http://sustainabilitysoutheast.org/
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tidal Posted 12:55 am
14 Dec 2007
Desmog points to new research by Martin Weitzman. Richard Tol replies and points to his review of Weitzman's unpublished paper here.
Just before posting some selective quotes from the two articles, I'd like to note a few things in the context of this thread. (1) Economics is responding to the unique challenges of the climate change problem; (2) Some of the "standard" models, such as the one that Jerry was using in deriving a $2/ton carbon cost, may be quite lacking (note that Tol has increased his estimated carbon cost from $5/tonne to $50/tonne based on Weitzman's work); (3) we are still talking about a "price on carbon", which means relying primarily on market solutions moreso than command-and-control.
From New Scientist:
When you take into account extreme temperature rises of more than around 6 °C, he says, they dominate all other options and effectively demand that investment aimed at stopping them be made now. "This tells us that we should take the problem much more seriously that normal cost-benefit analyses suggest," says Weitzman, who has submitted his paper to The Review of Economics and Statistics.
Economists have generally ignored extreme events when doing cost-benefit calculations. Such events are theoretically possible, they say, but are so unlikely and lie so far in the future that it is not cost-effective to spend money to prevent them... Weitzman's results are so dramatic that some economists, many of whom argued in favour of caution, are shifting their position.
Environment groups argue that the risk of extreme events justifies large investment now, but other groups, notably industry-orientated think tanks and many Republican politicians, have resisted such calls. "In the United States, cost-benefit analyses have been used to back up questions about whether [investment] is worth much now," says Grubb. "This throws a pretty fundamental spanner in the works."
Richard Tol of the Economic and Social Research Institute in Dublin, Ireland, is one economist who used to argue for investment levels that fall short of what green groups say is needed... Before reading Weitzman's paper, Tol had that figure at $5 - now he thinks it should be $50...
Weitzman's study shows... the potential cost of extreme events is so great that they come to dominate the assessment of risk, whatever method is used to compare the value of present and future generations.
Richard Tol review:
(Weitzman's) "Dismal Theorem" clearly casts doubt on results derived from a cost-benefit approach to climate policy, at least if the equity implications of declining marginal utility are recognized; indeed, it suggests that a warning label be attached to integrated assessment models that rely on the cost-benefit approach - something like "Warning: To be applied only to non-extreme climate change possibilities". The Dismal Theorem marginalizes the debate over the social cost of carbon and the associated discussions about what makes estimates high or low. All of the existing estimates are infinitely too small. It similarly renders the current obsession of the scientific community for reaching consensus on central tendencies of climate change obsolete....
It should now be clear why the scientific community must move beyond trying to nail down consensus about the central baseline tendencies of climate change and embrace (though not exclusively) an organized effort designed to examine the "dark tails" of our possible futures...
We now turn to the warning label that we promised. The Dismal Theorem is derived from taking limits, so it is tempting to take its conclusion to its logical extremes.... One might also apply the generalized precautionary principle to all social issues for which there are unfortunate consequences in the fat tails of the distributions of critical variables because expected marginal damages are infinite for all of them. But then, how should we set priorities for distributing the planet's finite resources in the social interest? The economic tradeoffs would simply be undefined. Thus, we offer a concluding warning label on the Dismal Theorem: "Warning: Not to be taken to its logical extreme in application to real world problems."
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Jon Rynn Posted 12:55 am
14 Dec 2007
Now, let's say we have a bill with RFS and a bill with the solar vouchers -- I contend that the solar voucher bill would be a good way to decrease support for the RFS bill. I think one of the motiviations for the RFS bill, besides the obvious self-interest, is the desire to do something. So I just leave it as something to think about, that there is a "do something" motivation to some policy proposals, and we should propose better do something's so that ethanol doesn't have a field day.
Sean, I have a feeling that you feel that the reason capital is misallocated is that the government distorts markets, and much of that is true. But sometimes the markets, even if not warped, would still misallocate. It's a little difficult to tell which is worse, government or the private sector -- witness the subsidization of suburban sprawl while the cities are allowed to decline -- and since this is the real world, we can't do experiments and figure out who is the worst offender. Another huge waste of capital for the last 50 years has been the military budget, for instance.
So there's plenty of blame to go around. So it seems reasonable to me to say, "OK, let's unwarp the markets, let's use market-based systems like carbon taxes, and let's do some direct investments." That way, we're covering all of our bases, and getting going with mitigating global warming (and plenty of other problems besides).
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tidal Posted 2:26 am
14 Dec 2007
Abstract:Using climate change as a prototype example, this paper analyzes the implications of structural uncertainty for the economics of low-probability high-impact catastrophes. The paper is an application of the idea that having an uncertain multiplicative parameter, which scales or amplies exogenous shocks and is updated by Bayesian learning, induces a critical "tail fattening" of posterior-predictive distributions. These fattened tails can have very strong implications for situations (like climate change) where a catastrophe is theoretically possible because prior knowledge cannot place sufficiently narrow bounds on overall damages. The essence of the problem is the difficulty of learning extreme-impact tail behavior from finite data alone. At least potentially, the influence on cost-benefit analysis of fat-tailed uncertainty about climate change, coupled with extreme unsureness about high-temperature damages, can outweigh the influence of discounting or anything else.
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amazingdrx Posted 2:45 am
14 Dec 2007
It is behind the very popular Ron Paul's surprising call to abolish social security.
Growth is good. Taxes hinder growth. Taxes are bad. Government always spends money more foolishly than business.
If government must do business, contract it out to real businesses (like Halliburton and blackwater). Free marketeers wish to sell the national highway system to Halliburton or some other Dubai based corporate entity.
Growth is good, the simple self evidently true (for fungi and human culture as well) fact of life is not so simple as it sounds.
Pure growth in human population, is that good? Nope.
Growth in pure consumption, is that good? More kwh or gallons of oil used per citizen? Nope.
Growth in quality of life, health care, nutrition, education, exersize, happiness, fullfillment, financial security? That is the growth you want.
Growth in productivity and efficiency, standard of living based on all the real quality of life related factors.
We aren't just fungi growing out underground to spread our spores eventually (not to say we are better), but even that largest organism on the planet (a fungi colony discovered in the UP of Michigan) a seemingly simple colony of the most primitive of life forms. Even that sluggish behemoth, adjusts it's growth in order to pop up some mushroom caps and spore out. Spore out dood!
Arguments based on pure growth as some ultimate good, fall upon these rocks. And are thus dashed to pieces in the powerful waves of bloggerel.
http://amazngdrx.blogharbor.com/blog
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LegumeSam Posted 3:05 am
14 Dec 2007
By "hundreds of ways", I mean distributed decisions. In order to avoid paying a carbon tax, any individual might: (1) turn down the thermostat and put on a heavier sweater; (2) move closer to work or school; (3) buy a smaller car; (4) bicycle or walk mor often; (5) replace their lightbulbs with more-efficient ones; (6) turn off their lights more often; (7) invest in a solar water heater; (8) ... you get the picture.
Do people behave differently to avoid paying taxes? Maybe if they're rich they invest in tax shelters, but otherwise? Are people spending less at the mall because of those onerous sales taxes?
And does any of this really count as a reduction of the human race's carbon footprint? Here's an illustration from Econ 101: the supply-demand curve. As demand goes down, price goes down. Any nation imposing "carbon taxes" severe enough to make a difference would just make oil cheaper for other nations.
The idea that with "carbon taxes" we can "do something" about the world's 85-million-barrel-a-day crude oil habit is a shell game. From Alf Hornborg's The Power of the Machine:
Unless we are prepared to reorganize society in a much more fundamental way, it seems that any "green taxes" or other brakes on the system substantial enough to have a real impact on consumption would lead to economic decline, the most obvious sign of which would be rising unemployment rates, in the face of which any government would very quickly retract its "green taxes." More likely, the "green taxes" would never reach the magnitude at which such effects would follow, in which case they would remain symbolic and pointless. (18)
It's time to admit that crude oil production follows Say's Law: "what is produced will be consumed." You want to reduce carbon-burning? How about leaving the carbon in the ground?
Your "free market" is a fetish. A universally popular fetish, of course, as world leaders convene today to save capitalism for a dying planet, but a fetish nevertheless.
A global, ecologically-sustainable society -- now that means something.
http://www.dailykos.com/User/Cassiodorus
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LegumeSam Posted 3:15 am
14 Dec 2007
Do see Foster's discussion of Jevons' Paradox...
http://www.dailykos.com/User/Cassiodorus
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odograph Posted 3:17 am
14 Dec 2007
To me it's all about the broad engagement we have on the problem, and the amazing right-middle-left dialog we see on carbon taxes and economic solutions.
I think Mr. Taylor's vulnerability, as he tries to shape an extreme as a moderate one, is when he jumps from saying:
I am all for internalizing negative environmental externalities. So are most economists.
... to trying to wiggle out of that again. He's all for internalizing negative environmental externalities ... except when he can undermine their severity or overplay their costs.
I'm not sure you all caught his other contradiction either, when he first endorsed $2/ton taxes, and then said essentially "of course they wouldn't do anything" - they'd have to be much higher.
But I actually don't worry too much. I don't think we'll convince Mr. Taylor (or at least we won't change his public opinion). We can on the other hand take some joy from the fact that he is the far right, most free market, placeholder. Look how far that placeholder has come!
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odograph Posted 3:23 am
14 Dec 2007
(My new Asus Eee PC uses 1/10th the power of my old web-surfing desktop ... can I possibly surf 10x more with my newfound efficiency? I don't think so.)
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stevenearlsalmony Posted 3:28 am
14 Dec 2007
Thanks for your contributions to this discussion and for the uncommonly constructive way in which all of you participate.
Perhaps some of you will be so kind and respond to three following proposals.
The first proposal is an idea that has been deeply developed by Dr. Jack Alpert of the Stanford Knowledge Integration Laboratory (SKIL), <www.skil.org>.
According to his calculations, if we agreed, as one family of humanity, to begin now to implement VOLUNTARILY a "One Child Per Family" policy, it would be possible in the coming 50 years to rapidly decrease absolute global human population numbers to 1.5 billion rather than have human numbers worldwide grow to a fully anticipated 9.2 billion people by 2050 (UN Population Division projections). Although there is much more to say about this proposal, I am going to immediately pass on to the matter of modifying the global economy: the second proposal.
There are remarkably well-developed ideas by Aubrey Meyer of the Global Commons Institute in England regarding a plan for the "contraction and convergence" of the global economy, as a way of protecting the Earth from the reckless and relentless expansion of economic globalization that could soon become patently unsustainable on a relatively small planet with Earth's limited resources.
It goes without saying that the Earth does not possess enough resources to sustain the human species, if every human being on the planet consumes resources as voraciously as people in the 'developed' world do now. My third proposal calls for a plan to be formulated that redistributes resources and caps excessive per-capita over-consumption.
I suppose what I am trying to point out is this: current per human consumption in the 'developed' world, unbridled increase of human industrial/production capabilities in the 'developing' world, and skyrocketing human numbers in the 'undeveloped' world cannot be sustained much longer by the limited natural resources and frangible ecosystem services of Earth.
As Jon Rynn has made clear to us, there is plenty of blame to go around for the distinctly human-forced predicament in which humanity finds itself in these early years of Century XXI. At least to me, it appears that all of us in the human community are implicated in this situation, even though no one among us is responsible for our circumstances. Collective thought and action is anticipated, I suppose.
