The sustainability of improving living standards

by John Quiggin on April 12, 2008

I mentioned this piece in comments a while ago and some interest was expressed. It should come out in the Australian Financial Review fairly soon, but there’s still time for me to benefit from comments and constructive criticism.


With the major scientific issues in the debate over global warming having been resolved, attention has turned to the economics of climate change, and of stabilising the global climate. The release of the Stern Review in the United Kingdom had a powerful effect on public debate in Australia, an effect that has been amplified by the recent Interim report of the Garnaut review.

Part of the impact was due to the dire assessments of the impacts of uncontrolled growth in emissions of greenhouse gases put forward by Stern and even more vigorously by Garnaut. Coming from mainstream economists with a longstanding reputation for cautious policy judgement, these assessments had a greater impact, for many, than similar assessments offered by environmentalists or climate scientists.

But Stern’s pessimism on the consequences of doing nothing was matched by striking optimism regarding the cost and feasibility of stabilising global climate. Stern concluded that the global climate could be stabilised with CO2-equivalent concentrations of 550 ppm.

Garnaut drew on more recent evidence suggesting both that the safe level of emissions was 450 ppm than Stern’s 550 ppm and that rapid growth in China and India had already made the achievement of such a target difficult, if not impossible, in the absence of immediate action. Still Garnaut endorsed Stern’s main point – the cost of stabilisation is far less than the cost of doing nothing.

The Stern review was highly controversial. Naturally, we heard from the noisy, but rapidly shrinking, group who still deny the reality of the problem. But the main dissent from economists focused on Stern’s estimates of the cost of doing nothing, and particularly on his treatment of the way in which future benefits and costs should be discounted.

This debate is exceptionally complex and unlikely to be resolved soon. Fortunately, at least for anyone willing to accept the view that massive changes in the climate are a bad idea regardless of the economic number attached to them, the problems of discounting can safely be left to the professionals to sort out.

There was much less criticism of Stern’s estimates of the cost of stabilising climate. Even the sharpest critics among economists only suggested that Stern’s estimates were at the optimistic end of a plausible range, the upper end of which might be 5 per cent of national income, or around two years of economic growth. That is, by 2050, a low-carbon economy might have the material living standards that would otherwise have been reached by 2048.

This is, on the face of it, a striking conclusion. We use energy in nearly everything we do, and it is, therefore, widely assumed that a modern economy is dependent on cheap energy. Yet mainstream economists, even those most critical of Kyoto, are unanimous in the view that we could greatly reduce emissions of carbon dioxide while continuing to improve living standards at much the same rate as in the past.

Stern’s optimistic view that CO2 emissions could be greatly reduced without a corresponding reduction in living standards is rejected by critics beginning from two diametrically opposed positions. Although deeply hostile to each other, the two groups find some surprising common ground.

The first group are ‘Deep Green’ pessimists who see the end of consumer capitalism as both inevitable and desirable. At least since the reports of the Club of Rome in the 1970s, members of this group have argued that continued economic growth is inherently unsustainable.

The Club of Rome initially focused on claims that stocks of various mineral and energy resources would be exhausted within a few decades, but claims of this kind have been refuted by experience. Most mineral resources have actually become cheaper. Even in cases where prices have risen, the economic impact has been marginal, relative to the long-run trend of increasing income.

As a result, most Deep Greens now focus on limits to the capacity of the natural environment to support continued growth and assimilate waste products like CO2. Their central claim is that economic growth depends critically on the use of the natural environment as a dump for our waste products.

The Deep Green position is qualitatively different from that of participants in the climate change debate, including James Hansen and Stephen Schneider, who argue that we are already close to, or perhaps past, a point where our activities will critically damage the environment. From the point of view of these commentators, damage to the environment is the result of mistaken (but hopefully reversible) policy choices, rather than an inherent consequence of modern civilisation.

The mirror image of Deep Green pessimism is that of the ‘Dark Brown’ pessimists who say that we should do nothing to stabilise the climate because to do so will wreck our standards of living. Dark Brown commentators from thinktanks like the Competitive Enterprise Institute warn of ruinous economic consequences even from modest first steps such as the implementation of the Kyoto Protocol.

As with the Deep Greens, the Dark Brown school must be distinguished from participants in the climate change debate, such as William Nordhaus, who recognise the necessity for large scale mitigation, but argue for a slower pace of initial action than is implied by the Kyoto process. Whatever the merits of this argument, it is driven by beliefs about relative costs and benefits, rather than an assumed fundamental conflict between the environment and the economy.

The track record of Dark Brown pessimists is no better than that of the Club of Rome. Time after time, Dark Browns have opposed environmental improvements as too costly, repeatedly overestimating the costs and underestimating the benefits. The debate over CFCs and the ozone layer provides a good example, since it was one of the first issues to be addressed on a global scale. The doomsayers repeatedly attacked both the science behind the ban on CFCs and the economics of the policy, claiming it would cause massive economic damage. In reality, even without taking account of health benefits, it seems likely that the CFC ban yielded positive net economic benefits.

Although many Dark Browns got their start in the CFC debate, there have been some new entrants to the camp. For example, Bjorn Lomborg has taken up the mantle of the late Julian Simon, and has repackaged Simon’s arguments with some success. More importantly in political terms, the Dark Browns are now part of the Republican party establishment in a way that wasn’t true when Richard Nixon signed the Clean Air Act. But the central arguments haven’t changed.

Both groups engage in a fair bit of wishful thinking about their position, the Greens arguing that we’ll all be happier in the long run and the Browns claiming that the environmental problems will solve themselves if we ignore them. But these opposing claims are secondary to the shared presumption that economic growth depends on increasing exploitation of the natural environment and, in particular, on the burning of fossil fuels.

Underlying both Deep Green and Dark Brown positions is a fundamental misunderstanding of the nature of economic progress and of economic activity in a modern society. The concept of economic growth is so firmly embedded in our thinking that we forget it is just a metaphor. The idea of growth implies physical expansion, and any process of physical expansion has limits.

Economists have contributed to these misunderstandings. The traditional model of economic growth is based on the accumulation of capital equipment, capable of converting an ever-larger volume of natural resources into physical products for human consumption.

Such a model leads naturally to the conclusion that economic growth cannot continue indefinitely. The classical economists of the 19th century, beginning with Malthus, were the first to reach this conclusion, which they phrased in terms of the idea of diminishing returns.

The central idea is most easily seen in terms of agriculture. The output of a given piece of land can be improved by the application of fertiliser, the use of more agricultural machinery and more labour. Initially the returns to such increases in intensity may be high. But the total amount that can be grown on a given plot of land is bounded, and eventually the benefit of additional inputs must decline or become negative.

The same logic applies in industrial capitalism. Productivity can be increased by investing in more capital equipment but if the labour force is held fixed, the marginal return to additional investment must eventually decline. It was this that led the classical economists (notably including Marx) to talk about the inevitability of a declining rate of profit.

Long experience of sustained growth suggested that the classical economists were missing something. For a long time, growth models made to fit by adding an unexplained and exogenous source of growth called technological change, but this was always unsatisfactory. Technological change is itself the product of economic activity, and therefore subject to the same logic of diminishing returns. Something was missing.

It has gradually been recognised that the missing ingredient was information, embodied in technological improvements and in the minds of skilled and educated workers. Unlike physical inputs to production, information is not subject to diminishing returns. Once some piece of information, such as an improved way of producing a good or service is discovered, it can be used and reused indefinitely. Use by one person does not diminish its availability to others. This insight led to the development of ‘endogenous growth theory’ as opposed to older theories based on exogenous technological change.

The public-good nature of information explains how economic progress can continue without additional resources. Most obviously, improvements in information technology allow more and faster communication which in turn allows for yet more technological improvements. There is no apparent indication of diminishing marginal returns in this field; if anything the opposite.

Once we think in terms of information, it is natural to think of economic progress, not as more of everything, but as a set of qualitative improvements. This can be seen most obviously by looking at the areas of the economy that are growing most rapidly, such as health services. Health care is all about information, from the skill and expertise of doctors and nurses to the information embodied in medicines and medical equipment. By contrast, the physical resources required are modest. Even a hugely expensive piece of medical equipment, such as a CT scanner, embodies less raw materials, and consumes less energy, than a passenger car.

As new treatments become available, and as the knowledge available to medical workers expands, the capacity of the health sector to improve both the length of life and the quality of life increases. The length of human life may be bounded, but there is no reason to suppose that limits to growth in the quantity and quality of health services are going to be reached any time soon.

What is true of health care is even more true of education, the information service par excellence. The only limit to our capacity for education is the capacity of the human mind. And while some have always argued that this limit is tight enough to mean that more extensive education should be confined to an elite few, supposedly tight limits have regularly been broken. High school completion, once a rarity except for the upper-middle class is now the norm, and the numbers going on to universities have increased massively. Yet the demand for educated workers, and for more skilled workers of all kinds, continues to outpace the supply.

That is, there is nothing in the nature of economic progress in a modern society that inherently requires increased volumes of physical output. Most growth will occur in activities where information is the crucial factor. But, it might still be argued, energy is essential to all of these activities, so a reduction in energy use must bring growth to a halt. The first part of this claim is true, but the second is false.

The most common problem with ‘energy fundamentalism’ is the failure to understand prices. As Hayek observed long ago prices are the critical information generated by a market economy. Even where explicit prices are not present, for example within firms and government agencies, increasing scarcity of any resource is reflected in higher implicit prices.

Before considering the future, we can use prices to assess the importance of energy in existing activity and the extent to which our current prosperity depends on readily available supplies of cheap energy. At current prices, primary energy accounts for less than 5 per cent of total expenditure. An immediate implication is that a doubling of the cost of primary energy, arising from a switch to more expensive sources of energy could cost no more than an additional 5 per cent.

But this is a substantial overestimate. An increase in the cost of carbon emissions would provide signals to users, from energy suppliers to industry to final consumers, of the need to become more efficient in using energy. Decades of cheap energy have produced a system characterized by inefficiencies at every stage of the process from production to final consumption.

