Comments (22)

• Pablo Escobar

• I'm not an academic... can someone tell me why it's considered dumb to let people know which journal you sent an article to?

• Published: June 5, 2008 3:39 PM

• Inquisitor

• Good luck.

• Published: June 5, 2008 4:28 PM

• Person

• Bob_Murphy: I read it, and it looks like this is your attempt to explain a "market" solution to the problem of global warming (as differentiated of course, from those dumb fake limits governments were swindled into believing the planet was capable of handling and that don't reflect in any way at all, genuine economic scarcity). But you didn't offer one, i.e., a way that private property rights allows the various private owners of scarce resources to resolve exactly who is allowed to emit how much. Because you didn't explain how to allocate property rights in the atmosphere.

  You just said that hey, the economy will surge if we don't interfere via these proposals, and then we'll have all the wealth needed for the massive geo-engineering projects (which run into the same public goods/no definite owner problem, but whatever) to patch up whatever problems do arise.

  Okay, granted. But this is exactly parallel to:

  "Yeah, yeah, I hear your whining about how your kids got asthma because of my factory's pollution, blah, blah, blah. But look at it this way -- if you let people like me have our way, we'll get such massive economic growth that you will, in just a few years, be able to afford a local air purifier and some inhalers for your kids! YOU will afford it, of course. I'm not buying it for you, don't be ridiculous."

  Yet I don't think you'd endorse that as your economist answer to the question of air pollution.

  Ultimately, I think the strongest case against action on global warming is what you mention in the paper: you have to consider the (oft-ignored) gains from economic growth, as well as the (oft-ignored) costs of the political process.

  The problem though, is that it gets you off the hook ... this time. That answer doesn't provide a general solution for genuinely global public goods that can handle the case where the potential catastrophe is SO large that it swamps the above corruption/economic growth concerns.

  Any plan to tackle that one any time soon? No? Okay then.

• Published: June 5, 2008 4:52 PM

• John

• If he submitted it to an awesome journal (and made it appear like it was gonna get in) and then it didn't get in, he would look dumb if he misrepresented its chances of getting in. Not academic anything, just common sense.

• Published: June 5, 2008 5:58 PM

• Pablo Escobar

• Before we even get to talking about carbon taxes or carbon trading schemes, economists should be arguing for the removal of all barriers to the development of alternative energy technologies!

  This point is so obvious that I'm surprised it requires a paper to be written about it to get it through the heads of economists.

• Published: June 5, 2008 6:01 PM

• Bob Murphy

• Person wrote:

  Ultimately, I think the strongest case against action on global warming is what you mention in the paper...

  Man, I'd hate to see your reaction if my paper hadn't included the strongest argument you think exists on the matter. Then you might get irritable and sarcastic.

• Published: June 5, 2008 8:28 PM

• Person

• Oh look honey, it's Bob_Murphy seizing on a tiny portion of my remarks, taking it out of context, and treating it as an endorsement!

  That's nice, dear.

• Published: June 5, 2008 10:33 PM

• Peter

• Please don't feed the trolls/Persons. Thx.

• Published: June 6, 2008 12:31 AM

• Brent

• I don't understand the seemingly irritated tone of the comments regarding *which* academic journal. Anyway, I have not read it yet, but I always like reading Dr. Murphy's articles / papers / thesis.

  Does it address the potential to sue for damages? I think global warming is about as accurate as next month's weather forecast, but it is an interesting topic to talk about alternative private solutions (if we grant that the Big GW Lobby's cause, effect, and predictions are all true).

• Published: June 6, 2008 1:16 AM

• Inquisitor

• Agreed Peter.

• Published: June 6, 2008 9:24 AM

• Taras Smereka

• I thought it was a great article, though I think you should have expanded on free market approaches to the problem.

  What I was thinking was (and of course I am no engineer) that an international enterprise could make a thing that would artificially increase the length of night time or something similar. I am sure it would be very expensive, but not $22.7 trillion like Gore's idea.

  It would be important for a private company to do this. You cant trust governments to do important things like this (Think nasa), and it will also be important to sell a global product globally ie to the Chinese and Indian people which I am sure through their idiotic politicking government officials would be unable to do.

• Published: June 6, 2008 2:35 PM

• Bob Murphy

• FYI David Zetland--an environmental economist--has critiqued the paper here.

  (Name misspelling and broken link corrected.)

• Published: June 8, 2008 11:11 AM

• BlackSheep

• Robert, the link from your comment doesn't work.

• Published: June 8, 2008 9:17 PM

• TokyoTom

• Bob, thanks for posting this.

  Here are a few quick notes:

  - although you note that every step in Nordhaus' analysis involves uncertainty, you have failed to note Marty Weitzman's recent work that tells us how strongly uncertaintly serves as a factor SUPPORTING early action - an important factor that neither Nordhaus nor you take into account at all. Weitzman states, "the inflence on cost-benefit analysis of fat-tailed structural uncertainty about climate change, coupled with great unsureness about high-temperature damages, can outweigh the influence of discounting or anything else."

