Tuesday, June 30, 2009

A quick comment on Waxman-Markey and logic

Three potential beneficiaries of Waxman-Markey.

I have a thing for polar bears--so much so that I'd say this about them: My existence and my world are intangibly better places because of their existence and would be intangibly worse off were they to cease to exist in the wild. These seem like frivolous things to say, I recognize: indeed, someone could reasonably argue--indeed, some are making it, in effect--that while I gain nothing material because polar bears exist in the wild, I will lose materially if the U.S. and the world's other economic powers take steps that might--might--preserve their habitat and, thus, their continued existence. Fine, I say. I'm really okay with that--and I say that as a person who, just now, is not especially privileged in the strictest socioeconomic sense.

Pretty dumb, huh? But maybe not: This morning, Andrew Sullivan links to an article in Scientific American about behavioral economics that contains an observation which seems especially apropos to me as I mull over the debates regarding climate-change policy (up to and including whether or not anything can/should be done by governments to address it . . . assuming, of course, you think it's even a problem in the first place).

One group that does not value perceived losses differently than gains are individuals with autism, a disorder characterized by problems with social interaction. When tested, autistics often demonstrate strict logic when balancing gains and losses, but this seeming rationality may itself denote abnormal behavior. “Adhering to logical, rational principles of ideal economic choice may be biologically unnatural,” says Colin F. Camerer, a professor of behavioral economics at Caltech. (my emphasis)
So, it's normal, at a personal level and no matter our wealth or poverty, to make economic decisions that make no rational sense but which we argue, rightly or wrongly, make our lives better in some way(s) we can't measure in the usual ways. This is another way of getting at why Jonathan Swift's "A Modest Proposal"'s utterly-correct, utterly-cold logic shocks us: babies are intangibly Good Things in and of themselves, never mind the various inconveniences they create for their parents; and to reduce them to commodities is, well, nuts.

All that said, choosing the wrong illogical benefit can also get us into collective trouble. Consider: for some time, we in the West have collectively decided that it's more fun all the way around to buy cheap things made elsewhere than it is to buy slightly more expensive things made here. One could claim that the decision to move manufacturing to poorer countries was driven by purely logical considerations--the reduction of costs--to which I'd say, Oh really? Fat profits for management and cheap stuff for consumers aren't pleasure-inducing? Ah, well. The auto-eroticism of consumerism, fueled by cheap credit and wealth created through speculation rather than genuine investment, has lost its magic: Such an economy was bound, sooner or later, to collapse on itself and, well, here we are--and we have no partner to blame for feeling less than satisfied.

So long as irrationality is going to figure into our economic decision-making anyway, I'd like to suggest that we might all be better off if we collectively acted more out of love of polar bears--or, to pick some slightly less-frivolous examples, the people of, say, Bangladesh or much of sub-Saharan Africa or various island-nations or, if those people are too far away, New Orleans.

If you've read this blog for a while, you've probably figured out without my telling you that I'm in favor of the American Clean Energy and Security Act, the complex cap-and-trade, reduction-in-carbon-based energy, investment-in-alternate-energy legislation that just passed the House of Representatives and faces an admittedly uncertain future in the Senate. My reasons for supporting it, though, include one that may surprise many of you, given that a) it's not usually one that comes up in the debates about the bill and b) that its source is John McCain.

I'll talk about (b) first because it will lead inexorably to (a). At some point during last year's campaign (the primaries, I believe), during a debate when the question was about climate change legislation, McCain said something to the effect that even if reducing carbon emissions does little or no good in affecting what may after all be a naturally-occurring phenomenon, there are still-indisputable goods to be obtained by passing such legislation: a cleaner, healthier environment and greater self-sufficiency (political as well as economic) due to reduced dependency on foreign oil. I agreed with very little McCain offered up as reasons to vote for him, but on these points, at least, he was absolutely right (and would be now, if he still felt it expedient to make them). However, it's equally indisputable that one reason these points don't get raised is that, as desirable as these things are, you can't quantify them so as to include them in any of the various cost-benefit analyses being offered up in support of or against Waxman-Markey. Thus, they become inadmissible as evidence.

