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Source link: http://archive.mises.org/7482/carbophobic-socialism-rules-ok/

Carbophobic socialism rules OK!

November 28, 2007 by

Unsurprisingly, the latest missive from the Doomsday cult of tax-exempt Phyllakes plays up the supposed horrors of ‘climate change’ for all it’s worth, before strongly recommending that we ‘Rich’ people bear most of the costs of their megalomania, neatly employing a weepy-eyed catchphrase – ‘Human Solidarity in a Divided World’ – which they know will appeal to anti-capitalist journos, to the MTV generation muddle-heads, the celebrity serial child-adopters, and the billionaire rock-star income-levellers among us.Most risibly of all, the piece tries to sweeten the pill (for political entrepreneurs among the carbon trading and subsidised energy crowd, at least) with an appeal to the putative “Keynesian and Schumpeterian mechanisms” which, we are told, promise “new incentives for massive investment, stimulating overall demand and creative destruction leading to innovation and productivity jumps in a wide array of sectors [sic]…”

In a previous post to the mail list, I pointed out that this latter is a key part of the spurious economic justification being advanced for ‘taking action now’. The specious idea is that, in the struggle to overcome the artificial barriers erected by the Ultraviridians to human endeavour, we will all thrive simply as a result of trying to restore our living standards to the level they were at before the Planners imperiously reduced them – it’s as if the 100m sprint could be improved by shackling the contestants’ legs together before the off!

Al Gore, Vinod Khosla, and the biofuel bandits might reap enormous rents out of this – and, of course, an army of bureaucrats will find employment for life, monitoring compliance and distributing doles – but the rest of us are likely to rue the day we ever allowed the Five Star Fabians to conflate being kind to cuddly animals with their Collectivist wish to restrict individual freedoms and to trample on property rights.

{ 63 comments }

Fundamentalist December 3, 2007 at 8:09 am

TT: “Barnett and Yandle (and your additional reference) fully support MY position…”

Only in your dreams. It’s clear that you don’t understand what Barnett and Yandle are writing. Barnett specifically applied his the benefits of trade to Pareto externalities with no transaction costs. No proposed solution to GW hysteria is a Pareto externality because it would be impossible to limit CO2 emissions without hurting the people who emit them. Neither would the transaction costs be zero.

It should be clear to most readers that Sean’s main point in his article is true whether GW hysteria is true or not. Even if GW were to cause the disasters that Al Gore predicts, no solution will make us richer than if global warming had not occurred. That would be impossible and an example of the broken pain fallacy.

Larry N. Martin December 3, 2007 at 10:41 am

There, do you regret your question now?
Not at all. Thanks for a considerate and thoughtful reply.
Was Mises a statist? Well, he certainly wasn’t an anarcho-capitalist, although many more recent Austrian econonomist types are AC, like Hans Herman-Hoppe. In any case, even if one is an anarchist, it’s true that governments aren’t going to go away overnight. By all means, let’s encourage governments to do the right thing, and pray they can understand what that means.
Deregulation and more strict property rights are good things, and naturally only a government can deregulate, since it’s the one doing the regulation in the first place, so deregulation isn’t necessarily statist.
And if Ron thinks “man-made global warming is developing faster than private property institutions can develop to respond to it”, why would he think that governments can adequately respond to the problem?

TokyoTom December 3, 2007 at 10:06 pm

Fundamentalist, nice job of moving the goalposts in order to avoid conceding that you are wrong on matters of fundamental mechanisms.

1. It should be clear to most readers that Barnett and Yandle agree with me and fully support my view that the progress of man is one of developing institutions to cope with “tragedy of the commons” situtations by turning unowned resources into managed common property and then into private property, as the benefits of doing so increase and as related costs decrease. Here’s me:

- “people and free markets work to resolve problems of externalities, “tragedies of the commons” and “public goods/bads” … precisely because there are mutual gains to be had by internalizing them. The question in each case is simply whether the marginal gains from moving towards internalization merit the costs.”

Here’s Barnett and Yandle, again:

Axiom #1: All inefficiencies, including [but NOT LIMITED TO] Pareto relevant externalities, represent unexploited gains from trade.
Axiom #2: When free exchange is allowed and transactions are costless, all Pareto relevant inefficiencies will be negotiated away.
Both propositions are obvious and entirely non controversial. Indeed, they capture the bargaining essence of the Coase Theorem and of Buchanan and Stubblebine’s (1962) “Externality” analysis. Where Pigou saw politics beckoning, Coase saw a market opportunity. Of course, property rights and rules of liability were central to Coase’s solution.