  - while you indicate that one key area of uncertainty is that future GHG concentrations may be overstated, your observations actually suggest the opposite - that because the oceanic sink is finite, as it becomes saturated atmospheric GHG concentrations are apt to rise even more sharply.

  - while you indicate that the temperature increase form a given GHG concentration may be overstated, you ignore the possibility of the opposite - that the long-term temperature impact of a given GHG level may be higher than the number Nordhaus has used. Further, given paleo evidence that Hansen has noted, it appears unlikely that climate sensitivity will be less than 3 degrees C.

  - Similarly, while you note that economic damages from a given temperature increase may be overstated, you fail to address the possibility that such damages may be understated - and also fail to note that the Earth is apparently more sensitive to climate changes than has been expected, witness the rapid Arctic/Greenland melting that we are seeing at only a 0.7 C increase, and the rapid expansion of tropical zones.

  - it is a distinct possibility that Nordhaus has underestimated nonmarket damages, as John Quiggin and others argue. In any case, Nordhaus does not account for the changing relative prices for various goods and services that the changing composition of the economy and climate change will induce,as Sterner and Persson have noted in a recent paper at RFF: "future scarcities that will be induced by the changing composition of the economy and climate change should lead to rising relative prices for certain goods and services, raising the estimated damage of climate change and counteracting the effect of discounting. ... [C]hanging relative prices ... has major implications for a correct valuation of future climate damages. We introduce these results into a slightly modified version of the DICE model (Nordhaus 1994) and find that taking relative prices into account can have as large an effect on economically warranted abatement levels as can a low discount rate."

  - in looking at damages, you tend to focus on the US picture alone, without regard to other nations - largely poorer ones - in which greater net losses are expected to be felt. You also completely fail to address, even in the case of the US, that benefits and impacts will not be uniformly shared, and that those with net benefits presently have no obligation to compensate those shouldering losses.

  - while you fairly note that Nordhaus' analysis can be helpful in comparing the relative net costs and benefits of different proposals, you fail to note that with changed assumptions, even using Nordhaus's model as is, much higher estimates of "optimal" levels of carbon taxes can be derived.

  - You point to Nordhaus' remarks on how free-riiding be various contries will drastically affect the benefits to be derived from any carbon taxes, but argue that this itself is a justification for the US to free ride, rather than for us to work to coordinate compliance by others.

  - You also seem to be very worried that a coordinated approach would actually result in heavily disorted worldwide production, when despread noncompliance by the various Kyoto parties indicates how ready nations are not to unilaterally assume burdens that other nations will not share.

  _ You also express concern that any coordinated approaches to climate change may be difficult to unwind as information changes, when it is clearly that various nations (and their industries) are acutely aware of comparative advantage and quite ready to react to what others are or are not doing (in the fact of the easy movement of capital).

  - Further, you have confused measures like possible geoengineering and carbon sequestration approaches - which would be incentivized by carbon taxes and are a form of "mitigation", with what is properly considered as "adaptation" to unavoided temperature increases and clikmate changes.

  There are of course many other points that one would like to see Austrians making - such as the benefits of freeing up the economy from burdensome regulations (while strengthening property rights and private litigation remedies), adding greater degrees of freedom and competition to energy markets to drive greater energy efficiency, allowing immediate depreciation of capital investments, and the desirability of avoiding government-directed investments and subsidies - but perhaps these are things you intend to address in another paper spelling out a truly Austrian approach, rather than nitipicking at a single conventional CBA argument?

  Sincerely,

  TT

  (I apologize that this is link-poor, but it seems like the best way to actually have this comment posted.)

• Published: June 12, 2008 7:49 AM

• TokyoTom

• Bob, allow me to suggest that you (and others) may also wish to consider taking a look at addressing also the recent short pieces by Joe Stiglitz, Tom Schelling and Ken Arrow others in last year`s The Economists' Voice; they are as relevant as Nordhaus, and much more accessible to the average reader:

  Joseph Stiglitz, A New Agenda for Global Warming

  Kenneth J. Arrow, Global Climate Change: A Challenge to Policy

  Thomas C. Schelling, Climate Change: The Uncertainties, the Certainties and What They Imply About Action
  

• Published: June 12, 2008 9:41 AM

• Rod Campbell-Ross

• The article is thinly veneered climate change denial dressed up in fancy economics jargon.

  Murphy leaves some critical issues out.

  1. He mentions average warming throughout the paper but fails to address temperature anomalies. These have temperatures in the tropics virtually unchanged, but the high latitudes are significantly warmer. The northern polar region is in places 6deg C warmer and NASA's GRACE program is measuring a rapidly accelerating rate of ice sheet loss from Greenland.

