When Pigous Fly


All due respec’ to Tim, of course, but there have been several studies that suggest that the marginal social cost of emissions taxes is higher than the tax itself.  In other words, the excess burden of the new taxes forms a deadweight loss to the economy greater than the value of the externalities avoided.  For example, one study found that a $5 per ton carbon tax would entail social welfare losses of $25 a ton.  Driving and energy use are that valuable to the economy.  So it is quite possible that the optimal tax on energy use should be negative, to encourage more of them.  More on this here.

All of which points to the Coasean idea that there are some externalities where we should just choose to absorb the costs and not worry about them. So, no, Jerry and Peter are not nuts -  the market has considered the externalities and decided it’s not worried about them.  You can get empirical evidence of this by asking just about anyone whether they’d be willing to consider an extra tax on gas of 60c.  There’s a reason why legislators want to dress taxes up in cap and trade schemes…

Not Nuts, No...


Jerry Taylor and Peter Van Doren are not nuts, no, but they are missing something. Spot on the money in fact except for one point:

He is either demanding that we surrender our evaluation of the relative worth of gasoline in favor of his (no thanks), asserting that we are too stupid to know what we want (wrong), or positing that there is some external cost associated with gasoline consumption, not reflected in its price, which leads us to consume more gasoline than is optimal.

The thing is we do know that there are external costs associated with gasoline consumption which are not reflected in its price and thus lead to a higher than optimal consumption. There’s the (hotly disputed, I agree) effect of CO2, or particularates, of NOX, or congestion, of noise…I’d try to add them all up but fortunately it’s already been done:

This paper develops an analytical framework for estimating the second-best optimal gasoline tax, accounting for passenger vehicle externalities and the efficient balance between excise taxes and labor taxes in financing the government’s budget. We estimate the optimal tax for the United States at $1.01/gallon, which is 2.5 times the current rate;

Yes, there are huge public choice and Hayekian information problems with allowing politicians anywhere near these sorts of calculations but I’m not aware of anyone who currently seriously proposes that the gas tax in the US is either just right or too high.

Sigh, if only I were either an economist or a public commentator, I too could join the Pigou Club .


Energy-Debate Time?


The Green Gospel


It’s difficult to follow the global-warming debate for long without running headlong into theological disputes. Yesterday Kathryn linked to an interesting article the Independent Catholic News, entitled Is Catholicism Really Green? It’s written by a Catholic named Mary Colwell.

Colwell complains that the Catholics are not consistently green, and hopes things will improve. She speaks as a Catholic, but I wonder where she’s getting her theology. She tells readers: “What is the true nature of our relationship with the earth? Get this right and everything else will begin to fall into place.” That’s the Green Gospel speaking. Jesus didn’t give the relationship between human beings and the Earth pride of place. He said that the first and greatest commandment is to love God, and the second is to love our neighbor as ourself. Everything follows from that. Christians of all stripes should take seriously our stewardship of the Earth. But our relationship to the Earth is not the first principle from which everything else follows.

Greenpeace is down wif da kids


This Greenpeace video manages to be creepy and hilarious at the same time.  It reminds me of the Children’s Crusade, although if the innocents then had been as threatening as this one, perhaps fewer would have been sold into slavery.

Someone on The Daily Show needs to do something with this.


Les Abeilles ! Courez pendant vos vies! (The bees! Run for your lives!)


An article in today’s London Telegraph says that France is being attacked by swarms of giant Asian hornets, and that it’s caused by global warming.

 Now there’s a Yellow Peril for you. And, as the things spread, it becomes apparent that the French don’t know about Le Pesticides.

Is There An Economist In The House?


KLo asked on Sunday:

Will every presidential campaign need a climate expert on staff this cycle?

I don’t see why this shouldn’t happen. It would obviously be helpful if such experts were in fact expert: able to point out that worrying about sea level rises of tens of meters is a bit like telling Columbus not to set sail because in 500 years time 40,000 people a year will die in automobile crashes (for that is the correct timescale, according to the IPCC, if it indeed ever happens).

Rather more important for the campaign staffs though would be an economist or two. For the sake of argument, let us say that everything the IPCC tells us is in fact correct. Climate change is happening and we’re causing it (roughly my own view). At this point we have no further need for climate experts: we’ve defined the problem and now we need experts in solving that problem. This involves trade offs, working out how much effort and cost now will lead to how much benefit for those living in the future. We have a science that is involved with such questions, indeed, is based upon them. It’s economics that we need, now that climatology has done its work.

