Looks like its Hail Mary time.

FEE Timely Classic:
“Mandating Renewable Energy: It Ain’t Easy Being Green” By Michael Heberling

Related posts:

1. Environmentalists Fight among Selves over Wind Power
2. Troubles Confront Senate Climate-Change Bill
3. Financial Legislation Heads toward Finish Line

The government of the United States spent the year debating major new undertakings, ranging from health care to climate change to energy development to tax reform. Yet a far more fundamental shift, in the form of a rapid and pervasive expansion of government power over the private sector of the economy, has been going on in stealth. Shifting economic power from individual decision-makers to the national government characterizes virtually every policy proposal being debated in Congress.

Take tax policy. A 131-page document issued by the Treasury goes way beyond recommending the extension of some of the expiring Bush administration tax cuts. For example, the fine print contains more than a dozen ways of discouraging American firms from doing business and investing overseas. Supposedly minor technical changes also would have a severe impact.

For example, eliminating LIFO (last in-first out) inventory accounting would raise business taxes over $60 billion in one decade. The Treasury also wants to revive four corporate environmental taxes that were eliminated in 1969. There’s no relation between the tax burden these four taxes would impose on a company and the pollution that company generates. This bears an uneasy resemblance to Willie Sutton, who robbed banks because that was where the money was.

Inevitably a variety of technical tax provisions will increase the paperwork burden on business. The penalties for failing to file information returns (such as Form 1099) promptly and accurately, for example, will rise in a very complicated, three-tiered fashion.

On the expenditure side, the typical stimulus project increases the power of government in private business decision-making. The bailout of the automobile industry is really an inefficient method of financing union pension and health plans. The stockholders got zapped and the bondholders poorly treated. The taxpayers are left holding the bag, especially considering the restrictions on importing the really fuel-efficient cars General Motors produces overseas. Apparently, the new General Motors factory for building compact cars was chosen on the basis of “carbon footprint” and “community impact.”

It is hard to keep a straight face when analyzing the Cash for Clunkers program. For example, owners of the biggest old “clunkers” got a $3,500 credit for trading in an old vehicle for a new one with an improvement of just one mile per gallon. Surely, it would have saved energy if the Treasury had just mailed the $3,500 checks directly to Detroit!

Of course, the Obama administration is making some reductions in federal spending. It is reportedly imposing a 9 percent reduction in the budget for the division in the Labor Department that polices fraud and other illegalities on the part of labor unions. As noted below, a simultaneous expansion of business-oriented antitrust enforcement is taking place.

The Business of America is Government

Turning to regulation, one of Ralph Nader’s biggest disappointments during his heyday as a “consumer advocate” was the failure of his proposal for a new Consumer Protection Agency. He should be a bit happier now: The administration’s financial regulatory plan creates a powerful new Consumer Financial Protection Agency (CFPA).

This new free-wheeling agency would take authority now divided between the Securities and Exchange Commission (SEC) and the Federal Reserve System. In a change guaranteed to cause confusion, the CFPA would share authority with the Federal Trade Commission. The new regulatory agency would also have a mandate to give consumers more economic education. Educators find that especially scary.

Moreover, the agency will have its own money pot, independent of the normal congressional appropriations process. It will be financed directly by fees assessed on “entities and transactions” across the financial sector.

The Treasury’s financial plan contains many other expansions of government power over business. The Federal Reserve System would have new authority to oversee any large financial entity whose failure the Fed thinks could generate “systemic risk.” The Treasury would head a new Financial Services Oversight Council to “resolve” the inevitable jurisdictional disputes among federal agencies. A new Office of National Insurance is to be established in the Treasury to monitor “all aspects of the insurance industry,” a sector of the economy traditionally under the province of state governments.

The SEC will require the registration of all advisers to hedge funds and other private pools of capital with assets over a given threshold. It also will have the power to inspect the books of the advisers and to ensure compliance by their clients. In addition, the power of the SEC will be expanded by legislative proposals to give it a more active role in guiding the compensation committees of all public companies.

Further, the Federal Deposit Insurance Corporation will have new authority to take over and shut down financial institutions (not just banks) whose failure is deemed to pose “systemic risk.”

Viewed in their totality, these technical financial changes would represent a historic expansion of government. Sadly, there is little comfort in the Treasury’s warning in its 88 pages of detailed proposals: “More can and should be done in the future.” Comparisons with the New Deal of the 1930s are too timid. Shades of Alexander Hamilton!

Business-Climate Change

The complicated climate change bill that recently passed the House of Representatives would dramatically expand government power over the economy. Again, the fine print deserves far more attention than it has received. For example, buried in the 1,201 pages of detail is a provision authorizing the Department of Transportation to require automotive manufacturers to produce vehicles that can run on methanol (wood alcohol), a fuel not widely available.

Other provisions, as expected, have little to do with the subject of global warming. For example, contractors on some energy projects must pay employees at least the locally “prevailing wage.” This well-known code means, in practice, paying higher union wage scales, thus letting unions set wages even for non-union firms.

Many federal departments are trying to climb aboard the economic stimulus bandwagon. The Department of Justice wants to help out by showing that antitrust should be a “frontline issue” in the response to the problems facing the economy. Apparently, business is not getting sued often enough. Incredibly, one new assistant attorney general views antitrust enforcers as “key members of the government’s economic recovery team.”

When we step back and try to add up all the tax, spending, and regulatory actions and proposals of the new Obama administration, the result is clear: a cumulative squeeze on private decision-making and a more slowly growing economy in the years ahead.

In the process, private businesses will be discouraged by a host of government policies from making major new investments, especially long-term investments with payoffs far in the future. The likelihood of higher taxes and greater inflation resulting from the huge budget deficits that are likely to arise in the next several decades, abetted by lax monetary policies, are the key negative factors. The American public is likely to have a long wait until the national unemployment rate gets back down to the 7.6 percent that was reported when President Obama took office in January 2009.

One fundamental point deserves to be stressed. For the next several years, in the inevitable tension in public policymaking between economic prosperity and income redistribution, the American people can expect income equalization to get the government’s priority over improvements in people’s living standards. The average American, at best, will receive a more equal slice of an income pie that will be far smaller than the public expects.

Related posts:

1. Limits to Monetary Expansion
2. Union Power and Government Aid
3. A Number, Not a Name: Big Brother by Stealth

None of those statements should come as news to the readers of The Freeman. Such precepts underpin most of what is written in these pages. What is remarkable is that they come in a book on global warming by a well-known climatologist with no training in economics.

Dr. Roy Spencer is the principal research scientist at the University of Alabama at Huntsville. He has a Ph.D. in meteorology and was a senior climate scientist at NASA. Along with his colleague Dr. John Christy, he developed the original method for precise monitoring of global temperatures from earth-orbiting satellites. But unlike many scientists whose work impinges on public-policy debates, Spencer understands the importance of economic analysis in answering the fundamental question: “What should be done?” He recognizes that just because science may indicate a causal connection between human activity and some negative consequence—either for the environment or for other human beings—it doesn’t follow that policies should be implemented to curtail those activities. That is, the answer to the “should” question cannot come from the sciences.

That is why, in the middle of his book about global warming, Spencer includes a cogent and well-schooled chapter on both basic economics and the relationship between freedom and prosperity. The title, “It’s the Economics, Stupid,” conveys the importance he places on economic analysis not only for formulating policies toward global warming but also in determining whether there should be any such policies at all.

Some might interpret Spencer’s excursion into economics as a form of disciplinary imperialism—pontificating in an area where he has no expertise. That would be wrong. In fact, it is an act of disciplinary humility.

