Monthly Archives: August 2010

Perspective On Climate Change

Many intelligent people view political and public public policy questions largely through the prism of climate change. They view climate change as the most serious challenge of our times, the science of climate change as a settled matter and the need to curb carbon emissions the fundamental global political priority.

Beyond certainty on these issues my friend David wisely suggests:

“I’m convinced that most of what we need to do to address the problem will improve the overall quality of our lives. That last conviction isn’t particularly scientific.  It’s really a preference for the kind of world I’d like to live in and help build.  I think it would be a world that is more elegant, beautiful, fun, healthy and genuinely prosperous than the one we’ve got.  So I’m sure that influences my view.  Even if I thought climate change were not settled science, I’d still be doing most of what I’ve been doing.  It just makes sense to me.”

He and I agree on all of this other than his presumptions regarding the “settled science” and the primacy of climate change as a political and policy priority. We agree on the technological and policy solutions that would be the best solutions to address human impacts on climate change and that would also help address serious challenges of national security, national balance of payment, our burgeoning federal deficits, unemployment, energy technology, innovation and other broad social and economic goals.

That said, all those solutions can and should be be promoted whether anthropogenic climate change is significant or not. As I have argued here, my sense is that the politics of climate change are getting in the way of the solutions regarding human impacts on climate change. And worse, they are increasing the polarization of our society at a time we need to find ways to reduce that polarization and find common ground.

I am not arguing that climate change isn’t real. It is inevitable that 6.8 billion people and all our technology must be having an impact on our climate. How could we not be.

But unlike these people that I genuinely respect, I am not convinced that the “the science is settled”, or that we understand how all the various human and natural factors impacting climate interact, how those interactions will be expressed or how significant any impact will be.

From my perspective, the key concerns of climate change include: potential increase in storms and severe weather; rising sea levels and resulting displacement of coastal populations around the globe, potential increases in disease; impacts on agriculture; impacts on ocean chemistry; and impacts to wildlife and natural habitats. These are all potentially serious concerns. Each should be evaluated somewhat independently.

Chris Landsea, a lead scientist at the National Hurricane Center recently co-authored an article in the journal Nature Geoscience reporting on studies commissioned by the World Meteorological Organization (WMO), the UN agency helps oversee the IPCC. The report calls into question the severe weather forecasts in the IPCC reports on climate change. Lansea suggests:

“We have come to substantially different conclusions from the IPCC. There are a lot of legitimate concerns about climate change but, in my opinion, hurricanes are not among them. We are looking at a decrease in frequency and a small increase in severity.”

The study and report were apparently prepared by a highly respected team of tropical storm experts who have held divergent views in the past regarding the influence of climate change on storm activity, and is thus seen as an important contribution to the latest understanding of the science.

Regarding rising sea levels and population displacements, while surely not inconsequential, it is important to consider time scales in considering this challenge.   No credible studies indicate that sea level rise will happen rapidly, but rather over a period of several decades or centuries. Even the most extreme projections I have seen, predict the sea level rise at only a few meters. If the seas rise, people will move.

Throughout history people have been migrating for all sorts of reasons. While some migrations clearly have roots in natural and ecological challenges, the most urgent and horrific population displacements have generally been caused by war, genocide, severe economic problems and other concerns generally related to bad governance. The United States itself is a good example of the benefits of migration. How many US citizens can trace their family heritage in this country more than a century or so? Yet we have been the most prosperous nation in history.

In 2001, I worked in seaport area of  Boston. Since that time, that whole area has been almost completely transformed. Less than 30% of the buildings now there were there ten years ago. And that whole part of the city used to a part of Boston Bay that was filled in during earlier times. The first year I lived in Providence. my son took a photo of the skyline that is hanging in our hall. Five years later, that skyline is transformed, even with the serious recession. Things change, people move and rebuild.

The more prosperous the society, the more adaptable it is to change. The real challenge in addressing migration caused by climate change or anything else, is to assure economic prosperity generally. Prosperous societies tend to be more welcoming of immigrants than those experiencing economic hardship. Humans have been migrating  since we first came down from the trees and we always will. The challenge is to maintain adequate global economic prosperity and peace so that immigrants are welcomed, as they have been throughout most of the history of the United States.

