Friday, June 7, 2013

"The Dharma offers great potential to help individuals, and society as a whole, accept the realities of climate change and respond with wisdom and compassion in action. This crisis has the potential to not only align ourselves with nature and reduce social inequity, but can also lead to the greatest awakening of the human mind and spirit ever seen."

Tuesday, June 4, 2013

James Hanson Gets it Partly Right

An economist with a Ph.D. in physics, David Friedman (, wrote this blog post that I thought you find interesting. I think he makes two good points. One is working on the axiom, "the best is often an enemy of the good," indicating that what might be an ideal solution might also never happen. What can we propose that will really be done? The carbon tax may be such an idea. The second idea he has been writing about is that there may be a net gain rather than a net loss from the temperature change predicted by some. He is not hoping that it will happen, but trying to separate our aversion to change and what might really be the net result of change.

James Hanson Gets it Partly Right

A recent piece by James Hanson proposes the formation of a centrist political party organized around the issue of global warming. The policy he proposes is a carbon tax charged to producers of fossil fuels, with the revenue returned to the population as a fixed amount per capita which he calls a dividend. Otherwise known as a demogrant.

There are several things I found interesting about the proposal. One is that, given his factual beliefs—that global warming due to the burning of fossil fuel imposes very large net costs—he has the economics right. His proposal makes much more sense than what politicians who talk about global warming have actually been pushing, which has ranged from electric auto subsidies to the mandated use of biofuels. If burning fossil fuels  produces large net externalities, the sensible way of taking account of them is to include those costs in the price of fuel and let individuals in a market society adjust to them.

Another thing I found interesting was the way in which his proposal was targeted at the political center. Conservatives and libertarians, even ones who agree with Hanson about the dangers of global warming, are unlikely to approve  either of a tax that goes to increase government spending or of extensive regulation. They might prefer that revenues from a carbon tax go to reduce other taxes or to reduce the deficit, but distributing the money to the population is at least better than sending it to Washington. 

Those left of center might prefer that the revenues from a carbon tax go to help the poor. But while a  demogrant is not a very efficient form of income redistribution, it does on net transfer from the rich to the poor, since the rich consume, on average, more fossil fuel than the poor and so pay more of the tax. The net effect of his proposal is to reduce the production of CO2 in what economists view as the least costly way of doing so without doing anything that either the left or the right would object very strongly to. The right gets the market, the left gets some mild redistribution, and earth stays cool. It is a policy that should be popular with people on both left and right who agree with Hanson about the dangers of global warming.

One other thing I liked about the Hanson essay is that he argues in favor of nuclear power. As I pointed out some time back, nuclear power is the one substitute for fossil fuel that produces no CO2 and can be expanded almost without limit. That does not prove it should be expanded—for one thing, it is currently a more expensive source of power than fossil fuel. But it does mean that people worried about global warming ought to be biased in favor of nuclear power—and Hanson is.
There are, however, two things wrong with his proposal. The first is that, on the historical evidence, creating a third party in the U.S. political system and making it a serious competitor to the existing parties is extremely hard, so hard that it has been more than a hundred and fifty years since the last time it happened. If global warming were really producing, here and now, the sorts of catastrophes its prophets warn of, that might be enough to make it possible, but it isn't.

The second is that Hanson, like many other people, takes it for granted that global warming will have large net negative effects. For reasons I have discussed in earlier posts, I don't. So far as I can see, global warming on the scale suggested by the IPCC reports, about three degrees Centigrade and a foot or two of sea level rise over a century, is at least as likely to produce net positive effects as net negative, probably more likely. That might not be true if the  trend was continued for several more centuries but, given how rapidly technological change is altering the world, I think any predictions more than a century out, probably any predictions even that far out, should be viewed with extreme skepticism.