Thursday, 9 July 2009

Quote of the day: Robert Murphy on climate change

"In the climate change debate, people often forget that under all but the most catastrophic scenarios, the future generations who will benefit from our current mitigation efforts will be much richer than we are."
                                                - Robert Murphy

As I paste that above quote into my blog writer, I have beside me a post from the Green Party’s Frog  Blog called ‘Calling names isn’t nice, especially when you’re wrong.’  It’s a doozy.  Its connection with Murphy’s point above will quickly become clear.  It begins thus:

I previously blogged about last night’s climate change target meeting in Wellington, where amongst other failings, Nick Smith accused the Green Party of only caring about the environment and having no regard for the impact on the economy.

Of  course Smith is dead wrong on this, just as he is on everything – including his decision to keep breathing. The Green Party don’t care about the natural environment.  Not in any genuine sense, they don’t. With their proven penchant for bans and big government, and a caucus composed almost entirely of the intellectual remnants of the Socialist Workers’ Party, they’re just a bunch of  authoritarians with a marketing wing – and with Jeanette Fitzsimon’s departure even their figleaf of genuine environmentalism is about to disappear with her. 

If you really want to see Greenwash in action, then the Green Party is the single most prominent contemporary example.

And it’s not true either to say that they’re unconcerned about the destructive economic impact of their regulation fetishThey and their luminaries are only too happy to have our economic lifeblood destroyed.

Anyway, their mention of Nick Smith is distracting me from from the main point of their post, and of this one.  The post at Frog Blog continues on to its main point, saying (apparently completely without irony):

    In the spirit of economic literacy, I wanted to remind our readers of these words from a recent Australian Treasury report into the economics of climate change: “The Treasury’s modelling demonstrates that early global action is less expensive than later action.”

I say “completely without irony” because if there is any group of people for whom economic illiteracy is a watchword it is the Green Party. There is surely no higher density of economic illiterates than in the un-perfumed climes of the Green Party’s electorate offices – except perhaps in the offices of Alan Greenspan and Ben Bernanke.

And as regards the “Treasury’s modelling,” it has about as much credence as BERL’s now thoroughly discredited report on the social costs of alcohol. Based as it is on the flawed “model” produced by Nicholas Stern at the behest of the British Treasury to justify onerous carbon taxes now to help the British Treasury later, the Australian Treasury’s modelling shares all the errors of Stern’s flawed report, including it’s utterly discreditable use of a carefully selected discount rate – a discount rate selected (like BERL’s careful rejection of the “benefits” side of their cost-benefit study) so as to give him the results his client had paid for.

As William Nordhaus (no friend of free markets) explains the resultant absurdity:

    Suppose that scientists discover a wrinkle in the climate system that will cause damages equal to 0.1 percent of net consumption starting in 2200 and continuing at that rate forever after. How large a one-time investment would be justified today to remove the wrinkle that starts only after two centuries? Using the methodology of the [Stern] Review, the answer is that we should pay up to 56 percent of one year's world consumption today to remove the wrinkle. In other words, it is worth a one-time consumption hit of approximately $30,000 billion today to fix a tiny problem that begins in 2200. [Italics in original]11

The intent of all the “modelling” carried out by the World’s Treasuries is nothing less than to justify strangling industry now (fifty percent by 2050 says our own John Key) for some unknown and unproven benefit in the future for your grandchildren – who, if we can predict anything with confidence, will probably want to know why your stupidity now has left them so poor.

Economist Robert Murphy (whose writings the Greens would do well to read if they do seriously wish to improve their economic literacy), points out in ‘The Economics of Climate Change’ that even the idea of modelling economies one-hundred years ahead is fatally flawed.

    Fans of Austrian economist Friedrich Hayek—who warned against the "pretense of knowledge"—should be even more concerned about the sheer audacity of the field of climate economics. After all, it is rather absurd to argue about the impacts of present tax policies on global temperatures in the year 2150. Yet, it is precisely these projections that provide the foundation for policy recommendations.
Many critics have raised this objection before, but it bears repeating: We have no idea what the world economy will be like in the 22nd century. Had people in 1909 adopted analogous policies to "help" us, they might have imposed a tax on buggies or a cap on manure, needlessly raising the costs of transportation while the U.S. economy switched to motor vehicles. This is not a mere joke; "serious" people were worried about population growth, and the ability of large cities to support the growing traffic from horses. Had someone told them not to worry, because Henry Ford's new Model T would soon transform personal locomotion without any central direction from D.C., these ideas would probably have been dismissed as wishful thinking. As famed physicist Freeman Dyson has mused, future generations will likely have far cheaper means of reducing atmospheric concentrations of carbon dioxide, if the more alarming scenarios play out.18
    In the climate change debate, people often forget that under all but the most catastrophic scenarios, the future generations who will benefit from our current mitigation efforts will be much richer than we are. For example, Nigel Lawson points out that even under one of the worst case scenarios studied by the IPCC, failure to act would simply mean that people in the developing world would be "only" 8.5 times as wealthy a century from now, compared to 9.5 times as wealthy if there were no climate change.19

To translate, this means that even if the scare-mongers were correct, they intend to strangle prosperity now – in the midst of the deepest depression in seventy years – simply so that your future generations one-hundred years from now might be able to afford an extra Pan-Galactic Gargle Blaster while they orbit the planets.

May I suggest that instead of bleating about name-calling, the authors of Frog Blog instead acquaint themselves with some real economics.  And read and digest the arguments in Murphy’s ‘The Economics of Climate Change.’ It would leave them looking less embarrassed when they talk so smugly about the economic illiteracy of others.