… why are the potential gains from trade unexploited? What prevents people from negotiating an efficient solution? … First, … the costs of negotiating private solutions may exceed potential gains from trade. This might occur, for example, when both (i) large numbers of persons are involved and (ii) the asset for which use gives rise to external effects is a public good. In this case, free-rider problems make it costly for private parties to define property rights such that all impacted parties are included in (Pareto relevant) bargains.

This complication may make transactions cost sufficiently high that they swamp even large
potential gains from trade. Examples where this is the case are surprisingly difficult to find. Air quality, ozone depletion and climate change are possible examples.

It is clear that there are large transaction costs relating to climate change; far from running from them I have expressly acknowledged them. Rather, you pigheadedly refuse to acknowledge that there is a DYNAMIC process at work, and instead blindly insist that because in the PAST the transaction cost-benefit calculations favored ignoring (again, a point I have expressly stated) GHG emissions, albedo changes and climate change, the calculation must now and forever remain the same. Why the insistence on a STATIC anlaysis and a denial of dynamics? Is it written in your scriptures somewhere?

Yandle elsewhere expressly stresses the dynamic process I speak of:

“I wish to put forward the notion that encounters with the commons form the fundamental stimulus that yields, instead of tragedy, what we today call civilization. The ascent of man from a primitive existence with no wealth accumulation to life as we know it is fundamentally a story about triumph over, not tragedy of, the commons. Let me explain.

“Our very existence as human beings is defined by evolved institutions for avoiding tragedies. We have names, which serve the economic purpose of identifying us as parties to contracts and agreements. Those names, first and last, form webs of communication that reduce the social cost of assigning responsibilities and liabilities. They enhance truth-telling and promise-keeping; they raise the cost of engaging in anti-social behavior. They limit a tragedy of the commons.”

and

“People can build institutions that take the edge off frantic commons behavior. People have unwritten and written constitutions that help to establish social order. People can and do accumulate wealth. People communicate, invent lines of kinship, and develop customs, traditions, and rules of law that limit anti-social behavior. People define, enforce, and trade property rights. People can and do avoid the tragedy of the commons. Indeed, instead of living with tragedies, people triumph over the commons. But the triumphs are never perfect or complete. There is always another commons to manage.”

http://www.fee.org/publications/the-freeman/article.asp?aid=4064

Yandle has further expressly stressed that this dynamic – seeking gains from better management of open access resources/externalities – is at work in the discussions relating to climate change, and he predicts that private property rights will evolve (as I noted above):

“As humans encourage rules for managing the global commons, is there any reason to think that property rights institutions for the global commons will vary from the command-and-control/regulatory property model that predominates today? The answer is yes. Because of the high cost of constructing political markets and the absence of tangible political gains, politicians and the interest groups they serve may be so constrained that 3-D rights will emerge in the global commons. Because there is no world constitutional order, the cost of constructing political markets at the international level is extraordinarily high. …

“[A]t any moment in time, there are multiple property rights margins …. At the intensive margin, 3-D property rights evolve for certain resources because the benefits outweigh the costs. However, these same rights will be denied in another place because of their cost or, regardless of their efficiency, because of the politics of special interests. At the extensive margin, where exploration is still occurring and the cost of defining and defending a resource is unaffordable, the commons remains unsullied by the rule of law and markets. In between these margins, there are mixtures, hybrids, and evolving property rights. As costs fall and scarcity values increase, these margins continue to shift. Eventually, even resources that are currently understood to be part of the global commons will become subject to 3-D property rights.

Bruce Yandle, “GRASPING FOR THE HEAVENS:
3-D PROPERTY RIGHTS AND THE GLOBAL COMMONS”, 10 Duke Envtl. L. & Pol’y F. 13 (link in prior post)

This dynamic process – in which the relative values of resources, trade-offs between them, and costs of access and transactions all change – is clearly at work with our atmosphere and oceans, just as Mises notes how it was in work with respect to externalities relating to the use of local land, water and fisheries resources. For example, the global community overcame transaction costs and took action to end production and use of CFCs because of the damage they do to our ozone layer and because progress made other alternatives available. The US and other nations also entered (and remain parties to) the Framework Convention on Climate Change and began to gather domestic GHG emissions data and to coordinate scientific data (the IPCC reports), and there are also a host of voluntary efforts to cut back on CO2 emissions, offset emissions, invest in alternative and sequestration technologies, etc., all outside of Kyoto. Not all is simple posturing to gain or dispense rents or political benefits. Why is this happening? Because technology is improving, people’s understanding of their impact on the climate and their respective preferences are changing, and economic risks and rewards are changing in response.

