Monday, February 25, 2008

Discounting Global Warming, Revisited

Running this blog is a pretty one-sided deal most of the time. Every week I send out some thoughts into the blogosphere, and rarely do I get a response. But last week's post about applying the economics of discounting to global warming got not just one, but two responses, both making similar criticisms. For this blog, that amounts to a storm of controversy, and I can't resist responding. But first, let me summarize the criticisms.

The first post (to be found under Nov. 19, 2007's "Yahoo Pays. . . ", to which it refers) accuses me of being either "sloppy or inconsistent." Here is some of what it says: " In the post about Yahoo, you get wrought up about the company not doing more to protect their [the Chinese citizens'] identity for engaging in free speech, but in "Should we discount global warming?" you advocate using a discount rate even though some of that $50 billion is lost lives due to less reliable weather, increased flooding, and more famine. (NOT jail time, death.) . . . . So should Yahoo continue its economic discounting, knowing that the occasional customer is jailed; or should the Yahoo-wannabes stop counting human suffering in dollars?"

The second post responding to last week's blog, signed "Cousin Mike" (yes, he is my cousin) says this, among other things: "A courtroom-drama movie once depicted an auto manufacturer as having made a conscious decision not to fix a problem with their brakes because they calculated economically that it was less expensive to pay off claims to people killed by the brake failures than to fix the flaw. The movie-makers obviously wanted the audience to view such conduct as morally odious, and I agree . . . . I know that if we really thought every life was infinitely valuable, we'd build autos like bumper cars,incapable of a fatal crash . . . . But it still gives me chills to think that the economically correct engineering solution to global warming is to leave the brakes flawed 'cause it'll cost too much money to fix."

The point these respondents are making, it seems to me, is that while I seem to hold up certain principles as absolutes (e. g. freedom rather than jail time for Chinese users of Yahoo), when I propose discounting global warming, I appear to be throwing away all these fine moral distinctions in preference to a cold economic calculation.

Allow me to differ.

Imagine a set of scales, like Lady Liberty (the gal with the blindfold) is often portrayed as holding up. If I were to do an editorial cartoon summarizing the criticisms above, it would show a pile of currency and gold coins on one pan of the scales, pulling it down, as a crowd of impoverished coastal fishermen drown in a miniature version of Hurricane Katrina on the rising pan. (You see why I don't do editorial cartoons for a living.) It looks like I'm cynically trading off money for lives. But that was not my intention.

When economic analyses are used on a large-scale problem such as global warming over a time scale of decades, the dollars involved are not exactly the same kind of thing that you pull out of your wallet. They are a symbol. Well, all money is symbolic in one sense, but what I mean is, the dollars in the global-warming discount calculation are a placeholder for the energy and wealth of nations. It isn't just dollars versus lives. It's lives versus lives, and dollars versus dollars, and Statues of Liberty versus who knows what unimaginable architectural achievements might be made in the next century if we don't wreck the world's economy with a misinformed economic dictatorship that has highly counterproductive effects, which could cost lives as well.

You want to talk lives? I'll talk lives. Malaria kills between one and three million people every year, most of them poor African youths and children, and debilitates hundreds of millions more. It is entirely possible to treat a population with prophylactic anti-malarial drugs so as to reduce the incidence of malaria to near zero. Doing so would not only eliminate an important direct cause of death, but would result in the equivalent of billions of dollars of economic stimulus to the areas affected because of the increased productivity of those who would no longer contract this disease.

I don't know what it would cost to wipe out malaria worldwide, but something similar has been done at least once: we eradicated smallpox. Say it would cost a few billion dollars. Now that few billion dollars is money that cannot be spent on reducing global warming. If you like, you can consider it as part of the money we could spend now on things other than global warming, if we buy into the economic-discounting idea that there is a reasonable and finite amount of money we should spend on global warming, and no more. And that money not spent on global warming, but spent on eradicating malaria, will absolutely save lives.

My point is, there are lives on both sides of the equation, not just dollars versus lives. What we're really talking about is the grand question of how to expend our current capital resources—natural, monetary, and most of all, human—and how much of them to expend on efforts to reduce global warming.

I have no objections to a calm, rational approach to reducing our use of fossil fuels. I think it's terrible that we fight over that black liquid that comes out of the ground in inconvenient places to get at, and I would love to see a coordinated global effort devoted to developing renewable energy sources that would eventually replace most of what we now use petroleum for. But the critical question is how this is to be done. I was listening to a discussion on the BBC the other morning about how air travel contributes to global warming. Both sides agreed that we had to quit burning fossil fuels to fly. To me, that poses a whole series of awkward questions. Okay, if we quit flying, how are we going to sustain the global economy? And if we keep flying without fossil fuels, how are we going to do it? The only battery-powered airplanes I know of could carry maybe a mouse, at a strain.

We saw what a hit the U. S. economy took with just a slight reduction in air travel after 9/11. Imagine what would happen to the world economy if somehow the U. N. passed a binding resolution to reduce air travel by 80% or something, and everybody stuck to it. The Great Depression in the U. S. is only a distant memory, but economic disasters are a lot more real to residents of many other countries which have suffered them more recently. If some ill-considered global-warming measure ended up putting the world economy in the tank for a few years, do you think that's not going to cost lives? And do you think the poorest and most vulnerable people won't pay the price in lost jobs and starvation? Think again.

In large measure, we are discussing imponderables, and that's one reason why talk about global warming inspires such overwrought emotions on both sides. The fact is, nobody knows exactly what would happen if we don't do anything about it, and nobody can guarantee that any given measure will avert the spectrum of catastrophes that Al Gore and company have laid out for our viewing pleasure. Like many things in life, it is a crapshoot. But we can definitely say what wrecking economies with arbitrary regulations can do, and whatever is done, we should avoid doing that to the extent possible and consistent with a measured approach toward the problem of global warming.

Sources: Statistics on malaria can be found at the Wikipedia entry under "Malaria."

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