  1. "Anyway, their mention of Nick Smith is distracting me .." :)


    A man who allegedly tried to acquire a firearm to shoot Nelson MP Nick Smith yesterday forced the closure of the politician's Nelson electorate office while police and the country's diplomatic protection squad dealt with the alert.

    Something we should know? :)

  3. There's nothing wrong with loving nature. In fact, that's a great thing.

    I call myself an environmentalist - especially so after watching a few hours of Discovery or National Geographic channel.

    As with so many other things, however, people forget that life involves trade offs. Very often its impossible to have one thing, and another.

    So whilst I love all things in nature - my particular favorites are monkeys, ants, larger cat species and rainforests - sometimes we are presented with unfortunate trade offs.

    When it comes down to those choices, I will always choose human welfare over that of another species.

    A "Greeny" will not. They will either refuse to see the trade off, or in the most disturbing of cases, recognize that trade off and choose an animal, or worse, a plant, over their fellow humans.

    So if the choice is between jobs, wealth, liberty or the general happiness of my fellow man, vs the existence of a bunch of ants - the ants are shit out of luck.

  4. Hmmm... 3 comments, none paying attention to the fact that "the most catastrophic scenarios" seem to be the ones we are aiming towards.

    I am reminded of that comment on Murphy's law "Murphy was an optimist"... it seems to bear some thought.

    As I read this I now understand why we get refugees on Frogblog from the vitriol dripping here. Is there anything constructive???

    The Green Party don’t care about the natural environment. Not even remotely true. We care about many things... the environment is at the top of the list for many of us. Some others regard social-justice issues as important. It is not like it is a monolith.

    if there is any group of people for whom economic illiteracy is a watchword it is the Green Party.

    Interestingly we predicted the Global meltdown at least a year ahead of its happening. I am appalled to see the lack of knowledge and repetition of stereotypes being promoted here, but I am not really surprised.

    The real problem here is that the economy is a SUBSET of the ecology. If you haven't got a viable ecological system you do not have an economy. Period. The "catastrophic scenarios" are the ones that are all too likely and the cost of preventing them is a matter of trading off an unacceptable risk for an acceptable one.

    OK... there is not anything constructive here because the assumption here is that whatever climate change will happen will have little effect on our economic is inherent in the discussion. An assumption that is barely acknowledged.

    I am not coming back to this topic on this blog. I will be on frogblog. I may look at some other topics.


  5. Hi BJ, Thanks for your respectful comment. I'll try to reciprocate.

    "3 comments, none paying attention to the fact that 'the most catastrophic scenarios' seem to be the ones we are aiming towards."

    Well, not exactly. In fact, not at all.

    The "projection" from the IPCC's last report, the Fourth Assessment, of a temperature increase of 0.2 degrees per decade already overstates the amount of warming we have seen -- or in scientist-speak, "based on measurements since 2001, and the four statistical models described above the central tendency for projections communicated in the IPCC AR(4) falls outside the range consistent with real earth weather data." See. Remember, this is despite accelerating emission rates and concentrations.

    They've been making these projections now for nearly twenty years , yet despite being able to "backward project" quite well with later reports (as the other three trend lines produced from later reports in 1995, 2001 and 2007 all manage to do), they're not quite so good when they try projecting forward.

    A series of articles by Roger Pielke Jr published in January, before this year's temperature dip, shows just how crap the previous future projections have been. In Pielke's words, "It seems pretty clear that the IPCC in 1990 over-forecast temperature increases", while the later record "is clouded by an appearance of post-hoc curve fitting."

    See the last few graphs and paragraphs in this post.

    [continued in next post]

  6. [continued from previous post]
    " . . . the environment is at the top of the list for many of us. Some others regard social-justice issues as important. It is not like it is a monolith."

    In fact, of your entire caucus, perhaps only Jeanette Fitzsimons has the environment as her number one value. For the others, I'd suggest the authoritarianism inherent in their "social justice" issues meshes quite nicely with the authoritarian controls your party wishes to impose in defence of the environment. Keith Locke is perhaps the prime example in this regard -- as are all the other blow-ins from the collapse of the Alliance.

    It's this tendency that George Reisman criticises in his 1990 essay 'The Toxicity of Environmentalism.'

    "Interestingly we predicted the Global meltdown at least a year ahead of its happening."

    I'd be very interested to see evidence of those predictions -- providing they weren't simply generalised "predictions" based on the already discredited "collapse" based on "peak oil" or "rampant consumerism."

    ". . . the assumption here is that whatever climate change will happen will have little effect on our economic is inherent in the discussion. . . "

    Well, not exactly. But before I explain my own assumptions, let me contrast them with the underling assumption by the likes of the Green Party for "action" -- which is that whatever climate change might happen is grounds for "action," by which is meant government action to ban private action.

    But how does that follow?

    My own assumption is that whatever climate change might actually happen (about which I'm skeptical) provides no justification at all for authoritarian controls that will only hamper our ability to adapt. We know that socialism doesn't work at fifteen degrees -- why do people think it will work at nineteen?

    And as regards Murphy's own assumptions: Murphy himself is a warmist, as you'd have spotted if you read to the end of his piece which he concludes: "Although it is probably true that the 'best evidence' suggests a connection between human activities and a warming globe, this fact about the natural world does not automatically justify aggressive government interventions into the economy. Given the historical corruption of governments and the demonstrated resilience of free entrepreneurs, proponents of such measures have a much harder case to make."

    Which is the point of this post: that the case for aggressive government interventions has not been made.

  7. Crazy crazy? The Australian Treasury modelling you refer to DID NOT make any assumptions what so ever about discount rates - as it was not a cost-benifit analysis. It simply looked at mitigation costs. Nor did it have anything to do with the Stern review. You might as well have said the modelling is terrible because Father Christmas was pushing the buttons - your statements are so fanciful.


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