The involvement of central banks in the climate wars deepens:
The world’s biggest central banks have identified nine ways in which they could use monetary policy to tackle the risks of climate change, including greener asset purchases and climate-related lending schemes, according to a new report.
The options were outlined by the Network for Greening the Financial System [NGFS], a group of 89 central banks and financial supervisors formed to support the Paris climate goals, in research published on Wednesday.
It advises central bankers on how to shield themselves from climate change risks and support their national governments’ green policies without diluting their main monetary policy tools. Each option was evaluated for its effectiveness in tackling climate risk and its impact on monetary policy.
There are a few things to note in those three brief paragraphs. The first is the reference to “risk,” a word that is being made to do a lot of work as central banks (and other financial regulators) try to justify the expansion of their reach into climate-related regulation. The second and the third are the references to the use of “greener asset purchases and climate-related lending schemes,” something that would appear to suggest that the current involvement by many central banks in the capital-allocation process will not just be confined to what many of them are now doing with interest rates. Last time I looked, central planning and capital allocation make for an unhappy combo.
I also note the reference to supporting “national governments’ green policies.” While it is appropriate in a democracy that green policies be decided at the governmental (if that means legislative) level, I cannot help wondering how easily this approach can be squared, in those jurisdictions where that is the rule, with central-bank independence.
Back to the FT (my emphasis added):
Global warming has shot up the agenda of major central banks in the past year. For example, the Bank of England has taken on a new mandate to make its monetary policy greener and the US Federal Reserve recently decided to join the NGFS. The European Central Bank has made the subject a significant part of its strategy review.
However, the question of whether central banks should use their multi-trillion-dollar bond-buying programmes to tackle climate risk by selling the bonds of big carbon emitters and buying more green bonds is one of the most contentious areas of monetary policy.
Rightly so. For central banks to buy up corporate bonds as part of their efforts to keep the economy on track is one thing (to be debated on another occasion), but for them to then use that power to pick favorites is quite another, and sets a distinctly ugly precedent. And it is not a course of action that can be viewed in isolation. As we are already seeing, large investors are using their clout either directly (or, by pressure on banks) indirectly to increase the cost of capital for climate sinners, something that is, de facto, a form of rule-making untrammeled by democratic constraints.
And the meddling is not likely to end there:
The FT (again, my emphasis added):
The NGFS sets out four ways central banks could change the rules on the collateral they accept from banks — such as cutting the collateral value of assets with higher carbon intensity — and examined three ways for central banks to make their own lending greener.
One would be to offer a lower rate on financing to banks that meet certain climate-related lending criteria — as the central bank of Bangladesh has been doing since 2009. A second is to lower the financing rate for banks that offer collateral with a smaller carbon footprint. Finally central banks could make access to their financing conditional on lenders meeting a threshold for green lending or for disclosing climate risk.
What that basically could mean is that banks will be forced to dedicate a portion of their capital to “green” lending (or, to put it more bluntly, to play sociopolitical games with depositors’ money) or, at the very least, to submit to a climate risk “disclosure” regime in which a response by the bank that it sees no short-term climate risk (other than flowing from regulatory change) will not, we can be sure, be acceptable.
Such disclosure is not, in any real sense, designed to inform, but rather to give activists a cudgel with which they can batter the banks.
In a talk (frequently cited by me) at a conference arranged by the European Central Bank (ECB), economist John Cochrane detailed what was wrong about the tack — a clear case of mission creep — now being taken with regard to climate issues by the ECB and “other central banks, or international institutions such as the International Monetary Fund, the Bank for International Settlements, and the Organization for Economic Co-operation and Development.”
And now, as noted above, the Fed has joined this happy, largely unaccountable band, something that Cochrane has . . . noticed.
And so, writing in City Journal earlier this month, he returns to the fray:
The Fed formally joined the Network of Central Banks and Supervisors for Greening the Financial System (NGFS). The New York Fed has set up a top level “Supervision Committee” on climate; its president, John Williams, stated that “Climate change . . . impacts all aspects of the Fed’s mission.” Fed governor Lael Brainard announced that the Fed will “ensure that financial institutions are resilient to climate-related financial risks.” She announced that “climate scenario analysis” would be applied to “a range of financial markets and institutions, as well as the potentially complex dynamics among them.” On March 23, Brainard announced a new board-level Financial Stability Climate Committee (FSCC) which will take a “macroprudential” approach— meaning everywhere in the financial system. And the Fed is a late addition to the alphabet soup of U.S. and global financial regulators in these efforts (these include ECB, BIS, IMF, FSB, BoE). The European Central Bank, in particular, proposes to judge bonds it will take as collateral by green standards and to buy so-called green bonds at subsidized prices.
