Economics of the Paris Agreement on Climate Change | Robert P. Murphy

looks like a lot of people must be sitting in on the judges opening targeting that's going on right now it's kind of unfair because last night he told you guys that some of your going to die in the public square so I think a lot of people are like tell me more I'm curious see Paris agreement or learning how I'm going to die let me think although ironically many you know interventionists would say this is how you're going to die so it's actually I'm going to be doing telling you how you're not going to die put it that way so let me just sort of frame this for you know where I'm coming from here in the because I do a lot of work for what's called the Institute for energy research and it's a free-market think tank that spent a lot specialize in energy issues if you want to see more on this stuff just email me and I'll send you a bunch of links and so a lot of what I'm going to do here is just let me back up a minute when I started working in this area of climate change economics I sort of had this idea based on the rhetoric that I was hearing from you know the the interventionist side the one that thought governments needed to take aggressive action to limit the emission of greenhouse gases and that you know they like to use managers like the science is settled and don't be a science denier you know it sort of sounds like Holocaust denier and that sort of thing so I sort of had this idea that oh I was going to go into this debate and I would have to you know oh yeah I'm sure although you know the mainstream science would would justify all of these really aggressive government policies that people were pushing in the name of so-called science and then I was going to have to go find like knows a guy like Richard Lindsay at MIT who was what's called a skeptic and so on and that's what I thought I was going to be doing and it turned out that that's actually not what I've end up doing in terms of the my sort of day job as it were in this in this field it's just people will say oh this is what we should do and I'll go read the reports issued like by the Obama administration working group on this area or I'll read the UN's periodic reports from the IPCC that stands for Intergovernmental Panel on Climate Change in low and behold I found wait a minute no their own reports don't justify the policies that the people in charge of these programs are saying oh we have to do X Y & Z or the government should do X Y & Z because of the science and you find out know what they're telling you in their own reports as the doesn't justify what they're saying so I'm going to spend maybe like the first let's say three forces just explaining that situations you just you can see how crazy this whole thing how Orwellian it is and then at the end though I will sort of say okay what what's a specifically Austrian take on these matters alright so that's the the framework here we'll go over let me just mention this is the first time I've talked to you guys in this capacity for this week let me just I've noticed this in previous Mises you and it's happening here as well so let me just mention something I see people they'll go up to somebody and have a book and be like would you mind autographing that is if somebody you know is going to say oh I'm so sick of the paparazzi just five trainer trying to teach economic we're not cool guys all right this is like the one week of the year where we're special so don't be at all afraid of coming up and saying can I take a picture with you or can you sign this that's fine all right we we were supportive we like reading economics and stuff do you think we were the cool kids in high school we weren't Peter Klein thought he was but he wasn't alright so another thing just to read this emphasize how cool the Mises Institute is this is a true story so I was the the bellhop or whatever you look at the kid that in the hotel who takes your luggage in and so on he was helping me load up my stuff you know I had a bunch of hangers and stuff for the for the clothes and he was helping me load that and bring it to the room he's asking me what I'm doing cuz I have suits and things what are you a business person so I said oh I'm here for this conference and he's all I study economics and it's really hard and so I'm trying to get him to you know start getting into Austrian economics like oh well you're in town he's not aa Bern student he went to a different school but he's around he works at the hotel so I would say well you know they're kind of busy this week with the conference but yeah you should check out what the Mises Institute does and I was trying to explain where it was and I said well it's on Magnolia and he's and I said oh well it's you know it's next to mama Goldberg's you know that he knew that and I said what's the building right next door and then I realized I had the great I said it's the building next to mama Goldberg's that looks like the x-men mansion and he was like oh I know exactly what you're talking about so just think I mean I think that's a good analogy and since we're going down that path you know somebody associated the me sense to somebody associated with the x-men mansion I'm look I'm not sitting on Wolverine I'm just saying if one of us were Wolverine it would clearly be me that's all I'm saying all right I'll move on now okay so what is the Paris agreement just to make sure we know what the the context is here so I'm June 1st of this year president Trump announced that he was withdrawing the United States from the Paris climate agreement on the next day people began freaking out okay and actually was that day but in terms of the print things you know coming out in newspapers and stuff it's just you know in case you think I'm exaggerating setting up a straw man you cannot believe what people were saying just to give you one example so Stephen Hawking the physicist said Trump pulling out of Paris agreement could push earth over the brink in other interviews he said because Donald Trump did this earth might turn into Venus alright and in terms of the oh the heat and so forth his engagement on Venus is hotter than Earth typically right so that is uh you know pretty over the top right although having said that I should mention that a few years ago Stephen Hawking also warned that artificial intelligence could end mankind right so guys kind of a buzzkill all around but anyway is when you say that