Global Warming: The Economic Case for Doing Nothing

The complexity of the global warming debate makes it a good one for those who want to use it as a lever to fight modern, industrial capitalism. It is similar to the Marxist critique of capitalism where the proponent takes a few truths and mixes it in with a variety of half-truths and some lies to create a theory that becomes difficult to make heads or tails of, let alone refute. The Marxists did this by taking certain historical facts such as child labor and slavery and weaving them into an argument that these were caused by capitalism. (That is not true, and can be the subject of another post, or I would simply cite Andrew Bernstein's book The Capitalist Manifesto for his discussion of those issues.)

In evaluating any particular global warming claim, we must carefully examine the motive and method of the proponent. Is he honest, does he deal only in facts, or is he dishonest? Most environmentalists, from what I can observe, are dishonest in their motive and method. They have a goal -- the establishment and preservation of a pristine natural environment that excludes man -- and they are willing to use any tactics to achieve it. For example, that could mean citing part of a time-series of data -- the part that supports their claim -- and then ignoring the other "inconvenient" part of the data that would contradict their claim. It may also mean citing a wide variety of anecdotes and then claiming that those anecdotes constitute proof.

The global warming advocates have used these tactics. For example, the earth appears to have warmed since 1970, but it was cooling in the several decades prior to that. The entire time-series of temperature history may reflect warming due to man's emission of carbon dioxide into the air... or it may not. Going back further in time, there is a correlation between carbon dioxide levels and temperatures. Both of these measures have fluctuated in tandem in a regular cycle going back hundreds of thousands of years. What is the relationship between carbon dioxide and temperature? In which direction is causation, or are they both caused by a third factor? The global warming advocate asserts that carbon dioxide causes the temperature increase, and that the recent man-made emissions of carbon dioxide will cause further global warming. How does he know this?

These are just a few questions that I would ask regarding the global warming debate.

However, my main objective here, in addition to encouraging a very healthy skepticism regarding the motive and "facts" of the global warming advocates (and some of their opponents, to the extent they are loose with the facts), is to interject an economic perspective into the discussion.

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To start, let us assume that the "global warmers" are correct. The earth will warm a few degrees over the next century because of carbon dioxide emitted into the atmosphere by man. My first economic question is: What will be the cost of abating that carbon dioxide?

Carbon dioxide is the central by-product of the key life-sustaining activities of man. First, it is the product of respiration, the process that every human and most non-plant life forms use to convert their food into fuel. Obviously, the carbon dioxide that is produced from respiration could not be controlled without killing humans or other living things.

Carbon dioxide is also the most abundant by-product of combustion. Analogous to respiration in its importance, combustion of fossil fuel is man's number one industrial process, in terms of its importance to our standard of living. For ancient man, combustion of wood, when cavemen learned how to control it, was his key technological achievement. It put man on the path to civilization. Today, combustion of fuels including natural gas, coal and oil is what provides us with heat in winter. Combustion of fuels is the basis of nearly all methods of transportation. Combustion of gasoline powers cars, combustion of jet fuel powers airplanes, and combustion of diesel powers ships and trucks.

Combustion of fossil fuels provides man with most of the electricity he uses. Electricity is the most useful form of energy man has invented to date. It powers our computers, which amplify our minds and enhance our productivity. It powers our televisions, our work tools, the implements used by surgeons to heal us, and the kitchen appliances that make our lives easier and more enjoyable. The list is extensive; try thinking of more examples of how you personally benefit from electricity.

The only way to reduce carbon dioxide is to reduce combustion. By reducing combustion we will have less of all of the life-sustaining and life-enhancing processes and products that arise from combustion, including all of those that depend on electricity.

Let us be clear with examples what is involved in reducing carbon dioxide so that the earth may become a couple degrees cooler and the sea level a couple feet lower a hundred years from now. We are talking about making our homes colder in winter, driving our cars less often, turning on the lights less frequently, and paying more for all goods that are transported by truck, rail, plane or ship. We are talking about increasing the cost of nearly all industrial processes and the cost of almost all manufactured goods. In sum, we are talking about reducing our standard of living.

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The second economic objection is: The global warming argument ignores the tremendous power of the human mind to solve problems. Even if global warming will result in warmer temperatures and higher sea levels, these effects will transpire over many decades. Will engineers, scientists and entrepreneurs do nothing during that period of time? Of course not. Will man’s technological capacities and ability to solve problems remain static during that time, or will it advance, as it has at an accelerating rate for the past thousand years? The latter is true, as long as the world’s economies remain sufficiently free and unencumbered by regulations, such as those that the global warmers would like to impose. As long as the human mind is free to employ reason, our technological capacity to solve problems will improve.

