Paul Krugman. Pot. Kettle. Black.
Paul Krugman has argued in his most recent New York Times column that opponents of the Waxman-Markey energy and environment bill (a.k.a. the “cap-and-trade” bill) are dishonest when they argue that it would be expensive to implement. He starts with wisecracks about climate change deniers; in what I assume is a first for Professor Krugman, he cites the behavior of a corporation as positive evidence for the moral worth of his position; and he quotes Joe Romm’s blog complaining that opponents of cap-and-trade are constantly changing their analysis in order to support pre-determined conclusions – which for anybody involved in this debate qualifies as the only really good laugh line in the piece.
When Professor Krugman eventually gets around to addressing substance, here is his argument:
[T]he best available economic analyses suggest that even deep cuts in greenhouse gas emissions would impose only modest costs on the average family. Earlier this month, the Congressional Budget Office released an analysis of the effects of Waxman-Markey, concluding that in 2020 the bill would cost the average family only $160 a year, or 0.2 percent of income. That’s roughly the cost of a postage stamp a day.
By 2050, when the emissions limit would be much tighter, the burden would rise to 1.2 percent of income. But the budget office also predicts that real G.D.P. will be about two-and-a-half times larger in 2050 than it is today, so that G.D.P. per person will rise by about 80 percent. The cost of climate protection would barely make a dent in that growth. And all of this, of course, ignores the benefits of limiting global warming.
Professor Krugman starts here by repeating the already-hackneyed political talking point that over the next decade Waxman-Markey is projected to have the same cost as “a postage stamp a day”. He then, to his credit, proceeds to consider its projected costs by 2050, which is crucial because emissions mitigation would need to be sustained for many, many decades in order to achieve its desired climate effects. He waves his hand at a projected cost of about 1% of income. But 1% of U.S. income is an enormous amount of money. Suppose I proposed some government program, and told you that it would cost “only” $150 billion per year, every year, for more than a hundred years, and then told you that this was no big deal because it’s only about 1% of the economy? I mean, it would “barely make a dent”. His argument is absurd.
Of course, if there were a persuasive case that it would create benefits that would more than offset this cost, it would be rational to support it. What is his argument about the benefits? “And all of this, of course, ignores the benefits of limiting global warming.” That’s it? Professor Krugman has a Nobel Prize in economics – he’s got to be able to do better than that. Why doesn’t he make any attempt to justify the costs? As I’ve argued at length, even using assumptions that are extremely favorable to the bill, the expected costs of Waxman-Markey are at least ten times larger than the expected benefits to U.S. taxpayers.
Professor Krugman then concludes his column with seven paragraphs that chastise his ideological opponents for lacking fair-mindedness and intellectual rigor.
Jim, since you’ve never bothered to actually refute the following arguments, I guess I’ll just stick them as a disclaimer to every AGW post you make here:
1. The analyses you’ve been citing for the economic costs of global warming are of limited use, at best – they don’t include the effects of ocean acidification, they don’t factor in the economic costs of wars and other conflicts caused by climate change, and they don’t include the <a href=“http://www.motherjones.com/kevin-drum/2009/09/climate-change-even-worse-you-think”>latest science</a> on AGW, which gets worse all the time. Yes, I know you’re using the IPCC estimates, but nobody – yourself included – has come anywhere near to showing that the economic parts of those reports are anywhere near as accurate or rigorously researched as the IPCC scientific analyses.
2. Even if those economic estimates are accurate, your arguments are still questionable. Even assuming strong growth under a scenario where little is done to fight climate change, there’s no guarantee that the growth will be uniform, or even that any of it will help those who will be most affected by global warming – certainly places like Somalia and Ethiopia have not done spectacularly well over the past 20 years, even though global economic growth has been good. Nor is there any evidence that economic growth will be all that effective in fighting the changes AGW will bring – spreading consumer goods to the third world is a good thing on balance, for example, but they don’t make it any easier for people to get access to clean drinking water.
