Coyote Blog

The ultimate argument I get to my climate talk, when all other opposition fails, is that the precautionary principle should rule for CO2.  By their interpretation, this means that we should do everything possible to abate CO2 even if the risk of catastrophe is minor since the magnitude of the potential catastrophe is so great.

The problem is that this presupposes there are no harms, or opportunity costs, on the other end of the scale.  In fact, while CO2 may have only a small chance of catastrophe, Bill McKibben's desire to reduce fossil fuel use by 95% has a near certain probability of gutting the world economy and locking billions into poverty.  Here is one illustration I just crafted for my new presentation.  As usual, click to enlarge:

A large number of people seem to assume that our use of fossil fuels is an arbitrary choice among essentially comparable options (or worse, a sinister choice forced on us by the evil oil cabal).  In fact, fossil fuels have a number of traits that make them uniquely irreplaceable, at least with current technologies.  For example, gasoline has an absolutely enormous energy content per pound of fuel.  Most vehicles - space shuttles, and more recently electric cars - must dedicate an enormous percentage of their power production just to moving the weight of their fuel.  Not so in gasoline engine cars, something those who are working with electric cars must face every day.

By the way, if you want to see the kick-off of version 3.0 of my climate presentation, it will be at my son's school, Amherst College, this Thursday at 7PM.  More here.

Update: By the way,  I was careful in the chart to say the two " are correlated".  I actually do not think one causes the other.  In this case, I think there are a third, and fourth, and fifth (etc.)  factors that cause both.  For example, economic development leads to (and depends on) increased fossil fuel use and CO2 emissions, and it leads to longer lives.

I know this is one reason ExxonMobil is hated by many, but you gotta love a CEO who is actually willing to speak his mind rather than spew the reconstituted generic platitudes that you get from most companies.  From CEO Rex Tillerson:

"If you want to live by the precautionary principle, then crawl up in a ball and live in a cave."

I found this 2009 graph and comment by Paul Krugman (dredged up by Megan McArdle) to be a hilarious call to arms for all his fellow lemmings to follow him over the cliff

[from November 2009]:  Why, people ask, would I want to compare us to Belgium and Italy? Both countries are a mess!

Um, guys, that's the point. Belgium is politically weak because of the linguistic divide; Italy is politically weak because it's Italy. If these countries can run up debts of more than 100 percent of GDP without being destroyed by bond vigilantes, so can we.

Today I spent time arguing with a group of folks about global warming and the precautionary principle.  The others all argued that a slim chance of a catastrophe justified immediate action.  I argued, of course, that they were understating the cost of the intervention, but that is another story.

Its amazing to me that so many on the Left squawk about the precautionary principle in the case of climate, but are ready to continue running up government spending and deficits despite the fact that the disaster of this approach, given the experience in Europe, is no longer even debatable.  Its simply math.

Our problem will play out differently than in Europe.  Long before interest rates on US securities run up to the 6% or so tipping point, the Fed will be running the printing presses.  Don't believe me, well, they already have been.

Savers beware, our path will be devaluation and inflation.

By the way, the speed with which hyperinflation can take hold is astounding.  Here is the inflation rate in the Weimar Republic.  As with the Fed today, the central bank of the Weimar Republic was buying up government debt with printed currency.  Look how fast the inflation took hold:

(source)  Imagine a quarterly meeting of the Fed in August of '22.  They are probably looking at month-old data, and in July it looks like everything is under control.  Boom, three months later, by the next schedule quarterly meeting, inflation is already out of control.  Krugman would say not to worry about inflation, they will have plenty of time to act.  Coincidently, this is exactly what Italy and France and Spain said about their sovereign debt, but in a flash, the crisis was upon them and so far out of control there is nothing they can do.

Here is an amazing example of how far the state will go to protect entrenched competitors from new competition.  Because it is far more important to make absolutely, 100% sure (precautionary principle, you know) that no one is competing in the Minneapolis market without a license than it is to encourage volunteer-ism in the wake of a natural disaster.

Tree trimmers who work in Minneapolis need to be licensed with the city. It’s a regulation in place throughout many cities, and something Haege knows all about. He’s licensed in Hastings and several area cities. Since he doesn’t work in Minneapolis, he isn’t licensed there.

All that was moot, of course. He was just going to volunteer and was not charging residents for his services.

He had brought a bucket truck to get high if needed, and he brought a wood chipper to dispose of fallen trees. He and the volunteers got to work on homes where the resident didn’t have insurance.

“We were removing stuff so people could get out of their driveways and out of their doors,” he said. “The place was a pretty big disaster.”

