Monday, May 26, 2008

Freeman Dyson vs RealClimate.ORG

Freeman Dyson reviews two books about the climate change policies - books written by William Nordhaus and Ernesto Zedillo, respectively.

David Archer of RealClimate.ORG responds. This exchange is mostly about policies which is why the extreme political colors of the RealClimate.ORG activists become even more obvious.

Let us talk about four main topics as summarized by Archer:
  1. Waiting for carbon sequestering technologies
  2. Estimating costs of removing CO2 emissions
  3. The validity of discounting in economics
  4. Attacks against climate realists
Carbon sequestering

Freeman Dyson expects that genetic engineering will soon lead to artificial plants that are able to remove CO2 from the atmosphere efficiently. Well, I find it conceivable but not guaranteed. At any rate, the possibility of a similar technological breakthrough should be considered as carefully as the possibility of a new efficient and widely usable energy source. Sometime in the future, one (or both) of these breakthroughs may take place. I don't know which one is going to be the first one. It is wrong to assume that we know it.




Archer also attacks Dyson for daring to consider the business-as-usual at all. Well, there is one thing I am pretty certain about: the business-as-usual is going to continue at least for a few more decades. A few countries may be affected by weird policies but the whole world won't notice. For example, the global CO2 emissions will only begin to drop once a new viable technology is found. Dreaming about something else means dreaming about the control over the whole world. The last man who was doing something like that was Adolf Hitler and even this guy didn't succeed.

I assure Mr Archer and similar fanatics that people like me have learned some lessons from the failed assassination of the Führer and we are unlikely to repeat the same mistakes again. The business-as-usual, also known as freedom of the other people, is a fact that you will have to learn to live with or your very existence will become marginally incompatible with the basic security of the world.

Costs of regulation and their impact

Archer confirms that the costs of carbon regulation represent a few percent of the global GDP (multiples of half a trillion dollars a year) and he thinks it is a detail (...) because such a payment will simply delay the attainment of a certain net wealth by a few years because the growth is a few percent, too. His comrades are used to stealing billions of dollars from the budgets so why not trillions? It's not a problem, is it?

He must be joking.

When we say that the costs of carbon regulation are a few percent of the global GDP, it means that this amount must be paid every single year and such a permanent reduction will clearly reduce the growth rate, too. If everyone has to pay 2% of his income for hot air, then 2% of his resources will be missing for the usual things he does - for consumption and for investment.

So he may reduce his consumption of cigarettes or other non-investment products that you don't care about by 1% of the income. Certain kinds of consumption simply won't be reduced. But the investment comes from the money that is left. There will be fewer resources for investment, too. The growth rate will be smaller, too. In fact, if the growth rate in a certain region is 1% in average, it is reasonable to expect that carbon regulation will change it into permanent stagnation (or even recession). Those 2% of income that have to be paid will be paid from reduced consumption (1% of income) and reduced investment and growth (1% of income).

I don't know what the exact distribution of those 2% should be (between reduced consumption and reduced investment to the future) but I am absolutely certain that the extra expenses will inevitably reduce the growth rate. For example, there will be less money for scientific research - because science is only paid after it is guaranteed that most people have something to eat. With the exception of the carbon-related research that is directly funded from those 2%, there will be less money for scientific research and for technological progress. Similar kinds of investment that affect the future growth will be affected, too.

Discounting

Archer says that he understands discounting as long as it only influences a few years but when it comes to centuries, one shouldn't discount at all. Wow! That's a rather dramatic modification to the rules of economics. While a 4% annual discount rate reduces the value of money to 2% of their original value in 100 years, Archer would apparently want the result to be raised by a factor of 50. Where is this incredible discontinuity supposed to occur?

If one dollar in 2000 is equivalent to 1.04^Y dollars after Y years, according to the laws of economics, and if Archer claims to agree with this exponential rule for small values of Y, what is exactly going to happen with his rule after a few decades? Will the discount rate change the sign? It seems to be necessary. How does he expect to return to one dollar after 100 years? A rational person understands very well that the exponential profile is a direct consequence of the "transitivity" and of the constancy of the growth rate.

Archer also revives the analogy between climate realists and the defenders of slavery. What a nice analogy - it is not emotional at all, is it? ;-) The abolition of slavery was also costly, he says, but it had to be done. Well, his statement is simply wrong. The abolition of slavery was costly for the slaveowners but they were using resources that didn't actually belong to them - namely the work of the slaves that was used for free.

Once the former slaves could have done the same work for a salary, it simply means that some money had to be paid for this work. When we calculate the benefits of the whole economy, the difference between the two arrangements was pretty much equal to zero. The only unwelcome costs were the temporary costs of the transformation. And when the former slaves learned how to get new jobs and move to other places, they became more flexible, efficient, and the whole economy benefitted. The economy becomes healthier when people are more free - a fact that Archer is clearly unable to understand.

But these conclusions simply do not apply to carbon regulation. If consumers and companies are forced - by the law - to buy much more expensive products that are otherwise doing the same thing as the cheap ones, they are simply losing money. No one is getting them, with a possible exception of subjects that are participating in the carbon regulation game. It follows that the living standards in all respects - except for the amount of CO2 emissions - will be getting worse (or will be getting better more slowly than before).

If you count the GDP in such a way that the hot air (without CO2) actually has a certain value, then the GDP might continue to grow. But that's not how sane people count their income.

Attacks against realists

Dysons says: "... Lindzen represents the small minority who are skeptical. Their conversation is a dialogue of the deaf. The majority responds to the minority with open contempt."

What does Archer say about this point? Well, he says that the "denialists" such as Lindzen are essentially killing his (Archer's) kids which is why he must be contemptuous. Well, I personally find it unethical if children are used as hostages in similar discussions. Richard Lindzen also has kids: what is Archer's argument supposed to mean? I am somewhat sorry about Archer's children that their father is an al-Qaeda-style fanatic who is ready to pay his children as a price to defend his undefendable fundamentalist ideology.

I am almost sure that it will only take a few years before these kids will realize that their father was an unreasonable person who was abusing their name and dignity to be able to continue to steal the money from the taxpayers for his pseudoscientific enterprises. They will have better tools to address any problem that they may face in the future - and it is very unlikely that it will be a similar kind of a problem that Archer is dreaming about. And they will be using a positive discount rate, not a negative one that their father wants to impose upon them.

And that's the memo.

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