A Few Things Ill Considered

Anti-green economics – Paul Krugman

It`s kind of nice to hear an expert in the field making the same observation I often have about the economic arguments that swirl around the climate policy debates.

Specifically, opponents to mitigation policy have no trouble relying on the magic of the market and technology to rescue us from any possible difficulty climate change might visit upon us. This of course includes the loss of huge services nature provides us for free. You know, things like rain and sea food and forests.


Yet, make a suggestion that CO2 emissions need to be forced lower and the Pollyanna`s instantly become the most shrill alarmists, predicting total world collapse and millions of deaths. Changes to energy consumption, either in intensity or in sources, is something this magic market just can not begin to handle.

As Krugman puts it:

Opponents of a policy change generally believe that market economies are wonderful things, able to adapt to just about anything — anything, that is, except a government policy that puts a price on greenhouse gas emissions. Limits on the world supply of oil, land, water — no problem. Limits on the amount of CO2 we can emit — total disaster.

Funny how that is.

Yeah, funny.

Comments

  1. #1 Russ Finley
    May 1, 2009

    Good one.

  2. #2 Betula
    May 2, 2009

    “Yet, make a suggestion that CO2 emissions need to be forced lower and the Pollyanna`s instantly become the most shrill alarmists, predicting total world collapse and millions of deaths.”

    So your saying the Deniers are Alarmists?

    Let me get this straight, your saying you want policies on C02 emissions to prevent assumed catastrophies….the problem is the deniers don’t want these policies because they would cause assumed catastrophies.

    To put it another way….the alarmists are alarmed about the alarming alarmists.

    Coby,
    Are you denying that a policy change won’t cause catastrophic problems? As I so often hear,why would you want to take a chance that they will?

    How dare you deny a possibility.
    How dare you deny an assumption.
    How dare you deny a speculation.
    How dare you deny a probability.
    How dare you deny an uncertainty.

    You are the worst kind of denier…. a policy change alarmist denier wearing a hypothetical straw hat.

  3. #3 Left_Wing_Fox
    May 2, 2009

    Betula: There’s been a number of economic studies showing that the impact of Kyoto Accord style regulation would not lead to the sort of financial devastation predicted by the people pushing the “Global Warming is a Myth” concept.

    The science behind climate change from burning fossil fuels is solid, has decades of interdisciplinary research behind it, and is pretty well understood, considering the complexity of the system at large. The arguments against AGW are inconsistent, scattershot-style objections that do not develop a cohesive alternative to AGW theory.

    The fundamental difference between Science and Pseudoscience is that science does what it can to disprove it’s statements, by eliminating the possible alternatives through rigorous testing. Pseudoscience is all about piling on the reasonable explanations, without attempting to discard those ideas that fail to stand up to testing. It’s what makes the Anti-AGW arguments fall apart like creationist statements or alternative medicine claims: the people who preach it can’t even agree whether there IS global warming, whether or not it’s caused by the sun, or not, or whether it’s a good thing, if it’s even happening.

    Why on earth should I pay attention to an economist who has already thrown out the majority consensus on science to produce an economic result that does not already support the political anti-AGW position he’s already obviously taken?

  4. #4 Chris
    May 2, 2009

    This argument in particular tickles my fancy. By all estimates and projections (something all AGWers can swear by!) the coming generations will have far more wealth than we do currently. Our poor kids and grandkids that will have to ‘deal’ with our ‘irresponsibility’ with regards to the climate will be far far FAR better equipped to respond to global warming than we are, should it ever present itself as a danger (unlikely, in my opinion). Why is this always glossed over? I guess it just sounds plain silly when we, relative beggars, are commanded to give up some of our wealth to solve a problem for a man 100 years away and many many times richer.

  5. #5 Chris
    May 2, 2009

    Krugman also completely glosses over the biggest problem with a cap and trade situation here in the US. Companies will simply leave. If the entire world was participating in a cap and trade system then it’d be a nonissue, but unfortunately other nations aren’t required to adopt the policies we do. The US has already lost millions of jobs to overseas workers. Putting another restriction on business that can be dodged simply by moving south of the border or across the ocean does little more than provide another disincentive to starting or growing one’s business here in the US of A.

  6. #6 Adam
    May 2, 2009

    Betula -

    Are you capable of making any argument other than playing word games? I’m sure you think you’re an oh-so clever boy, and stunning us with your brilliant commentary, but allow me to dispel that particular delusion for you.