What happened next shocked Haege.

A city inspector arrived at the scene. She told Haege he had to leave. Immediately.

“You have to leave right now,” the inspector told Haege. “You’re not licensed to be here.”

“I said, ‘I’m just a volunteer,’ and she didn’t believe me.”

Haege went back to his truck and got his volunteer paperwork. Still, that did little to get the inspector off his back.

“I don’t want to see you up here,” she told him.

“She just didn’t believe me,” he said.

A volunteer from the Urban Homeworks, who had been with Haege since he signed up to volunteer that morning, did his best to convince the inspector that Haege wasn’t charging for his services.

Residents then came out of their doors in his defense, telling the inspector that he had just performed work at their house and hadn’t charged them a dime. Still, the defense fell on deaf ears.

The inspector told him to get out of the city, so Haege left with the volunteer. As they were on their way back to the volunteer area, residents waved down Haege, pleading for help. He pulled over and helped get a tree out of the way for them.

Haege had no idea police officers were behind him in a sort of unofficial escort out of town. He said they stopped traffic for about two hours while they figured out what to do with him. At one point, officers threatened to throw him in jail, he said.

All the while, residents continued defending him, screaming in his defense.

Officers told him to leave. They told him he was going to receive a “hefty fine” in the mail, and that if he stopped on the way out, the fine would be doubled.

I have to tell one of my favorite stories of chutzpah.  In the 1940's and 1950's, railroads were making the transition from steam engines to diesel engines.  One of the changes was that a diesel engine only needed a driver, it did not need a fireman as steam engines did to shovel coal and keep the boiler running well.   The unions of course saw this coming.  So what did they do?  They preemptively made the demand that diesel engines should have to have TWO fireman.  Railroads spent so much time fighting this insane proposal that it took them years to get the firemen per locomotive to the correct number (ie zero).

I am reminded of this story when I think of how the Obama administration has handled the issue of CO2 abatement.  Reasonable people understand that CO2 abatement will be horrifically expensive - it just will not be cheap in terms of cost or lost economic output and lost personal liberties to take the country back to a CO2 per capita it last had in the 19th century.     But rather than taking this on, the Obama administration preemtively attacked, saying that in fact Co2 abatement would lead to economic growth and job creation.  This was the broken windows fallacy on steroids, but the usual progressive illiterates and consumers of party talking points have run with it.

We are finally getting folks to start to address the true costs of CO2 abatement, and they are enormous.  People who push the precautionary principle try to say that even a small risk of climate catastrophe outweighs some minor abatement costs.  But does a small change of manmade warming outweigh a near certainty of enormous economic costs?

I have said for years that to really get to an 80% reduction target, gas prices would have to rise over $20 a gallon  (they are at $10 already in Europe and they are no where near the targets).  Some researchers looked at the gas price implications of more modest CO2 targets:

To meet the Obama administration's targets for cutting greenhouse gas emissions, some researchers say, Americans may have to experience a sobering reality: gas at $7 a gallon.

To reduce carbon dioxide emissions in the transportation sector 14 percent from 2005 levels by 2020, the cost of driving must simply increase, according to a forthcoming report by researchers at Harvard's Belfer Center for Science and International Affairs.

And this is with a straight tax, probably the most efficient way to hit the targets.  The study agreed that other intervenist approaches didn't seem to work as well as a straight tax:

In the modeling, it turned out that issuing tax credits could backfire, while taxes on fuel proved beneficial.

Indur Goklany (pdf) has deconstructed the IPCC climate forecasts and models and finds something interesting -- for all the forecasts of catastrophe, it is hard to find it in the actual IPCC numbers  (vs. off-the-cuff statements by folks like Al Gore).

First, one needs to understand the basis for the various scenarios crafted by the IPCC.  I will leave some out, and focus on Goklany's analysis of just two - the IPCC A1F1 and B1 scenarios.  (the charts below have been edited to simplify them to just these two scenarios)

One can think of A1F1 being close to a "do nothing" scenario on CO2, what is often called a Richer but Warmer scenario.  The B1 scenario represents fairly large interventions in Co2 use and investments in energy technologies, with lower CO2 concentrations and as a result lower but still positive GDP growth  (it takes only a small change in GDP growth to result in large changes in GDP 80 years hence -- the miracle of compounding).  This is the cooler but poorer scenario.  I know the Left has a fantasy that climate legislation is somehow an economic engine, but most economists on this reality plane achnowlege a tradeoff between CO2 intervention and economic growth.

