EPA Will Destroy Jobs, Not Create Them
I know my environmental writings upset some of you, but I must press on… In this post I take on a new study from the Political Economy Research Institute. An excerpt:
Glancing through Appendix B of the PERI report, in which they explain the method by which they come up with such counterintuitive conclusions, shows that it truly is based on the crude “insight” that forcing businesses to spend money complying with new regulations, will cause them to hire workers. There is nothing in the PERI study showing that what these workers are doing is beneficial to the economy; it is the mere fact of their hiring per se that is supposed to be the benefit.
To demonstrate the problem with this approach, we’ll do the folks at PERI one better. To repeat their argument: they are claiming that the EPA’s new pollution regulations will create 640,000 years of work directly flowing from the need to comply with the new rules. But if that’s supposed to be a good thing, then why not pass a further regulation specifying that anyone performing upgrades to power plants must work with one hand tied behind his back? We haven’t done a formal simulation as the PERI folks have done, but we bet our augmented regulations would easily require 2 million years of work directly in the generation sector. So the IER plan creates far more jobs than the modest EPA proposal, especially when you factor in the indirect benefits flowing to the massage therapists who have a surge in arm and hand cramps to deal with.
…
If proponents of the EPA’s new regulations want to admit that they will hurt the conventional economy, but will yield benefits in the form of reduced air pollution or global warming, then that is at least a coherent argument. To see if the plan made sense, we would then face the empirical question of seeing whether the alleged environmental benefits came at too high a cost in terms of lost jobs and lower economic output.But that’s not what the folks at PERI are claiming. Instead, they are mixing up their costs with their benefits. They are saying that it is a good thing that it will take more workers to produce electricity, and hence drive up electricity prices.
Er … I *think* the implicit assumption is the benefits are to the environment and thus people’s quality of life, which everyone understands when reading these things.
Going back to the example I often use but you never “get”: Let’s say there was a problem of people sporadically dumping their trash on the street, and the EPA introduced rules saying that, “Um, if you idiots keep that up, we’ll stop you and charge you for the cost of cleanup.”
Then, to promote these “new” rules, and given the current political climate and economic understanding of most people, they would say, “Hey, this would create new jobs — you know, people have to expend labor to direct their waste into the appropriate receptacles rather than utilize the time-saving method of ‘My neighbor’s porch is a toilet’.”
But no intelligent advocate of the policy seriously believes that the jobs are the main reason for the rules: that’s just a way to sell it. The benefit is that it stops people from dumping too much of a harmful substance onto people who didn’t consent to that noticeable level of dumping.
Don’t let these nuances get in the way of your strawmen though. It’s perfectly acceptable to assume away the very problem that a policy attempts to deal with, and then call it stupid for addressing a non-existent problem. Par for the course, it seems.
“My neighbor’s porch” is very different from “dumping their trash on the street”, the distinction being private property vs. the commons. The political solution to the problem of one persons waste adversely affecting another is strong private property laws. The environmental movement and the EPA however, are not concerned with protecting people or their property. They are more concerned with protecting the earth from man, as evidenced by their total and complete crusade against all forms of industry and production. Changes to our collective environment as such is not a political problem to be solved by government bearcats and central planners. It is not a problem at all unless your premise is to hold the “environment” as something apart from man to be protected from man. Many of the more hard core and honest environmentalists state this goal openly, even some of their more popular propaganda (e.g. The Day the Earth Stood Still movie and the infamous 10:10 video “No Pressure”). The ones who are not honest will claim they are concerned about the environment but won’t go so far as to attempt outright murder, they attempt it by political proxy via stifling regulations and calls to cut fossil fuel production in place of pie in the sky wind and solar farms that they won’t let anyone build because of birds or turtles.
And here we see an ideologue completely dodge the issue of what to do about people using public property as a waste dump _now_, preferring to go on tangential rants about superficially-related topics.
Gene_Callahan, I think you’re on to something here.
Silas, privatizing the public property is the implicit solution in RS’ comment, i.e. prevent tragedy of the commons from happening in the first place.
Yes, that’s nice, and it’d be great to have. Still doesn’t justify dumping crap in the street during the time it’s public.
2 x wrongs 1 x right
oops. meant to post: two wrongs “do not equal” one right.
And I’m sure I’ll have a lot of insights to learn from further exchanges with you.
Silas:
Yes, that’s nice, and it’d be great to have. Still doesn’t justify dumping crap in the street during the time it’s public.
RS did not advocate for “dumping crap in the street”, nor was he justifying anyone who did.
You called him an “ideologue”, as if solving the tragedy of the commons by privatization (which you seem to agree will do it as you said, somewhat patronizingly, “Yes, that’s nice”) constitutes an evasion of dealing with the problem of pollution, when such a problem is due to the tragedy of the commons in the first place!
