Krugman Speaks (in His Native Tongue)

In his column appearing in the Seattle Times today, Paul Krugman says that the usual suspects (i.e. conservatives) will go wild if there is progress at the Copenhagen global warming conclave. He also thinks there will be cries that this is a vast scientific conspiracy which will destroy jobs and economic growth. In fact conservatives have been a little wild and more that a little angry. They have lately been wild with enthusiasm that the recent "climate-gate" revelations show that there is indeed a vast conspiracy that is finally being exposed. They have also been angry that such a hoax continues to be perpetrated against the citizens of this country and of the world. For myself, I am somewhat numb. I have seen too much of the ignorance of those who are the willing victims of this hoax to feel much outrage anymore. I still believe that global warming ranks in the top ten in all the history of tyranny against the mind of man. Satan in the Garden being number one and Marx, Lenin, Hitler, Mao, and a few like minded others vying for the other top spots. Unfortunately, for the same reasons that Mr. Krugman is optimistic, I am growing pessimistic.

Of course, Mr. Krugman is guilty of advancing and perpetuating egregious violence against reason, but I do not blame him. He is locked into a mind set that has hopelessly befuddled his thinking (related to "Keyneseism"). He advances several arguments in favor of the economic benefits that would accrue to us if we adopted a policy of cap-and-trade to fight global warming. To be generous to him, his thesis is probably better stated as something like, "cap-and-trade would cause far less decline than has been claimed by its detractors." It is a little difficult to say if maybe he does think there could be a net gain when he states that businesses will, "be able to increase their profits if they can burn less carbon." Actually, he means that they will mitigate their losses under cap-and-trade by "burning" less carbon. The only ones to profit will be those in the marketing of the carbon credits, i.e. the tax collectors

In any event, in his reasoning he falls prey to one of the most pervasive economic fallacies, the fallacy of the broken window. This was named by Bastiat and referenced by Hazlitt in Economics in One Lesson. The Nobel Laureate, Mr. Krugman claims that there can be economic gains by investment in development of various ways to emit less greenhouse gas. This is like the investment that Bastiat talks about to repair the broken window. The manufactures and the installer will all benefit by the "investments" made in repairing the broken window. They will spend their new gains, thus stimulation the economy. Therefore would it not be beneficial to break more, of even all windows? Especially, as claimed by Mr. K, at a time of economic downturn? The answer is: No.


The reason for this is not difficult to discern. The resources that go into the repair of the window would have been used for something else if the window had not been broken. If for some reason, no windows were broken for a year, we would experience an upsurge in the production of other economic goods. Perhaps the capitol, labor, and natural resources used in the production and installation of windows would go to the building of new houses. (The exact composition of the new goods would depend upon the what purchasers in the market demanded, for the consumer is king in the unimpeded market.) If more windows are broken, we cannot say what would be lost for we can never know what might have been. That so few can see this simple fact is what causes my pessimism.

With the case of global warming, the atmosphere is what is broken, according to Al Gore and the warmies. Much of the scarce recources of planet earth have to go to stopping the damage to the atmosphere, according to them. In the opinion of the conservative wing, we do not even get a new window, since the atmosphere is not really broken and our efforts will not fix anything.

Now Mr. K also says that to believe that Man Made Global Warming is a hoax, one would have to believe in a vast scientific conspiracy. That may be so. Yet to believe as Mr. K does, one would have to believe in a conspiracy of all the fossil fuel users around the globe. He says that we can reduce emissions at relatively low cost by, "improved insulation, more efficient appliances, more fuel efficient cars and trucks, greater use of solar, wind, and nuclear power and much, much more." All we need is the economic incentive of cap-and-trade to find and develop all these new ways. However I would point out that we already have the incentive of $70 to $100 per gallon oil. I would think that, unless there is some vast conspiracy among oil users to keep using oil, we would already be expending vast amounts of resources to use less. Yet petroleum, coal, natural gas, and firewood sill provide maybe 70% of the world energy needs. If significant use of alternatives and conservation had "a relatively low cost" why aren't they here now?

According to economists, which I now perceive Mr. K is not, the answer to that question is a little more subtle and involves the concept of economic decisions being made at the margin, and diminishing returns. Suffice it to say, that even common sense allows us to say that all decisions involve a trade-off between alternative actions. Whatever those trade-offs are, they cannot be as cost-free as the cap-and-traders want us to believe. I really don't know how much solar energy development would costs, but if there would be a great return to low cost efforts in that direction, it seems that we would have a lot more of it now.

If the schemes of the warmies come to fruition, those of us not among the elite architects of the conspiracy, will not like the result. However, if we are so ignorant as to be deceived by the likes to Al Gore and Paul Krugman, then we were literally made to be sold.