With warm regards,
Steve
Steven Earl Salmony
AWAREness Campaign on The Human Population, established 2001
http://sustainabilitysoutheast.org/
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Ron Steenblik Posted 3:28 am
14 Dec 2007
Yes, it's true that if carbon taxes were to start to bite, the before-tax price (and perhaps the after-tax price) of petroleum (and coal) would come down. But then so would production. Less would be produced from high-cost areas ("leaving carbon in the ground").
Some adjustment probably would have to be made to the tax rates from time to time. Alternatively, with a cap-and-trade system, the price of CO2 quota would adjust in line with supply and demand.
But focusing only on supply-side solutions -- e.g., reducing the cost of solar-generated electricity to match that of electricity produced from fossil fuels -- also has its pitfalls. Lower the price, and people will want more. If the economy cannot keep up with the pace of demand, then the marginal electricity supply will still for some time come from ... fossil fuels.
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LegumeSam Posted 3:41 am
14 Dec 2007
Hence, it's unclear whether the "hottest" world is really worse off than the "coolest" world - at least as these scenarios are constructed.
This construction, of course, ignores the one biggest fear about abrupt climate change: that it is, in fact, abrupt, that it is happening at a rate that does not allow the natural world to adapt without interfering rather dramatically with the resilience of the Earth's ecosystems.
(Pile that on top of the standard destruction of ecosystems during the industrial era, with (as Leakey and Lewin suggest in The Sixth Extinction) a species-extinction rate 1000 times the norm throughout most of natural history...)
http://www.dailykos.com/User/Cassiodorus
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LegumeSam Posted 3:45 am
14 Dec 2007
How is it inferred that "production would go down"? We live in a world-system, in which taxes on one set of carbon consumers make prices cheaper for another set who don't have to pay 'em. Once again, in today's fossil-fuel economy, fossil fuels follow Say's Law. Don't make me repeat this again.
http://www.dailykos.com/User/Cassiodorus
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Ron Steenblik Posted 3:57 am
14 Dec 2007
How is it inferred that "production would go down"? We live in a world-system, in which taxes on one set of carbon consumers make prices cheaper for another set who don't have to pay 'em.
I was assuming a world in which a majority of countries would be subject to a tax or an overall cap on their emissions. I presumed you were, too.
If you are assuming no such thing, then whether the reductions in U.S. oil use are achieved indirectly, through a tax, or through investing in non-carbon alternatives, the result in the rest of the world will be the same, no? That is to say, the USA's reduced consumption will exert a downward pressure on the price of oil globally, spurring demand elsewhere -- but also discouraging exploration, development and, over the longer term, production -- until a new supply & demand equilibrium is reached.
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Jon Rynn Posted 4:07 am
14 Dec 2007
For instance, how do we construct a sustainable transportation system? Is it going to say car-centered, or move toward being train-centered? What technologies are best for energy, and how can those technologies decrease carbon emissions? How are we going to design our cities, towns, and suburbs, and were are the farms and factories going to be located?
By engaging in these questions, hopefully, people become more familiar with the myriad issues involved in transforming the society. If we just stick to numbers (and numbers are fine, I'm just saying we need more than that), we miss the opportunity to educate people about how the economy works, from a production-centered point of view.
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atreyger Posted 4:11 am
14 Dec 2007
Insurance companies are run by who? Statisticians and economists, some of the most important 'players' in the realm of public policy; you know, what with the whole payout and weighing of risks.
They are extremely worried about the effects of global warming, because they are 'on the ground' and they will be losing money. That's part one.
Part two is that Cato Institute is supposedly run by the same people. Well, maybe not statisticians, which may be the root of the problem. And they're not worried about GW at all. They (Jerry Taylor's position) are actually CHEERY about it. Seems that they're either absolutely misguided, or funded by people that tell them to be cheery. I find it hard to be convinced by their position, which uses MODE as a reasonable statistic.
After all, there could easily be 100 estimates, with two of them producing the same number. If no other estimates agree on the same exact number, than those two are MODE, which means NOTHING.
I have never seen ONE statistician using mode, which is why one of the posters had to google it. I cannot side with Jerry Taylor on this one. And because of that and many other reasons (including underlying assumptions of typical economics), I cannot relinquish 'public policy' to economists, particularly at the Cato Institute.
P.S. environmental economics, which I have seen mentioned several times, are not ECOLOGICAL economics. Environmental economics are a subset of the common, neoclassical economics, with the typical assumptions, applied to resource use and commodity production.
At the same time, ecological economics are based on a different set of assumptions, that ground economic theory to biogeophysical reality, rather than hypotheses working off supply/demand curves.
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bookerly Posted 4:19 am
14 Dec 2007
I have never seen a proposal as to how a carbon tax could practically be applied in a way that was not punitive to poor people.
In order to change the behavior of those who cause most of the problem (the well off), it would have to be so high that it would destroy the lives of the poor. Talk of tax rebates are meaningless if the checks arrive at homes where the inhabitants have starved to death months earlier.
There is one tax that would work. A whopping income tax would reduce the ability of the well off to consume so much.
And the money could be applied globally to helping end poverty in a sustainable fashion.
As to the market, it has never worked very well for the poor, since the rich can never resist the temptation to manipulate it, all the while crying "free, free".
patrick in Beijing
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LegumeSam Posted 4:21 am
14 Dec 2007
People are not naturally economic agents. We don't just naturally view the world according to a balance sheet in which all objects are viewed monochromatically as "assets" or "liabilities," "revenue" or "expenses." It's bred into us, and we take on such a persona as an adaptation to circumstances.
The neoclassical economic model of "self-interest" is at best a tautology. Everyone behaves in her "self-interest" because "self-interest" is defined as what we do. Tautologies, of course, are intellectually harmless; the real intellectual hazard is in neoclassical economics' definition of "the self," as described above. My recommedation is that, if we are truly to focus upon ecosystem sustainability, we will in fact have to behave less as the "selves" defined by neoclassical economics than we do today.
Remember my quote above from Klein's essay?
The idea that capitalism can save us from climate catastrophe has powerful appeal. It gives politicians an excuse to subsidize corporations rather than regulate them, and it neatly avoids a discussion about how the core market logic of endless growth landed us here in the first place.
The market logic of endless growth got here because of the universalization of this monochromatic vision of the world. Neoliberal economic policy (about which Klein has much more to say) requires everyone to be an "entrepreneur," most especially the little girls you see in Sunday morning TV charity appeals who "make a living" selling collected glass from the Manila city dump. Economic hardship, then, is the tool the neoliberal elites have used to require people to behave as "economic actors."
Self-interested, balance-sheet-driven economic motivation is not the only motivation, nor is it clear that the profit motive is any good at all as something that can be twisted around somehow to benefit ecosystems rather than being one of their primary destructive agencies. For instance, Garrett Hardin's "tragedy of the commons" depicts "herdsmen" as mere economic actors as such, with disastrous results. Hardin's exact words:
As a rational being, each herdsman seeks to maximize his gain. Explicitly or implicitly, more or less consciously, he asks, "What is the utility to me of adding one more animal to my herd?"
After the publication of this essay, it was of course pointed out that in many cultures neither the economic model for "maximizing gain" as such held sway over individuals, nor was the tragedy of the commons a foregone conclusion as evidenced by ecological anthropology. This caused Hardin to change his slogan to that of the "tragedy of the unmanaged commons." Commons management, then, is our first priority.
What we want, then, is a society in which "agents" are motivated not to be "economic," but rather to create a global, ecologically sustainable society. Such a society can be brought into being by moving human behavior away from the "economic actor" model, and toward a model that imagines the human race working together to live in the natural world without destroying its ecological substrate. The protection of the ecological commons, then, must be the first law enforced, and human behavior must be adapted to what John Dryzek called "ecological reason" through which we recognize that, without a sufficiently resilient ecosystem, no other ideals can be achieved.
http://www.dailykos.com/User/Cassiodorus
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Jon Rynn Posted 4:26 am
14 Dec 2007
I also wanted to make the point that business economists can be a whole different bunch then think-tank economists, particularly at Cato, which is so anti-government that they don't like the military budget -- so they're actually on the "correct" side on military issues, in my opinion. business economists are much more concerned with what is going on on the ground.
And thanks for differentiating ecological from environmental economists -- are Herman Daly and Joshua Farley ecological economists, then?
Ron, when LegumeSam started talking about fungi, I couldn't help thinking about your post about ethanol subsidies. One of my biggest fears is that the craze for liquid fuels to power the infernal combustion engine will destroy what's left of the world's ecosystems (and agricultural land). Just seems like fungi out of control, or algae, or whatever organism you want to use. To me, the bigger question about ethanol is exactly the need for liquid fuels -- and the only way to get away from them is either renewably electrified trains, or renewably electrified cars, no?
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LegumeSam Posted 4:31 am
14 Dec 2007
That is to say, the USA's reduced consumption will exert a downward pressure on the price of oil globally, spurring demand elsewhere -- but also discouraging exploration, development and, over the longer term, production
Cheaper oil = more economic growth = more oil consumption = more exploration
More expensive oil = less economic growth = government retraction of oil taxes as part of its job of economic maintenance.
http://www.dailykos.com/User/Cassiodorus
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Jon Rynn Posted 4:40 am
14 Dec 2007
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LegumeSam Posted 5:39 am
14 Dec 2007
http://www.dailykos.com/User/Cassiodorus
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atreyger Posted 6:02 am
14 Dec 2007
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amazingdrx Posted 6:57 am
14 Dec 2007
With Halliburton moving to Dubai and the Iraq wAr set to wind down, how will the military contractors get payed? By raising gas prices.
The corporate libertarian (neoconservative) ordered world would pay an extra 2 bucks per gallon to oil corporations and they would pay contractors to keep the endless war for oil going. Until it's all pumped out. No government forces needed anymore.
Then highway travel would be payed for by the mile to the contractor who runs the highway system. but no fuel taxes. Hehey. paradise.
http://amazngdrx.blogharbor.com/blog
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Biodiversivist Posted 8:52 am
14 Dec 2007
This could easily be accomplished by making it illegal to walk upright. Although such a law goes against the grain of human evolution, it would slow the destruction of ecosystems to a crawl, figuratively, and literally.
In the end, it all comes down to biodiversity. Poison Darts--Protecting the biodiversity of our world
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odograph Posted 9:05 am
14 Dec 2007
That sentence fragment begs for a reading of the blank slate.
We are critters. We environmentalists should understand that. If "economics" captures some aspect of our nature, as critters, it has value. When "proto-economics" shows that we share things that might be called "economics" with monkeys and apes ... that's just the nail in the coffin.
If you want to move "human behavior away from the 'economic actor' model" you might have to do gene hacking.
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LegumeSam Posted 10:01 am
14 Dec 2007
Society can afford not to be "economic" when everyone's basic needs are satisfied (or at least with a social form that actively pursues common basic need satisfaction). Eating, sleeping, that sort of thing. Nobody has a right to eat, mostly for lack of effort in establishing such a thing.
http://www.dailykos.com/User/Cassiodorus
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LegumeSam Posted 10:11 am
14 Dec 2007
We live in an environment of constant "behavior modification." It exists in the police enforcement of traffic rules, the customs surrounding money and property, formal rules for greeting, commercials on television, billboard advertisements, schooling/ education (and reactions to it), demands of family life, and so on. Behaviors change when the conditions surrounding them change. Right now, we'd better start changing a lot of conditions, because the sum total of "behavior" is the burning of 85 million barrels of oil every day.