Who’s the ideologue again?
dodge the issue!?! if dumping on public property is the problem then get rid of public property, sell all federal and state owned land to private individuals and you will see how fast economic self-interests will protect desireable areas. if invironmentalists truly thought this was the problem they would be advocates for it but as I stated before, they are not concerned with protecting people and their interests, they are concerned with some disembodied thing they call the “environment”, which they define as anywhere people are not.
It’s not a nuance. It’s either a lie or ignorance. Dr. Murphy just asked that they at least be truthful and weigh the economic costs vs the environmental benefits.
Was Obama just throwing in some nuances when he told us all the jobs his stimulus would create? Seems like the State needs less nuance and more economics 101.
What would getting rid of public property mean in this instance? Privatizing air?
if you wish to breath pure 100% clean air untainted by human habitation, go live in the mountains. nobody is stopping you. except that you could not build a fire to keep warm or cook your food as that would “taint” your own air. or breath for that matter. it is a double standard to lay claim to a right to “pure” air, untainted by human life but expect to live your own life polluting just the same.
Air is already privatized.
Every SCUBA diver, every miner, every pilot, breathes privatized air.
Or did you refer to the volume of space that air is composed? That’s somewhat already privatized as well, in commercial lots for example.
Right, so people should just breathe from a tank then, so that we’ll have privatized the air? Brilliant!
I did not make any normative argument. I just said that air is already privatized.
You showed that air *in certain conditions* is already privatized. Normal people would understand from the context that “air” in this context refers to atmospheric air that we normally breathe, not oxygen tanks. In what sense did you regard your point to be relevant?
You showed that air *in certain conditions* is already privatized.
That is how all things are privatized: “In certain conditions”.
Private property does not imply that all physical matter everywhere is owned by someone. It just means that some property is owned by some people in certain conditions.
Normal people would understand from the context that “air” in this context refers to atmospheric air that we normally breathe, not oxygen tanks.
My comment did not contradict or evade any context. All I said was that air is already privatized, which is true, and I gave specific examples in the same post I claimed air is privatized.
If I only said air is privatized, and then left it at that, then it could plausibly be argued that I am misleading others by switching the context. But I gave specific examples of what I was referring to, which makes my particular context clear.
In what sense did you regard your point to be relevant?
In the sense that my point is relevant to air privatization.
RS,
Suppose that the factual claims made by the global warming people are correct: carbon emissions are causing the earth to get warmer, and if emissions aren’t reduced New York City (say) will end up under water.
What is the free market response to this? Do we just say that people in New York should move to the mountains?
A (very imperfect) “the polluter compensates the polluted” system. But it looks great compared to the non-free market response of committing economic suicide, doesn’t it?
Daniel,
Isn’t cap and trade a (very imperfect) “the polluter compensates the polluted” system?
That is the economic suicide that I was referring to. 🙂
I don’t see how cap and trade would be economic suicide. The caps might slow growth in some areas, but then having NYC underwater wouldn’t be great for the economy either.
On the other hand, Rothbard’s position (as described in For a New Liberty) that a free market would simply ban all pollution as a violation of property rights, really does seem like economic suicide.
Fine, but it isn’t proven.
Yancey,
Does the truth of libertarianism depend on the weather?
You’d be surprised how many think so.
Blackadder,
Even if we suppose they are correct with their 100 year predictions (which is prima facie absurd) their solution is worse than the alleged problem. Free market capitalism is what allows humans to live and adapt to a changing environment and it allows us to accumulate the resources to reduce the damages caused by natural disasters and recover quickly, think Haiti vs. Chile.
People cannot live without the energy and resources that capitalism provides but they can live in the most harshest environments as long as they are left free to find solutions to overcome those problems, including a slowly changing coastline over the next 100 plus plus years.
Carbon caps and regulations does just the opposite of what its proponents claim and they will continue to refuse to see the consequences because it is not human suffering from weather patterns that is their true concern, that is just a smoke screen pretense or an excuse to cover their desire to see a pure earth without man.
You don’t even have to take my word for it, they admit it themselves. Look at any “green” project that is ever proposed and it necessarily involves a “change” that affects the local environment so in every case it is the environment that is held over and above their very own project. The entire history of nuclear power attest to this not to mention why we can’t put solar panels in the desert because of turtles, or build wind farms because of birds. In every case it is the interests of the fish or birds that is held above and superior to the interests of man and if that is their admitted standard they deserve no further serious consideration no matter how sincere they make their predictions sound.
