Monday, December 07, 2009

Krugman is Optimistic in Hacky Ways

That Paul Krugman is considered a thought leader, and is employed by perhaps the most influential left-win publication in the world, tells you something about the economic expertise of your average liberal.

Read and weep.



Maybe I’m naïve, but I’m feeling optimistic about the climate talks starting in Copenhagen on Monday. President Obama now plans to address the conference on its last day, which suggests that the White House expects real progress.


Why does it suggest this? What do these two facts have to do with each other? If Obama were to attend the whole thing, or only the first part, Krugman would say the same thing.

It’s also encouraging to see developing countries — including China, the world’s largest emitter of carbon dioxide — agreeing, at least in principle, that they need to be part of the solution.

Lip service isn't principle. China also agrees, at least in principle, that it is bad to murder religious dissidents. Principle is kind of the sticking point, re: China.

Of course, if things go well in Copenhagen, the usual suspects will go wild.


Disagreeing with Krugman = Going Wild

We’ll hear cries that the whole notion of global warming is a hoax perpetrated by a vast scientific conspiracy, as demonstrated by stolen e-mail messages that show — well, actually all they show is that scientists are human, but never mind.


Let's apply this clever rhetorical dodge to other events.

Stolen e-mails indicate that Al Qaeda is planning a terrorist attack on the World Trade Centers. This is further proof that terrorists are human.


We’ll also, however, hear cries that climate-change policies will destroy jobs and growth.

This particular brand of dysphemism gets under my skin. Nobody will be "crying" at all. Krugman is uninterested in countering this argument like an adult, so he resorts to this hacky means of dismissal.

The truth, however, is that cutting greenhouse gas emissions is affordable as well as essential. Serious studies say that we can achieve sharp reductions in emissions with only a small impact on the economy’s growth.


Well, if "serious studies" say so. What, you're going to argue with "serious studies"?

And the depressed economy is no reason to wait — on the contrary, an agreement in Copenhagen would probably help the economy recover.


And I'll probably start shitting clowns. In other words, Krugman is defining downward the colloquial notion of probability.

Why should you believe that cutting emissions is affordable?


Because you have no common sense? Because you go to Bennington College? Because you've never really had to pay taxes?

Action on climate, if it happens, will take the form of “cap and trade”: businesses won’t be told what to produce or how, but they will have to buy permits to cover their emissions of carbon dioxide and other greenhouse gases.

No. The taxpayers will buy their credits for them. That makes an already stupid ponzi-esque scheme even, well, more stupid, but less ponzi-esque. Krugman is ignoring this, either because he is lying, or because the optimism has gotten to his brain.

So they’ll be able to increase their profits if they can burn less carbon — and there’s every reason to believe that they’ll be clever and creative about finding ways to do just that.


Lobbying congress to get taxpayers to foot the bill, for example.

As a recent study by McKinsey & Company showed, there are many ways to reduce emissions at relatively low cost: improved insulation; more efficient appliances; more fuel-efficient cars and trucks; greater use of solar, wind and nuclear power; and much, much more.


All you have to do is buy new cars, new appliances, and re-insulate your house... Oh, and relocate to a community that relies on wind energy. Easy and cheap. I don't know why you haven't done it already.

And you can be sure that given the right incentives, people would find many tricks the study missed.


Is putting the Democrats out on their asses in 2010 one of the tricks?

The truth is that conservatives who predict economic doom if we try to fight climate change are betraying their own principles.


Note to readers. Krugman knows the argument he is about to make is complete and utter BS. He is not this stupid. He is counting on the fact that his regular readers do not. They are this stupid.

They claim to believe that capitalism is infinitely adaptable, that the magic of the marketplace can deal with any problem.

Nope.

But for some reason they insist that cap and trade — a system specifically designed to bring the power of market incentives to bear on environmental problems — can’t work.


Sigh. Artificial price controls negate the free market. The same principle applies to fraud. Bad actors in free markets skew the markets in a way capitalism cannot accommodate. As such, conservatives argue that the government should NOT impose constraints on the free market, for the precise reason that capitalism relies upon a free market.

This is akin to arguing that, since (small d) democrats believe in the virtue of personal autonomy, they should not object to concentration camps, on account of the inevitable triumph of that autonomy.

The acid rain controversy of the 1980s was in many respects a dress rehearsal for today’s fight over climate change.

Insofar as demagoguery and flimsy science shaped policy then, too, yes.

Then as now, right-wing ideologues denied the science. Then as now, industry groups claimed that any attempt to limit emissions would inflict grievous economic harm.

