It would be a lot better for everyone — including the planet — if we left off the tribalism and the excommunications and went back to actually talking about the science: messy, imprecise and always open for well-grounded debate.
Read the whole thing. I am, like McArdle, reminded of macroeconometrics when I see statements based on climate models. Which is why I am a skeptic.
The WaPo’s Tamar Haspel writes,
The USDA’s certified-organic program — from its inception a marketing program, not an environmental initiative — has given organic farmers a way to make a living (and farmers do have to make a living) by connecting with like-minded consumers willing to pay a premium for a product that is grown in a way that is often labor-intensive and lower-yielding, and produces some bona fide environmental benefits.
The fact that organic food costs more indicates to me that organic farming is environmentally damaging and not sustainable. If organic food costs more, that is because it uses more resources, as the phrase “labor-intensive and lower-yielding” indicates.
Of course, the market may be mis-pricing resources. For example, suppose that non-organic farming causes more water pollution that is not reflected in its cost. If so, then proper pricing might tilt the balance more in favor of organic farming. But I do not see people making such a case. Instead, journalists, agricultural scientists, and environmentalists seem to me to want to over-ride market information without thinking about whether or not resources are correctly priced.
There is basic illogic embedded in the phrase “farmers do have to make a living.” Work is a cost, not a benefit. Nobody is saying that we should return to the way light bulbs were made 100 years ago because “glass blowers do have to make a living.” Nobody is saying that telephony should operate the way it did 50 years ago because “telephone operators do have to make a living.”
If you really want to increase jobs in agriculture, you could go back to doing farming the way we did 100 years ago. Getting rid of all of the farm equipment and plant breeds that have been developed over the past century would do the trick.
Haspel’s piece struck me as neither better or worse than most environmental analysis. It is the norm for such analysis to be grounded in economic ignorance.
An NYT story credits a policy called catch shares.
Under this system each boat is given a long-term share (say, 5 percent) of the total annual quota, to give the fleet a strong vested interest in rebuilding fish stocks. As Lubchenco explains: “If you have 5 percent of the pie, you’d like to see the pie grow.”
And here is Alex Tabarrok on technology that could help.
Environmentalists and economists share a common interest in the use of scarce resources. However, environmentalism all too often lapses into primitivism, which is the instinct that humans should revert to prehistoric lifestyles.
For example, consider an ethic of leaving nature exactly as you found it. For a hunter-gatherer, this is a reasonable ethic. If you deplete one of your sources of food, that’s it.
As humanity discovered cultivation, industrialization, and digitization, we have transcended the limits of what we can hunt and gather. As Paul Romer points out, we obey the laws of physics. Our activities neither create nor destroy matter. What we do is transform matter into different forms that are more useful to us.
In this modern world, where we better ourselves by transforming matter, the price system is our guide to making the best use of resources. Environmentalists tend to be hostile to the price system, and instead they tend to want to impose their own rules for using resources.
One way to reconcile environmentalism with economics and the price system is to use the theory of externalities to propose ways for government to fine-tune prices, using taxes and subsidies. However, government technocrats will only imperfectly calculate externalities. These technical flaws do not preclude government intervention, but even an enlightened benevolent despot would be conservative about intervening because of the calculation problem.
An even bigger concern is that we do not have enlightened, benevolent despots. Instead, we have rent-seeking interest groups. And we have demagogues who appeal to primitivism.
I wish that economists would do more to expose the problems with primitivism. I cringe when I see college campuses espousing primitivist ideology under the guise of “sustainability” while their economics professors remain silent.
I have an extensive treatment of this issue in the forthcoming Specialization and Trade, where I include more facts and less rhetoric.
For Western oil companies,the rational strategy will be to stop oil exploration and seek profits by providing equipment, geological knowhow, and new technologies such as hydraulic fracturing (“fracking”) to oil-producing countries. But their ultimate goal should be to sell their existing oil reserves as quickly as possible and distribute the resulting tsunami of cash to their shareholders until all of their low-cost oilfields run dry.
His claim is that there is no need to discover more oil. There is plenty of cheap oil available, albeit in countries that are not our favorites. But if you can pump oil for a few dollars a barrel in Iran or Russia, it is wasteful to search for oil that costs over $30 a barrel to extract elsewhere.
My main reaction is that we sure have come a long way from “peak oil” theory.
annual global production of lithium has more than doubled from from about 16,000 metric tons in 2004 to over 36,000 metric tons by 2014. Even with this rise in quantity produced, the price of a metric ton of lithium carbonate has risen from $5,180 in 2011 to $6,600 in 2014.
