Editor note: This responds to Professor Dolan’s post yesterday, “Hayek and a Carbon Tax: Response to Bradley, which answered Bradley’s post two days ago, “Hayek was not a Malthusian or Global Tariff Advocate (link to a carbon tax peculiar, errant).” The debate began with Dolan’s original piece, “Friedrich Hayek on Carbon Taxes.”
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“… let’s add the ‘fat tail’ of the global CO2 blanket protecting against a little ice age or an ice age in the next several hundred years. Why not think of global lukewarming as a short-term positive, and the CO2 blanket as a long-term positive?”
“Classical liberals should be focused on adaptation to climate change, natural or anthropogenic, which is wealth-as-health and free movements of goods and services and people. CO2 fertilization is part of this too.”
Overall, I believe it is silly (sorry, not a very scholarly term) to bring F. A. Hayek into the climate debate on any level, physical science, economics, policy. It is grasping at straws, and Hayek, as Robert Murphy will show (IER: forthcoming), actually was little interested in Pigovian taxation.
The real argument is not about Hayek. It is about whether an open-minded, scholarly, no-longer-living classical liberal would have been swayed by climate activist agenda. Hayek, in any case, would have probably smelled a Malthusian rat.
I utterly fail to see how the physical science of the human influence on global climate change is ‘settled’ to justify new government vistas. It is not settled but changing. Sometimes the more we know the more we realize we don’t know. In such cases, I trust free people and civil society and not open-ended government activism writ very large (Al Gore’s ‘central organizing principle’).
Climate sensitivity estimates have been coming down. Climate models do not know the physics of microclimate to be reliable. Models are running too hot, and the gap is widening (check out year-end 2017 in eight months to see where things stand versus satellite/balloon data).
The enhanced greenhouse effect is a global phenomenon and requires global strategies, not unilateral policies where noncompliers can free ride. Think tariffs or other assaults on free trade.
Only a romantic, perfect-knowledge view of government can make a case for a theoretical (versus real world) pricing of CO2. But there is government failure, not only market failure, that technical economists ignore because they do not know how to model it.
Classical liberals should be focused on adaptation to climate change, natural or anthropogenic, which is wealth-as-health and free movements of goods and services and people. CO2 fertilization is part of this too.
As one final point, let’s add the ‘fat tail’ of the global CO2 blanket protecting against a little ice age or an ice age in the next several hundred years. Why not think of global lukewarming as a short-term positive, and the CO2 blanket as a long-term positive?
Conclusion
Beware of experts, consensus, and new vistas for global government. Overpopulation … resource famines … ‘peak oil’ … catastrophic climate-change: same consensus, false, false, false, (trending) false.
Hayek saw this pattern in his lifetime (he was a big Julian Simon fan–see Appendix) and little doubt would have added climate to the exaggerated-scare list.
Hayek to Julian Simon: Two Letters
March 22, 1981
Dear Professor Simon,
I have never before written a fan letter to a professional colleague, but to discover that you have in your Economics of Population Growth provided the empirical evidence for what with me is the result of a life-time of theoretical speculation, is too exciting an experience not to share it with you.
The upshot of my theoretical work has been the conclusion that those traditional rules of conduct (esp. of several property) which led to the greatest increases of the numbers of the groups practicing them leads to their displacing the others — not on “Darwinian” principles but because based on the transmission of learned rules — a concept of evolution which is much older than Darwin. I doubt whether welfare economics has really much helped you to the right conclusions.
I claim as little as you do that population growth as such is good — only that it is the cause of the selection of the morals which guide our individual action. It follows, of course, that our fear of a population explosion is unjustified so long as the local increases are the result of groups being able to feed larger numbers, but may become a severe embarrassment if we start subsidizing the growth of groups unable to feed themselves.