3. Even if global warming in the future can be dealt with by the economic growth we’ll get by not dealing with it now, we’re still be damaging or destroying significant chunks of the ecosystem by letting it happen. You seem fine with writing that damage off with a dollar figure and nothing more – I, and others, would argue there are cost considerations other than money at play here.
— Chris · Sep 26, 07:20 AM · #
Speaking of the latest science: I saw this via Iain Murray’s fisking of the Krugman article. The blogger of course thinks it’s potentially game-changing. I have no aptitude to evaluate that claim, so I put it to you, Jim, to please offer your stance, since I have child-like trust in your ability to honestly and cogently evaluate climate data.
— Blar · Sep 26, 02:58 PM · #
Of course much of the point of single-nation efforts on global warming is to persuade other nations that we are serious about the threat. And that’s where your linked essay falls apart.
By your reasoning, if you are on a rowboat that is drifting towards the edge of a waterfall, and you are trying to urge everyone on the boat to pull at the oars, it’s useless to row oneself until you have persuaded everyone on the boat to row as well. If you pull at the oars yourself, though in such a way that is clearly inadequate to avert catastrophe, everyone else will simply leech off of your effort.
On the other hand, for those who don’t think we are really headed for a precipice, your reasoning is doubtlessly more persuasive.
— kth · Sep 26, 07:23 PM · #
@kth: What if “rowing by yourself” is more harmful than doing nothing?
— Blar · Sep 26, 08:00 PM · #
Blar-
I haven’t seen much discussion of the Linden paper, but this comment over at the Real Climate blog doesn’t make it sound like the end-all-be-all refutation to AGW that Iain Murray and others apparently do. Nor is Iain Murray’s fisking all that impressive, but that’s a separate argument.
— Chris · Sep 27, 02:12 AM · #
Blar:
I have the same reaction to this that I do to the opposite attempts to argue that some specific paper now shows we’re much worse off than we thought: The reason we bother to go through the IPC process with thousands of scientists every five years is that its really hard to collate the available information and create the best available estimates. If one person could just read the papers and draw the right conclusions, we’d just ask him instead.
— Jim Manzi · Sep 27, 04:18 AM · #
Chris:
Yes, I know you’re using the IPCC estimates, but nobody – yourself included – has come anywhere near to showing that the economic parts of those reports are anywhere near as accurate or rigorously researched as the IPCC scientific analyses.
There are at least a couple of huge problems with this argument.
First, all estimates of the climate impact of human-induced CO2 emissions rely on a long-term emissions forecast, which in turn relies on (i) forecasts of population growth, (ii) forecasts of economic growth per capita, (iii) forecasts for the energy intensity of economic output per capita, and (iv) technology forecasts for the carbon-intensity of each unit of economic output. That is, we can’t make a long-range climate forecast in the absence of long-range economic forecasts.
The differences in emissions across economic scenarios are not trivial. They are the basis for the UN IPCC’s scenario-based forecasting approach that leads to a difference in estimated temperature impacts by 2100 that are about 3 times larger for the highest-emissions plausible scenario versus the lowest emissions plausible scenario.
Second, if we assume that we have literally no technical capability to translate a temperature forecast to a forecast of damages, then we are forced to rely on intuition. A 3C increase by 2100 in temperature sure doesn’t sound so awful to me. Want to argue that I’m misguided, and here is this long list of awful things that will happen? We’re right back to estimating damages, and I’ll just point to what the IPCC, CBO, EPA and so forth estimate when they try to do comprehensive estimates of net impacts.
Look, I get the point that trying to forecast what our GDP will be in 2136 to within a few percent is ridiculous. It is. Further, I get the point that indefinite accumulations of CO2 in the atmosphere will eventually become very damaging. I also get the point that there is some risk that we might reach that point sooner than we think. These are all true statements.
But if they are to inform rational decision-making, they also require quantitative, not rhetorical, interpretation. When do we expect that CO2 will be how big a problem? How big is the risk that it will be worse than that? And so on. While we may legitimately criticize a specific cost-benefit analysis or methodology, it seems hard to imagine a rational approach to such decision-making that doesn’t try to envision the future world under alternative policy assumptions and assert a preference.