  2. The same is true the in the Southern Hemisphere, but the details are different. The Southern Annual Mode/Antarctic Oscillation is the dominant mode of non-seasonal tropospheric changes in the Southern Hemisphere. It is showing a clear upward trend that is highly correlated with increasing CO2.

  This is resulting in two distinct, but opposite changes. Central Antarctica is actually cooling and although it is too early to tell, this may be causing an increase in ice mass over the central continent. However, outside of this there is an area that is significantly warmer and the West Antarctic ice sheet is in this area.

  The Wilkens ice shelf suffered further loss of mass in late May and early June - in the middle of winter. This ice shelf is near the West Antarctic ice sheet; and its virtually certain complete dissappearance next summer will further expose the WA ice sheet to the warmer ocean. It should be noted that the WA ice sheet is grounded below sea level.

  The WA ice sheet is extrordinarily vulnerable to warming and its loss would result in a 5 metre sea level rise.

  Its is unclear whether any action that we can take will slow down the process by which the WA ice sheet could be destroyed.

  However it seems like an inordinately high risk to permit carbon to be pumped into the atmosphere. It is a stark choice I grant you. Turn everything off, our economies and our lives, or face a 5m sea level rise.

  3. The economic principles here are clear. And they were not mentioned in the article. They are:

  A - The precautionary principle. This is to not do, or to stop doing - anything that might be causing major damage; and 2

  B - The Polluter Pays Principle. CO2 is a pollutant (at these levels) and so the externality should be charged for. The fact that the quantum is uncertain is not a reason not to charge the best estimate.

  One final point: If a carbon tax was to replace, dollar for dollar, taxes on income/labour, wouldn't the outcome actually be better?

  That would give each of us a choice about whether to burn the carbon (and pay the tax) or not. That is instead of having to pay taxes out ones income. I thought Mises was all about the power of individuals and the choices they make.

• Published: June 14, 2008 8:10 AM

• fundamentalist

• Rod: "I thought Mises was all about the power of individuals and the choices they make."

  Government mandated choices can hardly be described as the "power of individuals." The real power of individuals would be demonstrated by not having C&T and allowing individuals to create CO2 if the have no fear of GW or abstain from it if they fear it.

  If CO2 caused GW is so obviously correct, and the science so clear, then why do you need the brute force of the state to persuade people to protect themselves by emitting less CO2? Can't you simply explain the danger to people and let them reduce their carbon emissions out of self-interest? Or are you afraid that your arguments are so weak that you won't convince more than a handful of people and so want to force your fears on the rest of us?

• Published: June 14, 2008 11:48 AM

• TokyoTom

• Bob, by the way, the guy who reviewed your draft is David ZETLAND (not Zeitland). His comments are here: aguanomics.com/.../counterpoint-on-carbon-taxes.html

• Published: June 16, 2008 11:20 PM

• TokyoTom

• Here's the full link to David Zetland's review: http://aguanomics.com/2008/06/counterpoint-on-carbon-taxes.html

• Published: June 16, 2008 11:21 PM

• TokyoTom

• Roger:

  "If CO2 caused GW is so obviously correct, and the science so clear, then why do you need the brute force of the state to persuade people to protect themselves by emitting less CO2? Can't you simply explain the danger to people and let them reduce their carbon emissions out of self-interest?"

  There are of course very many voluntary actions (and investments) underway by individuals and firms to reduce GHG emissions. Of course, there are many who like to mock such actions and question their efficacy, on the grounds that they remain voluntary so that if there is an externality associated with legal GHG emissions, it remains in the economic interests of actors not to shoulder any such external costs - so that those who do so are obviously irrational. Does this sound familiar to you?

  Also, while libertarians recognize the legitimacy of informal sanctions and "moral suasion" in moving towards private solutions to externality/commons problems, there are quite a few here who loudly protest such non-state efforts - as illeginimate "coercion" by human-hating commie nazi enviros and their co-religionists (you know, the major religions and every other institution and individual who is willing to raise their public voice about climate change). Sound familiar?

  Regards,

  Tom

• Published: June 17, 2008 12:27 AM

• fundamentalist

• TT: “…if there is an externality associated with legal GHG emissions, it remains in the economic interests of actors not to shoulder any such external costs - so that those who do so are obviously irrational.”

  Not necessarily. As with every issue, there is a conflict between the short run and the long run. If people believe the GW is man-made and will result in the disastrous consequences that some people preach, then they will be torn between the short run costs of switching vehicles (to a non-carbon fuel), living in smaller houses, and paying more for electricity in the short run, and the future benefits of staying alive. The externalities you mention exist only in the short run if GW hysteria is true. It seems to me that GW enthusiasts fear that their arguments are too weak to persuade the majority to take the long run view in their own self interest, or the people are too stupid understand the situation.