In writing this book on climate policy, Spencer realized that his own disciplines—meteorology and climatology—could not provide the answers to the policy questions. He understood that he needed to learn some economics. He did his homework well.

Ultimately though, the book is mostly about science and scientists. Indeed, it’s as much about the latter as the former. Chapters 3 and 4 are especially important. In the former, “How Weather Works,” Spencer addresses basic issues concerning weather, the climate, how the two are different, and how the former determines the latter. This is the background typically ignored in discussions about anthropogenic global warming. In Chapter 4 Spencer’s skeptical stance on global warming is conveyed in the title, “How Global Warming (Allegedly) Works.” Those chapters give the reader a solid, plain-language discussion of the science that almost anyone can understand.

As noted, much of the book is about scientists—their attitudes and the incentives they face. Spencer sets the tone with a cartoon showing three scientists standing in front of a battery of telescopes. The scientist in the middle is introducing a younger colleague to an older, more experienced researcher. The caption reads, “This is Doctor Bagshaw, discoverer of the infinitely expanding research grant.” Spencer spends many pages dragging scientists down off their pedestals. He shows that what they research and what they conclude, particularly in an area like global warming, is as much a function of financial incentives, ideological and religious beliefs, and peer pressure as it is a function of the scientific method.

The past decade has produced a battery of books written on global warming from a skeptical perspective. I have read many of them. What makes Spencer’s book stand out, in addition to its integration of sound economics with sound science, is its readability and sense of humor. It simplifies complex issues in climatology to a point where any reasonably intelligent person can understand them and keeps the reader continuously engaged.

Policies currently being enacted and proposed in the name of fighting global warming represent the biggest challenge to liberty of the last half-century. Those of us who cherish liberty need to come to grips with this issue and be able to discuss its ramifications intelligently. Spencer’s book is a great place to start.

Related posts:

1. Global Warming and the Layman
2. Higher CO2, More Global Warming, and Less Extinction?
3. Global Warming Revisited

—Aesop

In a sensible world the folks who had predicted doom and gloom because of dramatic increases in the price of gasoline would be revising their scenarios now that gas prices have fallen. 

My article in November’s Freeman extensively quoted environ-metal/New Urbanist writer James Howard Kunstler gleefully pointing to soaring oil prices—the result, he argued, of “unsustainable” policies that promote urban sprawl. Those prices will signal the end, he added, of America’s “Happy Motoring utopia.” (I’d love some logical explanation of the word “sustainable,” but I digress.)

Then in the short period between my writing the article and its arrival in your mailbox, local gas prices fell from about $4.50 a gallon, with predictions by analysts of ever-escalating prices, shortages, and gas lines, to about 2 bucks a gallon, with predictions of prices going even lower. As I write this, there are no gas lines and local stations can barely give the stuff away at around $1.59. Who knows where prices are as you read this, but the fluctuations suggest that some economic factor is at work that probably can’t be explained by Kunstler’s “unsustainability” hysteria.

Yet his analysis hasn’t changed. Writing in late November for the Whiskey and Gunpowder blog, Kunstler offers the same solutions without directly addressing the change in his oil-pricing forecasts, but this time he keys off the latest crisis du jour—the subprime housing problem and potential collapse of the U.S. auto industry: “All the activities based on getting something-for-nothing are dead or dying now, in particular buying houses and cars on credit and so it should not be a surprise that the two major victims are the housing and car industries. Notice, by the way, that these are the two major ingredients of an economy based on building suburban sprawl. That’s over, too.”

I quote Kunstler because he says forthrightly what most of those in the Smart Growth, New Urbanist, and environmental movements refuse to say directly. These folks want a radical transformation of the economic system in a statist direction (Kunstler argues that “a much larger proportion of the U.S. population will have to be employed in growing the food we eat”), complete government control over land-use decisions, and policies that coerce Americans out of their cars and into mass-transit systems, especially rail lines. Here’s where the Aesop quote above comes in handy: No matter what the economic circumstances—high gas prices or low, housing boom or bust—Kunstler and his ilk declare that the situation is proof that Americans must radically change the way they live.

None of this would be worth taking seriously except that recently the California legislature passed and Gov. Arnold Schwarzenegger signed a law that attempts to establish a planning regime based on the notions outlined above. Although gas prices and the housing situation were part of the debate for SB 375, the real rationale for its passage was—drum roll please—the so-called crisis of global warming. The bill radically changes land-use law in California, yet it was passed on a mostly partisan basis with little public discourse or notice. Granted, Californians are used to having their property rights assaulted for a variety of reasons, but this measure was big even for this state. Few newspapers extensively covered the debate over the bill, and those that did generally supported it. Few Californians have ever heard of it. I’ve talked with legislators—including a couple of supporters—who are unfamiliar with its contents, even though its advocates and detractors agree that it is one of the most significant laws to come out of Sacramento in a decade.

“This legislation constitutes the most sweeping revision of land-use policies since Gov. Ronald Reagan signed the California Environmental Quality Act,” said Schwarzenegger. Its author, Senate Leader Darrell Steinberg, said the bill “will be used as the national framework for fighting sprawl and transforming inevitable growth to smart growth.” Although the pro-Smart Growth California Planning and Development Report complained that the bill is too based on incentives rather than regulation, it declared: “It’s more powerful than advertised because it contains potentially revolutionary changes in California’s arcane processes of regional planning for transportation and housing—largely by mandating the creation of ‘sustainable’ regional growth plans. And those changes could become more important . . . when the California Air Resources Board is expected to double the greenhouse gas emissions reduction targets that local governments must meet through land-use planning.” 

Other supporters compare its passage to that of the California Coastal Act (creating the authoritarian California Coastal Commission, which has untrammeled power to dictate land-use decisions near the coast) and to Proposition 13 (limiting property taxes) in terms of significance. They appear to be right.

It All Started with Global Warming

In 2006 Schwarzenegger signed into law AB 32, designed to steeply reduce California’s so-called greenhouse gas emissions. AB 32 gave state officials widespread authority to regulate business to halt these emissions, but it largely left untouched emissions from cars and trucks. That’s where SB 375 comes in. Vehicle emissions are to be reduced partly through land-use plans designed to cut miles traveled.

It was an amazingly slippery slope that took California from the dubious theory of manmade global warming—and the even more dubious idea that the California legislature, which can’t even come close to balancing its budget, can save the entire earth from temperature change—to draconian regulations that could outlaw (or at least severely punish local governments that allow) the creation of new suburban-style subdivisions in this largely suburban and quickly growing state.

And despite the governor’s prattle about “market mechanisms,” there is nothing market-oriented about unelected regulators telling local officials that they must stop private developers from building what they term suburban sprawl or else lose transportation funds.

As with any political fad, it’s hard to separate the shysters from the true believers. Many developers love Smart Growth because it provides a politically correct means to lobby for something they always want—approvals to build highly lucrative, higher-density housing projects. In many communities it’s tough for developers to gain approval to build high rises, condominiums, and houses on tiny lots. It’s not always easy to market these projects either, as long as there are readily available single-family alternatives. The current suburban zoning restrictions often forbid higher densities, and NIMBY (Not In My Back Yard) activists often oppose plans to add density to their neighborhoods.

Now, with global warming the “in” thing, developers can claim to be helping the environment. They can talk about how their projects conform to California’s ever-tightening land-use restrictions. As a side note, I advocate dramatic reduction in land-use regulations of all kinds so that neither high-density nor low-density developments are mandated. The market should determine these matters, not regulators. It’s true that what critics call sprawl has to a large degree been mandated by government, but the solution is to stop mandating, not to mandate urban-style developments that will supposedly help deal with global warming. Yet the latter is all the rage in the world of government planning.

