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"Worst of Both Worlds":

Robert Samuelson joins the ranks of those unimpressed with the analysis presented by the Stern Review.

Stern's headlined conclusions are intellectual fictions. They're essentially fabrications to justify an aggressive anti-global-warming agenda. The danger of that is we'd end up with the worst of both worlds: a program that harms the economy without much cutting of greenhouse gases.

Let me throw some messy realities onto Stern's tidy picture. In the global-warming debate, there's a big gap between public rhetoric (which verges on hysteria) and public behavior (which indicates indifference). People say they're worried but don't act that way.

Even many nations that signed on to binding targets under the Kyoto Protocol have failed to make signficiant progress in curtailing their emissions. Samuelson offers three reasons for this:

1) "With today's technologies, we don't know how to cut greenhouse gases in politically and economically acceptable ways."

2) "In rich democracies, policies that might curb greenhouse gases require politicians and the public to act in exceptionally "enlightened" (read: "unrealistic") ways."

3) "Even if rich countries cut emissions, it won't make much difference unless poor countries do likewise—and so far, they've refused because that might jeopardize their economic growth and poverty-reduction efforts."

What then are we to do? Samuelson calls for "more candor" and a greater focus on technology.

Unless we develop cost-effective technologies that break the link between carbon-dioxide emissions and energy use, we can't do much. Anyone serious about global warming must focus on technology—and not just assume it. Otherwise, our practical choices are all bad: costly mandates and controls that harm the economy; or costly mandates and controls that barely affect greenhouse gases. Or, possibly, both.

The problem of generating enough energy to meet the world's future energy needs in an environmentally acceptable manner is a real problem. And, as Ron Bailey points out, one that will not be easily solved. One thing we should resist, however, is a naive faith that government mandarins can guide our way to a "clean" energy future. The history of federal efforts to spur technological advance is totally uninspiring. As Bailey concludes:

history teaches us to scrap the Apollo Project model for technology R&D. Federal bureaucrats are simply not smart enough to pick winning energy technologies. Instead, eliminate all energy subsidies, set a price for carbon, and then let tens of thousands of energy researchers and entrepreneurs develop and test various new technologies in the market. No one knows now how humanity will fuel the 21st century, but Apollo and Manhattan Project-style Federal energy research projects will prove to be a huge waste of time, money and talent.

The problem with this, however, is that there are sizable constituencies for Apollo-style federal spending programs, and a much smaller constituency for sound public policy.

Anderson (mail) (www):
I cheerfully don't know what to think of the Stern Review, but Robert "Hack!" Samuelson would be one of the last people to influence my thinking about it.

I guess by the time I've got grandkids, we'll know.
11.28.2006 9:11am
jvarisco (www):
I have not read the Stern report, but surely his reasons are nonsensical. If you look at the way the carbon-sharing scheme the EU is currently trying out is meant to work, it eliminates all three pretty easily. Allowing companies to buy credits - similar to a tax on carbon - while allowing them to buy/sell credits to others both raises revenue (from the buying in the first place) and cuts gases efficiently. Moreover, companies in rich countries are also permitted to buy credits from developing countries if they work to reduce emissions, thus resulting in private subsidy of their efforts (British companies, rather than curbing emissions themselves, can pay African companies/states to do so).
11.28.2006 10:07am
David Krinsky (mail):
It is strange to see the Apollo Project used as an example of what not to do.

Reasonable minds can differ as to whether Apollo was worth the cost or whether Apollo is the sort of endeavor that governments should engage in. Reasonable minds can also differ about the extent to which Apollo had positive collateral effects on American technological development; for example, I would argue that it was far more important than Bailey admits to the dawn of the computer age.