Disease is a similar issue. While there are clearly environmental factors central to many diseases, economic factors are far more significant. While factors for tropical disease or heat related problems would increase, challenges of the cold would presumably be decreased. In any case, if we want to invest in fighting disease, there are far more direct and effective measures that could be taken in mitigating disease than investments in climate change mitigation.

Regarding agriculture, two issues are at play. First is the possibility of climate change shifting rainfall patterns and thus relegating currently productive agricultural areas too dry for productive agriculture. The other issue is the impact of higher temperatures and increased levels of CO2 on agriculture.

The second matter is somewhat easier to contemplate. Scientific evidence seems to indicate that during the Jurassic and Cretaceous periods when dinosaurs roamed the earth temperatures and CO2 concentrations were both significantly higher, as was the biological productivity of the planet. Some greenhouse growers deliberately increase CO2 levels along with providing warm temperatures to increase plant growth. In general it would seem prudent to presume that other factors being equal, the overall agricultural and biological productivity of the planet should increase with higher CO2 levels and temperatures in the ranges predicted by the IPCC and others concerned with climate change.

Shifting precipitation patterns is another matter and a more challenging one. It appears currently that it is essentially impossible to predict what  might happen to precipitation patterns as the climate changes. In my opinion, this is one of the most significant concerns regarding potential climate change. But there are a number of factors which will all impact precipitation patterns: temperatures, cloud cover, aerosols and particulates in the atmosphere, deforestation, agricultural patterns, urbanization, industrial emissions, natural cycles like El Ninos, sun cycles, ocean currents and other factors. The reality is, changes in precipitation patterns have happened throughout history and it appears numerous civilizations have collapsed in the past for exactly this reason. It is essentially impossible to know if changes in precipitation patterns due to current climate changes will have more significant impacts than others in our past and it is likely impossible to do anything about it on a macro scale. As with many other factors though, prosperous nations have been better able to adapt both irrigation and water conserving agricultural practices than poor nations have. So while changing precipitation patterns, like sea level rise, could indeed cause shifts in agriculture and populations displacements, the best preparation we can have is to assure a peaceful democratic and prosperous future.

In my opinion, changes in ocean chemistry is the impact of potentially most concern regarding increases in carbon levels in the atmosphere. Relatively recent science indicates that as atmospheric carbon levels increase, much of that increase is absorbed in the oceans, increasing the acidity of the waters in a way that can potentially have significant impacts on calcifying organisms. This could potentially have a significant impact on ocean ecosystems along with the fisheries that supply important food resources for humans. It is critical that this science be studied further.

As for the changes to wildlife generally, many of these are inevitable. Species have been arising and going extinct since the dawn of life and will continue to do so. No doubt having 6.8 billion people on the planet impacting all the changes we make will inevitably impact other species. Development and land use patterns from such a large human population likely have a more rapid wildlife impact than temperature and climate changes. Once again, prosperous nations like the United States have proven most able to effectively protect endangered species and to limit the ecological damage of our presence.

From a moral perspective, I come down on the side of humans first, as suggested here. At the end of the day, if we are to prioritize wildlife over human life, the moral challenges of deciding whose children should live and whose should die are going to be ugly. While we should of course limit the damage we do to the planet and to other species as much as possible, yet again it seems to me that history has proven that prosperous nations have been best able to do so, thus the most important thing we can do to assure the protection of wildlife is to assure economic prosperity.

Recognizing that the challenges of climate change are best addressed through economic prosperity, then one has to question whether climate change should be a more serious concern than the very many threats to our economic prosperity, including some of the favored “solutions” to mitigate human impacts on climate change.

I am not questioning that climate change is happening, nor suggesting that it isn’t a serious concern, but rather that it has to be taken in context of many other very serious concerns, many of which are far more urgent in their time frame and potential impact. I am suggesting that to effectively develop a consensus on addressing climate change, we also need to respect the perspectives of the majority of people who are far more concerned about near term impacts of economic issues and other important challenges.

Wars, genocides, economic problems, weapons proliferation, starvation, prejudice, hunger, malnutrition, disease and all sorts of very urgent issues are all plaguing the world today. There are a whole lot more effective and cost effective means of dealing with all of them than through addressing potential climate change, even if we were addressing climate change in a serious and effective manner.

