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How Economists Impede Addressing Climate Change

On a recent post, some readers recoiled at the idea of putting a monetary value on human life. Yet that happens all the time. Courts come up with damages for injuries and wrongful deaths. Younger people with high earnings are more “valuable” than other people. And remember the Pinto? Companies similarly put a value on how much it is worth to them to spend on safety to prevent deaths and dismemberment.

As this article indicates, this sort of thinking winds up playing a role any time companies or governments look at making financial outlays. And this situation is made worse by the fact that due to reasons of cognitive bias or bad incentives, people and institutions have a predisposition not to do difficult things now. People engage in procrastination and hyperbolic discounting. Politicians find “kick the can down the road” strategies to be the best approach most of the time.

Conventional financial analysis is particularly hostile to long-term investments; the fact that America is neglecting the education of its young is no accident. Even in a low-interest rate environment, financial models tend to go out to at most ten years, and then punt on a residual value. Andrew Haldane of the Bank of England demonstrated what other studies have confirmed: investors also tend to assign an overly high discount rate, which discourages funding projects with long-term payoffs like infrastructure.

The problem is even worse when looking at 50 to 100 year time frames. In 2006, British economist Nicholas Stern argued in a report requisitioned by the UK for urgent action to combat climate change. But to make the math work, he had to assume a discount rate of 0.5%, which was so low, particularly in light of prevailing interest rates, that many took the view that his analysis showed that it didn’t pay to invest then to reduce greenhouse gasses.

The point is that the time value we assign to money, and the way that has become fundamental to assessing investments, has been and continues to be a serious impediment to taking action to fight climate change. And no, I don’t have any good answers. This approach is hard wired into a lot of decision-making.

By Eric Holthaus, a meteorologist and columnist for Grist, covering climate science, policy, and solutions. He has previously written for the Wall Street Journal, Slate, and a variety of other publications. Originally published at Grist

If you’ve heard anything about last week’s huge White House climate report, it might be that climate change could dent the economy up to 10 percent by 2100 — more than twice the impact of the Great Recession.

However, that number is a strange one to highlight. Yes, climate change hurts the economy — the hurricanes of the past two years alone have caused nearly half a trillion dollars of damages — but projecting that forward 80 years into the future is awash with unnecessary uncertainty. It’s a number gleaned from a graph buried deep in the assessment. The real takeaway is that climate change is already hurting people, today.

And as the years roll by, those impacts will get exponentially worse. In an era where the U.N.’s climate body says we only have 12 years left to complete the process of transitioning to a society that’s rapidly cutting carbon emissions, all the attention on far-off economic risks drastically understates the urgency of the climate fight.

Money just isn’t the appropriate frame when we’re talking about the planet. Climate change is a special problem that traditional economic analyses aren’t built to handle. The idea of eternal economic growth is fundamentally flawed on a finite planet, and there is substantial evidence that these economic costs will be borne disproportionately by lower-income countries. There’s no dollar figure that anyone can attach to a civilization’s collapse.

In addition to the widely covered economic risks, there were scads of human-centered impacts listed in Friday’s report: Unchecked climate change will displace hundreds of millions of people in the next 30 years, swamping coastal cities, drying up farmland around the world, burning cities to the ground, and kickstarting a public health crisis inflicting everything from infectious disease outbreaks to suffocating air pollution to worsening mental health.

This process is already in motion. Those of us who talk about climate change for a living should be focusing our dialogue on the immediate danger of climate change in human terms, not making it even more abstract and distant than it already seemingly is.

If an asteroid was going to hit the Earth in 2030, we wouldn’t be justifying the cost of the space mission to blast it out of the sky. We’d be repurposing factories, inventing entire new industries, and steering the global economy toward solving the problem as quickly and as effectively as we can — no matter the cost. Climate change is that looming asteroid, except what we’re doing right now is basically ignoring it, and in the process actually making the problem much, much worse and much harder to solve.

Understandably, Americans’ views on climate change are sharply polarized and have become even more so during the Trump era. In that polarized environment, dry economic analysis doesn’t seem like enough to matter. It’s the human stories that give people visceral moral clarity and firmly establish contentious issues as important enough for a shift in society.

There’s proof of this: In the aftermath of every recent climate disaster Google searches for climate change spike, heartbreaking images of survivors lead national news coverage, and my own Twitter account is flooded with messages from readers asking what they can do to help.

If we are going to take heroic action on climate change in the next decade, it will be because of an overwhelming outrage that our fellow citizens are literally being burned alive by record-breaking fires — not a potential decline in GDP in 2100. In order for people to feel the true urgency of climate change, we’re going to have to talk a lot more about the people it’s already hurting.

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68 comments

  1. Thuto

    Trump apparently flat-out said “I don’t believe it” when presented with this report, Bolsanaro down in Brazil is a Trump groupie who’s gearing up to lead a major assault on the Amazon rain forest. As of 28th November 2018, the prospects of reversing the damage in time to avert major catastrophe seem bleak, especially when denialism is being shouted from the rooftops of some major presidential palaces.

    I agree, framing this as a long term issue with
    Insidious rather than present day catastrophic effects allows the decision makers (ALL of whom will have shed their mortal coil when the year 2100 comes rolling in) to light the fire under the future of those generations that will be there to feel the unrestrained consequences of the unrestrained profligacy of their forebears.