this I grab and just to give you a specific it was pretty provocative but I'm saying though the rhetoric you were hearing from people like oh my gosh are you know it people were almost saying things like our grandkids are going to be underwater now because of what Trump did all right I'm just exaggerating a slight bit things like geez Trump even has children you would think he would not you know taking these measures that would ruin the fate of future generations and so not just hey I disagree I think this is a bad move no it was literally what Trump is doing now in parallels humanity itself all right and so that's what I want to say there's so many things wrong with that sort of reaction it's comical okay so let me just spend some time explain to you just how crazy this is because again the the terms of this climate change debate that Americans are hearing I'm sure it's probably similar in other countries for those of you who are from other countries but I can't speak to that with authority where is here they mean I've been working in this field for a while in terms of the context of US political in terms of the economics of climate change and it is just stunning to me how far removed from reality of these debates are and then when the people who are for intervention just keep wagging their fingers saying oh you're just you got to look at the facts well I'm sorry if empirical facts are inconvenient for you and that sort of thing when it says no I'm fine to go ahead and rest things on the facts is but you the fact that you even stipulate so anyway we'll see here now some of the issues so what is this thing that they're talking about in case you don't know so it was negotiated the UN auspices by representatives from almost 200 countries and their work on this thing for a while and then in December of 2015 they had agreed on like the language of this agreement all right and then the country started either signing it and/or ratifying it all right and so in terms of various countries and how do their governments react or respond to something like this a document like this you know they could sign it like the person that whoever the ruling official is at the time like a prime minister or a president whatever you're the executive branch in terms of our terminology could go ahead and sign this thing but then they might have further hoops that their governments go through to ratify something of this nature all right and so that so you can see how it's been doing what now there's lots of stuff in this thing obviously it's a huge document but up front it says the primary aim of this is to hold total global warming to well below two degrees Celsius and to pursue efforts to limit it to 1.5 degrees Celsius okay so this is a point I'm going to come back to so just keep that in mind it in general in this climate change debate it is somehow become just commonplace like just obvious of course we need to limit global warming to two degrees Celsius so by the way that what that refers to it means relative to the pre-industrial era benchmark okay so in terms of what they think the average global temperature was circa 1750 compared to now and that's how much global warming there's been so they're saying we need to limit that cumulative figure to two degrees Celsius at most all right so they're saying clearly we don't want to go beyond 2c and saying ideally we want to shoot for closer to 1.5 C I don't want to forget to say let me just mention just the hubris involved in this okay so I mean just if you're somebody I don't really know that much about this but the idea that we have a bunch of representative government's meeting to determine like what's the thermostat we're going to adjust for the planet I mean that's how these people think okay so that should just give you some idea of just the the inflated opinion of themselves and their abilities that they think they have but like I say it's that's almost too easy like it's you know you're tempted just to say oh my gosh you guys talk about central playing they're going to play in the plans temperature give me a break yes that's great and that's why I'm saying it to make sure we hit that point but even on their own terms it's not like their taste makes internal sense once you grant the premise that yeah let's say that we that it make sense for us to talk about the temperature new year 2100 it doesn't follow even if you grant them their own premises all right but that's what they're trying to do in the mechanism for doing this because this is really the the problem right so on its own terms the fact is okay there's this alleged huge negative externality that economic processes left unregulated by governments are going to allow for the emission of a large amount of greenhouse gases carbon dioxide so forth and then that causes the concentration of those gases in the atmosphere to go up and then it acts like a giant greenhouse effect right so sunlight can come in but then the he can't get out just like in a regular in a real greenhouse and so the earth gets warmer than otherwise would be so just so you know they it's necessary for life for that thing to be there if there were no greenhouse effect at all we'd all be dead right so it's the idea though is that oh this is actually just pushing us beyond the optimal point and it's making things eventually worse for humans and so in standard pigouvian economics you know named after per goo in terms of extra nelly analysis this has been called the biggest negative externality in human history alright so the idea is when you're driving your car you're not fully internalizing the true cost to society of your actions because in addition to you know using a crude oil and the workers who have to work to know process it and refine it and give you the gasoline there's also the fact that you're imposing damages on future generations and they're certainly not a part of that transaction of you buying the gasoline and driving your car right so that's the idea that the market price system is not fully capturing the true social cost of your activities so that's why they they have all these plans to limit it or you know I would say artificially to augment the the penalties of just the market price so the problem with then okay let's say we all agree on that or a bunch of governments what are we going to do the problem is okay we can talk about what would be the right trade-off to make it a global level like another words Oh