TT's Lost in Tokyo — by TokyoTom

[This is a work in progress and largely taken from previous posts, but readers might find some value in it in the meanwhile.]

1. Heated but vacuous climate wars

On environmental issues in general and climate in particular, find me someone (like George Will) ranting about “Malthusians” or “environazis” or somesuch, and I’ll show you someone who doesn’t understand – or refuses to acknowledge – the difference between:

(1) wealth-creating markets based on private property and/or voluntary interactions/contracts protected by law, and

(2) the tragedy of the commons situations that result when there are NO property rights (atmosphere, oceans), when the pressures of developed markets swamp indigenous hunter-gather community rules, in many cases where governments formally own and purport to manage “public” resources, and when governments absolve purportedly “private” actors from liability for harms to others (such as via grants of “limited liability“).

So what’s the deal? Here’s a perfect opportunity for skeptics to educate the supposedly market ignorant, but they refuse, preferring to focus instead on why concerned scientists must be wrong, how concerns by a broad swath of society about climate have become a matter of an irrational, deluded “religious” faith, or that those raising their concerns are “misanthropes” or worse.

Such pigheadedness is met by those on the left likewise see libertarians and small-government conservatives as deluded and/or deliberate pawns of evil Earth-destroying corporations.

Both sides, it seems, prefer to fight – and to see themselves as right and the “others” as evil – rather than to reason.

While we should not regret that we cannot really constrain human nature very well, at least libertarian and others who profess to love markets ought to be paying attention to the inadequate institutional framework that is not only poisoning the political atmosphere, but posing risks to important globally and regionally shared open-access commons like the atmosphere and oceans (which are probably are in much more immediate and grave threat than the climate). And they also ought to recognize that there are important economic interests that profit from the current flawed institutional framework and have quite deliberately encouraged the current culture war.

2. Why the reflexive libertarian disengagement?

I have on numerous occasions tried to point out, to posters on the Mises Blog who have addressed climate issues, the stunning unproductivity of the approach that they have taken — that of focussing on science and dismissing motivations and preferences, rather than exploring root causes and middle ground, and have continued to scratch my head at the obstinacy and apparent lack of vision.

The following seem to be the chief factors at work in the general libertarian resistance to any government action on climate change:

– Many libertarians, as CEI’s Chris Horner has stated,  see “global warming [as] the bottomless well of excuses for the relentless growth of Big Government.”  Even libertarians who agree that is AGW is a serious problem are worried, for good reason, that government approaches to climate change will be a train wreck – in other words, that the government “cure” will be worse than the problem.

– Libertarians have in general drifted quite far from environmentalists (though there remain many productive free-market environmentalists/conservationists). Even though libertarians and environmentalists still share a mistrust of big government, environmentalists, on the one hand, generally have come to believe that MORE government is the answer, despite all of the problems associated with the socialized ownership of resources and/or inefficient bureaucratic management (witness the crashing of many managed fisheries in the US), the manipulation of such management to benefit bureaucratic interests, special interests and insiders (wildfire fighting budgets, fossil fuel and hard rock mining, etc.) and the resultant and inescapable politicization of all disputes due to the absence of private markets. On the other hand, many libertarians  reflexively favor business over “concerned citizens”, while other libertarians see that government “solutions” themselves tend to snowball into costly problems that work in favor of big business and create pressures for more government intervention. Thus, libertarians often see environmentalists as simply another group fighting to expand government, and are hostile as a result.

– Libertarians are as subject to reflexive, partisan position-taking as any one else. Because they are reflexively opposed to government action, they find it easier to operate from a position of skepticism in trying to bat down AGW scientific and economic arguments (and to slam the motives of those arguing that AGW must be addressed by government) than to open-mindedly review the evidence or consider ways that libertarian aims can be advanced by using the pressure from “enviro” goals.

This reflexive hostility – at times quite startingly vehement – is a shame (but human), because it blunts the libertarian message in explaining what libertarians understand very well – that environmental problems arise when property rights over resources are not clearly defined or enforceable, and when governments (mis)manage resources, and that there are various private steps and changes in government policy that would undo the previous government actions that are at the root of environmentalists’ frustrations.The reflexive hostility is also a shame because it has the effect, in my mind rather clearly, of rendering libertarians largely blind to the ways that large energy, power and certain manufacturing corporations continue to benefit from (and invest heavily in maintaining) the existing regulatory structure, in ways that shift large costs and risks to unconsenting third parties.

– There are some libertarians and others who profess to love free markets at AEI, CEI, Cato, IER, Master Resource and similar institutions that are partly in pay of fossil fuel interests, and so find it in their personal interests to challenge both climate science and policy proposals that would impose costs on their funders.

I felt particularly struck by the commonness of a refrain we are hearing from various pundits who prefer to question the good will or sanity of environmentalists over the harder work of engaging in a good faith examination and discussion of the underlying institutional problem of ALL “environmental” disputes:  namely, a lack of property rights and/or a means to enforce them. 

3. The whys of climate concerns and calls for “clean” energy

I want to get started with a list of policy changes that I think libertarians can and should be championing in response to the climate policy proposals of others.

The incessant calls for – and criticism of – government climate change policies and government subsidies and mandates for “green/clean power” both ignore root causes and potential common ground.  As a result, both sides of the debate are largely talking past each other, one talking about why there is a pressing need for government policy to address climate change concerns, while the other is concerned chiefly about the likelihood of heavy-handed mis-regulation and wasted resources. This leaves the middle ground unexplored.

There are plenty of root causes for the calls for legislative and regulatory mandates in favor of climate policies and clean / green / renewable power, such as:

• concerns about apparent ongoing climate change, warnings by scientific bodies and apprehensions of increasing risk as China, India and other developing economies rapidly scale up their CO2, methane and other emissions,
• the political deals in favor of environmentally dirty coal and older power plants under the Clean Air Act,
• the enduring role of the federal and state governments in owning vast coal and oil & gas fields and relying on the royalties (which it does not share with citizens, but go into the General Pork Pool, with a relatively meager cut to states),
• the unwillingness of state courts, in the face of the political power of the energy and power industries, to protect persons and private property from pollution and environmental disruption created by federally-licensed energy development and power projects,
• the deep involvement of the government in developing, encouraging and regulating nuclear power, and
• the frustration of consumer demand for green energy, and the inefficient and inaccurate pricing and supply of electricity, resulting from the grant by states of public utility monopolies and the regulation of the pricing and investments by utilities, which greatly restricts the freedom of power markets, from the ability of consumers to choose their provider, to the freedom of utilities to determine what infrastructure to invest in, to even simple information as to the cost of power as it varies by time of day and season, and the amount of electricity that consumers use by time of day or appliance.

4. Is a small-government, libertarian climate/green agenda possible and desirable?

So what is a good libertarian to suggest? This seems rather straight-forward, once one doffs his partisan, do-battle-with-evil-green-fascist-commies armor and puts on his thinking cap.

From my earlier comment to Stephan Kinsella:

As Rob Bradley once reluctantly acknowledged to me, in the halcyon days before he banned me from the “free-market” Master Resource blog, “a free-market approach is not about “do nothing” but implementing a whole new energy approach to remove myriad regulation and subsidies that have built up over a century or more.” But unfortunately the wheels of this principled concern have never hit the ground at MR [my persistence in pointing this out it, and in questioning whether his blog was a front for fossil fuel interests, apparently earned me the boot].

As I have noted in a litany of posts at my blog, pro-freedom regulatory changes might include:

• accelerating cleaner power investments by eliminating corporate income taxes or allowing immediate depreciation of capital investment (which would make new investments more attractive),
• eliminating antitrust immunity for public utility monopolies to increase competition, allow consumer choice, peak pricing and “smart metering” that will rapidly push large potential efficiency gains (as identified by McKinsey),
• ending Clean Air Act handouts to the worst utilities (or otherwise unwinding burdensome regulations and moving to lighter and more common-law dependent approaches),
• ending energy subsidies generally (including federal liability caps for nuclear power and allowing states to license),
• speeding economic growth and adaptation in the poorer countries most threatened by climate change by rolling back domestic agricultural corporate welfare programs (ethanol and sugar), and
• if there is to be any type of carbon pricing at all, insisting that it is a per capita, fully-rebated carbon tax (puts the revenues in the hands of those with the best claim to it, eliminates regressive impact and price volatility, least new bureaucracy, most transparent, and least susceptible to pork).

