Still Cool With Being Sanguine

by Don Boudreaux on December 25, 2006

in Current Affairs, Energy, Environment, Politics, Science

Quoting my Favorite American of All Time, H.L. Mencken, Boston Globe columnist Jeff Jacoby reminds us that there is wisdom in remaining sanguine in the face of the current hysteria over global warming.

The Mencken quotation — characteristically brimming with insight, wisdom, and wit — is this:

The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary.

For this reason, among others, I cannot join my colleague Tyler Cowen in joining Greg Mankiw’s Pigou Club.  Even if global warming is a reality, another reality — one with a much more consistent track record throughout history and across different countries — is the perversity of political incentives.  Given these perverse political incentives (not to mention the inevitable scrawniness of government’s access to information and knowledge), I don’t trust government to impose and administer a Pigouvian tax with sufficient disinterestness and skill to make such a tax a plausible policy option.

As I’ve written before, I’m quite prepared to concede that global warming is real –  although I’ll not be surprised if, should I live as long as Ronald Coase (who turns 96 this month ), fears of global cooling will again supplant fears of global warming as the excuse for government to seize more of our money and our liberties in “exchange” for its promises to save us and lead us to salvation in which all marginal social costs are nicely equal to all marginal social benefits.

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{ 21 comments }

Bruce g Charlton December 25, 2006 at 1:17 pm

Sometimes the hobgoblins are real, and then the skeptics like Mencken come unstuck.

Mencken seemed never to recognize the threat of Germany under National Socialism, and seemingly regarded FDR as a greater threat to liberty.

Stephen Reed December 25, 2006 at 4:56 pm

Isn't one of the main ideas behind the Pigouvian taxes that the government has to collect tax revenue from some source, so the best policy is to collect those taxes from the source that causes the least amount of harm to society?

We know that a gasoline tax will lead to slightly less traffic, less oil money going to repressive government (as the world market price for oil falls due to decreased U.S. demand due to the tax), as well as helping to slow down global climate change.

Based on this criteria, it seems clear that a much higher gasoline tax would be such a tax as long as the tax hike on gasoline is kept revenue neutral.

Flynn December 25, 2006 at 5:05 pm

"Mencken seemed never to recognize the threat of Germany under National Socialism, and seemingly regarded FDR as a greater threat to liberty."

Because for America, Germany wasn't a threat, and FDR most certainly was. Do you need a list of the tyrannical programs established by FDR's administration?

True_Liberal December 25, 2006 at 5:48 pm

Flynn sez: "Because for America, Germany wasn't a threat"

Germany, lest you forget, torpedoed American ships, sometimes not far from our shores; it also had an intercontinental multistage rocket under development – an outgrown of the V-2 ballistic rocket.

It wasn't called WORLD WAR II on a whim.

Saloner December 25, 2006 at 9:01 pm

Prof. Boudreaux,
I share your skepticism toward governmental interventions.
That said, I'd like to know if your recommendation, for the time being, is an examination of the issue through a combination of scientific and public choice economic analysis to better arrive at an effective course of action, should it be necessary.

einzige December 25, 2006 at 9:19 pm

"…(as the world market price for oil falls due to decreased U.S. demand due to the tax)…"

Doesn't a tax reduce _amount demanded_, and not "demand," per se?

Stephen Reed December 26, 2006 at 12:15 am

Einzige,

Yes, quantity demand will decrease as a result of the tax, however, it seems plausable that the demand curve could shift over time as people purchase more fuel efficient vehicles, choose to live closer to work, set up carpooling options and mass transit options, etc.

Brad Hutchings December 26, 2006 at 1:23 am

Would anyone care to figure out what happened to the demand curve in the 15 months since Katrina? We've seen pretty significant price fluctuations at the pump since then, with sustained periods with the price above $3/gallon in many regions. The fluctuations are a heck of a lot larger than the Pig Tax. So we ought to now have a natural experiment to evaluate the effectiveness of such a tax 5-10 years out. Hint: the freeways are still crowded. I bet they'll be just as crowded with gas at $4.50, although the line at Starbucks might be a little shorter.

Russell Nelson December 26, 2006 at 1:35 am

What if 1) global warming is real, and 2) you didn't have any governmental solutions available. How would a free market solve this problem?

somaking December 26, 2006 at 6:02 am

Jacoby's analysis has a fatal flaw: our ability to measure warming trends accurately has grown exponentially, along with the growth of technology.

Not to say he doesn't have a point, just that its poorly substantiated.

True_Liberal December 26, 2006 at 8:31 am
Mike December 26, 2006 at 9:35 am

Don,

A bit of an aside, but could you recommend a book or two by or about Mencken that would be worthy places to be introduced to him?