My guess is that this is in a press release, since I've seen this argument made by several greenos over the last several days. I'm not going to rehash the entire debate over acid rain, but this is bologna.

But in 1990 the United States went ahead anyway with a cap-and-trade system for sulfur dioxide. And guess what. It worked, delivering a sharp reduction in pollution at lower-than-predicted cost.

Yeah. Visit here to see what Krugman considers to be a "sharp reduction". Or take my word for it. SO2 reduction occurred at the same rate from 1980-1990 as it did from 1990-2000.

Curbing greenhouse gases will be a much bigger and more complex task — but we’re likely to be surprised at how easy it is once we get started.


Well, he did warn us he was feeling optimistic.

The Congressional Budget Office has estimated that by 2050 the emissions limits in recent proposed legislation would reduce real G.D.P. by between 1 percent and 3.5 percent from what it would otherwise have been.

Yeah, 3.5% of the entire American economy. No big whoop. Let's be optimistic. What's projected to happen probably won't happen. See how easy it is?

If we split the difference, that says that emissions limits would slow the economy’s annual growth over the next 40 years by around one-twentieth of a percentage point — from 2.37 percent to 2.32 percent.


That's actually really bad. A drop from 2% GDP growth in 2007 to 1% in 2008 was sufficient to cost 7 million jobs. Take that figure, and divide it by twenty. That is 350,000 jobs lost, every single year, enough to constitute a .25% increase in unemployment. Again, Krugman knows this, and assumes you do not.

Add this to the $2k or so (depending on how the lobbyists do with this bill) that this will cost per family. Say you make $80,000 per year. You have an added .25% chance of losing your income at any given time. You have are now devoting $2,200 (5.25%) to a single piece of environmental legislation.

Still, should we be starting a project like this when the economy is depressed?


No, because obviously the costs will be front-loaded, meaning the bulk of the impact will be almost instantaneous... Which is a bad thi...


Yes, we should — in fact, this is an especially good time to act, because the prospect of climate-change legislation could spur more investment spending.


Noooooooo! That's not how an economy works. You don't impose a cost in hopes of spurring investment to reduce the cost. Otherwise, we might as well introduce a cap and trade system for soybeans and screwdrivers. It's like buying something solely for the tax break. This is depressing.

Consider, for example, the case of investment in office buildings. Right now, with vacancy rates soaring and rents plunging, there’s not much reason to start new buildings.

Yeah, let's consider things. That's a start. Things are good.

But suppose that a corporation that already owns buildings learns that over the next few years there will be growing incentives to make those buildings more energy-efficient.

This is what the corporation will do. It will sell its empty buildings. Alternately, it will foreclose on them. In either event, the new price will reflect the "incentives", thereby driving down the price of commercial property. I now return you to the land of make believe...

Then it might well decide to start the retrofitting now, when construction workers are easy to find and material prices are low.

Of course, if demand rises in accordance with Krugman's fantasy, material prices will be high and workers scarce. But again, in reality, they'll just sell the damn buildings and declare bankruptcy.

Oh, and this applies to homeowners as well. I mean, not Krugman's Central Park friends and Bennington College students, but people who exist in something resembling reality.

The same logic would apply to many parts of the economy, so that climate change legislation would probably mean more investment over all.

After all, weren't you just itching to re-insulate your house? All you have to do is cash out the equity in your home and use that money to... What? Oh, right. The economy.

So let’s hope my optimism about Copenhagen is justified.


Hope springs !@#$ing eternal with these people.

3 Comments:

Blogger Sarah said...

"shitting clowns" hahaha. That was funny. I think that people can't face that people are procrastinators. We can spend money to make it look like we're making progress but it seems real change only happens on the brink of disaster. If global warming is indeed a result of our carbon footprint,(and I don't think there will be incontrovertible evidence for this in our lifetime) then by the time seas start swallowing the continents and we live in "Water World" I will be long gone. I may naive enough to suspect the general population feels much the same. Do we care about global warming when we're facing unemployment and struggling to keep basic necessities? I think not. Much like I think many issues are accessory issues. They are only big issues when there aren't major crises going on. For example, I strongly believe that vegetarians will quickly give up their principles about animal cruelty if suddenly they were faced with starvation and animal flesh was the only available sustenance. Maybe I've just gone from an optimistic idealist to a pessimistic realist.....

10:03 AM  
Anonymous Anonymous said...

what is your beef with bennington, kevin?

7:37 PM  
Blogger Kevin Sawyer said...

Bennington serves as a stand-in for my vision of an overpriced school where kids are taught little aside from their own self-worth. Nothing personal, though nothing has ever impressed me about the place.

8:24 PM  

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