But those reasonable minds should not forget that Apollo succeeded in its goal: "before this decade is out . . . landing a man on the Moon and returning him safely to Earth."
11.28.2006 10:12am
Jonathan H. Adler (mail) (www):
jvarisco --

Thus far, the EU's carbon-trading scheme has not operated as planned. For a variety of reasons (some political, some economic) it has not produced the efficiencies many had hoped, most of Europe is falling behind in meeting Kyoto's targets, and it looks like few European nations are willing (as of yet) to adopt costly measures to fix these flaws.

JHA
11.28.2006 10:13am
jvarisco (www):
Yeah, I know it's not working right now. But it has the potential to work, unless one adopts the view that governments will never decide to implement it. Which then creates the question of why they went to all the trouble in the first place. My point was that there are efficient ways to reduce emissions rather than direct government regulation; it's possible to create economic incentives that work.
11.28.2006 10:58am
Andy Freeman (mail):
> Which then creates the question of why they went to all the trouble in the first place.

It's not often that you find someone who believes that govts are consistent over time.
11.28.2006 11:02am
Andy Freeman (mail):
It's important to remember that the first job of every govt is to stay in power. If they don't do that job, they can't do anything else.
11.28.2006 11:03am
jimboinsk1:
A direct consequnce of the Manhattan Project is the answer to CO2 emissions... Nuclear Power. It is just that unreasonable fear has casued THE one currently available solution to be so vilified that the public (and many global warming advocates) don't get it.
People who take the time to understand nuclear power know the risks, and compared to going for a ride in your gas powered car, they are trivial (both from an environmental and a personal safety standpoint).
11.28.2006 11:11am
Mark Field (mail):

Nuclear Power. It is just that unreasonable fear has casued THE one currently available solution to be so vilified that the public (and many global warming advocates) don't get it.
People who take the time to understand nuclear power know the risks, and compared to going for a ride in your gas powered car, they are trivial (both from an environmental and a personal safety standpoint).


Gee, since it's so wonderful, I guess Administration policy would encourage all nations to build more plants right away. Starting with, say, Iran.
11.28.2006 11:57am
Byomtov (mail):
The history of federal efforts to spur technological advance is totally uninspiring.

Yeah. Radar, transistors, nuclear power, the Internet, countless advances in medicine and other fields stimulated by government funded research , etc.

Uninspiring.
11.28.2006 12:05pm
J. F. Thomas (mail):
The history of federal efforts to spur technological advance is totally uninspiring.

Huh?! This has got to be the most stupid, anti-historical ignorant statement that has ever come out of a ideologically blind libertarian that I have ever heard. You just make statements that have absolutely no basis in fact and expect us to swallow us as though they are indisputable.

How about the atomic bomb and nuclear power? In three and half years we went from an unproven theory to a working weapon (not to mention the delivery system). That was probably the most staggering achievement in the history of mankind--completely funded, and kept secret by the U.S. government.

Then there is the early history of computers. Private industry was so uninterested in them the military undertook the task of writing the first practical business oriented programming language.

And that crazy man Kennedy said we were going to the moon within nine years, and the promise was kept, when we couldn't even get our rockets off the launch pad.

Except for the skyscraper, I doubt you can name a civil engineering advance that wasn't at least partially funded by a Federal or national government somewhere. Heck, cement was invented by the Romans, lost to mankind and was rediscovered until the 19th century.

And how about civil aviation? Without military aviation, it would be nothing but a plaything of the ultra rich. Again, jet engines were invented for military use.

And if you just want to focus on energy, ponder this. Europeans, with a similar income, use 25% less energy than us on a per capita basis. That is because of conscious decisions they made about land use, public transportation, taxation of fuel, and a whole bunch of other policy decisions that encourage efficient use of resources. To say we can't positively influence technology through government action is just ridiculous.
11.28.2006 12:20pm
Anderson (mail) (www):
How about the atomic bomb and nuclear power? In three and half years we went from an unproven theory to a working weapon (not to mention the delivery system).