Where the scope for efficiency improvement is limited, prices will signal the fact that some kinds of consumption are more costly than others. Consumers will respond, as they always have done, by changing consumption patterns to favor items that are relatively cheaper. Of course, this will entail social change, but relative prices change all the time, in many cases by much more than the likely change in energy prices. The plummeting cost of computers and the rapidly rising cost of healthcare provide two of the most important examples.

Taking account of efficiency improvements and substitution effects, it seems likely that a doubling of energy prices over a long period would reduce average income by no more than 2 to 3 per cent. Optimists like Stern can easily justify a lower number on the basis of plausible estimates of potential efficiency improvements and the like. Pessimists can argue for higher numbers. But even the most pessimistic cost estimates of economists are an order of magnitude away from those offered or implied by the Deep Green and Dark Brown doomsayers.

Would a doubling of energy prices be sufficient to permit a switch to a low-emission or zero-emission technology over several decades? As far as electrical energy is concerned, almost certainly it would be. Some renewable sources of electricity, such as wind, are already competitive in many locations at existing prices or with a modest subsidy. With a substantial further increase in prices, output from these sources would increase. Other energy sources including geothermal energy and (assuming safety concerns can be resolved) nuclear energy would become competitive, as would long-distance transmission lines which would permit more effective use of existing sources of renewable energy.

A doubling of prices would also provide incentives for innovation in a range of technologies including solar photovoltaics, solar thermal and carbon capture and sequestration. It’s unlikely that all of these technologies will turn out to be economically feasible, but it’s equally unlikely that none of them will.

As far as transport is concerned, the rise in oil prices over the past five years has already converted the purchase of fuel-efficient hybrid cars from a piece of conspicuous environmentalism to an economically sensible choice. It will take a long time for carmakers to retool their systems, and some laggards will surely fail along the way, but a shift towards hybrids is inevitable in the long run. With a further substantial increase in the cost of carbon emissions will come a move towards plug-in hybrids and then to electric or fuel-cell vehicles powered by renewable sources.

Of course, it would be mistake to leave prices to do all the work. The case of lighting provides an obvious example. Lighting accounts for around 17.5 per cent of global electricity use. According to the International Energy Agency, using compact-fluorescent in place of incandescent lamps, deploying high- in place of low-efficiency ballasts and phasing-out mercury vapour HID lamps would reduce global lighting demand by up to 40%. More gains could be made by improving installations and using automatic controls.

All these steps make economic sense even at current prices, but for a variety of reasons the switch has been slow to take place. In these circumstances, it makes sense for governments to give the market a push, by developing standards and, if necessary, announcing a phase-out date for incandescents, as has been done in Australia. What is needed is a clear commitment reflected both in the price we pay for energy and in a broad range of public policy settings.

But only an international agreement embracing all major countries will suffice, and the search for such an agreement is stalled until next January, when George W. Bush finally leaves office. His successor will face the task of turning around US policy and then achieving an international agreement that includes developing countries like China and India.

Despite the claims of Dark Browns and Deep Greens, we can, if we choose, have both a stable climate and steadily improving standards of living throughout the world. But the fact that we can achieve these things does not mean we will. At this stage, failure seems all too possible, as does a half-hearted response that will imply the need for much more costly action in the future.

{ 87 comments }

1

Dan 04.12.08 at 11:54 am

Great article; the nature of growth confuses the hell out of me. This has added to my confusion, but it’s good confusion.

Question: what you’re saying may well be true – growth doesn’t logically imply ‘increasing piles of stuff’. But that *is* where a lot of growth happens. Both in rich countries – we churn over things like mobile phones and PCs at an ever-increasing rate – and in ‘emerging markets’. This last is the biggest challenge, isn’t it? There are still several billions of people who, quite rightly, want what the i-pod-owning, car-driving, plasma-TV-watching (ahem) ‘post-materialist’ society has. This means increasing piles of stuff: Australia’s mining boom, which feeds China with raw materials for this growth, is an indication of that.

It’s that old (deep green) point about needing several planets-worth if everyone had equal piles of first-world stuff – and, though a cliche, that remains true, doesn’t it? The majority who don’t have all the nice expensive hi-tech things want them, and any amount of information-sourced growth isn’t going to substitute.

So, yes, perhaps future growth for the richer countries can be tilted towards information-growth – but surely not for most of the planet’s people?

So the question then becomes: should we aim for equity, or is there an implicit acceptance than most people will never achieve the kind of material affluence us blogging types enjoy?

Are are you arguing that everyone can have this kind of material growth in a world where carbon-costs are built into the price system? (Plus some well-chosen state interventions?) If so, I’m pretty sceptical. Not that I have any alternatives, mind…

Seems like you’re conflating two things: growth can be information-based, so the future won’t be about ‘more and more stuff’. And: carbon can be reduced through the price system / state action, so we’ll be alright anyway.

Or am I barking up the wrong wotsit?

2

Slocum 04.12.08 at 1:19 pm

Very nice. It would be a great thing to be rid of the idea that economic growth necessarily means ever increasing quantities of raw materials and pollution. I have to say, though, that antipathy to growth on the left seems more widespread than just a ‘deep green’ fringe, and it has aspects other than the growth fallacy you address. I know rather a lot of people on the left who would not really be cheered to hear that growth is compatible with more efficient use of materials and reductions in pollution because they are hostile to growth for a variety of other reasons. They believe, roughly, that economic growth is producing mostly cheap trinkets that we don’t need, that it produces a frivolous explosion of choice that overwhelms us (too many kinds of cereal, too many colors of socks), that it leads to a ruinous, zero-sum competition for ‘positional goods’ that leaves everyone worse off, and that change driven by economic growth destabilizes communities and undermines traditions. The dislike of progress by these kinds of ‘progressives’ is multidimensional. I’m afraid there’s a lot more work to do in this space.

3

Tim Worstall 04.12.08 at 1:42 pm

“Although many Dark Browns got their start in the CFC debate, there have been some new entrants to the camp. For example, Bjorn Lomborg”

That’s a little fierce isn’t it?

Like the points about economic growth a lot.

“Of course, it would be mistake to leave prices to do all the work. The case of lighting provides an obvious example. Lighting accounts for around 17.5 per cent of global electricity use. According to the International Energy Agency, using compact-fluorescent in place of incandescent lamps, deploying high- in place of low-efficiency ballasts and phasing-out mercury vapour HID lamps would reduce global lighting demand by up to 40%.”

Information from within the bowels of the lighting industry. One of my customers makes the mercury vapour + phosphors needed for CFLs as well as HID. Makes them for all of the large lighting firms. Pre the bans that were announced by the EU (and the US as well I think, or is that still being talked about?) the order book for 2007 was in excess of a billion bulbs for CFLs. Tungsten bulbs were already on the way out on those very price grounds: the cost of electricity. Maybe I’m too cynical, but my opinion is that the announced bans
are about politicians being able to claim credit for something that was already in process.

As to HID bulbs, no, please don’t ban them….I make my living in my day job supplying the miracle ingredient that makes them work.

It would be in you interest too: you really wouldn’t want more essays by me out there on the intertubes as I tried to make up the lost income, would you?

4

DC 04.12.08 at 2:25 pm

I enjoyed this article a lot too – very clear and helpful.

But I also share some of Dan’s feelings regarding North-South disparities and in particular Chinese/Indian/”emerging market” catch-up. I think the article would be helped if you specifically addressed the widespread concerns on that issue (and, I would add, the issue of population growth).

5

Eli Rabett 04.12.08 at 3:05 pm

As with tobacco, there is a lot of original sin in economics. Back in the early 1980’s when science clearly established that there would be a problem, and the cost of ameliorating (my new favorite word) man made climate change was low, William Nierenberg enlisted William Nordhaus, Gary Yohe and Thomas Schelling to create their don’t worry, be happy, nothing will happen soon and we can wait for later school of climate change economics, which again has reared its ugly head to and swallow the Stern Report and the IPCC AR4

6

david 04.12.08 at 3:45 pm

It’s wrong to assume good conscience on the part of all participants in the debate, of course, though I suppose it doesn’t matter much to your argument all that much.

It’d be nice to think there’s a happy middle to left and right, but you do need to confront a bit more directly the chance that, Club of Rome being around for 40 years or no, there very well may be some carrying capacity issues coming online.

7

fifi 04.12.08 at 6:30 pm

I don’t get it, how can we support dematerialized growth without continuing to extract a surplus from the earth? Real economies function as integrative wholes, the most information rich societies are also the ones that consume the most and create the most waste, so presumably dematerialized growth is related to old-fashioned material growth in some way. So what exactly do information economies use information for?

8

mrsizer 04.12.08 at 6:40 pm

Interesting, although perhaps a bit premature in the claim that the science is settled. If you go with the New and Improved Global Warming definition: Climate Change, I suppose everyone agrees that it is changing – it always has been (and amazingly, we’re all here to talk about it).

and (assuming safety concerns can be resolved) nuclear energy

Yeah, France has a big problem with nuclear power safety. Nuclear power is perfectly safe and the waste can be dealt with.

Wind and Solar are useless unless you only want power when it’s sunny or windy. The fact that electricity cannot be stored on a commercial scale seems to escape the advocates of wind and solar power. That 17.5% lighting load is not going to be helped at all, ever, by solar power.

When someone tries to create a commercially viable solar project it will get killed by environmentalists because it will require paving over miles of “fragile ecosystem” (aka useless desert). The Solar Tower project is an excellent idea, but probably doomed; too many lizards would die.

Good points about growth. Too many people think growth is a zero-sum game. It’s clearly not.

David, you’ve obviously missed the point about prices and substitution. We’re nowhere near any carrying capacity issues. Prices will fix the problem. When beef goes up to $100/lb, more people will be vegetarians (without mandates from the government to upgrade to “higher efficiency” food) and we can grow a LOT more vegetables with the same resources used to grow beef.

