Global Warming Heterodoxy

The real problem might be global cooling, because the sun might be going through a less-active period.

Solar activity fluctuates in an 11-year cycle. But so far in this cycle, the sun has been disturbingly quiet. The lack of increased activity could signal the beginning of what is known as a Maunder Minimum, an event which occurs every couple of centuries and can last as long as a century.

Such an event occurred in the 17th century. The observation of sunspots showed extraordinarily low levels of magnetism on the sun, with little or no 11-year cycle.

This solar hibernation corresponded with a period of bitter cold that began around 1650 and lasted, with intermittent spikes of warming, until 1715. Frigid winters and cold summers during that period led to massive crop failures, famine and death in Northern Europe.

To Spend or Not to Spend

Matthew Yglesias says:

Or to look at it another way, if Hillary Clinton's entire agenda were enacted, her climate change proposals would wind up doing more to improve public health than would her health care proposals.

Why? Well, for one reason, increasing spending on health care has almost no effect on health outcomes. So says Robin Hanson, and he advocates cutting health care spending in half to bring spending and outcomes in line.

Is ethanol good or bad?

Daniel Gross asks the question, then briefly runs down environmental, economic, and humanitarian arguments against expanding ethanol use, before trying to quickly dismiss them:

While I'm as susceptible to Malthusian thoughts as the next paranoid guy, I find much of the anti-ethanol case to be unpersuasive. In each instance, the haters would have us look at ethanol, and the ill effects its greater use would assuredly produce, largely in isolation. Might the production of corn ethanol cause pollution? Of course. Is it worse than the sort of pollution created by other types of energy production—i.e., coal and oil? Probably not. Does greater use of corn for ethanol help spur price increases for food? Sure, but so do many other factors, like, say, the transformation of China from a subsistence farming economy into a more modern one. Is ethanol more inefficient, and hence more costly, than gasoline? Yes. But our heavy use of gasoline imposes all sorts of other costs—from pollution to the hundreds of billions of dollars we spend each year in Iraq. Factor those in, and ethanol no longer seems like such an economic loser.

I don't really agree when he says, "the haters would have us look at ethanol, and the ill effects its greater use would assuredly produce, largely in isolation." Environmentalists don't just dislike ethanol because of the fertilizer and run-off, and they acknowledge that it is less polluting than oil or coal. But the net energy gain from using ethanol is barely positive -- if it is at all -- so we are using coal and oil inputs to produce ethanol energy, which we are then using. So we're still getting the oil and coal pollution, plus we're getting the negative environmental aspects of ethanol. In addition, there are a lot of other forms of alternative energy which could have greater effects on lowering pollution and carbon emissions, but are being crowded out by all the investment in ethanol production and infrastructure.

His point about the cost of ethanol raising food prices, especially for those in the developing world, is even less valid. Yes, China's movement from an agrarian to industrial society is having an effect on world food prices, but that would happen whether we use ethanol or not. Ethanol is adding to the problem, in a very real and significant way. The effects are especially pronounced in Central and South America, where poor peasants in some areas are literally unable to afford corn to make tortillas; they have to resort to wheat, which is an inferior good in those societies.

The point about economic efficiency is also wrong. As I said before, since ethanol production requires large inputs of fossil fuels, the costs of pollution aren't abetted much, if at all. And the notion that we are spending billions in Iraq solely in order to secure oil fields is simply laughable. The fact of the matter is, oil use is largely subsidized by foreign countries, who spend the money to find and extract the oil before it is refined in the U.S. With ethanol, we subsidize our farmers, and have to pay for all the infrastructure ourselves. That it is a net loss on economic terms is inarguable.

Daniel Gross is usually much, much better than this.

Quote of the Day

Virginia Postrel says that "science is not enough":

Scientists have gotten way too fond of invoking their authority to claim that "science" dictates their preferred policy solutions and claiming that any disagreement constitutes an attack on science. But, even assuming that scientists agree on the facts, science can only tell us something about the state of the world. It cannot tell us what policy is the best to adopt. Scientists' preferences are not "science." You cannot go from an "is" (science) to an "ought" (policy). Social science, particularly economics, can tell you something about the likely tradeoffs (hence some of my frustrations at Aspen). But it can't tell you which tradeoffs to make.

She's right, of course, and nearly no one would disagree with the sentiment if presented in this way. But a lot of people, particularly in the area of climate change, think that scientific consensus is especially meaningful when it comes to normative policy-making. Unfortunately, a lot of scientists make this mistake. So yeah, Krugman can rant and rail about income inequality, and the need to tax the hell out of the rich to make up for it; yeah, Stern can go ballistic on climate change, and exactly how much the rich countries of the world *should* be willing to pay for fixing climate change; but these things don't exist in a vacuum. Realizing the prescriptions of these social scientists involves real costs for real people. It is at this point that normative arguments become most important. Scientists often forget this (or purposefully neglect it). So their arguments become more convincing to the (less educated) layperson, but don't stand up so well scrutiny.

