I was reading a newsweek magazine today in the doc’s surgery and in particular an article about the Kyoto Protocol. The author, a Bjorn Lomborg, was arguing against it having any real merit and used economic comparisons to make his point.
I apologise for no cite for the precise wording/figures used (Newsweek is a pay site and I wasn’t impressed enough with the mag to cough up) but they are not important to this debate - its the argument itself that is puzzling me, the thrust of which is this:
To meet Kyoto commitments, signatories will have to pay US$150 billion per year in total and if they do so, in 100 years, when US$500 billion of losses would be attributable to global warming if nothing were done in the intervening years, the warming effects will only have been retarded by six years.
The way I see it, though, that is comparing apples with oranges.
Admittedly, taxpayers and shareholders are going to have to shoulder a severe burden to bear, but looking at the situation in a macro way, as an author of such a piece surely should, that $150 billion spent every year is not being “lost”, its being pumped back around the system, paying people to install filters and scrubbers, develop cleaner technologies - even employing monitors to keep an eye on the whole undertaking.
Meanwhile, the $500 billion in losses we will be suffering in either 100 or 106 years will be real losses: primarily land, from which real wealth can be derived, be it through farming, manufacturing, housing … whatever.
If I’m right then, again from the macro point of view, any amount of money put into play to put back warming destruction by any amount of time would produce a net gain, wouldn’t it?
The author than argued that, since countries like Bangladesh will be much more wealthy in 100 years, $150 billion/year devoted to that country’s poor now would be better spent than if it was earmarked to combat global warming … I agree with the second part BUT I can’t see it as an either/or situation: Companies and tax-spending governments will not start giving any money that they may save from the abandonment of Kyoto to poor Bangledeshis, otherwise they would be already. Therefore that line of reasoning seems irrelevant.
Basically, the author’s argument as above seems flimsy to me.
I am doubtless missing something, please advise.
Marky, I agree with you in general, but I think you overstate the case when you say . . .
“Admittedly, taxpayers and shareholders are going to have to shoulder a severe burden to bear, but looking at the situation in a macro way, as an author of such a piece surely should, that $150 billion spent every year is not being “lost”, its being pumped back around the system, paying people to install filters and scrubbers, develop cleaner technologies - even employing monitors to keep an eye on the whole undertaking.”
Is this not the same as saying money spent on the Iraq war is not being lost, it’s being pumped back around the system paying people to build Humvees, kill people, etc.?
It is kind of the same. Just like with any economic arguement, the crux is whether the money is effectively translated into a better life for people through this spending. Are the gains in human welfare (the more general meaning of the term, not the government program) worth spending X amount of money? Would it be better spent elsewhere?
This is really difficult when we don’t have an excellent handle on the consequences of the problem, as with global warming.
That’s not to say that spending is a bad idea, though. It’s entirely possible the damages from increased warming could exceed $150 billion a year. Another factor to examine is whether this increased cost actually causes some savings: e.g. a hybrid car burning less fuel is expensive, but as that fuel becomes more expensive, the relative cost of the hybrid over other technologies goes down.
I didn’t read the article, so I can’t comment on specifics.
Look at it this way: that’s $150B you’re having to spend on something which you could be spending it on something else.
I suspect Lomborg would suggest that this is Broken Window economics.
For a supposed level-headed anti-hysterical skeptic (and note that he is merely a statistician, not a climatologist of any expertise whatsoever - ie. arguably an attention seeking troll) his hysteria about the costs of Kyoto is really quite comical, especially since examples such as the UK show that emissions can be reduced without economic detriment by encouraging such unthinkable Herculean tasks as turning stuff off when you’re not using it.
On the other hand, allowing emissions to increase without any regulation at all might have far greater economic consequences. Here is what those liberal tree-huggers at the Pentagon suggest will happen to the US economy.
Well, yes, it is isn’t it?
But of course, with war, you’re creating very real losses at the same time: death, the inability of injured people to work, destroyed buildings, contaminated land, etc, all take a toll on wealth and wealth creation, let alone the impact on quality of life.
Interesting idea but I don’t quite understand that example. Overall, the village has had its shopkeepers’ window restored and the same amount of money that was in play before the vandalism is still in play afterwards. Individually, the shopkeeper has lost out, but the village as a whole seems no better or worse off.
Read through again: the ‘broken window’ fallacy is that money spent in returning to the original situation means that money is not spent on further progress. The shopkeeper ends up with just an intact window when he could have had an intact window and something else.
I understand that but, if the shopkeeper only has a (new) window, the glazier then has the shopkeeper’s money to buy himself something else. Overall, there is still a window and something else, just not in the same hands.