Sincerely,
F.A.Hayek
SHIMODA TOKYU HOTEL
Shimoda, Nov. 6, 1981
Dear Professor Simon,
… I have now at last had time to read [The Ultimate Resource] with enthusiastic agreement. So far as practical effect is concerned it ought to be even more important than your theoretical work which I found so exciting because it so strongly supports all the conclusions of the work I have been doing for the last few years.
I do not remember whether I explained in my earlier letter that one, perhaps the chief thesis of the book on The Fatal Conceit, the first draft of which I got on paper during the past summer, is that the basic morals of property and honesty, which created our civilization and the modern numbers of mankind, was the outcome of a process of selective evolution, in the course of which always those practices prevailed, which allowed the groups which adopted them to multiply more rapidly (mostly at their periphery among people who already profited from them without yet having fully adopted them.) That was the reason for my enthusiasm for your theoretical work.
Your new book I welcome chiefly for the practical effects I am hoping from it. Though you will be at first much abused, I believe the more intelligent will soon recognize the soundness of your case. And the malicious pleasure of being able to tell most of their fellows what fools they are, should get you the support of the more lively minds about the media. If your publishers want to quote me they are welcome to say that I described it as a first class book of great importance which ought to have great influence on policy….
With best wishes,
Sincerely,
F. A. Hayek
I believe that a large part of the apparent disagreement in this discussion can be resolved if we are careful about the way we frame the problem of pollution in general, and that of greenhouse gas (GHG) pollution in particular.
In a seminal article in the Quarterly Journal of Austrian Economics (Vol 7 No 1 Spring 2004, https://mises.org/library/toward-austrian-theory-environmental-economics), Roy Cordato contrasts the neoclassical and Austrian approaches to pollution in these terms:
“Economic analysis of the environment that starts from a praxeological perspective shifts the focus from maximizing the social value of output or equating price to . . . human conflict over the use of physical resources. Generally formulated, a pollution or environmental problem arises when individual or group A and individual or group B are simultaneously attempting or planning to use resource X for conflicting purposes. Unless emissions into the air, discharge into a river, or the extraction of fish from the ocean give rise to such a conflict then there is no economic, i.e., efficiency problem. Humans cannot harm the environment. Instead, they can change the environment in such a way that it harms others who might be planning to use it for conflicting purposes. . .
“For Austrians then, if the defining characteristic of pollution is that it is the consequence of a human conflict over the use of a resource, then it is logical that both the origin and the solution of the problem is to be found in a lack of clearly defined or enforced property rights.”
In both of the letters that Bradley cites, Hayek appears to concur, citing the importance of “traditional rules of conduct (esp. several [i.e. private] property)” and “the morals of property and honesty.” Hayek’s letters refer specifically to the problem of population growth, but I think he would also have acknowledged the importance of property rights in resolving problems of pollution.
In the specific case of GHG pollution, the resource in question is the earth’s atmosphere, and the human conflict over the use of the resource is between those who would use the atmosphere as a convenient, low-cost sink for disposal of GHG’s (thereby economizing on production costs compared with alternatives like carbons sequestration or the use of low-carbon fuels), and those who would prefer to use the atmosphere as a (partial) shield against the warming effects of solar radiation.
In an ideal Rothbardian world, these conflicts would be resolved by clearly delineating the property rights of the two groups and resolving their conflicts through contracting, backed by appropriate institutions for enforcing property law and tort law. dUnfortunately, we are not lucky enough to live in such an ideal Rothbardian world, but rather, in one where politics and transaction costs throw much sand in the wheels of tort and property law. We thus face the dilemma of either making do with second-best solutions like carbon taxes or cap-and-trade mechanisms, or leaving the conflicts over resource use unresolved, and accepting the resulting coordination failure.
This is an uncomfortable dilemma for many people. Not surprisingly, it is tempting to pretend that it does not exist, in this by a reluctance to accept the premise that GHG emissions have adverse effects on the climate. If those who take that approach are certain, within their innermost soul, that “the reasons for their reluctance are themselves rational and separate from their regret that the new theories upset their cherished beliefs” [paraphrasing Hayek, “Why I am Not a Conservative”], then we must simply agree to disagree.
