Environmental risk

I'm feeling rather pleased with a comment I posted to a thread on the Samizdata.net website, so I'm going to post it here too.

Jonathan Pearce had posted a thoughtful piece to Samizdata on the merits of David Cameron's announcement on rationing air travel, in the course of which he allowed that DC might genuinely have the interests of the poor at heart, but pointed out those interests were in the future, and asked "Why should a politician, answerable to an electorate, sacrifice or ask to sacrifice its interests for the interests of people in such a long time to come, and over a theory or set of theories that are, at best, not proven to the standards of a court of law?" Sounds like a good libertarian perspective, and many had agreed with him in more colourful language, accusing DC and his ilk of being fascists. Such exaggeration is often a good sign that people are thinking more with their guts than their heads, a habit discussed in my "Post-rational" post.

In response, I wrote:

Lots of use of the f-word on here, but it seems as inappropriate as its use for Islamic fundamentalists on the other thread. Both groups (greens and fundamentalists) seem inclusive, not exclusive to me - the problem is that they want all of us to accept the faith, not that they see themselves as a master-race or their issue as a question of national superiority. So, rather than call them Islamo-fascists and Enviro-fascists, can we (like Jonathan's boss) call them Islamo-communists and Enviro-communists?

As most people still make the mistake of thinking of fascism as a right-wing creed, calling them communists will help to make it clear that these movements are making the same collectivist mistakes that failed in Russia and China. When you get right down to the fundamentals of many of the green proposals, they are about state-allocation by rationing (as opposed to market-allocation by price), which is pretty close to "from each according to his ability, to each according to his need". Dave's flight-rationing scheme is an excellent case in point.

As for the original post, the arguments about impacts on the poor are more to do with the poor of the third-world and developing world, rather than of the rich-world, I believe. The fears of environmentalists are not so much that British poor will not be able to afford air conditioning, or that French elderly will not be able to get medicine (though I'm sure they'd seize on those examples as well, if asked), but more that the poor will be driven out of their homes and into greater destitution (or worse) by flooding in places like Bangladesh and by drought and starvation in parts of Africa and Asia.

But this only serves to reinforce your point, Jonathan. As the "...Swindle" programme pointed out, the impact of constraining the economic development of poor countries may be more severe and certain (in terms of mortality, health and quality of life) than the risk from AGW if their (and our) growth were unconstrained. That, of course, is the basis of the Lomborg argument.

It is by no means certain that current impacts are more important (the worst cases, if AGW did turn out to be severe, are very serious indeed), but what I am confident about is that it is better for Africans to make judgments about the relative merits of improving their standards of living now at the possible expense of their descendants, or of accepting constraints to their development now in order to minimise the risk to their descendants, than it is for us rich Westerners to paternlistically/patronisingly tell them what is in the best interests of them and their descendants. Some of them may feel that, if they are at significant risk now of death and disease, there's not a lot of point worrying about their descendants.

What we can inflict on them (as opposed to what they can choose to inflict on themselves), on the other hand, is another matter. That ought, in effect, to be a liability and insurance issue - if we do something that risks harm to someone else, and it turns out that the harm is incurred, we ought to compensate them for it. If we accept that obligation, the obvious answer would be for us to "insure" against the risk, and the cost of that "insurance" would be the real cost of carbon. The more likely or significant the harm, the higher the cost of the insurance (and therefore of carbon), and the more doubt is thrown on the science, the lower the cost of carbon. If you doubt the AGW theory, and you are willing to put your money where your mouth is, you could make money by underwriting some of that risk at a market-rate which, in your opinion, would be overvalued.

The question of the extent to which we should value the future relative to the present, from a classical liberal perspective, is an interesting one. The answer may not be quite as simple on this planet as it is in Alpha Centauri.

Henry Hazlitt, extending the lesson of his Economics in One Lesson into the field of morality, was of the view that differentiating between short-run and long-run interests was the key to avoiding the false conclusion of collectivists "that the interests of the individual and of society (or the State) are fundamentally opposed, and that the individual can only be led to cooperate in society by Draconian compulsions" (The Foundations of Morality, start of Ch.7). The interests would usually coincide in the long-run. Our moral and legal rules existed to ensure we gave fair weight to the future and to guide us towards the courses of action that would tend to produce the optimal outcome for the most people in the long-run. On this foundation, he concluded that "the ideal moral rules, therefore, may not only sometimes oblige an individual to make some immediate or temporary sacrifice in his own long-run interest, but even (though very rarely) to sacrifice even his own long-run interest to the larger long-run interest of everybody else" (end of Ch.14). He highlighted both the Voluptuary's Fallacy (encapsulated in a quote by Byron similar in spirit to that from CEO Nwabudike Morgan: "Let us have wine and women, mirth and laughter, Sermons and soda-water the day after") and the Ascetic's Fallacy, which sees some false virtue in self-deprivation for its own sake. We should not fall for the greens' Ascetic's Fallacy, but we should also not fall into the Voluptuary's Fallacy of undervaluing prudence.

I have spent a bit of time arguing with greens, and it still surprises me how many of them are devoted to the short-termist solutions of people like Keynes when they appear to place such a high value on the future in other regards. Classical liberals shouldn't make the opposite mistake - confusing individualism with selfishness and short-termism.

Keynes dismissed the importance of the future with the famous aphorism "in the long run, we are all dead". Sir Alan Walters restored regard for the future to its proper place in economic thinking with the rebuff "but now Keynes is dead, and we are in the long run", written in 1986 when we were recovering from decades of Keynesian short-termism.

As for testing the need for prudential action on the basis that the case has been "proven to the standards of a court of law", is that really the right test where it is a question of risk? Do we, in any other regard, disregard risk until it has been proven beyond all reasonable doubt? If this were the usual rule, we would never act to mitigate risk, because by the time it has been proved, it is no longer a risk but a certainty.

At the risk of sounding like a broken record, markets are our friends. Where there is uncertainty or risk or differences in perception, we can deal with them by valuing them in markets. To say that we should not act until a case has been proven (who should be the judge of that, by the way?) ignores other people's subjective valuations as much as saying that we must act regardless of doubt. Let's treat carbon as risk, create a market where people can trade that risk, and discover the optimal balance between prudential action and inaction. To oppose all action, or to prognosticate on the best courses of action, is to display as much unwarranted certainty about the science as is shown by the enviro-communists.

[The British poor and French elderly were Jonathan's examples of groups who might suffer on account of global warming. The references to Alpha Centauri and CEO Nwabudike Morgan were with reference to a quote from Sid Meier's Alpha Centauri, posted in the comments: "By what right does this forgotten future seek to deny us our birthright? None I say! Let us take what is ours, chew and eat our fill." AGW is, of course, Anthropogenic Global Warming]