RS,
If the proposed solution was that was to completely get rid of free market capitalism, then obviously the cure would be worse than the disease. In actuality, though, the proposal is just that you impose a tax on emissions to reflect the costs imposed by global warming. If we had complete markets this would happen anyway, but because we don’t, we need some kind of substitute.
On the other hand, Rothbard’s idea that you impose an absolute ban on pollution as a violation of property rights, really would mean a return to a Haiti like standard of living.
“…impose a tax on emissions to reflect the costs imposed by global warming.”
but that is just it, there is no “cost” of global warming. not in the sense of harm to people. it is an imagined “cost” to an imagined world to imagined people based on change from earth today to earth tomorrow, no actual people are not factored in and indeed, cannot be factored in because A) they do not exist anb B) it is impossible to predict and C) things change, nature changes. cost is something that is unique to an individual not a future imaginary collective.
RS,
If you don’t believe in global warming then of course there is no issue. But I consider that a dodge. There’s nothing in economics or libertarian political philosophy that says emitting CO2 can’t make the earth warmer or that this can’t cause real harm to real people.
whether I believe in global warming is not the issue. whether or not the earth gets warmer or colder is not the issue. whether or not man is the cause is not the issue. the issue is that man must emit co2 to live, if that warms the earth or changes the weather it does not change the fact that man must still live.
Basically, I would say that the global warming issue is an example of what is not seen vs. what is seen. Because it’s difficult to know the specific individuals who are harmed by warming, we conclude they don’t exist. Likewise, we don’t know the specifics of how the economy will be harmed by the broken window, and that leads many people to conclude that the broken window is beneficial.
I would generally agree with you here but be cautious. knowledge is gained by inference from the facts that we do know and we can only take actions on that basis and buy insurance for the rest 😉
Btw, I don’t particularly care whether I breathe air “untainted by human habitation.” On the other hand, I do care whether I breathe smog that will give me cancer, or whether my house gets flooded due to changes in the earth’s atmosphere caused by carbon emissions. Surely libertarianism should be able to distinguish between the two desires, right?
Surely libertarianism should be able to distinguish between the two desires, right?
Eh, as I learned from my long history debating “libertarians” about this … no. But good luck in your attempt to communicate with the modal self-described libertarian about this. I hope you have more success than I did, in which well-defined rights in scarce atmospheric resources are “socialism”.
Your history “debating” “libertarians” on this is probably “long” because when they pose an argument, you COMPLETELY ignore and simply mindlessly knee-jerk label the person an “ideologue”, instead of actually bothering to make one iota of effort to try to actually try read and understand the argument that person is trying to make. Genuine debate in which you are trying to find the most ‘correct’ answer means actually listening to the other side’s argument, you are not “debating”, you have already decided your argument is best and you aren’t even listening to counter-arguments. You’re obviously here to “tell” us your answer, not “debate” what the answer should actually be.
“Surely libertarianism should be able to distinguish between the two desires, right?” – Blackadder
well, I cant speak for libertarianism but as for laissez-faire capitalism it surely would because of strong property rights.
smog and acid rain are good examples as they are caused by specific types of pollutants and have specific physical consequences to actual humans and property (not some imagined harm to the “view” or to trees that no one ownes), real health effects to person and property. in these specific concrete cases it is OK to regulate those specific harmfull pollutants (similar to asbestos) because it can be scientifically show to cause physical harm and not because it “harms” the environment as apart or above the people that inhabit it.
Also, the regulations should apply to all indusry, not just those without political pull. physical human welfare is the standard to apply in any and all cases where one persons actions cause physical harm to another, this holds true for waste management as well as any other.
RS,
The problem is that we do not have property rights in the atmosphere. If we did, then the people who want to pollute and the people damaged by pollution would work out some mutually beneficial deal, where if the cost of pollution to others exceeded its value to the polluter then it wouldn’t occur, but where the value to the polluter exceeded the cost to others it still would. But since we don’t have property rights in the atmosphere, this can’t happen.
Blackadder,
you are reading my posts but not really listening to my arguments. pollution is a necessary consequence of life, all life pollutes in some form or another. dealing with that pollution is primarily a matter of technology NOT a matter of politics or of economics.
pollution is a necessary consequence of life, all life pollutes in some form or another.
Some pollution is a necessary consequence of life; most isn’t. Why must we treat pollution that isn’t a necessary consequence of life the same as pollution that is?
dealing with that pollution is primarily a matter of technology NOT a matter of politics or of economics.
This is like saying that health care is a matter of medicine not politics or economics, or that food is a matter of agriculture, not politics or economics.