Let us state a plain and obvious fact: climate change is an important challenge. But climate change poses no measurable risk to the financial system. This emperor has no clothes.
Climate means the overall pattern of weather—its averages and its range of ups and downs. Risk means unforeseen events. We know exactly where the climate is going over the horizon that financial regulation can contemplate. Weather is risky, but the range of weather over the next decade or so is well understood. More importantly, even the biggest floods, hurricanes, and heat waves have essentially no impact on our financial system.
Moreover, the financial system is only at risk when banks as a whole lose so much, and so suddenly, that they blow through their loss reserves and capital, leading to a run on their short-term debt. That a “climate crisis” could cause a sudden, unexpected, and enormous economic effect endangering the financial system in the next decade is a fantasy unsupported by scientific evidence.
Sure, we don’t know what will happen in 100 years, but banks did not fail in 2008 because they bet on radios, not TV, in the 1920s. Banks failed over mortgage investments made in 2006. Trouble in 2100 will come from investments made in 2095. Financial regulation cannot pretend to look past five years or so.
Sure, a switch to renewables might lower oil company profits. Oil stockholders may lose money. But “risk” to the “financial system” cannot be defined to mean that someone, somewhere may lose money. Tesla would not have been built if people could not take risks.
Yes, we are decarbonizing the economy, but similar transitions from horses to cars, from trains to planes, or from typewriters to computers did not cause even a blip in the financial system. Companies and industries come and go all the time.
So why is there pressure for financial firms to “disclose” absurdly fictitious “climate risks” and change investments to avoid them? Clearly, these proposals aim to defund the fossil fuel industry before alternatives are in place and to steer funds to fashionable but unprofitable investments by regulatory subterfuge, rather than politically accountable legislation or transparent rule-making by environmental agencies.
This goal is no secret. For example, the NGFS club of financial regulators states plainly that it seeks to “mobilize mainstream finance to support the transition toward a sustainable economy.”
But financial regulators are not supposed to “mobilize” the financial system—to choose projects, companies, and industries they like and defund those they disfavor. Thus, regulators must pretend that they are dispassionately finding risks to the financial system, and just happened to stumble on climate . . .
Financial regulation is too important to be eviscerated on the altar of defunding fossil fuel and subsidies for pet projects. If financial regulators cook up fantasy “climate risks,” and force regulated firms to do so, financial regulation will lose any capacity to detect and to offset genuine risks, and politics will determine the allocation of credit.
Of course, for those trying to build a corporatist state, a process for which the threat allegedly (I’m a lukewarmer, myself) posed by climate change has been both an inspiration and a very handy excuse, that latter point is a feature, not a bug.
Climate change is real and its impacts are mostly negative, but common portrayals of devastation are unfounded. Scenarios set out under the UN Climate Panel (IPCC) show human welfare will likely increase to 450% of today’s welfare over the 21st century. Climate damages will reduce this welfare increase to 434%.
Arguments for devastation typically claim that extreme weather (like droughts, floods, wildfires, and hurricanes) is already worsening because of climate change. This is mostly misleading and inconsistent with the IPCC literature. For instance, the IPCC finds no trend for global hurricane frequency and has low confidence in attribution of changes to human activity, while the US has not seen an increase in landfalling hurricanes since 1900. Global death risk from extreme weather has declined 99% over 100 years and global costs have declined 26% over the last 28 years.
Arguments for devastation typically ignore adaptation, which will reduce vulnerability dramatically. While climate research suggests that fewer but stronger future hurricanes will increase damages, this effect will be countered by richer and more resilient societies. Global cost of hurricanes will likely decline from 0.04% of GDP today to 0.02% in 2100 . . .
This does not look like too much “risk” to me.
Although this isn’t great:
Climate policies also have costs that often vastly outweigh their climate benefits. The Paris Agreement, if fully implemented, will cost $819–$1,890 billion per year in 2030, yet will reduce emissions by just 1% of what is needed to limit average global temperature rise to 1.5°C. Each dollar spent on Paris will likely produce climate benefits worth 11¢.
