Studying The Climate Doesn't Make You An Expert On Economics And Politics

In response to the Trump administration"s announcement that it was pulling out of the Paris Climate Accord, some of his critics declared that anyone who likes "science" would have supported the accord. 

Not surprisingly, Neil deGrasse Tyson rushed to declare that Trump supported the withdrawal because his administration "never learned what Science is or how and why it works."

But what does "Science" (which Tyson capitalizes for some reason) have to do with it? 

We know that Tyson is of the opinion that there is global warming. We also know that many other physical scientists agree with him. 

But, it does not follow logically that agreeing with Tyson on the matter of climate change must necessarily mean supporting the Paris Climate Agreement.

After all, the Paris Climate Agreement isn"t a scientific study. It"s a political document that lays out a specific public-policy agenda. 

Agreement or disagreement with the accord might hint at one"s opinions about climate science. Or it might not. One can agree that climate change exists and that human beings have a large role in the phenomenon. Agreement on this matter, however, does not dictate that one must also agree with the political policies outlined in the Paris document.

The two are totally independent phenomena. 

Science and Politics Are Not the Same Thing 

An analogy might help illustrate further:

Scientific inquiry tells us that obesity is bad for one"s health. Let"s imagine then, that in response to rising obesity rates, a large number of politicians gather and sign an agreement — let"s call it the London Obesity Avoidance Deal (LOAD). The supporting politicians claim that the deal will reduce obesity and that failure to abide by the agreement will spell a health crisis for humanity. 

Does this mean, then, that any politician who doesn"t sign onto the agreement is an "obesity denier"? Does a failure to approve of the agreement prove that the dissenters believe that obesity is not a real thing? 

Obviously not. 

Those who refuse to sign the agreement may be of the opinion that the LOAD does little to actually reduce obesity. Or, the dissenters may feel that the deal fails to properly compare costs and benefits when imposing its directives. Opponents may feel that "the cure is worse than the disease." 

In any case, dissent from the deal has nothing to do with denying the existence of obesity or the science behind the studies on the matter. 

The Problem with Paris 

The same is true of the Paris deal. Those who disagree with it may very well be — and probably are — taking issue with the specific provisions of the deal which may actually prove to be more costly to people than the presumed global warming itself. 

But, for physicists like Tyson — i.e., people who know nothing about economics or political institutions — public policy is like a magic trick. A group of politicians get together, declare that they"re going to solve problem X, and then problem X is magically solved, so long as everyone supports the "solution." 

But what if the policy prescriptions of the Paris politicians are wrong? Or, what if the cure is worse than the disease? 

Presumably, the agreement is supposed to improve the lives of real-world human beings by improving their standards of living. 

If this is true, then, the Paris agreement must accomplish several things: 

1. It must rely on good science about the climate.

 

2. It must accurately predict the effects of climate change on standards of living.

 

3. It must endorse public policies that will do something to mitigate the negative effects of climate change on standards of living.

 

4. It must demonstrate that these public policies will in fact mitigate the effects of climate change.

 

5. The agreement must demonstrate that the costs of the proposed public policies themselves are lower than the costs of the climate change. 

If the Paris agreement fails to do any of these things, it should be rejected. If the net effect of the agreement is to make people poorer, then the agreement is of no value. 

Now, without making any judgment about climate science itself, we can see just from looking at the Paris agreement that it could easily be rejected on the basis of numbers two, three, four, and five in our list.

After all, the agreement is based on policy predictions that are wildly speculative.They attempt to make predictions about the global economy decades in the future (a notoriously unreliable endeavor) and they fail to honestly take into account the true costs of imposing far-higher energy costs on most of the world"s poor and working classes — which is what the agreement would do. 

In fact, the agreement doesn"t even mention the cost to households that would face higher energy costs under the agreement. The only costs mentioned are the costs of adapting to climate change. In other words, the agreement assumes that there is no downside for households in the agreement"s provisions. That"s a huge red flag right there. 

Also ignored is the opportunity cost of adopting the agreement"s provisions. In real life, adoption of the agreement"s policy prescriptions will lessen growth by reducing access to basic energy resources. In addition to reducing household wealth, this will also reduce tax revenues. Money spent on higher energy costs is money that can"t be spent elsewhere — on things like health care, and research into better agricultural practices. Yet, at the same time, the agreement calls for massive redistribution of wealth and large amounts of government spending on various programs such as "emergency preparedness" and more government "insurance" to pay for the effects of natural disasters. 

