Decline of the Empire

That Makes Two Of Us!

Following up some recent posts, Suzanne Goldenberg, an environmental correspondent for The Guardian, is quoted concerning the IPCC's latest bureaucratic tour de force regarding the economic impacts of anthropogenic climate change.

We just got to one of the really tricky sections of the report - how much will climate change hurt the bottom line? This is one area where there really isn't much hard data, because of a lack of reliability in economic models.

One number that is out in the report is that climate change will shave between .2 and 2% of global income, if warming remains at about 2C.

That is far lower than other economists say, and it opens up the question just now: why bother to cut greenhouse gas emissions at all if that's the limit of the cost?

Chris Field said those reports don't take into account the full range of impacts, or plan for what might happen with catastrophic climate events, such as the melting of the Greenland ice sheet.

"We certainly wouldn't anyone to come away from this report doing a simple comparative analysis comparing mitigation with the costs of adaptation," Field said.

Congratulations, Suzanne!

Extreme Weather Events And Economic Accounting

Here's a follow-up to yesterday's post The Death Of "Climate Exceptionalism".  Although only a few hundreds of people read it, that post's message was surely a major bummer for anybody who cares about the long-term health of the Earth's biosphere.

I want to call your attention to this part of the post. (Quoted text is shaded.)

Indeed, the IPCC finds that climate change poses no substantial economic risk to our ever-growing global economy.

And the report is, on the face of it, more optimistic than the famous review of the economics of climate change by Britain’s Nicholas Stern in 2006.

Stern put the likely cost to the global economy of warming this century at 5-20 percent of GDP. The new IPCC draft says that a global average temperature increase of 2.5 degrees from pre-industrial levels may lead to a global loss of income of between 0.2 and 2 percent.

In so far as global GDP is expected to be 5-10 times larger than it is now by the year 2100, a global loss of income of between 0.2 and 2% is nothing at all. And that's if we reach an equilibrium surface temperature 2.5° centigrade higher than the 19th century baseline.

You might be asking how global GDP can be growing and growing while a warming Earth spawns ever more frequent and destructive extreme weather events. Here's the beginning of an answer.

The Death Of "Climate Exceptionalism"

Human psychology is an astonishing thing to behold. For all sorts of reasons I don't want to get into today, the simple rule of thumb says—

You can only tell humans what they want to hear.

If you try to give them some Bad News, they won't (can't) listen. If you tell them stuff they want to hear, they applaud wildly and then go off and continue doing the stuff which makes the news bad. Nothing changes with humans.

A forthcoming IPCC report on climate change impacts beautifully illustrates this simple rule. Those who have seen the almost-final draft have been telling us what it contains. On Yale's Environment 360 website, Fred Pearce gives us the skinny in New UN Report Is Cautious On Making Climate Predictions.

The Primacy Of Growth And The Human Future

In so far as humans seem perfectly incapable of making the connection between "growth" (in populations or consumption) and long-term, looming destruction of large parts of the biosphere, I have hypothesized that the urge to grow is an instinctual behavior of the human animal and thus unalterable. It follows that humans should behave in precisely the self-destructive ways we readily observe every day. This hypothesis also predicts that humans will be blind to other considerations which might be deemed important if they did not conflict with the instinctual urge to grow.

Both of these tragic consequences are on display in the discussion of a paper “Redistribution, Inequality, and Growth” which has been posted on the I.M.F.’s web site and authorized for distribution by Olivier Blanchard, the I.M.F.’s chief economist. The New Yorker's John Cassidy introduces the issue in Does Tackling Inequality Reduce Growth? No.

It's Almost Impossible To Believe

I would like to make some personal remarks today. It may surprise you when I say this, but it is true at this late date that I still find the stuff I write about—the Human Condition—almost impossible to believe. As I've reported this stuff these last five years, and as the evidence became more and more overwhelmimg that human beings are very fucked up indeed, I've thought oh, c'mon, how can this be? For most of my life I knew things were bad, but, really, this bad? Give me a break!