Goklany collates the impact on mortality from these two scenarios in the IPCC report:

Note that I am not even bothering to quibble with the IPCC numbers, which I could.  I have written plenty that these temperature increase forecasts are based on assumptions of positive feedback in the climate that make little sense.  Further, it makes little sense that the poorer and less advanced world in B1 would have lower base mortality than the richer, more advanced world.

Nevertheless, we can make three observations:

• The difference in mortality from "do nothing" to "strong intervention" is small, and I would suspect hardly statistically significant
• The improvement in mortality from advancing technology and wealth from the 1990 baseline dwarfs the effects of climate change
• The mortality improvements from massive focus on climate change are trivial compared to those that could be achieved with much less expensive focus on other issues.

Hat tip to Watts Up With That, who has more here in a guest essay by Goklany.

A bit over a week ago, I forecast that we had passed the economic bottom and would soon be back on the way up.  The IBD lists a number of reasons why I may be correct:  (ht:  Carpe Diem)

"¢ A broad rally in stocks, confirmed last Thursday, continuing into this week and led by the beaten-down financials.

"¢ A surprising 22% surge in February housing starts to a seasonally adjusted annual rate of 583,000 units.

"¢ A back-to-back jump in retail sales ex autos, in both January and February.

"¢ A return to profitability at several major banks, including Citigroup, Bank of America and JPMorgan.

"¢ A doubling in the obscure but important Baltic Dry Index, a key indicator of global trade flows.

"¢ An upwardly sloping yield curve, which Fed research suggests all but ensures a rebound by year-end.

"¢ A Housing Affordability Index that has hit an all-time high.

"¢ A two-month improvement in wholesale used-car prices, measured by the Manheim Index.

"¢ A rise in Monster's Employment Index in February, suggesting a turn in the job market may be around the corner.

"¢ A 4 1/2-year high in the dollar against other major currencies, on a trade-weighted basis.

"¢ A sharp increase in the money supply, as measured by M2 and M1. Weekly M2 growth has averaged 10.1% year-over-year since the start of 2009, while M1 has grown at a 14.6% rate.

"¢ A two-month rally in the Index of Leading Indicators.

"¢ A growing body of evidence that the "liquidity crunch" is dead. Data show nearly $14 trillion in liquidity on the sidelines of the markets, ready to boost consumer spending, credit growth or further stock market gains.

Of course, this makes the entire argument for the trillion dollar plus stimulus bill moot.  If my company had started spending itself into debt to fight some sort of emergency, and then found the emergency did not exist, you can bet we would be spending every hour of the day to stop as much of that emergency spending as possible.  Not so in Washington.  Despite now forecasting an improving economy, and basing his budget on this being a milder-than-normal recession, Obama has not even suggested any roll-back in the massive spending and debt-creation program.  Which just goes to prove that the "stimulus" bill had nothing to do with stimulus in the first place, but was a leftish spending plan sold based on panic, in exactly the same way the Bush administration sold the Patriot Act.

In fact, much of Obama's remaining legislative agenda (including nationalization of parts of the health care system and a Co2 cap-and-trade system) include what are effectively large tax increases that cannot realistically be passed in the depths of a recession.  So expect a lot of talking up of the economy to prepare the way for these tax increases, not to mention the tax increases that will be necesary, but have not yet been proposed, to pay for the servicing of the huge debt and new spending we just took on.

One final prediction:  As the economy improves enough for the average person to see the improvement, expect the Obama administration to be spinning like mad.  Their first objective will be to take credit for the recovery.  This is absurd, as it appears that the recovery will start long before the first dollar of spending occurs.  The media may, however, let him get away with this.  If it does not, his second story will be that the confidence exuded by the passing of the stimulus bill created the recovery.  This is also absurd on its face, given the crash in equity prices after the stimulus bill was passed and the extreme general skepticism about the stimulus in poll numbers.

Postscript: By the way, I would argue the whole story of this stimulus bill is a microcosm of the climate debate.  Extreme panic was generated based on a fear that their might be some possibility of a catastrophe (ie a second Great Depression) and that on the precautionary principle, we spent a trillion dollars just in case.  Remember that in January, Obama said there will be - not might be - another 5 million job losses, a number we will come nowhere near.

As it turned out, there was never a realistic chance of a catastrophe, but the costs will remain, and all the while the panic over the issue was used as cover to pass a whole range of freedom-reducing initiatives.   Naomi Klein was half right in the shock doctrine -- there are folks who use emergencies to successfully push for radical change, but it is almost always the forces of more government control who win out, not the supporters of laissez faire.

Update: A similar list here from Forbes.