Why does the Fed think its regulatory authority extends to climate issues? The short answer is that the 2010 Dodd-Frank Act opened the door for the central bank to intervene in markets any time there’s a connection, however weak, to “systemic risk.” This is absurd. The Fed should ensure adequate capital requirements for the banks it supervises, to protect against another financial meltdown. Once it starts using financial-crisis legislation as an excuse to walk the climate-cop beat, things have gone too far. Congress can and should step in to curb the Fed’s overreach . . .
I am not holding my breath. Meanwhile, John Cochrane writes:
We need to get financial regulation back to its job: making sure that financial institutions have adequate capital to withstand shocks that none of us, not least the regulators, can pretend to foresee. Yes, it’s boring. You don’t get toasted at Davos for tough capital requirements. Industry hates being told to get more capital. But that’s the regulators’ job.
Don’t let the EPA regulate banks, and don’t let our financial regulators dream up climate policy. We will get bad climate policy and an even more fragile and sclerotic financial system if we do.
Indeed. Read the whole thing.
The Capital Record
We recently launched a new series of podcasts, the Capital Record. Follow the link to see how to subscribe (it’s free!). The Capital Record, which will appear weekly, is designed to make use another of medium to deliver Capital Matters’ defense of free markets. Financier and NRI trustee David L. Bahnsen hosts discussions on economics and finance in this National Review Capital Matters podcast, sponsored by National Review Institute. Episodes feature interviews with the nation’s top business leaders, entrepreneurs, investment professionals, and financial commentators.
In the tenth episode David Bahnsen interviews Rene Aninao, Managing Partner of Corbu, a leading macro-research-intelligence firm on Wall Street, to provide some contrarian wisdom about key global economic themes that you aren’t likely to find in the headlines. The headlines are filled with questions about national debt, COVID-19, and fiscal stimulus, but what if the primary driver of financial markets for years ahead is something that seems to have been lost entirely? Namely: national security.
And the Capital Matters week that was . . .
Perhaps appropriately, given the description of regulatory creep contained in the first section of this Capital Letter, we began this week as we did last week with an article on this very topic, this time written by the CEI’s Richard Morrison:
During a speech at the Center for American Progress last week, SEC acting chair Allison Herren Lee said that “human capital, human rights, and climate change” are “fundamental to our markets,” and that the demand for information about those topics “is not being met by the current voluntary framework.” She assured her audience that “our efforts at the SEC should and will stay firmly rooted in our mission,” but that statement was not at all consistent with the rest of her remarks.
Lee clearly has plans that exceed the agency’s traditional parameters, announcing that “the perceived barrier between social value and market value is breaking down.” The COVID-19 pandemic, racial-justice protests, and climate change all became linked in the last year, as “the issues dominating our national conversation were the same as those dominating decision-making in the boardroom.”
And lest anyone think this is a technocratic verdict that will affect only nerdy readers of corporate 10-K statements, MarketWatch also summarized the acting chair’s remarks on further mission creep, warning that her proposed disclosure rules would require further disclosure of political spending as well.
Commissioner Lee clearly believes that an SEC-mandated “comprehensive ESG disclosure framework” is consistent with the agency’s long-term mission. But even if we agreed with her, the people most highly motivated to advance ESG-style priorities will not be bound by any such constraints. Climate change, for example, is by far the single highest-profile issue in the ESG basket, and the climate activists’ long-term playbook — which will be strengthened and advanced by additional disclosure mandates and political-spending restrictions — is a direct threat to the SEC’s true mission.
Many “climate-finance” policies — such as requiring companies to limit their carbon footprint — aim to punish any company that has the temerity to continue using and investing in the traditional energy sources of coal, oil, and natural gas. The energy sources, that is, that power over 80 percent of the world.
That goal is no secret to anyone who has followed the world of climate-change politics. Much like the pacifist investors in the 1970s and 1980s who had hoped they could drive defense contractors out of business by starving them of capital through divestment campaigns, climate-disclosure advocates aim to push politically disfavored companies and industries into the economic dustbin, next to buggy-whip makers and VCR repairmen.
See the comments on central banks above for more details.