If culture were natural, there wouldn't be all of the cultural diversity that exists in the world. Is it really "worth it" to make everyone into a possessive, individualist consumer?
The "economic actor" model only covers some of the rationalizations for human economic behavior. See any sort of literature written about culture in the substantivist or culturalist traditions of economic anthropology if you want to see how this plays out in observed human behavior. Your economic rules are not everyone else's, and certainly there is no genetically-determined rule that everyone is an "economic actor" in the neoclassical sense from birth onward.
http://www.dailykos.com/User/Cassiodorus
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LegumeSam Posted 10:18 am
14 Dec 2007
Get rid of the people. The people are causing the problem. No people, no environmental problem.
Get rid of the environment. If we didn't have a real live environment (one that had to be part of everyone's lives to the extent that it was NECESSARY to create a global, ecologically sustainable, society) there wouldn't be any concept of environmental disaster, and nobody would worry about it.
Can anyone think of a third?
http://www.dailykos.com/User/Cassiodorus
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bookerly Posted 6:16 pm
14 Dec 2007
It ain't the poor people who are causing the problem, it's the well off and the leaders of the well off swells who are causing the problem. So your first choice should be to get rid of the rich. This is unlikely until things get worse, so is not a viable solution at the moment.
As to number two, a lot of us get confused about the real world versus cyberspace anyway. Perhaps the Matrix would be a good model for us (as long as it's real life impact was minimalized).
patrick in Beijing
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Ron Steenblik Posted 7:28 pm
14 Dec 2007
1. Get rid of the people.
What I have to wonder is whether Legume Sam is voluntaring to become feedstock for Soylent Green (if so, thanks for the sacrifice, Sam!), whether he is hoping that the rest of us do (sorry, I have a dental appointment next month that I really can't miss), has in mind mass sterilization (too slow to get results, perhaps?), or a man-on-the-moon-scale program to colonize Mars.
Since the decision is to be decided democratically, I think that we can safely presume that the Mars mission will win out.
2. Get rid of the environment.
Hmm, now that would be a bit more difficult, I should think. I mean, the environment is all around us, right? But since there is a lot more ocean than land, I suppose that getting rid of the terrestrial environment is physically possible, simply by bulldozing all the earth down to its bedrock and pushing it into the sea.
While that would probably do in the sea for awhile, the sea has a pesky habit of recovering from its wounds. So, we nuke it.
Turning to the atmosphere, the solution is amazingly simple. (I should get a prize for this.) We repeal the Montreal Protocol and then sub-contract DuPont to generate and release a HUGE amount of chlorofluorocarbons (CFCs), which will open a gigantic ozone hole in the atmosphere, through which all of the earth's oxygen will then be sucked out into space.
Naturally, we time this action so that our friends on the Martian Mayflower will be passing through the hole at that very moment. Holding enormous plastic bags out the windows, they then scoop up enough oxygen to keep them breathing on Mars (for at least, oh, I don't know, 10 weeks?) and continue on their merry way.
Anybody left back on Earth, however, dies.
Problem solved.
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odograph Posted 10:21 pm
14 Dec 2007
I never said there was such a thing, or that our economic nature was our only nature. Indeed behavioral economics documents some interesting things about cooperation as well.
(For instance we have a bias toward cooperation, even when it costs us "profit," but this bias is strongest when we are face to face with another person. The more "remote" a person seems, the less the cooperative impulse.)
Obviously my point is that some people want to ignore, or worse, rewrite our nature.
(I believe police work within our nature, and not in opposition to it.)
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odograph Posted 10:54 pm
14 Dec 2007
Behavioral economics tells us that we humans have a bias toward cooperation. Recent twin studies tell us that this cooperation bias has itself a genetic bias.
Have you ever paused to think about how people with a low (or high) genetic bias for cooperation might cluster at certain organizations?
Wouldn't it be amusing to get some skin scrapes at iconic institutions of the right and left and then run the scans?
I kind of wonder how this will play out in future decades (if we do not turn away from science). I wonder if balanced-moderates will start to question how much influence extremes (outside the median nature) should influence things?
... I guess the joke would be on me if the median, mainstream, rejected that science.
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stevenearlsalmony Posted 10:59 pm
14 Dec 2007
Is it possible that the standard for determining what is real and true in a culture is this: whatsoever is widely shared, consensually validated and judged to be ecomonically expedient, politically convenient, socially agreeable and religiously tolerated is true and real?
At least to me, it seems that good science is being ignored and silence allowed to prevail when reasonable and sensible evidence comes into conflict with what culture prescribes as real and true. Perhaps science does present culture with evidence of inconvenient truths.
Steven Earl Salmony, Ph.D., M.P.A.
AWAREness Campaign on The Human Population, established 2001
http://sustainabiilitysoutheast.org/
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LegumeSam Posted 11:10 pm
14 Dec 2007
Of course, neither of the "solutions" I suggested means anything outside of the spirit of sarcasm/ irony in which they were suggested, the same spirit in which Jonathan Swift suggested the solution of killing and eating Irish children as a solution to the "Irish Problem" in his famous essay of the year 1729.
Nobody really wants to "get rid of the people" (except maybe the neoMalthusians who complain about "overpopulation," of which I am not one) and "getting rid of the environment" is only the fantasy of the folks who want to pretend the whole problem would just go away. The Cato Institute people seem to be in that category, sticking with their market fetish while looking for a cheap rhetorical device in order to wish away "the environment" and the "problem" it supposedly has.
What I was suggesting above, of course, is that a REAL solution means looking for a global, ecologically sustainable, society, and that if our society isn't ecologically sustainable, we might consider the possibility of changing society.
Was there anybody who read my "Modest Proposal" post and DIDN'T need this spelled out?
http://www.dailykos.com/User/Cassiodorus
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odograph Posted 11:32 pm
14 Dec 2007
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Pangolin Posted 12:33 am
15 Dec 2007
The primary problem with economics as I see it is that it tries to describe the exchanges and flows of limited items, oil, food, land when they are paid for by the infinitely available item of digital money. It's comparing apples and photons.
Government intervention: The government already has strong opinions on the herbs I grow in my garden, where my doctor went to school, whether I can buy organic almonds and what alkaloids, alcohols, esters or proteins my blood may or may not contain. If the federal government got any farther up my ass it would be my tongue. Why then are we freaked out about the government replacing my air conditioner with a geo-exchange HVAC or putting solar panels on my roof? Somebody?
Growth: Assuming that a high school kid invents the Mr. Fusion next week we would still be revisiting the climate change problem in a few hundred years due to heat pollution. The planet is finite and biologists tend to agree that environmental services to mankind cannot be maintained at the current population level. We're in ecological overshoot already so we should assume no more growth."Sustainable growth" is a physical impossibility. Die-off is still an option.
Resource allocation: The pretense that a "free market" is best at allocating resources doesn't pass the smell test. Of course it's the most efficient use of resources to trap our working population in individual vehicles for one to two hours a day simply to arrive at the workplace tired. The market has rendered health care an obscene morass. The marketplace ignores all of those with partial college degrees despite the immense loss in human resources. Ditto homeless people and the uneducated. Let's not mention the home mortgage nightmare. Market fundamentalism relies on 24/7 denial of reality.
Carbon Pricing: The price that should be charged for dumping a ton of carbon in the atmosphere should be what it costs to put 1.1 tons of charcoal into the ground as Terra Preta or equivalent mineralized CO2. The emission price should equal the disposal price plus a penalty. Why is this a mystery?
Fairness; I'm sorry to say this to the millionaires of the world but economic fairness is not going to be negotiable in this game. When one PO'd guy with a pack of matches can undo vast amounts of emissions reductions you have to give something to those less well off. Preferably you would give them the means to self produce a reasonable standard of economic betterment and a safety net for the inevitable washouts; on your dime.
Urgency: Ask the Australians how much rain they are buying with the proceeds from those coal exports. Ask the same question in Atlanta. Check the status of the arctic ice cap or the Greenland ice mass. The pretense that we can continue to dump carbon into the atmosphere at any rate requires a denial of the events of the last year. Extreme weather events are a daily occurrence now along with aftermath reports. There is no time left to dicker.
Accountability: Since this is a life and death question for the majority of the human race accurate measures of energy flows should dictate priorities. "Free markets" suck at accountability which is why GM's CEO gets paid at all. The list of executives paid millions to run corporations into bankruptcy is only growing. Notice the lack of heads rolling in the banking sector as they scramble to remain solvent. The scientific community, for all it's flaws, has shown themselves able to hold to a higher standard of accountability than economists or corporatists.
For my entire adult life I've heard economists claim that the new law, NAFTA, tax bills, school funding, whatever, would result in an improved standard of living for US citizens. Instead we have homeless people with cell phones and two parents working three jobs to raise one kid where my father paid the bills for a house and five kids by himself. This and inflation figures that exclude food, fuel, housing and health care nurture a strong skepticism regarding official numbers. The opinion of Joe Sixpacks everywhere is that economists are full of crap.
Can we stick to the science on this one?
Put the Carbon Back
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Ron Steenblik Posted 12:40 am
15 Dec 2007
A bit of (I have a feeling unwelcome) advice, L.S.: you'll get along better in life if instead of assuming that the people with whom you choose to argue are stupid ignoramuses, far beneath you, that you assume (at least until proven otherwise)that they possess some intelligence, learning and wisdom.
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Ron Steenblik Posted 2:46 am
15 Dec 2007
However, you do ask a good question, one that shows some of the problems that economists try to grapple with when devising policies:
Why then are we freaked out about the government replacing my air conditioner with a geo-exchange [heating, ventilating and air conditioning] HVAC unit or putting solar panels on my roof? Somebody?
"Freaked out" is probably too strong a word. But let's deconstruct the problem.
Especially if we are talking about a federal policy, clearly there are numerous geographical issues that immediately come to the fore -- namely, that only people living in certain parts of the country need both air conditioning and heating. Many people living in upper New England, the upper North-west and Alaska do not need an air conditioner, and many parts of Hawaii and some areas of California (where a ceiling fan suffices) have both low cooling and low heating needs. So a policy to subsidize replacing air conditioners will only benefit people in certain parts of the country. In effect, taxpayers in Maine will be cross-subsidizing home-owners in Texas.
Even within areas of the country where air conditioning has become a must-have item (somehow people before the 20th century survived without them), the relative cheapness of operation of a geo-exchange HVAC will differ according to local climate and the efficiency of the air conditioner that it replaces. That is to say, in some additional parts of the country, paying to replace an existing AC with a geo-exchange HVAC would not rate high in terms of cost-effectiveness. What might be more cost-effective? Probably a lot of investments, including installing window awnings, or better insulation.
The policy would probably be regressive: that is to say, the uptake of the subsidy would likely be much greater among relatively affluent home-owners than people renting small apartments and using detachable ACs (especially if the subsidy covered only part of the costs of the installation, since that part of the geo-exchange HVAC that is not mobile would stay behind when the renter moved). Moreover, replacing an existing AC with a geo-exchange HVAC in a private home would likely increase the value of that property. Hence, those home-owners would get an added bonus when they decide to sell their homes.