    Reply
    1. Wukchumni

      Stopped @ a roadside orange stand the other day, and usually they’re tended by the owner of a grove and really know their citrus, and he related that the size of oranges this year is a lot smaller than in the past, showing me the largest one he had which seemed medium+ to me.

      It of course varies from year to year, but smaller size = less money + tariffs not allowing any exports to China = bad manna harvest.

      One of the cabin owners in our community has many thousands of acres of citrus in mature orchards, and I asked him if he was worried about HLB (Huanglongbing) the Asian psylid that causes citrus greening and kills off trees and has devastated Florida & Mexico?

      He chuckled and told me that was a down the road problem, his most worrying concern was Brazilian juice oranges that were driving the price down so much he could hardly compete, as they were ripping out huge swaths of Amazon rainforest to plant them there.

      His salvation was navel oranges, which can’t be grown there, and curiously enough, they were originally from Brazil, and imported to SoCal in 1873.

      Reply
      1. drumlin woodchuckles

        “Brazilian orange juice” is a Free Trade problem. Banning its entry into the US would be a Protectionist solution. Unfortunately, it wouldn’t actually save the Amazon from the orange planters. It would merely absolve America of guilt for burning down the Amazon for some orange juice.

        The Brazilian orange juice-lords would merely sell it all to China, who would happily buy it all. Let the Amazon burn. What’s an Amazon between friends?

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  2. PlutoniumKun

    This is correct but if anything understates the epistemological failure of economics when faced with any environmental issue, and the distortions caused by the impingement of economics techniques into (for example) engineering decisions by way of the use of Cost Benefit Analysis and similar techniques. The inadequacies of CBA when faced with risk, uncertainty, and, most importantly, intangible values is well known in the literature and is a key failure in welfare economics. But because of the lack of a real alternative its still used widely in infrastructural analysis and decision making. The result I believe will be a gross underinvestment in both decarbonising the economy and in building more resilient infrastructure to deal with future risks.

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    1. Yves Smith Post author

      You make a good point. I just threw up some very high-level observations but this deserves a proper treatment when I can poke around a bit. This is yet another huge indictment of economics, but from what I can tell, the critique isn’t mainstream (the usual business about not pricing in externalities is about as far as it goes).

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      1. PlutoniumKun

        Back in the late 1980’s I did a Masters thesis on the topic of the application of economics techniques in decision making. I only scratched the surface of the literature, but I was very surprised at the time to find out just how fundamentally flawed techniques such as CBA, hedonic valuations, travel cost methodologies, etc., are at multiple levels – and how generally uncontroversial it was in the academic literature to point this out. A quarter of a century later the exact same techniques are still almost universally used, often without question by people who really should know better.

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        1. diptherio

          I wrote my BA thesis on the problems with CBA in ’04 — they are many, both practical and philosophical. However, despite all the well-known problems, it continues to be used largely, I think, because Reagan and then Clinton issued executive orders that require all regulatory changes be subjected to CBA before being implemented.

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          1. SJB

            Agree. Obama and W. continued to reinforce it. Another big, big problem is that OMB serves as the gatekeeper by reviewing and having the ability to reject Regulatory Impact Analyses, and hinder rulemaking until they see the RIA as up to snuff. They only approve the most mainstream approaches and analytical tools. You can’t even use institutional arguments, so RIAs are extremely limited, and can’t break new ground. It is required for all RIAs to put rules in terms of market failures, even if there really isn’t one, which leads to contortions of logic. And as problems being addressed become more complex, all these issues become more and more difficult to handle.

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          2. Irrational

            For example, you can tweak the economic rate of return on any road project by making different assumptions on the value of tme saved by each driver. This is just the most basic example.

            Reply
      2. Off The Street

        Greater volatility in the weather has various side effects. Expect some neo-liberal impact in the property and casualty market, quietly following the rest of FIRE. With all those increased payouts, look for corners to be cut, fine print to be made finer, STAT (statutory accounting for insurers, analogous to GAAP for non-insurers) accounting and lobbyist influence scandals and so on. Lack of agency will continue to be a feature, not a bug.

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      3. john c. halasz

        Sandwichman did a series of posts on the history of this topic a good while ago. In the 1930’s when CBA was first broached it was called benefit cost analysis and the point was to rank public works projects such as PWA in order of priority based on full assessment of benefits including various spill-over effects and only subsequently to divide by projected monetary cost. In the mid-1950’s a new government directive was issued adopting neo-classical CBA, which effectively treated public works projects as if they were investment decisions by private firms.

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        1. Yves Smith Post author

          Thanks but this issue goes beyond CBA. That’s not the method Nicholas Stern, Andrew Haldane, or private businesses use. They use discounted cash flow models.

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    2. Thuto

      We could start by a wholesale redefining of what constitutes “costs and benefits” and recognizing that, depending on the subject at hand (and the timeframes under consideration), what passes for a benefit today could end up being a cost later, and vice versa. This way of looking at it may seem simple, apparent and self-evident, but the frequency with which project sponsors disregard this in favour of deference to costs and benefits as traditionally defined/framed would suggest that it’s anything but. One need only look at the composition of transaction advisory teams (and the terms of reference that guide their work) in large infrastructure projects to realize that economics reigns supreme in setting the framework within which projects are assessed for viability (with externalities often dealt with as an afterthought).

