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All of these accept the premise that future damages from anthropogenic warming will be serious, i find this to be a useful discussion strategy:

  1. Climate change will cause massive heat and drought and leave people in need of food. OK, compare then, the most effective and optimistic scenarios for reducing CO2 emissions and preventing warming (and their costs) with simply reducing global agricultural tariffs and quotas, reducing agricultural subsidies, and freeing up the regulatory process?
  2. Sea level rise and natural disasters will put many people in harms’ way. OK, compare then, the most effective and optimistic scenarios for reducing CO2 emissions and preventing warming (and their costs) with reducing subsidies for living in high-risk areas and for allowing population to migrate slowly to higher ground as the “at -risk” capital stock depreciates.
  3. The heat from the planet will be a drag on productivity. OK, compare then, the most effective and optimistic scenarios for reducing CO2 emissions and preventing warming (and their costs) with an evolution of production patterns, ala Signapore, to adjust to warmer temperatures?
  4. Poor nations will suffer disproportionately from climate damages. OK, compare then, the most effective and optimistic scenarios for reducing CO2 emissions and preventing warming (and their costs) with an improved political system in those poor nations, and a reduction in barriers to international migration. Remember that some estimates suggest that the average well being of a poor person can increase by as much as a factor of 20 if we allow them to migrate to capital-rich and “institution-rich” areas of the world.

As any good economist can tell you, the “solution” (i.e. tradeoff) to any social cost problem does not necessarily imply that social costs are eliminated, or that the thing producing the social cost be stopped. It is fabulously incredible to watch 40,000 people at a Climate Conference and untold thousands reporting on it (including economists) simply ignore or miss that most elemental point that any Environmental Economics student learns in the first week of classes. For an analogy, think of other costs of production, such as electricity costs and labor costs. Surely having to pay these costs are “regrettable” but does a solution to a production problem entail eliminating 100% of our workers and 100% of our energy?

One Response to “Climate Questions That Are Rarely Asked – or Should Firms Fire 100% of Their Workers?”

  1. jb says:

    Spot on WC. By the way, I don’t recall any global warming enthusiasts wailing and crying when the powers that be decided to subsidize the rebuilding of New Orleans or the Jersey shore. …Crickets…

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