Indeed, realizing that they could recoup some of the cost of replacing an existing AC with a geo-exchange HVAC when they decide to sell their homes, some home-owners may have already been planning to make the investment on their own. Hence, for some cases, the subsidy will be a pure transfer, since the recipients will have already decided to make the investment in any case.
The government would in any case need to be careful that the subsidy does not create artificial scarcity in the good whose consumption it is tring to encourage. History is full of such examples, such as when the Dutch Government in the 1970s decided it would be a dandy idea to subsidize the replacement of single-pane with double-pane windows. Since demand was boosted suddenly, and the Dutch double-pane-window industry was already working flat out, all the subsidy did was to raise the price and drive most of the business to Belgian producers, who were the nearest ones with spare capacity.
Think also about the consequences of too-quickly expanding the capacity of the industry to meet that demand. For a couple of years, manufacturers of geo-exchange HVACs would make out like bandits. But then, once the market was saturated, there would be a bust.
There would likely be some claw-back in the gains in energy efficiency. Recipients of the new, more-efficient ACs, might decide to pay as much as they did before for air-conditioning, by keeping their homes cooler, or the ACs running more hours of the day.
**
One of the advantages of (dare I use the term again?), "market-based approaches to policy" is that they avoid many of these problems. Because no particular "solution" is favored, the effect on the markets for the different possible ways to deal with the problem (installing ceiling fans, dressing lighter and enduring warmer homes, improving insulation, planting trees around the house) is more diffuse: the subsidy does not simply end up being frittered away through a rise in the price of the targeted item.
Something like a carbon tax would also simultaneously both encourage fuel and electricity savings in areas with high heating, as well as cooling, demand -- i.e., its burden would be more equitably spread around the country.
In short, it is not that economists are loath to governments doing anything. Rather, they seek to steer policy makers away from promulgating policies that will yield fewer benefits for society than other ones.
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LegumeSam Posted 3:07 am
15 Dec 2007
I thought I was responding to sarcasm; these ideas about changing the genetic code and passing a law against walking upright and such. I just figured it was more of the same. Oh well. Sorry, whatever.
http://www.dailykos.com/User/Cassiodorus
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Ron Steenblik Posted 7:32 am
15 Dec 2007
[T]here was compelling evidence from around the world that putting a price on pollution under an emissions trading program hastened the speed and efficiency of the environmental cleanup.
"The main point is that you accomplish environmental goals at a lower cost," he said. "Because you put a price on the pollution, these economic instruments force you constantly to think about ways to get rid of pollution. By using resources efficiently, the government can afford to be more aggressive in terms of protecting the environment." [My emphasis]
Why wouldn't we want to deploy resources used (or mandated to be used) by government the most efficiently (and, yes, equitably as well) as we can?
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bookerly Posted 7:41 am
15 Dec 2007
Yeah I got it....
Did you think my matrix idea was a serious response???
patrick in Beijing
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Colin Wright Posted 11:01 am
15 Dec 2007
It is definately good to have concrete examples to show how abstract ideology plays out in the real world. For the record, I do think carbon taxes and trading have an important part to play. But I'm not convinced from your examples that they show that government is a relatively poor regulator/distributer of pollution/goods.
For instance, I think Jon has already answered your "one-size-does-not-fit-all" objections to "command-and-control" (by the way, a perjorative designed to stifle debate) subsidies. Namely, the government could distribute funding to localities to tackle their own energy use using their local knowledge base. (Further, the government could employ the services of economists to ensure that equity issues are addressed as much as possible.)
Neither does the example of subsidized windows from Holland lead to any radical conclusion, other than localities may need to import goods from other localities. Subsidized renewable energy in Germany, for instance, has made them leaders in the field.
Finally, the Jevons pardox that you touch on in point 7 leads me to the conclusion that we need a closer integration between government and citizens, rather than a deepened reliance on the market.
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Ron Steenblik Posted 6:19 pm
15 Dec 2007
Re-distributing funding to localities to solve their local carbon-abatement problems according to their own lights is a very different pproach than Jon Rynn's initial response, which was for government-led investment in government-chosen "solutions", and very different from Pangolin's suggestion for a very technology-specific subsidy.
My reference to the Dutch example was simply to illustrate that when governments decide to subsidize things, they'd better make sure the market conditions are right. To quote my source on this episode (Dirk J. Wolfson): "Targetting crucially depends on whether one can get the relevant elasticities under control; if not, subsidization amounts to shooting from the hip." ("Towards a Theory of Subsidization", 1990). In this case, the subsidy was almost like throwing money down the drain, since the price of the targetted good rose by almost as much as the subsidy. Its impact on the budget was significant; its impact on consumer behaviour was insignificant.
Personally, like you, I have no problem that foreign producers, as opposed to Dutch producers, were the main beneficiaries of the subsidy. But many people (I uspect Jon, for one, though he can correct me if I am wrong) feel strongly that if something is subsidized, that subsidy should benefit only domestic producers and consumers.
As for Germany, and the fact that their subsidization of renewable energy has made them leaders in the field, I have two responses:
That tells me nothing. If you subsidize any domestic industry enough (and you have smart people working for it), it will make that industry a leader in the field. That begs the question of whether the subsidy was cost-effective. In particular, is the aim of the subsidy to increase, for example, more wind-generated power, or to build up a domestic wind-turbine industry? During the late 1980s and throughout the 1990s, European governments threw a lot of money at their wind-turbine industries, each trying to get the better of their neighbour. It was extremely wasteful, and only ended when EU competition authorities put a stop to it.
Subsidies to PRODUCTION OF TECHNOLOGIES are one of the reasons why negotiators in the WTO now are having a hard time getting developing countries to agree to liberalize trade in goods related to renewable energy. Brazil and India, for example, are now significant producers of wind turbines and components. But they are struggling against the market leaders (Danish companies in particular), who gained that lead in no small part due to government help. This is an unfortunate situation. It would benefit the world for all countries to apply zero or low tariffs on renewable-energy technologies, but thanks to (understandable) suspicion by developing countries that they will never be able to compete with the pocketbooks of developed countries, they are holding back and refusing to sign up.
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stevenearlsalmony Posted 12:47 am
16 Dec 2007
1. Are facts irrefutable?
NO facts are irrefutable.
2. Where does the money come from?
From the people who have money, I suppose.
3. Who will administer wealth re-distribution?
I do not know.
4. What is Earth's ideal temperature?
Now this is a personal perspective, and the following idea should not be taken as more than that. The ideal temperature of Earth is any temperature that protects and preserves life as we know it.
5. Where is the proof of human-induced climate change?
Great scientists like James Hansen, Chris Rapley, E. O. Wilson and thousands of other top-rank scientists have produced so much evidence related human-forced climate change that I do not know where to begin to answer this question in a manner that would be found meaningful. Afterall, science speaks for itself. Scientists are only the messengers, I believe.
6. Define good science, please?
Good science is derived from sound scientific observations and empirical data that are not contaminated by what I would like to call "cultural bias."
Let me explain. It appears to me that some scientists allow their efforts to do scientific research to become unconsciously influenced by what their culture judges to be economically expedient, politically convenient, socially agreeable and religiously tolerated. Their biased research is not good science.
Let us look at the emerging science of human population dynamics, which, incidently, could explain the current skyrocketing growth of absolute global human population numbers. Why would this example of what I call "good" science be denied?
Hmmm, we can being by considering how the Catholic Church might find the new science of human population dynamics intolerable because it directly contradicts cherished Church doctrine. The new evidence indicates with remarkable clarity that the human species could benefit from allowing the voluntary use of contraceptives, among other things that would slow the growth of population numbers. The Catholic Church will not "receive" the good science because the Church opposes contraception.
To take another example, our brothers and sisters in economics provide another case in point. Note first that economists are great investigators, but they are not scientists. That is to say, economics is not a branch of science. Economists are not doing science, per se. When it comes to commenting on a problem like human-driven global warming, it appears to me that these investigators are in an exceptionally weak position to do so. That some economists choose to do so, nonetheless, appears unhelpful.
As yet another example, let's turn attention to politics. My view of politicians is uncharitable. Too many of these leaders appear to me to be clever posers, devoid of a capacity for the intellectual honesty necessary to understand the work of good science.
Needless to say, there is much more to say about all this. I have not yet touched on how people desirous of maintaining the status quo, come what may, will believe, widely share and consensually validate virtually anything that supports their lifestyles.
Steven Earl Salmony
AWAREness Campaign on The Human Population
http://sustainabilitysoutheast.org/
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Jon Rynn Posted 1:50 am
16 Dec 2007
I think Colin's idea of funneling money to localities, and letting the localities figure out how best to uses renewable finance capital sounds great. I was using the example of national vouchers just to bring up the idea of using government as the source of finance capital, but not the "deciders" when it comes to specific technology (and that goes double for the Feds, who should just be distributing capitgal). On the other hand, if the government was doing this, it would still have to have certain guidelines of how to use the money, obviously, which leads me to
I don't know if there is a difference, in your opinion, between a subsidy -- that is, paying part of the price of something that somebody buys -- and an outright grant. If the government gives an outright grant, it opens up the interesting possibility (at least to me) that the government could keep certain property rights in that good -- say, a geoexchange unit -- to the effect that the geoexchange unit could not be sold to someone else, except with the building, and if replaced would have to be properly recycled. Which leads to
One advantage of, to somewhat contradict my first point, having everyone use one particular kind of technology, say geoexchange, would be that noone would have a relative advantage over another owner of a building that didn't have one. It may also be that you would want to have a level of grants that was so high that you could simply do everything: geoexchange, solar, retrofitting, tree planting.
As for the Dutch example, yes, I think that subsidies (or grants) should be part of an overall strategy of establishing a coherent sustainable manufacturing base, and should not be simply bought from outside the region (at least, not most of it); although in the European case, I would consider Europe as one economy. But this need not lead to no use of foreign technolgy; the Koreans and Chinese have been very effective in allowing in foreign factories, as long as eventually "natives" learn the technology, and even take over the factory. That's sort of a win-win. Which leads to
I can understand why India et al are leary of completely free trade in renewable technology, and perhaps you can give your take on this: the idea that infant industries need protection for a while. Again, put in the context of a holistic effort to build a manufacturing sector, and also embedded in a performance-based economic policy, such as the Koreans have, this can work -- as long as it's not forever. The Koreans gave their conglomerates (chaebols) very favorable trade policies, but if the chaebol screwed up they would actually dismantle it and give the better chaebols the various pieces. That might be extreme, but it shows that performance can be a part of infant industry protection.
I absolutely concur that you don't want boom-and-bust cycles in machinery production -- that's what often leads to recessions, or even depressions. The US machine tool industry (and many other industrial producers) has been whipsawed by boom-and-bust cycles, much to their detriment. The solution would seem to be to introduce the subsidies/grants slowly at first, to give the producers the time to ramp up.
Finally, (phew!) I want to reiterate that all of these possibilities depend on the speed with which we need to attack climate change. We need to do more explicit "picking" if the hour is getting too late.
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Pangolin Posted 4:33 pm
16 Dec 2007
I must state here that it is a widely held view that it is not possible to discredit the profession of economics further without resorting to a frank acceptance of physical reality. As reality doesn't appear to impinge on economic theory from my layman's viewpoint I must ask you to bear my repeated reference to it.
