Tuesday, August 31, 2010

"Thinking like an economist" on climate change

Bjorn Lomborg, a famous "climate change skeptic", is publishing a new book where he identifies climate change as one of the biggest problems facing the human race, which should be addressed by a carbon tax and billions invested in addressing the problem (HT - Tyler Cowen). All very shocking stuff, right? This pronouncement by Lomborg is going to electrify the environmentalist community and it will be presented as a major coup.

The problem is, as far as I can tell Lomborg isn't really saying anything new. He's always asserted that climate change is real and a problem, and he has always (like a huge portion of economists) identified a carbon tax as the solution.

I think the public's view of economists is driven by the weird way that economists think and interact (relative to everyone else at least). For example, economists are very good at compartmentalizing different parts of a problem, and they are also good at thinking speculatively. Thus, in Superfreakonomics, you have the authors speculating about the relationship between time preference and the mitigation of climate change. They set aside the question of whether we should do anything about the problem (let's say, for the sake of argument, that we should) and ask "what should we do?". It may be more efficient to wait until climate change is actually a problem and cheaply pump sulfur aerosols into the atmosphere to cool down the Earth, compared to the impoverishing impact of reducing our carbon consumption. Like it or not, this is a serious thing to consider: do we do painful remedies now when we are relatively technologically unadvanced, or do we do cheap remedies later when we'll have greater technical know-how anyway. Normal people don't think in terms of these time preferences and trade-offs... but economists are not normal people.

Lomborg is the same way - he's severely criticized Al Gore and other alarmists for hyping extreme scenarios and misleading the public about the reality of climate change. Normal people assume this means that Lomborg is somehow unconcerned about climate change. After all, Al Gore seems to have good intentions. Anyone criticizing Al Gore must not take climate change seriously. This is not the case at all.

Generally speaking, natural scientists approach natural science objectively and social issues subjectively and emotionally. The general public often approaches both natural and social science issues somewhat subjectively and emotionally. Economists tend to approach social questions quite objectively. You can't assume that because an economist opposes cap-and-trade he is unconcerned about climate change. You can't assume that because an economist opposes the minimum wage he is unconcerned about low-income families. You can't assume that because an economist supports large budget deficits they are unconcerned about fiscal responsibility. They may be unconcerned about those things, but not necessarily. They view these questions objectively, as scientific questions, whereas the general public sees them as moral questions. If you come out against any proposed climate change policy it is assumed that you don't care about climate change. If you come out against any policy purported by elected officials to help the poor or to bring responsibility to Washington, it is assumed that you don't care about those things.

Of course, part of "thinking like an economists" is laughing it off when people assume you're a monster... in retrospect this probably isn't very conducive to straightening things out.

Another important element of "thinking like an economists" is amicable arguing. Criticism among economists is famously vicious, but professional. This catches a lot of non-economists off guard, which is why I think Lomborg has been branded as an opponent of dealing with climate change (and actually - Lomborg is not an economist, although he is a social scientist and he does "think like an economist"). I've run into concern about this "amicable arguing" at Cafe Hayek a lot. People there have accused me of "disrespecting" Don Boudreaux and Russ Roberts. That's because most people argue with people they don't like and try to smooth out disagreements with people they like. Economists aren't like that, as anyone who has been to an academic workshop in economics can tell you. This is what I tried on several occasions to tell people commenting on Cafe Hayek - I'm just raising what I see as concerns with Don and Russ's argument. Patting them on the back for good points seems unnecessary and unproductive. Beyond a shadow of a doubt, Don and Russ both get the same kind of scrutiny in their own workshops at GMU (just take a look at the Youtube debate between Bryan Caplan and Peter Boettke - amicable argument is the norm within economics departments).

Normal people don't generally act like this. Vigorous disagreement and disputation are taken as signs of opposition. Normal people try to cushion criticisms of friends, and let themselves go in criticisms of enemies. I've never seen that tendancy in economists. You don't do your friends any favors by indulging inaccuracy, and as Keynes said "There is no harm in being sometimes wrong- especially if one is promptly found out".

When you add all these things together: an eagerness to speculate, an ability to compartmentalize, objectivity on questions of social import (we can also think of this as a well tuned ability to distinguish between "is" and "ought" or positive and normative points), and an argumentative nature (even with friends), what you get is a group of people who can easily be mistaken as supporting something they actually oppose or opposing something they actually support. But that's not because we're being unclear about it - it's because you normal people are.