      Nothing short of a wholesale rewiring of the brain circuitry of project sponsors and teams around this subject will be required if climate change considerations are to dislodge the current modus operandi vis a vis CBA for large scale infrastructure projects.

      It’s not going to be easy of course because the denialists, having swept to power in countries like Brazil and the US, will use their political influence and deep pockets to drive “(pseudo)science-based” denialism, employing the false veneer of (pseudo)scientific rigour to fool the uninitiated into believing that the evidence on climate change remains inconclusive (this manufactured lack of “broad agreement” is of course a functional handicap to the need to have climate considerations become major drivers in how decisions are made about infrastructure projects). It’s going to be a painful war of attrition between both sides of the fence on this climate issue, and we’d all benefit from knowing sooner rather than later which side’s mast the economics profession will nail its colours to.

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      1. Carolinian

        Can we really blame it all on “denialists” when those politicians who accept the science have also done so little to address the problem? Doubtless defenders of, say, Obama would claim he could do so little because of Republican opposition but the truth is that he only tepidly addressed the issue and many of the solutions proposed by people like Al Gore wouldn’t help anyway.

        We’ve had this debate many times here but it is my belief that the persistent left view that the problem is one of communication and persuasion is hopelessly inadequate. The ship isn’t going to turn fast enough to avoid the iceberg so we better start thinking about what we are going to do when it does hit the iceberg. Climate change is no longer an avoidable disaster and perhaps it never was given the size of the problem and the industrial way of life that we have long ago chosen.

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  3. Plenue

    Seeing stuff like how the economy might be hurt up to 10% by 2100 is just surreal. Because everything I’ve seen and read tells me there very likely won’t be anything we would recognize as a global economy by 2100. We’re looking at the end of industrial civlization, not merely some Great Mega Super Bad Depression.

    It’s happened before; it can happen again. If anyone has 70 minutes to spare, this is worth a watch: https://youtu.be/bRcu-ysocX4

    Reply
    1. Jeremy Grimm

      Humankind is facing multiple large scale threats. Climate Chaos is only one of them. We are also burning through the riches of millions of years of energy stored from our star. When it is gone, there is no more. Our population is growing beyond our ability to grow and distribute food. Our soils are being pushed to their destruction with harvests supported by inputs from our stores of energy, and distributed relying upon those stores. As the Climate Chaos proceeds diseases we ignored in Southern latitudes are slowly and not so slowly moving our way and our abuse of antibiotics with the financialization of our Pharma and Medical Industrial Complexes assure we will find no magic bullets when diseases are at our doorstep. We are building up weapons and using them to waste resources with abandon. Worse still we are building nuclear arsenals around the world as the conditions of over-population and Climate Chaos ramp up tensions between nations. As you say, we are looking at the end of industrial civilization not just another ‘recession’ or economic downturn. I believe we are facing something which could be more than just the end of industrial civilization.

      Industrial civilization was built and grew with the large human populations fossil fuels made possible. Industrial civilization is the culmination of millennia of efforts by the relatively small proportion of our population specially gifted with the abilities peculiar to the pursuits of Science and Invention. I believe our present level of Knowledge could only have been attained as a consequence of large human populations and their larger number of human minds suited to science and supported by the surpluses made possible through efforts of the rest of the population, and through the application of large amounts of energy. The materials with with we construct our Science and Industry require large amounts of energy in their creation — ceramics, glass, steel, titanium, tungsten, silicon all require large amounts of energy in their processing and manipulation into our creations. Energy keeps our industrial civilization running but it is also critical in the creation of Industrial civilization. And we are burning through our fossil fuels as quickly as humanly possible. Climate Chaos complicated by disease, conflict, and the breakdown in the distribution of resources will strike down our large populations and our industrial society. What will remain of our special one-time gift of stored energy may not be sufficient to recover the hard gained knowledge lost in the after, at a time the few who survive must contend with an entirely new and hostile alien-Earth. Humankind, if we survive — as I hope and believe we will — may never again achieve any future human civilization approximating our present heights. The knowledge humankind can preserve and carry to the time after will be crucial to any future civilization.

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      1. marku52

        In the not-too-distant future, the entire era of industrial capitalism will be regarded as a massive mistake. A culture-ethos-system-of-belief that can’t even safeguard the ecosystem its own existence depends upon is is system that quite literally, has no future.

        My own vague premonition is that after the human population has been reduced to about a tenth of its present level, a theocracy will emerge run by the most important people in the new culture:

        The ecologists.

        If what you are doing damages the ecosystem, you will be burned at the stake.

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        1. Wukchumni

          I get the feeling we’ll not only burn the stake, but most of our forests for fuel in a frenzy to make up for lack of crude.

          Savage beast gotta do what a savage beast does.

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    2. lyman alpha blob

      Thanks for the link. I read the book a few years ago and look forward to watching the lecture.