However, you do ask a good question, one that shows some of the problems that economists try to grapple with when devising policies:
Why then are we freaked out about the government replacing my air conditioner with a geo-exchange [heating, ventilating and air conditioning] HVAC unit or putting solar panels on my roof? Somebody?
"Freaked out" is probably too strong a word. But let's deconstruct the problem.
1. Especially if we are talking about a federal policy, clearly there are numerous geographical issues that immediately come to the fore -- namely, that only people living in certain parts of the country need both air conditioning and heating. Many people living in upper New England, the upper North-west and Alaska do not need an air conditioner, and many parts of Hawaii and some areas of California (where a ceiling fan suffices) have both low cooling and low heating needs. So a policy to subsidize replacing air conditioners will only benefit people in certain parts of the country. In effect, taxpayers in Maine will be cross-subsidizing home-owners in Texas.
First, existing federal policy already involves massive subsidies to some states paid by the taxpayers in other states. Our entire agriculture and energy policies already involve subsidies that favor some states over others. Disbursement of federal moneys among the states is distinctly unequal; modifying this disbursement changes nothing.
Second, it is obvious that you have no familiarity with geo-exchange heating, venting and air-conditioning (GeoExchange) systems. They provide heating, cooling and hot water for significantly less energy and carbon output than all other active thermal regulation systems. The citizens who benefit MOST from these systems would be those living in the hottest and the coolest areas with Hawaii being the state that would have the least need but perversely the most cost benefit due to locally high energy costs. You comment with authority without even googleing the subject to familiarize yourself with it's basic structures.
Even within areas of the country where air conditioning has become a must-have item (somehow people before the 20th century survived without them), the relative cheapness of operation of a geo-exchange HVAC will differ according to local climate and the efficiency of the air conditioner that it replaces. That is to say, in some additional parts of the country, paying to replace an existing AC with a geo-exchange HVAC would not rate high in terms of cost-effectiveness. What might be more cost-effective? Probably a lot of investments, including installing window awnings, or better insulation.
Here you prove the standard ignorance of economists. The means of survival without air conditioning or refrigeration prior to the post-WWII period involved architectural adjustments for the wealthy, loss of productivity for the middle classes and suffering and death for the lower classes. Since 1960 most buildings have been built to assume active HVAC systems and many cannot be occupied without operational systems. Loss of heating/cooling abilities would require abandonment of buildings and productive activities.
GeoExchange systems are modular and designed for exterior retrofits whereas replacements of windows, insulation, doors, etc requires custom fitting of multiple parts per unit. A massive installation program of GeoExchange systems would take a large bite out of the nations carbon budget with an actual long term cost savings.
GeoExchange systems have proven themselves to be cost effective in Maine, California, Florida, Texas, and Alaska. Essentially anywhere where heating/cooling or hot water is needed on a daily basis. Please demonstrate where people live in the US without the requirement for heating or cooling or hot water or commercial refrigeration. The major limiting factor in new installation of new GeoExchange systems is inadequate provision of financial vehicles by the marketplace.
The policy would probably be regressive: that is to say, the uptake of the subsidy would likely be much greater among relatively affluent home-owners than people renting small apartments and using detachable ACs (especially if the subsidy covered only part of the costs of the installation, since that part of the geo-exchange HVAC that is not mobile would stay behind when the renter moved). Moreover, replacing an existing AC with a geo-exchange HVAC in a private home would likely increase the value of that property. Hence, those home-owners would get an added bonus when they decide to sell their homes.
There is actually no need for a subsidy. What is needed is regulation to encourage installation, particularly in rental units where existing HVAC and hot water systems are aged, poorly installed and grossly inefficient. These units should be replaced on ten year cycles anyway. Landlords frequently leave aged/inefficient appliances in buildings to increase their marginal profits; a market failure IMHO.
Retrofitting rental units offers no benefit to the property owner but renters benefit and utility companies can avoid capital improvements on transmission and generation equipment. Utilities should be allowed/encouraged through pricing and regulation mechanisms to refuse to service property units where efficiency standards aren't met. Simply mandating replacement of the least efficient of existing thermal management systems first would disproportionally benefit the least well off.
Aggregate financing with payments channeled through utility bills and financed at the federal reserve discount rate would be sufficient. Regulations would have to be enacted to penalize rental property owners who failed to facilitate installation of GeoExchange or an efficiency equivalent system. Facilitating shared well sites for multiple family housing or shared wall housing would speed installation and minimize the disruption of the transfer. Urban areas could install local thermal utilities where density makes this appropriate.
4 Indeed, realizing that they could recoup some of the cost of replacing an existing AC with a geo-exchange HVAC when they decide to sell their homes, some home-owners may have already been planning to make the investment on their own. Hence, for some cases, the subsidy will be a pure transfer, since the recipients will have already decided to make the investment in any case.
In the current housing and financing crisis, caused by poorly regulated markets, it is unlikely that homeowners will have the ability to independently finance these capitol improvements on the mass scale needed. We do not have the time to wait for "market forces" to correct inefficiencies on their own. Again with a sufficient financial/regulatory package no subsidy is needed due to long term efficiency gains.
5 The government would in any case need to be careful that the subsidy does not create artificial scarcity in the good whose consumption it is trying to encourage. History is full of such examples, such as when the Dutch Government in the 1970s decided it would be a dandy idea to subsidize the replacement of single-pane with double-pane windows. Since demand was boosted suddenly, and the Dutch double-pane-window industry was already working flat out, all the subsidy did was to raise the price and drive most of the business to Belgian producers, who were the nearest ones with spare capacity.
6 Think also about the consequences of too-quickly expanding the capacity of the industry to meet that demand. For a couple of years, manufacturers of geo-exchange HVACs would make out like bandits. But then, once the market was saturated, there would be a bust.
No, you are wrong. Heat pumps have a 15-20 year useful life already. A GeoExchange unit is little different from a standard heat pump with the exception of control units, heat exchangers and the ground loop. Like all pumps they would need regular servicing and the periodic replacement of parts. As the equipment is modular this should result in a taper of demand but not a drop off. There would be a boom/bust in well drilling operations but the energy savings justify it. Used drilling rigs could be sold to developing countries to facilitate their transition to GHVAC thermal management. As production tapered back for the US market exported units would reduce emissions in developing nations.
7 There would likely be some claw-back in the gains in energy efficiency. Recipients of the new, more-efficient ACs, might decide to pay as much as they did before for air-conditioning, by keeping their homes cooler, or the ACs running more hours of the day.
You are correct, installation of GeoExchange systems results in residents keeping their homes at their preferred temperature. At 70 to 75 degrees most people are happy with temperature. Before and after energy studies show marked energy savings in existing homes and buildings while providing MORE comfort.
One of the advantages of (dare I use the term again?), "market-based approaches to policy" is that they avoid many of these problems. Because no particular "solution" is favored, the effect on the markets for the different possible ways to deal with the problem (installing ceiling fans, dressing lighter and enduring warmer homes, improving insulation, planting trees around the house) is more diffuse: the subsidy does not simply end up being frittered away through a rise in the price of the targeted item.
"The market" is an idiot which is demonstrated with every SUV GM produces and the continuing mortgage disaster. Regulating markets is the natural function of governments if not the primary function. A change in rules favoring specific, proven, efficiencies should not trouble the market.
Climate change is the product of market failure and requires regulatory correction before we see a "market" in long pork. Bespoke markets in CO2 emissions are economist's fictions imagineered to allow continued profit taking by the polluting powers that be. They do not describe natural systems or energy flows in any useful ways. Market fundamentalism is a mental illness.
Something like a carbon tax would also simultaneously both encourage fuel and electricity savings in areas with high heating, as well as cooling, demand -- i.e., its burden would be more equitably spread around the country.
In short, it is not that economists are loath to governments doing anything. Rather, they seek to steer policy makers away from promulgating policies that will yield fewer benefits for society than other ones.
by Ron Steenblik at 9:46 AM on 15 Dec 2007
I advocate a carbon tax AND an efficiency program. I advocate the use of every wedge that gets us to negative GHG emissions. The problem is that economist are not scientists or technicians but rather employees of political or corporate entities. They advocate the policies and profits of their employers regardless of the environmental consequences. They have NOT proven to be reliable predictors of action and consequence on any macro level. They "make it up" as they go along as you just did.
This has led to the current state of affairs where despite the scientifically obvious and horrific damage caused by existing GHG emissions certain economists are advocating continuing emissions in order to maximize "economic benefit."
What is obvious to environmental scientists is that there may not be the environmental "services" in the future to support any reasonable portion of our current economy. The "doom and gloom" is not imagined but is as real as the flight engineer reporting the loss of three engines on an airborne 747. The margin for continued survival of 6 billion humans is very thin no matter what the passengers choose to think about it. The chances of a soft landing are receding as we delay making radical changes. Your falsehoods increase that delay.
Put the Carbon Back
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Ron Steenblik Posted 6:11 pm
16 Dec 2007
It is obvious that you have no familiarity with geo-exchange heating, venting and air-conditioning (GeoExchange) systems. They provide heating, cooling and hot water for significantly less energy and carbon output than all other active thermal regulation systems.
There you go again: being presumptive about other people's knowledge (or lack of it). I know about them -- perhaps not as thouroughly as you do, but my parents (in West Virginia) have one. (And I did Google.) You specifically spoke of subsidizing the replacement of old air conditioners (ACs), so I responded to that specific idea. If what you really meant was replacing cooling and heating systems in places that passed some cost-benefit threshold, then you should have said so. I still maintain that there would be plenty of areas in the country where other investments to reduce household energy use would be more cost-effective.
Here you prove the standard ignorance of economists. The means of survival without air conditioning or refrigeration prior to the post-WWII period involved architectural adjustments for the wealthy, loss of productivity for the middle classes and suffering and death for the lower classes. Since 1960 most buildings have been built to assume active HVAC systems and many cannot be occupied without operational systems. Loss of heating/cooling abilities would require abandonment of buildings and productive activities.
There you go, changing the question. You specifically said, "replace my air conditioner with a geo-exchange HVAC or putting solar panels on my roof? Somebody?" I assumed (OK, maybe I should have followed up with further questions of clairification instead) that you were talking of a private home, especially since you also referred to your roof. If your private home has insullated roof and walls, and the windows open, I don't see why it would be considerably worse to live in a modern home like that without AC than one built 100 years ago. But I am all ears if you want to explain why not.
And let's not exaggerate: sure, air conditioning has saved lives. But most AC use is for comfort, not for saving lives.
In respect of large office blocks, or malls, or loads of other buildings that have been built with industrial-scale air conditioning in mind, then I agree with your point.
But, again, I was only responding to your specific question, which I thought provided a good opening for discussing some of the economic issues.
GeoExchange systems have proven themselves to be cost effective in Maine, California, Florida, Texas, and Alaska. Essentially anywhere where heating/cooling or hot water is needed on a daily basis. Please demonstrate where people live in the US without the requirement for heating or cooling or hot water or commercial refrigeration.
Again, you attack me for responding to a different question than the one you posed (replacing AC systems). How many AC -- i.e., cooling -- systems in do you know of that have been installed in private homes in Maine and Alaska?
There is actually no need for a subsidy. What is needed is regulation to encourage installation, particularly in rental units where existing HVAC and hot water systems are aged, poorly installed and grossly inefficient.
Again, you are changing the original question. I think most people reading what you wrote would interpret it asking what would be so bad about the government paying (not regulating) to replace your AC. The U.S. federal government already regulates minimum energy efficiency standards for AC units and heat pumps, as you know.