47 comments:

  1. Anyone who had actually taken the time to read "The Skeptical Environmentalist" would realize that Lomborg's main argument is that things are much better than our rather pessimistic bias tells us and that we need to rationally appropriate resources based on that understanding.

    ReplyDelete
  2. What of course you leave out of your narrative is the effort to discredit Lomborg amongst well, professional scientists and social scientists. He was of course vindicated. So your argument about "normal people" falls rather flat because of this.

    Krugman vs. Lomborg - tell me which you think comes off better: http://vodpod.com/watch/2692022-lomborg-vs-krugman

    ReplyDelete
  3. He wasn't entirely vindicated. Don't mistake my "Lomborg isn't that outrageous in either direction - he's pretty mainstream on these things" stance for "Lomborg did everything right". There were, apparently, major problems with the book.

    I'm not sure you're quite understanding my point. I don't think that simply disagreeing with Lomborg or disagreeing on these issues in general is problematic. I also don't think challenging the scientific veracity of his work is problematic either. This is what scientists do, Xenophon.

    My point is not "people are criticizing Lomborg and that's bad". Quite the contrary, that's very good! My point is that "normal people" and natural scientists misunderstand Lomborg because they view his nuance and willingness to question details as a lack of concern, which it's clearly not.

    My argument does not fall flat at all in that sense. I don't have a problem with academic scrutiny.

    ReplyDelete
  4. I watched the video and I'm fine with both of them. I'm not sure either comes off better.

    I'm probably closer to Krugman on questions of the discount rate, closer to Krugman on the point that Lomborg is wrong to worry too much about crowding out other poverty-reduction efforts, closer to Lomborg on the question of prospects of legislative progress, also closer to Lomborg in the sense that I'm guessing cap and trade will be a waste of time and would prefer a carbon tax. I'm certainly closer to Lomborg in the sense that I think one of the most important things we can do now is invest in research.

    You seem to think that this was some great contrast. I guess I just didn't see it that way. Both came off quite well. I think Lomborg is probably right that a lot of the difference between them is due to the difference between the discourse in Europe and in the U.S. on these issues. In other words, Lomborg would probably sound more like Krugman if he lived in the U.S., and Krugman would probably sound more like Lomborg if he lived in Europe.

    But this is largely my point about the way that non-economists see these debates. That didn't really feel like a "debate" to me - they seemed to largely agree, but have slightly different policy views and slightly different emphases.

    ReplyDelete
  5. The charge of scientific dishonesty was entirely vindicated. Entirely. That was what the DCSD charged the book with. Doh!

    "I also don't think challenging the scientific veracity of his work is problematic either."

    Sure, so long as that is what is actually going on. Are you sure that is what was going on?

    Have you actually read "The Skeptical Environmentalist?"

    ReplyDelete
  6. Daniel,

    Note that his blog post advertising the debate was something like "Debating the not-so-great Dane."

    So you're fully on-board with the "catastrophe" language of Krugman?

    ReplyDelete
  7. The blog post by Krugman that is.

    ReplyDelete
  8. Xenophon -
    The DCSD did find the book to be "scientifically dishonest". It was the MSTI investigation that "vindicated" the book. I haven't read the book and even if I read the book I wouldn't be qualified to assess it on these grounds - but I certainly don't have a problem with other people assessing it. Indeed - I'd find it problematic if they didn't assess it.

    Sure, so long as that is what is actually going on. Are you sure that is what was going on?

    I'm not familiar with the details of the case. You brought the investigation up, not me. And I just responded that I don't have a problem with simply disagreeing with Lomborg. As far as I can tell, the DSCD wasn't concerning itself with whether Lomborg cared about climate change or not.

    ReplyDelete
  9. He didn't think Lomborg's argument was that great... and he made a bad pun about a dog breed...

    How exactly in your PC brain do you expect me to react?

    The primary differences between Lomborg and Krugman seemed to be around points of:

    1. The discount rate
    2. Crowding out, and
    3. Policy priorities

    I'm closer to Krugman on 1 and 2 and closer to Lomborg on 3. I'm not sure what the problem is with one guy assessing the other guy has having a "not so great" argument.

    This is precisely what I'm getting at in the post. Economists argue very forcefully and non-economists get way too hysterical over it.

    As for the "catastrophe" language - you'll have to be more specific. I do think there is a quite good chance it will be catastrophic. Whether I agree with Krugman or not on specific statements really depends on the statement.

    ReplyDelete
  10. "I'm not familiar with the details of the case."