But the glazer only made a (presumably small) profit from that money: most of it was used up in costs of materials and his own labour which itself could have been put to more “progressive” use than simply returning to the previous situation: the shopkeeper could have donated that money towards some good for the entire village like, say, a new clinic, and the glazier could have spent his time putting the windows in it, say. Overall, while the glazier and/or little boy may marginally be a benefactor, they are not the best possible one.
Of course, I don’t think the parable/fallacy of the broken window really applies to the possible abrupt and devastating climate change caused by carbon emissions (and that 5 year window just might be the exact ‘tipping point’: all expert climatologists say that 500 parts per million of CO[sub]2[/sub] approaches the very limit we can ever possibly allow - we’re at 378ppm now, ad rising by a record 3ppm per year), but it’s worth understanding anyway.
I thank you for your patience, SM, and I apologise if I’m just not seeing the bleedin’ obvious.
Even if the glazier is making but a small profit, the costs of materials are still being passed down to someone (manufacturers, suppliers, etc) - the money isn’t just disappearing - and while I understand that, potentially, the glazier could be employed in making something new rather than relacing something broken, that assumes he has “progressive” work booked that has to be put off to allow him to carry out the window replacement, doesn’t it? – which in the real world, may not always be the case.
Of course, in any specific situation things are not so black and white as “disappearance versus availability”. The parable is only to illustrate that spending following some kind of ‘breakage’ is not equivalent to other kinds of spending, but inferior. After all, upon hearing that a country is experiencing economic stagnation we do not suggest that the population holds a nationwide KristalNacht to jumpstart the economy!
I never finished Lomborg’s book (the library wanted it back) but I think his point is the cost would be in reduced productivity and growth - sort of as if Saudi oil wells just suddenly went dry. So it’s not that the money would be spent elsewhere but that the money, i.e. growth, would not be created.
But if fears of global warming are well-founded, then after we pass that “tipping point” by or before 2020 (as predicted by the Pentagon analysts in SentientMeat’s link) we’ll be in a world where any wealth creation is problematic, and we’ll be doing well just to survive. Isn’t that more important (i.e., expensive) than any “opportunity costs” that adhering to the Kyoto Protocol might involve?
From the link – Now the Pentagon tells Bush: climate change will destroy us | Environment | The Guardian
I just wanted to say that I haven’t read this thread, but I just watched The Day After Tomorrow, and it seems that ignoring the Kyoto treaty will result in the desalinization of the oceans, which (obviously) causes hurricanes and tornados and other stuff, which (obviously) results in immediate global cooling. I know that all of this must be scientifically correct, because this movie was an obvious remake of Independence Day, and that movie was scientifically correct on all counts.
(OK, I’ll remove myself to CS, or just go to bed. I think that 12 beers is probably enough.)
Come on, Rucks, you can manage 13! Nice baker’s dozen! CHUG! CHUG! CHUG!
What you’re missing is that you’re down a window.
Suppose a window is worth $20. If the window ISN’T broken, you have a $20 window from which you derive utility - you can keep your store warm and birds and bats won’t fly in. It’s worth something in and of itself. In addition to your $20 window, you also have $20 in cash you can spend on other stuff.
Now, imagine the window is broken, and you must spend your $20 in cash to buy a new window. You are correct in that THAT twenty bucks, in cash, is still around, it’s just been redistributed. But you’ve lost a twenty-dollar window. Before, you had $40 in utility - a $20 window and a $20 picture of Andrew Jackson. But now, with the window broken, you only have $20 - the cash. The window is lost, not the cash.
Can we drop the “parable of the broken window”? It’s like arguing about whether the Hindenberg charged too much for passenger tickets, it’s completely irrelevant. The question is not whether compliance or noncompliance with the Kyoto Accords would produce the more economically optimal results for any particular country. The question is whether widespread noncompliance would or would not lead to an irreversibly environmental disaster for the whole world.
Do you mean money spent on any clean-up between now and year calamity could be “better” used in straight wealth creation? Is this loss what he means by costs?
If that is so, surely there will be many bi-products of cleaning up the environment (and I don’t want to break any windows here), the value of which is impossible, even for the most gifted statistician, to estimate.
There’s no doubt that cleaning up the environment will produce useful by-products and technologies but I don’t think this will be restricted to some sort of International agreement.
It will be valuable for corporations to clean up the environment in the future just as it has in the past 30 years or so. New technologies and products will be discovered as a result of this effort.
I think what Lomborg believes is that agreements like Kyoto will require us to slow down growth (and so new tech/product invention in many fields) in order to reduce the severity of a possible calamity by a negligible ammount using clearly unreliable (to date) data.
Slowing growth will reduce created wealth which will, for sure be a calamity - most especially for developing countries. Less world wealth for us means fewer TV’s. For poor countries it means more sick and dead people.
I gotta get that book back.