The intellectual debate begins by studying the physical properties of carbon dioxide concentrations to assess human and ecological impacts. Don’t assume but debate the properties of CO2.
CO2 is the green greenhouse gas with noted benefits, not only costs. Moderate warming (global lukewarming) has distinct benefits too. The science is NOT settled but in vigorous review about the physical impacts of CO2 from which climate economists enter the debate.
And just how is an economist to judge whether the brute forces of government is worse than the alleged problem?
The social cost of carbon is about to be revisited where a peer reviewed literature can support a de minimis or negative cost (net benefit) even before ‘government failure’ is applied (for the real world). The romantic view of government must be relaxed in the political economy debate.
Debate, do not assume–as Hayek would do.
It is somewhat depressing to see Austrian economics used as a cover for a position that, at heart, is a climate policy based upon utilitarian welfare maximization. As Mr. Bradley is well aware, even the skeptical assessments of projected climate change offered by Michaels, et al. acknowledge that some degree of anthropogenic warming and that the likely effects include things like sea-level rise. This produces the sort of harms (i.e. property rights violations) that libertarians usually acknowledge, and should be clarifying. While there is ample room to debate how we should conceive of relative property claims int he atmosphere, there is no question that the right to property in land includes the right not to have it physically occupied by water due to the acts of others. And, as I already noted, one need not believe catastrophic projections about future climate to recognize this problem.
Mr. Bradley seems to insistthat climate change policy should be driven by an assessment of whether CO2 emissions generate a “net benefit.” (Talk about calculation problems!) Even assuming we have any confidence in a “social cost of carbon” estimate, this is the sort of argument I would expect to hear from a progressive government planner, such as to justify some massive public works project or the use of eminent domain, not someone who is appealing to Austrian economics and claims to be defending individual liberty. Note, however, that at least in the eminent domain context, the individual who loses his property would receive compensation. Those whose property is taken due to anthropogenic climate change, on the other hand, would receive nothing if Mr. Bradley had his way. So much for property rights.
In case other readers are interested in a longer version of this argument, see my paper here:
http://scholarlycommons.law.case.edu/faculty_publications/30/
In addition, here is an exchange I had with Indur Goklanyt on these points:
https://www.cato.org/blog/compensating-climate-change
Jonathan H. Adler
Okay, so we go from a ‘social cost of carbon’ macro standard to individual assessment of cost/benefit for each and every impacted person. Welcome to the new world of libertarian tort law!
If I am a farmer living near the water and my crops are growing more rapidly yet I have some soil erosion, will some court have an expert calculator to assess the net effect? Should I either receive or pay money to an oppositely positioned person, say a cow farmer?
Using greenhouse gas emissions as a new area of tort law would be a new central planning. Would you, Jonathan Adler, like to oversee a global system of assigning costs and benefits and arranging tort redress?
My God, you would have to be God! Trying to apply tort law to climate in a bottoms-up, precise way may be fun to debate in the academy (using false assumptions such as perfect knowledge, perfect government, and no transaction costs), but the real world is quite another story.
UPDATE: Judith Curry on the ‘Uncertainly Monster’ today: https://judithcurry.com/2017/05/19/uncertainty-about-the-climate-uncertainty-monster/
Also, eminent domain is a whole other argument. The causality is clear unlike climate impacts. Unfortunately, condemnation has prevented a free-market rights-of-way market to develop, something that a date-certain end to ED would rectify. Short of this, there are alternatives to ED that make the end of the coercion feasible for pipeline company and other parties.