    As Left_Wing_Fox points out, there have been numerous studies on this topic that conclude the abject lack of financial ruin.

    See here:
    http://www.mckinsey.com/mgi/publications/Carbon_Productivity/index.asp
    The macroeconomic costs of this carbon revolution are likely to be manageable, being in the order of 0.6–1.4 percent of global GDP by 2030. To put this figure in perspective, if one were to view this spending as a form of insurance against potential damage due to climate change, it might be relevant to compare it to global spending on insurance, which was 3.3 percent of GDP in 2005.

    And here:
    http://www.nber.org/papers/w13176
    Welfare costs vary from near zero to less than 0.5% at the start, rising in the most stringent case to near 2% in 2050.
    http://www.ipcc.ch/pdf/assessment-report/ar4/syr/ar4_syr_spm.pdf

    Nobel laureates in economics agree:
    http://ces.iisc.ernet.in/hpg/envis/doc97html/globalcl102.html
    Economics studies have found that there are many potential policies to reduce greenhouse-gas emissions for which the total benefits outweigh the total costs. For the United States in particular, sound economic analysis shows that there are policy options that would slow climate change without harming America living standards, and these measures may in fact improve U.S. productivity in the longer run

    And wouldn’t you know it, the IPCC report even addresses this issue.
    http://www.ipcc.ch/pdf/assessment-report/ar4/syr/ar4_syr_spm.pdf
    In 2050, global average macro-economic costs for mitigation towards stabilisation between 710 and 445ppm CO2-eq are between a 1% gain and 5.5% decrease of global GDP (Table SPM.7). This corresponds to slowing average annual global GDP growth by less than 0.12 percentage points.

    Of course, learning this requires you to actually, you know, read something other than WattsUpWithThat or listen to something other than Rush Limbaugh.

  7. #7 John Mashey
    May 3, 2009

    I’m no economist, but it seems possible that {Krugman, Stern, Nordhaus, Samuelson, and many others, including} are essentially wrong in one particular way, although some are wronger than the others:

    Most of the mainstream (i.e., neoclassical economics) models expect 2-3% CAGR GDP growth, more-or-less indefinitely. It appears that such think so, more-or-less because we’ve had that for 100-150 years, and unlike the minority biophysical economics, tends to minimize the roles of energy & resources.

    Robert Solow got an Economics Nobel for looking at economic growth, explaining part of it by Labor and Capital, and (more than half) by “The Solow Residual”, or “technology progress”, or as it’s called these days “Total Factor Productivity (TFP)”. This may be naive on my part, when more the half the variation is difficult to quantify, I lack confidence in the model.

    =====
    Two contradictory conclusion are drawn from these expected growth rates:

    a) Everybody will be rich in 2100, so we can leave it to them.
    b) With expected economic growth, it won’t cost us that much to lessen CO2.

    But, both sides *might* be wrong, although I Personally think a) is much wronger.

    See long post @ John Quiggin.

    IF Bob Ayres and Benjamin Warr are right, and a major component of economic growth is really:

    work = energy*efficiency

    THEN see the last page of Ayres, 2005, which does *not* show indefinite growth.

    Much of the last century’s economic growth seems based on cheap fossil fuels, i.e., one-time energy *capital*. As in any business, if you don’t invest one-time capital into income-producing assets, sooner or later you go out of business. Likewise, at the personal level, if you spend an inheritance like it’s income, sooner or later…

    Get your local library to buy new book by Ayres and Warr, of which my blurb was:

    `Would you want your great-children in 2100AD to have a 22nd-century industrial economy? If so, read this book to grasp how strongly wealth depends on energy and its efficient use. Start treating fossil energy, not as continuing income, but as one-time energy capital to spend on efficiency and long-term sustainable energy production. Otherwise, your descendants will inherit a broken 20th-century economy that only worked with cheap fossil fuels. They will not be rich and they will wonder what their ancestors were thinking.’

  8. #8 Betula
    May 4, 2009

    Adam.

    Thank you for the education. After reading your links, I have to admit, I have learned to look beyond the political biases and agendas of this subject, and to keep an open mind.

    Let’s take a closer look at a few of your links in an effort to educate others….

    1. From the McKinley Institute….

    Diane Farrell…..former director of Mckinsey Global Institute…
    “In January 2009 Diana Farrell joined U.S. President Obama’s administration as deputy director of the National Economic Council and deputy economic advisor to the President.”