Why is this so hard to understand or accept?

Finally and once again, yes, there is a broken pane fallacy. But far from proving that it is what underlies concerns about climate change, Sean simply presumes it, by the simple and juvenile expedients of (i) ignoring that the atmosphere is a global, open-access commons, and that our activities may affect it but we have no market mechanisms for either expressing our relative preferences, and (ii) scornfully assuming that all those concerned (scientists, economists, business leaders, political leaders globally etc. etc.) are either caught up in a religious “hysteria” or are liars and scoundrels.

The ends that we will go to insulate ourselves from reality by weaving a coccoon of self-deception and self-justification is sometimes rather amazing.

Would Sean (and you) also consider all past investments in air, ground and water pollution control and abatement technology and efforts as similar manifestations of the broken wind fallacy, simply because you do not like how various actors used the political process to trump a more preferable property rights approach?If not, why not?

Sean’s reluctance to support any governmental involvement in AGW is admirable. But he has not demonstrated either that he understands relevant underlying principles, the scientific case or the motivations and behavior of various actors. He would be more effective if he would approach all of this more forthrightly, rather than with some sneering but uninformed superiority.

TokyoTom December 3, 2007 at 10:28 pm

Larry, Ron Bailey has obvious (and correct) misgivings as to whether governments can adequately respond to the problem. I really can’t speak for him, but he does post his email and respond to comments to his Reason pieces.

However, I would venture that it seems evident that Ron has changed his mind, after careful monitoring, since the days when he took public positions AGAINST AGW – Bailey was the editor of Global Warming and Other Eco-Myths: How the Environmental Movement Uses False Science to Scare Us to Death (2002), and author of ECOSCAM: The False Prophets of Ecological Apocalypse (1993).

He has chronicled some of his change of mind in his online columns, “We’re All Global Warmers Now,” “Confessions of an Alleged ExxonMobil Whore,” “Global Warming-Not Worse Than We Thought, But Bad Enough,” and my proposal for carbon taxes as a way to reduce greenhouse gas emissions and spur low-carbon energy development, “Carbon Taxes Versus Carbon Markets”, all of which are linked in a recent column where he notes how he fell easy prey to rather obvious spoof purporting to show that all AGW, though real, was readily attributable to natural causes. http://www.reason.com/blog/show/123485.html#830993

Whether government action is justified and what, if any, action should be taken is precisely the real issue. I would note, as Yandle does, that as there is NO international government to hand down a solution by fiat, we face more of a voluntary negotiation among resources users, with governments acting as representatives and facilitators (and, of course, as gate-keepers to existing and pssoible future rents).

TokyoTom December 3, 2007 at 11:10 pm

Sean, I do appreciate the opportunity you provide to spam the Mises blog with my patently insane religious craziness.

So allow mr to note a couple of things that came to my attention yesterday:

- “At Nature, More Hysteria by AGW Religious Nuts and Vile Collectivists”:
A recent article in Nature Geoscience shows that measurable climate zone change is outpacing predictions.
http://mises.com/blogs/tokyotom/archive/2007/12/03/at-nature-more-hysteria-by-agw-religious-nuts-and-vile-collectivists.aspx

- “Hysteria from McKinsey: Costs of Reducing U.S. Greenhouse Gas Emissions”:
McKinsey: “Consensus is growing among scientists, policy makers, and business leaders that concerted action will be needed to address rising greenhouse gas (GHG) emissions in the United States. The discussion is now turning to the practical challenges of where and how emissions reductions can best be achieved, at what costs, and over what periods of time.”
http://mises.com/blogs/tokyotom/archive/2007/12/03/hysteria-from-mckinsey-costs-of-reducing-u-s-greenhouse-gas-emissions.aspx

TokyoTom December 3, 2007 at 11:30 pm

Oops, one more:

- “Australia Caves to Hysteria; Signs AGW Suicide Pact”, http://mises.com/blogs/tokyotom/archive/2007/12/04/australia-caves-to-hysteria-signs-agw-suicide-pact.aspx

TokyoTom December 4, 2007 at 6:12 am

Of course, then there are also the 150 top vile collectivists who are calling for immediate global poverty: http://mises.com/blogs/tokyotom/archive/2007/12/04/murdoch-amp-149-other-top-vile-collectivists-capitalists-call-for-global-poverty.aspx

Are these misanthropes worth addressing, Sean?