Other policy changes could also be put on the table, such as:

• an insistence that government resource management be improved by requiring that half of all royalties from mineral and fossil fuel development be rebated to citizens (with a slice to the administering agency), and
  
• reducing understandable NIMBY problems by (i) encouraging project planners to proactively compensate persons in affected areas and (ii) reducing fears of corporate abuses, by providing that corporate executives have personal liability for environmental torts (in recognition of the fact that the profound risk-shifting that limited liability corporations are capable of that often elicits strong public opposition and fuels regulatory pressure).

5. Other libertarian discussants

A fair number of libertarian commenters on climate appear to accept mainstream sciences, though there remain natural policy disagreements. Ron Bailey, science correspondence at Reason and Jonathan Adler, a resources law prof at Case Western, Lynne Kiesling at Knowledge Problem blog, and David Zetland, who blogs on water issues, come to mind.

I`m not the only one – other libertarian climate proposals are here:

• Jonathan Adler at Case Western (2000); he has other useful commentary here, here,
• Bruce Yandle, Professor Emeritus at Clemson University, Senior Fellow at PERC (the “free market” environmentalism think tank) and a respected thinker on common-law and free-market approaches to environmental problems, has in PERC’s Spring 2008 report specifically proposed a “A No-Regrets Carbon Reduction Policy“;
• Iain Murray of CEI; and
• Cato’s Jerry Taylor is a frequent commentator and Indur Goklany has advanced a specific climate change-targeted proposal.
•  AEI’s Steven Hayward and Ken Green together have provided a number of detailed analyses (though with a distinct tendency to go lightly on fossil fuels).

Several libertarians recently urged constructive libertarian approaches to climate change:

• Edwin Dolan, in his Fall 2006 Cato Journal essay, “Global Warming: Rethinking the Market Liberal Position“, analyzes relevant Lockean considerations and cautions that market liberals appear to be hamstringing their own analytic strengths by falling into a reflexive and conservative mind-frames that benefit established economic interests.
• Sheldon Richman of the Foundation for Economic Education also recommends Dolan’s essay and calls for less wishful thinking and greater engagement by libertarians in his piece The Goal Is Freedom: Global Warming and the Layman (December 8, 2006; The Freeman):
• Gene Callahan makes a similar warning in his essay “How a Free Society Could Solve Global Warming“, in the October 2007 issue of The Freeman.
• Ron Bailey of Reason Magazine, “Congratulations to Al Gore; But be wary of the man’s proposed solutions for global warming“,  October 12, 2007.
• One self-described libertarian group in California has specifically proposed carbon taxes, though their “Pay Your Air Share” proposal appears to be little-discussed.
• Dan C. Shahar, in his recent paper, “Justice and Climate Change: Toward a Libertarian Analysis” (The Independent Review, Fall 2009), notes that (i) libertarian arguments to the effect that, even if man contributes to climate change, mankind should just roll with the punches and adapt, presuppose that man-made climate change would not represent an injustice, and (ii) if climate change IS an injustice, libertarians should eagerly offer ideas about how best to protect the victims’ rights.

There have been several open disputes, which indicate a shift from dismissal of science to a discussion of policy; the below exchanges of view are worthy of note:

• The Cato Institute dedicated its entire August 2008 monthly issue of Cato Unbound, its online forum, to discussing policy responses to ongoing climate change.  The issue, entitled “Keeping Our Cool: What to Do about Global Warming“, contains essays from and several rounds of discussion between Jim Manzi, statistician and CEO of Applied Predictive Technologies, Cato Institute author Indur Goklany; climate scientist Joseph J. Romm, a Senior Fellow at the Center for American Progress; and Michael Shellenberger and Ted Nordhaus, the co-founders of The Breakthrough Institute.  My extended comments are here.

• Reason Foundation, posted an exchange on Climate Change and Property Rights June 12th, 2008 (involving Reason’s Shikha Dalmia, Case Western Reserve University law professor Jonathan H. Adler, and author Indur Goklany); discussed by Ron Bailey of ReasonOnline here; here`s my take.

• Debate at Reason, October 2007, Ron Bailey, Science Correspondent at Reason, Fred L. Smith, Jr., President and Founder of CEI, and Lynne Kiesling, Senior Lecturer in Economics at Northwestern University, and former director of economic policy at the Reason Foundation.

• Reason Foundation, Global Warming and Potential Policy Solutions September 7th, 2006 (Reason’s Shikha Dalmia, George Mason University Department of Economics Chair Don Boudreaux, and the International Policy Network’s Julian Morris).

• Readers might also find this upbraiding of Penn & Teller at a gathering of skeptics in 2008 to be interesting.

Finally, I have collected here some Austrian-based papers on environmental issues that are worthy of note:

Environmental Markets?  Links to Austrians

Ones such paper is the following: Terry L. Anderson and J. Bishop Grewell, Property Rights Solutions for the Global Commons: Bottom-Up or Top-Down?

[Folks, I hope you do a better job than I do at saving draft posts before they`re finalized; I just lost alot of work. This will necessarily be shorter.]

I have on numerous occasions tried to point out, to posters on the Mises
Blog who have addressed climate issues, the stunning unproductive approach. Rather than simply reiterating my criticisms, let me get started with a
list of policy changes that I think libertarians can and should be
championing in response to the climate policy proposals of others.

The incessant calls for – and criticism of –
government climate change policies and government subsidies and mandates for “green/clean power” both ignore root
causes and potential common ground.  As a result, both sides of the
debate are largely talking past each other, one talking about why there
is a pressing need for government policy to address climate change
concerns,
while the other is concerned chiefly about the likelihood of
heavy-handed mis-regulation and wasted resources. This leaves the
middle ground unexplored.

There are plenty of root causes for the calls for legislative
and regulatory mandates in favor of climate policies and clean / green / renewable power,
such as:

• concerns about climate change,
• the political deal in favor of dirty coal and older power plants under the Clean Air Act, 
• the enduring role of the federal and state governments in owning
  vast coal and oil & gas fields and relying on the royalties, which it do not go to
  citizens but into the General Pork Pool, with an unhealthy cut to states), 
• the unwillingness of state courts, in the face of the political
  power of the energy and power industries, to protect persons and private property from
  pollution and environmental disruption created by federally-licensed energy and power projects,
• the deep involvement of the government in developing, encouraging and regulating nuclear power, and
• the
  frustration of consumer demand for green energy, and the inefficient
  and inaccurate pricing and supply of electricity, resulting from the
  grant by states of public utility monopolies and the regulation of the pricing
  and investments by utilities, which greatly restricts the freedom of power
  markets, from the ability of consumers to choose their provider, to the
  freedom of utilities to determine what infrastructure to invest in, to
  even simple information as to the cost of power as it varies by time of day and season, and the amount of electricity that consumers use by time of day or appliance.

So what is a good libertarian to suggest? This seems rather straight-forward, once one doffs his partisan, do-battle-with-evil-green-fascist-commies armor and puts on his thinking cap.

From my earlier comment to Stephan Kinsella:

As Rob Bradley once reluctantly acknowledged to me, in the halcyon days before he banned me from the “free-market” Master Resource blog, “a
free-market approach is not about “do nothing” but implementing a whole
new energy approach to remove myriad regulation and subsidies that have
built up over a century or more.” But unfortunately the wheels of this principled concern have never hit the ground at MR [my persistence in
pointing this out it, and in questioning whether his blog was a front for
fossil fuel interests, apparently earned me the boot].

As I have noted in a litany of posts at my blog, pro-freedom regulatory changes might include:

• accelerating cleaner power investments by eliminating corporate
  income taxes or allowing immediate depreciation of capital investment (which would make new investments more attractive),
• eliminating antitrust immunity for public utility monopolies (to
  increase competition, allow consumer choice, peak pricing and “smart metering” that will
  rapidly push efficiency gains),
• ending Clean Air Act handouts to the worst utilities (or otherwise
  unwinding burdensome regulations and moving to lighter and more
  common-law dependent approaches),
• ending energy subsidies generally (including federal liability caps for nuclear power (and allowing states to license),
• speeding economic growth and adaptation in the poorer countries
  most threatened by climate change by rolling back domestic agricultural
  corporate welfare programs (ethanol and sugar), and
• if there is to be any type of carbon pricing at all, insisting that it is a per capita, fully-rebated carbon tax
  (puts the revenues in the hands of those with the best claim to it,
  eliminates regressive impact and price volatility, least new
  bureaucracy, most transparent, and least susceptible to pork).