Thus, the agreement calls for more spending, while reducing the ability of both the public and private sectors to engage in that spending. It"s a self-defeating endeavor. 

Other opportunity costs include the impact on the production of fresh water. As I noted in a 2015 article: 

A second major factor here in the necessity of energy is fresh water. The California drought has reminded us that fresh water is a scarce resource, even if the government likes to treat it as if it were not. But even as larger populations demand more water, fresh water can be produced through the use of energy via desalinization and pump-based aqueducts.

Today, most such schemes are still uneconomical because the problem of water scarcity can usually be solved through cheaper means such as importing food from wetter climates and through cheaper aqueduct systems that are primarily gravity-based.

In the future, however, as water does become more and more scarce as populations grow, the most practical answer will indeed become more energy-intensive solutions.

By centrally planning and artificially limiting energy usage, however, what the global warming lobby wants to do is raise the price of water processing, and by limiting the use of such methods, also inhibit technological progress by preventing practical experience in the use of water processing and fresh water production.

The Paris Climate Agreement supporters will no doubt retort that the provisions of the agreement will somehow amazingly prevent the need for more spending on clean water in the future by reducing global temperatures. Based on what evidence? Based on a computer model for what will happen decades from now?

With such flimsy evidence, it"s easy to see that it might be wiser to stick with policies we have now that are likely to produce a bird in hand — rather than the two birds in the bush merely promised by the Paris agreement. 

We already know we can help the poor now with cheap energy, more productive capacity, and a robust economy. The Paris agreement only promises to help hypothetical people in the future based on a theoretical and untried public policy regime. 

Many prudent people will elect to go with the former. 

Moreover, many of the global warming lobby"s own people deny that the Paris agreement does much of anything to reduce temperatures anyway. Thus, prudence would dictate a renewed interest in investing in technologies and poverty-relief measures (such as those that encourage more trade and capital investment) that we know will help the poor right now. Adopting policies that cripple our ability to invest in these measures — as the Paris agreement does — only makes matters worse. 

Nevertheless, in the imaginary world of physicists and climate scientists who can"t comprehend the complicated realities of economics and public policy, simply wishing something to be so makes it so. If we just wish really hard that all our problems are solved, surely the good people in government will make it happen.

These Are The Top Global Risks For 2017 According To The World Economic Forum

Ahead of next week"s Davos meetings organized by the World Economic Forum, in which the world"s top politicians, financers, and celebrities will mingle, today the WEF released its annual report on what it believes are the top global risks for 2017.

For those who would prefered to just focus on the charts, please skip this part.  For the rest, and especially those pressed for time, and unable to read the 78 page report, here is the exeutive summary:

For over a decade, The Global Risks Report has focused attention on the evolution of global risks and the deep interconnections between them. The Report has also highlighted the potential of persistent, long-term trends such as inequality and deepening social and political polarization to exacerbate risks associated with, for example, the weakness of the economic recovery and the speed of technological change. These trends came into sharp focus during 2016, with rising political discontent and disaffection evident in countries across the world. The highest-profile signs of disruption may have come in Western countries – with the United Kingdom’s vote to leave the European Union and President-elect Donald Trump’s victory in the US presidential election – but across the globe there is evidence of a growing backlash against elements of the domestic and international status quo.

The Global Risks Landscape

One of the key inputs to the analysis of The Global Risks Report is the Global Risks Perception Survey (GRPS), which brings together diverse perspectives from various age groups, countries and sectors: business, academia, civil society and government. This year’s findings are testament to five key challenges that the world now faces. The first two are in the economic category, in line with the fact that rising income and wealth disparity is rated by GRPS respondents as the most important trend in determining global developments over the next 10 years. This points to the need for reviving economic growth, but the growing mood of anti-establishment populism suggests we may have passed the stage where this alone would remedy fractures in society: reforming market capitalism must also be added to the agenda.

With the electoral surprises of 2016 and the rise of once-fringe parties stressing national sovereignty and traditional values across Europe and beyond, the societal trends of increasing polarization and intensifying national sentiment are ranked among the top five. Hence the next challenge: facing up to the importance of identity and community. Rapid changes of attitudes in areas such as gender, sexual  orientation, race, multiculturalism, environmental protection and international cooperation have led many voters – particularly the older and less-educated ones – to feel left behind in their own countries. The resulting cultural schisms are testing social and political cohesion and may amplify many other risks if not resolved.