Fundamentalist December 4, 2007 at 8:05 am

TT: “nice job of moving the goalposts in order to avoid conceding that you are wrong on matters of fundamental mechanisms.”

You’r projecting. I’m not moving the goalposts; you are. In addition, you seem to think verbosity will make up for the weaknesses of your argument. The question is simple: will efforts to reduce GW by limiting CO2 emissions make us richer or poorer. Anyone who thinks it will make us richer is a complete idiot.

More free markets will eliminate some externalities. But removing those externalities involves cost shifting, not wealth creation. As for closing the commons, that created wealth in the past because the commons were generally a wealth producing asset, land for the most part, and because it was scarce. The atmosphere is not wealth producing and not scarce. Any and all efforts to reduce CO2 will make everyone poorer.

Fundamentalist December 4, 2007 at 8:15 am

TT: “For example, the global community overcame transaction costs and took action to end production and use of CFCs because of the damage they do to our ozone layer and because progress made other alternatives available.”

Nice re-writing of history. The truth: hysterical environmentalists frightened and blackmailed politicians into outlawing CFC’s. The transaction costs in that were very small, just the cost of legislation. The costs to the world’s wealth was enourmous as the shift to new refrigerants and equipment was enourmous. The world became much poorer because of the CFC hysteria. Today, evidence that the concern over CFC’s destroying the ozone was nothing but irrational hysteria is becoming very strong. I’m very confident that in another decade or so the same will happen with the CO2 hysteria.

Fundamentalist December 4, 2007 at 8:20 am

TT: “Would Sean (and you) also consider all past investments in air, ground and water pollution control and abatement technology and efforts as similar manifestations of the broken wind fallacy, simply because you do not like how various actors used the political process to trump a more preferable property rights approach?”

There you go trying to use your psychic powers again before they’re fully developed. I neither like nor dislike the “various actors” in the debate. Whether I like them or not has nothing to do with the validity of their arguments. I wonder why this is so difficult for you to grasp? Do you think it’s impossible for people to objectively evaluate propositions based on the validity of the logic? Or only people who agree with you can do so?

You still don’t get the broken pane fallacy, either. No one is saying that environmentalism is the broken pane fallacy; the idea that solving environmental problems will make us richer is the broken pain fallacy. Talk about pigheaded!

TokyoTom December 5, 2007 at 1:54 am

Roger,

- The broken window fallacy is that the economic activity generated by a loss of/damage to private wealth makes up for or justifies the initial loss or damage.

- That fallacy does not apply voluntary, private actions intended to close identified externalities or to community investments to convert open-access resources into regulated commons or to convert commons to private property.

You may wish to apply it broadly to every activity by government, but that is hardly helpful in discerning the underlying dynamics at work in how human societies progress by finding means to control tragedy of the commons behavior (once the consequences become apparent and the benefits to be gained begin to outweigh the costs). The reason why common property and then private property rights arose in the first place was because of the gains to be had from regulating was what previously a “free”, open-access resource.

One may argue that government action is never justified to address externalities, but one should not allow that stance to ignore the potential benefits to be gained from closing externalities (which is the main driver for the public discussion).

- But removing those externalities involves cost shifting, not wealth creation. False. Clearly all voluntary transactions to eliminate externalities create wealth by advancing the preferences of those involved, or else the parties would not engage in the transactions. The transfer of wealth, if there is any at all, occurs when a society lays down (via law or common law) a liability rule or property right that forces one party to compensate the other in order to engage in a previously unprohibited practice.

- As for closing the commons, that created wealth in the past because the commons were generally a wealth producing asset, land for the most part, and because it was scarce. The atmosphere is not wealth producing and not scarce. Any and all efforts to reduce CO2 will make everyone poorer.

More nonsense. What makes any material substance or energy source a “resource” or “asset” are human preferences and our abilities to use such sucbstances/energy sources to advance our objectives (living, breathing, eating, procreating, clothing and housing ourselves, companionship and the various higher-level activities we engage in for ancillary purposes). The atmosphere is clearly a resource that we make use of daily; that it has not been “scarce” is historically true, but does not make it any less important or less of a resource.

As our technology and uses of the atmosphere have changed, so too have our rules regarding it. Austrian literature is full of examples of how the common law system and private law (vluntary transactions) evolved to deal with growing pollution problems, until much of this was interrupted by resort to political processes. Similarly, sunlight is also a resource, and one whose value has grown and use increasingly regulated as private or regulatory property. One of the Yandle pieces I cited illustrates this well in talking about the evolution or air rights in Japan.