On the topic of regulation, Jordan McGillis didn’t think much of the administration’s approach to carbon pricing:
The social cost of carbon (SCC) is the bridge spanning the fields of climate science and economics. William Nordhaus, the first modeler to be recognized by the Nobel committee for work at this nexus, describes the SCC as the single most important economic concept we have for evaluating the effects of climate change on human life.
It is the SCC that girds the arguments for carbon-mitigation policies that tend to attract right-of-center economists and policy analysts. The concept ostensibly facilitates our evaluation of climate damages and enables us to assess policies in a cost-benefit framework. Putting on hold analytical disagreements over utility comparisons and normative disagreements over discounting, the work of Nordhaus and others such as Richard Tol on the SCC has even convinced some libertarians of the importance of internalizing the costs our actions might impose on others.
In the right-of-center case for carbon-mitigation policies, the SCC is the tool that lets us see into the future, approximate the damage emissions will cause, and factor the cost of that damage into our decision-making today. The most attractive approach to those right of center is typically to invoke the work of A.C. Pigou and apply a “Pigovian” carbon tax that bakes climate costs into our everyday economic choices.
But those to whom the Pigovian approach appeals should view the upcoming Biden revisions to the SCC with caution. Unlike the exercise performed by the Obama administration, on which the interim $51 figure is based, the new administration’s undertaking is likely to abandon the Nordhausian approach altogether and work backward from Biden’s preconceived and conveniently round goal of net-zero emissions by 2050 . . .
Rather than estimating harm from climate change and using the dollar-translated figure as a basis for cost-benefit analysis or a carbon tax, [Noah] Kaufman suggests that we assume a goal of net-zero emissions and regulate from there with what he calls a near-term-to-net-zero carbon price. This approach, right or wrong, breaks distinctly with the methodology that garnered Nordhaus Nobel recognition and won the support of so many right-of-center thinkers.
The flaw here is obvious: If we don’t have trustworthy estimates of climate damages, as Kaufman alleges in Nature, how do we know zeroing out carbon emissions is a cost-efficient endeavor? The Nordhaus approach, inconveniently for Biden and his new CEA hire, finds that the policies required to achieve a goal like Biden’s for 2050 would cause more harm than they would alleviate through emissions reductions . . .
This is beginning to sound rather familiar.
Steve Hanke cast a wary eye over the goings-on in Turkey:
Turkey’s President Tayyip Recep Erdogan has done it again. Late last Friday, he ousted the governor of the Central Bank of Turkey, Naci Agbal, replacing him with Islamist Şahap Kavcıoglu. Agbal is the third governor who has been shown the door in the last two years. Just what was Governor Agbal’s sin? To stabilize the Turkish lira, he cautiously raised Turkey’s policy rate by 875 basis points to its present rate of 19 percent during his short tenure of just over three months. Even with these increases, the real, inflation-adjusted interest rate is in deep negative territory (approximately -10 percent).
To understand the revolving door that faces Turkey’s central bank governors, we must understand what makes President Erdogan tick. And to do that, we have to understand Islamic finance, which is replete with theories about why interest rates should be avoided. Erdogan has made it clear that he embraces Islamic finance. Indeed, as he once clearly put it, interest rates are the “mother of all evil.” President Erdogan’s economic ideas are fundamentally rooted in charismatic, medieval texts that are far removed from the real world of today, or even yesterday.
Not surprisingly, on the first hours of trading since Governor Naci Agbal was axed, the lira plunged by 17 percent against the greenback, coming close to its all-time low of 8.52 TRY/USD. Lira instability and weakness and associated elevated inflation are nothing new for Turkey. Indeed, inflation has ravaged Turkey for decades. The average annual inflation rates for the 1970s, 1980s, 1990s, and 2000s were 22.4 percent, 49.6 percent, 76.7 percent, and 22.3 percent, respectively. Those horrendous numbers mask periodic lira routs. In 1994, 2000–01, and most recently since 2018, the lira has been torn to shreds . . .
Sami Karam wondered if we had hit peak Tesla:
That the stock is overvalued seems beyond contention, except among fans who love the story but don’t do any analysis, as well as some highly visible pros who built their reputations on pricing in developments that will not bear fruit for years, if ever.
The most prominent Tesla bull among the pros is Cathie Wood, whose team at ARK Invest last Friday set a base case 2025 price target of $3,000 (and a bearish case target of $1,500). ARK’s team believe in disruption on a massive scale in the next ten years and see Tesla as one of the greatest beneficiaries. Their research is available online.
