If anything – I think the economic costs of climate change policy are more immediate than the costs of climate change itself. So if you're arguing from a position of "insufficiently fearful of relatively distant threats", as you are here, I'm not sure why that priveleges anti-regulation over pro-regulation.

But the psychology of the discount rate is an important problem to be raised with any intertemporal market choices. So, I would add, is the fact that the institutions that structure private property price the economic consequences of regulation into market decisions already. They don't, however, price the economic consequences of your choices on other people (through climate change) into the market.

Not that any of that gives us an ideal policy – I just don't see how it militates against some sort of proactive policy.

No, it's politicians and entrepreneurs who are "counseling" me about the course of action I ought to take. They are operating with a vested interest in obtaining and solidifying power over everyday activity, or leveraging a position in a newly created market for a gas.

This is assuming that anyone's chices are actually having any significant influence on the Earth's climate changes. If these choices are not having a significant influence, why have any policy? It's this whole premise that may make this a non-starter.

My considered judgment: The AGWCT is bogus as it stands.

Needing policy/regulation to curb pollutants.

>>The point that militating against regulation isn't justified by consideration of the psychology of discount rates?<<

Why even discuss the psychology of a discount rate when the 'investment' now [by investment I mean cost - cost of reducing pollutants] won't change a damned thing that nature is already 'planning' on doing?

Ummmm…. because that was what the post was about and I personally found the discount rate question interesting.

Sam -
It's a shame about the suppression of that report. It shouldn't happen. It's like Bush administration redux. The fact is, even people who are convinced by the climate change evidence have some critiques of the IPCC report. It's important to give a voice to the dissenting opinions. I think it's the fear that the 24 hour news cycle will latch onto a single report and claim it conclusively refutes the administration's policies. It doesn't. Or, to put it more correctly, it's part of a larger discussion where there are also documents supporting the administration's policy. Being secretive is only hurtful in the long run. Government scientists and private scientists should do science – not be beholden to the ideological priorities of either side of the aisle.

A = f[(P * Cr1),(C * Cr2)]

A = Action
P = Probability of threat
Cr1 = Credibility of the source asserting the threat
C = Cost of the threat
Cr2 = Credibility of the source asserting the costs

It's not a perfectly honed formula, but humans have pretty good bullshit detectors, and notwithstanding all the wild-eyed coverage of a sensationalist press, most people severely discount both the likelihood of the threat or its costs.

Kristoff is wrong. We are a species that engages in hugely elaborate rain dance ceremonies and costly monuments to heaven. We have willingly sent off our children to die in foreign lands against aggressors we have never seen. The idea that we couldn't muster an expensive defense against the "end of the world as we know it" is crap. If we believed the press and politicians pushing this crap, we'd spend everything to stop it. Public intellectuals like Kristoff just don't like the idea that their credibility is kind of shot.

In other words, when a bad choice is extremely bad and extremely likely, you don't want to rush to a decision without knowing the results.

Indeed – it's not the misunderstanding of the economic costs of the legislation that is driving the argument. For the most part, people understand and agree about those costs. The side of the ledger that there is huge disagreement on is the economic costs of climate change. So let's not pretend proponents (and I'm not one of them for cap and trade… I don't think… I'm personally a little agnostic right now) are somehow unaware of the costs of the policies.

Okay, so let's discuss this comment of yours: They don't, however, price the economic consequences of your choices on other people (through climate change) into the market.

Do we currently know specifically what those future 'consequences of [insert accusatory pronoun here] choices on other people' will be?

What if the costs that we collectively impose on ourselves now would cause future generations to have a harder time adapting to any climate change or life in general (in the absence of significant climate change)?

It appears that it is you that is not pricing the economic consequences of your choices on other people (through hamstringing regulation, stiffling innovation, and lower klivuing standards) into the (temporal) market(s).

I agree that the costs we impose now will give future generations a harder time – that's why I'm hugely skeptical of cap and trade. I think a carbon tax of some sort is very appropriate – and it doesn't have to be a net drag on the economy (and it can be adjusted easily if it's too burdensome).

It would work like this: tax all energy producers based on the carbon content of their emissions, so higher carbon emitters pay higher taxes. Then rebate the total tax revenue from the tax to all energy producers based on energy output. That way, you internalize the cost of pollution WITHOUT imposing a net cost on the economy.

Or who knows – something like that.

I agree with you – I'm skeptical of cap and trade. But my skepticism doesn't make the markets any better at responding to the externalities that are at the heart of the economics of climate change.

I dislike this approach…strongly. I do not trust the government in this matter (and many others). I do not trust the underlying ideology among the emotional. There are, in my view, reason to question everything and realize that the politics of this issue (and many others) is perverted and potentially as toxic as the pollutants in question.

My ideal 'policy' is to not have policy. Not have Pigovian taxes. To see what the particpants of the market (to include consumers of stuff that gets produced in which pollutants are emitted) figure out as conditions change; to the extent they change, the magnitude they change if they change at all.

It's like politics anytime and anywhere.

That's an argument FOR acting on possible threats from man made climate change as opposed to doing nothing. Especially when I can point to a period in which "good regulation" was in effect and the economy hummed along with no such major catastrophes.

The idea that regulation is the biggest threat to the economy just doesn't match the facts. There's always been regulation and the big picture is that our economy/the modern economy/ is the most efficient ever. The problems consistently occur when we back off regulation too much or pass poor or inefficient regulations. The fact that the well regulated banks in Canada are doing just fine is more evidence to the contrary of your claim.

They are literally planning to make derivatives and traunces out of the sale of pollution credits. Morgan Stanley and AIG are all excited. The fact is the supreme court has decided that the EPA can regulate CO2 as a pollutant so no real bill needs to be passed. If what I've heard is correct the cap and trade bill takes the control away from the EPA. The bill appears to be a Trojan Horse.

My fellow liberals are in a tizzy over this because it seems more and more that those who claim the Democratic party is no different then the Republicans in their ability to be bought by lobbyist may have a good point. The world is turning into a large corporatacracy that will please neither liberals or conservatives.

I guess you had to witness it for yourself.

As I've explained before, all, ALL governments manifest as oligarchies. Even "democracies" manifest this way.

How many ordinary people do you know who have the time and resources to mount viable campaigns against the political class?

Right.

So that leaves management of the political order to those who are wealthy enough to devote their attention to such matters.

If you find that the regulatory regime is lacking, we might suppose there is a reason it is so.

OTH, a regulatory regime presents onerous obstacles to new competition against the "ins" that have become comfortable in their established markets and relationships with the "official" political class.

For sake of argument, let's say that AGW is true and happening.

Well great, cap and trade is basically what Kyoto called for, if I recall correctly. I haven't read any analysis of this latest venture, but as I recall for reading analysis of Kyoto, the projected warming was something like 2F over the next century. If everyone who signed on to the accords followed through with them (and no one has because it's impossible to do so with existing technology without stopping all economic growth….which might just be the point? I digress), then the warming would be something like 1.7F. I'm sure I've got the exact numbers wrong, since it's been a long time since I looked at them. But the basic point is true.

So we spend untold TRILLIONS of dollars in outlays and lost growth…….just so we can have a world that's still warming up, just a teensy tiny bit slower.

Well that's just great! Totally worth it! Sign me right up!

Sheesh

The sheer idiocy of this whole notion is incredible.