Other policy changes could also be put
on the table, such as an insistence that government resource management
be improved by requiring that half of all royalties be rebated to
citizens (with a slice to the administering agency).

I`m not the only one – other libertarian climate proposals are here:

• Jonathan Adler at Case Western (2000); he has other useful commentary here, here,
  
• Bruce Yandle, Professor Emeritus at Clemson University, Senior Fellow at PERC
  (the “free market” environmentalism think tank) and a respected thinker
  on common-law and free-market approaches to environmental problems, has
  in PERC’s Spring 2008 report specifically proposed a “A No-Regrets Carbon Reduction Policy“;
• Iain Murray of CEI; and
  
• Cato`s Jerry Taylor is a frequent commentator and Indur Goklany has advanced a specific climate change-targeted proposal.
•  AEI`s Steven Hayward and Ken Green together have provided a number of detailed and relatively balanced analyses.

Several libertarians have recently been urging constructive libertarian approaches to climate change:

• Edwin Dolan, in his Fall 2006 Cato Journal essay, “Global Warming: Rethinking the Market Liberal Position“, analyzes
  relevant Lockean considerations and cautions that market liberals
  appear to be hamstringing their own analytic strengths by falling into
  a reflexive and conservative mind-frames that benefit established
  economic interests.
• Sheldon Richman of the Foundation for Economic Education also
  recommends Dolan’s essay and calls for less wishful thinking and
  greater engagement by libertarians in the December 8, 2006 edition of The Freeman:  The Goal Is Freedom: Global Warming and the Layman.
• Gene Callahan makes a similar warning in his essay “How a Free Society Could Solve Global Warming“, in the October 2007 issue of The Freeman.
• Ron Bailey, “Congratulations to Al Gore; But be wary of the man’s proposed solutions for global warming“,  October 12, 2007.

These discussions and exchanges of view are also worthy of note:

• The Cato Institute has dedicated its entire August 2008 monthly issue of Cato Unbound, its online forum, to discussing policy responses to ongoing climate change.  The issue, entitled “Keeping Our Cool: What to Do about Global Warming“, contains essays from and several rounds of discussion between Cato Institute author Indur Goklany; climate scientist Joseph J. Romm, a Senior Fellow at the Center for American Progress; and Michael Shellenberger and Ted Nordhaus, the co-founders of The Breakthrough Institute.  My extended comments are here.

• Reason Foundation, Climate Change and Property Rights June 12th, 2008 (Reason’s Shikha Dalmia, Case Western Reserve University law professor Jonathan H. Adler, and author Indur Goklany); discussed  by Ron Bailey of ReasonOnline here; here`s my take.

• Debate at Reason, October 2007, Ron Bailey, Science Correspondent at Reason, Fred L. Smith, Jr., President and Founder of
  CEI, and Lynne Kiesling, Senior Lecturer in Economics at
  Northwestern University, and former director of economic policy at the
  Reason Foundation.

• Reason Foundation, Global Warming and Potential Policy Solutions September 7th, 2006 (Reason’s Shikha Dalmia, George Mason University Department of Economics
  Chair Don Boudreaux, and the International Policy Network’s
  Julian Morris)

Finally, I have collected here some Austrian-based papers on environmental issues that are worthy of note:

Environmental Markets?  Links to Austrians

One such paper is the following: Terry L. Anderson and J. Bishop Grewell, Property Rights Solutions for the Global Commons: Bottom-Up or Top-Down?

I just stumbled into Bob Murphy`s June 8 post at the LvMI Daily site, and submitted a few comments.  As it looks like my links prevented my comments from posting, I`ve copied them here (with a few typo tweaks and links added):

Bob, I didn`t realize you had put a post up here.

Allow me first to copy here a few points that I made on your related post at MasterResource, but which freedom- and open-debate-loving Rob Bradley blocked (your truly has been banned there for the past few months):

“The below is copied from MasterResource, where I remain on permanent moderation – IOW, banned – even though Bob and the authors of various threads seem perfectly interested in engaging me.

“TokyoTom { 06.09.09 at 12:53 am }

A few comments, if I may (in the hope that springs eternal that even the “unclean” will be allowed to post): [Note to readers:  rest easy; that the final “I`ve been banned!” reference.]

1. “Cost/Benefit Analysis Cannot Justify Waxman-Markey’s Aggressive Targets”

Why this headline, which is completely unsupported in the post?

You do link to a prior post, where you try to draw the conclusion that “If the whole world adopted the stringent emission cutbacks in Waxman-Markey, then the costs to the global economy would far outweigh any reasonable estimate of the benefits (measured in avoided climate damage)”, but both there and here you fail to address Weitzman, much less more fundamental problems regarding the validity of CBA (aggregating preferences across persons situated vastly differently, ignoring the problems of frustrated preferences, enrtrenched rent-seeking and the continuing lack of property rights or other mechanisms to manage an important commons).

And far from “agree[ing] with you”, the RFF paper much more fairly illustrates some of the complexities in applying CBA to the moving ball of international negotiations.

2. “the costs to the global economy would far outweigh any reasonable estimate of the benefits (measured in avoided climate damage)”

“Yet mainstream models of the global economy and climate system show that worldwide adoption of Waxman-Markey would be foolish as well. It takes heroic assumptions both of lurking climate catastrophes and of international dipomacy to justify support for the current bill.”

Again, you offer conclusions not established here or elsewhere. You appear to acknowledge your overstatements when you say: “If proponents of aggressive government measures want to say the benefits justify such costs, fair enough; but let’s not kid ourselves that this is going to be cheap.”

3. “RFF study, which says the cumulative cost through 2050, expressed today in present-value terms, is up to $43 trillion worldwide.”

Actually, don`t the RFF authors make clear that this estimate is based on universal adoption worldwide and least-cost reductions – 70% of which would take place in developing countries – with a clear indication that such countries are not likely to act agressively for decades? Accordingly, the RFF study implies that global costs will fall below the straight estimate.

4. It is interesting to me that you ignore the dynamics of the international context of climate policy and negotiations. Why no comment on the observations in the RFF paper that likely “leakage” of carbon-heavy industry to developing countries and dampening Western demand for fossil fuels will constitute net subsidies that spur development in poorer parts of the globe?

Your comment is awaiting moderation.”

Thanks for putting these up at your own blog.

Further, let me note:

1.  Your criticism of W-M on conventional CBA grounds is limited to W-M, and doesn`t address the many CBA analyses that conclude (as Nordhaus has done weakly for decades) that carbon pricing mechanisms are now justified.  Economist Richard Tol last year summarized the economic literature as follows:

“Firstly, greenhouse gas emission reduction today is justified. Even the most conservative assumption lead to positive estimates of the social cost of carbon (cf. Table 1) and the Pigou tax is thus greater than zero. Yohe et al. (2007) argue that there is reason to reduce greenhouse gas emissions further than recommended by cost-benefit analysis. The median of … peer-reviewed estimates with a 3% pure rate of time preference and without equity weights, is $20/tC. …. The case for intensification of climate policy outside the EU can be made with conservative assumptions. … Secondly, the uncertainty is so large that a considerable risk premium is warranted. With the conservative assumptions above, the mean equals $23/tC and the certainty-equivalent $25/tC. More importantly, there is a 1% probability that the social cost of carbon is greater than $78/tC. This number rapidly increases if we use a lower discount rate—as may well be appropriate for a problem with such a long time horizon—and if we allow for the possibility that there is some truth in the scare-mongering of the gray literature.  Thirdly, more research is needed into the economic impacts of climate change—to eliminate that part of the uncertainty that is due to lack of study, and to separate the truly scary impacts from the scare-mongering.”

[Cato`s Jerry Taylor has a good summary of Tol`s review here.]

2.  Granted that you focussed narrowly on W-M, but by doing so you completely fail (a) to acknowledge the atmosphere/climate system as an open-access commons under growing infuence by man, and (b) to put forward a “free market” agenda that would serve as a win-win response to the wide array of people, firms, institutions and nations that are concerned about man`s role in ongoing climate change and about the likelihood of future climate change stemming from the growing use of fossil fuels and other human activities.

Are you indeed interested in addressing people`s legitimate preferences regarding climate, and pushing for freer markets?  This is a question that I have asked Rob Bradley at his self-declared “free market” MasterResource blog any number of times.