humanity as a whole is emitting too much beyond the optimum point if only we could get humanity to scale back by such and such but then the issue is even if you could agree on that which if you think about that's kind of a hard thing to get a bunch of people to agree on anyway I mean if you've never been part of a big group that's trying to decide to go to a movie or to order a pizza you can see you know what a pain that is and how compromises have to be made and there's different so imagine having a bunch of things from 195 or sorry from close to more 200 countries deciding okay everybody how hot should the earth be in 2100 what do you say what do you say you're right that's a crazy question so but even if you could agree to that then the issue is okay now how are we going to get there because in order to achieve that given the science that they do the empirical cause-and-effect relationships of how nature works that we're just taking from these climate scientists is a fact just to stipulate it okay what that means what is our the advanced country is going to all of a sudden screech to a halt and have no growth at all are we going to say to China and India you know yeah actually having modern industrial systems has worked out pretty well for us but sorry you can't do it you know you you have to slow your growth because sorry the plants at stake and you know too bad hey you should have industrialized 200 years ago how do you feel right you can you say that so you can see how just apportioning the responsibility of meeting this target that they all agreed to is problematic so the the mechanism they use to get consensus in this is they said oh the agreement itself is not telling each participant what you're going to do it's just saying each participant unilaterally tells us when they join when they sign on to this thing this is what our intended nationally determined contributions ind see is going to be okay so that's what you have to do in order to sign onto this thing is to say here's what we're going to do is our contribution to hitting this shared goal of clearly keeping global warming under to see and ideally trying to keep it closer to 1.5 C okay so what could go wrong okay so one thing is why do we keep calling the Paris climate agreement and not a treaty because doesn't it sound kind of like a treaty this thing that a bunch of countries are agreeing to and it's going to limit their actions in order to achieve a mutual goal doesn't that seem like the kind of a thing that treaties normally do so why are they doing this well it's because this way the Obama administration can agree to this thing can sign it so I've got the US is one of the signatories of this thing but they don't have to have the US Senator prove it right because the Senate has to approve an actual treaty and that's what actually happened with the Kyoto Protocol which was something that was negotiated in the during the Clinton administration and so Clinton you know was all for it but they knew the Senate wouldn't ratify it and so they'd never actually went to a Senate vote right so it was like the US was a signatory of this thing but hadn't actually ratified it so especially back then the u.s. was a bigger player in the world scene economically and so everybody knew if the US doesn't sign up up for this thing that it's pointless right and so the Kyoto kind of was dead in the water because of that so looking at their mistakes from what happened here the people when they crafted this Paris climate agreement realized ah it's not the Paris climate treaty it's the Paris climate agreement kind of like if you know US history the what we call the Korean War I believe at the time the gut US government referred to it as a police action or something like that right because if it were a war I would there have to be a declaration and so on so that's okay so here we go so Obama is happy about this so in terms of you know how would the u.s. feel about this or how would rothbard II and let's say feel about this idea of the government using you know changing labels and so on just to get around what the Constitution clearly requires so again what they're doing sort of getting the us to sign onto this international agreement sort of ceding sovereignty in a way so that even the legislature now can't have any input on this I think this kind of sums up what the reaction would be it was funny I was googling for this lady because I knew it's call the output in Thomas but and I couldn't find it I was googling like sad Tom woods and it wasn't coming up and I was at with the heck and I realized what it turns out this is grumpy Tom woods right so if you're trying to find this it's a yachtie mean generator dotnet he's got his own meme that's how big the guy is but it's grumpy and you realize yeah that is grumpy it's not I have trouble with emojis also alright so let's talk a little bit about these these promises that are part of this again so again the way they because you might think gee wow that's amazing and I had some people saying this when I was writing sort of giving a qualified defense of what the Trump administration had done on this one issue to say yeah well he did makes total sense there's no way the US was going to go this is a crazy thing it's bad for America's using their own data you know get into some of these numbers in a minute and some people were pushing back and they were saying no this is amazing that you got all these countries to agree on this come on yet and part of the way they did it was because there were no there was no penalties right so in other words they get everybody to say what their contribution is going to be and then if you don't even meet the thing that you unilaterally said this is what our country was going nothing happens to you right this is a purely symbolic thing so that's partly how they got while this amazing historic agreement among all these nations of the world and look at humanity coming together to meet this common full of climate change it's because there's no penalties in this thing at all right it's purely symbolic so that's that's one issue and then it's amazing part of the way what the critics were doing when when Trump took this step in order to show what a he is is they're saying Trump's talking about how this is a bad deal for the United States well that doesn't even make any sense because there's no penalties in this thing so the US could just blow right through the pledges