      We’ve had a collapse or two since then as well. They don’t call it the RE-naissance for nothing…

      Reply
  4. The Rev Kev

    I put this article through a semantic equivalency algorithm which came up with the following-

    https://www.youtube.com/watch?v=9EH1G4EwljM

    Over the years, I have noticed that a lot of the studies about the effects of climate change talk about what happens to third world countries. I may be unkind in saying this but in advanced countries it was a case of “Meh! Won’t effect me then”. New Orleans should have put an end to this belief but apparently not. And stuff like this is happening everywhere. Right now in Oz in the north there are bush-fires as fierce as those that hit California and are literally off the scale. Meanwhile, down in Sydney, they are being drenched in rain which is causing floods and are of an intensity that has not been seen in thirty years. The future is here and it looks like the first world is going to cop it as bad as the third world.

    Reply
    1. Thuto

      Spot on Rev, if the “first world” could rid itself of its collective hubris borne of a prescience about the uneven (read heavily skewed towards the “third world”) distribution of future climate change effects, we, as the collective called humanity, might actually be better off, to say nothing of mobilizing collectively to avert disaster.

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    2. Eclair

      “New Orleans should have put an end to this belief …..”

      During Hurricane Katrina, we were on a family vacation in Maine, with toddler grandchildren, who pretty much consumed all our time and life, so we never even turned on TV and the local newspaper was published only once a week; we had no idea what was happening in New Orleans. Vacation over, we were driving home and stopped at the local market to pick up a NY Times to read on the journey.

      Before even looking at the headlines, a photograph just below the fold on page one caught my eye. It showed the body of a Black woman, floating in muddy water. I thought …. oh, a disastrous flood in Africa. I remember the shock I felt when the realization hit me that this woman had died in New Orleans, Louisiana, US of A.

      The shock of memory remains with me, like hearing of Kennedy’s assassination, or learning of the Challenger explosion.

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    3. Dwight

      Another problem was that IPCC Working Group 3 was pricing lives in poor countries much lower than lives in rich countries, which skewed the benefit side of the calculation since most deaths avoided from lower emissions would be in poor countries. This was in the 90s; I don’t know if they changed it in response to criticism.

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    4. Harry Shearer

      If, by “New Orleans”, you mean the 2005 flood, that was not a climate-change phenomenon. Take the time, if you like, to look up two independent forensic engineering studies of the disaster (the ILIT report from UC Berkeley and the Team Louisiana report from LSU), and you’ll see, standing tall amid the other contributing factors, this statement from the Berkeley report: the flood was “the greatest man-made engineering catastrophe since Chernobyl.” Four decades of mis- and mal- feasance by the US agency tasked by LBJ in 1965 with protecting the city from the maximum probable hurricane: the Army Corps of Engineers. The same agency which has for years used the CBA criterion politically, putting its thumb on whichever side of the scale will help its budget, and its contractors (who are the contributors to the Congressmen who approve those budgets). It’s called the Iron Triangle.

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      1. Tony Wright

        Having spent my professional life in the prevention of mosquito borne diseases I am a great fan of six feet of yellow sand as a permanent prevention of mosquito breeding, where environmentally acceptable.
        The same principle should have been applied to the rebuilding of New Orleans – fill up the below see level basin first that constitutes about ninety percent of the city, then rebuild on top. Use the Mississippi river to barge fill ( e.g.mining overburden from throughout the huge river catchment) down to “Nawlins”
        Instead they keep building levees and pumping to keep the city from flooding, even without hurricanes, which will increase in frequency and intensity due to anthropogenic climate change, whatever the King Canutes/ Flat Earth society types like to believe.
        So, Harry , that explains it – find something illogical and behind it lurks a vested interest, in this case the US Army Engineers.
        And that probably explains why I never got a reply eight years ago when I wrote to your President suggesting the above solution in more expansive detail .
        I hope to visit New Orleans again before it is totally trashed by the inevitable future hurricanes which will overwhelm the stupid levee system currently in place.

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        1. rd

          There is a reasonable chance that an upstream flood will break the Old River Structure and re-route the Mississippi into the Atchafalaya before New Orleans gets flooded again. At that moment, New Orleans will literally be a backwater.

          Fragility is everywhere.

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          1. Tony Wright

            Thanks rd, that is an interesting scenario. However, that does not change the fact that most of New Orleans outside of the Vieux Carre is below even existing sea levels, and therefore subject to flooding as it is well inside the hurricane belt, even before the hurricane amplifying effects of anthropogenic climate change on water temperatures within the Gulf of Mexico.

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  5. Jason

    Why indict economists when pricing carbon (which is the single most powerful policy for conservation) is as close to a consensus opinion as anything amongst economists? That governments aren’t doing these things has nothing to do with economists’ advice, but simply a matter of short-sightedness, selfishness and lack of political will.

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    1. diptherio

      Typical economist thinking: that market solutions are the only solutions. Imho, putting a price on carbon will just create a market for carbon…which will be gamed by the corporate behemoths just like every other market.

      The real problem, I believe, is economists have created a world for themselves in which all values must be expressed in dollar terms, despite the fact that most values are not amenable to that measure. It’s like insisting that everything be measured in inches…lengths, weights, the quality of books, etc. What economists need to understand is that the world cannot be understood using a single metric, no matter how hard they try to make every value fit into that procrustean bed.