In the current housing and financing crisis, caused by poorly regulated markets, it is unlikely that homeowners will have the ability to independently finance these capitol improvements on the mass scale needed.
I am tempted here to pass judgement now on your knowledge, but will merely point out that you are making a very sweeping generalization here. There are plenty of long-time home owners who certainly do have the means to invest in such systems (especially if they will save money doing so). That is NOT to say such investments will necessarily be sufficient, which was not my point.
And don't forget, massive spending means massive taxation -- the money does not come from nowhere -- unless, of course, you have in mind borrowing massively (e.g., from China) to pay for it. I'm not suggesting that either might not still be worth it. But let's always keep in mind that the money has to come from somewhere.
No, you are wrong. Heat pumps have a 15-20 year useful life already. A GeoExchange unit is little different from a standard heat pump ...
No, I am right. If a "massive" surge in demand were created, and the capacity to meet that demand was already tight, prices of the HVAC units would climb quickly. Yes, there would be a big, and permanent surge in numbers of people servicing the units, but I am speaking here of the manufacturing side. In the Dutch example, what kind of life do you think double-pane windows have? Certainly (unless somebody throws a rock at one), at least 15-20 years.
"The market" is an idiot which is demonstrated with every SUV GM produces and the continuing mortgage disaster. Regulating markets is the natural function of governments if not the primary function. A change in rules favoring specific, proven, efficiencies should not trouble the market.
There you go again: changing my wording. I speak of "market-based approaches to policy", such as pollution taxes, and you change it to simply "the market" and invoke SUV sales.
The trusted government and its regulations that you so extol, in fact, have played a tremendous role in encouraging sales of SUVs. If you have not aready read it, I encourage you and everybody else to buy or borrow a copy of Keith Bradsher's High and Mighty: SUVs: The World's Most Dangerous Vehicles and How They Got That Way, or read the extended review of the book (by Gregg Easterbrook) here. The Government favored this specific, proven technology by declaring SUVs to be "small trucks" and subjecting them to lower fuel-economy standards, lower pollution standards, and lower standards for vehicle and pedestrian safety, and provided special tax breaks for people owning the very largest models of them. Thank you, Uncle Sam!
That is not to say that regulations don't have a role. Of course they do. But they can be twisted for ill just as easily as they can be made a force for good.
But I digress. You then write:
Climate change is the product of market failure and requires regulatory correction before we see a "market" in long pork. Bespoke markets in CO2 emissions are economist's fictions imagineered to allow continued profit taking by the polluting powers that be.
Oh, give me a break. Now it's your turn to Google and read up on that literature. To characterize advocacy of carbon taxes or (e.g.,auctioned) CO2 allowances as "fictions imagineered [hey, cool word!] to allow continued profit taking by the polluting powers that be" is an insult to people who have the environment as much at heart as I am sure you do.
The problem is that economist are not scientists or technicians but rather employees of political or corporate entities.
Huh? A huge number of economists work for universities, and are fiercly independent. Some (like me) work for NGOs. A number work for government agencies, especially those involved with regulations. But now I'm confused. Are you suggesting that everybody else who works for say, the EPA, is honest and trustworthy, but the economists that work for the EPA are scoundrals?
In any case, the bulk of policy design -- whether it relies on a pollution charge, subsidy or regulation -- is decided by members of Congress. The latitude left to the EPA and similar agencies is relatively small. If you want to blame "economists" for the mess we're in, blame those making "economic" arguments who lobby for special interests.
The margin for continued survival of 6 billion humans is very thin no matter what the passengers choose to think about it. The chances of a soft landing are receding as we delay making radical changes. Your falsehoods increase that delay.
Now, I think I've responded to your points without calling you false, or stupid, or naiive. I'd appreciate if you show similar respect in the future, or I'll just cease responding. Your plea ("Somebody?") was an invitation to respond to a particular question. I stuck my neck out, and did. What do I get for my troubles? You lash out at me, personally, presumably because you don't like my answers. I do not consider that fair play.
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Jon Rynn Posted 11:59 pm
16 Dec 2007
Your understanding of geoexchange, which I think is very valuable, is an excellent way to do both. You don't even need to be "impolite", because the data itself, and your understanding of how it contradicts neoclassical theory, is enough. I think it's been very valuable having you and Ron discuss this, and it elicited that marvelous comment on geoexchange from you (minus the "impoliteness"), so obviously something constructive is going on here.
So anyway, my two bits, and keep up the good work, and I hope it can be civil enough so that the two of you can continue these conversations.
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stevenearlsalmony Posted 12:17 am
17 Dec 2007
Dear Friends,
From my vantage point, perhaps now is an occasion to momentarily discuss the human overpopulation of Earth and how a population of 6.63 billion people now can SUSTAINABLY GROW to a projected 9.2 billion people in 2050. That is a 40% increase in the global human population in the next 43 years.
Let's look at what is happening now. We have millions of people who are conspicuously over-consuming Earth's limited resources and becoming obese; on the other hand, billions of people do not have substantial sustenance, are going hungry, living in poverty and many are emaciated.
How on this good Earth are we going to manage properly 2 1/2 billion additional people to our current numbers by 2050 and improve life for the family of humanity? Is such a goal realistic? If so, how? If not, then what can be done to move forward in a more humane, reality-oriented way, thereby preserving life as we know it and the integrity of Earth? Skyrocketing absolute global human population numbers could soon threaten life as we know it; and obscence per human over-consumption of resources, at a rate that dissipates Earth's resources faster than they can be restored for human benefit, could irreversibly degrade our planetary home.
Scientific research, reason and common sense fail to provide good evidence of how "proper management" and "improvement in human wellbeing and environmental health" is realistically accomplished between now and 2050. I am supposing that we cannot keep doing what we are doing now: that is, over-consuming and overpopulating the planet we inhabit. Ideas of "staying the current course" remind me of magical thinking and such a strategy looks like a prescription for disaster.
For example, the seemingly endless growth of cities, or of any other human construction, for that matter, is bound to become patently unsustainable at some point in time in a finite world, will it not? Whatsoever is is, is it not.....regardless of human wishes and intentions to the contrary?
Is it reasonable and sensible to consider an alternative? Let us examine the probability that in 2050, we will have millions more people over-consuming resources, just as we are doing now. We will also have billions more people going without substantial sustenance by 2050.
If such an unsustainable situation was somehow likely to occur in first half of Century XXI, then we could begin now to protectively and ably respond by putting forward a humane and more reality-oriented "action plan" both for limiting per-capita over-consumption of finite resources and rapidly reducing absolute global human population numbers.
Always,
Steve
Steven Earl Salmony
AWAREness Campaign on The Human Population
http://sustainabilitysoutheast.org/
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Jerry Taylor Posted 1:49 am
17 Dec 2007
Sean Casten claims that economic calculation about the costs associated with business as usual and the costs associated with doing something about climate change "are, at core, based on a flawed economic theory. Namely, that capital is efficiently allocated. If it is, that means that any change from the status quo is associated with economic pain." Sean Casten is correct that many economic models assume a move from one general equilibrium state to another and then calculate the costs and benefits of such a shift. Sean Casten is also correct that this methodology (a) does not reflect the underlying reality that the economy is not in equilibrium (and probably never will be), and (b) has important impact on the resulting calculations. But this methodology actually biases the calculations about the cost of reducing greenhouse gas emissions downwards - not upwards.
Steve Salmony asks whether business as usual would have a detrimental impact on biodiversity. Not necessarily. One could argue that the agricultural advances associated with the Green Revolution in have actually done more to save habitat - and thus, ecosystem health - than anything else one can think of by reducing the amount of land necessary to feed the world. For instance, if trends in agricultural productivity continue, by 2070, an area the size of Amazonia currently being husbanded for human use will likely be returned to nature.
One could also cite the relationship between improvements in per capita income and improvements in environmental quality (so-called "Environmental Kuznets Curves") and note that if business as usual scenarios produce more economic growth than alternative scenarios, environmental improvements in many sectors will likewise follow.
Regardless, Steve Salmony is right to note that development has taken some serious tolls on ecosystem health. The Great Plains, for instance, was radically altered with the migration West after the Civil War. Is mankind worse off because it lost the buffalo (among other things) but gained the most productive cropland in the world? I think the trade was worthwhile from a human perspective, but you are welcome to prefer the native habitat over human well-being if you like. But please note that the world did not come to an end as a consequence.
Steve Salmony then - like some others - evinces a concern about equity and business as usual. "For a fortunate few people with obscene riches to conspicuously consume limited resources, while millions of unlucky children go without adequate food to eat, is a structure worthy of modification in a timely fashion. Inequity is sad enough; grotesque inequity will one day be intolerable, I suppose." I agree. Which is one of the main reasons I oppose greenhouse gas emission controls. In short, if we assume a 2 percent annual growth in GDP (defensible given historical trends), then sacrificing for the future means transferring wealth from the relatively poor (us) to the relatively rich (our grandchildren). As Larry Summers once famously said, "Poverty is already a worse killer than any foreseeable environmental distress. Nobody should kid themselves that they are doing Bangladesh a favor when they worry about global warming."
Steve Salmony is right to point out that economic models of the future under warming do not generally consider extreme events (like the shut-down of the Jet Stream) that might have a very low probability of occurring but have very high impact if they do occur. I am not aware, however, of many economists who specialize in the field who are (a) unaware of that, or (b) have shifted their position because of that.
This is usually where environmentalists make the argument for the Precautionary Principle. For those that want to make that argument in this context, allow me to ask a question: How do you feel about President Bush's foreign policy? It is, after all, the Precautionary Principle in action - but in another realm (http://www.washingtonpost.com/wp-dyn/content/article/2007 ...). It seems to me there is no good reason to embrace the Precautionary Principle in some fields of public policy but not in others.
Anyway, how much money should we spend to hedge against low probability, high impact scenarios? Well, deciding whether an insurance policy is worthwhile requires an economic calculation, so we can't run the guys with calculators out of the room just yet. Still, that calculation will differ from one person to another depending upon their risk tolerance and willingness to spend. In other words, people can legitimately disagree about this without a "right" or "wrong" answer to discover.
Odograph accuses me of favoring the internalization of environmental externalities "except when he [Taylor] can undermine their severity or overplay their costs." I don't know what Odograph means by that. For a more robust discussion about how I feel about internalizing environmental externalities, see my recent study on that matter in the course of identifying the "right" gasoline tax: http://www.cato.org/pubs/pas/pa-598.pdf.
Odograph then writes "I'm not sure you all caught his other contradiction either, when he first endorsed $2/ton taxes, and then said essentially "of course they wouldn't do anything" - they'd have to be much higher." Odograph misunderstands me. I do not endorse a $2/ton carbon tax. I believe that IF we want to go about internalizing the costs of greenhouse gas emissions, THEN a $2/ton carbon tax would probably be the best policy. Internalizing environmental costs simply means getting prices right. How consumers respond to those (more accurate) prices is up to them. That's one of the reasons that many environmentalists eschew carbon taxes and embrace cap & trade programs. The latter allows the government to dictate outcomes while the former does not.