If the incentives within a given system are to pollute, then people will pollute. If the incentives are to create cleaner technologies, then people will create cleaner technologies. Politics and economics are highly relevant to those issues.
define necessary in this context. we are talking about harmful pollution. trees pollute the air with pollen, birds pollute the area with noise, people pollute the night with lights etc. etc. this entire debate rests on the premise that some of these things harm people. we treat those differently because of that standard but it is not right to switch the standard from “harm to people” to “pollution” as such, or even “pollution by man” vs. “pollution by non-man” as the environmentalist do since it changes the nature of the actual problem people are trying to solve.
I said primarily. economic activity is a means to an end, so is politics and they are only relevant as long as those “incentives” are meant to substitute one persons ends for another. our various political and economic systems only describe whose ends are to be put first, for communism it is the ends of the poor, fascism it is the ends of the rich, environmentalism it is non-man etc. etc. whose ends do you prefer we “incentivize” and on what grounds?
I think the objections bob made are perfectly valid.
Its quite obvious that the paper is horribly biased, if it wasn’t biased it would talk about the jobs that would have been created had this policy not came about.
After reading the paper, I cant believe someone got paid to write this, the tone is professional but the focus is so myopic.
I dont know why Silas is getting all angry, bobs point was exactly right, using their same language, updating a few graphs and doing a replace all, the paper could have just as easily been “The employment effects of hand mutilation” or, the “employment effects of mandatory rides in horse and buggy carts” and finished at the exact same conclusion.
Libertarians have many answers for the environment. Google Walter Block and environment and you’ll find a lot of info.
Dan,
I’m familiar with the basic ideas of free market environmentalism. It makes sense in lots of contexts, but it’s hard to see how it would apply in the case of global warming. Either you give everyone on the planet the right to veto all manufacturing and industry, or you introduce ad hoc procedural requirements that effectively mean there is no redress.
Walter Block had a good take on this in his latest book where he debated back and forth with Four Arrows called Differing Worldviews in Higher Education. It’s a great book especially if you like debates.
He says,
“In the period 1830-1840, there were a spate of nuisance lawsuits (we would now call them environmental cases) in the U.S. (Rothbard,1982; Horwitz, 1977). Typically, a little old lady would come into court, spluttering, “That there factory engaged in aggression against my property rights. When I hung out my laundry, it was clean and wet. When I returned to my clothesline a few hours later, it was dry, but dirty.” The plaintiff would demand two things: damages for the cost imposed on her re cleaning her washing, and an injunction, forbidding the business firm from continuing it’s trespass of smoke particles onto her laundry. Or, a farmer would complain that the railroad emitted sparks that burned his crops. He, too, pleaded for damages and an injunction. Or, someone would complain that crop dusting, or residential smokestacks, or some other pollution was violating his property rights, and come to court for similar relief.
It is not true to say that these victims of this pollution always prevailed in their lawsuits. Sometimes, in these early days, they were thrown out of court. But, often, they were upheld, and the smoke particle or spark-trespassers were forced to cease and desist.”
He obviously went into more detail but that gives a good gist of his arguments.
Dan,
I understand the arguments. My point is that if the old lady’s position is established in law then you can’t have the industrial revolution. Certainly if you were to apply those principles to global warming today, it would mean that a single hippie from San Francisco could get an injunction against anyone driving a car.
No, the hippie doesn’t have a case if your not on his property.
It wasn’t like the people in the time period above prevented industry from expanding. One of the effects of these lawsuits was to cause polluters to substitute to a cleaner burning but more expensive coal from the dirty cheaper sulphur coal. They did this because they would have to pay the higher costs from polluting through law suits in order to use the cheap dirty coal. This is the free market at work. Just add a free market court system and we really got something going.
Dan,
Suppose I buy some land in California along the San Andres fault. I then pack my property with dynamite and resulting explosion causes an earthquake which levels San Francisco. It’s true that I never went on anyone else’s property. Does that mean it’s tough noogies for the residents of San Francisco? Hopefully not. In fact, if the residents of San Francisco get wind of what I’m planning, they should be able to stop me from setting off the dynamite, even though it’s on my own property, because of the risk this will damage other people’s property.
Similarly, every time I drive a car I am emitting CO2 into the atmosphere, which makes the earth warmer, which leads to lots of property damage (among other things). So if we’re going to deal with global warming via the tort system, the hippie would seem to be able to get an injunction stopping me from driving (and if you think that he shouldn’t be able to do this, then how do you not conclude that I can do untold damage to other people’s property and there’s nothing they can do about it?).
you emit CO2 when you breath, does that mean that other people who breath get to kill you because of the harm you are causing to their property? why not you kill them?
the fact of the matter is that we all must consume energy to live and that necessarily involves changing chemical states from one to another. that is fundamental to all life so it is a contradiction to claim that such changes are anti-life as if one persons life is more metaphyscially important than anothers. one what grounds? by which standard? none. so people who breath and drive cars and smelt ore and burn wood are all livng their lives and the people who complain that they are “killing” others are basically saying that they have no right to live, that unless we can figure out how to “live” wothout “living” (i.e. change) we should not live at all. that is basically the premise to all environmentalists, even if they do not realize it.
you emit CO2 when you breath, does that mean that other people who breath get to kill you because of the harm you are causing to their property?