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      1. funemployed

        I think I once heard George Lucas (of all people) say that STEM fields deal with “how” questions and the humanities deal with “why” questions (or something like that).

        From the humanities angle, the fundamental economic question is something like “what is most worthwhile to do with our time and energy and stuff?” Philosophers, artists, historians, etc. are really quite good at rigorously “why” questions like that – mainly because we know you have to be quite blinkered to not realize maths and randomized controlled trials are the wrong tools for the job.

        I don’t think it’s a coincidence that authoritarian social orders fear artists and poets more than scientists. Nor do I think it’s an accident that deep engagement with the humanities has largely been purged from the study of economics, business, law, and the physical sciences.

        I mean, for god’s sake, that people can be awarded a PhD in economics without spending at least a few years studying history and social/political philosophy/theory is insane. That they are also taught that mastering Bayesian statistics gives them some godlike insight into all decisions of importance is, well, a symptom of the times I guess.

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        1. JBird409

          I don’t think it’s a coincidence that authoritarian social orders fear artists and poets more than scientists. Nor do I think it’s an accident that deep engagement with the humanities has largely been purged from the study of economics, business, law, and the physical sciences.

          That is why the 19th century’s political economics became the 20th century’s economics. Ostensibly the same field, but not really.

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      2. Darius

        Carbon pricing isn’t a panacea but now we are paying people to burn fossil fuels by making them artificially cheaper than alternatives.

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        1. Ignacio

          Carbon pricing just does not work at all. It is a scam.
          If there is “carbon pricing”, tell me, please tell me why on earth household $/kwh prices are muuuuch higher than corporate $/kwh when household consumption in kwh/m2 or kwh/year are muuuuuuch lower? –at least in Spain–

          Households subsidise corporate energy consumption. That is markets

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      3. Jasonuke

        Even if you don’t like carbon pricing, you have to admit that even this solution is being ignored by the politicians. That they don’t plan to do much for the environment has nothing to do with economists’ advice or models or anything, for the matter.

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    2. Jeremy Grimm

      After step one, denial, carbon pricing and carbon taxes are step number two for dealing with Climate Chaos. They don’t work and aren’t intended to work. However, they do make for some nice profit opportunities. The real pay-off will come from step three geoengineering. Some of the increasingly dire reports describing Climate Chaos are already feeding moves toward geoengineering ‘solutions’.

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      1. drumlin woodchuckles

        I will merely re-mention my suspicion that stratospheric sulfate dispersion will be used as an excuse to restore coal, gas and oil to central supremacy in our energy supply. The excuse will be this: strat-sulf lets us cool the global. The more CO2 we emit, the more strat-sulf we can spread to keep cooling the global.

        The mid-range goal of all this strat-sulf geo-engineering would be to shroud the earth in enough sulfates to reduce the sunlight enough that solar electric panels can no longer work. That would restore coal, gas and oil to a total and utterly unchallengeable monopoly-source position as our only energy source.

        The next-step goal after that would be to further enshroud the earth enough to prevent anyone from growing food plants out of doors. The plan would be to force total dependence of eleventeen billion people on indoor electric gro-lit hydroponic greenhouses all over the earth, creating a yet bigger market for coal, gas and oil.

        The end game would be/ will be getting all the survival bunkers ready for the Overclass, and when they are all ready, shutting off the power to all the gro-lit greenhouses except the special underground bunker greenhouses meant to feed the bunkered-in Overclass.

        If someone thinks they can write a novel or make a scary movie based on that scenario, I give that scenario away for free . . . if anyone thinks they can “fictionalize” it and “distopianize” it for weaponization and dissemination to pre-poison the ground against the coming efforts by the “geo-engineering conspiracy” to stealth-create the conditions for the Last Jackpot.

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  6. Newton Finn

    “If an asteroid was going to hit the Earth in 2030, we wouldn’t be justifying the cost of the space mission to blast it out of the sky. We’d be repurposing factories, inventing entire new industries, and steering the global economy toward solving the problem as quickly and as effectively as we can — no matter the cost.” The call for urgent action on a massive scale is on the money. But even the mention of “cost” misses the mark. Before we can have an environmental paradigm change, we must have an economic one. Awareness of agency precedes action.

    https://arcade.stanford.edu/content/unheard-center-critique-after-modern-monetary-theory

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    1. drumlin woodchuckles

      Where the asteroid analogy fails is here: the asteroid doesn’t have a trillion dollar industry making trillions of dollars per year , year after year, every year that the asteroid is in flight towards the earth, and continuing to make billions of dollars per day, millions of dollars per hour, thousands of dollars per second, second after second, up to the very moment of impact. The asteroid doesn’t have a huge mighty Asteroid Lobby and bought-off Asteroid Politicians fighting to keep the asteroid safe and flying toward the earth.

      But the coal, gas and oil industry has all those things. Its a trillion dollar asteroid and will stay that way until it hits the earth. To turn the coal, gas and oil “asteroid” off its earth-impact flight path, we would first have to eliminate the power of all the Friends of the Asteroid and Servants of the Asteroid.

      Reply
  7. TG

    The main thing that is impeding action on ‘climate change’ is the utter refusal to accept that Malthus was right.