Although anti-establishment politics tends to blame globalization for deteriorating domestic job prospects, evidence suggests that managing technological change is a more important challenge for labour markets.  While innovation has historically created new kinds of jobs as well as destroying old kinds, this process may be slowing. It is no coincidence that challenges to social cohesion and policy-makers’ legitimacy are coinciding with a highly disruptive phase of technological change.

The fifth key challenge is to protect and strengthen our systems of global cooperation. Examples are mounting of states seeking to withdraw from various international cooperation mechanisms. A lasting shift  in the global system from an outward-looking to a more inward-looking stance would be a highly disruptive development. In numerous areas – not least the ongoing crisis in Syria and the migration flows it has created – it is ever clearer how important global cooperation is on the interconnections that shape the risk landscape.

Further challenges requiring global cooperation are found in the environmental category, which this year stands out in the GRPS. Over the course of the past decade, a cluster of environment-related risks – notably extreme weather events and failure of climate change mitigation and adaptation as well as water crises – has emerged as a consistently central feature of the GRPS risk landscape, strongly interconnected with many other risks, such as conflict and migration. This year, environmental concerns are more prominent than ever, with all five risks in this category assessed as being above average for both impact and likelihood.

Social and Political Challenges

After the electoral shocks of the last year, many are asking whether the crisis of mainstream political parties in Western democracies also represents a deeper crisis with democracy itself. The first of three “risks in focus” considered in Part 2 of the Report assesses three related reasons to think so: the impacts of rapid economic and technological change; the deepening of social and cultural polarization; and the emergence of “post-truth” political debate. These challenges to the political process bring into focus policy questions such as how to make economic growth more inclusive and how to reconcile growing identity nationalism with diverse societies.

The second risk in focus also relates to the functioning of society and politics: it looks at how civil society organizations and individual activists are increasingly experiencing government crackdowns on civic space, ranging from restrictions on foreign funding to surveillance of digital activities and even physical violence. Although the stated aim of such measures is typically to protect against security threats, the effects have been felt by academic, philanthropic and humanitarian entities and have the potential to erode social, political and economic stability.

An issue underlying the rise of disaffection with the political and economic status quo is that social protection systems are at breaking point. The third risk in focus analyses how the underfunding of state  systems is coinciding with the decline of employer-backed social protection schemes; this is happening while technological change means stable, long-term jobs are giving way to self-employment in the “gig  economy”.

Managing the Fourth Industrial Revolution

The final part of this Report explores the relationship between global risks and the emerging technologies of the Fourth Industrial Revolution (4IR). We face a pressing governance challenge if we are to construct the rules, norms, standards, incentives, institutions and other mechanisms that are needed to shape the development and deployment of these technologies. How to govern fast-developing technologies is a complex question: regulating too heavily too quickly can hold back progress, but a lack of governance can exacerbate risks as well as creating unhelpful uncertainty for potential investors and innovators.

Currently, the governance of emerging technologies is patchy: some are regulated heavily, others hardly at all because they do not fit under the remit of any existing regulatory body. Respondents to the GRPS saw two emerging technologies as being most in need of better governance: biotechnologies – which tend to be highly regulated, but in a slow-moving way – and artificial intelligence (AI) and robotics, a space that remains only lightly governed. A chapter focusing on the risks associated with AI considers the potential risks associated with letting greater decision-making powers move from humans to AI programmes, as well as the debate about whether and how to prepare for the possible development of machines with greater general intelligence than humans.

The Report concludes by assessing the risks associated with how technology is reshaping physical infrastructure: greater interdependence among different infrastructure networks is increasing the scope for systemic failures – whether from cyberattacks, software glitches, natural disasters or other causes – to cascade across networks and affect society in unanticipated ways.

And now, for the visual summary, first the The Risks-Trends Interconnections Map:

Next, the WEF"s summary of The Evolving Risks Landscape, 2007-2017. It shows how the "world"s most important people" have seen the transformation of risks over the past decade. We find it curious that after years of Social issues dominating the top spot, suddenly it is "extreme weather events" are the biggest risk for the world. Ironically, this takes place just as the social upheavals of the past year have converged to result in the biggest fallout against the status quo in modern history.

Next, is a simple summary of the WEF"s Global Risks Landscape of 2017.

It"s not just standalone risks - the next chat shows how global risks are interconnected.

Finally, here is a breakdown of all the various global risks the WEF can envision, which likely means that if anything threatens the system, it won"t be on this list.

Full presentation below (pdf link)