And the politics of cataclysmic climate change is doing significant harm in that it has been seized on as an excuse to legitimize nuclear power and spread all the insurmountable challenges of toxins, terrorism, weapons proliferation, restrictions of freedom and other problems that go along with nukes. If climate change were used to pass corrupt corporate welfare schemes like Cap, Trade and Offset, we would weaken the economy and our resiliency to effectively mitigate the potential impacts of climate change.

From my view of historical evidence, the best thing we can do to protect the environment and address human influences on the climate is to have a strong economy with the luxury of spending money for environmental protection. The good news is that the history of economic progress is one of increasing decarbonization of our economy. There is a very direct linkage between decarbonization, reduction in pollution and economic prosperity, which I explored a bit here

Having majored in environmental studies as a student, I can’t help but recall that the landscape where I live was largely shaped by changes wrought by the sheet of ice that used to cover this place. As recently as 20,000 years ago in the Last Glacial Maximum, this area and much of the planet was covered in ice.  The climate of the planet has always been changing. Public policy cannot stop that.

The issues of concern regarding human impacts on climate change  are long term challenges that won’t be addressed unless we do so in the context of very immediate and urgent problems impacting peoples lives today. So rather than arguing for measures that would threaten the economy like Cap and Trade or oppressive regulation, lets push hard for the real solutions to climate change that also address the urgent challenges of of our economic problems, of creating jobs and which very clearly have other national security and economic impacts that the vast majority of Americans will support.

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Filed under Climate Policy, Environmentalism, Fundamental Perspectives

United States Is Bankrupt

Bloomberg this morning published an editorial by Laurence Kotlikoff with a pretty stark headline suggesting that the United States is bankrupt. The respected Boston University economist is not making wildly radical claims, but quoting and referencing the analysis of the International Monetary Fund and the Congressional Budget Office.

It is refreshing to see our nations unsustainable entitlement programs described clearly in the main stream media as exactly what they are – Ponzi Schemes. The longer Congress avoids reality, the more likely the mess they have created will end very badly.

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Filed under Economic Policy, Politics

Replace ALL Federal Government Revenue With A Simple Energy Tax

America needs a new answer regarding energy, economics and the environment.  Our current systems are failing and the solutions currently on the table won’t work.  And everybody knows it.

We also need to rethink how we fund our government. The current tax system discourages work, productivity, free enterprise, job creation and almost every other goal and value our economy is purported to be based upon. The anger growing across America is in large part inspired by the complexity and irrationality of our tax system.

It is increasingly obvious that it isn’t enough trying to address the massive challenges that confront our nation by making minor adjustments to the sclerotic patchwork of contradictory public policies that has emerged over the decades. And recent efforts at government micromanagement of the entire econ0my are clearly not going to work. It is pretty clear from the polls that most Americans are fed up with Congress, the federal government and with politicians from both parties.

But one real solution to address many of our most fundamental challenges is astoundingly simple, clear and bold. It is a solution that can be strongly supported by people across the entire political spectrum of America – once we overcome our profound fear of sensible change.

I propose that it is time that we replace 100% of our federal government revenues with an energy tax and in doing so completely unleash our society  from the burdens and distortions of our current counterproductive tax system.

That sounds completely impossible at first thought, but as shown below, the numbers work. It is actually a far more realistic proposal than all counterproductive pseudo-solutions to the daunting problems our country faces that make their way through Congress these days.

After the failures of the Copenhagen Climate Conference and the Cap and Trade corporate welfare scheme in the Senate, the environmental and clean energy communities are regrouping to figure out what’s next.

Many environmentalists are now jumping on board with the Breakthrough Institute and others who are calling for massive new government research and development for clean energy solutions on the order of the Manhattan Project or NASA’s mission of the 1960’s to put a man on the moon. Surely better technology will be welcome. But after all the recent waste our federal government has been involved in and the massive deficits we already face, it is highly doubtful that Congressional or public support for such a huge government effort will be forthcoming.

Others have long argued that if we are serious about reducing pollution from our wasteful energy system, making renewable energy cost competitive, spurring the growth of dynamic new energy industries, creating bountiful new job opportunities, reducing our dependence on foreign oil, improving our balance of trade deficit and all sorts of other notable goals – then we clearly need to raise the price of petroleum. And we should do it simply and completely transparently through an oil tax. But up until now everyone, including me, has been talking about timid energy tax solutions that are unlikely to be enough to either do the job or garner adequate public support.

