Thursday, 4 July 2019

Me & Climate Change: I Guess Things Are About To Get Hot!!

Although I’ve made the occasional foray into climate change commentary over the past few years, with about 30 blog posts, I’ve been too preoccupied with all my other projects to give it the time it warrants. And for a while, it was never that pressing to me: a few years ago all you heard from environmentalists were marginal pseudoscientific utterings from the likes of Greenpeace, a few wacky Green party politicians, and the odd crass article from intellectual lightweights like Naomi Klein and George Monbiot. 

But in recent months there has been an explosion of green halfwittery, with militant, Gaia-venerating eco-warriors causing mass-disruption to public life, making ridiculous arguments for their cause, and propagating the most asinine beliefs I’ve heard in a long time. They are surely the most confused political group on the planet right now - and let's be honest, there are plenty of challengers to the claim of that distinction.  

Alas, their proliferation in numbers has really rather forced me to take more of an interest in them - they’ve kicked this particular gentle hornet’s nest - and forced me out to see what all the fuss is about. My inclination to take on this fight for climate change truth is (perhaps surprisingly) less about the public disruption these extremists cause - it’s actually more to do with the fact that the political establishment has been taken in by this nonsense to such an extent that climate change propaganda has become normalised in an intellectually anodyne culture, where politicians want to use global warming panic to increase taxes and to make the state bigger. I’m not especially alarmed by wacky climate change alarmists wanting to bring down capitalism - the world is full of people with crazy beliefs. But I am alarmed by these people when they freshen up, put on a suit, get elected and wield political power.

Here's something horrifying. Last night I read the transcripts of this week’s House of Lords debate about the proposal for Net Zero carbon by 2050 - which millions of the electorate seem to blindly support without the first thought of its consequences. What I read was truly shocking - so shocking, in fact, that it's a good contender for the dumbest policy in recent memory. Here it is. Despite the fact that Britain is responsible for just 1% of global emissions, many of our politicians are embracing a ‘Net Zero’ emissions target by 2050, even though estimates are that it will cost between 1-2% of GDP per annum. 1-2% of GDP per annum is a LOT of money!!! 

Spending 1-2% of GDP per annum on climate change for the next 30 years, adjusted for increasing GDP total size over the years, and including the £15 billion a year that we already spend on subsidies to renewable energy (adjusted for inflation) is going to cost the UK taxpayers around £1 trillion. For us low-key spenders, for whom things like a house is the most expensive thing we’ll ever buy, it’s not easy to picture just how much money £1 trillion is. To put the spending pledge into perspective - it is like agreeing to spend just over £91 million every day on climate change for the next 30 years!

To think about the inanity of this policy - I’ll break it down into steps:

1) 99% of the world’s global emissions are created outside of the UK.

2) The vast majority of those countries are not going to sign up for any ‘Net Zero’ program.

3) This means that even if the Net Zero program is a good idea (it isn’t, see below) it will have a very negligible effect on reducing the world’s carbon emissions - so much so that it will have almost no positive effects on the planet as a whole (for complex reasons, see below).

4) For a policy that will have almost no positive effects, the politicians want to force the British people to pay a staggering £91 million every day for the next 30 years (£1 trillion) and get almost nothing in return - money that could be spent on global development, on health, on social care, on tackling crime, or on the numerous other important services where it would actually do some good.

5) So, in conclusion, we are faced with politicians forcing us to cough up £91 million every day for the next 30 years to pay for a project to which we are only marginally connected, to which the majority of other countries would refuse to be signatories, and that would do almost no good in the world anyway.

Sound like a terrible idea? Yes, but it gets worse. Even if we generously started with the assumption that a ‘Net Zero’ emissions target by 2050 is a good thing for the world’s countries to be trying to achieve - the above points show clear-cut reasons why it’s a terrible idea for the UK to be committing to it, knowing it will do very little good, knowing most polluters won't join us, and knowing how many more pressing things there are on which to spend £1 trillion.

I know what some of you are thinking - ah, but this is just the start: if more countries get on board with this then a lot of good will come from the ‘Net Zero’ target. To which I’d say, firstly, that is entirely the wrong way to look at it; secondly, you can’t even begin to make such a plan without a proper cost-benefit analysis that includes both the benefits of carbon and the seen and unseen costs of climate change expenditure; thirdly, even if you provide a valid cost-benefit analysis, you need a detailed proposal of why Net Zero is the right amount of carbon emissions (as opposed to some other number) and why 2050 is the right date (as opposed to some other date).

Not only are none of these forthcoming, or ever factored in to the equation, there is never even a pretence that these considerations matter. Most people act like empty vessels into which any old political propaganda can be poured - and the politicians treat the mass population as though they really are that credulous. Politicians give the electorate the politics they deserve. But it just won’t do - and this kind of dangerous madness needs to be exposed, because it will cause more harm than you can possibly imagine.

On top of the miserable failure to acknowledge the necessary cost-benefit analysis that factors in ALL sides (that is, costs and benefits of carbon, and costs and benefits of anti-carbon green policies), there are three other principal mistakes here. One is misunderstanding how humans operate and the underlying engine that bootstraps those operations; two is a failure to understand how humans have done this well so far and how our past industrial limitations meant we actually couldn’t have done things very much better than we have; and the third is a quite shocking underestimation of how all those benefits stack up in comparison to the myopic, fantastical attempts to meddle with them.