Atreyger argues that insurance companies are worried about the impact of climate change, so that demonstrates that statisticians and economists - when they have money on the line - are more alarmed than when the same are in an ivory tower. Well, most economists accept the argument that climate change will impose some costs. It will also provide some benefits. And the net impact has to be considered against the net costs associated with greenhouse gas emissions. Insurance companies - by the very nature of their business - are exclusively concerned with only one small part of that calculus. The benefits that might be derived from warming do not impact their business much, nor do the costs of greenhouse gas emission controls. And for those of you who might already be howling at the idea that warming might have benefits as well as costs, read your IPCC documents!
Atreyger then goes on a bit about the insidious nature of "the mode" in Richard Tol's survey of the economic literature about the external costs associated with greenhouse gas emissions. Rather than go into detail about why I think the $2/ton [mode] estimate from Tol's survey of the literature is a better number to go by than the mean or median estimates that he finds, I will simply once again refer readers to the text of Tol's study. As best as I can tell, no one besides me in this discussion has actually read it. He provides many good arguments for the lower figure.
Atreyger then echoes many by stating that "I cannot relinquish 'public policy' to economists, particularly at the Cato Institute." Well, I do not wish for public policy to be "relinquished" to economists either. Please read my initial post. I argued quite explicitly against leaving public policy decisions to experts of whatever field.
Finally, John Reyn contends that "business economists can be a whole different bunch then think-tank economists, particularly at Cato, which is so anti-government that they don't like the military budget -- so they're actually on the "correct" side on military issues, in my opinion. Business economists are much more concerned with what is going on on the ground." That may be, but is there any concrete proof regarding differences of opinion? I am not aware of any.
The best evidence I can find about what the economics profession as a whole thinks about climate change is a survey published last year in the Economists' Voice. Robert Whaples, chair of the economics department at Wake Forest, sent questionnaires to 210 Ph.D. economists randomly selected from the American Economic Association to ascertain how they felt about the impact of climate change on the U.S. economy.
19.6% thought that GDP would be reduced by 5% or more by the end of the 21st century if the world did nothing to address industrial greenhouse gas emissions;
35.7% believed that warming would reduce U.S. GDP by less than 1% and may even increase it up to 1%!;
21.4% thought that GDP losses would be somewhere between 1-5%;
16.1% believed that U.S. GDP would increase by 1-5% as a consequence of warming; and
7.1% though U.S. GDP would increase by more than 5% because of warming!
In short, the number of economists who thought global warming would improve the U.S. economy outnumbered the number of economists who thought that global warming would harm the economy to the extent feared by the Stern Review.
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amazingdrx Posted 2:28 am
17 Dec 2007
No need for any government intervention. Ever.
In fact, GHG disaster climate "insurance" ought to be turned over to the same guys who insure everything thing else in our miraculous free market system.
Why have government shift subsidies to steer energy policy away from the status quo? The free market will most efficiently deal with any climate change as it happens.
Move cities due to rising sea level? That creates growth in the construction industry and growth is always good.
Mighty fine work. You win a jetset first class private corporate ride on US to the latest fun filled junket on climate change! Congrastulations.
http://amazngdrx.blogharbor.com/blog
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odograph Posted 3:21 am
17 Dec 2007
"IF we want to go about internalizing the costs of greenhouse gas emissions, THEN a $2/ton carbon tax would probably be the best policy."
That seems to contradict your answer to my comment that recent energy price increases, probably more than equivalent to $2/ton, had not curbed consumption:
"Yes they have ... demonstrating that it would take a major increase in the cost of fossil fuels to get even minor reductions in their use. A very important point with a lot of implications."
Why on earth would it be "best" policy to do a burdensome tax that would not reduce CO2 emission? I mean if your choice is to go to hell in a hand-basket, you can do that with even less tax burden.
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Jerry Taylor Posted 3:31 am
17 Dec 2007
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odograph Posted 3:43 am
17 Dec 2007
You ask me to believe that "infinite" growth elsewhere, will somehow compensate for "infinite" loss of environmental services.
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Jerry Taylor Posted 3:51 am
17 Dec 2007
Nor am I comfortable with the term "infinte" in this discussion. Costs cannot be infinite by definition. If nothing else, at some point, the money runs out, and it's at that point that the cost becomes quite finite; all the money there is. Infinite growth suggests ... what exactly? Growth that occurs from now until the end of time? I would not want to predict that because I cannot predict what will happen with war, econoimc policy, etc. Growth that increases to an infinite level? What would that even mean?
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odograph Posted 3:53 am
17 Dec 2007
What if that's us, Jerry?
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Jerry Taylor Posted 4:01 am
17 Dec 2007
We might leave the fossil fuel age for any number of reasons. I strongly suspect, however, that when we do, it will be for economic reasons, not political reasons.
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Michael Tobis Posted 4:42 am
17 Dec 2007
Life will get you through times of no money better than money will get you through times of no life. Quite a bit better, actually.
An absolutely amazing failure to understand this blazingly obvious fact is at the root of the failure to understand the limits of conventional economic thinking and its ridiculously skewed insertion into arguments about the fate of the biosphere.
It's too strong, I think, to say that conventional economics has nothing to say about our predicament. Still, it is being compulsively applied at scales where it simply doesn't apply. It's interesting how acculturation trumps perception and prevents some people from seeing this.
This confusion isn't new. Witness the myth of King Midas.
mt
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Jerry Taylor Posted 5:22 am
17 Dec 2007
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odograph Posted 5:23 am
17 Dec 2007
I think what we see with Jerry is the refusal, at the last, to use that framework. Rather than develop an "internalized cost" that actually solves the AGW problem, he offers an internalized cost that merely defers it.
He waits for [fill in the blank] to arrive, with a post-fossil-fuel economy.
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EliRabett Posted 5:39 am
17 Dec 2007
"In short, the number of economists who thought global warming would improve the U.S. economy outnumbered the number of economists who thought that global warming would harm the economy to the extent feared by the Stern Review."
It refers to
a. The US not the global economy
b. Specifically to the extent feared by the Stern Review not anything else.
But in fact even on THAT basis, Mr. Taylor has not RTFR. If he has not, why is he trying to pretend he has. If he has, why is he misleading us?
Stern does present an analysis for the US GDP, in chapter 5 of his review.
"In the USA, one study predicts a mix of costs and benefits initially (± 1% GDP), but then declines in GDP even in the most optimistic scenarios once global temperatures exceed 3°C."
and further on
"Jorgenson et al. (2005) used a general equilibrium model to estimate the impacts of climate change on investment, the capital stock, labour and consumption in the USA for two scenarios: one "optimistic" (assuming "optimal" adaptation, a strong carbon fertilisation effect and low potential damages) and one "pessimistic" (assuming little adaptation, a weak carbon fertilisation effect and high potential damages). Recent field-based studies suggest that the carbon fertilisation effect may be about half as large as the values used in the "optimistic" case (more details in Chapter 3).
For a warming of 3°C, the study projects a net damage of 1.2% of GDP in the pessimistic case and a benefit of 1% of GDP in the optimistic case. In the optimistic case, the benefits peak at just over 2°C warming and then decline from around 3.5°C. In the pessimistic case, warming causes increasingly negative impacts on GDP. The range of outcomes encompasses other earlier estimates of the costs of climate change for the US economy, such as Mendelsohn (2001)."
Which turns out to be right on what the survey that Mr. Taylor presents says
35.7% thought that GDP growth would be neutral
19.6% thought the losses would be > 5%
21.4% thought losses would be btw 1 and 5%
That's 41.0% who thought things would be worse.
How many thought things would be better
16.1 thought gains would be 1-5%
7.1 thought gains would be > 5%
that's 23.2.
Now why can't our Jeremy Taylors read and add?
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EliRabett Posted 5:45 am
17 Dec 2007
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Jerry Taylor Posted 5:49 am
17 Dec 2007
IF, however, politicians decide to do something to reduce carbon emissions, I think a carbon tax is preferable to fill in the blank. If the impact of climate change is great, then internalizing those costs will require a steep tax. If the impact of climate change is modest, then internalizing those costs will require a modest tax. If the impact of climate change is small, then internalizing those costs will require a small tax. The tax can vary as scientific information about climate change matures.
But, as you intuit, a tax does not guarrantee the kind of demand respose you want. If so, then a cap & trade program would be preferable ... from your perspective. This, too, I've noted before.
The reason I prefer a tax to a cap & trade program is because I would rather leave it to consumers (and we are all consumers, are we not?) to decide what tradeoffs they want to make between economic well-being and climate rather than to politicians. While you apparently would not, let me suggest that no poltician will likely stay in office long if he or she is perceived to be forcing significant economic costs on his/her constituents in a manner that they would not were the decision left to them. So the debate about the merits between the two is rather academic ... particularly since you can write a cap & trade program to work much like a carbon tax by providing a ceiling on permit prices.
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Jerry Taylor Posted 6:08 am
17 Dec 2007
Chapter 5 of the Stern Review offers no hard estimate for GDP loss in the U.S. as far as I can tell. It cites several studies offering small impacts (and at least one showing a net plus for the U.S. economy as a possiblity), but does not explicitly embrace those studies nor does the Stern Review discuss those studies without reservations.
But if you want to argue that the Stern Review suggests only minor impacts on the U.S. economy, fine.
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Michael Tobis Posted 6:29 am
17 Dec 2007
I suppose Mr. Taylor's last contribution does at least constitute a response to a main point. However, even here he resorts to rhetorical tricks. The discussion I started was about economics, not about the IPCC.
So this "not even the IPCC says that" argument is a rhetorical trick, moving IPCC from the middle, on one set of environmental issues, where it belongs, to representing some sort of alarmist extreme on the whole cluster of environmental issues, which it emphatically does not.
Let's remember that the IPCC is the result of a stodgy political process that can say very little except what is nearly universally agreed upon. Let's also remember that the IPCC is focussed on only one of the major spheres of anthropogenic disruption. It is very unclear what the long range response to the sum of all our behaviors will be.
For instance, a nearly lifeless ocean is certainly feasible; ocean acidification is not among the phenomena studied by IPCC since strictly speaking it doesn't fall under "climate change". That doesn't mean it isn't going to happen.
What will that do to the rest of the planet in the long run? I prefer not to pursue this experiment.
Indeed there is no check you could cut me that would induce me to do so if I had the power to decide. Yet checks are being cut every day that drive us closer to that eventuality and people are cashing them.
What IPCC says is not the issue as far as I am concerned. I think the issue is how to make sustainability an explicit goal of civilization, now that we have essentially completed as much growth as could possibly make sense. We need something that actually does what economics claims to do, but which operates on much longer time scales.
Otherwise we will continue to operate under enforced shortsightedness.
mt
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odograph Posted 6:30 am
17 Dec 2007
"My position is that no tax is needed."
You are leaving CO2 growth open-ended until someone else caps or reduces it.
It's kind of laughable to think that you've "internalized" anything there. It is the essence of an "externalized" argument. Someone, or something, else will take care of it. That may be true ... but what's the line?
A wish is not a plan?
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Jerry Taylor Posted 6:40 am
17 Dec 2007
Try telling the hundreds of millions of people who live in misery and poverty that we have all the economic growth that makes sense at the moment. Several million of whom, by the way, die every year from environmentally-related diseases induced by gut-wrenching poverty.
You want sustainability? If by that you mean a steady-state world with little economic or population growth but little environmental impact at the margins, we've been there. It was called the Dark Ages. Life expectancy was less than 40 years. Not my idea of utopia. But your mileage may vary.