Smart Growth blogger Paul Shigley, writing about a conference held by the California chapter of the American Planning Association last year, noted: “Clearly, land use planners have gotten the green religion. Every session—heck, every conversation in the hallway—seems to touch on global warming.

It’s the old Baptist and Bootlegger scenario, like during Prohibition when the Baptist foes of liquor teamed up with bootleggers, who wanted to keep Prohibition going to stifle the legal competition. Here we see the true green religionists working with developers to assure that all California communities must promote high-density developments, transit-oriented projects, and other highly subsidized government-backed programs.

Some developers aren’t all that keen on the new types of buildings that will be mandated, but they have accepted the “deal” that SB 375 will streamline the environmental review process. As conservative political observer Stephen Frank of the California Political News and Views explained, “They are in for a shock. The environmentalists will use other laws to end the streamlining, like AB 32 and federal regulations.”

A Heated Argument

It’s strange that there is little discussion over whether forced urbanization will actually reduce global warming. Libertarian blogger and activist Wayne Lusvardi of Pasadena argues on Frank’s website that “Concentrating housing development in already highly dense urban areas will only worsen the urban heat island effect and thus increase ‘global warming.’ The obvious solution from the greenhouse effect resulting from pollution is dispersion, not concentration.” The U.S. Environmental Protection Agency explains: “Heat islands can affect communities by increasing summertime peak energy demand, air conditioning costs, air pollution and greenhouse gas emissions, heat-related illness and mortality, and water quality.”

It’s a reasonable point to at least consider before undertaking government policies that cram more people into urban areas. Another related point raised by Lusvardi: “The environmental intent of SB 375 is to reduce auto commuter trips, air pollution and gasoline consumption. However, the legislation will unintentionally result in more reliance on imported water supplies from the Sacramento Delta, Mono Lake and the Colorado River for thirsty cities along California’s coastline instead of diverting development to inland areas which have more ‘sustainable’ groundwater supplies.”

Clearly, these are questions that need to be analyzed scientifically, but I have more than a small suspicion that those who promote urbanization will do so no matter what it does for the climate. The answer for them is always the same: more urbanization. Don’t worry about the exact question.

The result of SB 375 will be that an “unaccountable tribunal can set any greenhouse-gas target for the 17 regional transportation agencies that it wants,” wrote Auburn City Councilman Kevin Hanley in a September 29 Sacramento Bee column. “If this unaccountable tribunal decides that the ‘sustainable communities strategy’ doesn’t cut the mustard, then the SACOG (Sacramento Area Council of Governments) will have to submit an ‘alternative planning strategy’ showing how the greenhouse-gas targets will be achieved in the region through alternative development patterns, infrastructure or additional transportation measures or policies. They want to change where we live and how we get to work.”

Becoming like Marin

For a real-world idea of what these anti-global-warming crusaders have in mind, take a look at Marin County, the wealthy suburban county just north of San Francisco. Government officials in Marin have been doing for years what Attorney General Jerry Brown and other environmentalists want the rest of us in California to do. As Sacramento Bee columnist Dan Weintraub explains, “Brown, in fact, cites Marin as a model for how every local government should be complying with the California Environmental Quality Act, which requires cities and counties to identify potential environmental impacts from proposed developments and take reasonable measures to mitigate them.”

Marin County has overall low density but that’s only because most of the land is off limits to development. Most people live in a few fairly dense communities along the main freeway, and Smart Growthers—in Marin and elsewhere—seek to force all new growth into the existing urban footprint.

One person’s reasonableness is another’s insanity. In an Orange County Register column in August 2007, I looked at how Marin deals with development matters. For instance, 84 percent of the county’s land is set aside by the local, state, or federal government as permanent open space. The developers I know who have tried to build anything on the remaining 16 percent explain that local and county restrictions make it nearly impossible to do so. It’s even worse to build there than in the rest of this highly restrictive state.

“California has more than 36 million residents and is expected by some projections to have 60 million by 2050,” I wrote at the time. “If other counties embrace Marin’s overall approach toward development, the newcomers will have nowhere to live. . . . Smug state officials might believe that Marin County is successfully battling global warming and urban sprawl, but these no-growth policies simply are pushing sprawl and all the global-warming-inducing development toward the outer reaches of the Bay Area.”

With SB 375, state officials have the tools to stop the growth in those outer reaches. It’s not hard to figure out what happens next. Although this is now state law, there still are a few years before its full implementation, which means there’s still time for the legislature to turn this radical antisprawl law into something less destructive of property rights and the American Dream. But this being California, don’t count on anything rational taking place in the legislature.

Related posts:

1. Land Use Regulation Harms the Poor
2. Zoning Misuses Land and Other Resources
3. Farm Land and the Free Market

That article was tantamount to heresy among those who devoutly believe in anthropogenic (manmade) global warming. A physics professor responded, “Heberling’s commentary is the latest in a long list of junk-science commentaries about climate change. Heberling, who is not a scientist, but rather the president of a small business school, repeats several old and misleading ideas.”

Of course, Al Gore, the Nobel laureate who has made global warming his cause, is not a scientist. He has a B.A. in government. For the record, I have a B.S. from Cornell University, where I took courses in physics, chemistry, geology, and meteorology. However, this makes little difference because my sin was to downplay the severity of global warming, and too many people and organizations are tied financially to the “crisis.”

As MIT atmospheric physicist Richard Lindzen puts it, “Ambiguous scientific statements about climate are hyped by those with a vested interest in alarm, thus raising the political stakes for policymakers who provide funds for more science to feed more alarm to increase the political stakes. Indeed, the success of climate alarmism can be counted in the increased federal spending on climate research from a few hundred million dollars pre-1990 to $1.7 billion today.”

The Government Accountability Office says that for over 15 years the federal government has funded programs to study the earth’s climate and to reduce emissions of carbon dioxide and other greenhouse gases linked to climate change. A review of the number of government agencies and the amount of government money devoted to “climate change” is staggering. Nine of the 15 cabinet-level departments receive significant funding for climate-change activities. A 2007 White House press release boasted, “The President has devoted $37 billion to climate-change-related activities since 2001.” The U.S. Global Change Research Program, which has 13 federal agency participants, has made the largest scientific investment in climate change research at $20 billion over a 13-year period. The federal organizations with the largest budgets devoted to climate-change activities include NASA, the National Science Foundation, the Department of Energy, and the National Oceanic and Atmospheric Administration.

For those who embrace big government and centralized planning, the global-warming crisis has been a godsend. Under the mantra “preventing global warming,” government has greatly expanded into our daily lives. Mandates have superseded consumer choice in the areas of energy, transportation, and appliances. For example, when compared to the traditional light bulb, the new government-mandated compact fluorescent light bulb is far more expensive, loaded with mercury, and takes time to illuminate. To compensate for this delay, consumers leave the lights on. How does this help the environment or curtail global warming?

And the Horse You Rode In On

Given the billions of federal dollars at stake, it is not surprising that there would be resistance to any free flow of ideas that might question the crisis. If we don’t have a crisis, then we won’t need the government to ride in on a white horse throwing billions around to save us. It therefore becomes imperative to squelch or marginalize dissent. Name-calling, shooting the messenger, and the use of such show-stopper statements as “We have consensus” and “The debate is over” usually do the trick.

In the name-calling category, we find the following epithets: “climate-change denier,” “flat-earth advocates,” and “tools or stooges of Big Oil.”

Jeff Kueter of the Marshall Institute says that scientists who challenge global warming “are quickly labeled as having received money from the petroleum industry. The media consider their findings and their opinions to somehow be tainted because they’ve got a financial relationship.” Why is there never any suspicion in the other direction, when a researcher has a financial relationship with the government and its agenda for more regulations, more mandates, a carbon tax, and the nationalization of the energy sector? Why don’t the media ever call such a researcher a “tool of big government”?