Biggest flaw in your post: The light-bulb mandate (see food example, above). You’re just impatient and want to get everyone to switch NOW. Different people have different sensitivities to prices (see Al Gore’s electric bill). People will switch when it makes sense for THEM to do so. If the price of electricity accurately reflects its production costs – extrinsic and intrinsic – then it doesn’t matter how efficient peoples light bulbs are because the waste does no harm.

Question: Do government regulations on the electric industry increase or decrease the accuracy of the price? My guess is that it’s about 70% (regulated prices) / 30% (clean-air requirements) in favor of “decrease”.

Overall, I’d say that you still believe the government can be helpful rather than make the problem worse. Theoretically, that’s true. History does not offer many encouraging examples (Clean Air Act, good idea. Repealing the tax funding the Spanish American War (1898) in 2006, more typical).

9

John Quiggin 04.12.08 at 7:23 pm

TW, I deleted the reference to Lomborg in a later revision. Everyone else thanks for these useful comments and please keep ‘em coming.

10

david 04.12.08 at 7:45 pm

At the risk of derailing a useful discussion: Mrsizer, disagreeing is something different from missing, though I suppose you may be right that a crayon sketch of prices and behavior will pop to life someday. Also, the idea that solar and wind advocates don’t think about storage is bullshit, and it suggests that you don’t read them very much, or are not arguing in good faith. Which was my original point, lots of people snipe in bad faith, more often from the dark brown than the deep green side.

On point, it occurs to me that this would read better with a few words about infrastructure investment, rather than subsidies and price setting alone.

11

engels 04.12.08 at 8:11 pm

When beef goes up to $100/lb, more people will be vegetarians (without mandates from the government to upgrade to “higher efficiency” food) and we can grow a LOT more vegetables with the same resources used to grow beef.

I’m probably missing something, but then why is this not thought to contribute to a decline in the standard of living? (I don’t want to eat vegetables!)

More generally, the picture is that as resource scarcity starts to bite output of information-intensive products will continue to rise rapidly even as output of resource-intensive products declines more moderately. Consumers will substitute information-intensive products for resource-intensive ones, eg. instead of taking their SUVs to the National Park they will stay at home playing Nintendo. But without any considering the role that is played by each of these classes of goods in contributing to our well-being is there any reason to think that they are actually becoming better off as this happens. Mightn’t they be getting worse-off?

Like I said, I’m probably missing something…

12

Markup 04.12.08 at 8:15 pm

Overall, I’d say that you still believe the government can be helpful rather than make the problem worse. Theoretically, that’s true. History does not offer many encouraging examples…

Of course ‘market based’ solutions have their dark side(s) as well, which quite often prove to be much darker, and quite often result in the G-men (tax dollar) throwing beaucoup dollars in the cesspools which are left behind. One of which we are enjoying the aroma of now is the mortg/credit pit where much “innovation” went in to creating a product that had a real negative value, added no tangible product or benefit long term. Generally speaking vested economic interests have vision that seems to stop regularly somewhere near the ends of there nose(s). Granted, some of those do grow to excruciating lengths…

A few generations of coats of paint and roof shingles does little to shore the subsiding foundation, and after a while contribute to it’s failure, but it was at the time the more economical ‘solution’….

The French nuclear solution/model will not happen here because of our dependence on privatized profit and past lapses by the very industry. The track record of self regulation is dubious and costly enough to make it a very hard sell, which in some sense is a shame.

13

Sortition 04.12.08 at 8:15 pm

I find this to be more of a polemic than a convincing argument. In terms of data, I think the Hard Rose camp (“mitigation is cheap”) is no less ideological and weak on empirics than either of the other Hard camps. The generic economic efficiency argument presented here is of course completely fact free, but the point is that almost the same can be said of the venerated Stern Report. Despite the superficial cover of graphs, table and references to scientific literature, the report is really nothing but an elaborate speculative opinion piece. This is probably the reason why there was so little substantive discussion of the findings – there is very little of substance to discuss.

If CO2 emissions reduction is just a matter of allocating a little resources and applying the right technology, we could expect to see examples (certain countries, or at least provinces or cities) which manage to maintain a first world lifestyle at a third world emissions level. The fact that no such examples exist (or do they?) is suggestive.

14

John Quiggin 04.12.08 at 8:18 pm

There’s a whole branch of economics (welfare economics) devoted to this kind of thing, Engels, which can give pretty good estimates of how much worse off or better off you are when relative prices change. That’s where the numbers like 1 or 3 per cent come from.

Of course, all of this assumes that people are the best judges of their own welfare. If you think driving SUVs is morally beneficial, and that people should be made to do this whether they like it or not, you would reach different conclusions. But to the extent that there’s any social consensus on this (not much) I think it would go in the opposite direction. As I noted, I’m willing to make marginal exceptions in cases like lightbulbs where I think preferences could do with a shove or where markets don’t do a great job of reflecting actual preferences.

15

John Quiggin 04.12.08 at 8:37 pm

#13 The fact that no such examples exist suggests that prices (and supporting policy initiatives) are nowhere enough to generate them. The large difference in energy use between the EU and US, with similar incomes but very different prices illustrates the point.

And on your assessment that this is “just speculative opinion” I have to say that you are flat-out wrong. Lots of independent economic analyses, including those of Kyoto opponents, have reached much the same conclusion.

By all means say, “I don’t care what the experts say, and I don’t mind that I have no answer to their analysis, I don’t believe it”. I’m well enough used to that from observing the climate science part of the debate.

16

engels 04.12.08 at 9:14 pm

Thanks, John. I suppose what I was trying to say is that I would be interested to be pointed towards some of the results from welfare economics that underly what I take to be your claim that (pace pessimists on both sides) the continuing substitution of information-intensive goods for resource-intensive ones which you foresee will never lead to a decline in the level of welfare. (But perhaps this is getting away from the issues which you were addressing here…)

17

John Quiggin 04.12.08 at 9:38 pm

I don’t say that it will never lead to a decline in welfare, other things equal. But the decline will be so small as to be invisible against the background of steady improvement in technology, and undetectable for individuals relative to the random income shocks dealt out by the ordinary workings of market economies.

As I mentioned, you can set an upper bound by supposing we replace all existing energy use by an expensive alternatives like solar photovoltaic, then add a whole lot more expenditure to build a grid big enough to cope with supply fluctuations. You still get a cost that is less than a decade or so of income growth, and any economically reasonable estimate is much below this because of substitution by consumers.

18

HH 04.12.08 at 9:38 pm

More imaginative speculation about the nature of existence suggests that increasing virtualization of life will afford a high quality of existence with sharply lower energy consumption. Moving around is a major drain on energy, and to the degree that learning, adventure, and socialization happen in our heads, we can lead very rich lives while burning a fraction of the fossil fuels we currently consume. The good side of the Matrix is a sustainable future habitat for humanity. We need to learn how to build it.

If large steamships were essential to human happiness, we would all be quite miserable. I suspect that many of us will learn how to live without jet airliners in a few decades. Happiness takes place in the mind. We need to learn how to exchange happiness delivered in atoms for happiness delivered in bits.

19

engels 04.12.08 at 10:01 pm

Ok, I get it.

20

David Wright 04.13.08 at 3:59 am

This is a good article. It’s almost good enough for me to move JQ out of the “left-wing idealogue” column and back into the “left-leaning economist” column. :-) (In the spectrum of beliefs about climate change that JQ defines, I am near Nordhaus.)

But in the last few paragraphs, after carefully explaining the wonders of the price mechanism, JQ adds, out of the blue, “Of course, it would be mistake to leave prices to do all the work,” and endorses some command-and-control intervention.

Perhaps JQ doesn’t really believe this, but is afraid of loosing his left-wing-idealogue fellow travelers unless his expresses some anti-market sentiment.

But if JQ really does believe this, he needs to do a much better job explaining the positive role of command-and-control. (The light bulb example doesn’t do that — there is no explation of why the price mechanism wouldn’t achieve light bulb replacement, if the utility gain really does exceed the net cost.) And he needs to outline how we can distinguish cases where the price mechanism is appropriate from cases where command-and-control is better.

21

Sortition 04.13.08 at 5:46 am

“I don’t care what the experts say, and I don’t mind that I have no answer to their analysis, I don’t believe it”

It is not that I think that “the experts” are necessarily wrong as much as that they are claiming they know with reasonable certainty things that are far too complex to be analyzed with confidence.

My main “answer” to the experts is the one I wrote before: if the analysis was correct, significant reductions in emissions should have been common in the West. According to the Stern review much of the reduction can be achieved at negative cost – why isn’t it already upon us? The fact that per capita emissions in the West have been more or less constant (despite having moved much of the emissions-heavy manufacturing to China, by the way) indicates that emissions reduction is much more difficult than we are being led to believe. To me, this kind of evidence (while not a “proof” by any means) is much more solid than various “expert” predictions on the trends of technological development, etc.

Casting doubt on specific claims in the review is extremely easy – there are just so many of them and they are so arbitrary. Just to pick a random subject, let’s look at the issue of biofuels. Stern, following an IEA report, promises us 2-3 GtCO2e/year reduction through biofuels by 2050 – about 10% of total reduction. Yet, recently some experts indicated that the entire biofuels idea may be more of a problem than a solution (1, 2). Of course, you may still choose to believe the Stern’s experts – and they may still be right, but this is far from certain.

22

Barry 04.13.08 at 12:03 pm

Sortition: “My main “answer” to the experts is the one I wrote before: if the analysis was correct, significant reductions in emissions should have been common in the West.”

And as John explained before, your analysis is incorrect. The reasons are clear, and anybody who is capable of discussing economics or policy impacts can grasp those reasons.

“It is not that I think that “the experts” are necessarily wrong as much as that they are claiming they know with reasonable certainty things that are far too complex to be analyzed with confidence.”

After failing logic 101, you don’t have a lot of credibility left to dismiss the experts’ grasp of things.