    Well, it is that case that is the center of controversy re: Lomborg (and of course the cause of much of the confusion regarding his work).

    ReplyDelete
  11. Daniel,

    You're trying to paint Krugman as if he was merely arguing forcefully, when in fact what he was being is a dick. Lomborg was the only person there merely arguing forcefully.

    "This is precisely what I'm getting at in the post."

    That is precisely the narrative you are trying to weave; I don't buy it in the least.

    ReplyDelete
  12. Well, it is that case that is the center of controversy re: Lomborg (and of course the cause of much of the confusion regarding his work).

    Well right - that's my point isn't it?

    When economists argue about these sort of things (and in this case, really when scientists in general argue about these sort of things), people get confused because they ascribe moral significance to things that they shouldn't.

    There were concerns about use of data, different citations, etc. - valid concerns to raise (Lomborg is hardly the first that's been accused of this sort of thing). So they investigate, as they should. It's a pretty important topic after all.

    When the public sees that, they interpret it as "Lomborg who doesn't care about climate change" vs. "the DCSD that does care about climate change". I don't know the details of this particular case, and I really don't care. What I do know is that when Lomborg scrutinizes other people's work, or when other people scrutinize Lomborg's work it should not be interpreted as indicative of a normative disagreement.

    ReplyDelete
  13. "You're trying to paint Krugman as if he was merely arguing forcefully, when in fact what he was being is a dick. Lomborg was the only person there merely arguing forcefully."

    Because he said Lomborg isn't so great? Give me a break, Xenophon. You need thicker skin. You're going to be scandalized when I post my EJW critique of Buturovic and Klein.

    I've called Krugman a drama queen in the past - I'm not denying that. But you're making way too much of this particular exchange.

    That is precisely the narrative you are trying to weave; I don't buy it in the least.

    Well based on my assessment of non-economists, generally speaking you wouldn't be expected to buy it, would you?

    ReplyDelete
  14. The point is that it was scrutinized as a normative disagreement. Scientists are just as prone to that sort of behavior as "normal people" are.

    "Because he said Lomborg isn't so great?"

    No, because of how he acted in the "debate." Of course you could have picked that up from the my portion of the statement regarding Lomborg being "there." Clearly Lomborg was there regarding the title of the blog post.

    "Well based on my assessment of non-economists, generally speaking you wouldn't be expected to buy it, would you?"

    There has been enough done on the sociology of scientists to demonstrate that they are just as prone as non-scientists to this sort of behavior. It is actually is a pretty cool area of academic literature to delve into.

    ReplyDelete
  15. "Clearly Lomborg was NOT there regarding the title of the blog post."

    ReplyDelete
  16. I wonder if a sociologist has ever looked at the behavior of economists.

    ReplyDelete
  17. "The point is that it was scrutinized as a normative disagreement. Scientists are just as prone to that sort of behavior as "normal people" are."

    They are prone to it - I seriously doubt they're "just as prone" to it.

    Could you elaborate on this a little more. I don't know the details of this DCSD investigation. You seem to think you do. Could you explain why it wasn't a review of the merits? I don't care to defend bad scientific review at all, but you seem to expect me to assume they're guilty. Could you explain why you think they're guilty of this?

    ReplyDelete
  18. Ok, time to get my day started. Have a good one.

    ReplyDelete
  19. I was talking about some aspects of the general scientific reaction to the book, not the DCSD specifically. I'd have to read Danish to get into that.

    ReplyDelete
  20. Well OK - I suppose my criticism still stands.

    On what basis should I believe these are normative challenges? I'm sure many of them are - and as I said, I'd oppose that.

    But you can't cite peer criticism as unreasonable without explaining why you think it is.

    I'm concerned with arguments like "Lomborg doesn't care about X". If someone says "Lomborg is wrong about X", you better have a good argument if you expect me to believe that what they're really saying is "Lomborg doesn't care about X". Otherwise you're confusing the issue in precisely the way that I'm concerned people are confusing the issue.

    ReplyDelete
  21. My suggestion is that you take an hour or so to review (if it really interests you - if it doesn't, don't do it - you're a busy guy these days from what I can tell) to look at the scientific reaction to Lomborg's book. Much of it is rather overwrought. That's the point I am getting at.

    And since we've veered basically into the sociology of knowledge, one of my favorite books that deals with the subject re: science is "The Golem: What You Should Know About Science."

    ReplyDelete
  22. Speaking as someone specialising in environmental and resource economics, 'The Skeptical Environmentalist' is certainly an interesting book. It has some very valid propositions... and then and some highly dubious ones.