    It’s all about the population growth – and government policies aimed at pushing it higher. For decades now, global per-capita energy consumption has been flat. The overall increase in energy use is due to population growth.

    Since a high in the 1970’s, per capita energy use in the Untied States has declined about 15 percent. However, the government’s cheap-labor immigration policy has more than cancelled that out (and no, immigration does not just move people around, it maximizes global population growth. A world without borders will soon have its population set by places like Bangladesh).

    So if people can actually conserve 15% of their per-capita energy use, and population is increased by 40%, we simply say that well the Americans didn’t conserve enough so it’s their fault. But 15% conservation is what Americans could actually achieve! Left to themselves the Americans would have been making slow but real and steady progress. It is dishonest to throw barriers in front of people, and when they cannot overcome them, blame the victim. If I throw someone into the ocean during a storm and they drown, well, they didn’t swim hard enough. I throw someone out of a plane without a parachute and they fall to their death, they didn’t flap their arms hard enough to fly etc.

    Bottom line: sure, in a lab setting you can have a process that is nominally twice as efficient as the existing ones. To make an entire established industrial economy 50% more efficient is another task entirely, it is far harder and more expensive than environmentalists acknowledge. Left to themselves, a stable population could make slow and steady progress – and it would only need to make slow and steady progress! But massive population increases are simply more than flesh and blood human beings can compensate for. It’s putting us on a treadmill that goes faster and faster, easily wiping out all of our progress and more, even as increased overall CO2 production increases the need for even deeper per-capita reductions…

    Environmentalists have never, ever come up with a real physical plan for how we can significantly reduce CO2 emissions in the face of continued population growth – because it’s not physically possible. We are led to the idea that somehow saving the environment is like Peter Pan – we just have to believe and think virtuous thoughts. But there is never any coherent integrated plan, because there can’t be.

    If we can’t talk about the primacy of population growth as the driver of climate change, we are wasting our time. We might as well just enjoy the party while it lasts.

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    1. lyman alpha blob

      Exactly. Which is why I get a chuckle from articles explaining what we’ll need to do to be able to feed the projected population of 12 or 15 or 18 billion people some number of decades down the road. The concept of a carrying capacity clearly isn’t a familiar one to these types of people.

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      1. Tony Wright

        Well said,TG, Shinola and lyman.
        Another way of putting it is ” if we don’t learn to live without growth and start reducing the plague of top predators(humans) which has overpopulated the planet, we are all screwed”
        Problem is, economists never study ecology or evolution, and now the US has a President who dismisses anything he does not like as ” Fake News”, including science.
        And ecology and evolution show that any species which overpopulates will be reduced by disease, famine or conflict, and we have added anthropogenically accelerated climate change as fuel to the process.
        Because we humans have the power of consequential thought, and because we have been successful in overrunning the planet, we arrogantly think we can override these laws of nature.
        We caan only hope that the economic crash that many pundits are now forecasting for the near future ( probably 2019 or 2020) , largely due to the $125trillion in debt accumulated to enable the massive growth of everything human, occurs to shake us out of our collective epidemic myopia.
        Then maybe we can start planning an economy based on sustainable ecology and without the perceived need for endless growth. And start repairing the massive damage we have done to the planet over the last couple of hundred years, so that we halt the massive species extinction we have caused, by preserving and repairing natural habitats.
        Plenty of jobs needed for that program MAGA voters, a hell of a lot more than are going to be created by some mythical resurrection of American manufacturing industry.

        Reply
    2. John Wright

      There is one environmentalist who simply stated:

      “The class of “No technical solution problems” has members. My thesis is that the “population problem,” as conventionally conceived, is a member of this class. How it is conventionally conceived needs some comment. It is fair to say that most people who anguish over the population problem are trying to find a way to avoid the evils of overpopulation without relinquishing any of the privileges they now enjoy. They think that farming the seas or developing new strains of wheat will solve the problem–technologically. I try to show here that the solution they seek cannot be found. The population problem cannot be solved in a technical way, any more than can the problem of winning the game of tick-tack-toe.”

      This was written by Garrett Hardin, almost 50 years ago (December 13, 1968)

      https://www.garretthardinsociety.org/articles/art_tragedy_of_the_commons.html

      Population control is never mentioned by the businesses that want more customers (the media, entertainment industry, homebuilders, retailers, medical industry, financial industry….)

      And the news media loudly decries the “demographic time bomb” in Japan as its population shrinks.

      How does a country shrink its population, short of organized killing of the elderly, without creating what is the much maligned “demographic time bomb”?

      I can’t think of ANY business group that doesn’t advocate for more “economic growth” which population growth feeds.

      In a broad sense, humans may be like other animals in increasing our numbers until we hit an environmental limit that limits our numbers. One large difference is that other animals do this in localized areas, while humans may be doing this, via climate change, to the entire world.

      It is a very interesting time to be alive, and as you wrote: “We might as well just enjoy the party while it lasts.”

      Reply
  8. mle detroit

    Thanks for the link. Shouldn’t it be strongarmeconomics.com? (The “About” page is good for a laugh.) Why does his last citation of social proof date from 2011? And none pertains to climate science or meteorology. Guess Mr Armstrong is using his $10k per hour to short the USA. I suspect he’s not alone. BTW. if you buy this, there’s a bridge in Cincinnati you may be interested in.