Yes, but the private sector would've had it built in *3* years, and then marketed it all over the world! As compared to its taking 60 years for countries like Pakistan and Iran to finally get the Bomb!
11.28.2006 2:03pm
srp (mail):
Actually, the record of non-military technology development by government isn't very good. See Carter's synthetic fuels program for a typical example. The problem isn't that projects fail. Business tech projects fail, too. The problem is that projects fail for reasons specific to their public provenance--pork barrelling, rent seeking, image mongering, etc.

When there is an urgent military need (or a quasi-military propaganda objective like Apollo), then it is possible to maintain discipline on objectives and timelines and get things to work. Absent such conditions, government-directed applied tech projects tend to trip up on the usual pathologies of the public sector. (Note that this has little to do with basic research.)

Business-based applied tech projects fail all the time, but they tend to do so more quickly and with less waste, because of competition for the resources they consume and because of the incentives of their funders. When you get a situation where a tech project in business gets separated from these pressures, bad things can happen in ways very similar to what goes on in public projects.
11.28.2006 4:02pm
Alaska Jack (mail):

Moreover, companies in rich countries are also permitted to buy credits from developing countries if they work to reduce emissions, thus resulting in private subsidy of their efforts (British companies, rather than curbing emissions themselves, can pay African companies/states to do so).


Isn't this one of the criticisms of Kyoto? That it's just a thinly disguised wealth-transfer scheme?

- Alaska Jack
11.28.2006 4:41pm
Tom952 (mail):
It makes no difference if Europe and the US become more efficient. No one is going to stop the Chinese and Indians from having lots of cars and building electricity-generating plants. All the oil that can be produced will be burned unless someone comes up with an acceptable alternative technology.
11.28.2006 4:42pm
albarello (mail) (www):
Actually, the record of non-military technology development by government isn't very good.

Whoosh! That sound you heard was the goalposts being moved sideways. Libertarians are the people who tell you we need government only to provide the framework through which contracts can be enforced and to defend borders. That means a vital branch of the state is the one dealing with coercion and legitimate force. If in the pursuit of these tasks it has beneficial side-effects like technological innovation (see numerous examples above) then that's what happens. You don't get to rule them out as irrelevant.

Moreover, something like the Apollo project is somewhat unusual in that it had a well-defined goal that the technological developments were all in the service of that goal, more or less. The most interesting cases are where the apparent goal (the "urgent military need" as you say) gives rise to genuine innovation -- i.e., unforseen discoveries with unexpected benefits.

because of competition for the resources they consume and because of the incentives of their funders. When you get a situation where a tech project in business gets separated from these pressures, bad things can happen

I wouldn't disagree for common-or-garden innovations, but again many of the most successful R&D shops in the private sector (the ones that produced game-changing innovations) worked specifically because they could insulate themselves from these market pressures, whether by heavily buffering them within the organization (e.g., Bell Labs, or IBM's research division) or by initially grounding themselves in a commons-based hobby culture (e.g., early software/computing startups in the 70s). Just look what happened to innovation at Bell Labs when it was exposed to market discipline as Lucent Technologies.
11.28.2006 6:43pm
David M. Nieporent (www):
And if you just want to focus on energy, ponder this. Europeans, with a similar income, use 25% less energy than us on a per capita basis.
But they don't have a similar income. They have a significantly smaller income. (I don't mean to exaggerate; it's a lot closer to us than to, say, Africa. But there's a significant gap there.) And let's not forget that Europeans live in a more compact space -- no, I don't mean land use decisions; I mean Europe itself is smaller and more densely packed, which reduces transportation costs, including energy.
11.28.2006 6:54pm
M. Simon (mail) (www):
There is a technology on the horizon that just might make cheap nuclear fusion possible. Also nuclear rocket engines. Earth to Mars in 33 days.

Easy Low Cost No Radiation Fusion.

Unfortunately the government has suppressed this technology for reasons of politics. Look at the video at the above link to find out why. The guy who gives the talk was once Deputy Director of the AEC.
11.28.2006 8:18pm
M. Simon (mail) (www):
BTW if the whole world went nuclear we would have a problem similar to the oil problem.