The benefits carbon has bestowed on the world need little introduction - just about every single good thing that humans have done to improve the species' material well-being and standard of living has some connection (either proximal or distal) to carbon-based technology. Carbon benefits greatly outweigh carbon costs - by a factor of several orders of magnitude - of that there is no reasonable doubt. If you doubt it, there's too much you currently don't understand. Here's a picture that's worth about a thousand words:

But it goes deeper than that - because the benefits of carbon, and all harnessing of industrial and technological innovation, are nested in an even more important quality that we should mess with at our peril. Here's how it is. For nature to provide the highest efficiency possible and thus maximise growth and innovation (and poverty reduction, increased standards of living, etc), it requires the optimal level of freedom, because freedom means more ideas, more competition, more cooperation, and more problem-solving.

People get this in every other smaller way - they just fail to get it in the bigger ways. If you restrict the freedom of a car engine to run as it is designed to run, an ant colony, a bicycle chain, legs in a pair of trousers, or just about anything that has moving, variable constituents, the system or organism performs less effectively. Yet when it comes to things like human ingenuity, capital, work, and incentives to innovate, people suddenly become blind to the same principles they endorsed earlier - they suddenly become averse to optimal freedom, not just by wantonly calling for further suppressions of liberty, but by advocating policies and systems that restrict their freedoms in ways to which they are blind.

Now don't misunderstand me - no one here is endorsing an unfettered, chaotic freedom with zero rules or responsibilities (obviously!!). But the more centralised and uncompetitive something becomes, the less efficient and more wasteful it usually becomes - not just because its fitness suffers (although that's true too) but more so because of the opportunity costs in relation to less competition, reduced sharing of ideas, and fewer instances of innovation.

Everywhere you look you can see this is true. A service that is run by a state monopoly power lacks the fitness explosions seen in a highly competitive industry. A manager who only cares about her own opinion, and takes no feedback or input from her team, will have a less effective team. Government debt, deficits, bonds, fractional reserve money and centralised top-down banking are all methods of pooling the administration of capital, where resource-allocation is narrowed, and the freedom of the agents is severely restricted to a much smaller pool.

This negatively affects all of us - it is the biggest sleight of hand trick ever played on populations in the modern era - it is economic Stockholm syndrome. Here's a very obvious example: a quick Google search tells me that the government spends £39 billion a year on debt interest alone. Who do you think is going to pay for that? It is future generations. Locking them in to a future promise like that is tantamount to putting them in a pair of trousers that is 3 sizes too small for them - it severely restricts their freedom (I’ve got blog posts about some of these spillover effects in my Banking section).

One of the main benefits of optimal freedom is that the underlying engine of the price system is the most well-oiled it can be - because it is freedom that most effectively allocates resources and sets their prices in relation to supply and demand curves. Coasian bargaining also becomes most effective with optimal freedom, so even when there are externalities we claim not to like, as long as the transaction costs are sufficiently low, there will generally be a positive (although never perfect) amble across the Pareto frontier (that is to say, resources are allocated whereby we cannot make any agent better off without making at least one agent criterion worse off).

That is why I am deeply sceptical about climate change interventionist politics - and by deeply sceptical I mean I think it is one of the most confused, reactionary scams humans have ever invented. They just do not understand these above topics at all - and as a consequence, they get all the basics backwards. If they really do want to advance good things for the environment, and everyone in it, they should be embracing the above mechanisms of greater freedom to share ideas, to cooperate, and to maximise growth and innovation, because that is what really will do the trick better than anything else.

Even the well-intentioned folk who just want to live a bit less wastefully have been swept up in a vortex of hysteria, to the point that anything to do with the environment is all-but indistinguishable from political agenda and extremist dogma. That is to say, even if there are some grains of truth in the economics of environmentalism (which there are), they have made such a mess of things, annoyed so many people, and been so unreasonable in their dispensations that they are now completely devoid of credibility and utterly divested of integrity.

It isn’t just the case that freedom to exchange ideas leads to the greatest progress and increased standards of living - there is a converse effect that bad ideas, foolish political agendas and widespread misinformation makes progress harder and increased standards of living more protracted. Here’s why. As populations increase and become more widely interconnected, and as thoughts and ideas become less centralised in a decentralising nexus, the rate of idea-sharing increases, the power of communication and knowledge advances, and progress looks more like an exponential curve.

But when bad ideas pollute the epistemological landscape, and sub-standard reasoning muddies the waters, diversity of thinking is narrowed and propagated, and there is a clustering effect that creates choke points within the landscape of ideas and knowledge. Bad ideas don't just pollute the inner mind; they pollute the landscape for outer minds too, as concentrations of tribal thinking lead the in-group members astray, but also gravitationally attract outsiders who begin with ambivalence, but are looking for somewhere to belong, however foolish and damaging it may be.

The upshot of all this is that climate change alarmism isn't a fight I ever thought would be prominent enough to warrant very much mainstream participation. But it seems I'm going to have to dust down my pistols, buckle up my holster, and get on my horse to join the good fight - because this most reactionary, dangerous cult is here to stay for a while yet.