23

RnBram 04.13.08 at 3:11 pm

Quiggin wrote Naturally, we heard from the noisy, but rapidly shrinking, group who still deny the reality of the problem.. Actually the number who recognize there is no problem is growing quite rapidly in N. America, while activism and media hype have increased concerns of a large rather uninformed middle group.

Al Gore (USA) and David Suzuki (Canada) have been so outspoken with such strident and at times blatantly absurd science and draconian demands, that many people no longer care. The sentiment is, “Let the climate change, it changes anyway and I would rather deal with that than have these fanatics running my life”.

There are some pretty fundamental points that quite justify that sentiment!

A mere 1,000 yrs ago, Scotland had the climate of Southern France, vineyards were abundant there and the Vikings were cruising the very green shores of Greenland and Newfoundland. Obviously, glaciers had receded, the polar bears had not all drowned, and ocean levels had not swamped London, England. Life carried on.

Back then CO2 levels rose somewhat after the temperature climbed. Strong evidence suggests that has been the case for the last 800 million years. Estimates of various kinds agree that temperatures have fluctuated by about 5*C, over that length of time. Life carried on.

The more sane projections of the Climate Change modelers have been dropping. Instead of a 5*C increase, they are now only calling for a 0.5*C increase, and there are still many serious unknowns… not the least of which is the weather in four or five days time!!

Past CO2 levels, even as recently as 100 million years ago (and that is very recent), have approached 5% of the atmospheric gas mix cf today’s ~0.035%. The Global Warming tempest is based on an increase, over 50 yrs or so, from `0.027%. Today’s plants are starving for CO2! But life will carry on.

The real beast in Climate Change is not Mankind; it’s the cosmos. Ever since sunspots began to be regularly recorded, Mankind has been gathering information about solar output. Ship’s Captains have kept logs somewhat longer, and have recorded the southern reach of Arctic Ice. It advances and recedes in lock step with solar output. We kept sailing, because we learned.

The notion of sustainability, while reducing CO2 production and obeying the burgeoning list of Environmentalist Commandmants, is a greater danger than Climate Change. For one thing, “sustainability” is at best a holding pattern, freezing humanity from the progress that will reduce real poverty and improve health. To restrict or deny individuals of such future benefit is an attack on their lives. That denial amounts to an even deadlier threat than changes man may make to the environment. That is the presumption that some men may dictate the lives of other men. For much of history the tyrants were Attila’s or Witch Doctors. After a century where more than a billion people struggled under the oppression of communist/socialist Attila’s, the last thing we need is Environmentalist Witch Doctors imposing their style of oppression. The only thing worse would be for those EWD’s to join in with the United Nations inexorable creep to its goal of being the World Government. The result would match George Orwell’s worst nightmare.

I gave up following the we-must-do-something anthropogenic global warming discussions some ten years ago, and I see the quality of writing is at times more erudite. I say “seems”, because only the the vocabulary and style have improved, while the substance has not… it looks good but its content, though greatly expanded as minds like Quiggins delve into more and more rationalistic links, is as weak as ever. Rather like a hollow tree, the outside grows, but so does the empty chamber inside.

24

mpowell 04.13.08 at 4:30 pm

David Wright- you have heard of uncaptured externalities, right?

25

Cranky Observer 04.13.08 at 5:00 pm

> But if JQ really does believe this,
> he needs to do a much better job
> explaining the positive role of
> command-and-control. (

You will find that discussion over in the business school under a heading similar to “the theory of the firm”. When one looks at entities such as General Electric (even more so in the 1950s than today) they should not in theory exist, but they do and many of them have prospered over long periods of time. “Market signals” apparently aren’t everything in an industrial economy.

Cranky

26

Barry 04.13.08 at 5:28 pm

Cranky, it’s probably not so much that as the uncaptured externalities. We’re in a situation analogous to where people are dumping waste into a lake, and levels have built up to the point where it’s causing problems.

27

Lee A. Arnold 04.13.08 at 5:43 pm

John I like this very much. You have put the whole thing in a nutshell. I have three constructive comments:

(A) The primary practical point concerning growth is that, by pricing in the scarcity of the atmosphere as a waste sink, and by government policies to jump-start R&D in certain fields, many of the sought-after innovations will be either energy-conserving physical technologies, or sustainable physical product-&-waste recycles, as well as non-material improvements in service industries. These will help solve the environmental problem while providing new business opportunities — one reason why GDP growth won’t be affected much, if at all.

It is a secondary follow-on, that endogenous growth theory contends that certain policies to encourage the development of ideas, (and allowing them to remain non-rival yet partially or temporarily excludable,) would therefore accelerate this process of innovation — but a growth theory cannot guarantee that each innovation itself is not subject to diminishing returns, and indeed physics demands otherwise.

Leading with “information, embodied in technological improvements” somewhat obscures this practical sequence.

(Information is best considered as an abstraction about economizing in general. As such, “information” is also embodied in institutions, which reduce the costs of transactions or transitions — this is of course part of the source of non-material improvements in the service industries. In this sense, technological improvements and institutions are homologous, as well as being homologous to lots of other things. I am drawing a picture of this at http://youtube.com/watch?v=GrVsLdTtepM

(Many institutions, although they are homologous to growth, however are not valued by money. Coasian firms show up in the GDP because they are in price competition, since they make products to be valued by consumers. But government and social institutions are not priced, although they may be just as valuable if they are properly designed. They may not show up in GDP numbers, but in “quality of life” indicators. Ways to think about the proper design of institutions are similar to thinking about technological improvements: sharply focused; easy to use; amenable to change; may be soon superseded or made obsolescent. This is in fact the way to think about climate mitigation strategies of course.)

(2) A likely climate mitigation strategy is going to be carbon sequestration leading to storage or recycle. Genome technologists appear to believe that a biomolecule could be engineered to extract carbon from the air and then make it into biofuel: a balanced fuel cycle? and not much different from the creation of petroleum hundreds of millions of years ago.

(3) I have no truck with the Brownies: they don’t really understand science, have no religion, and their ethics are of the instrumental or operational type that came in with Machiavelli, Hobbes, and was operationalized by Smith — i.e., disregarding the classical ethics from Aristotle to Aquinas that there is a pursuit of the Good separate from wealthgetting, and that this pursuit is the substantive function of politics. I say: redline the yellowbellied bluenoses of the anti-green brownlash!

The Greenies may be their polar opposite, but of a different logical type. They have a very strong substantive ethics plus a vague religion (I share it somewhat) and they are looking at the whole theatre, not just climate: the disappearance of species by habitat fragmentation, our ill effects in other biogeocycles particularly nitrogen, the increase in untested synthetic chemicals and rare cancers and other diseases, etc.

I hope to God that all of these things can be solved while giving everybody a better standard of living, but we are about to nearly double the world population in a very short period of time, and there is no guarantee from within the theory of economics that the rate of technological innovation will stay commensurate. We have very little time.

28

bigTom 04.13.08 at 6:32 pm

I think the focus on energy, rather than scarcity of key ingredients is misplaced. I’m of the camp which says that energy will be a near term perhaps quarter century problem, but then low/no carbon sources (solar Nuclear(Thorium) etc.) will become mainstream. In this view the energy pinch has started, but eventually when we get good technological solutions worked out, and scaled up energy will not be a major constraint. That is not the case for many other critical materials. Unless of course you believe we will create cheap and ubiquitous space travel.

Lets substitute the more generic “critical-resources” for energy and all the same arguments apply, but the nonspecificity means that they will still be valid fifty years from now.

29

pampero 04.13.08 at 7:19 pm

Interesting article but I wonder how “growth” can be measured better than through that lousy term “GDP”/ Afer all, if you inject two or three burglars in a mid-sized town, its GDP will increease as locksmiths, security guards, insurance companies etc. will get extra business but the general welfare will have suffered.
I wonder why wester n countries are going so much for wind power which requires a tremendous amount of installed capacity in relationship to actual production. Hydraulic (tides and currents, ) energy is much more reliable, Tidal mills have been with us since the middle ages and the Gulf Stream could be used from NE Brazil to cape Hatteras.
If you consider the social costs of SUV;s (10000 deaath from rollower a year in the US alone), you can ask yourself if consumers ever make rational choices

30

David Wright 04.13.08 at 7:43 pm

MPowell @ 23: Yes, I have heard of uncaptured externalties. And the standard economists’ response to them is to use the price mechanism, either though a tax (Pingu) or an auction (Coase). That is what Stern advocates, and what JQ advocates, up utill the last few paragraphs, where he suddenly praises the direct specification of behaviors, for reasons as yet unexplained.

31

David Wright 04.13.08 at 7:59 pm

Cranky @ 24: “The Theory of the Firm” has nothing to say about this case. That is an interesting set of highly qualitative ideas about why pockets of command and control (firms) might develop and thrive within a free market. It does not attempt to specify exact conditions, because it doesn’t need to: if a particular aspect of production would be better served by more or less central control, a competing firm is free to do so, and prosper by its innovation. A government mandate isn’t like that — there is no possibility of exit from the mandate. It’s like turning an entire country into a command-and-control firm from which you can’t resign to go found a competitor if you have a better idea.

32

John Quiggin 04.13.08 at 8:06 pm

DW I’ll post on why I think there’s a role for direct regulation in a while. Relevant issues include bounded rationality, and hard-to-fix market imperfections in areas like markets for house design.

But I guess the main thing is, not being an ideologue, I tend to focus on what is likely to work.

33

Cranky Observer 04.13.08 at 8:08 pm

> That is an interesting set of highly
> qualitative ideas about why pockets of
> command and control (firms) might develop
> and thrive within a free market. I
> […]
> david wright

Calling the sum of General Electric, General Motors, and US Steel “pockets” of the US economy in the 1955 timeframe is an interesting characterization. And you do seem to have a bit of difficulty with the nature of what a single counterexample does to your theories.