Just once, I wish someone would come along and say, When clean-water and clean-air legislation were enacted in the '70s, businesses pitched fits about their increased costs and having to pass those costs on to consumers. Well, sure: and as a result we pay more because businesses were forced to change behavior they were very likely not to have changed out of the goodness of their hearts (because there was a time when it cost literally nothing to dump waste as people saw fit, air and soil and water quality be damned--and it showed, I well remember those days). But is anyone opposed to Waxman-Markey, or anyone opposed to "excessive government regulation," seriously going to argue that that our quality of life would be better if not for the creation of the EPA, given the clear road we'd been heading down? The resounding No we'd hear, true, doesn't fit into a strict cost-benefit analysis, but the fact that it shows people prefer--and benefit from--cleaner air and water surely needs to figure into this debate. Or has that become such a given (the '60s and '70s becoming ever more distant memories for many of us) that it strangely seems negligible as a consideration?

I recognize that the costs of this legislation, by some reckonings, are potentially enormous**--but I'd argue that the fact that we can't place a monetary value on all its benefits is not, in and of itself, a valid reason for opposing it. But, so long as we want to stick to the quantifiable, some of these analyses implicitly assume that doing nothing to reduce carbon emissions costs us nothing and, therefore, is preferable to doing something. But many times, as many people who have delayed and delayed a repair can attest, there often are costs, many times unforeseen and often much more expensive than the initial fix would have been.

Still: for me, the most helpful way to think about this question is not in terms of costs but in terms of the simple question, What kind of planet do we want to live on? As I answer that for myself, I go back to John McCain's argument: a cleaner planet and a more economically- and politically-independent United States are inarguable long-term goods in and of themselves--and not just for us here in this country. And maybe, just maybe, if enough nations around the world answer in the same way, we might get to have polar bears around for longer than might otherwise be the case.


**One critique of these estimated costs is that they assume technologies and economies won't be developed or adapt in ways that mitigate these costs; yet, a big part of Waxman-Markey is investment in precisely such things.


Amy said...

We've made up our minds about global warming (or climate change as we call it here in NH where we're having a cold wet summer so far) - that we are the cause and that we can affect it. But what if we aren't right? We won't even listen to dissenting voices right now, before pushing through a rushed, unread, hugely expensive bill that will cripple some parts of the economy and that experts agree may have little or no impact on global temp. Voices for example like this:


Amy said...

Leaving aside the question of climate change, I don't think there's anybody who also doesn't want clean energy and reduced dependence on foreign oil and plenty of polar bears (but not too close since they are large and carnivorous). I heard McCain talk about that and of course almost no one can disagree these are good things. The question is how to get there. There is an element of unskeptical belief and religious end-times fervor as well as hubris in climate change issues that I am wary of. Cap and trade has always struck me as bizarre and somewhat medieval-church, like selling indulgences - it concentrates power and money with the few people and agencies who dispense the indulgences, who regulate cap and trade. Isn't there a way to encourage clean energy with tax breaks and targeted funding and rely on human ingenuity and invention rather than institute a complex (and game-able)system that has already been shown not to reduce emissions in places like Europe that went in on the Kyoto protocols? "Fools rush in where angels fear to tread" pretty much sums up my feelings about that bill at the moment. And now I'll get off my soapbox. :)

John B. said...

Thanks for commenting. I've been away for a while and so am just now reading this.
It's strange to me how it's the cap-and-trade portion of ACES that gets most of the attention from people, when the bill also contains provisions for investment in alternative energy sources and tax breaks for R&D. I would just say that there's plenty of hubris going around on this issue, what with coal and oil producers (and, yes, congress-people, too) making the arguments they do out of what is at base self-interest. Genuine disinterestedness demands self-sacrifice, too. We hear all this talk about U.S. businesses' ability to innovate to meet changing market demands, but they sure don't seem to like to have their bluff called. But meanwhile, I don't see people clamoring for the return of the Ford Pinto.

As I said over at your place, I'm not pleased with the specifics of ACES' cap-and-trade system. The assumption behind it, though, is a sound one, I think: those who pollute the environment should bear some cost for the "privilege" of doing so until/unless they choose to pollute less than they are. Nor do I know of anyone who is seriously arguing that ACES will fix everything. The hope is that those nations previously reluctant to curb their own emissions will see that the U.S. is (finally) doing something more than asking businesses to volunteer to reduce pollution, and that other nations--and we, too, on down the road--will fix the flaws in their own cap-and-trade systems.

So, yeah: at heart, we agree as to the ends. Means are another matter. I don't pretend to know enough--or believe--that ACES is the One True way to work toward those ends. But it is one way and, imperfect though it is, I'm glad we've chosen it. Let's just hope the Senate can improve its means without making its ends weaker.