Not enough uranium.

The technology mentioned in the above link could use Boron as its fuel. There is lots of boron in the world and therefor it is cheap. Using it as an energy source would have a very small effect on supply and demand.
11.28.2006 8:25pm
TokyoTom (mail):
Jonathan, I agree with your conclusions about the likelihood that we are going to get Congress serving up a whole lot of pork on this if we are not careful, and Bailey's conclusion that setting a price for carbon, either through permits or taxes, is essential.

What is puzzling is that you can't see the flaw in Samuelsons's logic, or the reasons why the EU ETS program is struggling. Isn't this rather obvious - in the context of a global commons no government has an incentive to really stick it to its own citizens/firms when others like the US are thumbing their noses at collective action. Rather, it's in the incentive for everyone to drag their heels until common rules applicable to the chief grazers can be agreed and enforced. The US needs to join, and to bring China, India and a few others along. It seems like Samuelson is very unfamiliar with the incentive problems that make solutions to open-access resources difficult.

The Stern reports should be seen as part of the jockeying between nations (and domestically) for the purposes of getting the US on board. Those in the UK and EU feel the need to gird their loins, and to let the US know they are doing so. In part, it is also an appeal to citizens in the US to push US policy makers towars constructive engagement.
11.29.2006 2:55am
srp (mail):
I don't know what goalposts albarello thinks are being shifted. The post was about civilian applied energy technology development. The record of public R&D in areas of this kind is quite poor. It doesn't matter if you're a libertarian or not. Heck, read Richard Nelson, our leading guy on national innovation systems and not exactly a lover of laissez-faire. He'll tell you basically the same thing, only with more judicious academic language.

I have no problem in principle with the government performing (or paying for) tech development necessary to its legitimate functions. The military is the leading example, of course, and any spinoffs that come from that are all to the good. Yea ARPA!

The point about Bell Labs proves the point I tried to make earlier. Bell Labs did great basic research but generated surprisingly little in the way of advanced technology development. Basic research often does work best in a "playing around" mode, and public vs. private sources of funding don't seem to matter much there (modulo political interference with unpopular stuff and private attempts to hype results). But applied technology innovation is a whole other thing, and the civilian public sector is really bad at it. Look at the national labs and read all the things the "competitiveness" people said about them back in the 1980s and early 1990s when we were running in fear of Japan.
11.29.2006 7:58pm
Riskable (mail) (www):
The world can easily be powered by wind and solar energy. It is even economical. The problem is getting from point A to point B. When you have an enormous oil-and-coal infrastructure in place you can't switch over night. It also doesn't help that oil and coal special interests have sway over many of our politicians and that companies such as Exxon-Mobil actively market anti-global warming propaganda (presumably because it helps their bottom line).

We can and will switch over to renewables and it will happen a lot faster than you think. It will go even quicker if our politicians help out, but it might be best if they start small. Perhaps ending oil and coal subsidies would be a good start.

The problem of global warming seems nearly insurmountable because it requires changes in almost every business sector and every aspect of life. It can happen, but it must go in small steps. A government contract here, a subsidy there, small taxes on non-renewable goods, tax relief for citizens who invest in renewables, raising CAFE standards, etc. There's literally thousands of things the government can do to help out and they will help the economy more they they will hurt it.

Trillions of our dollars are exported to foreign countries for the purchase of oil. The whole point of renewables and the "green revolution" is to buy local, buy organic, and more importantly, buy buy buy environmentally-friendly goods! That is going to need some serious in-U.S. manufacturing and that means more jobs, a more stable economy, and a stronger dollar.

-Riskable
http://riskable.com
"If you elect leaders that act irresponsibly towards nature, you'll find that irresponsibility is the nature of your leaders."
11.29.2006 10:57pm