I’m not a Rothbardian. Whether on Rothbardian principles my emitting CO2 when I breath constitutes aggression (because of the damage it does to other people’s property), and whether killing me would be a legitimate response to this aggression, I cannot say. Personally the whole issue seems to be one Rothbard’s system is simply not equipped to handle.
we all must consume energy to live and that necessarily involves changing chemical states from one to another. that is fundamental to all life so it is a contradiction to claim that such changes are anti-life
I admit I poisoned him, your honor. But if you think about it all I really did what change chemical states from one to another, which all of us do to live. So surely you would not be so anti-life as to condemn me for killing him.
” admit I poisoned him, your honor”
this is an equovication. as a living organism, your own personal consumption of energy is an action to must take or die. you do not have to act to poison others to live. furthermore, even if you consider breathing as equivilant to poisoning (which is the same as a lifeboat situation), in a court of justice, what standard could anyone apply that would condemn you for such an act? on one hand you must breath but on the other you must kill? thankfully we dont have to worry about that because we do not live our lives in lifeboats.
this is an equovication. as a living organism, your own personal consumption of energy is an action to must take or die. you do not have to act to poison others to live.
I was pointing out your own equivocation. You have to breathe to live; you don’t have to drive a car or smelt ore to live.
“you don’t have to drive a car or smelt ore to live.”
really? how about the people in Haiti? do you think they would have survived the earthquake better if they had had stronger steel or better bulldozers to move rubble?
The San Fran example falls right into the categories I presented above. The plaintiff would be able to charge for damages and get an injunction against the defendant. You don’t have to be physically on someones property to cause damage.
For the second example, if you could make a case in court to prove that emitting CO2 was causing damage to your property then you would be able to do the same as the people in the previous examples. The likelihood is that the car manufacturers would bear this cost and would have to make changes to how the car runs. It might make electric cars a better alternative for them. Although I don’t buy into the global warming hypothesis and doubt a case would hold up in court. If it did Al Gore would be in knee deep in it with all the CO2 he pours into the atmosphere from his plane trips and giant mansions he owns.
The point is that the free market would allow people to demand damages and injunctions against polluting of their property. The cost of polluting would be borne by the polluter and would give them an incentive to look for alternatives just like the companies that switched to more expensive cleaner burning coal.
I’m not even sure why there is a debate on what economic system handles the environment better. Centrally planned societies have historically been environmental disasters compared to free market alternatives. Why allow some politicians like Al Gore, who would make enormous amounts of money slanging carbon credits, to be in charge of such important matters? I think we would do better praying to the weather Gods than hoping politicians will learn how to control the weather.
EPA supporters must support a powerful government, which means that they hold liberty in contempt. Threaten your fellows with violence if they do not conform to your standards and call yourself anything other than a tyrant? Ha!
Blackadder, as current predictive models go, we aren’t exactly talking Noah’s ark here. Do you think maybe you could sell your house in the next 60-80 years?
If yes, then I don’t think you are going to get flooded out of it.
If no, then long story short, man, you bought the wrong house.
Just because Al’s slides show normal NYC / FLOODED NYC!!!!, doesn’t mean we are facing flooding of NYC in the next half-century. Actual scientists, as opposed to PR guys with megaphones, are talking about gradual rises in sea levels over the next century, and far, far beyond.
If humans were trees, it might even mean something. But as it is, even without a strong CO2 reduction from the US etc, the rates it will happen at are going to mitigate all of the reasonable people’s economic losses.
Realistically speaking, under some of the worst case real-science scenarios, this isn’t a race to the door.
It’s a 75-year jaunt.
Cody,
If I sell my house to someone else that doesn’t solve the problem, it just means it’s some other guy’s house that gets flooded.
Similarly, if neighborhood kids keep throwing rocks through my windows, I might decide to just move. But that doesn’t mean the kids stop throwing rocks through windows.
Blackadder, I’d like to try my hand at this and see what you think.