But then I’ve not come across a presidential campaign yet that wouldn’t be improved by the presence of a rational economist or two, if only the candidates would actually listen to them.

Is Catholicism Green?


Make a Movie, Get an Oscar Ph.D!


So: The University of Minnesota hopes to drum up some attention for itself by giving Al Gore an honorary degree for his work in climatology. The article quotes a spokesperson for the University offering two reasons for the offer: “He’s in the news and is a legitimate expert on a pressing issue of global concern, climate change.” Hmm, let’s see… “in the news” or “legitimate expert”—I wonder which of those two reasons is more pressing for the university?

Of course, the students get it. The article quotes one freshman shrugging off the rumor by saying, “It’s mainly a publicity thing”—a pretty accurate description, I think, of much of Gore’s global warming shtick.

All Academic Honors


Michael Crichton


From a reader: 

I watched Charlie Rose’s interview of Michael Crichton last night.  Very interesting.  Charlie Rose is usually pretty non-confrontational, but when he and Crichton started discussing global warming–Rose got increasingly defensive.  Crichton stuck to his guns, saying he acknowledges the planet is warming, it has gotten about 0.7 degrees warmer in 100 years, that CO2 is a greenhouse gas and has increased 30% in the last 100 years, and we can expect the planet to warm some more.  His problem with the global warming problem is the evidence is not being scientifically verified and that the problem is far far less than people make it out to be.  He does not accept catastrophic scenarios.  Crichton felt compelled to write on the topic after he reviewed the data and then challenged many of the scientists involved to explain away his doubts.  They could not do so.   When asked about Al Gore, Crichton said he likes Al personally very much, but that an Inconvenient Truth is not accurate and the 20 foot sea level rises are not a legitimate threat.  He basically said, as diplomatically as possible, that Al Gore is relying too much on “experts” and has not verified this data himself.   Crichton said people want to believe the worst and that is a driving factor in global warming.  At dinner parties saying global warming is not a problem brings yawns or angry responses–everyone gets interested and animated when you say it is really bad.  Environmental issues are highly charged emotionally so people often forget to be rational.  Yes, imposing carbon controls and fuel economy are important and worthy things to do (within reason), but to spend literally trillions of dollars on this issue is nuts, compared to the host of other serious issues that need to be addressed in the world. 

Tragedy of the Ocean Commons


A real environmental concern I spend a lot of time worrying about is the state of the world’s fisheries. Thanks to the lack of genuine oceanic property rights, it’s a real tragedy of the commons out there as each fishing boat tries to tak as much catch as it can before another boat does. Yet the tragedy is made worse by the fact that much of the deep-sea overfishing is directly caused by government subsidy:

“Eliminating global subsidies would render these fleets economically unviable,” said Rashid Sumaila, of the University of British Columbia in Canada, an economist who led the analysis of fishing subsidies. “From an ecological perspective we cannot afford to destroy the deep sea. From an economic perspective, deep-sea fisheries cannot occur without subsidies. The bottom line is that current deep fisheries are not sustainable.”
Until there is some sort of property-based solution to this that stores long-term value of fisheries for fishermen, the best hope fisheries have is an end to these subsidies. That’s why I’m happy to back the Cut the Bait campaign of the environmental group Oceana.

Shades of Gray


Did I detect a little global-warming skepticism in the New York Times Sunday?

The Climate 10 Commandments


Add another “shalt not” to the list of proscribed climate activities.

Thou shalt not consume meat… is now added to the existing list of “shalt nots,” such as…

Thou shalt not wear cotton, nor own thine own garb…nor tumble dry thine clothes.

Thou shalt not burn the lamps of Edison.

Thou shalt not fly, yeah, even to learn to heal others.

Thou shalt not smoke.

Thou shalt not be fat. (This one will be easier if number 1 is followed.)

Thou shalt not permit your sheep to fart.

Thou shalt not “sprawl.”

Thou shalt not drive.

Thou shalt not use instant-on appliances.

But really, we’re told, solving climate change will be easy!

Al Gore May Not Be in Running, But...


