Reader Mike Roberts pointed me to a longish interview Paul Krugman did with the Washington Post's Ezra Klein. Before we dismiss this exercise as one idiot talking to another, it is worth examining the last part of the interview, which Mike found "very odd."
Klein — Let’s step back for a moment. What do you think we should be worrying about in 10 years?
Krugman — I really think 10 years from now the signs that we’re on a runaway climate change will start to become a lot more obvious. It won’t be big rises in temperature yet, but will be enough to make people look around and say, oh my God. But by then, it will be very hard to bring it under control.
Klein — Are you a technological optimist on this?
Krugman — Well, there are different kinds of technological optimists. One kind of technological optimist says we’ll spontaneously develop technologies that give us perfectly clean energy. I think so long as fossil fuels are cheap, people will use them and it will postpone a movement towards new technologies. And then there’s geoengineering, which we may eventually use out of desperation, but is full of unintended consequences and political questions. That won’t affect all countries equally. It will hurt some countries and help others. It would be a helluva thing to throw into the global situation.
I’m a technological optimist in that I think if we had appropriate pricing, we’d find it remarkably easy. The cost of getting out of rising emissions would be much lower than legend has it. But I’m not politically optimistic that we’ll do that.
Klein — So you’re an economics optimist. You think if we got the price right, we could get the technology right.
Krugman — Yes. But it’s scary stuff.
I don't find Krugman's thoughts odd. In fact, they represent the standard view of how the world works and the Human Future. That's why Krugman sometimes invites my ridicule. So let's break this down line by line, carrying out a critical exegesis of the text.
I really think 10 years from now the signs that we’re on a runaway climate change will start to become a lot more obvious. It won’t be big rises in temperature yet, but will be enough to make people look around and say, oh my God...
This is interesting because global warming is not a critical issue 10 years from now. The climate will deteriorate steadily over decades. At least that is the most likely outcome, and Krugman is not talking about a radical non-linear change in the Earth's climate—it won’t be big rises in temperature yet. So why does Krugman mention it as his biggest fear in 10 years?
This must be understood in context, i.e. we must consider the source. Global warming has become a political issue, unlike peak oil and some others we could name. Specifically, it is a liberal political issue which is strongly identified with the Democratic party, and Krugman is the quintessential liberal political animal. I have been reading Krugman for many years now. It would not be much of an exaggeration to say that everything he says or writes for public consumption is political in nature. This will make more sense as we go along, so let's move on.
Well, there are different kinds of technological optimists. One kind of technological optimist says we’ll spontaneously develop technologies that give us perfectly clean energy...
It may appear to you and me that there's only one kind of technological optimist, but in Krugman's world there are two. Here we briefly turn away from politics and engage with standard economic thinking.
I think so long as fossil fuels are cheap, people will use them and it will postpone a movement towards new technologies... I’m a technological optimist in that I think if we had appropriate pricing, we’d find it remarkably easy. The cost of getting out of rising emissions would be much lower than legend has it.
This could not be clearer. It is the magic of the Econ 101 supply & demand graph which will deliver us from the evils of global warming. This magic is so powerful, so efficacious, that it will be "remarkably easy" to replace fossil fuels with renewable, "clean" energy sources such as wind, solar and geothermal. The "two kinds" of technological optimists neatly divide into pure technologists who think we can replace fossil fuels regardless of the pricing mechanism, and economists who believe in the infinite power of price. Krugman is one of the latter.
You should now review my post The Inherent Contradictions Of Pro-Growth Environmentalism. No serious person thinks it will be "remarkably easy" to replace fossil fuels with other energy sources, but Krugman is typically viewed as one of the most serious people we have. That's why Ezra Klein is interviewing him and not me or anybody else with a clue.
Let us consider the case of crude oil. In Krugman's standard view substitutes for oil will magically appear as its price goes up. This is Adam Smith's Invisible Hand at work, a view which has it roots in the standard theory (based on Hotelling, 1931) of the economics of non-renewable resources. The price of oil has been rising for nearly a decade now, and no substitutes for it have appeared. The situation is shown in the graph below.
The crude oil supply has been flat since 2005, but the price has been rising since 2003. In economic terms, we have price inelasticity of supply. See my post A Peak Oil Update.
It is important to note that the world has augmented the crude oil supply with so-called 1st generation (conventional) biofuels, mostly ethanol from corn and sugarcane. However, our ability to produce those fuels is reaching a hard limit, and we have not replaced crude oil in any sense. In fact, that is why the price of crude oil has been rising for some years now, despite a lot of volatility due to short-term economic conditions (shifts in demand in the graph above).
It is also important to note that if the price of fossil fuels were to rise in the way Krugman would like to see, this precious global economy of his would go belly up in the noonday sun.
And thus the magic of the price mechanism which Krugman relies on for all fossil fuels (coal, natural gas) has not worked with respect to crude oil. In short, Krugman is full of shit.
But I’m not politically optimistic that we’ll do that [i.e. replace fossil fuels to cut emissions].
Having posited a magical solution to replacing CO2-emitting energy sources, the entire problem becomes a political issue, just as we would expect with Krugman.
runaway climate change ... it’s scary stuff.
Why is it scary stuff? Because Krugman's basic assumption is that the global economy will grow and grow without limit throughout the 21st century just as it did during the 20th century. Therefore, Krugman believes every business-as-usual scenario that climate scientists like Richard Alley and activists like "Wild" Bill McKibben trot out to scare the living shit out of people, for "environmentalists" like Bill make the same bogus assumption Krugman does—the economy will grow and grow without limit in the 21st century. Need gasoline? Not a problem. Just buy a solar-rechargeable plug-in hybrid. That's what McKibben will tell you. Don't worry about the cost, those persistent battery problems and the lack of electricity from solar sources.
And although Krugman does not mention it here, I'm sure he makes the same assumption McKibben does about the causes of our inaction on global warming, namely that it is the evil oil & gas companies who are responsible for our inability to deal with the issue. In short, global warming is merely a political issue, not one among many existential threats to humankind in the 21st century. Democrats could solve the global warming problem (Waxman-Markey, cap & trade) if only those evil Republicans would let them. Contemplate for a moment the simplemindedness of this view. This nonsense is like a diabolical onion. Once you deconstruct one layer of feeble-minded confusion, you find that it rests upon another such layer of confusion.
But let me tell you what is scary. It is scary—actually, it is terrifying—that Paul Krugman has so little appreciation of the predicament humankind finds itself in that he can make these kind of facile statements. If only we had "appropriate" pricing of fossil fuels, it would be "remarkably easy" to replace them. And every single thing this second-rate preacher represents—technological optimism based on discredited economic theories, the inability to transcend politics-as-usual—makes humankind's problems worse. The deep hole humanity has dug for itself gets deeper every time somebody pays their respects to charlatans like Krugman.
I hope you've found this little exegesis informative. It is important that you fully grasp everything I said here. If you did, you will find that DOTE makes a lot more sense than it might have previously.