The Reality-Based Community: Global warming and the economy:

The ideas in good currency, between the lunatic fringes (there is also some supergreen advocacy for shutting down everything right away) are “taking action as long as it doesn’t hurt the economy” and taking more strenuous actions that (presumably) do. The first has a sensible, thoughtful, businesslike aroma, but it is profoundly nuts, unless you think that your family economy would be helped by borrowing lots of money and spending it right away on vacations and entertainment.

At first I thought this post by Michael O’Hare was just stupid, but now I think it’s actually quite useful at exposing the incoherence of phrases like “hurt the economy.” What made me think is was stupid is this passage:

There are three generic ways to stem the flow of CO2 into the air. The first is to catch it at the smokestack (for example, of a coal-burning power plant) and put it back in the ground or at the bottom of the sea. This is not impossible but it will never be cheap, almost certainly has no future for vehicles, and at the moment, it’s very expensive except at a few locations well suited to it. The second is a group of blue-sky geoengineering ideas needing (and deserving) many, many years of research and development but not certain to be practical ever. These include schemes to shade the earth with sulfur dioxide in the stratosphere or some sort of parasol in space between the earth and the sun, or to accelerate the growth of algae in the ocean by sprinkling iron about.

The third, and the only one we can start to use now or even soon, is to burn less fossil fuel, something that in turn can be done in only two ways. The first is to conserve energy. The second is to substitute fossil energy sources with something else. Nuclear, wind, and biofuels are good for this, but they are all more expensive and will be for some time, perhaps forever.

The first paragraph appears to confuse CO2 emissions reduction, enhanced removal of CO2 from the atmosphere and “global-cooling” techniques that would operate even as CO2 emissions continue to increase. This does not augur well.

The second paragraph engages in the common fallacy of pegging increased efficiency (and the general decoupling of GDP from energy use or CO2 emission) as “conservation”, which is always associated with turning down thermostats and driving tiny cars. It wasn’t conservation of rubber that motivated Goodyear to make vulcanized tires, or conserving vacuum tubes that got Shockley et al to make transistors. If we can do the same stuff, or more, with less CO2 going into the air, that’s not only dandy but also economically speaking a really good thing. And of course the whole “don’t hurt the economy” thing started with the observation that a lot of the steps you would like to take to mitigate global warming are in fact intensely profitable (once you’ve gotten over the market-entry hurdles).

So while I was grumbling about that, I started to take apart the rest of the paragraph, asking “what do you mean by ‘more expensive’? Do you mean they have a higher initial price, or that they’re more expensive even after all of the externalities and the disposal costs and so forth are factored in?” Because of course if you take global warming seriously, there’s a lot of stuff whose added up-front cost is more covered by the savings of, say, not having to relocate three-quarters of the major cities in the world.

And once you start down that road it becomes clear that “hurt the economy” isn’t really a meaningful phrase by itself. First, you have to decide on a bunch of time horizons and discount rates and risk sensitivities and such. So calling something “more expensive” only makes sense with respect to a particular interest rate, set of risk scenarios blah blah blah.

But the second part is even more important: what is this “the economy” whereof we speak? Yes, diverting resources to mitigating global warming means not spending them elsewhere. But so what? Diverting resources to building the internet or killing somewhere north of half a million people in Iraq or sending pieces of metal stamped “Lockheed Martin” to Mars all mean not spending them elsewhere. By this kind of simpleminded measure the Marshall Plan or the Interstate Highway System hurt the US economy terribly.

But of course they didn’t. It’s not as if the money spent on those things vanished down a rathole. People got paid their wages and bought food and clothes and cars and parts of houses. The immediate effects were distributional rather than on total activity.

Which brings us to the notion that mitigating global warming would be like a 1% in reducing consumption. That kind of formulation makes sense from the reactionary position where taxes are something you pay and get only intangibles for in return. But not so much if you think about government spending as providing tangible benefits — wages, services, infrastructure — for real people. (Yes, even “people like us”.)

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