  TT: “…there are quite a few here who loudly protest such non-state efforts - as illeginimate "coercion" by human-hating commie nazi enviros and their co-religionists…”

  I don’t think that’s true. I think you’re confusing honest disagreement over evidence with a desire to stifle speech. People can disagree with the evidence for GW without wanting to end the right of GW radicals to free speech. Those of us who disagree with the evidence for man-made GW also see where the hysteria of GW is headed—greater state control over the economy and our lives, that is, less liberty. We know that is the direction GW hysteria is heading because all of their “solutions” to the problem include nothing but greater power to the state. No radical GW promoter is even willing to consider letting the public decide for themselves what to do. I’m not aware of anyone who considers the non-state efforts at persuasion illegitimate coercion; it’s the effort to wrap GW hysteria in power of the state that we oppose.
  

• Published: June 17, 2008 8:37 AM

• TokyoTom

• Roger, thanks for your comments.

  - First, I noted that there are many individuals and firms that are already changing their behavior based on their perceptions and concerns about man's contributions to climate change, but that some here would argue that, since climate change effects to one's personal GHG releases are largely external, that voluntarily assuming costs frequently gets dismissed as "obviously irrational". You have essentially conceded my point about what many here think about voluntarily internalizing external costs, while noting that such behavior changes might NOT be irrational - IF they believe that GW is man-made and will result in the disastrous consequences (but haven't you left out a couple other big ones - that they have a reasonable basis for their belief, and a reasonable expectation that their personal behavior will have a direct impact on the climate or will be efficacious in persuading others to change their behavior, such that assuming additional costs now will have a suitably valuable effect later?).

  - You say that "It seems to me that GW enthusiasts fear that their arguments are too weak to persuade the majority to take the long run view in their own self interest, or the people are too stupid understand the situation."

  I'm afraid I don't understand the basis of your conclusion (about weakness of arguments or assumptions of stupidity), especially as von Mises, Rothbard, Cordato and Block have all expressly recognized that "environmental" problems occur when the lack of clear or enforceable propoerty rights means that economic actors don't face their full costs and that market transactions by which everyone expresses their preferences are hampered.

  - "No radical GW promoter is even willing to consider letting the public decide for themselves what to do."

  This is obviously a gross overstatement, as the literature of the "radical DW promoters" is replete with information about climate change and what individuals can do about it personally.

  - "I’m not aware of anyone who considers the non-state efforts at persuasion illegitimate coercion; it’s the effort to wrap GW hysteria in power of the state that we oppose."

  I appreciate you saying this, but I aside from this statement by Gene Callahan of FFF, I have seen NO support here for moral suasion efforts or efforts aimed at private economic actors (such as fossil fuel manufacturers, large users or the auto industry):

  "One way negative externalities can be addressed without turning to state coercion is public censure of individuals or groups widely perceived to be flouting core moral principles or trampling the common good, even if their actions are not technically illegal. Large, private companies and prominent, wealthy individuals are generally quite sensitive to public pressure campaigns." http://www.fee.org/publications/the-freeman/article.asp?aid=8150

  - I am not "confusing honest disagreement over evidence with a desire to stifle speech", but noting a strong sentiment that "enviros are the enemy of mankind", worse than or equal to nazis and commies, and that the world would be magically better off if enviros (though with preferences that non-property or socialized property resources be better protected) all killed themselves.

  - And just what is "GW hysteria," anyway? It sure seems to me like a simple, ad hom short-hand by which you can dismiss anybody who has an opinion different than yours.

  - Is it it really "the effort to wrap GW hysteria in power of the state that [you] oppose," or ANY solution that involves property rights - which to be meaningful require private (individual or group) or state coercion to enforce?

  Don't private property rights (including community property), to be meaningful, require that those who assert them have the ability to use force or other sanctions to be able to exclude outsiders or to ensure that community members respect property rights rules? Try placing your lobster traps wherever you want to in Maine, for example.

  - As I've noted before, intenational cooperation is needed to address climate change, and private parties simply are not in a position to negotiate with China. Because of the essential international aspect, these discussions are akin to discussions among ranchers or other community members over how to manage a range or other open-access resource, which dampens the ability of rent-seekers to control the outcome. See Jon Wiener:

  "In principle, the voluntary assent rule at the global level means that . . . coercive redistribution cannot occur. No country will adopt a treaty that does not yield net gains for the country. International agreements, unlike majoritarian legislation, are analogous to voluntary multiparty contracts in which every contracting party must benefit to secure its participation."
  On the Political Economy of Global Environmental Regulation, 87 GEO. L.J. 749, 769-71 (1999);
  http://eprints.law.duke.edu/1554/1/87_Geo._L.J._749_(1998-1999).pdf
  

• Published: June 18, 2008 4:51 AM