As Yandle also notes, it is clear that we are in a similar process of transition relating to the atmosphere and our climate system generally. That government is entangled in this process does not negate that the process, though very complex (and obviously not simply about CO2), is one with the class of other “tragedy of the commons” problems that man has, with varying degress of success, struggled over time. You declined to address any of man’s past investments in air, ground and water pollution control and abatement technology and efforts – clearly much of these activites were wealth-generating; why? (Austrian economics does not deny this, but rather asserts that better results could have been obtained more quickly, at less cost and less damage to individual liberty if government had stayed out of the process.)

- The question is simple: will efforts to reduce GW by limiting CO2 emissions make us richer or poorer. Anyone who thinks it will make us richer is a complete idiot.

By your standards, the second sentence is a strawman, ad hominem and a display of “psychic powers”; good job.

As for the first, besides being a strawman (since the problem is clearly much more complex than simply one of CO2), I think I’ve indicated that there are at least theoretical arguments to be made that, if our CO2 emissions do affect the climate and welfare of others, that there is possible wealth generation in at least voluntary transactions between groups of emitters and those
claiming to experience negative consequences. Whether the purported benefits are swamped by costs if government is involved is an empirical issue that has not been demonstrated.

- No one is saying that environmentalism is the broken pane fallacy
Sorry, but the broken window fallacy was one of Sean’s main points, and one that you expressly praised him for raising (though you are now amusing yourself with the contrast between pane and “pain”; this merely exhibits the “broken wind” phenomenon).

- The truth: hysterical environmentalists frightened and blackmailed politicians into outlawing CFC’s. … The world became much poorer because of the CFC hysteria. Today, evidence that the concern over CFC’s destroying the ozone was nothing but irrational hysteria is becoming very strong.

Hysteria, hysteria, hysteria – is that all you’ve got? How about giving us both a little history and an update on the current evidence to support your conclusions?

- Finally, you might not like a loaded question, but dismissing it as an attempt to display “psychic powers” is nothing but a neat ad hominem. You clearly display your own feeble psychic powers by talking about what I “seem to think”; by your standards, your own loaded questions are displays of similar “psychic powers”. Maybe some day you’ll stop using such transparent and silly rhetorical devices.

I don’t object to your leading questions though, since I can simply address them, rather than whine. To whit: while I think it is possible for people to try to objectively evaluate propositions based on the validity of the logic, I also think that this is indeed a difficult task, as we are full of cognitive predispositions. We all face this challenge, so no, I don’t suppose that I and “only people who agree with” are best positioned to objectively evaluate propositions.

- I neither like nor dislike the “various actors” in the debate.

Okay; I take you at your word. You just like calling “environmentalists”, “socialists” and unspecified others “idiots”, “hysterical”, “ignorant”, and “groupies of the GW Horror Show”, and then get all high and mighty if someone else should take to slinging insults.

Your partner in empty verbosity and weak arguments,

Pigheaded Tom

Fundamentalist December 5, 2007 at 8:02 am

TT: “The broken window fallacy is that the economic activity generated by a loss of/damage to private wealth makes up for or justifies the initial loss or damage.”

Have you read Hazlett? I don’t think so. The broken pane fallacy is that the work generated in repairing damage causes a general increase in wealth. The broken pane generates business for the seller of glass and the repairman, who become better off financially. The fallacy lies in claiming that everyone is better off because the owner of the broken window loses money as well as the business people who might have received the money spent on the pane. The owner of the window might have spent the money on a pair of shoes had the pane not broken, so the shoe maker is worse off. The broken pane transfers wealth from one group of people to another. Hurricanes often revive the broken pane fallacy because journalists claim that the funds spent on rebuilding will boost the economy. It does boost the local economy, but at the expense of other parts of the economy.

I’ll not respond to the rest of your post because it shows a similar lack of understanding of externalities and commons.

“- The question is simple: will efforts to reduce GW by limiting CO2 emissions make us richer or poorer. Anyone who thinks it will make us richer is a complete idiot.
TT: “By your standards, the second sentence is a strawman, ad hominem and a display of “psychic powers”; good job.”

No. It was a simple insult.

TokyoTom December 5, 2007 at 9:37 am

Roger breaks the wind, and retires as Sean`s Fundamentalist champion.

Will neopyrrho ride to the rescue?

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