What about the consensus we hear so much about? Gregg Easterbrook expresses the mainstream sentiment: “The consensus of the scientific community has shifted from skepticism to near-unanimous acceptance.”

The late author Michael Crichton had this response:

I regard consensus science as an extremely pernicious development that ought to be stopped cold in its tracks. Historically, the claim of consensus has been the first refuge of scoundrels; it is a way to avoid debate by claiming that the matter is already settled. Whenever you hear the consensus of scientists agrees on something or other, reach for your wallet, because you’re being had. Let’s be clear: the work of science has nothing whatever to do with consensus. Consensus is the business of politics. Science, on the contrary, requires only one investigator who happens to be right, which means that he or she has results that are verifiable by reference to the real world. In science consensus is irrelevant. What is relevant is reproducible results. The greatest scientists in history are great precisely because they broke with the consensus. There is no such thing as consensus science. If it’s consensus, it isn’t science. If it’s science, it isn’t consensus. Period.

One of the biggest tragedies of consensus science is the chilling effect it has on those who fall outside of this consensus. “Scientists who dissent from the alarmism have seen their grant funds disappear,” Lindzen says. “It’s my belief that many scientists have been cowed not merely by money but by fear. Alarm rather than genuine curiosity, it appears, is essential to maintaining funding. And only the most senior scientists today can stand up against this alarmist gale and defy the iron triangle of climate scientists, advocates and policy makers.”

Threat Level Whatever

The problem with public policy based on alarmism is that it’s hard to sustain. There are three reasons for this. The first is overselling the crisis. The general public has become numb and cynical about the endless barrage of ills all tied to global warming. (Even the disappearance of the Loch Ness Monster has been attributed to it.)

The second reason is clear and convincing evidence to the contrary. This is what did in the last climate-change crisis. A New York Times headline on May 21, 1975 blared: “Scientists Ponder Why World’s Climate is Changing: A Major Cooling Widely Considered to be Inevitable.” But it was hard to continue the hype about global cooling when it got hot outside. While the current global warming debate may be over, Mother Nature is, unfortunately, not cooperating. Contrary to the infallible computer climate-model predictions (which I call high-tech crystal balls), global temperatures peaked ten years ago, in 1998. There was no appreciable temperature increase for the next eight years. However, for the last two years the temperatures have actually fallen. The past two winters have been brutally cold. This painful realization may help to explain the sense of urgency in Congress to pass climate-change legislation–right now! Rep. Henry Waxman said at the opening of the 2009 congressional hearings on global warming that he plans to move “quickly and decisively” to push through climate legislation before Memorial Day (Or does he mean before it gets even colder?)

The final reason is that the alarmist crisis gets run over by a real crisis. With the financial turmoil, the housing crisis, the stock-market crash, and rising unemployment, it is hard to get excited about global warming. In the January Pew Public Survey Poll, global warming came in 20th out of 20 on the list of Top Priorities for America. The top five were: the economy, jobs, terrorism, Social Security, and education.

The global-warming crisis was tailor-made to simultaneously advance the agendas of the environmentalists, big government, and those who vilify the oil industry and business in general. There is far too much at stake to have this crisis die peacefully. As a result, there will be extensive efforts to keep it alive. For starters, the phrase “global warming” is being used less frequently (if at all). It’s been replaced with the nebulous, but error-free, “climate change.” Given that the earth’s climate has been changing for millions of years, “climate change” covers all bases (both warming and cooling). The problem with this approach, however, is that the public won’t buy it. It is hard to get excited about the dangers of “climate change.”

Be prepared for more talk about “energy security” and “energy efficiency.” This will lead to more government-mandated products and less consumer choice. There will still be a push for a carbon tax–or a cap-and-trade scheme, President Obama’s preferred policy. However, without the global-warming hysteria, this will be a harder sell.

Carbon dioxide will continue to be demonized as a “greenhouse gas.” Even though it is harmless to humans and is needed by all plant life, it will be called a toxic pollutant by the media, militant environmentalists, and politicians. Yet carbon dioxide makes up less than 4 percent of all greenhouse gases. Water vapor accounts for 95 percent.

Shut Off the Alarmists

What’s to be done? First, we should abandon all efforts and discussions related to cap-and-trade, carbon offsets, carbon footprints, and carbon taxes, which would never go away if implemented and won’t measurably change the temperature.

Second, we should stop government from funding climate change science. As John Tierney of the New York Times writes: “[Government] officials running the agencies have their own agendas . . . which can be [met] by supporting research demonstrating that there’s a terrible problem for the agency to solve.” Climatologist Patrick Michaels states, “[N]o one ever received a major research grant by stating that his or her particular issue might not be a problem after all.”

Third, we should demand that lobbyists for expanded government power disclose their financial backers.

Finally, we need to accept that climate change, both global warming and global cooling, will continue. Ironically, of the two we should wish for warming. Mankind has prospered in warming periods because agricultural production increased at higher latitudes and elevations. The opposite was true with global cooling. I’ll take global warming over another Ice Age. My request to Washington: Please don’t pass legislation to make Michigan any colder than it already is.

Related posts:

1. Higher CO2, More Global Warming, and Less Extinction?
2. Climate Confusion: How Global Warming Hysteria Leads to Bad Science, Pandering Politicians, and Misguided Policies that Hurt the Poor
3. Global Warming and the Layman

It’s been said that when the only tool you have is a hammer, every problem looks like a nail. For politicians, bureaucrats, and many activists, when the only tool they have is coercion, the cause of every problem looks like too much freedom.

Make no mistake: if you are committed to accomplishing your social goals by using government power, then by definition your only tool is the hammer of coercion. An observation often attributed to George Washington has it that “Government is not reason; it is not eloquence; it is force.” And when people choose to use government to accomplish their goals, they are choosing to use force, not reason and certainly not eloquence.

True to form, governments at all levels have affirmed Washington’s reputed observation. But I think state and local governments are the biggest culprits. Issues like eminent domain and gun control, where constitutional issues arise, tend to get widespread publicity and public scrutiny, but routine tyranny occurs with respect to day-to-day issues that are often considered legitimate local-government functions.

If a local grocery store’s produce department runs out of oranges or its deli has a shortage of roast beef, it doesn’t blame its customers for having too much freedom to purchase fruit and meat. It simply finds a way to accommodate that freedom and meet the demand. That’s not how governments respond.

The People Are Nails

Typical is Raleigh, North Carolina’s approach to solving its drought and water-shortage problems. The city for much of the past year has been running short of water, one of only a handful of goods it is charged with supplying. Its response has been to blame people for having too much freedom, including the freedoms to water their lawns, wash their cars, power-wash their homes, and most recently, to enjoy the conveniences of a garbage disposal. In the name of solving its water shortage, Raleigh has passed an ordinance banning the installation or replacement of all garbage disposals. Instead of city politicians’ asking themselves, “How can we accommodate our citizens’ free choices?,” as the grocery store would, they immediately blame the problem on those freedoms. This is their nail, and their solution is the hammer of force.

Here’s another example. For years, city and regional transportation planners have faced traffic congestion in larger cities and medium-size communities around the country. Traffic congestion is much like a water shortage—it is a shortage of road space. Governments have massively failed to adequately accommodate people’s free choices regarding their transportation needs. And as with the water shortage, politicians think the traffic problem is caused by too much freedom, specifically, too much freedom in the use of cars.

