Quote of the day: Robert Murphy on climate change
"In the climate change debate, people often forget that under all but the most catastrophic scenarios, the future generations who will benefit from our current mitigation efforts will be much richer than we are."
- Robert Murphy
As I paste that above quote into my blog writer, I have beside me a post from the Green Party’s Frog Blog called ‘Calling names isn’t nice, especially when you’re wrong.’ It’s a doozy. Its connection with Murphy’s point above will quickly become clear. It begins thus:
I previously blogged about last night’s climate change target meeting in Wellington, where amongst other failings, Nick Smith accused the Green Party of only caring about the environment and having no regard for the impact on the economy.
Of course Smith is dead wrong on this, just as he is on everything – including his decision to keep breathing. The Green Party don’t care about the natural environment. Not in any genuine sense, they don’t. With their proven penchant for bans and big government, and a caucus composed almost entirely of the intellectual remnants of the Socialist Workers’ Party, they’re just a bunch of authoritarians with a marketing wing – and with Jeanette Fitzsimon’s departure even their figleaf of genuine environmentalism is about to disappear with her.
If you really want to see Greenwash in action, then the Green Party is the single most prominent contemporary example.
And it’s not true either to say that they’re unconcerned about the destructive economic impact of their regulation fetish. They and their luminaries are only too happy to have our economic lifeblood destroyed.
Anyway, their mention of Nick Smith is distracting me from from the main point of their post, and of this one. The post at Frog Blog continues on to its main point, saying (apparently completely without irony):
In the spirit of economic literacy, I wanted to remind our readers of these words from a recent Australian Treasury report into the economics of climate change: “The Treasury’s modelling demonstrates that early global action is less expensive than later action.”
I say “completely without irony” because if there is any group of people for whom economic illiteracy is a watchword it is the Green Party. There is surely no higher density of economic illiterates than in the un-perfumed climes of the Green Party’s electorate offices – except perhaps in the offices of Alan Greenspan and Ben Bernanke.
And as regards the “Treasury’s modelling,” it has about as much credence as BERL’s now thoroughly discredited report on the social costs of alcohol. Based as it is on the flawed “model” produced by Nicholas Stern at the behest of the British Treasury to justify onerous carbon taxes now to help the British Treasury later, the Australian Treasury’s modelling shares all the errors of Stern’s flawed report, including it’s utterly discreditable use of a carefully selected discount rate – a discount rate selected (like BERL’s careful rejection of the “benefits” side of their cost-benefit study) so as to give him the results his client had paid for.
As William Nordhaus (no friend of free markets) explains the resultant absurdity:
Suppose that scientists discover a wrinkle in the climate system that will cause damages equal to 0.1 percent of net consumption starting in 2200 and continuing at that rate forever after. How large a one-time investment would be justified today to remove the wrinkle that starts only after two centuries? Using the methodology of the [Stern] Review, the answer is that we should pay up to 56 percent of one year's world consumption today to remove the wrinkle. In other words, it is worth a one-time consumption hit of approximately $30,000 billion today to fix a tiny problem that begins in 2200. [Italics in original]11
The intent of all the “modelling” carried out by the World’s Treasuries is nothing less than to justify strangling industry now (fifty percent by 2050 says our own John Key) for some unknown and unproven benefit in the future for your grandchildren – who, if we can predict anything with confidence, will probably want to know why your stupidity now has left them so poor.
Economist Robert Murphy (whose writings the Greens would do well to read if they do seriously wish to improve their economic literacy), points out in ‘The Economics of Climate Change’ that even the idea of modelling economies one-hundred years ahead is fatally flawed.
Fans of Austrian economist Friedrich Hayek—who warned against the "pretense of knowledge"—should be even more concerned about the sheer audacity of the field of climate economics. After all, it is rather absurd to argue about the impacts of present tax policies on global temperatures in the year 2150. Yet, it is precisely these projections that provide the foundation for policy recommendations.
Many critics have raised this objection before, but it bears repeating: We have no idea what the world economy will be like in the 22nd century. Had people in 1909 adopted analogous policies to "help" us, they might have imposed a tax on buggies or a cap on manure, needlessly raising the costs of transportation while the U.S. economy switched to motor vehicles. This is not a mere joke; "serious" people were worried about population growth, and the ability of large cities to support the growing traffic from horses. Had someone told them not to worry, because Henry Ford's new Model T would soon transform personal locomotion without any central direction from D.C., these ideas would probably have been dismissed as wishful thinking. As famed physicist Freeman Dyson has mused, future generations will likely have far cheaper means of reducing atmospheric concentrations of carbon dioxide, if the more alarming scenarios play out.18
In the climate change debate, people often forget that under all but the most catastrophic scenarios, the future generations who will benefit from our current mitigation efforts will be much richer than we are. For example, Nigel Lawson points out that even under one of the worst case scenarios studied by the IPCC, failure to act would simply mean that people in the developing world would be "only" 8.5 times as wealthy a century from now, compared to 9.5 times as wealthy if there were no climate change.19
To translate, this means that even if the scare-mongers were correct, they intend to strangle prosperity now – in the midst of the deepest depression in seventy years – simply so that your future generations one-hundred years from now might be able to afford an extra Pan-Galactic Gargle Blaster while they orbit the planets.
May I suggest that instead of bleating about name-calling, the authors of Frog Blog instead acquaint themselves with some real economics. And read and digest the arguments in Murphy’s ‘The Economics of Climate Change.’ It would leave them looking less embarrassed when they talk so smugly about the economic illiteracy of others.