Journal: News & Comment

Friday, September 06, 2002
# 7:53:00 AM:

How to tell if someone has a brain

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The sign of an intelligent mind is when you can't predict what someone's going to say simply by determining their political persuasion. I think Andrew Coyne (whose personal site needs updating) is the best newspaper columnist in Canada. I admit I haven't read every writer, but it takes talent for a conservative like Coyne to have someone like me (who'd be called a social democrat in most countries, but we don't use that term much in Canada) regularly nodding along, somewhat surprised, thinking, "yeah, he's got it right."

In the past couple of days Coyne has addressed the Kyoto Protocol, and once again he frames the debate differently than most, finding ways to support it from a conservative, free-market, follow-the-money perspective. Here's a bit from his September 4 piece:

A study for the Alberta government [...] put the cost of [Kyoto] ratification [at up to] $40-billion annually. Forty billion dollars! Kerrangg!

Er, wait a minute. This is a $1.1-trillion economy. In 10 years' time, it will probably be at least [...] $1.5-trillion, without Kyoto. With Kyoto, it only grows to $1.46-trillion. That enormous, devastating, death-knell-sounding $40-billion, in other words, is essentially a rounding error, a paltry 2.6% of GDP, or about as much as the economy churns out every nine days. Instead of a 33% national pay raise, we'd have to settle for a lousy 30%. [...]

Maybe 10 years from now, with the benefit of better science, we'll decide it was all a false alarm. On the other hand, maybe by then it will be clear that the threat is real. I'm not a betting man, but either way, it seems a small enough ante to keep us at the table.

He extends that argument today (in a column that doesn't yet seem to be online, called "The Skeptic's Case for Kyoto") by comparing the Kyoto agreement to insurance. Most of us buy life insurance in case we are hit by a bus or otherwise unexpectedly smitten, even though, individually, fatal accidents are relatively rare. So:

...the chances that the many distinguished scientists who predict an impending climatological catastrophe will prove to be right must be considerably greater than the chances I will be run over by a bus tomorrow. Or at any rate, they are greater than zero. In which case, would it not be prudent to take out some insurance against the event? [...]

Suppose you think there is a one-in-three chance that global warming is real, and you put the costs, whether in terms of adapting to climate change or simply enduring it, at $120 billion a year -- about 10% of present-day GDP. In that case, you should be willing to pay as much as $40 billion a year in insurance, which is the upper limit of most estimates of what it would cost the country to comply with Kyoto. To put that in perspective, that's about $100 a month, per person.

Not cheap. But plenty of people spend close to that for a single tank of gas for their SUVs. I agree with Coyne's analysis, but there are two difficulties:

  1. We can usually choose, individually, whether to buy insurance, and thus pay the price either in "wasting" our money on it (if we do, and don't need it) or in the financial consequences of a disaster (if we don't, and do need it). Even in situations where we're "forced" to buy insurance -- such as to register and drive a car -- we usually do have a choice. You don't have to own or drive a vehicle, but it is convenient for most people, so we pay. Kyoto does not give us that kind of choice. We either all pay, or we don't, and we all suffer -- one way or the other -- or we don't, depending on our collective luck and that of our environment.

  2. Unless the insurance company goes bankrupt (not common -- can you get insurance against that?), insurance pays out if the insured event occurs, i.e. if you get accidentally hit by a bus and die, your family gets some money. The Kyoto Protocol, on the other hand, may not actually save our butts, or it may be implemented so poorly that bureaucracies make a whole bunch of rules that make no sense, we don't meet the emissions targets, and we just screw up the economy for no real benefit. That's what some fear.

That's a good argument for trying to make emissions reductions market-based, by setting high-level rules on how commerce is conducted so environmental effects are part of the accounting, but letting smart and self-interested people figure out a whole bunch of different and competing ways for how to make the changes happen -- like the various alternative power options I mentioned yesterday.

Hey, I said I was a social democrat, not a Bolshevik.


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