Cheers,
Mike

Ray G December 26, 2006 at 11:25 am

Good for you, and yes, you score points for both intelligence and wisdom for not jumping on the latest wagon.

In the 70s, my elementary teachers scared the daylights out of us with stories of the next ice age which was already supposed to have taken place.

As for WWII, and the German threat, Hitler's obvious goal was dominance of Europe, and there's been very little to support that he had any real designs past Europe.

Now, we know madmen never stop, and he would have continued to work on the jet, and the atomic bomb, and would have proven a threat to the US, and our fighting him in WWII was the right thing to do.

But these larger points were not known, or readily seen in Mencken's day, much like the majority of today's media has problems seeing the real threat that state sponsored terrorism poses, including Saddam Hussein.

More to the point of the post however, Pivovian methods are the Trojan horse to higher taxes, and eventually fewer personal freedoms.

Ray G December 26, 2006 at 11:27 am

I forgot to drop the no-pigou address.

http://nopigouclub.blogspot.com/

Al Abbott December 26, 2006 at 11:45 am

Saloner,

It is a huge assumption to consider that there is "an effective course of action" regarding global climate changes. More likely there are a multitude of courses of action (including no direct action) and that imposition of a single approach would tend to preclude those.

Ken Willis December 26, 2006 at 1:14 pm

—"What if 1) global warming is real, and 2) you didn't have any governmental solutions available. How would a free market solve this problem?"

What if global warming is real but not the result of anything humans are doing? This is a reasonable assumption since global warming has occurred many times in the history of the planet and not once has human activity been the cause. Then your adored "government solutions" will become a real problem trying to solve an imaginary one.

Mike Hammock December 31, 2006 at 11:46 am

I wonder, Don, are you also opposed to the SO2 permit market on the grounds that the government isn't capable of sufficient disinterestness and skill to implement the right level of permits? Wouldn't your argument apply to any and every possible environmental regulation? That might be a defensible position, but I think it would be more straightforward for you to simply say "I oppose all environmental regulation on the grounds that the government won't regulate correctly".

Jim January 2, 2007 at 7:21 am

An interesting piece by geologist / paleoclimatologist Bob Carter is "There IS a problem with global warming… it stopped in 1998", in the September 4, 2006 Telegraph (posted at tinyurl-dot-com/fotvp).

Before supporting a carbon tax, economists ought to be damned sure that there is indeed a CO2 problem. As long as there are many, many reputable scientists like Carter who question whether anthropogenic CO2 causes global warming, economists should eschew supporting a carbon tax.

Jim January 3, 2007 at 2:59 pm

. . . I'm quite prepared to concede that global warming is real — although I'll not be surprised if . . . fears of global cooling will again supplant fears of global warming as the excuse for government to seize more of our money and our liberties in "exchange" for its promises to save us and lead us to salvation . . . .

This reminds me of the following quote from Benjamin Franklin:

Any society that would give up a little liberty to gain a little security will deserve neither and lose both.

loan motorcycle January 28, 2007 at 6:10 pm

It is badly:O Faut not to think that the experiment of the licence conveys, if it is necessary, could be of an unspecified help. :o ui: The control of the motor bike is very different. :bah: Sporting of 106cv (in France) it is: – a part cycles hyper especially rigid made for the circuits, most recent which were radicalized – performances graying, but inaccessible for the commun run of the new licences, and even certain motorcyclists of long date. – a braking of madness which will not in particular forgive the approximations on wet ground. – a bike made to roll quickly and where all encourages to roll quickly… And that requires obligatorily experiment, in more than one balance of intact points on the licence – a position of control parfois/souvent incompatible with the use of a motor bike of tous.les.jours. – an insurance which will coutera as expensive as a CB500 of bargain of 50.000km, perfect to begin. It is also: – a progression in the training of the motor bike completely directed towards a bike of which the use first is the circuit… The motorbike licence is made to roll on the road. – a bike completely incompatible with puerile moods of young a 22 years licence:bah: – the error to be made is to think that one knows already and that one will be in the future to keep the cold head. – They IS FALSE!

Nathan - 4 Easy Ways To Prevent Global Warming February 9, 2007 at 8:56 pm

Don,

Do you extend your argument to the War on Terror? Do you agree that the war is just a fabrication designed to scare people into following the government?

If not, you should. Look at how much government money is dedicated to fighting global warming, or even dealing with environmental problems more broadly, and then look at the amount of money spent on the war.

I agree political incentives create hug problems, but that doesn't mean real problems don't exist and don't need to be addressed.

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