Rob has stated there in response to me [before he banned me] that: “a free-market approach is not about “do nothing” but implementing a whole new energy approach to remove myriad regulation and subsidies that have built up over a century or more”, but he and his co-bloggers (including you) haven`t  seen fit yet to actually recommend ANY free market approaches to climate concerns!

Failing any effort to actually offer policy suggestions, is it unfair to wonder whether you guys are, consciously or not, simply providing cover for the rent-seekers who benefit most by generating pollution and other risks in the manner permitted by current regulations?  (Why did Exxon stop funding Rob`s Institute for Energy Research, BTW?) 

[It`s very clear that Joe Romm and others perceive you this way; are you not seeking to persuade them?]

Regards,

Tom

PS:  Your chief post doesn`t actually link to the comment thread, which readers have to search for.  You might want to fix that.

The incessant calls for – and criticism of – government-funded/mandated “green/clean power” pork both ignore root causes and potential common ground.  As a result, both sides of the debate are largely talking past each other, one talking about why there is a pressing need for government policy to address climate change concerns (concerns underscored by the May 19 MIT study), while the other is concerned chiefly about the likelihood of heavy-handed mis-regulation and wasted resources.  This leaves the middle ground unexplored.

While there are plenty of root causes for the calls for legislative and regulatory mandates in favor of clean / green / renewable power, such as:

• concerns about climate change,
• the political deal in favor of dirty coal under the Clean Air Act, 
• the enduring role of the federal and state governments in owning vast coal fields (the royalties from which it does not distribute to citizens but go into the General Pork Pool), 
• the unwillingness of state courts, in the face of the political power of the mining industry, to protect persons and private from pollution and environmental disruption created by mining,
• the deep involvement of the government in developing, encouraging and regulating nuclear power,

the most obvious and proximate root cause is something that attracts far too little attention – the frustration of consumer demand for green energy, and the inefficient and inaccurate pricing and supply of electricity.  It`s prettty clear that the grant of public utility monopolies and the regulation of the pricing and investments by utilities greatly restrict the freedom of power markets, from the ability of consumers to choose their provider, to the freedom of utilities to determine what infrastructure to invest in, to even simple information as to the cost of power as it varies by time of day and season, and the amount power consumers use by time of day or appliance.

With freer markets, we would see much more competition, better pricing, much more cost-saving (and conservation), and more money flowing into green power. So why is so little attention being paid to all of the gains that could be achieved from less – and more rational – power regulation?

Allow me to provide a few quotes and links to those interested:

1.  Lew Rockwell, President of the Ludwig von Mises Institute, “The Real Cause of Blackouts” (July 27, 2006):

Now, if markets were in charge, a heat wave would not be looked at as a problem but as an opportunity. Entrepreneurs would be swarming to meet demand, just as they do in every other sector that is controlled by markets. The power companies would be praying for heat waves! …

Just who is in charge of getting electricity to residents? A public utility, which, in the absurd American lexicon, means “state-run” and “state-managed,” perhaps with a veneer of private trappings. If you look at the electrical grid on a map, it is organized by region. If you look at the jurisdiction of management, it is organized by political boundaries.

In other ways, the provision of power is organized precisely as a central planner of the old school might plan something: not according to economics but according to some textbook idea of how to be “organized.” It is “organized” the same way the Soviets organized grain production or the New Deal organized bridge building.

All of centralization and cartelization began nearly a century ago, as Robert Bradley points out in Energy: The Master Resource, when industry leaders obtained what was known as a regulatory covenant. They received franchise protection from market competition in exchange for which they agreed to price controls based on a cost-plus formula — a formula that survives to this day.

Then the economists got involved ex post and declared that electrical power is a “public good,” under the belief that private enterprise is not up to the job of providing the essentials of life.

What industry leaders received from this pact with the devil was a certain level of cartel-like protection, the same type that the English crown granted tea or the US government grants first-class postal mail. It is a government privilege that subjects them to regulation and immunizes companies from business failure. It’s great for a handful of producers, but not so great for everyone else.

There are many costs. Customers are not in charge. They are courted only for political reasons but they are not the first concern of the production process. Entrepreneurial development is hindered. Our current system of electrical provision is stuck in time. Meanwhile, sectors that provide DSL and other forms of internet and telecommunication services are expanded and advancing day by day — not with perfect results but at least with the desire to serve consumers. …

How New York and California consumers would adore a setting in which power companies were begging for their business …. Competition would lead to price reductions, innovation, and an ever greater variety of services — the same as we find in the computer industry.

What we are learning in our times is that no essential sector of life can be entrusted to the state. Energy is far too important to the very core of life to be administered by a bureaucracy that lacks the economic means to provide for the public. How it should be organized we can’t say in advance: it should be left to the markets. …

What we need today is full, radical, complete, uncompromised deregulation and privatization. We need competition. That doesn’t mean that we need two or more companies serving every market (though that was common up through the 1960s). What we need is the absence of legal barriers to enter the market.

2.  Lynne Kiesling, Senior Lecturer in Economics at Northwestern University and former director of economic policy at the Reason Foundation; participant in debate at Reason online “Carbon: Tax, Trade or Deregulate?“

3.  Paul Joskow, current President of the Alfred P Sloan Foundation and former head of theMIT Department of Economics (now on leave) and former director of the MIT Center for Energy and Environmental Policy Research; speech at the National Press Club in September 2008:

For almost 50 years this sector was stuck in an organizational and regulatory framework that may have been well matched to the electricity generation and transmission technology available in 1935, but was surely poorly matched to changes in technology, new technological opportunities, contemporary investment needs, or current economic and environmental challenges. Then in the early 1980s, electricity sector reformers began to stir, responding to concerns about the system of regulated vertically integrated monopolies inherited from the 1930s. The “good old days” of regulation represent a view to the past with rose colored glasses. The system of regulated vertically integrated monopoly was plagued by cost overruns associated with nuclear power plants, poor operating performance for both nuclear and large fossil-fueled plants, poor fuel procurement decisions, wide price differences between neighboring areas, excess generating capacity, inefficient dispatch and economy energy trading between generating companies, regulatory incentives to keep old inefficient plants operating rather than retiring them, too many small utilities to take advantage of economies of scale, institutional and technological barriers to using the transmission network to access lower cost power, productivity lags, and inefficient retail prices. The system …was unnecessarily costly and inefficient.

Reformers looked to the favorable experience with restructuring, competition, and regulatory reform in other sectors and with electricity in other countries to help to solve the problems associated with the fragmented electric power sector made up of over 100 vertically integrated geographic monopolies. Municipal distribution companies and large industrial customers were especially aggressive at promoting reforms focused on open transmission access, the creation of transparent organized regional competitive wholesale markets, and (in the case of large industrial customers) retail competition.

A large number of states initially embraced this restructuring, competition, and regulatory reform vision and began to implement it. In 2000 it looked like restructuring and competitive market reforms were going to sweep the U.S. electric power industry.

Then came the California electricity crisis, the collapse of Enron and a number of merchant generating companies, increased volatility to natural gas markets and associated volatility in wholesale electricity market prices, and a long march upward in fossil fuel prices ultimately resulting in rising retail electricity prices in both regulated and restructured states. Most of the states that were leaders in restructuring during the late 1990s, when natural gas prices were low and there was excess capacity, initiated reforms during a period when regulated prices for generation service were expected to be much higher than perceived comparable competitive wholesale market prices. The expectation was that over time retail prices would fall. This forecast was based on the assumption that low prices for natural gas in particular would continue and that a new system built on efficient CCGT technology would evolve. At that time, a major “problem” that many of these states had to cope with were the “stranded generation costs,” primarily associated with what were perceived to be costly nuclear power plants, that were expected to result from the introduction of real wholesale and retail competition. This was expected to be a “transition problem” because it was expected that competition would result in market prices that would fall to levels below the embedded costs of nuclear plants and older fossil plants that would have otherwise been used to calculated (higher) regulated retail prices.

However, as natural gas and coal prices continued to rise far above anyone’s expectations, many of these states soon found that competitive market prices were rising dramatically along with natural gas prices (which affect competitive wholesale electricity prices in most regions of the country) — arguably rising to levels above what regulated prices would have been today under the status quo ante (though this requires a difficult counterfactual analysis). This, of course does not mean that these electricity sector reforms were a failure. In states that adopted the restructuring, wholesale and retail competition model, retail prices now reflect marginal supply costs, as they should to give consumers the right price signals to use electricity wisely. Rather it means that regulated prices are or would have been too low to give consumers appropriate incentives to make wise consumption decisions.