    Reply
    1. Wukchumni

      Perhaps before 2011, he was somewhere else Joliet-adjacent?

      The Nation of Celestial Space (also known as Celestia) is a micronation created by Evergreen Park, Illinois, resident James Thomas Mangan. Celestia comprised the entirety of “outer space”, which Mangan laid claim to on behalf of humanity to ensure that no one country might establish a political hegemony there. As “Founder and First Representative”, he registered this acquisition with the Recorder of Deeds and Titles of Cook County on January 1, 1949. At its foundation Celestia claimed to have 19 members, among them Mangan’s daughter Ruth; a decade later a booklet published by the group claimed that membership had grown to 19,057.

      https://en.wikipedia.org/wiki/Nation_of_Celestial_Space

      Reply
  9. Pelham

    Of course, we’re talking about neo-classical economics, aren’t we? Although this stuff is taught everywhere as a kind of science, it’s merely one school of economic thought out of many and has proved itself especially weak at the macro level.

    As a supposed science, it also excludes political factors and human nature, both of which underlie any sound economic analysis. Thus the conclusions of economists are useless at best, as in this case.

    Reply
      1. JBird4049

        Neo-Classical economics does have its limitations, but Neo-Liberal economics is just an ideological con job using the masquerade of being an honest economic ideology and study. Rather like how some “communist” countries used communism as a masquerade to their dictatorship or oligarchy.

        This is separate from whether neoliberalism, communism, capitalism, or many other economic, political, or social -ism are any good; they have all been used to justify pillage and oppression.

        If one compares Western Imperialism, using such countries as Spain, the United Kingdom or the United States and their empires to the Russian Empire and later its USSR and its Warsaw Pact and associated nations which all used a form of mercantilism or economic imperialism Raw resources and rough goods went to a central nation, were made into finished good be it clothes, furniture, or main battle tanks and shipped back. Different names, different ideologies, and some real differences, but the economic relationships between countries strangely similar.

        Reply
  10. Wukchumni

    Every last economist pretty much was ok with oodles of money emanating out of central bank money orifices to save the day a decade ago, they lost all credibility way back then, by condoning it.

    Reply
    1. JBird4049

      Not all of them. There were economists who were against socializing the losses while privatizing the profits or effectively printing oodles of free money and giving it to Big Finance. But yeah, too many sold their reputations for the money, and that is serious problem as we need honest and competent economists.

      Reply
  11. Ignacio

    For me the most important ideas in this post and I totally agree with these is that:

    Money just isn’t the appropriate frame when we’re talking about the planet. Climate change is a special problem that traditional economic analyses aren’t built to handle.

    Economists should be relegated to a secondary role as it occurs during (oh no!) wars and emergencies. This is an emergency. Politics should decide goals in terms of emission reduction, carbon consumption etc. I am quite sure that confronting economists with the goals that have to be met they would finally and creatively find their way to ensure that money is not the problem. All in all money is not a resource, it is just an exchange tool, it is not subjected to physical limits except those that we auto-impose ourselves.

    And markets, well markets… it’s like asking the casino to come and help with the fire in your house.

    Reply
  12. Chauncey Gardiner

    Thank you for enlightening me that financial metrics in the form of Net Present Value cost-benefit analysis and assumptions regarding the time value of money and other estimated costs are mandated in federal policy-making. I had not previously considered this, but given the policies implemented over the past several decades, it makes perfect sense, particularly if one ignores MMT.

    If the politically dominant values and federal public policy drivers are limited to financial values in an assumed environment of monetary scarcity, then the current policy set ranging from ignoring climate change to wars to homelessness to theft of public lands and resources and a multitude of other issues that ignore or seriously underestimate the externalities and transfer costs like acidic oceans, loss of vast swaths of previously arable land, and widespread public health issues are what we end up with. And the Supreme Court’s Citizens United decision locks it all up for the few temporary beneficiaries of the current policy set and throws away the key.

    Reply
  13. Ignacio

    I did some time ago a few analysis on the return of carbon footprint in energy efficiency investments. For instance I estimated that the carbon footprint of a PVC window (1m2 = approx 255 kg CO2) with heat transmitance of 2 W/m2K and air permeability below 27 m3/hm2 replacing an existing aluminium window (U = 5 W/m2K and P >50 m3/hm2) would be returned in saved emissions in about 3 years using 2012 estimates of KgCO2/kwh for Spain.

    In € terms the same window was fully amortized in 12 years…

    Reply
    1. Chauncey Gardiner

      Excellent idea, Ignacio, changing the “currency” in which the cost-benefit analysis is done. Thanks for this.

      Reply
  14. Bobby Gladd

    Then there’s POTUS:

    “One of the problems that a lot of people like myself, we have very high levels of intelligence but we’re not necessarily such believers. You look at our air and our water, and it’s right now at a record clean.”