that the Obama administration may just violate them and nothing would happen anyway so why didn't he want to just stay in it so you get why how duplicitous that a one hand Trump is you know ruining our grandkids chance survival and on the other hand there were no penalties for staying in he could have just you know we could have just developed and whatever anyway and violated our own the pledge that was made only by registration and no big deal so why didn't he stay in so that's just how how topsy-turvy this whole thing is incidentally when I do this just a note on notation my son's been playing chess lately and so if you ever looked at like the notation they give for chess games if they give an exclamation point usually what that means is this looks like it's a stupid move but really it's a brilliant move right it's it's smarter than you realize when I'm using it here in this talk it means this looks like it's a stupid move but it's even stupider than it looks like right if you started as much as I did you would realize how crazy this is right so my point again here is to say when you think through the logic of what they're saying that no Trump should have stayed in because we could have just violated those pledges anyway who cares there was no immediate just shows you that why are they you know what they're trying to have their cake and eat it too when Obama signed this thing and came back he was the toast of the town all you know the real respectable people is oh this is such a great thing we're so glad we have a man of Science in the White House and he's and then when Trump holds out everybody else says if this thing had no teeth anyway there was just clearly symbolism what's the big deal right that it doesn't those two don't go together all right so also if you look at what their pledges were from the various countries because again it's not that the agreement said okay we're going to try to limit it to to see closer to 1.5 you know if things turn or break our way China we want you to do this India we want you this u.s. you do this Europe that's not what it said it just said when you if you want to agree to this thing and participate you tell us what are you going to do it's non-binding but you just tell us your that's why they call the intended contribution and so when you start looking at what some of these countries agree to it's hilarious so China gave specific numbers and things in terms of you know I'd like to our carbon emissions per unit of GDP where but when you look at the trend of what's happened before they agreed to this arguably they were just saying what was probably going to happen anyway all right so they but at least they were saying something official whereas the funniest one Orrin Kass noted this from Manhattan ensue he said that what if you look at the wording that packed the Pakistani government use they agreed to cut emissions after they reach peak levels think about that I'm giving you three exclamation points so that should be a flag wait a minute don't just move on think what the Pakistani government is agreeing is yes we will reduce our emissions after they peak run SIA why that's a definition that's not a pledge yes of course once emissions peak they're going to start falling that's what it means that they peaked at that level okay they're not saying a year or anything they're just saying no at some point our emissions will peak and then from that point forward we will have lower emissions that's what they're agreeing to all right I had I knew I had to keep hitting and make sure you really got it all right so so you start to see now how crazy this was and the fact that Trump pulled out of it again this is not you know there's lots of stuff the Trump administration has done that I'm totally opposed to but on this particular issue what he said made perfect sense and the fact that so many people were screaming bloody murder just shows how the debate on this issue at least the United States is completely crazy okay another thing people would say is well this is horrendous because you need US leadership on this the u.s. is a huge country you know there's all this prestige and now Donald Trump just ruined everything and it's some people we're linking it's like military action and so far they're saying because now we lost credibility on this issue the Trump has gone back on our pledges that you made on the event you know no other country can trust us how we're supposed to fight Isis now right they were saying stuff like that and so just to to walk through the one thing in particular some people were saying like this so this isn't for everybody but there were Pitino I can show you articles in the straw man of people who are making arguments like that that oh my gosh now this is all going to fall apart because you know without the u.s. doing it clearly it doesn't make sense for the other countries to do it they're not going to you know hurt their own economies by restricting emissions that the u.s. is going to do with that pointless so this is it you know and then they'll also say Trump is being a fool because now China and some other countries are going to get the jump on us in terms of advanced solar and wind technology and so they're going to corner that market and so really you know from shooting ourselves create jobs for American workers or whatever well gee now we're gonna miss it all these jobs for solar panels and wind turbines so they're again they're trying to have their cake and eat it too it's like okay so if being in this thing is really great for your own economy and Trump just doesn't see that because he's an idiot okay so the other countries will stay in on a rational self-interest right the fact that the u.s. pulls out doesn't mean they should pull out if we take your argument seriously so again they're trying to have it both ways to say I mean think about why wouldn't it make sense for the other countries to go in and participate even if the US doesn't unless the critics agree with Trump that being in this thing is bad for your country okay so what I'm saying here you could consistently say and in some like actual PhD economists who are in the climate change debate in favor these sorts of measures they do at leat they're at least coherent they will say yes being part of this thing makes us poorer than otherwise but as long as enough countries could all agree to do that then we would all be better off than if we each do what their