To win restitution for harm, a person must show that they have suffered actual harm. It is not sufficient to say that a certain factor tends to increase the chance of a harm happening over a long period of time. If the actual tendency towards harm cannot be quantified, then neither can the damages. Calculation is not possible, except to the extent that a person’s psychic income might be reduced by the uncertainty of a future catastrophe if he’s a nervous nelly. This would be one factor that figures into his decision to live in a particular location or not. A person might choose to live somewhere that is very likely “global-warming-flooding-proof,” if that is truly important to him. But the very fact that this possible risk exists (and the nature of scientific extrapolations about future events are ALWAYS speculations into things that are never certain), does not entitle such a person to some kind of damages. Against whom? For what, exactly? The fact that Smith emitted some CO2, and CO2 is likely to contribute to future climate changes which might ultimately affect the property values of a house in a particular location, is not an economically addressable situation. Nor is it morally addressable. There is simply no aggression here.
If someone, say, hid dynamite in your garage and then lit a long fuse that began on his own property, then he could be sued for damages for the assault (even if you learned of his plot and managed to extinguish the fuse before the dynamite blew). Here we would be dealing with a direct mechanism that causes tangible, observable, and measurable harm. Dynamite blows things up, and your neighbor TRIED to dynamite you. Knives tear flesh, and your neighbor tried to stab you. Etc.
But CO2 does…what, exactly? Increases the odds of a flood on your property by 2075 by .0000000000001 per ton? That is not even knowable.
The point Cody makes about the long haul nature of the problem is still a good one, I think. Things happen all the time that affect the value of our property. Different properties face different risks for different kinds of potential damages. This is not a new problem of global warming; it is just good old-fashioned uncertainty that has always been a key part of our world. But we have no right to a certain exchange value for our property. If you are worried that some particular disaster is going to befall your property, the first thing you should do is consider guarding yourself against that risk via insurance (also a good point already made above somewhere). If that is insufficient to assuage your fears, then you should seek to sell the property to someone who is not as risk-averse as you are, or who simply forecasts the genuine risk as much smaller than you do.
In the end, economically speaking, how is this situation any different than one in which a person is worried that a nearby volcano might erupt and destroy their house at some point in the future? This is just one factor that figures into a person’s subjective evaluation of whether the house is an advantageous purchase or not. But the volcano is an entirely natural cause, and so there is nobody you can sue to compensate you for your concerns. But in the case of something like CO2 possible causing a flood at some future time, the person emitting CO2 is, for all economic purposes, as “natural” as a volcano. It is not rationally-calculable behavior. This is not a shortcoming of Rothbardianism; it is an inherent feature of our uncertain world that NO system of political economy can eradicate.
I wholeheartedly agree with Xon Hostetter.
His point that risk assessment is inherently personal in nature as well as a metaphysically fundamental part of existence applies equally to metaphysical facts, such as a volcano or hurricane, but also to man made facts such as carbon emissions or traffic accidents. It also most especially applies to the types of jobs we accept and the products we buy. We all live in the real world and must use our own judgment to navigate the hazards both known and unknown to the best of our individual abilities, a truly free insurance market would essentially allow the trade of risk between people who believe they hold too much risk (risk averse) or do not have enough (risk taker).
Blackadder,
“Similarly, if neighborhood kids keep throwing rocks through my windows, I might decide to just move. But that doesn’t mean the kids stop throwing rocks through windows.”
– How similar is this example? Is your house already being flooded? I spoke specifically of departing the property before it was in danger of damage from rising sea levels.
This would actually be (somewhat) similar if you knew your neighbor was raising a child next door who would grow up to live in the same house and raise another child, whose offspring would then start throwing rocks at your windows.
And if you know that, then you have the chance to move away. Now. No rocks, no broken glass, no flood damage.
“If I sell my house to someone else that doesn’t solve the problem, it just means it’s some other guy’s house that gets flooded. ”
For one thing, you make it sound like the water is sneaking up on your house, and will at some point jump out of the bushes and flood it without notice, which is precisely contrary to my point; the guy who buys your house might not pay full price when he sees the canal lapping at the front walk.
And, if the ground where your house resides now is going to lose value in 75 years when it starts getting flooded, is that the end of the story?
You accuse me of ignoring the poor fellow who buys your house only to have it ambushed by ninja tides and washed away.
What about the fellow whose farm contains the sloping land behind your house? In seventy five years or so, your land will be worthless and under water, sure. That farmer, however, will own a bevy of waterside lots. (So, really, you have to consider that your neighbor’s great grandchild might end up pitching for the Yankees, all because of his practice on your shattered panes.)
The value of property, especially non-portable property, is non-static. When a property’s value dynamics are chaotic and difficult to predict, that is when people stand to lose serious money on it.
However, if you for instance know the useful life of the property, (like, say, when a house will become too moist for human habitation,) then you can account for the change and valuate the asset accordingly.
So in the first place, waterfront real estate is for the most part a zero-sum game: the swamps lose value as the high ground gains, and vice versa.