Let me give you an example I've written about frequently, especially lately. Two economists, one from Princeton and the other from the University of Chicago—my alma mater—have started a blog called House of Debt. Well, good for them!

Their post today was called The Most Important Economic Chart. I have published a version of this chart maybe a dozen times, most recently in I Do Not Make This Shit Up. (And see the follow-up Knowing When Someone Is Blowing Smoke Up Your Ass.) And I agree with them, it is a very important chart.

Humans DO Understand The Exponential Function

I was reading through a mostly uninteresting book by William Ophuls called Immoderate Greatness—Why Civilizations Fail. Right there near the beginning, in the "Biophysical Limits" section, at the beginning of the "Exponential Growth" chapter, was physicist Al Bartlett's famous quote.

The greatest shortcoming of the human race is the inability to understand the exponential function.

NO, NO, NO! Humans (including economists) DO understand the exponential function.

The problem is they don't think it applies to them.

Note On Missing Malaysian Airplane

I just received this brief note from Xinthius, Executor in Chief of the Exalted High Command and Grand Poobah of the planet Fukwityu, which revolves around a star in the constellation we call Cygnus (actually, Kepler-24b).

Greetings Dave!

Earthlings are making up all sorts of stories about that missing Malaysian plane, so here's letting you know we snatched that sucker right out of sky for study purposes.

We're on our way back to Fukwityu, so you won't be seeing those people again.

All those ridiculous explanations. My, what fertile imaginations you Earthlings have!

We read your excellent blog every day—it's the best one we've found on the primitive technology you call "the internet"—and we're hoping most people on Planet Stupid ... uh ... Earth, which we call Dumfukistan, do too.

So if you would be so kind as to pass this note on to your fellow humans, we would be most appreciative. There's no need for such a fuss!

Hands across the Universe,

Xinthius

Well, OK, then, I think that settles it.

Knowing When Someone Is Blowing Smoke Up Your Ass

Thomas Piketty's new book Capital In The Twenty-First Century is causing a revolution (small "r") among American economists. I'm sure this upheaval (small "u") will blow over soon, but I'm pleased as punch that Piketty (a Frenchman educated at MIT) is repeating so many of my DOTE themes. In a review of Piketty's book, economist Heather Bouchay covered a few of these splendid points.

Among other conclusions, the data lead Piketty to describe the popular argument that we live in an era where our talents and capabilities matter most as “mindless optimism.” The data also lead him to reject the idea that wage inequality has grown as technological change increased the demand for higher-skilled, college-educated workers.

Instead, Piketty’s evidence suggests it is the rise of what he calls the “supermanager” among the top 1 percent since 1980 that is driving the rise in earnings inequality.

It is here that Piketty takes his sharpest swipe at economists.

This next one is my favorite.

Notes On My 61st Birthday

I've been writing lately, but I'm just keeping busy. I've lost much of my former interest in the Human Condition. It exists, it sucks, it can't be changed, there are no alternatives to it, so I've got to live within it. And that's all there is. I can't help thinking about this stuff today as I complete my 61st year on this planet.

I see stuff here and there, little islands of sanity in a sea of cluelessness, which don't give me hope but do reflect my own views. Not that I require outside validation—I don't. It's simply nice to see that not all human beings are utterly hopeless. It's nice not to feel so lonely. I'll mention two items today.

I Do Not Make This Shit Up

This is a detailed follow-up to my long essay Moral Failure In Liberalized Market States, and particularly the introduction to that essay, in which I talked about wages versus productivity. Please read or review that text if this subject interests you.

As Yogi Berra said, "you can observe a lot by just watching." Indeed you can. For example, at the Washington Post's Wonk Blog, we see The top White House economist’s favorite graph might restore your faith in the future.

At the end of a briefing Monday on the Economic Report of the President, I asked Jason Furman, the Council of Economic Advisers chairman, what his favorite chart in the 410-page book is. He replied that his favorite new chart is this one on the trend in total factor productivity — a measure of how efficient we are, taking into account technological advancement — from 1953 to 2012.