Tuesday, April 03, 2007

Climate Science and The Politics of Economic Growth

by John Buell in the Bangor Daily News


The politics of global warming is a telling and consequential instance of economic power corrupting political judgment.

The latest Intergovernmental Panel on Climate Change report, which adds further support for the relationship of greenhouse gases to global climate change, has provoked an odd reaction among many business leaders. Even some who have long denied any connection between hydrocarbons and global warming now concede the link, but they take a new tack. They claim that any serious attempt to slow the pace of global warming will do serious damage to the national economy. They can reach this conclusion because they equate their short-term bottom line with “the economy,” and surprisingly many in the media follow them in this judgment.

Oil industry defenders portray leading climate scientists as hell bent to place draconian curbs on the U.S. economy. Yet prominent climate scientists are, if anything, too restrained in their pronouncements. Even the most conservative introductory economics texts, like that by former chairman of Bush’s Council of Economic Advisers Gregory Mankiw, recognize that markets have imperfections. When the purchase and use of a commodity harms third parties, government has an appropriate role in taxing and thus discouraging consumption of that commodity. In the world of economic textbooks, a neutral and informed government calculates the extent of the damage and enacts an appropriate tax.

Yet in our contemporary corporate economy, oil, auto, and private utility interests have enormous market power, which they eagerly translate into political power. They already enjoy vast favors in the forms of subsidized leases, government supported highways and emergency services, and lower tax rates. A tax on gas that reflected not only carbon content but much of our military cost as well as air pollution, congestion, and highway accidents would substantially impact several key corporations. Nonetheless, is their welfare synonymous with “the economy?”

Tax and regulatory policy in the late eighties and nineties led to major gains in energy efficiency and if anything were very beneficial to overall economic development. James Hansen, one of the mad scientists most reviled by leading oil companies, has put this case in language that reads as though it came straight out of market economics 101: “The U.S. is still only half as efficient in its use of energy as Western Europe, i.e., the U.S. emits twice as much CO2 to produce a unit of GNP, partly because Europe encourages efficiency by fossil fuel taxes. Available technologies would allow great improvement of energy efficiency, even in Europe. Economists agree that the potential could be achieved most effectively by a tax on carbon emissions… The tax could be revenue-neutral … leaving government revenue unchanged; and it should be introduced gradually. The consumer who makes a special effort to save energy could gain, benefiting from the tax credit or decrease while buying less fuel; the well-to-do consumer who insisted on having three Hummers would pay for his own excesses.”

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