interests are like a prisoner's dilemma thing so that at least is coherent but again some people were trying to even go over the top and say being in this thing would have been good for our economy because it would have you know promoted efficiency houses would have had more things to make sure they don't leak heat and things like that that would be great companies would save money just to give you another example in this area this it popped in my head you have people saying I want the government to have stricter regulations on efficiency standards so that like a big building you know company heats its building and if they just installed more insulation than they would save on heating and air conditioning costs if we want the government to force them to have more such efficiency measures than they're voluntarily doing right now and it will save them money so really don't listen to these right-wing critics this is the way I see them if that's true you don't need a regulation just take up you know take your iPad or your white paper in fax it to the companies and say look at you can save money and they'll say oh my gosh you're right let's save money it's like we know we need to force these companies to save money that is such as their hatred of the planet they would spend money to destroy the planet right that's what these people are saying we said so okay another element in this you might say okay but the u.s. is such a big player on the world scene and that's why you know they really kind of need their participation that was you know true historically the u.s. is one of the biggest emitters but just using standard models so here you know I had I'm friends with some climate scientists and they worked up this thing so this is not like the right wing model or some this is standard stuff to using a particular scenario that they call a 1b in this literature it's just saying okay if things go you know middle the road projections from this point forward sway you know this was in early 2017 they ran these numbers between now and the rest of the end of the century what fraction of total global emissions of governments you know keep their current policies in place and don't take aggressive measures to limit things what are we talking about here in under this particular scenario the US was on going to emit about 11% of the total emissions going forward in that time frame you can see China and India or more and you can see what the US was compared to the world total all right so again even on its own terms if it really made sense to do this thing then the u.s. pulling out doesn't just oh yeah the whole thing is pointless that it would it would still make sense for these other countries to do it so again just showing that this these scare tactics and oh my gosh because Trump did this now the whole thing's worth it it doesn't follow okay so so far I've told you how it's that these things these pledges are kind of nonsensical and so the whole thing seems a bit dubious especially when there's not penalties so you might you might be thinking you know being commonsensical and so forth I'm thinking the world surely makes sense at some deep level right you probably think that the political sense at least you're probably thinking okay so what you're saying Murphy is if all these governments met the targets that they agree to are the you know if they the pledges they made then it would limit it but you're just saying they're probably going to cheat right because there's no penalty no that's not what I'm saying I'm saying even if we look at the pledges they all made they're nowhere near to meeting that target okay so again just showing you craziness for example this was a Vox article so this guy David Roberts is like boxes in house expert on climate change issues he's the person who writes on this stuff all the time and so this came out in late April right so this was well before Trump made his announcement and what was he saying no country on Earth is taking the two-degree climate target seriously right and there was a I didn't include it because I wanted to have room here but there was a photo of Earth on fire going along just to make sure you get how serious this is all right so the point is here they weren't taking its ears something from I apologize if I blew it up that would get fuzzy let me see so this is the that you can go to a climate action track org so this is very much a website in favor of government intervention right this isn't like from the Heritage Foundation so this is very much in favor of it and they have this thermometer and so over here they've got the pledges so they're saying if all the governments of the world did met the pledges they made when they join the Paris agreement but if they say they lived up to those unilaterally imposed obligations then our best estimate is that with limit warming to 2.8 degrees okay so we should blowing way past the to see absolute ceiling even if they all did what they said they were going to do and then there but there's another nuance they say let's instead of looking at what do they say they were going to do let's look at their current policies right now and say if they just kept those in place what are we on track for and they're there warming was three point six degrees Celsius okay so again what's my point here is even just before Trump pull out everybody who is look for this thing was saying the government's the world we're not anywhere near hitting this thing even if all the participants did what they said they were going to do we would blow away passes to see target come on people so then Trump says you know what this whole thing is a sham we're not doing this and I was oh my gosh now we're all dead do you see how like you're using marginal analysis you can see wait a minute if we were all dead before he did it and we're all dead after he did it that him pull out really isn't why we're all dead even on your own terms okay so that's 50 importance of marginal analysis for you right there okay so thus far I've shown you I think compelling arguments that even if they agreed or even if they met their targets you know the things they agreed to it wouldn't hit it clearly if you look at the weaker thing of what are they actually doing right now because in other words you could agree to something that's onerous and then not follow through with it because it's always politically easier just to kick it down the road right like you could say yeah I