The Best Argument Against Climate Legislation — And the Best Answers

July 26th, 2010

I’ve long lauded Jim Manzi for his cogent and convincing arguments against carbon taxes. He’s the antithesis of the “1998 was really hot! Look: it’s cooler now!” school of head-in-in-the-sand self-delusionists. Rather, he takes the 2007 IPCC report as the best available consensus scientific knowledge we have, and uses it to think through a clear-eyed, long-term cost-benefit analysis of carbon taxes/cap-and-trade. Anyone interested in this subject should read this article (and note that it’s published in the regular “In-House Critics” column of the  decidedly lefty New Republic, which speaks volumes about which side of this debate is willing to tolerate and consider — and yes, publish — strongly argued dissenting views).

When I consider arguments in favor of climate legislation, Manzi’s thinking is what I measure those arguments against. Here’s his argument in small (my emphasis for easy skimming):

• “the cost of policies designed to limit the rise in atmospheric carbon dioxide to 450 parts per million (ppm) average a little over 6 percent of global GDP by 2100 (with a very wide range of estimates). That is, we would start paying a cost today that would rise to about 6 percent of world output by 2100 in order to only partially avoid a problem that would have expected costs of about 3 percent of world output sometime later than 2100.”

• “hedging your bets and keeping your options open is almost always the right strategy. Money and technology are our raw materials for options.the loss of economic and technological development that would be required to eliminate all theorized climate change risk (or all risk from genetic technologies or, for that matter, all risk from killer asteroids) would cripple our ability to deal with virtually every other foreseeable and unforeseeable risk.”

Yes, he addresses the uncertainty/risk/probability issues of global warming — notably those from Harvard’s Martin Weitzman.

It’s a compelling argument: given the risk scenario painted by the IPCC in 2007 — and its uncertainty — our best response is to promote economic and technological growth and development, so we have the resources to address problems in the future, when we have a clearer picture of what the problems are.

But the counterarguments are also very strong. If Manzi incorporated them into his thinking, I think he would come to very different conclusions. Respondents at The New Republic have offered several of them; I will steal from them unabashedly, and add a few of my own.

The 2007 IPCC report is getting long in the tooth — it’s based on the best research from four to six years ago. Recent research is (almost uniformly) far more alarming. Two examples: 1.The area of summer sea ice remaining during 2007-2009 was about 40% less than the average projection from the 2007 IPCC Fourth Assessment Report.” 2. One report posits a circa 5% chance that large portions of the planet will be rendered uninhabitable — including the eastern U.S..

The 2007 report specifically did not make projections for sea-level rise. The modeling of ice-sheet behavior was considered too difficult at the time. The economic costs from rising seas could dwarf all others combined. A cost-benefit analysis that doesn’t include those costs doesn’t tell us much.

A 6%-of-GDP insurance policy against those eventualities starts to sound more reasonable. But even the 6% estimate has serious problems.

• Manzi assumes that carbon taxes will add to, not replace, other taxes. Economists agree that consumption taxes and “Pigovian” taxes — taxing negative externalities — are more economically efficient (they result in greater economic growth and prosperity) than many of our current taxes, like those on income, corporate profits, etc. A carbon tax is a Pigovian consumption tax. If our tax base shifts in that direction, the result is more economic efficiency, yielding the very result — faster growth and development — that Manzi champions.

• He assumes the need for a global taxing regime, ignoring the benefits to the U.S. of a unilaterally imposed carbon tax. The long-term savings in national defense and security from reduced fossil-fuel consumption are darned hard to predict, but even most righties will acknowledge that we wouldn’t have invaded Iraq if there was no oil over there. That war will cost us trillions, all told — somewhere north of 25% of U.S. GDP for a year. And that’s before even considering the fuel that it poured on the fire of global jihad. That was one damned expensive insurance policy to ensure future oil supplies.

He ignores the threat that global warming poses to U.S. national security, as detailed by those left-wing nut jobs at the Pentagon in their Quadrennial Defense Review for 2010 (PDF): “climate change could have significant geopolitical impacts around the world, contributing to poverty, environmental degradation, and the further weakening of fragile governments. Climate change will contribute to food and water scarcity, will increase the spread of disease, and may spur or exacerbate mass migration.While climate change alone does not cause conflict, it may act as an accelerant of instability or conflict, placing a burden to respond on civilian institutions and militaries around the world.”

He ignores the truly horrific, potentially even apocalyptic human impact of global warming, and a “mere” 3% decline in GDP, especially outside the developed world. (Quite resoundingly demonstrating Jonathan Haidt’s findings about libertarians’ lack of compassion.) As Nate Silver has pointed out (H/T Bradford Plumer) we could eliminate 43% of the world’s people and only reduce world GDP by 5%.

As I said, I greatly admire Jim Manzi’s thinking. But I have to say that his failure to include these points in that thinking gives the strong impression of confirmation bias.

  1. Chris T
    July 26th, 2010 at 15:13 | #1

    Part of the problem is that we need a global solution. Even if the United States and EU put controls in place, it will come to nothing if emerging economies such as China and India do not also take steps to limit GHG emissions.

    I’m glad to see someone else at least acknowledges that botching policy could wind up causing more economic damage than if we did nothing. I’m all for GHG reductions, but get very nervous when proponents act as though there are no dangers to attempting to guide and restructure the global economy. Being blind to potential downsides is no way to advocate or conduct policy.

  2. July 26th, 2010 at 15:53 | #2

    @Chris T: we need a global solution

    Well yes, to really solve the problem. But no, not as a country. The economic benefits of shifting our tax base from income/work/profits to consumption/carbon are so manifest, it seems to me, as to outweigh the concerns about global business competitiveness.

    I’ve been ranting about this for some time:

    http://www.nytimes.com/2004/05/27/opinion/l-a-gas-guzzler-tax-it-s-just-a-thought-751707.html

    Followed up here:

    http://www.asymptosis.com/gas-guzzler-tax-just-turn-it-on.html

    And: if we institute climate-friendly policies (as China is doing, in spades), the rest of the world will come along (much?) faster — serving to ameliorate the problems of global competitiveness.

    We could jump-start the whole virtuous circle.

  3. Chris T
    July 26th, 2010 at 16:41 | #3

    @Asymptosis
    I could certainly support going to a VAT and carbon tax. In terms of actually getting carbon to an acceptable level, Cap and Trade would be better. Unfortunately, C&T is so easy to politically game that I doubt we’d ever see the benefits outweigh the costs.

  4. July 27th, 2010 at 10:26 | #4

    Chris T :

    @Asymptosis
    I could certainly support going to a VAT and carbon tax.

    My point is that a carbon tax (C&T is a carbon tax) *is* a consumption tax.

    In terms of actually getting carbon to an acceptable level, Cap and Trade would be better.

    It’s just a matter of certainty. While C&T would specify particular limits, a high enough carbon tax would also get carbon to an acceptable level. We just don’t know how high that tax is. Based on past experience with auctioned pollution permits (the market value of permits always ends up *far* lower than predicted by industry), the cost of lowering carbon emissions is probably much lower than the petroleum industry would have us believe.

    Unfortunately, C&T is so easy to politically game that I doubt we’d ever see the benefits outweigh the costs.

    Agree completely. Just tax it.

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