Your willingness to abandon any commitment to property rights is amply demonstrated by your response. The question of whether rights have been violated is prior to any assessment of the net effect. If the farmer has rights, then the farmer gets to decide if he wants to trade the loss of some portion of his land in exchange for increased productivity on the remainder. The rights — and therefore the choice — belong to the property owner, not the person or firm who claims they can use the rights more productively, and certainly not to some central planner who purports to be able to do some overall net welfare calculation about the ultimate costs and benefits of climate change. In your zeal to deflect any and all arguments that might justify taking climate change seriously, you blind yourself to first principles. That’s unfortunate.
P.S. As for eminent domain, at least in the ED context, the owner gets direct compensation. You’d deny even that to the property owner whose rights are violated in this example. I don’t know what principle this protects, but it certainly is not the sanctity of property rights.
I’m totally committed to property rights.
There should not be eminent domain law where the surface property is disturbed. The idea that weather and climate confer a property right when the +/- of the human influence is not established is the mother of all pretenses of knowledge, to use Hayek’s term.
It is fine, Jonathan, to hypothetically make calculations of causality, harm, apportionment, etc. under a range of assumptions in the ivory tower. But the real world is what matters. Climate change has no place in tort law now and probably in the deep future.
P.S. Any court deciding climate cases would make judges the bureaucrats to the central planners providing the ‘expert’ knowledge. Global courts, global governance on Malthusian pretexts–what a world that would be!
Free people making their own decisions in light of future weather and climate in regard to their property is infinitely preferable to climate courts.
Because our system of legal adjudication has become so susceptible to the suasion of utter nonsense dressed up by the rhetorical unscience of brazen barristers (viz, lawsuits won by those presumed injured because of hot coffee, or given cancer caused by breast implants/living near electricity power lines/drinking Ovaltine, etc–I’m sure readers have their own favorites), it might one day hold some government regulatory body responsible for property damage caused by the overflow of a local embankment that itself was deemed (by a climate pundit for hire) caused by an excessive dose of CO2 in the atmosphere that triggered a change in the intensity of storms in the area. It’s hard to type this with a straight face, let alone happy fingers. Never mind that there are myriad other much more likely causal agents. One need only look back to last week’s cogent post by Bob Endlich (May 11) to see how difficult it is to measure accurately and assess properly any rise in the waters of the Atlantic Coast–let along assign causal influences.
Rob carries the day here, rather easily. Those who “believe” that CO2 emissions “cause” particular damage in particular places at specified times would have an impossible time proving it in the court of skeptical inquiry (the only inquiry permitted by science). But obviously not in the highly politicized judicial arenas now so common throughout the land, in the process doing injury to the olfactory senses as well as to intellectual well being.
The scientifically vetted evidence for any significant damage to people or their property caused by a surfeit of human induced CO2 into the planet’s air and water is vanishingly scant, all things considered. Calls for confiscatory taxes to mitigate and reparate such damage can trace their lineage to protection rackets, Pascal’s creepy Wager, high church indulgences, and perhaps Lot’s wife…. To name but a few.
I hope JA jumps back in, but here is another step down this nonsense road. What if I buy properties near the ocean at a discount (because of past/present/future erosion) and jump into Climate Court with my estimate of climate damages. How do you handle the opportunism (which is making your point Jon in another way)?
We have been hearing about climate ruin since 1988 when the issue went mainstream. So property owners today might have bought their property ‘knowing’ of the risk of erosion from a one inch sea level rise, some of which is anthropogenic. SO are they really victims, and would Climate Court assess damages on a fraction of this?
Really … I am surprised any classical liberal is trying to fit this into the real world, the academy aside.
The rhetoric of victimhood, Rob, is now firmly ensconced in our cultural milieu. And is making its way into “legal” precedents not least because so many judges have been trained badly, often by teachers themselves enriched by fostering and disseminating that rhetoric. Case law on drivel is expanding exponentially. It’s a phenomenon born out from nearly all political suasions, enabled because so many otherwise bright people are unable to think critically, scientifically. Their unseen prejudices are easily fooled, as any good magician and a lot of bad politicians know. Alas.