Cranky

34

David Wright 04.13.08 at 8:27 pm

JQ @ 30: I see. From a purely editorial standpoint, then, this essay could be slightly improved by mentioning those justifications. Something along the lines of “recent results in behavioral economics, the theory of meta-preferences, and the constraints of the political process mean that mandates may have some role to play” instead of just “i like mandates, too”.

And with regard to the second paragraph of your response: touche. :-)

35

John Quiggin 04.13.08 at 9:43 pm

DW, thanks for this useful suggestion and graceful acknowledgement.

Pampero, if you check back you’ll notice that I have everywhere used terms like “income” or “living standards” rather than GDP for precisely this reason. I’ve posted on this before but probably I should do so again.

36

Slocum 04.13.08 at 10:24 pm

But I guess the main thing is, not being an ideologue, I tend to focus on what is likely to work.

That strikes me as rather odd. You (rightly) argue that price signals are the right way to effect change across the board. Just for private houses, these parameters would include: house size, lot size, location (commuting distance), family size, ceiling height, insulation value, window sizes, heating and cooling levels, high-efficiency and smart HVAC systems, paint colors, roof colors, shade trees, earth-sheltering, appliance efficiency…and getting the damn kids to turn off the lights when they’re not using them (which will never work, so make that last one — motion-activated lighting). Some of these require a turnover in the housing stock, but most of them are applicable to existing buildings.

And nearly all of them are much more consequential than a switch from tungsten bulbs to CFL bulbs (especially given that there is a large overlap between heating and lighting seasons so most of the time, the waste heat of a tungsten bulb isn’t really even wasted).

Given all of that, why zero in on one particular, trivial aspect of the problem and deal with that using direct regulation?

Especially because it’s not going to work out well — there are many fixtures where CFLs work poorly (recessed, dimmable ceiling lighting, for example). Either there will be enough exemptions to make the ban meaningless, or lots of people are going to be quite angry to find they have to tear out and replace built-in fixtures, all for a minimal or zero savings in energy. This is the sort of thing that makes people think the government is a stupid, heavy-handed beast (as a libertarian, I suppose I should support a tungsten bulb ban on the basis of ‘heightening the contradictions’ — pissing large numbers of people with trivial but irritating regulations is probably a good way to create sympathy for libertarian views). But given that you are not a libertarian, as a pragmatist, you should oppose a tungsten ban on the grounds that it will provide minimal energy benefit and is likely to create a backlash.

37

John Quiggin 04.13.08 at 10:39 pm

My understanding, which I will check, is that the energy savings are significant. And, in Australia, the “lighting for heating” counter-argument isn’t of much relevance.

38

mpowell 04.14.08 at 1:49 am

JQ has already answered well enough, but I’d add that in this debate the pros and cons of various pricing regimes are frequently discussed. Suffice it to say, it’s hard to get it right. In the context of that debate, I wouldn’t jump to question the intellectual integrity of a writer simply for indicating a preference for some command and control schemes.

39

Gar W. Lipow 04.14.08 at 1:56 am

Hi for the people who have accused Quiggin of being fact free when he says that we have a lot potential inexpensive savings we are not tapping:

My own site has extensive info on this. Cooling It: No Hair Shirt Solutions to Global Warming. If you want some peer reviewed work: Arjun Makhijani’s “Carbon Free and Nuclear Free”. Also one of the larger bodies of work on the topic that has been around a long time The Rocky Mountain Institute. Because putting the links in the post put it into moderation, I’m posting this without links, but google will find all these sites.

40

Lee A. Arnold 04.14.08 at 2:53 am

One would also be questioning the intellectual integrity of Ronald Coase, who called the government a sort of “superfirm,” and wrote, after a discussion of the general ways in which governmental regulation can go wrong, “But equally, there is no reason why, on occasion, such governmental administrative regulation should not lead to an improvement in economic efficiency.” But then, Coase is not much of an adherent of one-equation chalkboard economics, and prefers the real world. The real question, looming ever-larger in the crowded future, is the proper design of non-market institutions.

41

Slocum 04.14.08 at 3:12 am

My understanding, which I will check, is that the energy savings are significant.

In terms of individual light bulbs and lumens per watt, yes the ratio is something like 4:1. But lighting accounts for only 10% of household electricity use (in the U.S.), and household energy use encompasses a great more than just electricity (heat and hot water, obviously, but also transportation energy usage that is dependent on housing location choice). And then, of course, a non-trivial fraction of household lighting has been fluorescent for decades (garages, basements), and sales of CFLs have expanded rapidly without any legal mandates — in the U.S., sales of CFLs doubled between 2006 and 2007 and already make up 20% of the market:

http://yosemite.epa.gov/opa/admpress.nsf/7ebdf4d0b217978b852573590040443a/970f05bf0bc5d9aa852573d10055b38d!OpenDocument

Given all that, the benefit to annoyance ratio of an incandescent lighting ban just doesn’t make sense.

42

Crystal 04.14.08 at 3:34 am

IIRC, I was one of those who commented that I would be very interested to read John’s article. So thanks for posting it!

I’m no economist, so many of the finer points in the comments go waaaaaay over my pretty little head; however, I was glad to see the article raise the two extremes of the “deep Greens” and the “deep Browns” and why neither is a viable position. We can’t go on with a totally selfish, schmibertarian, Brown mentality – if for no other reason than the rich people in the North aren’t going to be able to insulate themselves from the problems faced by the world’s poor, forever. On the other hand, I’ve known quite a few Deep Greens, and some (not all, but a vocal minority) want us to go back to the Neolithic. Which we can’t, and I don’t think even most Deep Greens really and truly want to.

Dan, way back in #1, raises the point that we in the North waste an awful lot, and poor people also want what rich people have – Ipods, laptops, etc. Realistically, the simple, frugal, lo-tech life will only appeal to a few. How to balance our modern lifestyle with sustainability is a huge question; also, how to encourage conservation and responsible behavior with a carrot instead of a big, bad governmental stick? Just for an example: I’d love to see US cities and suburbs become more bike-friendly. I don’t know if I could ride a bike where I live without being turned into roadkill; however, I also think wistfully of the weight I’d take off and keep off if I rode a bike instead of driving most places (vanity makes a big, juicy carrot!).

43

fifi 04.14.08 at 3:37 am

The public-good nature of information explains how economic progress can continue without additional resources.

Health care is all about information, from the skill and expertise of doctors and nurses to the information embodied in medicines and medical equipment. By contrast, the physical resources required are modest.

Are you saying that you can indefinitely divert people from production into information work at no cost to the environment? I’m no economist, help me out here. To make a doctor you have to accumulate more matter and energy than he can provide for himself, right, so 10 doctors reduce more natural capital, somewhere in the world, than 10 rice farmers, and of course in the real world doctors, economists and professional Nintendo players exist in addition to farmers and miners and truckers. You make it sound obvious but it isn’t at all obvious you can value health services independently and add them up to produce a sustainable, growing economy. Well it’s obvious to some but it isn’t to me. When I look out the window at growth, a catabolic process with positive feedback dynamics looks back at me, and I have to marvel at how consistently economists underestimate market and non-market components of growth. Such as the matter and energy required to manage information and support increased complexity. I don’t think it’s a coincidence the risk-averse and highly managed — by economists and health professionals and other social gardeners – societies of N.A. and Europe are the ones with the largest per capita cost to the environment.

I mean I can imagine plausible economies in which resource depletion and waste aren’t problems and what counts is know-how. But to get there from here? Tell you what, not that there’s anything too wrong with buying light bulbs (and hybrid cars, solar panels and so on) but the Deep Green’s end of consumer capitalism is more believable.

44

lemuel pitkin 04.14.08 at 4:00 am

The problem here is we’re confusing *economic growth* with *improving welfare*. Of course this is conventional but it completely muddies the water here.

* The important costs of climate change are not captured in the effects on GDP. To take the extreme but not irrelevant case, the Stern-Garnaut-Quiggin framework doesn’t distinguish between a 1% reduction in world GDP that also involves the premature deaths of 1% of the world population, and a 1% decrease in GDP that does not.

* The costs of action, on the other hand, probably are largely captured in this framework, so in that sense the conclusion is correct. But we need to be clear that the point of addressing climate change now is *not* to maximize the long-term expected value of world GDP, but to avoid catastrophic disruptions to people’s lives.

* Economic growth is important because capitalism requires growth to function properly. An acceptable level of profitability requires a minimum rate of GDP growth; in its absence you get capital strike, mass unemployment, increasing fierce distributional conflict, etc. In this sense, economic growth is, under current arrangements, necessary to stable welfare.

* It is emphatically not the case, however, that GDP growth translates directly — or, indeed, at all — into welfare improvements (which in any case can’t be measured precisely or expressed in any single index.) We know that people who have physical security, stable social status, meaningful work, and strong personal relationships are happier than those without them, but past a certain point (a per capita income of perhaps $10 or $15,000) GDP doesn’t have any definite relationship to those things.

It is probably true that addressing climate change need not have a negative impact on long-term GDP growth. But GDP is not the appropriate metric for measuring the costs and benefits here.

45

lemuel pitkin 04.14.08 at 4:06 am

(I see JQ sort of addressed this at 35. But the point is that income =/= living standards =/= wellbeing. Eliding these distinctions is a mistake.)

46

John Quiggin 04.14.08 at 5:52 am

Lemuel, the distinctions are important and need to be addressed. But you can only do so much in one article, and I tried as hard as possible to indicate that I was talking mainly about living standards. And while I didn’t include an off-topic rant about GDP in the article, my careful avoidance of the term ought to indicate something.

The relationship between living standards and wellbeing is complicated but I don’t think that the differences are particularly related to energy use.

47

Andrew Condon 04.14.08 at 11:09 am

Several commenters have raised the issue of the environmental load due to increased materialism that seems to be correlated with growth.

I think that a key meme here is the “Cradle to cradle” design approach described in the book of the same name.