    Martin Baily, Mckinley Institute Senior advisor…

    “Baily was previously chairman of the Council of Economic Advisers during the Clinton administration (1999-2001)”

    http://www.mckinsey.com/mgi/perspective/biography/index.asp

    I have to admit, very impressive.

    2.Your link to:

    “ECONOMISTS’ STATEMENT ON CLIMATE CHANGE” — Feb. 13, 1997

    I notice this is 12 years old, going back to 1997 when Al Gore was Vice President.

    Adam, can you tell me the reason the U.S. didn’t ratify the Kyoto Protocol under Clinton and Gore again? Oh, wait….

    “On 25 July 1997, before the Kyoto Protocol was finalized (although it had been fully negotiated, and a penultimate draft was finished), the U.S. Senate unanimously passed by a 95–0 vote the Byrd-Hagel Resolution (S. Res. 98),[61][62] which stated the sense of the Senate was that the United States should not be a signatory to any protocol that did not include binding targets and timetables for developing nations as well as industrialized nations or “would result in serious harm to the economy of the United States”.”

    “The Clinton Administration never submitted the protocol to the Senate for ratification”

    http://en.wikipedia.org/wiki/Kyoto_Protocol#United_States

    Extremely educational.

    And this from your 1997 link…

    “The United States and other nations can most efficiently implement their climate policies through market mechanisms, such as carbon taxes or the auction of emissions permits.
    The revenues generated from such policies can effectively be used to reduce the deficit or to lower existing taxes.”

    So the revenues from taxes can be used do reduce the taxes?

    No wonder they are Nobel Laureates!

    In an effort to take what I have learned and put it to work, I have asked my boss to lower my income so I could save more. In addition, I have taken the current administrations policies to heart and have decided to increase my spending to reduce my spending.

    With this new approach, I figure I will be wealthy in no time, at which point I will learn I should be held legally liable for many of the worlds problems, as mentioned below.

    3.Your (2) IPCC links to “The Summary For Policy Makers”

    A Draft, in part prepared by Saleemul Huq, who was chosen as the lead Author of the IPCC 4th assessment report on Adaptation and Sustainable Developement.

    Saleem, who “argues that a profound shift is taking place in the way climate change is perceived. From what was originally a purely environmental issue, it is now one of global justice — “or, more correctly, global injustice.”

    http://www.thehindu.com/2008/03/27/stories/2008032754261100.htm

    Yes Adam, I learned “perception” is very important.

    He also wrote these words in his typical biased style…..

    “In future, therefore, when affected countries demand assistance from the rich countries of the world in helping address climate-related disasters such as floods, it will not be for a request for charity but for compensation, appealing to their moral responsibility, if not their legal liability, to for which their activities have, directly or indirectly, been partially responsible.”

    http://www.scidev.net/en/editorials/bangladesh-floods-rich-nations-must-share-the-bl.html

    Yes Adam, I have learned that we need to further create “perceptions” of “global injustice”, and that words and phrases like “demand”, “compensation”, “moral responsibility”, “legal liability” and “make good the damage and destruction” really help to drive that “perception” home.

    So once again Adam, thank you for teaching me about hidden biases and agendas, particularly when they are combined with exaggerated fears built on speculations….. I have learned that they truly bring out the best in all of us.

  9. #9 monica
    May 6, 2009

    One thing many Americans don’t realize is how important domestic energy is to our country’s economic recovery and overall security. Currently, half of our electricity comes from coal—which happens to be our most abundant fuel resources.

    In fact, we recently kicked off the America’s Power Factuality Tour—a country-wide road trip in search of the people, places and technologies involved in producing cleaner, domestic electricity from coal.

    We started in Wright, Wyo., at the Powder River Basin, which produces more coal than any other site in the U.S. Take the tour for yourself and see our most abundant domestic fuel at work. factuality.org

  10. #10 Monica from ACCCE
    May 20, 2009

    I know that energy is a complex issue, but coal is critical not only in securing affordable, reliable and domestic energy, but also in creating steady jobs across the country.

    My team went to the Harriman Dispatching Center in Omaha, Neb., where 800 employees work around the clock to ensure the smooth operation of Union Pacific’s entire rail operation—which helps move coal to produce nearly half of the country’s electricity.

    They went behind the scenes of this operation for the 2009 Factuality Tour—take a look to see photos, videos and interviews from our stop in Omaha.
    Factuality Tour