Some Things Money Can’t Buy, For Everything Else There’s Waxman-Markey
There will be no snow left on Kilimanjaro within a few years. The economic cost of that change to US GDP is zero. There will be no year-round snow left in the Himalayas in 100 years. The economic cost of that change to US GDP is tiny. There will be no Everglades in 100 years. The economic cost of that change to US GDP is marginal. There will be no Venice in 100 years. The economic cost of that change to US GDP is tiny. There will be no New Orleans in 100 years. The economic cost of that change to US GDP is extremely small.
There are two issues here. First, GDP measures income, not wealth. If your house burns down, it will most likely not change your income. Does that mean you should spend nothing to protect your house from burning down? Second, GDP only measures things that can be measured in money. But the worth of many precious things cannot be measured in money….
What Steinglass fails to address is whether or not Waxman-Markey would indeed save Venice or New Orleans. Rather than addressing the merits of the bill itself, Steinglass focuses on climate change writ large. The fact is, this is bad legislation that is not only subject to regulatory capture but which will leave the gates already entirely in the pockets of special interests.
Once again it seems proponents of Waxman-Markey are talking right past the actual objections to the bill and speaking instead quite generally about the moral impetus of climate change legislation itself. In the great rush to just do something – anything – because the moral consequence of doing nothing seems so great, lawmakers and supporters of climate change legislation will rush headlong into even a very bad piece of legislation so long as it allows them to wash their hands of the sin of simply standing by while the Himalayans melt. That the Himalayans will melt anyways is secondary.
Of course, this line of reasoning is tantamount to treason, at least according to Paul Krugman. Once again, skeptics of climate change legislation are conflated with skeptics of climate change itself. One can believe that climate change is in fact occurring and also believe that a cap and trade system is the wrong approach to fixing the problem. This does not make them a climate change denier.
Like cap and trade itself, the passage of Waxman-Markey is an example of legislation as indulgence. Carbon credits, like papal indulgences, don’t actually limit carbon emissions anymore than indulgences sped one’s soul to heaven. Perhaps in theory they do, but in reality the concessions to industry are always too great, the compromises entrenching industry status quo and crowding out innovators and alternative energy start-ups. But meaningless legislation does wonders to ease a guilty conscience – the conscience of a liberal, perhaps, who sneers that opponents of Waxman-Markey have a “contempt for hard science” that is “unforgivable.”
Perhaps doing nothing is not, in fact, the worst course of action, when doing something is little more than an expensive illusion.
Patrick Appel writes:
I have this nagging feeling that half-measures that are sold as panaceas will make it harder to propose new half-measures.
This is exactly right, though I suppose at the end of the day I worry that any really wide, sweeping federal measures will be subject to the same flaws that Waxman-Markey is subject to. Perhaps a better way forward on climate change is to continue to work on improvements to existing clean air laws, investment in new, green technology research and development, and especially investment in mass transit options. I worry that too much fear-mongering will lead us down the road of bad legislation time and again rather than letting smart people figure out smart solutions on their own. What I see more and more is that whenever big government attempts to do something big they inevitably benefit the status quo. Thus the big corporations most at fault for carbon emissions will benefit the most from regulations supposedly enacted to curb their carbon output.
Jason Arvak has a great line:
Waxman-Markey is ritual flagellation with a trillion-dollar price tag.
Also, more from Manzi:
Numerous very intelligent bloggers have raised the valid point that global GDP, or any measure of money income, is not a comprehensive measure of human well-being. I’ll have a future post on this topic. But it is striking that, at least when looked at in terms of the economy, we should expect the benefits of emissions mitigation to range from losing money (my view) to a positive gain of 0.17%, assuming perfection.
The problem is that we’re putting a global economy with present value of $2,000 trillion at risk to go after less than $4 trillion of expected present value of benefit. The desire to regulate the global economy to avoid the risk of catastrophic climate change is not a one-sided bet.
And Patrick again, at the Dish:
When faced with huge economic and climate uncertainties, it’s hard for me to come down forcefully one way or the other. I appreciate that obliterating the planet is a a smidge bigger risk than spending too much money, but I worry about the unintended consequences of regulation, and there are diminishing returns from playing the world destruction card if your proposed legislation isn’t going to fix the problem. Krugman performs this slight of hand today in his column; instead of debating the merits of Waxman-Markey, he beats up on climate deniers for 800 words. This allows him to discuss the bill without shedding light on any of the details.
In pure economic terms, I’m not sure this bill is worth it (if it accelerates new energy technology, it still could be). But in reflecting on this, I do believe that my generation of humans should not be responsible for altering in unknowable ways the eco-system that sustains us and so many other forms of life. We have a responsibility not simply to advance our own material welfare, and weigh costs and benefits, but also to conserve our natural inheritance as much as we can. I reach this from a religious perspective, but it is easy to reach it from other grounds. And if this bill is the beginning of a process we can improve on and tweak and finesse in the coming years, then I think it’s worth the loss of economic growth. Some things count for more than money or our own species’ well-being. And climate change could take on a momentum impossible to impede if we carry on the way we are.
On so many of these points I agree – we do have a responsibility to go beyond simple material welfare, and we do, as de facto stewards of this earth of ours, have a duty to conserve and protect our natural environment. My opposition to this bill is that I don’t believe that it will actually achieve this (and it will fail to do so at great cost), and I don’t believe, as optimists like Andrew do, that we can “improve on and tweak and finesse” the bill in coming years to any great effect. To me this is the act of taking our eyes off the ball, of settling for something that merely seems to address the issue, when it in fact does not.
A simple carbon tax would certainly be more palatable; investment in mass transit and education would probably do more in the long run than any of these things. A new generation of scientists who could commute on a high speed rail instead of by car to their labs where they could come up with new green technology solutions is the best bet we have at a more sustainable future. Faith in cap & trade should not replace faith in human ingenuity.