In evaluating restructuring, competition and regulatory reform one must understand all of its efficiency and distributional properties, not just at short run price effects. From an efficiency perspective, the restructuring reforms implemented at the federal level and in some states have led to numerous cost reducing successes in the face of rising fossil fuel prices.  These include dramatic improvements in the performance of divested nuclear plants, significant improvements in the performance of fossil plants that now face market incentives, roughly 200,000 GW of new (mostly merchant) gas-fired generation has been added to the system between 1999 and 2004, while the risk of cost overruns, fuel price fluctuations, demand variations, and availability problems experienced by some of these plants were shifted to their owners through the market rather than borne by consumers through cost-of-service regulation. There is good empirical evidence that the expansion of the boundaries of RTOs (e.g. PJM) have led to significant changes in power flows and more efficient dispatch of power plants, while inefficiencies are observed at the boundaries of RTOs that have not agreed to be consolidated (e.g. NY/NE). Gradual improvements in wholesale market designs have increased the efficiency of these markets and have restored investment incentives. Moreover, retail prices now respond quickly to changes in wholesale market prices, providing consumers with the right price signals rather than the wrong price signals resulting from retail price regulation. And these price signals are properly differentiated by time and location to reflect marginal supply costs, rather than the depreciated original cost of generating plants built 50 years ago. Demand management programs linked to short-term supply and demand conditions are expanding quickly as well in the reform regions.

Of course, the full reform program has not been implemented in large areas of the South, the West, and portions of the Midwest. The partial electricity reform equilibrium that we appear to be in now will not serve the country well and is potentially quite unstable. We have a system that is 1/3 reformed and 2/3 stuck in the structural and regulatory paradigm of the 1935s or somewhere in between.

The problems created by an antiquated industry structure and incompatible mix of state and federal regulation have not gone away. They are lurking out there to undermine achieving the goals that I enumerated earlier. Absent a comprehensive national electricity policy framework this sector is and will perform poorly in meeting the four sets of goals that I discussed earlier.

Joskow has spelled out his specific proposals for reform, which I note here.

4.  Google, September 19, 2008 press release – “Partnering with GE on clean energy“:

Today we announced that we’re joining forces (PDF file) with GE to use technology, information and corporate resources to drive the changes necessary to empower consumers with better energy choices. We will focus on improving power generation, transmission and distribution – a combination of technologies that could be known as the “smart grid.” (It would be fair to refer to electricity technologies in common use today as a “grid of only average intelligence.”)

The existing U.S. infrastructure has not kept pace with the digital economy and the hundreds of technology opportunities that are ready for market. In fact, the way we generate and distribute electricity today is essentially the same as when Thomas Edison built the first power plant well over one hundred years ago. Americans should have the choice to drive more fuel efficient cars – or even electric cars – and manage their home energy use to reduce costs, and buy power from cleaner sources, or even generate their own power for sale to the grid.

We all receive an electricity bill once a month that encourages little except prompt payment. What if, instead, we had access to real-time information about home energy use? What if our flat screen TVs, electronic equipment, lights and appliances were programmed to automatically adjust to save money and cut energy use? What if we could push a button and switch the source of our homes’ electricity from fossil fuels to renewable energy? What if the car sitting in our garage ran on electricity – the equivalent of $1 per gallon gasoline – and was programmed to charge at night when electricity is cheapest?

This vision is what unites Google and GE. We’ll start by working together in Washington, D.C. to mount a major policy effort to enable large-scale deployment of renewable energy generation in the United States.[deregulation? mandates?] We’ll also work on development and deployment of the “smart” electricity grid that will empower consumers, utilities, and technology innovators to manage electricity more efficiently and lower their carbon footprint. Finally, we’ll collaborate on advanced energy technologies, including technologies to enable the large-scale integration of plug-in vehicles into the grid and new geothermal energy technologies known as enhanced geothermal systems (EGS).

As I have noted elsewhere, 

5.  Jerry Taylor, senior fellow at Cato Institute, “The Right Way to Fix the Grid“, August 19, 2003 (New York Post):

Yes, the need for more investment in the grid seems clear. The system was designed to handle a limited number of transactions, not the large interstate exchanges of electricity now common. Moreover, transmission capacity has been stagnant relative to the growth in power generation, stressing the system even more.

Why has the grid deteriorated?

* Transmission projects are considered, approved and paid for at the state level – but the benefits cross state lines. And state-level decision-makers understandably resist using ratepayer dollars to pay for investments that will mainly help out-of-staters.

* In much of the country, incumbent utilities and state politicians actively resist improving the grid. Vertically integrated companies (which own the generating plants, transmission lines and distribution networks within a service territory) often fear that a more robust transmission system would boost potential competition.

Many politicians also oppose grid improvements because new transmission capacity would make it easier for out-of- state customers to bid-away the cheap power from in-state consumers.

* Returns on transmission are regulated, so utilities have found that they can make more money by investing in virtually anything besides transmission infrastructure.

* With many regulatory fights still unresolved, and the potential for profit thus unclear, investors have delayed risking their money on the grid.

The solution now in vogue to solve these problems is to give the Federal Energy Regulatory Commission more authority over transmission investment. State regulation of transmission is, after all, an archaic relic of another era; and all who use the transmission system are vulnerable to the weakest links in it.

But forcing utilities to invest in transmission upgrades through increased federal regulation is too crude and blunt a policy hammer. It may get the job done to some degree, but running industries by federal dictate is less efficient than ensuring that proper incentives exist for the industry to operate efficiently on its own.

Instead, why not try deregulating the grid? Kill the cap on transmission profits. Jettison the state regulations that protect transmission companies from competition. Cease the endless political debate over how the transmission lines ought to be organized and managed and let grid owners discover for themselves how to most efficiently run their businesses – something market agents are more adept at learning than legislators or regulators.

Most analysts are convinced that the transmission system is a natural monopoly, and so recoil at the very thought of competition to the grid. But it already exists, in the form of natural-gas pipelines.

All new power plants, after all, are natural gas-fired. They can be located far from urban areas and their product shipped to urban areas via the electricity-transmission system, or they can be located in urban areas and their output shipped locally.

The competition between gas and electric transmission is no worse than the competition between cable and satellite television service providers.

Deregulation would also mean an end to rules that force grid owners to do business with anyone who wants access to their wires. Transmission providers should be allowed to negotiate the terms and conditions for both putting power into the lines and for taking it off.

Those who own the power lines, after all, have a greater incentive to ensure that their lines run safely than do the regulators who watch over them, particularly since they wouldn’t be able to rely on regulatory bodies to guarantee them a rate of return on their investments.

Deregulation can’t guarantee that blackouts would never again occur. But it would almost certainly lead to a faster flow of dollars into overdue investments in reliability and a far wiser use of such dollars than would the orders and mandates being contemplated in Washington.

More by Taylor on power regulation here and here.

Any Austrians who have read through this may be familiar with these words from Roy Cordato:

“by placing environmental problems within the context of personal and interpersonal plan formulation, we discover that they are not about the environment per se but about the resolution of human conflict. …

“Humans cannot harm the environment. Instead, they can change the environment in such a way that it harms others who might be planning to use it for conflicting purposes.”

“The focus of the Austrian approach to environmental economics is conflict resolution. The purpose of focusing on issues related to property rights is to describe the source of the conflict and to identify possible ways of resolving it.”

“Environmental problems are brought to light as striking at the heart of the efficiency problem as typically seen by Austrians, that is, they generate human conflict and disrupt inter- and intra-personal plan formulation and execution.” 

Do Austrians and others have their problem-solving caps on, focussed on aiding conflict resolution?  Or are they instead simply fighting over the wheel of government, in a way that ensures the continuing frustration of the concerns that many have about apparently very serious climate change risks? 

Robert L. Bradley, Jr. is an energy expert (author, former speechwriter for Key Lay and director of public policy analysis at Enron, founder and CEO of Institute for Energy Research) with libertarian leanings. 

But in a series of posts on climate issues on the recently launched  “free market” energy group blog MasterResource that he spearheads, Rob doesn’t come off as much of a libertarian, free-market guy as he suggests, since he doesn’t so much advocate for free market approaches to such issues as he takes evident pleasure in mocking enviros (and the preferences they share with many others) – all while ignoring that the status quo isn’t free of rent-seekers (precisely as Roderick Long and Ed Dolan have criticized libertarians).