Here’s one concise summary of the authors’ proposition:

“In cradle to cradle production all material inputs and outputs are seen either as technical or biological nutrients. Technical nutrients can be recycled or reused with no loss of quality and biological nutrients composted or consumed. By contrast cradle to grave refers to a company taking responsibility for the disposal of goods it has produced, but not necessarily putting products’ constituent components back into service.”

Thanks for the article, John.

48

novakant 04.14.08 at 12:45 pm

I think some crucial questions have been raised by dan in the very first comment – any thoughts on thsi John?

49

Slocum 04.14.08 at 1:33 pm

I’ve known quite a few Deep Greens, and some (not all, but a vocal minority) want us to go back to the Neolithic. Which we can’t, and I don’t think even most Deep Greens really and truly want to.

And there are many more who don’t want to return to the Neolithic but who think that it would be a good thing to see an end to rising living standards along with globalization, ‘crass materialism’, and ‘rampant consumerism’ (materialism is invariably crass and consumerism invariably rampant). These strike me as pretty widespread sentiments on the left.

50

jackd 04.14.08 at 1:53 pm

, it seems likely that a doubling of energy prices over a long period would reduce average income by no more than 2 to 3 per cent.

Given the massive inequalities in income distribution, I have to wonder how this reduction would be actualized. Will it be like the current sharp increases in grain prices, which have very little effect on the wealthy, but are devastating to people who spend a large portion of income on food?

51

lemuel pitkin 04.14.08 at 2:24 pm

46-

Rereading your post, I see it doesn’t really do the first thing I was objecting to — expressing the costs of climate change in terms of reduced output or income. On the second point — the distinction between economic growth and improvement in human wellbeing — there is some slippage, with words like “growth” and “progress” being used interchangeably. But yeah, on the whole my critique was a little misplaced. I was thinking more of your earlier posts on the Stern report.

52

lemuel pitkin 04.14.08 at 2:30 pm

should we aim for equity, or is there an implicit acceptance than most people will never achieve the kind of material affluence us blogging types enjoy?

False dichotomy. In the 19th century, the height of luxury was travelling by your own private railroad car. The vast majoriity of the world’s people will never enjoy that pleasure, but that’s not a retreat from equity.

There’s no reason people in China, India, etc. can’t aspire to more European rather than American standards of affluence — short workdays, long vacations, guaranteed income, health care and other social insurance, a clean & beautiful built environment, high-quality culture & entertainment, etc.

In fact, it seems pretty clear that luxury consumption is rather more skilled-labor-intensive than resource-intensive, in general.

53

abb1 04.14.08 at 3:32 pm

They want to buy a house, the Chinese; that’s what I’ve been told. They go work at those sweatshop factories to save enough money to buy a house and a piece of land back in the village. That seems more American than European.

54

Crystal 04.14.08 at 5:29 pm

Lemuel @ 51: your comment made me think that one way to get Americans to consume less, if that is the goal, is to give them European-style affluence – generous vacations, health care, accessible and inexpensive amenities and culture, public spaces, etc.

Europeans use less than Americans not because they are noble, selfless frugalistas at heart, but because they can have a good quality of life without filling in the empty psychic spaces and/or assuaging anxiety with tons of stuff. They have carrots, not sticks.

Carrots tend to work better than sticks if only because people eventually rebel against sticks, and often over-indulge in previously “forbidden” or stigmatized behavior. (There’s a reason why there are so many cliches around sailors getting drunk, spending money and having orgies.) One can see how well the Communist and formerly Communist countries’ clamping down on both consumerism and religion worked when those restrictions were lifted. The minute they got a chance people went right back to praying and spending.

As I noted, most “deep Greens” don’t really want to go back to the Neolithic (though those that do provide a convenient strawman for the entire movement). However, many of them do not get that hectoring and shaming people into giving up their Nasty Selfish Ways doesn’t usually do much good, and in fact creates a backlash. Behavior inducements, OTOH, work. Rewards, “carrots,” work. If buying a Prius means some abstract of “doing good,” a lot of people will shrug their shoulders and say, “So what?” But if buying a Prius means that Joe Blow saves on gas, then Joe Blow will buy a Prius. And if Joe Blow can safely bicycle to work, which means he saves on gas and auto maintenance, AND loses weight and is in better physical shape to boot, that’s a HUGE inducement for Joe Blow to bike to work. Whereas some abstract of doing good might appeal to the Gandhis and Schweitzers among us, but not to most people.

55

lemuel pitkin 04.14.08 at 5:54 pm

one way to get Americans to consume less, if that is the goal, is to give them European-style affluence – generous vacations, health care, accessible and inexpensive amenities and culture, public spaces, etc.

Exactly! — altho let’s be clear, it’s not consuming less, just consuming differently.

56

Slocum 04.14.08 at 7:01 pm

Europeans use less than Americans not because they are noble, selfless frugalistas at heart, but because they can have a good quality of life without filling in the empty psychic spaces and/or assuaging anxiety with tons of stuff. They have carrots, not sticks.

Oh, please. Europeans use less energy mainly for accidents of history and geography, including:

1. High population densities. Holland has 3X the density of mainland China. The U.K. has 2X the density of China. And China’s density is 4X the U.S. And then there’s Canada — but 1/10th the density of the U.S. (and 1/100th that of Holland). Despite the Euro-style social programs, Canada’s per capita energy use is higher than in the U.S.

2. High transport fuel taxes (imposed not for reasons of environmental stewardship, but because European countries have little oil). These taxes lead to small cars (and diesels and manual transmissions). And high fuel taxes combine with high population densities to make public transport more feasible.

3. Maritime climate. London, for example, is at the same latitude as the southern tip of Hudson Bay, but is significantly warmer in the winter than Oklahoma City which is at the same latitude as northern Africa. The average Jan low in Oklahoma City is 25F, in London it’s 40F. In terms of heating costs, that’s a huge difference. And that’s for Oklahoma City, not Minneapolis. And it goes without saying that London is also much cooler and cloudier in the summer.

And why on earth would one expect more vacation to lead to lower energy usage? I was under the impression that Europeans were increasingly using their vacation time to hop on dirt-cheap Easy Jet flights (when they aren’t hopping on for a weekend jaunt).

57

lemuel pitkin 04.14.08 at 7:31 pm

And why on earth would one expect more vacation to lead to lower energy usage?

Because it’s a substitute for higher income.

58

Slocum 04.14.08 at 7:48 pm

And why on earth would one expect more vacation to lead to lower energy usage?

“Because it’s a substitute for higher income.”

But what is the greater constraint with respect to vacation travel — money or vacation time? I would say time much more than income. And given economic growth, the trend certainly must be in that direction (even for Europeans, vacation time is not increasing every year, but disposable income is).

59

lemuel pitkin 04.14.08 at 8:30 pm

Slocum, don’t be obtuse. The point is just that there are many different ways to improve living standards, some of which are more resource-intensive than others.

60

John Quiggin 04.14.08 at 8:37 pm

What matters with vacations is not the length of vacation but the number of trips. Fewer and longer vacation trips is one easy way of reducing emissions while maintaining the contribution of vacations to living standards.

61

freshlysqueezedcynic 04.14.08 at 8:41 pm

These strike me as pretty widespread sentiments on the left.

Well yes, if you get struck by strawmen.

62

Slocum 04.14.08 at 9:27 pm

lemuel pitkin: Slocum, don’t be obtuse. The point is just that there are many different ways to improve living standards, some of which are more resource-intensive than others.

Yes, I’m not disputing that very general point. But that’s not what we’ve just been discussing. What I am arguing (and what you now seem to have conceded) is that the lower energy usage of Europeans derives from factors like population density, maritime climate, and tax regimes driven by natural resource availability rather than social democracy (and that where social democracy is present but those other factors are absent — as in Canada — per capita resource usage is not lower than in the U.S.)

freshlysqueezedcynic: Well yes, if you get struck by strawmen.

Well maybe it’s just because I live in Ann Arbor and know many academics, but my experience is that anti-globalization, anti-consumerism, and general suspicion of the desirability of continued economic growth are are quite common, and the people who hold these positions aren’t at all shy about expressing them. But your experience may be different, I suppose.

63

abb1 04.14.08 at 9:32 pm

People really do fly a lot in Europe, thanks to Easyjet. To see a football game, for a couple of days of skiing, to spend a weekend in Barcelona.

They say, though – and I don’t know if it’s true or not – that all those flights would’ve happened anyway, that their main business is moving cargo and passengers are just for the extra income. I don’t know, it could be true – I don’t see nearly as many big trucks here as in the US.

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virgil xenophon 04.14.08 at 9:43 pm

Slocum is correct–history and geography make a HUGE difference. The entire land mass of Austria, for example(ALL trees lakes, mountains, etc., plus people) may be fitted within the boundaries of the Grand Canyon(sq. footage-wise, not by border outline). Driving from the Baltic coast to Monaco is like trip from, say, Milwalkee to Louisville. The problems of Europe just cannot be compared to a continent-sized nation. Same for cities. All were developed prior to the automobile, hence their greater construction densities. And, like most U.S. cities East of the Mississippi, their infra-structure(mass transit, H2O/electrical, gas, etc.,) was constructed during and era when labor wage rates were on the order of pennies/hr.
Hence despite Urban Planners love for “light-rail”
etc., as being far cheaper per passenger/mi. as
compared to cars in terms of operating costs, today’s construction cost component (see, for example, multi-billion dollar cost overruns on Boston’s “Big Dig”)makes them economic losers. (Check out the site called the “Anti- Planner” for some eye opening number-crunching on this score.)

Also to be considered is the social aspect of cars v mass transit. Cars are democratic in that one can go and come when and where one pleases. Except for rare instances (New Orleans, for example) mass transit is the mode of the lower
and working class. Its a tough sell for anyone else unless the most draconian Soviet-style system
is imposed–and even then there are limits to the reach of even totalitarian systems. Stalin and Beria combined could never totally succeed in forcing physicians into the country-side to provide rural health-care. And its not for nothing that the Metro Atlanta Regional Transit System (MARTA) is labeled by those who have the means to avoid using it “Moving Africans Rapidly Thru Atlanta.” In Europe, until very recently, the
auto was considered a luxury–not a necessity. A
totally different cultural mind-set. And, as many who contribute to this site live in Europe, they must know that except for the very rich,the average middle-class European lives in housing the square footage of which is less than the average of those who live below the income poverty-line in the U.S. Down-sizing to a European life-style will be tough sledding. (Consider popularity of the SUV and Pick-Up truck for example.)

