Comments Jerry Taylor has made

Gingrich Pablum

The GOP is in danger of becoming nothing but a party representing a coalition of big business, neo-con international crusaders, anti-Left cultural warriors, and mystics.  Gingrich is the wordsmith trying to hold it all together and sell this brave new political world to those few of us who once saw something else in the Republican Party.  To wit, a [principled commitment to individual and economic liberty.  Well, as you say, those days are for the most part past.On Gingrich's further explications of green conservatism do not inspire confidence posted 1 year, 10 months ago 11 Responses

David,

I don't believe that economic development and fossil fuel use is necessarily linked.  Given current technology, however, it's hard to imagine having the former without the latter.  But that may change.  

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.On Cato's Jerry Taylor responds to Michael Tobis posted 1 year, 11 months ago 131 Responses

Stern & Economic Impact

Since the Stern Review argued that climate change will cost the global economy somewhere between 5-20% of GDP - or more! - every single year under business as usual, I used the survey response of those who believed that climate change would cost the U.S. economy 5% of GDP or more.  That represents 19.6% of those surveyed.  The number that think climate change will prove to be a net plus for the U.S. economy is larger than that.

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.    

    On Cato's Jerry Taylor responds to Michael Tobis posted 1 year, 11 months ago 131 Responses

All for Nothing

Dr. Tobis, you are creating a straw man.  No one argues that that one should - or could reasonably defend - selling the ability to sustain life on earth for a cash payment.  Hence, economists do not dwell on such exchanges; it is a silly proposition.  I gather you contend that warming poses such a challenge.  If so, I missed the discussion in the latest IPCC report that entertained that possibility.  Could you point it out to me?    On Cato's Jerry Taylor responds to Michael Tobis posted 1 year, 11 months ago 131 Responses

Huh?

Well, I doubt that we will "expand CO2 foreover," if by that you mean that CO2 emission growth rates will remain unchanged until the end of time.  I am pretty sure that, sooner or later, for one reason or another, we will eventually leave the fossil fuel age for another.

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?On Cato's Jerry Taylor responds to Michael Tobis posted 1 year, 11 months ago 131 Responses

Taylor Replies

Given the interest you all have evinced in this discussion, a last (and probably final) round of commentary follows regarding some of the more interesting claims and arguments that have arisen over the last few days.  

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!

... Yes and No.

Yes to the first proposition, no to the second.  My colleague Randal O'Toole, for instance, finds that the amount of greenhouse gases emitting by moving a person a mile over light rail is actualy greater than the amount of greenhouse gases emitted by moving a person a mile in a passenger vehicle.On Cato's Jerry Taylor responds to Michael Tobis posted 1 year, 11 months ago 131 Responses

Taylor Defends Taylor

A few answers to direct questions posed to me:

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.

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.   On Cato's Jerry Taylor responds to Michael Tobis posted 1 year, 11 months ago 131 Responses

Dems Voted for It

It should be noted, however, that the bill passed in the House with substantial Democratic support.  The same will likely be the case in the Senate today.  That's the story it seems to me.  I.e., it's not surprising that Republicans like this bil.  But what are Democrats doing supporting the biggest windfall the nuclear power industry has experienced in modern memory?  On It ain't pretty posted 4 years, 4 months ago 3 Responses

Yet Another Correction

Please read more carefully.  I did not write that "global warming or climate change (I call it global climate disaster)is unproven."  I wrote that the economic costs of climate change are subject to dispute and are quite unclear.  Those are two different things.

My opinions about Walmart or whatnot are immaterial to the my take on the energy bill, so I won't address them here.On Libertarians seem oddly silent on the subject of subsidies that benefit the oil and gas industries. posted 4 years, 4 months ago 12 Responses

Cato Neocons? Come On.

Cato hijacked by neocons?  Please.  Go to our webpage and take a look at our foreign policy work.  We've been blasting neocons from stem to stern for years now.  Or go to Amazon and check out Jonathan Clark's new book which damns the neocon hijack of the conservative movement (Clark's an adjunct scholar at Cato) - it's been widely and favorably reviewed in the mainstream press so should have hit a few radar screens.

Having a serious conversation about public policy requires two things.  First, being civil and not reflexively going into ad hominem mode.  In Dave's original blog post, he says "OK, I read Taylor & VanDoren's op-ed, now what's their motive?"  Come on - let's be civil and assume our motives are as pure as yours.  Besides being polite, it's a logical fallacy to assume that one's motives have anything to do with the merit of what is being said.

Second, one must know something about what one speaks - or at least, be willing to learn something about what one speaks.  "Energy industry schill" this and "neocon" that demonstrates that one does not not of what one speaks.  We may be wrong, be we are neither of the above - as even 10 minutes on the web would reveal to anyone interested.On Libertarians seem oddly silent on the subject of subsidies that benefit the oil and gas industries. posted 4 years, 4 months ago 12 Responses