1.  Take, for example, his January 25 post, Why Do the Alarmists Feel Bad About Debates–and Debating?.  In this post, Rob examines an online debate between scientist Joe Romm of Climate Progress and Jerry Taylor of Cato, notes that Joe later seems to acknowledge that Jerry did better in the debate, but skips over some of Joe’s chief criticisms of “skeptic” opponents by concluding:

Mr. Romm has all but conceded that the skeptics of climate alarmism beat the alarmists in debate, posting about it here and here. He blames it on the dishonesty of the “deniers,” but in fact they might have a much stronger intellectual and practical case. And I dare say that Romm does not feel he did particularly well against Taylor in their online debate and is not itching to debate him again, particularly in person.

But if I am wrong, I say: let’s get a big audience for it. Make the stakes high. Sell tickets. Poll the audience. It will be that entertaining!

Here was my comment to Rob:

Well Rob, Joe Romm isn’t ALL alarmists, but I’d say it’s rather clear that he’s saying that “scientists” are not good policy debaters – as it’s something that they’re not trained in. I suppose you would hardly disagree.

On top of that, Joe Romm and others simply are not trained in public choice or Austrian perspectives on political economy issues, so he clearly doesn’t understand what Jerry patiently tries to explain. But there’s rather alot of that to go around – across the political spectrum and on many, many issues – and I rather fail to understand how mocking that who lack understanding is a good way to open their minds to how wealth creation occurs and to the perils of using the state.

In addition, Jerry Taylor is clearly different from – more open and intellectually honest – most of the other debaters Joe Romm refers to.

2.  In another thread, Rob suggested that “doing nothing” was the preferred policy approach to climate; thankfully, in response to a comment from me, Rob expressly noted that

a free-market approach is not about “do nothing” but implementing a whole new energy approach to remove myriad regulation and subsidies that have built up over a century or more.

Great!  Inquiring minds are waiting to hear about what it is that Rob Bradley and others at “MasterResource” actually recommend as an approach to climate concerns!

Meanwhile, can we stop pretending that “enviros” are the only ones fighting over the wheel of government, much less that they can hold a candle to wealthy corporate insiders?

In a post of the same title at at NRO, Jerry Taylor and Peter Van Doren of Cato do a great job of demonstrating  there is absolutely no relationship between energy policy and national security.

However, they forgot to provide the answer to their own question – Republicans are “unhinged” on energy strategy for a very simple reason – because “energy security” is a very convenient way of justifying a meddlesome and paternal big government, and the Republican administration is in charge of the pork spigots and can control the flow of favors to special interests. 

Do Taylor and Van Doren find the Republicans “unhinged” only because they expected that Republicans actually meant their disavowals of “nation building” and the like?  Though Americans seem to share a congenital idealistic streak, I suspect that they are not that naive. 

No doubt the Dems will also find “energy security” to be a convenient way to aggrandize their own power, reach into Americans’ pocketbooks to direct federal largess their friends and to keep the US involved in the internal affairs of other countries.  They will have been aided by a Republican administration that was more liberal in the assertion of the right to exercise power than many Democratic administrations that preceded it.

[Update: Readers may wish to note the latest developments, as I note in these follow-up posts.]

Stephan Kinsella – whom I have engaged before on the ramifications of the decidedly non-libertarian state grant of limited liabiility to corporations – has a new post up on the Mises Blog on global warming;  his first on this subject, as far as I know.

The post is surprisingly short, and consists of a simple introduction by Stephan a copy of letter to the EPA (which he has appended) that one Howard Hayden, a retired physicist, one whom Stephan assures us is “a staunch advocate of sound energy policy” – whatever that means (hey, me too!) – submitted in connection with the EPA`s Supreme Court-mandated consideration of whether to regulate CO2 and other greenhouse gases. Stephan also refers to Dr. Hayden`s letter as a “one-letter disproof of global warming claims.”

I welcome Stephan to this discussion, which has taken place at the Mises Blog in fits and starts over the past few years. However, the absence of any commentary by Stephan leaves me scratching my head. Where`s the beef? Are this person`s scientific views on climate so convincing or obviously correct, and are the policy implication so straightforward, and correct, that we should all “get it” and agree, without any commentary by Stephan? Or Is Stephan simply playing with our credulity, and his own?

In any case, given both (1) the focus of Austrian economics on productively addressing conflicts between people with conflicting preferences (and the frequently negative role that governments play in resource tussles, generally to the benefit of entrenched insiders and to government itself) and (2) the recent Nobel prize award to Elinor Ostrom regarding the ways that humans work together successfully or not) to address common resources, I am simply disappointed. Is this all that Stephan has to offer?

Observing that Stephan fits within a grand tradition at Mises of shallow thought on climate and other “environmental” issues, I felt compelled to post a few thoughts at Stephan`s post, which I copy below:

Stephan:

Thanks for bringing your post to my attention.

My short response? Remember “Thank you, Prof. Block, for feeding our confirmation biases“?

But since I can`t resist doing what nobody else seems inclined to – I suppose it is, after all, why you invited me to this feast – let me make a few comments on matters that would apparently not otherwise occur to you or to the rest of the community.

The fact that most of the contents of Dr. Hayden`s letter is confused twaddle that has been explained in detail countless times (and personally by me, ad nauseum, to the extreme annoyance of most of the blog over the years 2006-2008) aside, it puzzles me that you and others prefer to treat the pages of the Mises Blog as a forum to dismiss – through drive-by postings like this (a la Walter Block) of a particular piece of “skepticism” that caught your fancy – extremely widespread scientific views (held by EVERY major national academy of science, including China and India), rather than engaging in a discussion of preferences, institutions and policies.

As I`ve asked Jeffrey Tucker previously, is science the forte of the Mises Blog, or its readers?

Even if those who believe that man`s rising emissions of CO2 have nothing to do with an observably rapidly changing world and pose no threat whatsoever – and that those who disagree are all deluded and/or evil – turn out, after we play our little massive and irreversible game with the Earth for another few centuries, to be absolutely right, is engaging with them by dismissing their concerns an approach that holds even the slightest prospect of success?

It`s as if Austrians were determined to ignore their own principles, stampede themselves into irrelevancy, and to make sure that we get the WORST policy outcomes possible.

Why not, if you think others all wrong, deluded or evil, play along with their game, and actually seek policy changes that might not only address the expressed concerns of others in a meaningful way, while also advancing a libertarian, freedom-seeking agenda?

As I have noted in a litany of posts at my blog, most recently one addressed to Bob Murphy, such pro-freedom regulatory changes might include:

• accelerating cleaner power investments by eliminating corporate income taxes or allowing immediate amortization of capital investment,
• eliminating antitrust immunity for public utility monopolies (to allow consumer choice, peak pricing and “smart metering” that will rapidly push efficiency gains),
• ending Clean Air Act handouts to the worst utilities (or otherwise unwinding burdensome regulations and moving to lighter and more common-law dependent approaches),
• ending energy subsidies generally (including federal liability caps for nuclear power (and allowing states to license),
• speeding economic growth and adaptation in the poorer countries most threatened by climate change by rolling back domestic agricultural corporate welfare programs (ethanol and sugar), and
• if there is to be any type of carbon pricing at all, insisting that it is a per capita, fully-rebated carbon tax (puts the revenues in the hands of those with the best claim to it, eliminates regressive impact and price volatility, least new bureaucracy, most transparent, and least susceptible to pork).

Other policy changes could also be put on the table, such as an insistence that government resource management be improved by requiring that half of all royalties be rebated to citizens (with a slice to the administering agency).

As Rob Bradley once reluctantly acknowledged to me (in the halcyon days before he banned me from the “free-market” Master Resource blog), “a free-market approach is not about “do nothing” but implementing a whole new energy approach to remove myriad regulation and subsidies that have built up over a century or more.” But unfortunately the wheels of this principled concern have never hit the ground at MR [persistently pointing this out it, and questioning whether his blog was a front for fossil fuel interests, appears to be what earned me the boot].

There have been occasional   libertarian  climate  proposals floated over the past few years, but they have never graced the Mises Blog, instead falling gently to the ground unnoticed – apparently, except for me – like the proverbial unstrained koala tea of Mercy.

Austrians seem to act as if the love of reason requires a surrender of it in favor of the comforting distraction of a self-satisfied echo chamber of a type that would warm the cockles of any like-minded religious “alarmist” cult.