Mirroring the more extreme bull scenarios, some bearish estimates put Tesla’s fair value at somewhere between $50 and $250 per share, depending on whether you consider its cars a software product rather than an automotive product with a long-range battery.
This wide divergence of views can be seen in the pricing of Tesla options. An at-the-money March 2023 put or call is priced at nearly 40 percent of the stock price, a very high level that suggests poor collective confidence in today’s price. For some, it is way too high. For others, it is way too low.
Meanwhile, competition is coming fast, with all the major automakers rolling out electric vehicles (EVs). It may be that none of them match Tesla’s cool factor, or that Tesla’s battery can travel farther on a single charge, but these considerations alone will not prevent the likes of Volkswagen and Ford from making significant inroads in Tesla’s market share in EVs. Competition is coming fast in software too, with Google, Apple, and others all developing automated-driving software. Meanwhile, the profit picture is unclear. Carbon credits helped the company turn a profit in 2020 (and join the S&P 500), but they are expected to fade in 2021.
Much depends on the macro environment. With free money gushing out of Congress and the Fed, Tesla stock could make new highs throughout the rest of the year if long-term rates do not rise too quickly.
But the selloff in stocks in the past few months was precipitated by a rise in Treasury rates. The ten-year yield climbed from 1 percent at the end of January to 1.7 percent as of March 22, essentially returning to its pre-pandemic level. The rest of the year will probably hinge on inflation expectations. Several prominent economists see inflation accelerating to at least 3 to 4 percent. In order to offer a positive real rate, ten-year yield would then have to exceed these levels. A ten-year yield of 4 percent or higher would wreak havoc on the valuations reached by the fastest-rising stocks of 2020. If the move is gradual and not excessive, we could see for the rest of the year what we saw in the past two months: a sector rotation that raises 2020 laggards much faster than it does 2020 leaders.
Robert VerBruggen looked unenthusiastically at the prospects for yet more spending:
White House aides are aiming to present Biden with a package costing $3 trillion — about $9,000 for every individual living in this country. In addition to pumping massive sums into American infrastructure (which, as I noted last week, is not in fact “crumbling”), it would extend the COVID bill’s controversial “child allowance” for a few more years, make community college free (which I guess isn’t as bad as, say, forgiving all student debt), and subsidize child care (which deliberately blunts a big advantage of stay-at-home parenting).
And while the “COVID relief” bill was simply added to the deficit, this time around the Democrats will pay for at least some of their spending with tax hikes. Options include hiking the corporate rate from 21 to 28 percent and raising taxes on wealthy individuals. Biden has said he won’t hike taxes on “anyone” making less than $400,000, but some of the corporate tax is borne by workers, not even corporate shareholders are universally rich, and when Biden said “anyone” apparently he was including married couples whose income exceeds that threshold only when both spouses’ earnings are combined.
There’s a lot of talk about the filibuster these days, but the filibuster can’t stop this if Democrats use the same “budget reconciliation” process they used to pass the COVID bill. That process is limited to matters that affect the budget. But you know what affects the budget? Shoveling tons of federal money out the door and hiking taxes.
Relentlessly, Robert then moved on to the question of entitlement programs. The news is not good, but you knew that:
When Republicans get all juiced up about cutting taxes, the CRFB points out that they’re adding to our already unsustainable deficits. These days, though, it’s Democrats, still high off the thrill of passing a $2 trillion “COVID-relief” bill that wasn’t all that dedicated to COVID relief, who look at our current budget situation and think the numbers aren’t out of whack enough. They’re currently working toward another multitrillion-dollar spending binge.
Naturally, the CRFB saw this as a good time to put out a detailed report about how four of the government’s major “trust funds” are spiraling toward bankruptcy, along with some options for fixing the situation. Spoiler alert: Any solution will involve tax increases or program cuts, so there are no political wins to be had here.
The trust funds at issue include two for Social Security (old-age benefits and disability), plus one for Medicare (Hospital Insurance, or Part A) and one for highways . . .
Apart from that, Mrs. Lincoln . . .
Jerry Bowyer had news on the debt front too:
Earlier this month, the Congressional Budget Office released its Long-Term Budget Outlook. In a presentation this week, the CBO director warned that the report did not take into account the recently signed American Rescue Plan Act, and that things will very likely be worse than the official projections we are about to read . . .