Many states, instead of better managing the supply of roads, have adopted an approach euphemistically known as transportation-demand management (TDM). As the Nevada Department of Transportation describes it, TDM “is a general term for actions that encourage a decrease in the demand for the existing transportation system.” And as noted by the North Carolina Department of Transportation, “[M]ost TDM strategies deal with the modification of travel behaviors.”

Ultimately, TDM is a collection of policies meant to force people out of their cars, either directly or through artificial incentives, and onto public transportation. But this is only feasible when people live in high-density communities. So not only does their freedom to make transportation decisions need to be “modified,” but so does their freedom to choose living arrangements. Along with transportation-demand management comes “housing demand management” and “land-use demand management.” To accommodate public-transportation systems and to discourage driving, TDM typically includes new zoning laws intended to cram people into areas with dozens of housing units per acre. Transportation planners have taken it on themselves to substitute congested living arrangements for congestion on the roads.

According to transportation planners in North Carolina the “vision [of TDM] extends far beyond public transportation. It embraces notions of how we want to live in the 21st Century and what we want our neighborhoods and communities to become.”

It is quite clear that the “we” being referred to is not individual citizens and families. It is instead the paternalistic “we” of bureaucrats and government planners.

Environmental Regulation Is the New Hammer

Probably the most pernicious example of government-as-force-not-reason is the approach now being taken by many state governments ostensibly to fight global warming. While the federal government is looking at broad-brush policies such as carbon taxes or cap-and-trade programs, state-level policies are much more aggressive in using global warming as an excuse to micromanage people’s choices. More than 25 states have hired an advocacy group, the Center for Climate Strategies (CCS), that poses as an objective consultant to help devise policies that would force people to modify their behavior in order to reduce carbon-dioxide emissions. CCS can charge bargain-basement consulting fees to the states because it is subsidized by a host of statist left foundations, including the Rockefeller Brothers Fund, Heinz Endowments, Turner Foundation, and Z. Smith Reynolds Foundation. (See the critical website www.climatestrategieswatch.com.)

While there are competing theories regarding the causes of global warming (for example, see research by Duke physicists Nicola Scafetta and Bruce West on the influence of the sun on climate change at http://tinyurl.com/rs2hp), in hiring CCS, the states agree not to discuss these alternative theories when formulating policy. In fact, they must agree that the science is settled with regard to human-generated greenhouse gases.

This is ominous to those concerned about freedom because other theories, such as those related to natural climate variation, would not imply the need for coercive restrictions on people’s lifestyle choices. In other words, the only theory of global warming that these states are considering is the one that has freedom as the culprit. It is important to note that everything humans do, including breathing, emits carbon dioxide. The implication then is that all production and consumption activities are up for scrutiny and possible coercive control. The proposals CCS suggests to every state are generally the same. They include restrictions on the kinds of cars people can drive, fuels they can use to heat and light their homes, and auto insurance and appliances they are allowed to buy. The size of the lots they can build houses on and the size of those houses are also subject to the proposed restrictions.

The actual goals of such proposals are questionable. Indisputably, these restrictions will not reduce global temperatures, even if the whole world adopted them—and state officials and their CCS consultants know it. This implies that these proposals are not really about global warming, but are instead exercises in what could be called “lifestyle imperialism.” Like laws against homosexuality or gambling, they are in fact an attempt to legislate morality.

Given the principles behind the founding of the United States, policymakers need to view individual freedom as a moral imperative. They should realize that it is not the role of government to solve all conceivable problems but to protect liberty. To the extent that government takes on a problem-solving role, the question decision-makers should continually ask themselves is: “How can we achieve our objective without limiting people’s freedom to live as they see fit?” Unfortunately, many, if not most, bureaucrats and policymakers seem more interested in asking which freedoms they can get away with limiting.

Related posts:

1. President Set Back on Climate-Change Deal
2. Higher CO2, More Global Warming, and Less Extinction?
3. Land-Use Controllers Never Quit

Some people were relieved to finally hear the other side: “Thank you, thank you, thank you for your report on climate change. . . . I’m sick of hearing ‘the debate’s over’ and writing anyone who differs off as a nut. This report showed the true nature of the debate and true lack of consensus, something you can’t get anywhere else.”

Others were just mad: “Your 20/20 report on Global Warning made me sick. . . . Your sarcastic ridiculing of Al Gore . . . I have lost all respect for you and your reporting.”

Yes, the globe has warmed, but whether severe warming is imminent and whether human beings are causing it in large degree are empirical questions that can’t be answered ideologically. The media may scream that “the science is in” and the “debate is over,” but in fact it continues vigorously, with credentialed climate scientists on both sides of the divide. The Intergovernmental Panel on Climate Change (IPCC) may present a “consensus view of scientists,” but the “consensus” is not without dissent.

“Consensus is the stuff of politics, not science,” says Paul Reiter of the Pasteur Institute.

The scientific process ought to be left to play itself out with as little political bias as possible. Politically influenced research is poison to science.

Part of the problem is the IPCC itself. Reiter points out, “It’s the inter-governmental panel on climate change. It’s governments who nominate people. It’s inherently political. Many of the scientists are on the IPCC because they view global warming as a problem that needs to be fixed. They have a vested interest.”

Phillip Stott, professor of biogeography at the University of London, says that the global-warming debate has become the new “grand narrative” of the environmental movement. “It’s something for people to get excited about and protest. It’s more about emotion than science.” While the scientists thrash things out, what are the rest of us to do?

There are good reasons to begin with a presumption against government action. As coercive monopolies that spend other people’s money taken by force, governments are uniquely unqualified to solve problems. They are riddled by ignorance, perverse incentives, incompetence, and self-serving. The synthetic-fuels program during the Carter years consumed billions of dollars and was finally disbanded as a failure. The push for ethanol today is more driven by special interests than good sense—it’s boosting food prices while producing a fuel of dubious environmental quality.

Even if the climate really needs cooling down, government can’t be counted on to accomplish that. Advocates of carbon taxes and emissions trading talk about reducing CO2, but they promise no more than a minuscule reduction in temperature. Temperature reduction is supposed to be the objective.

In fact, even drastic plans to cut the use of carbon-based energy would make only a negligible difference. As John Christy, director of the Earth System Science Center at the University of Alabama in Huntsville and a member of the United Nations Intergovernmental Panel on Climate Change, wrote recently in the Wall Street Journal:

“Suppose you are very serious about making a dent in carbon emissions and could replace about 10 percent of the world’s energy sources with non-CO2-emitting nuclear power by 2020—roughly equivalent to halving U.S. emissions. Based on IPCC-like projections, the required 1,000 new nuclear power plants would slow the warming by about 0.2 degrees Fahrenheit per century. It’s a dent.”

I agree with Stott, who says, “The right approach to climate change is adaptation—and the way to do that is to have strong economies.”

We will have a strong economy if we don’t give up our freedom and our money to fulfill the grand schemes of big-government alarmists.

Related posts:

1. Book Review ~ The Satanic Gases: Clearing the Air about Global Warming by Patrick J. Michaels and Robert C. Balling
2. Cool on the Idea of Cooling Global Warming
3. Climate Change: What if They’re Right?

Thus far the typical libertarian response to the growing clamor has been to challenge the science behind it. Now it really is the scientific consensus that global warming occurred during the twentieth century. What is not so obvious is that (1) humans caused this warming and (2) this warming is necessarily bad.

Although it is interesting to explore the question of whether science has been perverted in the cause of environmentalism, there is a danger for libertarians in pinning their entire case on this strategy. After all, every serious student of science knows that when it comes to empirical claims, we never achieve certainty. For example, even if today one thinks that there are insurmountable problems facing the theory of manmade global warming, one still must accept the possibility that new evidence or theoretical advances could indicate that the environmentalists are perfectly right. Another possibility is that there is some other, similar disaster lurking unsuspected.