    Xenophon, by the way you've couched your language here - Lomborg was "entirely vindicated" - you overlook the flaws in the TSE, of which there are undoubtedly more than a few. To belabour the point; absence of (academic) dishonesty does not constitute freedom of error.

    Among other things, Lomborg to often paired highly complex environmental issues with crudely simplistic solutions that, ultimately, are misleading or unworkable in the real world. To illustrate, take the following critique of TSE's discussion of fresh water issues: http://www.pacinst.org/publications/essays_and_opinion/lomborg_review_by_gleick_for_environment.pdf
    (The author is Peter Gleick, founder of the Pacific Institute and, arguably, the foremost expert in the field.)

    ReplyDelete
  23. Thanks for the insights stickman!

    Although I thought it was concluded that the book was "academically dishonest", simply that it was concluded that Lomborg himself didn't know any better.

    For me a lot of this is besides the point - academic works will be critically reviewed. That's fine and that's important. I've certainly had errors in my own work corrected by peer review. That's a very good thing.

    The point is, Lomborg (and Krugman, for that matter) is misperceived because the public moralizes and emotionalizes on these issues.

    ReplyDelete
  24. Going back to the original focus of this post, I certainly agree that many people misunderstand economic arguments for delaying action against climate change (such as suggested by, e.g., Nordhaus), or intervening in other environmental issues. If I had a dollar for every time I had to explain the concept of opportunity costs to someone then... well, I'm not saying I would be a rich man, but at least I would have been more comfortable ordering that '95 French wine last night instead of the house red. ('Twas very average.)

    That being said, I do think that there are sound economic reasons for strong action against climate change sooner, rather than later. Principally, these boil down to reasons of uncertainty (cf. Weitzman, Gollier) and to the imperfect substitutability of man-made goods with environmental goods.

    On this latter issue, if there was ONE paper that I could recommend anyone read on climate change economics, it might very well be this one: http://reep.oxfordjournals.org/content/2/1/61.full
    Seriously, have a look. It's not too long and is very readable. The authors provide a good overview of the basic arguments in the literature (e.g. Stern vs Nordhaus on discount rates) and go on to introduce their own 'relative price' (between man-made and non-market goods) proposal for emissions reduction.

    ReplyDelete
  25. If you can't access the above link, look for:
    "An Even Sterner Review: Introducing Relative Prices into the Discounting Debate" by Sterner and Persson. (Published in the Review of Environmental Economics and Policy, Winter 2008)

    ReplyDelete
  26. Great - thanks for the links. I'll take a look at them and try to post on them if I think I have anything worth saying.

    ReplyDelete
  27. Apologies for being a comments whore, but Daniel you did mention cap-and-trade; something you've previously indicated your scepticism of (citing a preference for a carbon tax).

    The strong opposition to C&T always surprises me somewhat, given it's sound theoretical underpinnings and real-life successes. Personally, I lean towards C&T over a carbon tax because, among other things, it has the ability to overcome information problems and is not subject to distributional bias (a problem, of course, inherent to virtually all taxes). I understand that some companies may prefer the "price certainty" of a carbon tax to help forecasting, but that's more an issue of regulatory uncertainty to my mind. As Robert Stavins has argued many times, the problem with C&T is design implementation, rather than the instrument itself.

    A good (and short) disposition on C&T versus the alternatives: http://belfercenter.ksg.harvard.edu/analysis/stavins/?p=355

    ReplyDelete
  28. stickman -
    I don't have a background in environmental economics, so I think I prefer a carbon tax because of the more general approach to externalities and market efficiency that I take.

    C&T has just always struck me as more rigid. Supply and demand for carbon are going to naturally shift over time, so setting a cap seems more difficult than pricing the externality. We expect supply and demand to oscillate - I don't think we expect the externalized social costs to oscillate as much, right? In that sense, pricing the externality seems easier than guessing the extra carbon consumption due to the externality.

    I also don't see how a cap provides the same sort of intertemporal flexibility. Let's say Israel goes to war with Iran and there is a major oil shock. A carbon tax seems like it would be able to deal with this better than a cap.

    If the externalities were so huge that we would seriously consider refraining from using carbon entirely, a substantial cap and trading system might be the best way to efficiently use what fossil fuels we do end up using. But on the margin like this - in a situation where we do think we want to use fossil fuels, we just want to address the externality they introduce, it seems to me that guessing the cost of that externality is easier than guessing how much carbon would be optimal.