Then of course, we have our own  home-grown libertarians who are happy to participate actively in the debate (with many excellent points, naturally), but carefully skirt for the purposes of maximum effectiveness (and felicitously, for their own consciences) the fact that their views are funded by the dirtiest class of rent-seekers. Plus we have a few who are happy to regurgitate for us “heroic” “grassroots” efforts that are transparent corporate PR ploys.

Finally, since no one else seems to be remotely interesting in scratching the surface of Dr. Hayden`s letter, here is what a little due diligence turns up:

– sure, the solubility of CO2 in water decreases as water warms, and increases as water cools. Some skeptics use this to suggest that rising atmospheric CO2 concentrations are due not to man, but to a naturally warming. That`s why it`s so interesting that, despite a warming ocean, ocean pH is rising [oops, I meant pH is “falling”, as I`ve noted in a previous comment about rapidly changing ocean pH]  because dissolved CO2 is also rising (because man`s CO2 emissions are forcing more CO2 to be dissolved in water).

– You ask sarcastically, if the melting point of ice is 0 ºC in Antarctica, just as it is everywhere else, how will a putative few degrees of warming melt all the ice and inundate Florida, as is claimed by the warming alarmists? The answer is, simply, that (1) the warming oceans melt and undermine the coastal ice, and (2) as coastal buttresses are removed, gravity brings the continental ice down more rapidly. This process is well underway and apparently accelerating, as described in a study just published in Nature. Note also that not all of Antarctica lies precisely at the South Pole, and that some parts are melting directly as the atmosphere warms.

– finally, not all men are dinosaurs, nor is the rest of extant Creation (save birds, of course). Why should we feel comforted by the fact that we may, in the blink of an eye in geologic time (decades/centuries), be terra-forming the Earth for creatures that no longer exist, while stressing it for the rest of Creation? Do we have no right of preference in climate or in the life we share the Earth with, or have the investors in fossil fuel firms homesteaded the right to modify environmental matters willy nilly, come what may?

Thanks for providing the soapbox, Stephan.

Tom

I note that Stephan closes his introduction to Dr. Hayden`s letter with the following:

“I love Hayden’s email sign-off, “People will do anything to save the world … except take a course in science.””

Would that problems of governance of shared resources were so easy as taking a science course! Then ALL of us Austrians, and not merely our leading lights at the Mises Blog, could simply pack up and go home, and leave everything to a few philosopher-king scientists!

[Update: I copy at bottom a follow-up exchange I had on Bob`s thread with another reader – radio silence from Bob.]

Bob Murphy has a new post up at his blog, “CBO Testimony Misleads on Cost of Cap-and-Trade“, that draws attention to a new blog post at the Institute of Energy Research that Bob says he “had a lot to do with”.

The IER post rightly criticizes some of the numbers that the Congressional Budget Office has released, but the IER is playing games itself.

I left the following note at Bob`s (now substantially goosed up for the benefit of readers):

TokyoTom said…

IER? Isn`t that the “free-market” blog that bans libertarians who are not on their pro-coal, pro-pollution wagon? [Oops, I confused this with Rob Bradley`s MasterResource blog; IER is different, in that IER is – much more clearly than MR – an active rent-seeking front for fossil fuel interests, which Exxon made clear last year when it publicly announced that it would no longer fund IER`s “unproductive”, climate-skeptic position.]

But while we`re on the subject, let`s not forget:

– Austrians` fundamental objections to cost-benefit analysis;

–
that the mining, transport and combustion of coal, in addition to whatever climate “cost” it
might have to various people whose preferences can`t be measured, have
very real and significant costs in terms of damage to persons and property;

–
that federal law authorizes this (via the “Clean Air Act”, surface mining laws and ownership of the TVA), and grandfathers the very worst
midwestern utilities, the oldest 10% of which (41 or so) are  estimated to be responsible for 43% of the
$62 billion in annual  damages (not including damages from harm to ecosystems, effects of some air pollutants such as mercury, or climate change)(according
to the latest NAS report on the indirect costs of fossil fuels);

– that our federal government and states own most of the coal deposits and are otherwise addicted to the royalty revenues and complicit in turning a blind eye to damages;

– the future “costs” that the IER analysis refers to (in 2050) are not discounted to present value;

–
that alternative policies – such as

• a rebated carbon tax,
• accelerating cleaner power investments by eliminating corporate income taxes or allowing immediate
  amortization of capital investment,
• eliminating antitrust immunity for
  public utility monopolies (to allow consumer choice, peak pricing and “smart metering” that will rapidly push efficiency gains),
• ending Clean Air Act handouts to the dirtiest
  utilities (or otherwise unwinding burdensome regulations and moving to lighter and more common-law dependent approaches),
• ending energy subsidies generally (including federal liability caps for nuclear power (and allowing states to license), and
• speeding economic growth and adaptation in the poorer countries most threatened by climate change by rolling back domestic agricultural corporate welfare programs,

are never advanced, much less their costs weighed [that is, no attempt is ever made to engage opponents in good faith or to seek mutual gains by working to resolve underlying problems];

– the costs/consequences/risks and equities of “do-nothing” policies are hardly considered, and when so are heavily discounted;

– that deliberate “geo-engineering” holds no promise as a panacea, and itself is fraught with issues about statism, preferences, risks and liaibility;

–
the need for investment in infrastructure and change in laws to adapt
(and foster adaptation) to very real ongoing climate changes are never
discussed; and

– no one at IER ever seems to question the
unstated presumption that utilities and our transportation industries
have somehow homesteaded an ownership right over the global atmosphere – or the massive role that our federal government and states play as coal and other energy resource owners),
so that it`s perfectly okay to dismiss the preferences of those who
have concerns at home [those “religious” nuts like Exxon, and our Academies of Science] and those abroad in the least developed countries
that are most vulnerable to damages (much less to suggest how those
injured should be aided).

In other words, those defending the
status quo seem to have abandoned any Austrian training (or to have no
familiarity with its concern for problem-solving and awareness that
[as Block points out] common law protection of private property rights was hijacked a century
ago, with massive pollution and rent-seeking problems being the result).

Someone
ought to post a few of these thoughts over at IER; Rob Bradley somehow
finds comments of this type over fundamental principles to be “ad hominem” arguments [of the kind that very quickly tested his patience and got me banned, without any word to his co-bloggers, who found my comments worthy of considered response].

Sure, we should fight over policy, but let`s not ignore principles or put our heads in the sand.

October 28, 2009 10:10 AM

*  From the NAS report:

Coal accounts for about half the electricity produced in the U.S.  In
2005 the total annual external damages from sulfur dioxide, nitrogen
oxides, and particulate matter created by burning coal at 406
coal-fired power plants, which produce 95 percent of the nation’s
coal-generated electricity, were about $62 billion; these nonclimate
damages average about 3.2 cents for every kilowatt-hour (kwh) of energy
produced.  A relatively small number of plants — 10 percent of the total number — accounted for 43 percent of the damages.  By 2030, nonclimate damages are estimated to fall to 1.7 cents per kwh.

[update:

Supporters of cap and trade always turn to the
argument that opponents are burying their heads in the sand. It’s not
true. This legislation won’t do anything to help the environment. It is
merely a front so that the administration and the Democrats can say
they did “something.” We don’t need legislation that is going to cost
every single American household and won’t even be able to achieve its
stated goals. Write your Congressmen at
http://dontcapandtradeourjobs.net/?tr15.

[A], you`re missing my higher -level poinht, which is that IER is
rather apparently UNINTERESTED in engaging productively or on a
principled basis on this issue; rather, they are simply sniping (though
they make excellent points) at the cap-and-traders).

Though,
of course, from the view of those financing them, this form of
engagement may very well be “productive”, if it delays any action that
will lower returns to coal, rail or utility investors.

What`s
regrettable is that this obfuscation, which has been going on for
decades, is what is likely to saddle us with extremely costly, porky
and ineffective “climate change” policies.

# posted by  TokyoTom : October 29, 2009 12:08 AM

“If you cannot measure it; You cannot improve it.”

— Lord Kelvin

I noted in February (“Empowering power consumers: Google beta tests software to give consumers real-time info“) that Google, whose climate change-related efforts I’ve blogged about previously,
has been beta testing a new “PowerMeter” software that – when coupled with a “Smart Meter” installed by the local utility – will help consumers to measure, track and compare their real-time
electric usage, thereby allowing them to make better choices as to when
and how they use electricity, and to better match such use
to the pricing programs of their utilities. Google testers
have found that the software allows them to relatively easily cut use
(by an average of 15%), and to save on their electricity bills by an
even greater percentage.