For these reasons, I believe it is crucial to accept provisionally, for the sake of argument, the scientific claims behind the case for manmade global warming. In the present article I will demonstrate that it still would not follow that the taxes and other regulations typically proposed by greens are the best way to address the problem. Just as the free market is still the optimal economic arrangement, regardless of how many citizens are angels or devils, so too does the free market outperform government intervention, regardless of the fragility of Earth’s ecosystems.

When trying to determine if the free market is to blame for possibly dangerous carbon emissions, a logical starting point is to list the numerous ways that government policies encourage the very activities that Al Gore and his friends want us to curtail.

The U.S. government has subsidized many activities that burn carbon: it has seized land through eminent domain to build highways, funded rural electrification projects, and fought wars to ensure Americans’ access to oil. After World War II it played a key role in the mass exodus of the middle class from urban centers to the suburbs, chiefly through encouraging mortgage lending.

Every American schoolchild has heard of the bold transcontinental railroad (finished with great ceremony at Promontory Summit, Utah) promoted by the federal government. Historian Burt Folsom explains that due to the construction contracts, the incentive was to lay as much track as possible between points A and B—hardly an approach to economize on carbon emissions from the wood- and coal-burning locomotives. For a more recent example, consider John F. Kennedy’s visionary moon shot. I’m no engineer, but I’ve seen the takeoffs of the Apollo spacecraft and think it’s quite likely that the free market’s use of those resources would have involved far lower CO2 emissions. While myriad government policies have thus encouraged carbon emissions, at the same time the government has restricted activities that would have reduced them. For example, there would probably be far more reliance on nuclear power were it not for the overblown regulations of this energy source. For a different example, imagine the reduction in emissions if the government would merely allow market-clearing pricing for the nation’s major roads, thereby eliminating traffic jams! The pollution from vehicles in major urban areas could be drastically cut overnight if the government set tolls to whatever the market could bear—or better yet, sold bridges and highways to private owners.

Of course, there is no way to determine just what the energy landscape in America would look like if these interventions had not occurred. Yet it is entirely possible that on net, with a freer market economy, in the past we would have burned less fossil fuel and today we would be more energy efficient.

Even if it were true that reliance on the free-enterprise system makes it difficult to curtail activities that contribute to global warming, still the undeniable advantages of unfettered markets would allow humans to deal with climate change more easily. For example, the financial industry, by creating new securities and derivative markets, could crystallize the “dispersed knowledge” that many different experts held in order to coordinate and mobilize mankind’s total response to global warming. For instance, weather futures can serve to spread the risk of bad weather beyond the local area affected. Perhaps there could arise a market betting on the areas most likely to be permanently flooded. That may seem ghoulish, but by betting on their own area, inhabitants could offset the cost of relocating should the flooding occur. Creative entrepreneurs, left free to innovate, will generate a wealth of alternative energy sources. (State intervention, of course, tends to stifle innovations that threaten the continued dominance of currently powerful special interests, such as oil companies—for example, the state of North Carolina recently fined Bob Teixeira for running his car on soybean oil.)

Private insurers have a strong incentive to assess the potential effects of global warming without bias in order to price their policies optimally—if they overestimate the risk, they will lose business to lower-priced rivals; if they are too sanguine about the dangers, they will lose money once the claims start rolling in. Individuals finding their homes or businesses threatened by rising sea levels will find it easier to relocate to the extent that unfettered markets have made them wealthier. Industrial manufacturers, as long as they are held liable for the negative environmental effects of their production processes—a traditional common-law liability from which state policies intended to “promote industry” have often sought to shield manufacturers—will strive to develop technologies that minimize the environmental impact of their activities without sacrificing efficiency. Government interventions and “five-year plans,” even when they are sincere attempts to protect the environment rather than disguised schemes to benefit some powerful lobby, lack the profit incentive and are protected from the competitive pressures that drive private actors to seek an optimal cost-benefit tradeoff.

If the situation truly becomes dire, it will be free-market capitalism that allows humans to develop techniques for sucking massive amounts of carbon out of the atmosphere, and to colonize the oceans and outer space. Beyond these futuristic possibilities, the obvious responses to global warming—such as more houses with AC, sturdier sea walls, and better equipment to evacuate flooded regions—are again only feasible when the free market is unleashed.

It is the poorest people and nations that stand to suffer the most if the worst-case scenario for global warming is realized, and the only reliable way to alleviate their poverty, and thus help protect them from those effects, is the free market.

Can the Market Meet the Threat Head-On?

In the first section I summarized some of the ways governments inadvertently contribute to the very activities that allegedly cause dangerous global warming; in the second I sketched some of the ways that free markets allow humans to better adapt to climate change. However, I haven’t really tackled the problem directly. Am I conceding that with a worldwide problem the market—which is just dandy for one-on-one interactions—can’t match the concerted “will of the people” working through their elected representatives for a common solution?

Of course not. Even when economic transactions generate so-called negative externalities (activities that shower harms on third parties), I still contend that the free market is the best institution for identifying and reducing the problems.

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.

To cite just one recent, significant example, Temple Grandin, a notable advocate for the humane treatment of livestock, asserts that McDonald’s is the world leader in improving slaughterhouse conditions. While many executives at the fast-food giant genuinely may be concerned with the welfare of cattle, pigs, and chickens, undoubtedly a strong element of self-interest is also at work here, as the company realizes that corporate image affects consumers’ buying decisions.

But that self-interest does not negate the laudable outcome of the pressure McDonald’s has applied to its suppliers to meet the stringent standards it has set for animal-handling facilities. Similarly, to the degree that the broad public regards manmade global warming as a serious problem, companies will strive to be seen as “good corporate citizens” that are addressing the matter. And this isn’t ivory-tower speculation on my part—I can see the “green friendly” ads already.

Critics of libertarianism sometimes denigrate it as a political program of “market fundamentalism” that, if put into practice, would reduce all human values to the price they can fetch as mere commodities. But that is a caricature of the social arrangements advocated by any sensible libertarian. The great figures of classical-liberal and libertarian thought have always recognized the vital contributions that nonmarket institutions, such as churches, families, charities, social clubs, communities of scholars and their students, art foundations, conservation groups, neighborhood associations, and youth athletic leagues, make to the healthy functioning of a free society. What libertarians offer as an alternative to statism is not a social order that judges every human interaction solely on a miserly calculation of profit or loss, but a society in which every desirable form of voluntary association is allowed to flourish, free from coercive interference by the state.

Customary Law

Besides the samples listed above, most libertarians recognize private or customary law as another important, nonmarket source of social order. A historical case in point is the Anglo-American common-law tradition in which legal norms evolved spontaneously from the customs of the people to whom it applied, rather than through legislation and state planning deliberately aimed at achieving some “public good.” The many centuries during which the common law sustained civic order in the face of inevitable divergences between individual citizens’ own interests demonstrate that a successful legal order does not inevitably require state sponsorship. The common law has shown itself to be fully capable of dealing with a number of issues that, while not exhibiting the worldwide scope of global warming, are still similar to our present concern in arising from the cumulative effects of many individual actions, each of which, regarded in isolation, appears to be unproblematic and not subject to legal sanction. For instance, the salmon-fishing streams of Scotland are a valuable natural resource, and the communities along them have developed quite successful institutions for ensuring the value of the streams is maintained, including private policing and legal penalties for overfishing and for polluting the water.