Here’s John McCain from Iowa on Saturday: “I believe climate change is real and we have to act.”

And here’s Rudy Giuliani earlier in the week:

When asked about former Vice President Gore’s Oscar-nominated documentary about global warming, “An Inconvenient Truth,” Mr. Giuliani criticized the film as lacking in solutions.

Mr. Giuliani said he believes global warming is occurring but is not sure how much is caused by humans, and he suggested America should look at expanding its use of nuclear power and other alternative energy sources.

Will every presidential campaign need a climate expert on staff this cycle? 

Hot Links


World leaders reach climate change agreement (UK Telegraph)

Shorter version: World leaders agree that global climate change is happening, and that they agree to agree it’s happening (which is important, mind you!), that the U.S. should really do something—preferably something that kneecaps the U.S. economy—to stop the global warming madness now (even if it probably won’t have much of an effect). The agreement is non-binding, but if close your eyes and click your Birkenstocks three times, you’ll believe that all it takes is agreeing to agree. Don’t you agree?

Why Al Gore will be the next President of the United State (Prometheus)

Did you ever wonder how it would be possible to be both terrified and completely bored at the same time? Roger Pielke, Jr. lays out what sci-fi book jacket writers would call “a disturbing vision of the near future.”

Theory vs. evidence


This press release reporting research by scientists at Ohio State, headed by David Bromwich, is a telling study in the relationship between theory and evidence in the global warming debate. Ideally, evidence should be able to count for or against a theory. But when dealing with an intellectual orthodoxy like human-induced, catastrophic global warming, evidence is treated quite differently. The theory functions as an interpretive grid: confirming evidence gets through, disconfirming evidence is explained away.

The report begins: “A new report on climate over the world’s southernmost continent shows that temperatures during the late 20th century did not climb as had been predicted by many global climate models.” This adds to the evidence that Dennis Avery and Fred Singer report in their new book Unstoppable Global Warming. In contrast, there is evidence of warming on the Antarctic Peninsula, which is farther north than most of Antarctica.

So there’s evidence against warming over the largest part of the continent, and there’s evidence for warming over the small, northerly part. The uninitiated might take this to mean that there is still an open debate on the subject of warming in Antarctica. But instead of stating this obvious point, the press release labors to fit the data into the theory. The scientists speculate that the ozone hole and strong winds might make the evidence for global warming more complicated down south. In any case, the theory itself isn’t in dispute:

“Bromwich said the disagreement between climate model predictions and the snowfall and temperature records doesn’t necessarily mean that the models are wrong.

“‘It isn’t surprising that these models are not doing as well in these remote parts of the world. These are global models and shouldn’t be expected to be equally exact for all locations,’ he said.”

It’s hard to have an honest debate about a theory when contradictory evidence is treated not as contradicting the theory, but as justification to look harder for evidence for the theory.

Weather vs. Climate


The Center for American Progress has just released a report explaining the difference between weather and climate. The gist of the report is that you can’t detect large-scale global warming merely by observing local weather. You may find yourself stuck in a blizzard, for instance, but you can still be darned sure we’re causing catastrophic global warming: “The chaotic nature of weather means that no conclusion about climate can ever be drawn from a single data point, hot or cold.” OK, but then why don’t the global warming Chicken Littles ever make this point when we’re having a heat wave?

Do You Think?


In his column today, Thomas Sowell comes to the defense of our friends at the American Enterprise Institute, currently under attack by the inhabitants of Planet Gore.

A genuine case of market failure


So the EU’s Emissions Trading Scheme is two years old. How’s it doing?

As US states mull setting up their own market to trade in carbon dioxide (CO2) emissions, they are casting a worried eye on the almighty crash in the European Union’s Emissions Trading System, the first and so far only significant market in carbon.

A year ago, CO2 was changing hands in the ETS at 30 euros (HK$304.30) a tonne, triple that at the market’s launch in January 2005.

Today, a tonne of CO2 can be bought for little more than one euro.

That’s the trouble with this market — if the price is high, emissions reduce, but customers face the squeeze and the carbon companies grow rich (as explained here by Fred Smith), but if the price is low, nothing much happens.

A far better way to reduce emissions would be by means of a carbon tax. The fact that so few people are talking about that — even in tax-happy Europe — speaks volumes about the seriousness of the issue.


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