What If Climate Change

Ignore for a minute everything you know or have heard about climate change.

Now, suppose its 1992 and an overwhelming scientific consensus has emerged that the Earth is on the brink of a drastic global temperature shift. We are about to enter a significant ice age brought on by totally natural, NON-anthropogenic forces. Experts are in agreement that, if unabated, this trend will have devastating consequences for the global economy and human welfare, as well as for biodiversity and ecological health.

What is the optimal response in terms of public policy and social responsibility?

Do we have a moral obligation to not interfere with natural climate change? Would it be permissible (or rational) to protect the current environment and existing species from the harshness of…the environment? Isn’t that an oxymoron?

Or, alternatively, is our moral obligation to preserve human welfare?

How skeptical should we be of the ability of science to predict and effectively respond to a totally natural phenomenon?

I’m not trying to make any particular point here. I’m just curious what the response would be. How much of the current response to climate change is due to the self-loathing of modernity and a general disgust for industrialization rather than environmentalism or good economics per se. In other words, how much of the political and societal response hinges on “anthropogenic” climate change?

Prompted by this article from Reuters:

"We know abrupt climate change happens," said Jim White, a paleoclimatologist at the University of Colorado at Boulder.

"We don't know why it happens and we don't know what to look for as a first early warning."

Marginal Inflight Service

At dinner last night there was discussion of the quality of (or lack there of) airline service. One individual complained about the consumer injustice of some airlines now charging for checking an additional piece of luggage. I made the observation that most of us at dinner were business travelers or light packers so, on average, we benefit from the policy through lower ticket prices. “But that’s ridiculous, ticket prices haven’t gone down,” everyone at the table scoffed. I tried, rather unsuccessfully, to explain:

A piece of luggage is additional weight and so adds to the cost of the flight. Absent pricing, the cost is distributed across all ticketed flyers. Unless you carry more than the average amount of luggage, you benefit from the policy by no longer splitting the bill with heavy packers. In fact, flyers will respond to the price signal, begin to pack lighter, on average, and the entire flight will become more efficient, so the cost should go down marginally for everyone, but more for lighter packers.

The same is true for airline food. Unless you really like airline meals, the policy of charging for snacks instead of serving free meals is a net benefit to you.

Of course, given the variability in airline prices and myriad other costs, it would be IMPOSSIBLE for a customer to observe this effect. But unless you think airline prices are set collusively, it HAS to be true.

The logic is glaringly obvious. And yet it amazes me how difficult it is for otherwise exceptional bright people to grasp the concept. How has a species which appears to have selected for a general aversion to or incapacity for economic thinking achieved such prosperity?

Empowering Consumers

I sent the following letter to the NYT this morning in response to this article.

To the Editor:

Paul Krugman indicts poor regulation for recent food scares that have consumers worried about their groceries and have devastated some export markets (“Bad Cow Disease,” June 13). He’s right.

Where Krugman misleads is implying that more regulation is inevitably good regulation. It is the extent of the current regulatory regime that has entrenched big farm and food interests and hamstrung competition. The result? Companies have no incentive to self-regulate knowing USDA and FDA bureaucrats will ultimately be held responsible. And, it is nearly impossible for new companies to enter the market and feed consumers the products we want.

Not only do consumers have less choice, we also have less motivation to be informed buyers. A misguided willingness to trust fallible and poorly incentivized regulators helped create this situation.

If you want a safe food supply, then ease regulation, induce greater competition, and watch the power of reputation takeover.

That’s the guardian of free-market capitalism Milton Friedman espoused, not lawyers.

Kevin L. Richards