Finally, as the late Eric Voeglin has opined, the inevitable end result of trying to install/instill
“progressive” government/social systems for “the greater good” is a highly authoritarian if not totalitarian regime. We can see this as in Hillerycare which proposed making it illegal under
pain of felony conviction and fine for both physician and patient for those who had the ability to pay out of pocket. The recent attempt by SoCal Edison and State of Cal. to install remote-controlled thermostats controlled by the power company under the direction of Sacremento in all new private-home construction is another. Needless to say, John Quiggan is not my cup of tea–intelligent and lettered as he obviously is. Remember, Hitler’s Germany was probably the most thoroughly educated and cultured society on Planet Earth at the time. Concentration-Camp guards often relaxed at night reading Goethe and listening to Wagner, Bach and Beethoven. “The road to hell is paved with good intentions”, as my grand-mother always used to say.

.

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lemuel pitkin 04.14.08 at 9:44 pm

What I am arguing (and what you now seem to have conceded) is that the lower energy usage of Europeans derives from factors like population density, maritime climate, and tax regimes driven by natural resource availability rather than social democracy

You may be right about this…

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lemuel pitkin 04.14.08 at 9:47 pm

the inevitable end result of trying to install/instill
“progressive” government/social systems for “the greater good” is a highly authoritarian if not totalitarian regime.

You were doing pretty well there for a while, virgil. What happened, the medication wore off mid-comment?

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abb1 04.14.08 at 10:04 pm

I used to live in suburban Boston driving my democratic minivan to Cambridge every morning (about 10 miles) – and that was hell; 2 to 3 hours/day of pure hell. Down-sizing to a European totalitarian life-style can be a beautiful thing, man.

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John Emerson 04.14.08 at 10:26 pm

The late Eric Voegelin has also opined that Joachim da Fiore (d. 1202) destroyed Western Civilization, so perhaps we should take his opinings with a grain of salt.

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Markup 04.15.08 at 1:30 am

virgil x “The road to hell is paved with good intentions”, as my grand-mother always used to say.

Did she per chance mention who did the paving? Perhaps it was the same folks that moved out to Sandy Springs in the mid 70’s.

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Gar W. Lipow 04.15.08 at 2:36 am

A couple of points on all this:

1) Yes GDP is not the same thing as social welfare. But it is worth considering that the particular social changes that increase social welfare without increasing GDP also set up a situation in which GDP increases can increase social welfare – so that having a way of increasing GDP without increasing externalities remains very desirable

2) Most forms renewable sources are more expensive than fossil fuel sources – if you don’t count externalities. So on the face of them a switch to renewables would tend to decrease GDP slightly. However, there are also huge opportunities for efficiency increases. If we use more expensive renewables, but do so more efficiently then switching to renewables does not decrease GDP. Of course if you can get an increases standard of living per unit of GDP, so much the better.

3)There is no shortage of available renewable energy. Concentrating Solar Power using mirrors to focus solar energy and produce heat energy could provide electricity equivalent to several time the world’s total energy (not electricity) consumption using a very small percent of the world’s deserts. Similarly wind alone could provide the same thing. Of course a great deal of consumption is climate control and hot water for buildings, much of which could be produced of local solar energy rather than from electricity, however renewably generated.

And if you look at the Rocky Mountain Institute, or my own on-line book “Cooling It! No Hair shirt solutions to global warming” or any of hundreds of other sources you will find no shortage of ways to use that more expensive renewable energy more efficiently.

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lemuel pitkin 04.15.08 at 4:46 am

it is worth considering that the particular social changes that increase social welfare without increasing GDP also set up a situation in which GDP increases can increase social welfare – so that having a way of increasing GDP without increasing externalities remains very desirable

I’m a big admirer of your stuff, Gar. Great to see you commenting here, hope you’ll do so more often. But — there’s always a “but” — there’s a *lot* to unpack in that sentence. Smarter (IMO anyway) to keep a clean distinction between the questions of GDP and welfare…

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SG 04.15.08 at 6:17 am

Slocum, I would like to see your comparison of US energy usage with Japan. As I understand it Japan is the most efficient energy user in the OECD, but Japan produces a large portion of the world’s stuff, and has an extremely unpleasant climate – much hotter than most of urban Australia in Summer, and much colder than most of the UK in winter. All of its transport infrastructure was built in the last 30-50 years, as were its cities, so one cannot say that the problem is either that they were built on the cheap in the neolithic era, or that they were built before cars. Further, housing in Japan is absolutely shit, so there is a lot of energy usage for that housing.

It seems to me that a lot of the problems some claim are problems of history or geography are actually more amenable to solutions than you let on. I’m sure that the US Eastern seaboard would be amenable to mass transit systems, for example. And I suspect a large part of the efficiency of Japan’s transport system is not, in fact, because of the size of the cars (and their size is not an accident either, is it?) but because of the speed limits.

I can see your point about climate and distance, but I think you are playing fast and loose with your definition of a historical or geographical cause.

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abb1 04.15.08 at 8:17 am

Too bad the Znamya project got canceled…

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reason 04.15.08 at 10:35 am

Most forms renewable sources are more expensive than fossil fuel sources – if you don’t count externalities. So on the face of them a switch to renewables would tend to decrease GDP slightly.

I wonder if people really understand what “more expensive” actually means here. Investment is included in GNP but intermediate goods aren’t. Moving from using fossil fuels (an intermediate good) to investing in machinery to utilise some form of renewal energy resource will actually increase measured GNP. One man’s cost is another man’s income. Looking at cost as an input to one single production process can be misleading as to the total impact. (And remember we are assuming here that an increase in cost of providing energy will have an opportunity cost somewhere else in the system, because we start by assuming full employment.) As others have pointed out, GNP is not a good welfare measure – removing negative externalities is actually a welfare plus.

The public-good nature of information explains how economic progress can continue without additional resources.

If information is a public good, why do we seem to be so keen to use it as a basis for distributing rents?

I’m not so convinced, by the way, that information is not subject to diminishing returns. The ability of humans to handle the information is limited.

I think the apparently exponential growth we have seen (and the rate does always eventually decline) is a sum of hysteresis curves and can be maintained only by expanding new markets on the up slope (pre-saturation). Eventually everything will look flat at best.

As for the distance accounts for the high energy use argument, I want to see somebody prove it (especially for the US which is fairly populous – unlike say Canada and Australia). Most journeys are local, and there is plenty of international travel within Europe (even if more of it is pleasure rather than business). I don’t see a good reason for average journeys to be (much)longer in the US than in Europe. Keeping houses at a reasonable tempature is of course another issue, but here surely the technical possibilities for improvement in the US (through better housing) are enormous.

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Slocum 04.15.08 at 12:13 pm

Slocum, I would like to see your comparison of US energy usage with Japan.

For starters, Japan has a very high level of population density (a bit lower than the Netherlands, but higher than the U.K.) — 11 times higher than the U.S. Japan may have recently constructed transport infrastructure, but it is infrastructure designed for a densely populated country. Also, like Europe, Japan lacks petroleum reserves (you may recall this being a particularly sticky problem a few decades back) and, as a result, has European-level fuel taxes. I wasn’t able to google-up anything for Japanese heating and cooling costs.

I don’t see a good reason for average journeys to be (much)longer in the US than in Europe.

Density affects local travel as a well as inter-city travel. Because population densities are much lower, land is plentiful and cheap. Those factors, combined with low gas taxes have made it possible for people to spread out, and that is what has happened.

This looks pretty interesting on the topic of city area and energy use — sounds like there are a few unresolved questions:

http://findarticles.com/p/articles/mi_qa3927/is_200406/ai_n9436743

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SG 04.15.08 at 1:52 pm

So fuel taxes, right, Slocum? These aren’t historical inevitabilities. People control them. The US made a choice to design low-density cities dependent on imported fuel, the Japanese didn’t. As a consequence Japan is mostly forest, with cheap and clean public transport and a massive, efficient manufacturing base. Why can’t the US make that choice?

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Gar W. Lipow 04.15.08 at 6:14 pm

>But—there’s always a “but”—there’s a lot to unpack in that sentence. Smarter (IMO anyway) to keep a clean distinction between the questions of GDP and welfare…

Yeah, I was guilty of excessive conciseness – not my usual vice. OK, under what circumstances can a rich nation decrease GDP and increase social welfare? I’d argue greatly increased economic equality, a shift of some individual consumption to social consumption, and increased leisure.

I don’t think anyone would argue that these things alone would decrease resource use to a sustainable level. But there would be some significant benefits in that direction, and the political context in which such a change was possible would also be the political context in which other actions to reduce externalities would be greater.

But if you do all that, decrease inequality, shift some individual consumption to social consumption, increase leisure, then start decreasing externalities as well via increased water and energy efficiency, and substitution of clean energy for fossil fuels, then you have a situation where increased consumption may really increase welfare. (And it is really unfortunate that typo in the post you are responding to left out the word “may”.)

In such a case where increasing GDP really has a good shot of increasing social welfare, it is really important to be able to disconnect increases in GDP from increases in use of natural sources and sinks, to generally be able to disconnect GDP increases from negative impacts on the fragile ecosystems upon which we all depend.

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abb1 04.15.08 at 7:16 pm

I’m all for greatly increased economic equality, but intuitively it seems that it’s likely to have the effect of increasing the GDP. More consumption.

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Gar W. Lipow 04.15.08 at 7:56 pm

>I’m all for greatly increased economic equality, but intuitively it seems that it’s likely to have the effect of increasing the GDP. More consumption.