Upon reflection, I’ve come to realize conventional solutions aren’t nearly enough. Neither a modest energy tax or  significantly increased public investment in clean energy technology,  while infinitely better than corrupt proposals like Cap and Trade, are bold enough solutions. Facing continuing economic stagnation, as we pass the crest of the era of peak oil production, it’s time to completely re-imagine political possibilities and get serious about  transforming our economy and restoring our nation’s economic productivity.

Replacing 100% of our federal government revenues with an energy tax is a transformative proposal that can inspire the American people and appeal across the political spectrum, while igniting an unprecedented era of economic prosperity.

Look at the numbers:

According to the US Energy Information Agency, our country currently consumes 19,498,000 barrels of petroleum a day, which is the equivalent of 298,904,340,000 gallons of petroleum a year.

All federal revenues for fiscal year 2010 are projected to be about $2,165,000,000,000. That includes all individual income tax, corporate income tax, investment taxes, social security tax, disability insurance, hospital insurance, unemployment insurance, excise taxes, fees, energy and transportation taxes, and every other form of federal government revenue other than debt.

So doing the math, if we were to replace every single source of government revenue with a tax on petroleum, that tax would only be $7.24 per gallon. And if you add in the full recent cost of gasoline of about $2.60 a gallon nationally, not even discounting for the federal and state taxes already built into that price, the total price on gasoline and other petroleum based fuels would be $9.84 a gallon.

According to the US Energy Information Agency, that isn’t significantly more than average European gas prices in March of this year: Belgium-$7.18, France-$6.98, Germany-$7.12, Italy-$7.06, Netherlands-$7.68. And those countries are burdened with massive taxes on top of high energy prices.

On average according to the US Energy Information Agency, along with paying far more for petroleum, Europeans paid about twice what Americans paid for natural gas and coal in 2009. So if we added to the energy sources being taxed to offset current federal revenues both the over one billion short tons of coal consumed each year in the US, along with the 23 trillion cubic feet of natural gas we consume annually, the overall level of fuel taxes could be around the same as  European energy prices, while completely replacing all other forms of federal taxation and government revenue.

Most sensible people would jump at the opportunity to trade a European level of energy prices in exchange for no IRS, no income taxes, no payroll taxes, no business taxes, no inheritance taxes, no government fees and no government interference with our business revenues and personal income.

For those who will inevitably scream this level of energy taxation will make American industry uncompetitive, the one other revenue source the feds should have is a tariff on goods from countries that don’t implement similar levels of taxation on energy. That unilateral action will do far more to spur other countries toward responsible energy policy than complicated well intentioned, but unenforceable climate treaties. At the same time it could further reduce our energy taxes, or perhaps help offset the federal budget deficit.

Of course change this profound couldn’t happen overnight and would need to be phased in. And inevitably in the transition, the winners and losers will all be lobbying madly in Washington to turn a simple idea into the inevitable compromised and complicated sausage making that is all Congress seems able to produce. But if we insist that simplicity and transparency are fundamental to success, perhaps a bold proposition like this could gain enough public support to overcome the corrupting influence of lobbyists.

Is this whole idea completely crazy? …..  Maybe.

Or maybe its so obvious and simple that the only reason not to consider it is all the special interests that will be completely upended by the elimination of our current corrupt and senseless tax system. Lets face it, this kind of change would impact every single American in a major way and will scare the hell out of many. But in the end, anyone honest will recognize that it would be a far more rational and sensible way to fund our government than the increasingly untenable ways we do so today.

Think of the business and investment potential it would unleash. Think of the truly free economy unfettered by manipulations of the tax code. Think of the productivity gains when businesses make decisions based on common sense rather than tax consequences. Think of the rebirth of American industrial opportunity when advantages are eliminated for cheap products from China being subsidized by their low cost energy, lack of environmental standards and the low cost of wasting fuel in transport. Think about the jobs created when we no longer impose punishing taxes on working, on hiring and on productive investment. Think of the jobs restored to this country when we eliminate the insane tax subsidies for shifting industrial productivity overseas and eliminate the payroll tax penalties on hiring people. Think about the time, money and talent it would free up when we no longer have to spend countless hours and dollars reporting our personal business to the IRS. (According to CNS news: The Internal Revenue Service  estimated that about 7.75 billion hours of human labor went into completing all of the 2009 tax forms and that doesn’t begin to count the huge amounts of time and money wasted figuring out how to game the system and avoid taxes).  Think of the personal freedom and productivity regained for everyone when we eliminate the entire irrational tax code.