    ReplyDelete
  29. That's just my take - I may be thinking of this the wrong way.

    ReplyDelete
  30. "To belabour the point; absence of (academic) dishonesty does not constitute freedom of error."

    I never claimed otherwise. I was very specific with regards to what he was vindicated of. Very, very specific.

    The biggest problem with C&T is that it is prone to lots of arbitrage ... as has been shown in Europe.

    Matt Ridley on the IPCC: http://www.rationaloptimist.com/blog/reform-ipcc-sake-science

    ReplyDelete
  31. Xenophon -
    The trouble is, you wrote "The charge of scientific dishonesty was entirely vindicated", and if Wikipedia is to be trusted, The Skeptical Environmentalist was found to be "scientifically dishonest". Is there any reason to think this is a misrepresentation?

    ReplyDelete
  32. It was originally found to be so by the DCSD; the MTSI said basically that the DCSD had no basis for that claim.

    ReplyDelete
  33. OK - and the DCSD said that MTSI had no basis for its claim.

    I'm having trouble figuring out exactly what you're trying to say.

    A committee of reviewers suggested that there were instances of scientific dishonesty. The political body with oversight over the committee rescinded the decision. I don't know what that means legally for Lomborg - presumably it is good. From a scientific standpoint I don't see how that changes the finding of scientific dishonesty, particularly since even after the MTSI review, DCSD maintained its critique.

    In peer review, if two reviewers come to different conclusions that doesn't negate the concerns of the more critical review! Politically, MTSI's decision was significant for Lomborg. Scientifically, I don't see how it changes the question of dishonesty.

    And again - I'm not trying to pile on Lomborg. Critical review is a good and natural thing, and no one - not even the DCSD - tried to imply that Lomborg intentionally did anything wrong. I'm just trying to get away from the public's tendancy to lionize people who agree with them and villify people they don't agree with, which you seem to be engaging in here.

    ReplyDelete
  34. The DCSD maintained its critique, yet did not act on it. It is sort of an odd circumstance actually; particularly since they argued was scientifically dishonest but the author was not.

    ReplyDelete
  35. What's odd about that? People make mistakes. A social scientist commenting on some question of natural science is bound to.

    The DCSD maintained its critique, yet did not act on it.

    What would be the purpose of acting on it if the oversight body disagreed?

    ReplyDelete
  36. The oversight body sent back a set of recommendations; the DCSD looked at them and said, well, we'd come to the same conclusion anyway but that's all we're going to say. It is sort of an odd conclusion from my perspective.

    ReplyDelete
  37. Anyway, you have a pleasant evening.

    ReplyDelete
  38. Here's CSICOP's take on the Lomborg affair (it isn't one that I agree with, but it is something I found and I like all sides being presented): http://www.csicop.org/specialarticles/show/skeptical_environmentalist_a_case_study_in_the_manufacture_of_news/

    ReplyDelete
  39. Well, not all sides literally ... don't want to sound like I'm some sort of intelligent design or scientific creationism advocate.

    ReplyDelete
  40. Thanks for the reply, Daniel. I have to go get back to some regular work (like everyone else here it seems!), so I'll try to give my thoughts fairly briefly:

    "C&T has just always struck me as more rigid. Supply and demand for carbon are going to naturally shift over time, so setting a cap seems more difficult than pricing the externality. We expect supply and demand to oscillate - I don't think we expect the externalized social costs to oscillate as much, right? In that sense, pricing the externality seems easier than guessing the extra carbon consumption due to the externality."

    Well, I agree with you about the fixed nature of the externality, but my take on the prescription is quite the opposite. And it stems largely from another benefit of C&T over carbon taxes that I didn't mention above: environmental effectiveness. In other words, by setting a limit on emissions (the "cap") we are guaranteed not to exceed some critical threshold.

    From my perspective, the externality in question stems from a desire to limit warming to somewhere around 2°C above pre-industrial levels. (This is the level recommended by the Stern Review based on his CBA calculations, although some studies would argue higher and others lower... see my earlier link!) According to our best scientific estimates, this would correspond to an overall CO2 level of 450-550 ppm in the atmosphere. The cap of a C&T would be quite generous at first and then progressively lowered over time to reach this critical, say, (+/-)500 ppm level. So I also don’t see C&T as suffering from a lack of “intertemporal flexibility”, as you put it.