The Fed has already signaled that it will act to rescue America from the American Rescue Plan Act both by keeping its target rate low and by indicating in its most recent meeting that it intends to continue to do so. Given the rising importance of interest on the national debt, it’s unlikely that they will fail to rescue us (and our good faith and credit) from future fiscal-rescue attempts. And the only way they can rescue interest rates is by sacrificing the dollar.
We ran a lightly edited excerpt from The Dictatorship of Woke Capital: How Political Correctness Captured Big Business by Stephen R. Soukup.
Here’s an excerpt from the excerpt:
Indexers have always insisted that the combined power they wield is irrelevant. “We aren’t necessarily aligned on issues,” they say, and we certainly don’t “coordinate.” Except that now they do. On ESG concerns, BlackRock and State Street are nearly perfectly aligned and they don’t need to coordinate, because their ESG research and proxy advisory services . . . do the coordination for them. And Vanguard, the third of the Big Three, is not far behind them.
And here’s where things get a little bit sticky. Traditionally, active asset managers who were unhappy with the performance of a company — be it for environmental, social, governance, or any other of countless reasons — simply sold the stock. They said, in essence, we don’t think you’re running your business in a manner that is conducive to the values we embrace, and we won’t be a party to that.
Passive asset managers, by contrast, do not have that option. They own the company because they own every company. And they cannot walk away from any of them. Therefore, passive managers have two choices: They can simply ignore management and governance issues, hoping that the market will eventually sort the matter out; or they can use their power to change the company — its management, its directors, its policies, even its business plan. Historically, passive managers have chosen the former. Increasingly, however, they’re choosing the latter, in part because they’re so big now that they are the market, and in part because they’re led by zealots . . .
Jerry Bowyer pointed out that (contrary to some claims) we already do audit the Fed. The results are not pretty:
We already do audit the Fed. It undergoes a GAAP-based audit by a public accounting firm on a yearly basis, and the results of the latest one were released on Tuesday. Lest I keep you in suspense, the Fed revealed that “an independent public accounting firm engaged by the Board has issued unqualified opinions on the financial statements and on the Board’s and each Bank’s internal controls over financial reporting.” That is what’s known in the trade as a “clean” audit opinion. It is as close to an “Amen” as the auditors are allowed to give.
But all of that really misses the point, doesn’t it? The issue, at least for sensible people, has never been whether the Fed is cooking the books. The issue has always been the scandal of what it is doing openly and with full transparency. It has grown to a gargantuan size and done so at an extraordinary pace: “Total Reserve Bank assets as of December 31, 2019, were approximately $7.4 trillion, an increase of $3.2 trillion from the previous year.”
Jordan McGillis examined China’s climate Realpolitik:
When Xi Jinping pledged to the United Nations last September that China would be carbon neutral by 2060, credulous Western media outlets and climate commentators seized an opportunity to level criticism at emissions policies in the United States. China was taking the initiative and filling a leadership vacuum, they asserted.
The New York Times called the announcement “a tectonic shift,” writing that China was “pledging to lead by example, setting itself goals befitting a country that aspires to be a superpower.” Vox approvingly described China as “becom[ing] more active in international institutions long dominated by Western countries.” It was “us[ing] climate as a way to upstage the U.S.”
But with its March release of a new five-year plan (FYP), the 14th in its history, China has embarrassed its climate cheerleaders in the West. Beijing’s plan institutes no carbon cap, no coal phase-out, and no roadmap by which it will execute upon Xi’s words. Despite the carbon-neutral-by-2060 pledge, the FYP emphasizes the importance of coal to China’s continued development, not the emissions that come with its use . . .
Finally, we produced the Capital Note, our “daily” (well, Tuesday–Friday, anyway). Topics covered included: the bubble puzzle, the lira tanks, a hot take on tulipmania, tax and inequality, Prince Harry’s new job, Pfizer’s new drug, the EU and China — trouble in paradise (?), centuries of declining interest rates, big ships, the bank effect, the last Suez blockage, the EU: getting free markets wrong, getting vaccines wrong, the economics of Nord Stream 2, bubble update, troubles for wind-power financing, and the economics of climate change.
To sign up for the Capital Letter, follow this link.