The many cases in which voluntary solutions to problems of collective choice have worked pose an empirical embarrassment for those who argue that “public goods” must be provided by the government. Most advocates of compulsory solutions to pollution abatement, for example, would assert that voluntary efforts will be vitiated by “free riding.” If individuals are not forced to contribute their fair share toward addressing these problems, this argument runs, each person rationally will hold back and hope others will pay for the proposed solution, since any free riders would gain the benefits (such as clean air) anyway. Since almost no one likes to be “the sucker,” it follows that the amount of resources devoted to the provision of the public good will fall woefully shy of the total that would be available if each person gave the amount he’d be willing to give if only he could count on everyone else pitching in equally. The sole solution that can be imagined is for the members of a society to create a “social contract” by which they are forced to pay for pollution abatement.

However, Anthony de Jasay notes in his book The State that this argument is severely flawed. If people cannot solve public-goods problems through voluntary cooperation, how can they rely on politicians’ promises to do so? There is no external authority to enforce those promises. There is only public opinion, the same thing that would enforce voluntary solutions. Moreover, government is itself a “public good” in the sense that free riders benefit from the efforts of those who try to get the government to produce public goods such as clean air.

Is Temperature a Public Good?

Another consideration is that the earth’s temperature isn’t such a public good after all. That is, certain people really do have more at stake, particularly if the warming is moderate. For example, if Manhattan became submerged because of rising sea levels, that calamity would not affect every human being equally. The residents of Manhattan and the owners of its skyscrapers would be hurt far more than people living in inland China. Because all the various potential dangers of global warming affect particular people more intensively than others, it is these groups that (in a free market) would have the incentive to reduce CO2 concentrations. For example, if rising sea levels would cause $10 trillion in damage to a comparatively small group of wealthy individuals, that’s a huge “pie” that the wealthy can offer others to motivate them to reduce emissions.

Despite my optimism about the potential to deal with environmental problems through voluntary means, I don’t wish to be misunderstood: If the official global-warming story is true, it presents a serious problem that humanity will find difficult to solve through voluntary means. But this isn’t a strike against voluntarism—of course a difficult problem will be difficult to solve! By the very same token, the government doesn’t do a terrible job at collecting stray dogs, because that’s a very simple task. When it comes to harder assignments, such as stopping terrorism or reducing teen pregnancy, the government’s record is quite a bit worse.

The very features of the official global-warming scenario that hamper purely private solutions would apply equally to government efforts. For example, even if the U.S. government passed draconian measures at home, that alone wouldn’t be enough if China and Indiadon’t follow suit. And just as private companies in a free market may have an incentive to pollute if they can get away with it, so the state, under the influence of special-interest groups and run by leaders always tempted to ignore the public good in favor of increasing their own power and wealth, can have incentives to allow more pollution than is optimal. (It should be clear the “best” amount of pollution is not zero, because even using fire to cook generates some pollutants, and I doubt that anyone but the most misanthropic, fanatical nature worshippers want to reverse all of the last 40,000 years of human progress.)

As in all debates over public versus private choice, it’s inappropriate to measure a realistic free-market response to global warming against an idealized government program. We must try to envision what real people would do if their property rights were respected and compare that scenario with the probable outcome of actual politicians in today’s world being given a blank check in the name of saving the earth.

Government programs don’t ameliorate world poverty or sickness, and no libertarian would deny that these are serious problems. So even if manmade global warming is a real threat, why should we expect governments to get it right on this issue?

Related posts:

1. Global Warming Revisited
2. Higher CO2, More Global Warming, and Less Extinction?
3. Global Warming and the Layman

Here’s some self-promotion: the December 21, 2006, issue of The New York Review of Books published this letter of mine—a letter saturated with the obvious influence of FEE’s founder, Leonard Read:

I’ve read few passages in your pages that are as mistaken as Bill McKibben’s assertion that “the technology we need most badly is the technology of community—the knowledge about how to cooperate to get things done. . . . We Americans haven’t needed our neighbors for anything important. . . .” (“How Close to Catastrophe?,” NYR, November 16.)

Each of us cooperates daily with countless others—neighbors, fellow citizens, foreigners—to ensure not only our prosperity but our very existence. My mind boggles at the number of people who cooperated to make available to me, for example, the shirt on my back. Cotton growers in Egypt; fashion designers in Italy; textile workers in Malaysia; merchant marines from around the globe; investment bankers in Manhattan; insurers in Hartford; truck drivers along the East Coast; department store executives in Seattle; security guards and retail clerks in Virginia—these people and millions of others cooperated so that I might wear an ordinary shirt. Ditto for my house, my food, my subscription to The New York Review of Books.

For McKibben to say that “cheap fossil fuel has allowed us all to become extremely individualized, even hyperindividualized” is to be blind to the amazing and vast system of cooperation that today spans the globe. Clearly, we have, in spades, “knowledge about how to cooperate to get things done.”

Bill McKibben responded:

Donald J. Boudreaux’s response proves precisely the point I was trying to make—and it says something about the blinders that too many economists have strapped on. We do cooperate, unconsciously, to promote our individual self-interest; Chairman Boudreaux’s slightly less elegant restatement of Adam Smith’s remarks about the butcher and the baker are [sic], as far as I can tell, not in serious dispute. What is in dispute is whether this cooperation carries over into more crucial matters—like keeping the planet from overheating in the next decade. Since my article came out, the British government has released a report estimating that the economic cost of global warming will exceed the combined impact of both world wars and the Great Depression of the 1930s. So far, there is precious little sign of our communities coming together to meet this challenge—politically, economically, culturally. Which doesn’t prove Smith—or even Boudreaux—wrong. Just incomplete.

I wonder if Mr. McKibben really believes that keeping the planet from overheating in the next decade is “more crucial” than is cooperation within markets. If he truly holds this belief, then he doesn’t begin to appreciate how marvelous are the everyday achievements of markets and how utterly dependent we all are on the continuation of this cooperation. Put simply, without this cooperation, billions of us would soon die. Without the food, clothing, shelter, sanitation, and medications that this global cooperation produces daily, only a tiny fraction of those of us now breathing would still be breathing three or four years from now. And none of us, even those who manage to stay alive, would live as comfortably, as cleanly, and as securely as we live today. This fact is true regardless of how important it is to save the planet from “overheating” between now and 2017.

Even if we assume that global warming will cause massive damage—even if we accept as inevitable the National Resources Defense Council’s “worst-case scenario” that “global warming could make large areas of the world uninhabitable and cause massive food and water shortages, sparking widespread migrations and war”—saving the world from global warming clearly is not more crucial than maintaining the vast division of labor and market-inspired cooperation that spans the globe.

McKibben’s and many other environmentalists’ failure to understand that markets bring us not only prettier trinkets and more convenient appliances but also the means with which we maintain our very lives leads these persons to discount the market’s importance to humanity. They see only capitalism’s (real or imagined) costs and are blind to its indispensability. This blindness, in turn, causes many environmentalists to endorse policies that, in fact, would likely kill and impoverish many more people than would be killed and impoverished by global warming or other (real or imagined) threats to the natural environment.

This blindness of environmentalists—often borne of a mindless, romantic adoration of nature—underpins the reluctance of those of us who recognize the true significance of capitalism to yield power to governments to tackle global warming. We worry that this power will kill the goose that’s laying our golden eggs.

Exaggerated Worry?

If you think that such a worry is exaggerated, recall that it’s not only globe-trotting anti-commerce intellectuals such as Bill McKibben who want capitalism to be severely reined in. In his book Earth in the Balance, former U.S. Senator and Vice President Al Gore asserted that we are suffering an “environmental crisis” that can be avoided only if we “drastically change our civilization and our way of thinking.”

“Drastically change our civilization”?! Scary stuff. Gore wants us to scale back significantly our reliance on markets, trade, and industrial activities in order to lessen our “footprint” on the earth. We can, no doubt, make our environmental footprint much smaller, but how great a benefit will this achievement be if it returns us to the ages-old condition of high mortality and high morbidity?

