Melancholia and the Danes

When the climate-change-is-hooey-and-will-kill-the-only-economy-we've-got crowd starts turning to Denmark for its authoritative sources, you know they're desperate. That's even more true of the taxes-are-evil bloviators. As regards taxes, the Danes pay some of the highest rates in the world. They're not complaining, perhaps because they get good value in return for their money. (Hmmm ... getting good value is more important than whether your outlay is "taxes" or "consumption". How radical!)

Still, that didn't stop National Taxpayers Union VP Pete Sepp from relying on a Danish professor's opinion (presented entirely out of context) in his recent description of how cap-and-trade will land us all in the poorhouse. The slight intellectual content in Sepp's argument is discernible from his third paragraph: "Meanwhile, some scientific models show no consensus on how strongly man-made carbon dioxide contributes to melting glaciers, tropical storms, or polar bear deaths. Solar radiation and natural weather patterns may offer some explanations, too." Presumably, if only "some" (not "most") scientific models show no consensus, then most models must be in general agreement. And if the best that can be said for solar radiation and natural patterns is that they "may offer some explanations, too", they're pretty far down in the also-ran category.

(My inner Sophist does admire, however, the way in which Sepp takes a weak case and seemingly understates it, thus managing to convey that he's merely being diffident about his evidence. It's a pretty good example of what Mark Twain called the second way of lying artistically.)

Pete Sepp aside, however, there have been quite a spate of "ecology vs. economy" articles and pronouncements, both in the press and in Washington, DC. It's important to remember that all of them are entirely bogus. "Addressing global warming will cost too much and ruin our economy" is an internally inconsistent argument. As costs go up, economic activity is increased -- particularly if the expenditure is somehow mandated. The economy thrives when new technologies replace old ones -- it's sticking with the old technologies that creates economic stagnation.

If the argument were that addressing global warming would divert lots of money towards clean energy and away from profligate spending on sex, drugs and rock & roll, then it might have some validity. Mandated expenditures do tend to decrease funds available for discretionary pleasures (licit or otherwise). But, from the economy's point of view, expenditure is expenditure. Sex may sell, but it shows up in the GDP no differently from spinach or solar PV panels. "Economic growth" should never be confused with "human wellbeing".

Case in point: when the hurricanes hit New Orleans, or (earlier) Florida, human wellbeing took a nosedive. Homes were destroyed. Misery was rampant. This was not a good thing, except in national economic terms. Destroyed homes had to be rebuilt, which required labor and materials. Labor and materials cost money. Disasters triggered intense bursts of economic activity.

So disaster may be the exception to what I said earlier -- disasters create situations in which sticking with (recreating) old technologies creates economic growth. But replacing old technologies with new ones creates growth that's not dependent on misery. Mandating the adoption of new energy sources will create economic benefits even in excess of the social benefits the Danes have already discovered.

So why is "ecology vs. economy" being promoted with all the fervor of the next WWE Steel Cage Smackdown Death Match? It's an old marketing tactic, often used by purveyors of technologies time is passing by. It's called the "FUD factor" -- fear, uncertainty, and doubt, associated with the possibility of change. Change always contains some element of risk, and in the current economic climate, what other form of risk could have greater emotional impact? What's being preached is that addressing climate change will spell the end of the economy. What's closer to the truth is that addressing climate change will spell the end of some of today's (really, yesterday's) major economic players. New economic players will come along, and some of the most bloated business barons and whited sephulchers are going to have to give way. Schumpeter would approve.

There may, in fact, be temporary discomfort. We know what we have experienced. We parent as we were parented. We drive as we were driven. We eat (more or less) as we were fed. The familiar is comfortable, and its presumed extension into the future is non-threatening (at least on an emotional level). But behavioral change is rarely as threatening as we fear, and never as uncomfortable as our current enablers would like us to believe. Change can be a good thing. Improvement requires change. After all, as the Danes themselves make clear:

"Denmark is a front-runner in eco-efficient technology. We have contributed to advancing
the agenda - through relentless political pressure; through the power of example;
and not least through adopting new types of environmental regulations that incorporate
environmental technology as an integral aspect of development, for example, as in the
new agricultural regulations. These are measures that purposefully push forward new
technologies from research and development environments, and this is vital if we are
to decouple environmental impact from economic growth. We have been successful in
several areas in Denmark, and amongst other things this has provided us with an excellent
window for Danish products and experience."

Wouldn't our economy benefit from "an excellent window for [American] products and experience"?