So, show us your alternative forecasts and provide sources and methodologies. If you choose to respond with a bunch of words describing how awful things could look, or wave your hands, you’re still making a forecast – it’s just not of any real use. False precision is one way to evidence the problem of a unwarranted assertion of certainty, but so is simply asserting that we know the damages that we should expect within some finite time outweigh the costs of some proposed program to avert them, without providing the evidence.
The forecasts of every responsible body, as I have gone to such boring lengths to show over many articles, actually make it very hard to justify any so-far proposed carbon pricing or rationing schemes based on the benefits we should expect them to produce over the next roughly 100 years. (I think the fact that my critics are mostly attacking the idea of cost-benefit analysis itself, rather than my quantitative arguments, is pretty good evidence of this.) Eventually, of course, if we assume linear extrapolation of current trends, CO2 will become a deadly problem; but I think if you’re honest, you’ll find yourself having to justify these programs based on things that you project will happen in the 22nd century and beyond. Who’s being arrogant about predicting the future now?
— Jim Manzi · Sep 27, 04:34 AM · #
Fair enough, but a 3 degree increase in the Earth’s temperature represents an energy increase of 4.5 quintillion kJ. That’s an amount of energy equivalent to that necessary to drive about 100 hurricanes.
— Chet · Sep 27, 07:43 AM · #
Jim-
This is not true, strictly speaking – insofar as emissions forecasts do rely on economic growth forecasts, said forecasts are, as far as I’m aware, nowhere near as accurate as the kind of numbers you’re throwing around trying to discredit taking action on global warming. In fact, all that’s essentially needed for climate modeling purposes is carbon emissions over time, and while that data can be derived from broad economic models, it can also be derived from linear extrapolation from historical emissions.
In short, it’s simply NOT the case that the accuracy of climate forecasts is inexorably tied to that of economic forecasts.
I’m not saying we “have literally no technical capability to translate a temperature forecast to a forecast of damages,” but I am arguing that nobody has demonstrated that we have the technical capability to forecast damages with anywhere near the accuracy needed to argue that we’ll be OK without acting on global warming. There’s a substantive difference between the two.
No, we’re not back to estimating damages, Jim. We can have a pretty good idea of the kind of tipping points that global warming will bring – there’s a list in the Kevin Drum article I linked to earlier, for instance – but that doesn’t imply we can estimate economic damages. Case in point, the Indian Monsoon cycle is already in danger of changing because of global warming. Can you or I or anyone else estimate the economic or political fallout from that? Has the IPCC, CBO, or EPA even tried? And if not, doesn’t that make the economic estimates you keep relying on essentially meaningless? It’s like talking about the costs of Katrina by calculating how long the oil refineries and the Port of New Orleans were offline, and completely overlooking the destruction of half the city.
This is false, bordering on ludicrous. We make a huge number of decisions, from the mundane to the earth-shatteringly important without the kind of “quantitative” interpretation you’re talking about, Jim. Did FDR calculate the loss to US GDP that an Axis-dominated world would imply, and compare that to the cost of launching World War 2? Did Jefferson demand a precise resource inventory and estimated industrial production schedule for the Louisiana Purchase territory before he signed off on the deal? Are we currently parsing out research money for swine flu because we have solid numbers on how much money it’ll take out of the economy if we don’t develop a vaccine, or are we simply proceeding with research because we know a large-scale epidemic will be bad (although we don’t know how bad), and because a vaccine will save lives?
You can dismiss these decisions as “rhetorical” if you want, Jim, but I don’t think you’d find many people willing to agree that said decisions aren’t rational.
Actually, Jim, I’m not attacking the idea of cost-benefit analysis itself – I’m attacking its relevance to this particular question, in large part because your quantitative arguments lack several key considerations, such as ocean acidification. More than that, I’m pointing out that unchecked global warming could lead to, among other things, millions dead in water wars between India and Pakistan, or the virtual destruction of key rivers in China due to evaporating Tibetan glaciers.