intend to lose 30 pounds before that wedding and then you know you and suppose you were 50 pounds overweight and then you could say well even if you did that you would still be overweight but then looking and say you know what you're not going to the gym your keep eating pizza every night so clearly if we look at the policy what you're actually doing then that's even further away from what you said your goal is okay so you can so I've explained you all that not what a farce this is but it gets even worse or better depending if you like paradox you again everybody it's hard for me to emphasize just how much everybody agrees oh of course we got a limited - - see that's that's a given you go beyond - see we're talking about catastrophe like ice sheets collapsing and you know that okay Bangladesh people being drowned and so for it's crazy and you then say okay well surely then the consensus science this thing that the UN publishes it periodically the IPCC reports Intergovernmental Panel on Climate Change this is the thing that codifies all the latest peer-reviewed research in terms of the you know the natural science like just Oh with emissions of greenhouse gases what about methane versus co2 what's the global warming potential of those to get that sort of thing and then they also have things about mitigation efforts like okay what steps could governments do various things what about adaptation okay suppose certain warming is inevitable will farmers plant crops differently and people might move and will build more dikes and so forth because of sea level right right they have all this such humungous volumes of documents here or papers summarizing all the literature from the last one you go to that thing and I try to do this when it all came out the last issue and I was saying okay surely I'm going to be able to see why the two degrees Celsius target makes sense right in other words they using their own numbers the benefits to humanity of limiting emissions to to see or warming a to see will clearly outweigh the costs alright just the way they do things because they have cost-benefit figures in this document so surely and it turned out no that that's not true I can use the UN's own document to make a pretty strong case that the to see target is a bad idea right so again this is what I'm talking about I'm going to come later at the end of this talk to the more rothbard in approach so I'm not saying in general certainly not Rothbard a libertarians are going to go around running cost-benefit analyses especially on stuff like this but I'm just saying to show you how crazy it is using their own stuff the cure they're proposing is worse than the disease alright so here I realize this might be difficult to see but just to give you an example so this was a chart or a table that I took from the last issue of this UN document and you can see they have the consumption losses and cost-effective scenarios meaning if government's rationally and efficiently limit warming using the best possible means which of course in practice governments wouldn't do but even a best-case scenario this role right here is what they would need to do to limit to to see warming to have a good chance of doing it this is the atmospheric concentration you can see they give number so by the year 2050 they're saying percent reduction in consumption relative the base leather said Oh in the year 2050 if governments take measures that would likely limit warming by 2100 to to see the economy in the year 2050 will be three point four percent smaller than it otherwise would have been and by 2100 will be four point eight percent lower okay so this is the cost of these measures to limit global warming all right and so then you say okay so those are like the costs the economy as of the year 2100 be 4.8% lower or the consumption technically will be four point eight percent lower than otherwise would be so then you say okay so where the benefits and so to do that you so think about it there's going to be a certain amount of global warming they say it's going to cause damages and interesting if we limit the warming to see by the year 2100 that's going to cost our economy 4.8% right because now instead of doing the cheapest ways of producing electricity we got a switch away from coal-fired plants and go towards wind or solar it's driving cars that use gasoline more people are going to switch over to electric cars more quickly than they otherwise would have done right so in other words if we're forcing people to do things differently then clearly that has a cost otherwise they would have done it voluntarily right so that's the idea so they're quantifying socially okay so on their own charts tables they're saying can cost 4.8% by 2100 so what's the benefit in there if you think about it well it's not just the gross damages of what's unrestrained global warming going to do by the year 2100 you got to use marginal analysis because even on their own terms if there's 2c of warming they're still going to be climate change damages so to figure out is that makes sense it is you need to look at the change you need to say what's the likely amount of global warming if we do nothing as governments how much damage would there be then what if we impose these limits to limit the to see how much damage would there be with 2c of warming and then that difference is how much we spare ourselves by this and then how does that compare to the four point eight number that's what you would need to do so I went through that and they don't even have the numbers in the right form right so it's hard to dig that stuff up but using approximations and looking at various things that they do give you I could back it up and say clearly by 2050 it's not even close and by 2100 it's basically a wash in other words if all the government of the world did things perfectly efficiently optimally limited blah blah blah it looks like it's close to being about a wash but it's still slightly worse in terms of the cost of the economy so you know isn't that interesting that number one if you try to run the numbers using their own stuff it doesn't fully work it looks at best like it's a wash but number two like I say I had to go through and be a detective and grab stuff it's not like it's all in one spot so it's just showing that this is really sort of a foregone conclusion that the people participating in this they already knew that the answer was going to be all we had to do something