A recent Washington Post article by Stephen Stromberg epitomizes the smug ignorance of the policy wonks pushing for aggressive government intervention in the name of fighting climate change. Stromberg refers to the recent publicity stunt of having senators vote on various propositions regarding climate change, and then is grateful that at least some members of “the stupid party” (i.e. the GOP) are willing to listen to the findings of modern science. He then invites them to adopt the policies that Stromberg supports, such as a carbon tax. Yet as I’ll show in this post, Stromberg was far from proving his case, so he should check his disdain at the door.
Stromberg’s Non Sequitur
For concreteness, let me quote from Stromberg’s article to convey the essence of his argument:
[S]enators took several votes on how they view climate science. Republicans couldn’t dodge the issue with vapid rhetorical evasions, such as “I’m not a scientist.” Nor could they simply grant that climate change is occurring without taking a position on why. Ninety-eight senators voted for that least-common-denominator proposition, but then they had to clarify what they meant in subsequent votes. The chamber voted on whether humans contribute to global warming. Fifty-nine senators voted that we do. Then senators voted on whether humans contribute “significantly” to climate change. Fifty voted yes.
True, only half the Senate voted for a position that nearly all climate scientists hold. But Democrats no longer run the place. Five Republicans had to vote for the measure to get it to 50….Ten more Republicans stopped just short, voting for the first two measures but not the last…
But there is no question about the logical implications of their positions. If more than half the Senate believes that climate change is real and human-influenced, then more than half the Senate should be working on a policy response. If there is a risk, even one senators see as uncertain, a rational government would hedge against it. And any free-marketer worth her passing Economics 101 grade knows that the efficient way to deal with externalities such as carbon dioxide emissions is to set a price on them, through a carbon tax or similar policy.
Stromberg thinks that if people can agree on the natural science relationships, then his desire for a carbon tax pops out automatically. Yet that doesn’t follow at all; he is ignoring the economic issues, even though he cites “Economics 101” in his breezy conclusion. To show what I mean, let’s assume for the sake of argument that the three propositions about climate change that Stromberg discusses are 100% true. It still does not follow that the U.S. government should impose a carbon tax.
If Humans Contribute to Climate Change, Doesn’t Mean U.S. Government Should Tax Carbon
In a recent post, I walked through the flaws in the standard argument for a carbon tax. For our purposes here, let me focus on some of the biggest problems.
First, Stromberg never established that climate change—even if “significantly” caused by humans—was bad. He just assumed that as a given. He might be surprised to learn that even one of the leading computer models—and one of the three used in the Obama Administration’s Working Group to estimate the “social cost of carbon”—actually shows global warming conferring net benefits on humanity at least through the year 2050.
Now don’t misunderstand, Richard Tol (the developer of the FUND model which shows net benefits for moderate warming) supports a carbon tax. But that’s because he thinks the benefits of warming are already baked into the cake, and he’s concerned about what will happen decades from now. So would Stromberg—since he is so committed to empiricism and science—want the senators to vote on how many more decades of benefits from global warming humanity will receive, according to one of the models chosen by the Obama Administration? I bet a lot of Republicans would line up for that one, so Stromberg should be glad to see their commitment to truth.
Another major problem with Stromberg’s whole argument is that even if you concede humans are significantly causing global warming, and even if you think it’s a problem, you still have to show that the harm from taxing carbon dioxide emissions is less than the net harms from global warming. It’s possible, for example, that even a $1/ton tax on carbon dioxide would cause more economic harm—especially to poor people in Africa who currently do not enjoy plentiful energy—than it would spare in climate change damages. I hope the reader is seeing just how empty Stromberg’s case was, when he leaped from “humans significantly contribute to climate change” and landed immediately on “therefore Republicans should support a carbon tax.”
Also on this point, notice that even if you thought it would be worth restricting carbon dioxide emissions and crippling economic growth, if that were the only option, it still wouldn’t mean it was the best way to deal with the potential threat. That was one of Princeton physicist Freeman Dyson’s points, and why he is now labeled as a “skeptic” and considered a pariah in some circles even though he used to be a cool “eccentric” scientist with amazing ideas. (My brief and cynical summary of the treatment of Dyson: Dyson’s brilliant imagination of the potential of humanity was great until he started thinking of cheap ways our kids could deal with the possible dangers of climate change. After his musings wandered on to that topic, fashionable people threw him under the bus.)
There are all sorts of ways humans several decades from now could address possible dangers from a changing climate—I discuss some of them in this article. Stromberg simply assumes that humanity must forfeit literally many trillions of dollars of potential economic output over the coming decades by artificially restricting carbon usage, rather than thinking about other possible solutions. Maybe Stromberg’s right and his policy is the only way to do it, but he doesn’t even seem to notice this is a crucial part of the argument. When his suggested solution will cost humanity trillions of dollars, he at least should do us the courtesy of spelling it out.
When you start actually comparing the costs and the benefits—which any rational policymaker would do, so Stromberg should applaud my thought process here—you realize it’s not as simple as, “Climate change bad, tax carbon good.” It starts mattering how big the tax is, and what jurisdictions are implementing it. For example, I recently documented how James Hansen—mentor to Al Gore and obvious hero among climate change alarmists—referred to the California state government’s carbon restrictions as “half-assed and half-baked,” because they were empty gestures in light of emissions from China and India.
At a D.C. panel discussion on carbon taxes that I helped to organize in the summer of 2013, Ross McKitrick—author of a graduate-level textbook on the economic analysis of environmental policies—explained how one could stipulate all of the standard climate models, but using economic logic estimate the “optimal” carbon tax at $0 per ton. To repeat, this wasn’t because McKitrick was a “denier” in terms of the physical projections. Rather, he was showing all of the problems that start seeping in when you assess the costs and benefits of various policies.
During the panel, McKitrick’s talk focused on the “tax interaction effect,” which shows that the Economics 101 case—the one Stromberg loves—falls apart once we take into account the prior existence of distortionary taxes on capital and labor. In short, Stromberg should learn some economics above freshman level before he starts lecturing us all again on carbon taxes.