How on Earth can you quantify the economic loss associated with such things, Jim? More importantly, how can you stand up with a straight face and say that it’s not worth trying to cut back on the carbon emissions that will cause these deaths because it will mean Americans will get rich less quickly?
— Chris · Sep 27, 08:26 AM · #
Chris:
In fact, all that’s essentially needed for climate modeling purposes is carbon emissions over time, and while that data can be derived from broad economic models, it can also be derived from linear extrapolation from historical emissions.
But you would be linearly extrapolating a trend that was created by a century of dramatic, ahistoric growth. You would be making an implicit economic forecast, but burying it within this assumption of linear growth.
I am arguing that nobody has demonstrated that we have the technical capability to forecast damages with anywhere near the accuracy needed to argue that we’ll be OK without acting on global warming.
Then how we do we have the accuracy needed to argue that it will create a severe problem?
We can have a pretty good idea of the kind of tipping points that global warming will bring – there’s a list in the Kevin Drum article I linked to earlier, for instance – but that doesn’t imply we can estimate economic damages.
Once again, if we don;t care about the climate changes per se, but rather economic results (in the broad sense of the term “economic”, i.e., incorpoarting the loss of life, consumption and so on), it would not matter if we could predict the “tipping points” or any other climate changes, if we lack the ability to translate the forecast of climate changes into economic effects.
— Jim Manzi · Sep 27, 07:15 PM · #
Are you serious?
— Chet · Sep 27, 07:39 PM · #
And, as I said before, Jim, it’s not that economic forecasting is completely and utterly impossible, but that we can’t (or at least, you haven’t proven we can) do it at the accuracy we’d need to comfortably write off damages arising from AGW. It’s one thing to forecast a range of emissions schedules, based on various extrapolations from the historical record, and note that certain scenarios are in-line with what we’d expect to see from moderate economic growth and moderate improvements in energy efficiency (or low growth and low efficiency, etc.) It’s another thing entirely to say that we know that the fallout from allowing global warming to continue unchecked will be manageable.
Let me state this again, more clearly: it’s not unreasonable or illogical to forecast what kind of climate change will happen if carbon emissions continue to grow or shrink across a range of rates. What you’re saying, however, is that we can take those forecasts, accurately predict the kind of climate change that will be caused, and, on top of that, accurately predict the economic fallout from climate change to a degree where we should be comfortable not taking action against AGW, even though we’re not taking a wide range of germane factors (geopolitical reaction to shifting water resources, ocean acidification, etc.) into account.
Jim, this simply doesn’t work. You can’t urge inaction in the face of forecasts that even you are implicitly admitting are badly incomplete.
Because there are a huge range of things we can predict will create severe problems without being able to economically quantify how severe a problem they’d be. War. Famine. Epidemics. Terrorist attacks. Speculative bubbles. Dinosaur-killer asteroids. Are you seriously arguing that we cannot make the statement “These are bad things, but we don’t know how bad they will be?”
I do care about climate changes per se, but that said, as far as I can tell the IPCC economic forecasts you’re relying on do NOT use the “broad sense of the term economic” – they’re NOT concerned with loss of life so much as loss of dollars. And unless you can show otherwise, it’s dishonest of you to pretend that these forecasts are accurate enough to be used in cost/benefit decision making.
— Chris · Sep 27, 09:31 PM · #
Jim,
Great post, as usual. For those who are still reading the comments, please forgive me for linking to my own critique of Krugman on these issues over at MasterResource. In particular, Krugman basically called Martin Feldstein a liar and a fool for using the $1600 per household figure as Waxman-Markey’s cost, when Krugman’s own suggested numbers (expressed as a percentage of GDP) work out to $4,800 per household by 2050, or $2,700 per household even if the economy didn’t grow between now and 2050. It’s simply hilarious. I don’t know if Krugman even realized this was the case, or knew and didn’t care.
— Bob Murphy · Oct 3, 09:34 PM · #
Chris, you are right – I think we should spend the climate change prevention money instead on asteroid prevention. Asteroids are much worse than climate change.
— andrew · Oct 6, 06:57 PM · #