I've Been Waiting for This

Finally... a reality-based take on the economic costs of "fixing" climate change, and, thus, the political infeasibility of doing anything significant any time soon. It's literally this simple: people want a cause, and climate change fits nicely because everyone is to blame, and everyone can contribute in some small way to lessen the effect (by putting in flourescent light bulbs or planting trees). But real, actual, meaningful changes -- the sort that will have any noticeable effect on climate change -- wouldn't get 10% of the vote in a referendum. People want a cause, but they also want that cause to come free-of-charge, or mostly so. But this stuff is all about trade-offs, and I don't know anybody who would sacrifice as much of their own economic well-being as would be required to "fix" the problem. People have a need to DO SOMETHING NOW about big problems; they don't have a need to truly examine the costs of solutions, or the true effects of their piddling actions. One square of toilet paper isn't going to save us. It will take massive economic sacrifices. Our legislators realize this, which is why nobody talks in specifics on this issue. This is why Kyoto got rejected (and hasn't been lived up to by a single one of its signatories).

The Stern Report estimated that at least 1% of world economic output would have to be sacrificed each year for about 100 years in order to combat climate change in a meaningful way. Doesn't sound like much? If, from 1870 to 1990, the U.S. had a 1% lower growth rate, we would be about as wealthy as Mexico today. That's a lot of economic growth being sacrificed over the next 3-4 generations.

Not only that, but that assumes that every country in the world is willing to get on board. Of course that isn't going to happen, so the richer West will have to shoulder even more of the burden to get the same amount of change. There's no point in sacrificing 1% of economic output if the rest of the world doesn't, and climage change continues unabated.

"Fixing" climate change has very real costs. Costs which nobody is willing to bear.

China's Environmental Problem

Marginal Revolution points us to a great article in the Washington Monthly about China's environmental problem. Pollution has been rampant, and the government can't control it on its own. So what is it doing? Empowering NGOs and individuals to do a lot of the work for them. It's a strategy that must work, or else China is in trouble.

P.S. On bad days, 25% of smog in L.A. originates from China. Didn't know that.

An Assault on the Pigou Club

I'm in favor of carbon taxes. I also realize that they are politically infeasible. So does Robert Reich, who proposes an alternate solution to the energy Hydra Head (climate change, exporting money to despots, exposure to potential supply shocks, etc.), and it isn't cap-and-trade:

The best idea I've heard is described as a carbon auction. Companies would have to bid for the right to pollute. And, most ingeniously, the money raised in the auction would be shared equally by all citizens in the form of yearly dividend checks -- just like the residents of Alaska now get yearly dividends for their share of the state's oil revenues.

I mean, it's our atmosphere, right? Think of a national park or a national forest. No company is simply allowed to take what they want from it, free of charge. Why should the atmosphere be any different? In a carbon auction, companies would have to bid against other companies for a portion of the atmosphere they intend to use -- within overall limits that reduce pollution levels.

Get it? It's a win-win. The auction market itself determines who can pollute and by how much. And since companies will inevitably want to reduce their bidding costs, they'll search for new technologies that cut their emissions. And even if companies pass on increased costs to their customers, we'll still be better off because we'll get dividend checks and cleaner air.

Message to presidential candidates: American voters will buy this one. And it's good policy.

Reich is certainly right: a carbon auction is more politically feasible than a Pigouvian carbon tax. But it's also less effective. The overall aim -- to reduce emissions -- is the same, but the Pigouvian tax attacks demand, while the carbon auction takes aim at supply. In order to have the same effect, carbon auctions would have to have a prohibitively high "reserve" (minimum price), and/or the number of available carbon permits would have to be limited in some way, thus mirroring the cap-and-trade system which Reich opposes.

Reich maintains that this system would foster technological improvements in order to reduce their costs. This would be true if the energy industry was competitive, with little or no barriers to entry. In fact, however, the energy industry most closely resembles an oligopoly, with incredibly high fixed costs and many other barriers to entry. As American deregulation has shown, treating the energy industry as if it were a competitive industry can have disastrous results.

The carbon tax may be less politically feasible, but it would certainly have a greater effect. It is regressive, but making it revenue-neutral by combining it with a big expansion of the EITC could off-set most of those negative effects. A carbon auction might be more feasible; it might even be second-best, but it can't be better than that. And, as Matthew Yglesias is wont to say, all progressive policies seem impossible at first; changing the political dynamic is a process. But that doesn't mean that we should stop trying, or automatically settle for the easiest option.

(ht: Greg Mankiw, who doesn't seem impressed with Reich's logic)

Is Tony Snow an Idiot or a Liar?

It's a serious question:

Tony Snow: "there is a carbon cap system in place in Europe; we are doing a better job of reducing emissions here."

First of all, neither the U.S. nor Europe are reducing their carbon emissions. In fact, none of the countries which signed the Kyoto Treaty have done so. But Europe is trying to reduce the rate of growth of emissions, with some (very modest) success, while the U.S. is literally doing nothing at all.

Think what you will about the science of climate change and the politics which surrounds it, but this statement by Snow is patently false, and he has to know it. He should not be speaking for the leader of the government of the United States.