Given man’s inventiveness, are we to assume that he will passively do nothing while rising ocean levels submerge some of his coastal lands? Even with 20^th century technology (which should be dramatically eclipsed in this century), consider the problems man has been able to solve. Much of Holland lies below sea level. Yet in the middle of the last century, a water control system was deployed that keeps Holland dry and prosperous. Venice, which has been sinking in the mud for hundreds of years, is now in the process of deploying a water management system that is designed to keep not just the magnificent Piazza San Marco, but all of Venice, from flooding.

In reality, in the vast majority of cases a sea level rise of a couple feet that manifests itself over decades will be handled with much simpler, “low-tech” solutions, such as: building sea walls higher, and putting new buildings and houses on a higher base of earth. Property owners will have decades to incrementally make these changes.

To worry about a rise in sea level of a couple feet is to assume that people in the affected regions will do nothing. Instead, scientists, engineers, businessmen and property owners will figure out how to prevent flooding, or people will gradually move inland from affected areas, or they will address the problem through simple methods such as building taller sea walls. It will be in their self-interest to do so. The time-frame for action will be stretched out over decades. No one is facing the prospect of an immediate flooding of coastal regions, which is the unstated fear the global warmers want to convey.

Man’s inventiveness is abundantly capable of solving big problems. When whales disappeared in the seas due to over-fishing in the 1800s, and whale oil prices shot up 10-fold, scientists discovered kerosene, which turned out to be better than whale oil. Not only was it cheaper, but it emitted less smoke and better light. When rubber and oil became unavailable to warring nations in World War II, scientists invented processes for making synthetic rubber (still used today) and processes for converting coal into oil (used extensively by South Africa when it faced a trade embargo). To solve the “problem” of slow travel, engineers invented airplanes to replace ships. To solve the “problem” of slow, hand calculations, scientists invented the calculator and later on the computer.

The point here is obvious. Man’s ability to solve problems is limitless. That ability requires only one thing: freedom. This means the freedom to size up a problem, investigate it and solve it using his own mind. This means economic freedom: secure property rights unencumbered by taxation and regulation. This means the right to act as he sees fit, without having to gain approval from a governmental authority. This means not facing the type of regulations, such as taxes on carbon, or prohibitions on certain technologies and subsidies for others, that the global warmers advocate. The best defense against potential problems from global warming is the unfettered human mind.

To recap, the first economic point I have made so far is that restricting carbon dioxide emissions will reduce our standard of living. The second is that if the human mind is kept free, it will solve whatever problems may emerge from global warming.

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The last economic question I will ask is: What are the benefits of global warming? This question is largely ignored in the debate. Yet, it must be asked. For instance, the earth was warmer during the “Medieval Optimum” and then cooled significantly before the temperature rose again more recently. During the last Ice Age, man discovered how to control fire which, arguably, was the most important technological advance of human history. Man has demonstrated an ability to adapt and even prosper under varying climatic conditions. Why should we assume that global warming this time around will only be bad for him?

A few examples illustrate the significant benefits from having more carbon dioxide in the atmosphere and from higher temperatures. For example, consider that carbon dioxide is plant food. When there is more carbon dioxide in the air, plants will grow bigger and faster. Therefore, more carbon dioxide in the air may enhance crop yields, and make food for humans more abundant and cheap. (It may also introduce a feedback loop whereby more plant mass converts more of the carbon dioxide in the air into oxygen, thereby bringing down the carbon dioxide levels naturally.)

Warmer temperatures may open up frigid lands in Canada and Siberia to cultivation.

Less ice in the Arctic may open up the Northwest Passage for ocean-going vessels, thereby reducing the shipping distances between Europe and the Far East.

Warmer temperatures at northern latitudes reduce the cost of heating homes in winter.

Of course, all of the standard claims regarding the disasters from global warming counteract these benefits. Pick up any newspaper or magazine to read about those; I will not recount them here.

An objective analysis, untainted by the environmentalist mission of the global warmers, may show that global warming is a mixed bag. Both good and bad consequences could emerge over the coming decades and centuries. Of course, all of this assumes that global warming is really happening and that it is caused by man.

The “threat” of global warming provides a convenient scare campaign for those who oppose man’s industrial progress and material comfort on earth. It is a campaign that unites environmentalists, who prefer pristine nature over man, and religious ascetics, who despise material comfort.

While parts of their argument may turn out to be accurate, I skeptically challenge and refuse to accept at face value the claims, conclusions and calls for action made by such a disingenuous group of advocates. For each of their points, the burden of proof is clearly on them. Yet, even if man is causing global warming through his industrial processes that emit carbon dioxide, restricting those processes will harm us enormously today for a small benefit many years in the future, if there is any benefit at all. No government has the right to forcibly impose such self-sacrifice on its citizens. If global warming is a real problem, the only solution is the unfettered human mind.

Modified 1/17/07: Minor style edits.