Google has just announced that it has side-stepped the need for consumers to wait for their utility to install a smart meter, by partnering directly with TED (“The Energy Detective“), the provider of the TED 5000 device, presently priced at about $200, that consumers can  have attached to their power supply.

More information is here (from The Energy Circle, which has been testing PowerMeter with an earlier TED device) and here (CNET).

—

Next up? Hope springs eternal that developments like this will remind policy makers, pundits, pressure groups (like the U.S. Chamber of Commerce and browbeating enviros like Joe Romm) that the real reason for the nasty public squabbling over “green” power mandates and subsidies (as I noted in a recent post about Steven Milloy`s railing about “evil” GE and federal stimulus
money) is the fact that power markets are not free, but are burdened by sweet – and horrifically inefficient – cost+ deals to the public utilities. As I noted previously:

While there are plenty of root causes for the calls for legislative
and regulatory mandates in favor of clean / green / renewable power,
such as:

• concerns about climate change,
• the political deal in favor of dirty coal under the Clean Air Act, 
• the enduring role of the federal and state governments in owning
  vast coal fields (the royalties from which it does not distribute to
  citizens but go into the General Pork Pool), 
• the unwillingness of state courts, in the face of the political
  power of the mining industry, to protect persons and private from
  pollution and environmental disruption created by mining,
• the deep involvement of the government in developing, encouraging and regulating nuclear power,

the most obvious and proximate root
cause is something that attracts far too little attention – the
frustration of consumer demand for green energy, and the inefficient
and inaccurate pricing and supply of electricity.  It`s prettty clear that the
grant of public utility monopolies and the regulation of the pricing
and investments by utilities greatly restrict the freedom of power
markets, from the ability of consumers to choose their provider, to the
freedom of utilities to determine what infrastructure to invest in, to
even simple information as to the cost of power as it varies by time of day and season, and the amount power consumers use by time of day or appliance.

With freer markets, we would see much more competition, better
pricing, much more cost-saving (and conservation), and more money
flowing into green power. So why is so little attention being paid to
all of the gains that could be achieved from less – and more rational –
power regulation?

Sadly, so-called “free-marketers” are often so busy smacking down bad arguments from greens that they fail to note, much less acknowledge, that they’re fairly frequently making bad arguments themselves or ignoring gaping inconsistencies in their own positions.  Of course it IS awfully easy to get caught up in partisan conflict, which provides a nice rush of self-righteousness, but it probably also helps if you’re being paid to post by fossil fuel interests, like the folks over at the supposedly “free-market” MasterResource energy blog, of Rob Bradley‘s Institute for Energy Research.  In any case, it’s disappointing, not solely because it comes from “free-marketers”, but because it offers no hope of engaging productively with those with whom they disagree.  In other words, more of Culture Wars “R” Us.

I’ve already commented quite a number of times here about Rob Bradley and his co-bloggers at MasterResource, but I continue to be astonished by the inability of the bloggers (and some commenters) to notice when they are being inconsistent or are taking anti-market/anti-lbertarian positions.  A recent post by Rob Bradley on the limitations of wind power, with follow-on comments by others, is a case in point.  In his post, Rob trots out some very old literature to make some perfectly fine – if rather obvious and well-known – points about the limitations of wind power; I observed that of course one can make similar observations about the short-comings of other energy sources, such as the social costs of coal. 

While Rob fails to respond, a visitor and one of his guest bloggers, Tom Stanton, senior energy fellow at the Pacific Research Institute (which bills itself as a “champion [of] freedom,
opportunity, and personal responsibility for all individuals by
advancing free-market policy solutions”) ride to his rescue, with strawmen and astonishingly non-libertarian (indeed, utilitarian) commentary.  Why can’t the right do better than this?

For the interested, I excerpt the relevant comments below (emphasis added):

1
TokyoTom { 03.04.09 at 12:09 pm }

Rob, thanks for this; you are right of course about the drawbacks to wind.

Now can I interest you in some very, very old tracts on how dirty
coal is, both in mining and combustion, or newer ones about deaths,
health costs, damages to property that are still ongoing and
uncompensated?
BTW, while you are obviously an advocate for coal, are you also an
advocate that coal producers and consumers bear their own costs? Or is
shifting those costs to others a right that they have homesteaded?

Andrew { 03.04.09 at 6:45 pm }

Tom,
the question isn’t “is coal bad?” its “is it better than (essentially)
nothing?” It is. Coal, I submit, has save far more lives than it has
cost, and has improved quality of life more than damaged it.

TokyoTom { 03.05.09 at 3:58 am }

Andrew,
the question is NOT whether “coal is it better than (essentially)
nothing?”, just as it is not whether wind or any other energy source is
perfect or preferable.

The question is whether those who engage in economic activities are
bearing the costs or risks of those activities, or whether those
activities appear relatively preferable to the people involved because
they are able to shift damages, costs, risks and/or responsibilities
for consequences to others.

True libertarians insist that individuals (and firms) bear full
responsibility for harms caused to others; some in fact insist that
those who are harmed without their consent have the right to use courts
to enjoin the damaging activity. Maybe this all seems a little quaint
to you?

My point is simply that Rob is ignoring, rather obviously and perhaps deliberately, the human costs of the use of coal.

Tom Tanton { 03.05.09 at 9:15 am }

The
“human cost of coal” has been extensively studied as have most other
energy (nay, all economic) technologies. That study are most often
referred to as “externalities”–Guess what? The economic ‘costs’ of coal
are mostly, if not completely, offset by the economic benefits. The
negative externalities are NOT enough to offset the higher cost
premiums of technologies like wind that never quite mature (most likely
because of the heavy per unit subsidy they’ve become dependent on after
35+ years.)
Now let’s see about human costs–in countries with coal (or nuclear or
any meaningful) baseload power isn’t the average life span about twice
that of folks living in countries with no or primitive energy? Aren’t
THOSE folks also less educated, and less free? Do they even have 15
minutes a day of “leisure time”?Aren’t those folks also burdened with
spending every daylight hour finding a piece of wood (or dung) to cook
their measly daily bread and using unsanitary water to boot?
I don’t believe Rob is ignoring the costs of coal. I believe Sir you’re
ignoring the economic and human benefits of coal and modern energy.

TokyoTom { 03.05.09 at 12:08 pm } [links added]

Tom,
it seems that you understand little, if anything, about free markets or
libertarian principles. Murray Rothbard`s paper on air pollution makes
it clear that it was utilitarian arguments like yours – “the damage my
pollution does to you is fine because people want to but my products” –
that industry used in the 1800s to subvert the common law and run
roughshod over property rights, leading to the “pollution is free”
philosophy and ruinous competition where the non-polluter went
bankrupt. The upshot was the horrible pollution in the 50s, 60s and 70s
that led to tremendous citizens` movements to use government to bring
pollution under control – with laws signed by Republican presidents.

No externalities? Where were you? What motivated the Clean Air Act, Clean Water Act, SuperFund?

As for coal vs. wind, please spare me the strawman. I`m not at all
suggesting that wind OUGHT to be subsidized. I`m just asking for a
little intellectual honesty that will recognize that coal use IS
subsidized, by being allowed to shift real and significant costs to
others, and that we`d all be better off if those socialized costs were
internalized.

Perhaps someday it will occur to those who (correctly) want to bash
greens for their stupid proposals that they might be more successful if
they were a little more consistent themselves and started exploring
common ground. Where`s the post praising the federal court decision
forcing TVA to do a better job at cleaning flue gases than required by
the CAA in order to limit harm caused in NC, for example? Where`s the
post calling for the privatization of the bumbling, polluting TVA,
which keeps generating costs for taxpayers and ratepayers?

But that`s not what this blog is all about, is it? You guys are more
into making enemies and fighting over government than in truly shifting
risks and regulation back to markets and the courts.

As for countries abroad, this is of course unrelated to a discussion
local/regional costs and energy alternatives in the US. But since you
bring it up, don`t forget that the real reason why these other nations
aren`t developed yet is that they`re still kleptocracies that don`t
sufficiently protect private property rights and returns on
investments.  Why are you cheering on poor governance, instead of
suggesting that they could become wealthier sooner by accelerating
their move up the Kuznets curve (which is an artifact not only of
preferences, but of insufficient information and laws that protect the
elites over private property of the masses)?