    (WaPo, 11/27) SMH…

    Reply
  15. Jeremy Grimm

    I believe Phillip Mirowski is correct in arguing the key for dislodging the Neoliberal stranglehold over our political economy is dislodging the Neoliberal concept of the Market as an ultimate computer — the faith in the Market as the ultimate epistemological arbiter for all questions of human society and values. The business practices of cost-benefit accounting are tools supporting the broadest possible applications of the Market for problem solving. The Neoliberal Market is a tool of bad faith not epistemology.

    On the other hand the ‘fair’ application of cost-benefit analysis as a purely economic tool applied to business enterprise — to ALL layers of Corporate and Government management would be beneficial. Until that is done using costs and benefits for spreading limited capacity for action across multiple demands serves little purpose but to hide the embedded looting. By a ‘fair’ application I mean a measure of economic costs compared to economic costs and benefits weighed by their subjective values to an overall strategy. Enterprise requires an integrated strategy of actions as well as the careful application of resources.

    Reply
  16. JimTan

    A Cost Benefit Analysis for climate change might compare the cost of removing opposition to greenhouse gas reduction, versus the benefit of avoiding what environmental damages will result if greenhouse gasses are not reduced.

    Estimating the benefit of avoiding environmental damages is a little tricky, because no one really knows how many interdependent environmental phenomena will be impacted by global rising temperatures. Estimating the cost of removing opposition to greenhouse gas reduction, however, is a much easier assessment when you consider which interests are involved. The two main interests I can think of are greenhouse gas producers, and greenhouse gas consumers. Producers are opposed to greenhouse gas reduction because almost all their wealth is tied up in fossil fuel reservoirs that will become worthless if their contents cannot be extracted and burned. Some consumers have opposition to greenhouse gas reduction because this can mean a lower supply of some forms of energy, so their cost to consumers will become correspondingly more expensive.

    What’s interesting about the cost side of this analysis is it suggests a quantifiable amount of money which could purchase and idle the number of fossil fuel reservoirs which we estimate will contribute to rising global temperatures. Governments could also subsidize or regulate the resulting price spikes so that fair(er) prices for some rationed energies are available to all. I’m usually never a fan of rewarding bad actors in order to fix a problem they helped create, but there is historic precedence for solving intractable social problems by paying bad actors to go away. This is my two cents if all the better solutions to climate change fail.

    Reply
  17. steven

    Maybe the FIRE sector will save us – particularly the Insurance part of the acronym. (Maybe?) All they would have to do is tack on the cost of paying for the hurricanes, wildfire damage, etc of recent years – together with their usual and customary profit of (?)%, explicitly billing it all to climate change. My guess is that might change a lot of denialists to no-longer-denialists.

    Reply
  18. ChristopherJ

    This economist does not need reeducating. Done that all by self and feeling okay about the prognosis.

    Cairns had its hottest day (three in row in fact) ever this week – around 44. Birds were seen on the ground – a common sight – and my sunbirds gave up the eggs. We are right on the coast… Can’t see the coral surviving the water temps. Who wants more evidence that we are stuffed and there will be no place to hide, eh?

    Reply
    1. Tony Wright

      Maybe if a hurricane goes straight through Mar a Lago you know who might sit up and take notice…
      Our bushfire storms and unprecedented floods e.g. Here in northern NSW, dont seem to be penetrating the collective psyche of the govt. though

      Reply
      1. Tony Wright

        So we have had a total logjam here in Australia regarding both climate change and energy policy for the last decade.
        Thanks Tony Abbott – you created this, that is your wonderful legacy. Expletives( many) deleted.

        Reply
  19. Ignacio

    Using economic terms for climate change action is self defeating. Three years ago my expenses in electricity were about 2,22€/day. Even as energy prices have increased, as a result of improving energy efficiency and other energy saving my expenses are currently 1,67€/day (these are rolling-year daily averages). I have less economic incentives to invest in energy saving than three years ago. I have incentives but NOT ECONOMIC.

    Reply
  20. Susan the other

    Must ask if there has ever been a cost-benefit analysis done for ignorance and denial. I think those studies go under the sub-heading of chaos and conflict. That point where risk analysis is “overtaken by events.” Yves’ “the time value we assign to money… for assessing investments” is the mirage of the century. Time-value can only exist when time is on your side. I honestly think time has run its course for neoliberalism if not totally for capitalism. We can’t continue to defend the tenets of capitalism when capitalism cannot be made to work. And speaking of defense, it has occurred to me more than once that Trump is a realist. We lost our window for timely mitigation of climate change and now we are left with “adjusting” to it. We’ve known this was coming since the late 50s (Betty Friedan’s article was in 1958 – and it addressed the speculation that the planet would warm up, the ocean stream would equalize and the polar ice cap would melt, this would in turn cause more frequent and heavier storms producing a cooling and ushering in a cooler world, too cool, if not a new ice age.) So here we are facing floods, fires, plagues and famine. Literally. And it looks like everyman for himself – making perverse logic out of Trump’s behavior. That border wall? That’s our solution for global warming. I think the time passed us by long ago, at the early stages of the industrial revolution, to cut back to sustainable living. We let this thing get way out of hand without a clue how to change it. A good analogy is building nuclear reactors with sensitive maintenance demands because when they blow there’s no technology for stopping them or cleaning them up. Everybody just has to pack up and move. And all the developers looked at was the lifespan of projected profits.

    Reply

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