He cites a report from Goldman Sachs on emerging themes, one of which is “Lithium is the new gasoline.” (The other claims in the report are also provocative.)
Changing our energy technology does not automatically eliminate scarcity. It is instead a form of substitution.
according to new research from Carnegie Mellon University, following the USDA recommendations to consume more fruits, vegetables, dairy and seafood is more harmful to the environment because those foods have relatively high resource uses and greenhouse gas (GHG) emissions per calorie.
I put zero trust in this sort of study. I think that market prices give you a much better indicator of resource cost. I think that environmental scientists have not business telling us that they know better.
The Gates-led Breakthrough Energy Coalition will be investing over $1 billion dollars, the Wall Street Journal reports. The exact dollar amount pledged is unknown, but a Gates spokesperson told Tech Insider that “it represents many billions of dollars in willing capital.”
The report links to an essay by Gates, who writes,
Today’s batteries also have a far lower energy density—that is, they store much less by weight—than fossil fuels. Coal provides 37 times more energy per kilogram than the best lithium-ion batteries available today. Gasoline provides 60 times more
Like the Obama Administration, Gates thinks that throwing money at firms attempting to solve this and other problems related to energy is a good idea. I do not think that either Obama’s people or Gates are particularly skilled at this sort of investment, but I have much more respect for Gates because he is throwing money that he and other investors are providing voluntarily, rather than appropriating taxpayers’ money to fund his dubious scheme.
Unfortunately, elsewhere in the essay, Gates touts the virtues of government-funded research and development. He should read Matt Ridley’s analysis of that in The Evolution of Everything. Ridley offers a refutation of Gates’ recycled cliches.
For another optimistic take on batteries, see Seth Borenstein’s article.
Jayson Lusk and Pierre Desrochers write,
In a recent paper, Andrew Zumkehr and Elliott Campbell (2015; Front Ecol Environ 13[5]: 244–248) present a simulation study that assesses the technological feasibility of providing enough local calories to feed every American. In so doing, they suggest turning back the clock on one of Homo sapiens sapiens’ greatest evolutionary achievements: the ability to trade physical goods over increasingly longer distances, producing an attending ever-widening division of labor (Horan et al. 2005). The main benefit of this process is that one hundred people who specialize and engage in trade end up producing and consuming far more than one hundred times what any one individual would achieve on his or her own. By spontaneously relocating food production to regions with higher biotic potential for specific types of crops and livestock in order to optimize the overall use of resources, trade and the division of labor have delivered more output at lower costs.
Pointer from Mark Thoma.
I am stunned by the casual way in which environmentalists dismiss the information that markets provide concerning costs. They instead substitute their own cost estimates.
Some further thoughts:
1. If you really have a better estimate of costs than the market, then there should be profit opportunity. In the case of locavorism, you should be able to offer local food for lower prices. Do any locavorists stop to wonder why food that comes from far away cost less? Do they suppose it is some perverse conspiracy on the part of “big food” to subsidize the transportation industry (or perhaps the other way around)?
2. Consider recycling. At a local elementary school, I saw the winning poster in a county contest to promote recycling. The poster pictured a barren, brown earth, and said that this is what would happen if we did not recycle. And yet, economically, government-forced recycling is unsustainable, and it probably results in a net cost to environmental desiderata. (I wonder if people on the left would be so attached to government-run schools if the propaganda coming from those schools offended them.)
3. Consider two extremes: “free-market fundamentalism,” which says that markets always lead to optimal outcomes; and “market denialism,” which I will define as the belief that the information found in markets is of so little importance that one’s personal opinions should take precedence. I think that in practice market denialism is much more prevalent than free-market fundamentalism. In fact, it is so prevalent that no one refers to it as “market denialism.” They just presume that it is the appropriate point of view.
Related: Clive Crook cites Dani Rodrik‘s 10 commandments for economists.
“Substituting your values for the public’s is an abuse of your expertise.”
Pointer from Tyler Cowen. And how can Rodrik be immune from “abuse of your expertise”?
Despite decades of exhortations and mandates, it’s still typically more expensive for municipalities to recycle household waste than to send it to a landfill. Prices for recyclable materials have plummeted because of lower oil prices and reduced demand for them overseas. The slump has forced some recycling companies to shut plants and cancel plans for new technologies. . . .
Moreover, recycling operations have their own environmental costs, like extra trucks on the road and pollution from recycling operations. Composting facilities around the country have inspired complaints about nauseating odors, swarming rats and defecating sea gulls. After New York City started sending food waste to be composted in Delaware, the unhappy neighbors of the composting plant successfully campaigned to shut it down last year.
Belongs on first-year economics course reading lists everywhere.