Hmm not arguing that increasing equality automatically decreases GDP – in fact I agree that on its own it is likely to increase it. (Though that is a net effect. if you transfer wealth from someone with their own fleet of private jets to someone who does not get enough to eat, there may well be some decreases going on.) The point is that if you want to decrease GDP and increase human welfare, increase economic equality has to be a big part of it. You can have a deliberate policy, (handwaving away political feasibility for the sake of discussion) that would increase equality and decrease GDP and increase human welfare. Increasing leisure, trading less stuff for more time, and then making sure there was enough equality so nobody had too little stuff to live on or be in a really awful positional position via neighbors would be part of that. Incidentally shifting some consumption from individual to social consumption would tend to both save resources and increase human welfare. In terms of the former: Amway product use up a lot more resource per dollar of GDP than education. In terms of the latter: My view here is very USAcentric, and just about every survey shows that USAians want more spent on education and healthcare – even if it required increases in their own taxes. That is really good proxy for intensity of support . If people favor raising their own taxes to provide something, they strongly support.

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Slocum 04.15.08 at 9:40 pm

sg: So fuel taxes, right, Slocum? These aren’t historical inevitabilities. People control them. The US made a choice to design low-density cities dependent on imported fuel, the Japanese didn’t. As a consequence Japan is mostly forest, with cheap and clean public transport and a massive, efficient manufacturing base. Why can’t the US make that choice?

The Japanese and Europeans chose high fuel taxes because they have to import all of their oil — and they’ve had dense, compact cities since long before the automobile. Compact cities did not result from high fuel taxes, nor were high fuel taxes a choice based on farsighted thinking about housing patterns or the environment.

Obviously the U.S. can move to higher fuel taxes (and will, I expect), but the built environment takes a long time (decades) and a lot of money to change. And there’s obviously nothing that can be done to reduce the distances between New York, Los Angeles, Chicago, and Seattle.

Higher fuel taxes will probably stop and reverse the trend toward greater sprawl, but I expect that a lot of the adjustments won’t actually involve packing back into apartments in the city and riding the bus. Switch from an Explorer to a Prius and cut the fuel cost of commuting by 60%. Car pool with just one other person and cut it in half again. Or telecommute and cut it to zero. These kinds of adjustments are far more feasible and likely than a wholesale switchover to European or Japanese housing patterns.

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SG 04.16.08 at 12:06 am

Slocum, I don’t know if you know this, but Japanese gasoline prices are almost exactly the same as Australian. Australia also has to import a lot of its oil, but it has low-density cities.

All major Japanese cities had to be rebuilt after the war, and in at least 3 cases “rebuilt” means “built”. So they could have made different decisions. In fact, one of the worst cities to move around in Japan is Kyoto, one of the few unbombed ones. Earlier you argued that American cities were built in many cases in the era of the automobile, and so have high energy use. But this applies for Australian and Japanese cities too, and probably for a lot of rebuilt German cities. While your comments about the cost of adjustment may be partially true, the idea that the current situation in the US was historically unavoidable is giving a free pass to stupid decisions.

It’s worth bearing in mind that there are other benefits to the type of cities the Japanese and Europeans live in. Japanese apartments are much cheaper to rent than Australian apartments for example, it is much more feasible to live alone in Japan, and there is no competition for apartments for ordinary people like me. Also commuting is much more pleasant here than in Australia, and Japanese people experience the ultimate “democractic” means of travel – they can go almost anywhere in their own cities by bicycle. The shift to high-density housing is not necessarily a reduction in the standard of living, and in the long term it is well worth a large expense. It was the visionary decision of the Japanese to invest in the Shinkansen in the 70s which made travel here so easy, and I think it’s time Australia and the US started thinking the same way.

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Slocum 04.16.08 at 1:17 pm

sg: Slocum, I don’t know if you know this, but Japanese gasoline prices are almost exactly the same as Australian. Australia also has to import a lot of its oil, but it has low-density cities.

Which would be an indication that gas prices are a less powerful determinant than population density. If Australian gas prices have historically been on par with those in Europe and Japan, but city density is on par with the U.S., then that suggests that the most important factor is available land. Perhaps it’s the case that where people could spread out, they did — where they couldn’t, they didn’t and that gas prices weren’t high enough anywhere to change that much.

Earlier you argued that American cities were built in many cases in the era of the automobile, and so have high energy use. But this applies for Australian and Japanese cities too.

But Japanese cities were constrained by land scarcity whereas U.S. and Australian ones were not. So U.S. and Australian cities are sprawling and energy intensive (at present, anyway).

While your comments about the cost of adjustment may be partially true, the idea that the current situation in the US was historically unavoidable is giving a free pass to stupid decisions.

For the most part, there were no high-level ‘decisions’ (smart or stupid) that determined the course of development in the countries we’ve been discussing — the characteristics of the built environment emerged from local conditions (land costs, fuel and vehicle costs, affluence, congestion, etc). And to the extent that top-down planning decisions were involved, they certainly were not motivated by concerns of greenhouse gas emissions, but by minimizing oil imports or preserving farms (as in the U.K. and Japan). There was no top-down decision in the U.S. to have sprawl–people voted with their feet and wallets. It’s not even accurate to say that the U.S. had a ‘cheap gas’ policy; the U.S. has had a neutral policy — neither subsidized (as in many oil-producing countries) nor taxed (except for the purposes of building and maintaining highways).

It was the visionary decision of the Japanese to invest in the Shinkansen in the 70s which made travel here so easy, and I think it’s time Australia and the US started thinking the same way.

Travel is easy in Japan? Don’t the Japanese have the longest commute times in the industrialized world?

http://www.japan-guide.com/topic/0011.html

In any case, what is appropriate for a small, densely populated nation like Japan is not going to work equally well in sparse countries the size of the U.S., Australia, and Canada. If people would prefer to keep living in detached suburban houses, but want to invest in insulation, high-efficiency heating, and drive to work in vehicles like this:

http://www.aptera.com/

Why not? Going exactly where you want to go, when you want to go in privacy and comfort is a great thing (and mass-transit has it’s own energy inefficiencies — e.g. mostly empty buses during non-peak hours, for example).

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SG 04.16.08 at 1:59 pm

I agree with your last paragraphs, Slocum, but I don’t think the explanation is entirely down to the local conditions determining the economic results. If this were true, Australia would not have the crazy water policy it does, and Japan and the UK would be more profligate with water than they are. And if it’s land scarcity which determines these things, why is it that the Japanese have such fuel-efficient vehicles? They drive very short distances in small cities, with gas prices similar to Australia, but their cars are much lighter on the gas when it is only a tiny portion of the cost of the car. While it may be true that some of these things are due to just people voting with their feet and their wallets, in many ways this does represent a stupid decision – we have known for a long time now that these problems are coming and the majority of us have done nothing about them. Oil has been an issue since the 70s, after all, so someone has to be to blame for our continuing dependence on it. And it is not the case that people in our countries invest in the energy-saving technologies you suggest, and drive efficient vehicles – this is a large part of our concern here, isn’t it? Something needs to intervene to make us. I think in the past that something has been at least partly cultural, and at least partly the result of big social decisions, made in the era of the car and rapid population growth.

(I would suspect too that the reason Japanese people have the longest commute times is that their public transport system enables them to live far from work. I know a guy who lives in Matsue and commutes to Hiroshima to give seminars; and a woman who lives in Kyoto with her parents and commutes to Osaka every day to work. Travel really is easy here, unbelievably compared to Australia).

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Slocum 04.16.08 at 6:59 pm

While it may be true that some of these things are due to just people voting with their feet and their wallets, in many ways this does represent a stupid decision – we have known for a long time now that these problems are coming and the majority of us have done nothing about them.

But the fears in the 1970s were that fossil fuels were going to run out soon. Now the fear is that they won’t run out and, as a result, we’ll keep pumping CO2 into the atmosphere.

And it is not the case that people in our countries invest in the energy-saving technologies you suggest, and drive efficient vehicles – this is a large part of our concern here, isn’t it?

But they will — when the price gets high enough, they will. Actually, it’s already happening. Investments in alternative energy technologies are booming. And higher gas prices are having a very noticeable effect in the U.S. already — SUV and pickup truck sales have dropped while sales of fuel-efficient cars are growing:

http://publications.mediapost.com/index.cfm?fuseaction=Articles.showArticleHomePage&art_aid=79733

Meanwhile, GM’s highest highest priority project is the Volt:

http://www.msnbc.msn.com/id/23982378/

Something needs to intervene to make us.

Yes–higher prices.

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SG 04.16.08 at 11:51 pm

but CO2 doesn’t cause those higher prices – at least not through a mechanism we want to wait for. Someone needs to force those higher prices. Which is exactly what someone hasn’t been doing for a long time. Hence the stupid decisions.

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virgil xenophon 04.17.08 at 9:42 am

Ah yes, “someone” has to “force” higher prices. I
wonder exactly “who” that “someone” will be–and what will be the mechanism to determine the “who.” And “who” will run said mechanism and how will “they” be chosen? “Scratch a Russian and you’ll find a Tartar” is an old saying. An updated take on this aphorism might be: “Scratch a ‘prog- ressive’ and you’ll find a potential Robespierre.” Its not for nothing that our friendly Frenchman named HIS mechanism “The Committee on PUBLIC Safety.” Anything for the good of the great plebeian unwashed. If only they didn’t make such “stupid” decisions. Sigh. If only they could get over their “false consciousness.” (Gee… where have I heard THAT phrase before?)

As one former Supreme Court Justice once said: “The essence of democracy is that if the majority is determined to go to hell in a hand-basket you’ve got to stand back and let em.” Anybody ever
heard of better public education? Don’t you people here trust the products of your own system? O Ye
of little faith.

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SG 04.17.08 at 10:51 am

well virgil, feel free to explain how global warming is going to force up the price of CO2 by itself. What mechanism do you envisage which will just cause prices to rise through the action of market forces?

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