they're just trying to illustrate the specific reasons but there's nowhere in those things where you could actually see a formal case of yes the reason it makes sense using our own methodology or whatever to do this is because here's the cost here's the benefit they don't even make that case anywhere I had to kind of piece it together myself drawing on various sections of the document okay another little slippery thing just watch out for notice what they did here they say where's my thing percentage point reduction and annualized consumption growth rate from here there's a point zero six percent so when this document came out several years ago a lot of people are running around and saying oh un says the cost of fighting global change virtually negligible because what they're saying here is it will only be a reduction in the rate of growth of point zero six percentage points so like if normally the economy around the world would grow 3% if we have these policies you know to fight climate change then it would only be what two point nine four percent right is a rounding error okay but you see the the sleight of hand there that if you have that little bit of a reduction in the growth rate over 90 years well then by this year you know that the actual difference between what it would have been and what it isn't is now is a bigger number and so that's fine but it's not like the math is wrong but they weren't then saying you know and I did this when these kind of spins came out and I said Oh UN reports the cost of climate change is negligible because I looked at like some of the bad scenarios of what climate change damage would do in the Year 2200 and then I just show you know even if in other words even if there's a 50% hit to the world by 2200 in terms of the percentage that you need rolling over all that time exponentially to get to that isn't a big number at any one year so you could use the same trick just to show off see it's not a big deal but of course they weren't framing it like that so again just showing that you can take these numbers you go and read this stuff and see what they're actually saying it doesn't add up another example in this realm is work the work of William Nordhaus so I have an article and the independent review on this it's called rolling the dice nor houses case for carbon tax or something like that the title is because his model is called the dice models is an acronym D IC e stands for what he's doing and in this thing so I like him so this guy in case you don't know him he has a book he was one of the guys who for a while was the co-author with Samuelson on his famous textbook he's been around Paul Krugman worked you know for as a research assistant for him when Krugman was was in school so leave me that doesn't recommend him to you I don't know what would and and he's one of the pioneers in climate change he was his model was one that was picked by the Obama administration of three when they were calculating what's called the social cost of carbon okay so this guy is clearly you know he's very much in favor of a carbon tax he's totally in that camp and he literally is one of the pioneers in this field of the economics of climate change okay so he's a huge authority in this area you're going to say is somebody in authority and in this book he says that yeah the two degrees Celsius target is not very scientific and he's saying that they never made this kind of pull that out of the air there's there's no desiccation and in fact his own in his own modeling and whatever he recommends you know an optic of ermine surround the world adopted what he thinks is the optimal carbon tax you know given the cost and benefits and the externalities and blah blah blah there would be a lot more than to see of warming in his optimal trajectory of how would the world go if the governments all do what I think is the proper thing economically adjusting for the externality alright so again just showing you that it's it's insane that the the rhetoric is somehow settled on this to see target as clearly we have to do this and yet the people even from that camp who have run the numbers and stuff it doesn't pop out now what will happen is you'll see people say stuff I've made these these arguments and some people will push back and they'll say things like well yeah but you know those models they leave out a lot of stuff yeah of course they do I mean you're building a computer model that's going to simulate the the climate system in the economy through the year 2100 yeah they leave out a lot of stuff duh but the point is we've been lectured to all these years about oh you got to follow the science and yours making up stuff and so you go and look at their own documents and their own models and so forth okay well this doesn't just say oh yeah well you can't trust those things you see them say so it's like the consensus science is great except when you go and read it and say wait this doesn't justify what you say and then we can't trust those things come on there's all sorts of problems with all that that's well known so they'll also use an insurance analogy right so I want to I want to move on but at that time but they'll some people will agree with you upfront oh yeah in terms of what's likely to happen all these measures we recommend probably will cost more than they're worth but you know there's a small chance a disaster could strike and say okay again and I'll say so like with fire insurance or something because it'll be like someone comes up to you now and says hey we wanted to give you to give three percent of your income as a premium because fifty years from now there might be a fire that at that point would burn down twenty percent of your house and in that case we'll indemnify you for maybe ten percent of the cost whether the damage is it would you wouldn't buy that kind of a insurance policy but that's kind of what these are being sold as right that it's it's a big hit to the economy up front to spare what is not a catastrophic loss down the road under most projections and then even if there is going to be that outcome what we're doing now is not going to avoid it entirely that's kind of the irony here it's like catch-22 the worse they make these projections they look at how awful things are going to be that's like okay but then the stuff you're proposing wouldn't fix that problem just like we saw earlier with the you know no country on earth is taking the 2c target