Many will argue that people will start to conserve energy with high price signals, thus putting government revenues at risk. Radically reducing energy waste and pollution is one of the two fundamental propositions of the whole idea. And yes, significantly reducing the size and scope of the federal government is the other fundamental goal and benefit, one that would be a welcome relief to the vast majority of Americans.

Most Americans fundamentally trust and favor transparent market oriented solutions and don’t want the government meddling in our lives and in our economy.  Watching the sales of fuel efficient cars after the 1973 Oil Embargo, the 1979 Iranian Oil Crisis and the huge spike in gasoline prices in the summer of 2008, as well as the lack of interest in such vehicles when oil prices dropped, nobody should question the reality that unlike government programs, price signals actually  work to inspire the goals clean energy advocates hope to achieve.

This proposal is a real test for environmentalists, as well as political liberals and conservatives alike.

Are environmentalists really concerned about the environment, or as opponents often suggest, are environmental issues merely excuses for increasing the power of elitist bureaucrats to exercise government control over every aspect of our lives?

Are conservatives really interested in political freedom, economic efficiency and free markets, or is all their rhetoric really just a cover for protecting the special privileges and loopholes for increasing the wealth and power of the already wealthy and powerful corporate oligarchies in our country?

Liberals are bound to hate the idea initially because it removes all the redistributionist “progressive” aspects of our tax code. But based on the accelerating levels of wealth disparity in our country, the impenetrable complexity of the tax code and the hypocritical shenanigans that many prominent liberal politicians get caught using to avoid the tax burdens they want to impose on the rest of us, maybe its time for everyone to just admit that the current system is completely failing to meet those idealistic goals, which are negated by all the special loopholes embodied in the unreadable thousands of pages of the tax code. The reality is that when one includes payroll taxes in the overall calculation, our current tax system is neither progressive, fair or in any way rational.

Rather than everyone just pointing fingers and blaming the other guys for our problems, if we focus on finding solutions simple enough, bold enough and sensible enough to actually garner broad support, maybe maybe there is a possibility of rediscovering consensus in our society.

Lets start taxing waste and pollution instead of using the tax system to punish people for working, creating jobs and making productive investments. Let’s actually try real market based solutions and restore the economic competitiveness our nation enjoyed before every aspect of the economy was micromanaged by the government and manipulated for tax reasons.   Let’s encourage the prudent conservation of our limited fossil fuel reserves so we don’t impoverish our children and grandchildren with our prolifigate waste. And yes less sensibly prune back the over-reaching size and scope of our federal government.

Why single out fossil fuels for taxation? Energy is the lifeblood of a modern economy. The highly concentrated energy available from fossil fuels is a precious resource both for us and for future generations. Unlike metals and other minerals that can be readily recycled in a prudent society, once mined and burned, the concentrated energy in fossil fuels is dissipated and unavailable for future use. Arguably, those concentrated energy resources stored over millions of years shouldn’t be squandered, but rather be husbanded wisely, as higher price signals would encourage. Balance of trade, foreign policy, pollution and a variety of other reasons which almost everyone is aware of, further contribute to the selection of fossil fuels as the sensible focus for taxation.

Perhaps as this fundamental idea of tax shifting gets refined, we will find consensus to add other wasteful, dangerous or polluting industries to the mix of appropriate consumption taxes, so we can begin to balance our federal budget and pay down our out of control federal debt, while also making our nation a safer, healthier and saner place to live.

But we should start the conversation recognizing how surprisingly affordable it could be to align rational revenue policy with sensible market mechanisms that would encourage economic prosperity, job and business growth, broadly shared environmental and clean energy goals along with the basic principles of freedom and liberty that our country was founded upon.

Let’s fundamentally reform the American economy with a government funding system that no longer undermines the most essential ideals and principles of our national heritage. Let’s support an idea bold enough, simple enough and compelling enough to actually work.


Filed under Best Stuff, Climate Policy, Economic Policy, Energy Policy, Environmentalism, Politics