Morris Coats--
In great haste, the U.S. House of Representatives passed the new climate change bill that attempts to halt global warming. This bill with nearly 1200 pages of text, 300 pages of which arrived only at 3 A.M. Friday morning, was passed by that evening in a very close vote . You can bet that it includes a lot of pork to buy the votes of some congressmen. Buried text in those 300 pages that were rushed through are sure to contain unpopular provisions used to purchase votes to pass this bill. Logrolling in this way amounts to taking two bills that cannot get a majority on their own and fusing them together so that both get passed.
In addition to the pork in the bill, making it much more costly than needed to meet its goal, we should take a close look how well the bill can be expected to meet any goals of halting or delaying the impact of global warming. We should never forget that global warming is not a national problem, but a global one. What is done to reduce greenhouse gases in one place can be undone elsewhere.
The prevailing international agreement on global climate change, the Kyoto Accord, allows developing nations, particularly India and China, to continue to increase their greenhouse gas emissions as the developed nations reduce their emissions. So as the U.S. decreases its use of coal, China, which has been building many coal-fired generators, will be able to purchase the same coal that would have been used in the U.S. and burn it in their new power plants. The result is cheaper power in China than in the U.S. and more manufacturing there with less here.
There is a new round of talks to work toward a new international agreement on climate change to begin in Copenhagen, where Obama hopes that the new climate change bill can help him lead these talks. The U.S. is one of the few countries not to sign the Kyoto Accord, so Kyoto is likely to be the starting point for any new agreement. There is a provision in the new bill that allows tariffs to be placed on imports from China or other developing country that does not adopt similar regulations to reduce greenhouse gas emissions, but China has had increasing leverage over our policies with their increasing holdings of American debt and American dollars, as well as the weight of many other countries having already agreed to Kyoto. Increased tariffs on Chinese imports merely threaten to repeat the trade war of 1930s that were precipitated by the Smoot-Hawley tariffs imposed by the U.S. that prolonged and deepened the Great Depression. This is something that no one wants to repeat, especially given the existing global depression.
One misleading argument made by the administration is that the new climate change bill will bring about an explosion of new jobs in alternative energy sources. Of course, many jobs in traditional energy areas will be lost. However, to maximize “number of jobs” should never be a social goal. We could easily increase the number of jobs by prohibiting efficient technologies. For instance, after the city of Bordeaux in the mid 1800s suggested that a break in the railroad from Paris to Spain would increase employment by requiring cargo to be unloaded and reloaded there, the 9th century economist and pamphleteer, Bastiat, facetiously suggested that by replacing the train altogether with what he called “a negative railroad,” so that a long line of people would just hand packages from one to another, would increase employment enormously. Of course, it should then be obvious that either these cargo handlers could only be paid a pittance, or the cost of such transportation would lead to other methods of transporting goods from place to place, such as by donkey and wagon, and no one would be employed with a negative railroad.
Too often we fail to see that people do not want work for work’s sake, but want it for what they can get for their effort. We can all work more without producing any more than before, and then we will have wasted our efforts in unproductive ways. More so-called “green jobs” might be available after this bill, but this does not mean that these jobs will be producing as much as we had been before. More work and less to show for that work does not sound like progress.
The truth is that energy costs, under this bill, will undoubtedly rise, making it unbearable for a poor person to live in the areas of our country with many heating or many cooling days, as in the Gulf South where I live or in Buffalo, New York. Industries that are heavily dependent on energy are likely to become decreased. Transportation, upon which most trade is based, will fall off and demand in all physical goods will fall. The steel industry, which is already in trouble in the U.S., will face further trouble as using coal becomes almost prohibitive, so steel production is likely to move out of the U.S. In addition, since cheap electric power is necessary for aluminum production from bauxite, another industry will likely leave this country.
Of course, if global warming is the threat we are told, then perhaps such action is necessary to keep other wealth from being destroyed, such as the many buildings, homes, factories and farmland in low-lying areas. What are our alternatives? How effective are the actions that are being proposed and how costly are they likely to be? Bjorn Lomborg of the Copenhagen Consensus asked another question, “What global problems are there that we could do with our limited resources to help the planet and its people?” Lomborg and his associates looked closely at various contenders for global priorities and try to prioritize solutions to the world’s problems.
They examined estimates of the costs and benefits of various world problems and concluded that fighting global warming was not a high priority. The reason is that there is very little that fighting global warming will do. With spending the huge amounts that have been proposed, the climate change models that have been proposed, will at most delay the effects of global warming by six years. His talk at the TED (Technology, Entertainment and Design) Conference explaining the work of the Copenhagen Consensus on setting global priorities is very powerful and worth hearing. The bottom line is that while global climate change has gotten much of our attention with so much focus on the issue, there is very little we can do to stop it and so much more we can do that will be effective by tackling other issues, such as AIDS prevention and fighting malaria. Perhaps, with so little effect we have on global warming climate change legislation amounts to tilting at windmills.
Passing laws in haste, having them railroaded through, or perhaps “negative railroaded” through, should be cause for suspicion. Still, the “cap and trade” provisions of the bill are worth consideration and are based on ideas economists have suggested at least since the 1970s.
R. Morris Coats is a Professor of Economics at Nicholls State University in Thibodaux, Louisiana. He was educated at Louisiana State University and at Virginia Tech. He taught at Lynchburg College and at Marshall University before coming to Nicholls State where he teaches classes on environmental economics, health economics, public economics and managerial economics. He has authored or co-authored numerous articles in peer-reviewed journals, such as the Southern Economic Journal, Journal of Public Economics, Public Choice, Public Finance Quarterly, Legislative Studies Quarterly, National Tax Journal, the Journal of Marketing for Higher Education, and Applied Research in Economic Development. He has co-authored several papers on sustainable economic growth and common-property resources. In addition, he has performed various impact and forecasting studies for the South Louisiana Economic Council and various tax studies for local and state governments. He has also published papers on cigarette smuggling, bribery of politicians and wasteful spending on homeland security. He takes special pride in now having at least one economic advisor for both the presumptive Republican nominee and the presumptive Democratic nominee for President of the United States for 2008 cite his research.
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Jul 2, 2009 
