Today, in the New York Times, Paul Krugman and Conservative wunderkind Ross Douthat present competing theories on why climate change legislation is dead this year. Douthat, surprisingly, admits that Global Warming is a genuine problem:
“…Conservatives who treat global warming as just another scare story are almost certainly mistaken. Rising temperatures won’t “destroy” the planet, as fear mongers and celebrities like to say. But the evidence that carbon emissions are altering the planet’s ecology is too convincing to ignore. Conservatives who dismiss climate change as a hoax are making a spectacle of their ignorance.”
Douthat blames the demise of legislation on conservatives; in his words there is “seemingly an unbridgeable gulf between the conservative movement and the environmentalist cause.” Of course, that framing of Global Warming is purposeful. In Douthat’s mind, Global Warming is a problem for bird watchers to worry about. In fact, Douthat provides the argument for inaction by making a dangerous assumption:
“…The assumption that a warmer world will also be a richer world — and that economic development is likely to do more for the wretched of the earth than a growth-slowing regulatory regime. But it’s also grounded in skepticism that such a regime is possible. Any attempt to legislate our way to a cooler earth, the argument goes, will inevitably resemble the package of cap-and-trade emission restrictions that passed the House last year: a Rube Goldberg contraption whose buy-offs and giveaways swamped its original purpose… Not every danger has a regulatory solution, and sometimes it makes sense to wait, get richer, and then try to muddle through.”
Douthat does not discuss the concept of externalities, and this is key. An externality is the result of a transaction that is borne by neither the buyer nor seller directly, but rather by a third party. In the case of our fossil fuel supplies, the externalities are only growing. In addition to greenhouse gasses, you have pollution from coal plants that has measurable health impacts on communities surrounding them, and you have the ghastly side effects of hydraulic fracturing of shale for natural gas. Of course, don’t forget about the oil spill in the Gulf of Mexico. The scary thing? We subsidize these fossil fuels. Douthat, however, just wants to rely on unending growth to solve all of our problems. Unfortunately, the Earth will not support unending growth. Douthat would be wise to read Tim Jackson’s Prosperity Without Growth.
Paul Krugman, on the other hand, points the blame for the demise of climate legislation in a more
believable and useful direction. In Krugman’s mind, we need to just follow the money:
“The economy as a whole wouldn’t be significantly hurt if we put a price on carbon, but certain industries — above all, the coal and oil industries — would. And those industries have mounted a huge disinformation campaign to protect their bottom lines. Look at the scientists who question the consensus on climate change; look at the organizations pushing fake scandals; look at the think tanks claiming that any effort to limit emissions would cripple the economy. Again and again, you’ll find that they’re on the receiving end of a pipeline of funding that starts with big energy companies, like Exxon Mobil, which has spent tens of millions of dollars promoting climate-change denial, or Koch Industries, which has been sponsoring anti-environmental organizations for two decades. Or look at the politicians who have been most vociferously opposed to climate action. Where do they get much of their campaign money? You already know the answer.”
That is the key of course. Producers of fossil fuels do not want to have to account for externalities of their products. They would rather society at large bear those costs. We are slaves to growth and slaves to consumption, unable to see the forest for the trees. As Krugman points out, 2010 is the hottest year on record. Inevitably we will need to place a cap on carbon emissions; the longer we wait, the more difficult it will be.
How do we solve these problems? Herman Daly, an ecological economist, offers some viable prescriptions. I will highlight one of the most important ones, which you will not see any politician advocate: ecological tax reform. Right now labor and capital (the value added) is taxed; ecological tax reform would end value added taxes and instead tax that to which value is added: the throughput of resources extracted from nature (depletion) and returned to nature (pollution). Ecological tax reform would reward entrepreneurs who are able to add value and innovation efficiently. We want to encourage value added, and discourage depletion and pollution. It sounds simple, but it goes against the neo-classical devotion to unending growth. As such, Douthat and his fellow conservative denizens continue to believe in Business as Usual.