seriously that it's a problem there in where they're trying to scare people but yet they realize if what we say is too scary people are going to tune us out so they kind of have to say no it's really it sort of like if we do nothing we're all dead but to fix it it's really cheap don't worry all you know solar turbines and stuff they're just around the corner there just waiting to pop on the market we just need a little carbon tax we'll get it okay so I've spent some time just running through the main sort of mainstream analysis here what would a more Roth barding approach look like so let's be clear here it's not that libertarians are pro-business are you sometimes get that mentality if you watch the political debates in terms of the way it would play out between let's say conservatives and liberals or ever the standard arguments in the United States context at least often seem to say like oh yeah one group cares about jobs and American workers and production and the other group cares about the environment in nature and leaving a legacy for our grandchildren in terms of the beauty of the environment and that is not the way Murray Rothbard looked at it right so he clearly explodes those fallacies and says it's not that libertarians are pearl big business and he talks about historically how a lot of times you know there was from the common-law tradition like if you were down you want a house and you were downstream from some factory that was dumping chemicals in the river you could get an injunction against that right because they're violating your property rights and it was actually government intervention in the name of promoting industrialization that sort of overturned that at the time right so it's don't at all fall for this idea that if you're if you care about the environment you couldn't possibly be a libertarian in fact walter block is the editor of a collection called free-market environmentalism right so you can see that that's actually a phrase free-market environmentalism where's - a lot of people they would think that's that's a contradiction on the other hand though and I've seen some people try to people who are for a u.s. carbon tax tried to use Ross bards name to justify what they were doing because they quoted Rothbard rejecting you know the move by conservatives who just wanted to say big business could do whatever they want who cares about the environmental you know don't be such a whiner and Roberts you know that's that's not correct people quote that and then they omitted though the next thing though the next look is literally the next sentence or two where rather than transitions and says that on the other hand it also doesn't follow that we should go for these quote market approaches to limiting emissions and so on or offered he wasn't he was writing before the climate change is the big deal so I want to be clear it's not the raw fur was directly writing on carbon taxes or things like that he was talking about more like standard pollution and things but he was saying this idea of like quotas for emission emissions and the government's going to say okay you can emit this much of things that cause smog in a certain year and then you can trade them among yourselves and that's a market out-cook roffels point this how is that a market outcome you have a bunch of bureaucrats deciding how much total emissions of this type the economy's going to do that's clearly that you know that's like a version of central planning yeah maybe it's more efficient than if they're literally telling each firm this is how much you can emit and letting the firms decide through a market but clearly that's not like capitalism it's not the free market so what I point out here is sometimes people trying to justify this stuff will say well I mean it's kind of like the tragedy of the Commons and until we had property rights there you know people had their grazing animals grazing and when there wasn't well established property rights there was over grazing and we fixed that by having property rights and barbed wire fences and bla bla bla and so that's what we're doing with having cap-and-trade or having a carbon tax and say no that doesn't follow having cap-and-trade or a carbon tax at the u.s. level is analogy this that would be like what animals were grazing if the government said okay we're going to tax farmers every time their cow takes a bite of grass but only if it's domestic house if foreigners want to come in with their animals and eat the grass that's fine right you see how that clearly wouldn't solve the tragedy of the Commons that's what it would be like if the US government said to businesses okay this is how much you can emit to deal with this problem of climate change because then if the US government does it then other countries can still have as much emissions as they want so that's it's clearly not solving the problem okay so I only have a minute here let me just point you to if you really want to see because I know people say okay suppose though the science really is saying that there's disaster going to strike unless we sharply reduce emissions I agree governments can't be trusted but what would happen if we had a worldwide anarcho-capitalist system that's a big question and I think that's something that you know future researchers can work on just to flesh out libertarian theory but clearly where you need to go start is Roz Byrd's article from 1982 on this let me so he talks about property rights let me just mention one last thing here is I've seen some people disparaging this they owe the libertarian approach just as property rights but that's crazy because then that means nobody could do anything because any little thing you do if I light a cigarette that emits smoke and that may hit somebody in California where and so clearly that can't our Rock Birds much more nuanced than that or he has in their discussion he looks at case law he has a distinction between nuisances and trespass okay so it's it's very sophisticated much more than I've seen other theorists do in terms of what would a property rights approach to solving these problems look like so that's clearly where you need to start okay thanks everybody [Applause]

Channel: misesmedia

Views: 31,233

Rating: 4.7857924 out of 5

Keywords: Economics, Paris Agreement, Trump, Climate Change, Austrian School, Mises, Rothbard, Murphy, Lecture

Id: Uefn7ikVnVc

Length: 47min 8sec (2828 seconds)

Published: Thu Jul 27 2017