In the second, market forces like insurance rates will prevent people from moving into houses that are about to be flooded. At least, that is my guess. Maybe not. But if not, I would imagine the insurance companies are the losers, right?
Here’s an interesting article about Global Warming by Gene Callahan, for anyone unfamiliar.
http://www.thefreemanonline.org/featured/how-a-free-society-could-solve-global-warming/
I have been on the road (literally, in a car) for much of the past two days and so haven’t been able to keep up with this. But let me say this:
Silas, how was I attacking a strawman? Go look at their article (if you haven’t already). I skimmed it to see if they acknowledged my point; they didn’t (as far as I could see). They are quite literally saying this batch of regulations is good because it will create jobs. That is wrong, and you know it is wrong.
(In contrast, I at least acknowledged at the end of my article that there is a possible tradeoff between the environment and other conventional goods. You don’t get that in the PERI analysis, at least not that I saw.)
Also, it’s not even the case that the government means well and is a bit sloppy in their wording. I absolutely do not believe that the EPA is trying to protect the environment. Maybe the people at PERI are; but no I don’t think the head of the EPA is just using a faulty means to try to make everyone better off.
So the actual argument is totally 100% wrong, and the people behind the policy are up to no good. So what exactly is your problem with my post?
* * *
BTW Silas you are slipping: I myself used jobs as a metric of consumer welfare in the last paragraph. I can’t believe you didn’t accuse me of hypocrisy.
(To clarify, I caught the apparent contradiction–which actually isn’t a contradiction but it’s subtle–after I submitted the article.)
Bob, WHY must you “press on” with your thin and one-sided analysis on environmental issues? Because you’re being paid by polluters to do so?
It pains me to see that the nuanced, libertarian Bob whom we see explaining what’s wrong with the Keynesians and the Fed always takes a leave of absence, and sends in his poor substitute, the utilitarian It-Grows-Jobs-And-Makes-Us-Wealthy-To-Destroy-Commons Bob.
Yes, CERES’/PERI’s argument that regulations create jobs ignores jobs likely to be lost by mandating investments in pollution controls, their overall argument is not as simple or as obviously stupid as you make it out to be. From the executive summary:
“Clean air safeguards have benefitted the United States tremendously. Enacted in
1970, and amended in 1990, the Clean Air Act (“CA”) has delivered cleaner air,
better public health, new jobs and an impressive return on investment—providing $4
to $8 in benefits for every $1 spent on compliance.1”
“History has proven that clean air and strong economic growth are mutually reinforcing. Since
1990, the CAA has reduced emissions of the most common air pollutants
41 percent while Gross Domestic Product increased 64 percent.2”
“Focusing on 36 states3 in the eastern half of the United States, this report evaluates
the employment impacts of the electric sector’s transformation to a cleaner, modern
fleet through investment in pollution controls and new generation capacity and
through retirement of older, less efficient generating facilities. In particular, we assess
the impacts from two CAA regulations expected to be issued in 2011: the Clean Air
Transport Rule (“Transport Rule”) governing sulfur dioxide (SO2) and nitrogen oxide
(NOx) emissions from targeted states in the eastern half of the U.S.; and the National
Emissions Standards for Hazardous Air Pollutants for Utility Boilers (“Utility MACT”)
rule which will, for the first time, set federal limits for hazardous air pollutants such as
mercury, lead, dioxin, and arsenic. Although our analysis considers only employment-related
impacts under the new air regulations, the reality is these new standards will
yield numerous other concrete economic benefits, including better public health from
cleaner air, increased competitiveness from developing innovative technologies and
mitigation of climate change.”
Given the externalities involved, you are wrong to assume that the new jobs are all costs and do not represent wealth-creating activity. If we junked the EPA and environmental laws and regulations altogether and replaced them with a strict enforcement of property rights (Block points out that we lost this because corporations bought off judges), THEN would the jobs created as people scrambled to sue and businesses scrambled to reduce pollution be wealth-creating? Surely such policies also would “stimulate productive investment and job creation”, right?
Why, then, do you consistently drop your libertarian principles when it comes to energy and environmental matters and adopt a shallow assumption than only corporations producing “desired goods” is a “productive purpose”? Why instead of a recognition of external effects/catallaxy problems, we get suggestions that government should help “the economy” via policies such as – surprise! – “lift[ing] arbitrary restrictions on domestic energy production” that would “stimulate productive investment and job creation.” (Um, remember BP, the Gulf of Mexico and all of the “wealth creation” and great new jobs that just got “created” down there?).