    There is no certainty that a carbon tax will guarantee the same environmentally effective outcome... For one thing, it implies that Government has perfect knowledge of firms’ marginal cost sensitivity (w.r.t. emissions); which, of course, is impossible. Unless Government has full Marginal Cost of Abatement (MCA) information, they may set the tax too high or too low relative to the desired abatement level. Put slightly differently, unlike a C&T scenario – where firms establish their own MCA – Government has to ascertain this on an economy-wide level if it wishes to ensure economic efficiency at a desired level of abatement. Again, it’s very much unlikely that it has sufficient knowledge of the MCA of all firms to do this – at the very least, it implies additional monitoring and enforcement costs.

    ReplyDelete
  41. Thanks for the reply, Daniel. I'll try to give my thoughts fairly briefly:

    "C&T has just always struck me as more rigid. Supply and demand for carbon are going to naturally shift over time, so setting a cap seems more difficult than pricing the externality. We expect supply and demand to oscillate - I don't think we expect the externalized social costs to oscillate as much, right? In that sense, pricing the externality seems easier than guessing the extra carbon consumption due to the externality."

    Well, I agree with you about the fixed nature of the externality, but my take on the prescription is quite the opposite. And it stems largely from another benefit of C&T over carbon taxes that I didn't mention above: environmental effectiveness. In other words, by setting a limit on emissions (the "cap") we are guaranteed not to exceed some critical threshold.

    The externality in question stems from a desire to limit warming to somewhere around 2°C above pre-industrial levels. (This is the level recommended by the Stern Review based on his CBA calculations, although some studies would argue higher and others lower... see my earlier link!) According to our best scientific estimates, this would correspond to an overall CO2 level of 450-550 ppm in the atmosphere. The cap of a C&T would be quite generous at first and then progressively lowered over time to reach this critical, say, (+/-)500 ppm level. So I also don’t see C&T as suffering from a lack of “intertemporal flexibility”, as you put it.

    There is no certainty that a carbon tax will guarantee the same environmentally effective outcome... For one thing, it implies that Govt has perfect knowledge of firms’ marginal cost sensitivity (w.r.t. emissions); which, of course, is impossible. Unless Govt has full Marginal Cost of Abatement (MCA) information, they may set the tax too high or too low relative to the desired abatement level. Put slightly differently, unlike a C&T scenario – where firms establish their own MCA – Govt has to ascertain this information on an economy-wide level if it wishes to ensure economic efficiency at a desired level of abatement. Again, it’s very much unlikely that it has sufficient knowledge of the MCA of all firms to do this... at the very least, it implies additional monitoring and enforcement costs.

    ReplyDelete
  42. "Well, not all sides literally ... don't want to sound like I'm some sort of intelligent design or scientific creationism advocate."

    Heresy!
    :)

    ReplyDelete
  43. stickman,

    Just for fun: http://www.youtube.com/watch?v=yArPNtiQDcM

    ReplyDelete
  44. @ Xenophon... Yup, it's almost too easy to make fun of those guys. On a similar note, have you see Bill Maher's "Religilous"? Very funny and has one or two clips of Cameron in there for good measure (although, ironically, it gets a bit evangelical at the end for my liking).

    ReplyDelete
  45. [Going back to the general discussion at hand, I tried several times to post the below comment last night... So if insanity is repeating the same action expecting different results, then sign me up!]


    "The biggest problem with C&T is that it is prone to lots of arbitrage ... as has been shown in Europe."

    Ya, I know that the ETS has copped a lot of flak, but it's a pretty misunderstood animal. The last few years have really been an experimental phase for players to familiarise themselves with process and to pre-empt problems that might arise once the system starts proper. The real test will come once Phase III begins in 2013.

    Again, I think that problems with C&T are almost always down to bad design implementation. Real-life successes (e.g. phasing out of leaded gasoline and helping to halve acid rain in the US) indicate that such a system can work very well, indeed.

    On the subject of Matt Ridley, have you seen George Monbiot's criticism?
    http://www.guardian.co.uk/commentisfree/2010/may/31/state-market-nothern-rock-ridley
    and
    http://www.guardian.co.uk/commentisfree/cif-green/2010/jun/18/matt-ridley-rational-optimist-errors
    (I don't claim that Monbiot fully understands the premises of Libertarianism - or Austrian economics for that matter - but he certainly offers food for thought on Ridley himself, as well as errors in his book. It seems hard not to note at least some blatant hypocrisy.)

    ReplyDelete
  46. * sorry, that should obviously be "EU ETS" in case of any confusion.

    ReplyDelete

All anonymous comments will be deleted. Consistent pseudonyms are fine.