Undoubtedly, most people who seek government action to fight global warming are not Rousseauian romantics in the mold of Bill McKibben or posturing politicians such as Al Gore. Most people are “reasonable.” They envision no drastic changes to our civilization, just a marginal tempering of industrial activity that results in marginal improvements in the natural environment’s future prospects. And I concede that cost-effective steps to reduce global warming might, in principle, be possible at the margin. But I’m sure that it’s also true that most of the “reasonable” people who demand action against global warming are unaware of just how critical is the role that capitalism plays in improving the lives of ordinary men and women.

I also worry that when “reasonable” people empower government to “solve” the global-warming problem, the risk is high that anti-commerce environmentalists will form an alliance with politicians and bureaucrats who welcome excuses to boost their power. Such an unholy alliance will consistently exaggerate the magnitude of the problem and understate the costs of “solving” it.

Given the widespread ignorance of the benefits of capitalism along with political realities and the hysterical language used by the likes of Al Gore—who, let’s be clear, is not on the fringes of the U.S. power structure—it’s a perfectly legitimate stance for truly reasonable people to conclude that the best policy regarding global warming is to neglect it and to let capitalism continue its uninterrupted history of making us healthier and wealthier.

Related posts:

1. Don’t Look to Government to Cool Down the Planet
2. Global Warming and the Layman
3. Global Warming Revisited

The itching question becomes: What do we do? If your answer is “Get the government to do something,” eight world-class economists will give you a failing grade. The economists are Jagdish Bhagwati, Bruno Frey, Justin Yifu Lin, Nancy Stokey, and Nobel laureates Vernon Smith, Douglass North, Robert Fogel, and Thomas Schelling. They comprise the panel assembled by the Copenhagen Consensus Center, headed by Bjørn Lomborg, author of The Skeptical Environmentalist. In 2004 the panel, which operates under the auspices of the Copenhagen Business School, inquired into which of the world’s major problems would be most soluble (measured by bang for the buck) if $50 billion were available for the task. On a list that included diseases, malnutrition, and economic problems, the group ranked global warming dead last. In the language of cost-benefit analysis, government fixes for climate change promise big costs with little to no benefits. (The top-ranked proposal was control of AIDS/HIV. A complete analysis of the rankings is found in Global Crises, Global Solutions, edited by Lomborg. The panel will meet again in 2008.)

But you don’t need Nobel laureates to explain why government solutions to climate change are wrong-headed. Let’s linger on the main solutions offered: cap-and-trade and carbon taxation.

A Kyoto-style cap-and-trade system is one in which a government committee establishes an “acceptable” level of greenhouse-gas emissions for relevant industries. If a plant releases greenhouse gases in excess of the standard, it may go into the “carbon market” and purchase units from other companies that have emitted less than the standards call for and so can sell credits. Thus the process uses quasi-market mechanisms to cut emissions—purportedly minimizing costs to the plants.

Capping might work well to clean up, say, the Chesapeake Bay. But if applied globally the problems are manifold. First, no cap-and-trade system yet conceived has been able to promise a significant reversal in warming trends. (Even a number of Kyoto signatories have admitted this fact.) To bring about an abatement of warming (based on current climate science), cap-and-trade standards would have to be set so high that many industries would be crippled, with unforeseeable ripple effects, potentially leaving millions without work in the developed world. If there are fewer economic resources as a result of the standards, it will be harder to adapt to local global-warming problems.

Second, a truly effective cap-and-trade system would require virtually unanimous agreement from the developing world as well. If developing countries were to opt out, their industries would produce more while industries in the developed world produced less. So emission levels would remain unchanged at best. On the other hand, even if the emerging giants—for example, China, India, Russia —were somehow convinced to agree to a cap-and-trade scheme, their development would be severely retarded, leaving millions destitute.

Third, unanimous international agreement, even if it wouldn’t sound the death knell for the developed economies, would kill the hopes of the poorest nations.

But unanimity is not feasible, given the incentives to defect. And temptations to do so by high-growth industrial newcomers like China would be especially great. Cap-and-trade would thus provide an indirect subsidy to the developing world—with all its dirty, less-sophisticated, carbon-emitting industries. Emitters would subsequently be encouraged to move to defectors’ shores—often to countries with poor political institutions—despite the risks. This outcome would mean little for economic growth in the developed world, force industrial collusion with corrupt governments in the developing world, and do nothing for climate-change abatement. (Indirect subsidies to poor countries may sound great to someone who cares about global redistribution; but it does not bode well for those keen to stop global warming.)

In short, an international cap-and-trade system would seem to offer an unpleasant choice of evils. Ad hoc attempts to lessen such evils after the fact would result in unintended consequences and epicyclical policies.

Carbon Taxes

What about carbon taxes? Overall, similar cost-benefit disparities affecting cap-and-trade apply also to taxes. But at least to some with a market orientation, taxes would have the effect of directly taxing a “bad” (greenhouse-gas emissions) rather than unpredictably taxing a “good” (such as revenues). Thus companies would pay to pollute, and the economic effects would be easier to predict and measure.

The U.S. government largely agrees, and in comparing the two schemes, it comes down largely on the side of taxes. According to the Congressional Budget Office’s issue brief “Limiting Carbon Emissions: Price Versus Caps” (March 15, 2005):

The cost of meeting a given cap on carbon emissions is likely to be difficult to estimate for at least three reasons. First, the cost of meeting a future cap would vary significantly with the amount of growth in carbon emissions in the interim. Those emissions are difficult to predict: they are a function of numerous factors, including population trends, economic growth, and energy prices. Second, policymakers have less information about the cost of controlling emissions than do the firms that create them. Third, the cost of meeting the future cap will depend on the technologies that are developed to reduce carbon dioxide emissions and the economic consequences of adopting those technologies—neither of which can be predicted with certainty.

But in terms of abatement, it’s not clear that taxes could reduce emissions as effectively as caps. In fact, most economists believe that a cap-and-trade system would have a more predictable (and forceful) effect on abatement—notwithstanding its effects on the economy. So, sort of like with Heisenberg’s Principle, it’s all in where you want your uncertainty.

Opting for Taxes

It is predictable that the government would opt for taxes: it likes the revenue. Similarly, “bootlegger and Baptist” coalitions—alliances of privilege-seeking firms and moralistic environmental activists—would benefit more from taxation than capping. Clever companies like Duke Power and Progress Energy have already begun to side with environmental groups to lobby government for carbon taxes instead of caps. Why? So they can benefit from their competitors’ taxation woes. (Progress and Duke have nuclear and natural-gas interests.) Alas, rent-seeking companies would turn right around and burn their natural gas for energy, only to leak methane, which has a 25-times greater greenhouse effect than carbon dioxide. Of course, methane and H2O emitters could be taxed too, but then you’re back to the overall problem of how much of the global economy you have to cripple before the globe cools down.

In any case, the Copenhagen Consensus panel and a number of other economic realists think the best thing we can do for climate change is to make local adjustments. (See “Living with Global Warming” by Indur Goklany, www.ncpa.org/pub/st/st278/.)

If we keep getting richer, we may find technological measures both for mitigating negative effects of climate change as well as for sequestering greenhouse gases. Until then, very few credible economists argue that we should slow growth or hobble the global economy—assuming, that is, the climate change skeptics are wrong. What we are left with, then, is an ironic symmetry between two sets of consensus: one that says man is warming the earth and one that says we’ll do best simply to adapt.

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2. Troubles Confront Senate Climate-Change Bill
3. Climate Change in the Great American Desert