Why, indeed, if you’re still an honorable man? You’re better than this, Bob.
http://mises.org/Community/blogs/tokyotom/archive/2009/08/25/fun-with-self-deception-and-rent-seeking-bob-murphy-s-quot-man-in-the-mirror-quot.aspx
http://mises.org/Community/blogs/tokyotom/archive/2009/10/28/bob-murphy-rob-bradley-and-the-austrian-road-not-taken-on-climate.aspx
http://mises.org/Community/blogs/tokyotom/archive/2009/12/19/bob-murphy-speculates-on-quot-the-benefits-of-procrastination-the-economics-of-geo-engineering-quot-cui-bono.aspx
I’m sorry to be pushing meta-issues, but one of the reasons why the Left doesn’t listen to libertarians and ‘free market’ criticisms is that these criticisms seldom are acknowledge, much less directed at, the major impersonal corporate rent-seekers who REALLY are behind government and whom the Left rightly distrust.
Best,
Tom
A lot of people are missing my point, which means I probably didn’t make it very well.
Let me try to restate. Under Rothbard’s system, there are two possibilities: either you get an injunction against the pollution or you get nothing. In the case of global warming, neither option is satisfactory. If you can’t get an injunction based on CO2 emissions, then this is not a solution to the problem of global warming. On the other hand, if you can get an injunction, then since virtually all industry and transportation involves carbon emissions, you end up with a cure that’s worse than the disease.
Both of these options are suboptimal, and by suboptimal I don’t just mean that I don’t like the outcome. Manufactures, drivers, etc. would still be willing to engage in some (though not all) of their polluting activities even if they were made to bear the costs of their pollution. Likewise, lots of people who may be damaged by the effects of global warming would be willing to pay to prevent this from happening. Thus, there should be some middle ground between banning all emissions and doing nothing which would make everyone better off. Markets generally serve this function, but in this case they cannot because the relevant markets simply don’t exist. There is no market in atmospheric temperature, no property rights in CO2 emissions, and the transaction costs involved in reaching some kind of agreement between polluters and those damaged by it are so astronomical (if you’ll pardon the pun), that such negotiations never occur.
If you are a fan of free markets, I would think the thing you would want to do here is try to figure out how you might create the necessary markets to deal with the problem.
Blackadder,
I know you consider it “dodging” the issue but there is a fundamental problem with the premise to your argument which is treating global warming or climate change or whatever as a problem that requires a solution. It is not by itself a problem and the reason there is no market for those things is because environmentalists have literally invented an artificial standard which they expect people to “act” to achieve and when they don’t live up to this mythical expectation they label it a market “failure” and call for intervention.
It is the same story with any alleged “market failure”. A market is where people engage in production and trade, if people decide not to produce or to trade certain things, including cleaner production processes, then on what grounds can one claim such choices are a “failure”. The reason the statists keep gaining power is because they constantly invent things that they think people should be producing and when they don’t they pass laws ensure that they do. Such is the story of how freedom and capitalism has been all but discredited and destroyed all over the world.
Blackadder,
As I understand it, you are saying that markets through which polluters pay in advance for the costs of their pollution need to be brought about so that free trade can then mitigate the problems we are bringing our own way through global warming.
Beyond the clear contradiction inside your point (The definition of “free markets” implies that they evolve through the free interaction of individuals, not by the fiat of some technocratic authority.) I will take a moment to restate my final (and in a way my whole) point, in case you missed or mistook it.
Take for example the insurance companies: in order to preserve their reserve of capital and profits, they are going to have to take the likelihood of the effects of climate change into account in their actuarial paradigms, right? Otherwise, they are going to lose money.
So, what has such a company done? In raising the beachfront house insurance rate, they are in a manner of speaking betting on the coming climate change and preparing for it. A better example might be agriculture.
There is land in England which was once warm and dry enough to produce good wineries. If one concern or another were to buy up such land in expectation of being able to bring forth a heady Alban bouquet, they would be staking investments on the eventuality of climate change. The same for grain-farming concerns in Ukraine.
The markets, or more accurately the market, for which you claim there is a necessity to prevent the losses climate change threatens in the long term, exists. It is the whole world. We can prevent economic losses by staking money on a future we can see coming!
The scientists are telling us it is going to be a warmer, wetter world with higher ocean levels in three quarters of a century?
What is preventing you or me from investing in the likelihood of that eventuality right now?
If we know what the day after tomorrow looks like, there is nothing to stop us from exploiting that knowledge for the benefit of the world, of humanity. The investment opportunities are as boundless as the human imagination.
Whoever tells you that change must be bad, is probably not in the habit of betting winners. How many people have you known who were terrified of change and did anything really useful or creative with their lives?
In short: since we know climate change exists, why are we bent on believing it means us evil? Every force in nature can be harnessed in some way or other for the prosperity of humankind. Climate change is not a magical exception to that rule.
Sorry I’m so long-penned. It isn’t intentional.