Lets assume for the sake of argument that climate change will induce a forced retreat to a pre-industrial era. If so, at least mankind had a few glorious centuries of relative well-being. I wouldn't have traded it all for all of the sustainability in the world.
Of course, I don't buy the idea that such a forced retreat is in the offing. But having been hammered up and down for not bowing down to the omniscient, omnipotent body that is the IPCC, I find it a relief to find that apostasy regarding their clay tablets is OK in certain circles.
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David Roberts Posted 7:00 am
17 Dec 2007
You seem to be assuming:
That development and fossil fuel use are inextricably linked, and that reducing the latter means stunting the former. I think and hope that's not correct.
That the only possible model of development is the current one wherein a small number of hyper-rich people "lift the boats" of the miserably poor, up to the point where they're living tolerable lives.
I know this is a Rand thing, that the brave striving of the few increases welfare for all, and thus that those who do strive must be rewarded beyond all measure, but I don't necessarily accept it.
With the current wealth in the world, we could easily lift everyone on the planet to a relatively comfortable standard of living. And there's a decent amount of evidence that the vast wealth of, say, people in the U.S. is not doing a damn thing to make them happy or more fulfilled -- possibly the contrary.
So the obvious thought is to take some of that wealth that's not creating any happiness or fulfillment, and get it into the hands of people for whom it will make an enormous difference.
Yeah, I know: socialism blah blah. I would like to think, though, that there are ways other than direct state control to accomplish the dread redistribution -- voluntary, democratic ways, undertaken by the rich in the West with the full knowledge that they are making themselves better off, making the poor better off, and saving us all a great deal of suffering down the line.
Some people, I expect you among them, think that's simply impossible given human nature, the allegedly wealth-maximizing character of economic agents. Maybe you're right. But it seems like that should be the locus of argument here. IMO.
grist.org
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Jerry Taylor Posted 7:38 am
17 Dec 2007
Nor do I believe that poor people are unnable to improve their economic well-being without the helping hand of their economic "betters." But I do believe that economic liberty is a prerequisite for wealth creation (and, I would argue, environmental improvement).
I do not support income redistribution, but that has nothing to do with the case (or lack thereof) for greenhouse gas emission controls. But I do think it is worth pointing out that - for those who do worry about equity - emission cuts will transfer wealth from the poor to the rich.
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EliRabett Posted 8:02 am
17 Dec 2007
When challenged you try and twist what you said to justify your unethical behavior. Typical, but thanks for letting us know how much trust to put in your words and your organization. A number significantly lower than zero.
Michael is wrong to hope that one can have an honest conversation with anyone from Cato.
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Biodiversivist Posted 9:36 am
17 Dec 2007
Most of the arguments seen here rest primarily on extrapolations of existing trends, which is certainly better than flipping a coin. Remember when humanity was supposed to be on the verge of mass starvation? It was assumed that population growth would be exponential. The number of malnourished was growing. Future extrapolations did not look rosy. But then women began choosing smaller families and food productivity soared. Economists did what they always do. They got busy explaining in hindsight why these things happened, like they did for the Great Depression.
I suspect we are due for a similar unexpected change of events. And if I'm right, economists for many years to come will be gainfully employed explaining in hindsight what happened.
I'm not any more of a soothsayer than anyone else here so I can't say in any detail what is going to transpire but this global warming meme has many similarities with the overpopulation meme propagated primarily by the Ehrlichs. By predicting the future the Ehrlich's changed the future and nullified their own prediction.
This time, instead of the Ehrlichs, we have Gore. And if my suspicion pans out, Gore will suffer the same fate of many prophets through the ages. He will be mocked in hindsight by those who will cobble together theories to explain what happened after the fact as if it were obvious all along.
My opinion is that everyone here has a pile of puzzle pieces to several different puzzles but collectively there are only enough pieces to finish one puzzle. The task is to sort through the piles to put that puzzle together.
But I do think it is worth pointing out that - for those who do worry about equity - emission cuts will transfer wealth from the poor to the rich.
That is an assumption, not a fact. For example, if wealthy nations do end up buying carbon credits in the form of some kind of ecologically sound, sustainable carbon sink protection or creation scheme, you might expect a transfer of wealth in the other direction. If ways can be found to ecologically and sustainably grow biofuels in third world nations, a similar tranfer could occur.
In the end, it all comes down to biodiversity. Poison Darts--Protecting the biodiversity of our world
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EliRabett Posted 11:42 am
17 Dec 2007
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markbahner Posted 1:26 pm
17 Dec 2007
The current world per-capita GDP is approximately $10,000 (purchasing power parity). That means a world per-capita income of $7,500 (purchasing power parity).
How many people do you know who live relatively comfortably on a per-capita income of $7,500 (i.e., $3.60 an hour)?
Mark Bahner
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LegumeSam Posted 2:56 pm
17 Dec 2007
Since I'm working on my rhetorical skills, and since there are at least a dozen ways of expressing the same concept, I'm going to try to reiterate my previously-voiced objection to this form of reasoning in another, more creative way:
Money has no inherent worth, and so monetary values have no inherent meaning either. In short, nothing, nothing at all, can be deduced from a figure of "$7,500" or of any number one cares to name.
Money only has value (beyond its material presence as coins, bills or pixels) in a social context in which buyers and sellers are exchanging products. And the values themselves, the prices of each product, are a measure of the bargaining positions of both buyer and seller as regards the supply/ demand for each commodity. Desperate buyers can be charged high prices; desperate sellers with large, perishable inventories can often be persuaded to unload large quantities of stuff for next to nothing.
The archetypal "free market" exchange was depicted millenia ago in the parable of Jacob and Esau in the Bible, in which the exchange value of Jacob's "mess of pottage" fetched Esau's birthright. The meaning of this exchange should be painfully obvious even to an obtuse reader: Esau's hungry desperation was something Jacob could leverage to great material advantage.
In the context of the inventory-plagued American food business, of course, a "mess of pottage" is worth maybe three bucks, $1.50 if you buy the stuff at a grocery store, a few cents if you shop cheaply, and nothing at all if you're good at dumpster-diving or if you have transportation to the local food bank. As a participant in my local Food Not Bombs, outfit, I've served a rather large number of "messes of pottage" for next to nothing in actual monetary expenditure.
As a trivial aside, I've lived rather comfortably on quite a bit less than $7,500 annually, and I'd regard it as a priceless gift if everyone in the world were to be given a relatively comfortable standard of living as such; the social benefits of universal access to food, water, clothing, and shelter would be priceless as a material contribution to peace on Earth, not to mention peace of mind.
http://www.dailykos.com/User/Cassiodorus
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LegumeSam Posted 9:27 pm
17 Dec 2007
"Economic growth" for most of the world's people means the "right" to exchange rural poverty (which brought them a relatively high standard of living) for urban poverty, which today grants them the "economic freedom" to leverage nothing into nothing, having neither land to work nor any labor of value to sell. See, for instance, Jeremy Seabrook's Victims of Development or Mike Davis' Planet of Slums for graphic first-hand observations of how this reality came into being. The idea that more "economic growth" as such will do anything besides force quite a few more people into cities while enriching a rather tiny "middle" class is rather difficult to believe.
The point of saying there's enough economic growth, by the way, is merely to point out that greater prosperity for all could be easily achieved if the present-day level of economic growth were to be distributed more equitably, without there being any crying need to throw the economies of the exploiter nations into further crises of overproduction just to keep the investor class in business.
You want sustainability? If by that you mean a steady-state world with little economic or population growth but little environmental impact at the margins, we've been there. It was called the Dark Ages. Life expectancy was less than 40 years. Not my idea of utopia. But your mileage may vary.
The false dilemma being offered here, rather uncreatively I might add, is that we can either have economic and population growth (i.e. either an accumulation of wealth by the very rich in a world being relentlessly urbanized into ecological disaster), or we can just go back to the Dark Ages. I might add at this point that, for anyone who does a serious analysis of what urbanization does to the ecosystemic resilience of an area over the long run, both routes will lead to a Dark Ages.
As an aside note here, the famous Dark Ages, at least in the western portion of the Roman Empire between (more or less) 400-1000 CE, was caused by the disappearance of a society (Roman imperial society) that had grown dependent upon mass production. See, especially, Bryan Ward-Perkins' The Fall of Rome and the End of Civilization, which (among many other things) engages a comprehensive summary of artifact finds at Roman ruins. The evidence suggests that, as the Roman Empire collapsed, the mass production supply lines disappeared, leaving whole populations who were at that point incapable of making their own pottery, farming their own food, building their own tools, and so on, leaving Britannia in a more primitive state than it was during the Bronze Age. If anything in modern society is evocative of the Dark Ages, then, it is the populations which have become so dependent upon "economic progress" that they have forgotten the basic skills of wresting a living from the land.
A third route, past the false dilemma, might be that of an orderly transition to a conserver society, a society that manages a comfortable standard of living for all of its members while at the same time operating at a much slower pace than the current, competition-frenzied, capitalist society we live in today.
Lets assume for the sake of argument that climate change will induce a forced retreat to a pre-industrial era. If so, at least mankind had a few glorious centuries of relative well-being. I wouldn't have traded it all for all of the sustainability in the world. Thus spake the privileged, in their lack of imagination re: sustainability. 'Course, the Cato Institute doesn't pay folk to think...
Of course, I don't buy the idea that such a forced retreat is in the offing. But having been hammered up and down for not bowing down to the omniscient, omnipotent body that is the IPCC, I find it a relief to find that apostasy regarding their clay tablets is OK in certain circles.
Taylor is probably not an apostate. An apostate would be someone who used to believe, but no longer does: the classic example was the (Roman) Emperor Julian, ruling from 361-363 CE: having been raised as a Christian, upon having been proclaimed Emperor by his troops, Julian abandoned Christianity and became a worshipper of the traditional Gods. Taylor, on the other hand, shows no signs of having believed in the IPCC's words (or even of having addressed its arguments) in the first instance.
http://www.dailykos.com/User/Cassiodorus
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odograph Posted 10:49 pm
17 Dec 2007
I mean to me, pedantic soul that I am, it is a contradiction that you declare a cost "internalized" while you leave the harm still expanding.
And yes, a contradiction (or concession) to say that harm won't keep expanding because someone else will arrest it.
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tidal Posted 9:47 am
07 Jan 2008
Also recently at Common Tragedies - Sir Nicholas Stern discusses his Stern Report:
"We underestimated the risks," he says.
Sir Nicholas, now head of the U.K. Government Economic Service and Adviser to the Government on the economics of climate change and development, delivered the annual Richard T. Ely Lecture at the American Economics Association meeting in New Orleans on Friday. (Ely was one of the founders of the AEA.)
"We underestimated the flow of emissions from developing countries, especially China," he said, observing that emissions of greenhouse gases from China over the next 25 years will equal the total emissions from the U.S. and Europe over the last century. Emissions from developing countries and developed countries must be capped, he said, but the ethics of allocating the pain are delicate. "If you're consuming the goods, you can't blame the location of the factory," he argued.
Sir Nicholas said the cost of reducing emissions of greenhouse gases from the current trajectory would cost about 1% of global gross domestic product, a cost he said is manageable without undermining global prosperity. "This is not a low growth story. It's a low carbon growth story," he said.
That "China emissions over the next 25 years equals US and Europe emissions over the last century" is deeply worrying @ ~ 385ppm CO2e now.., n'est ce-pas?
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