Asking the Right Question on Climate Change

Since we can’t be certain that the globe is warming, and we can’t be certain that it isn’t, we are essentially in the position of a homeowner deciding whether to buy fire insurance. Buying insurance is generally a good idea.

Ask yourself whether Donald Trump is right that global warming is a “hoax,” or whether progressive greens are right that the science supporting it is “settled,” and you will be asking the wrong question. Both sides have strong political reasons for taking their positions, which do not conduce toward unbiased conclusions. Trump’s political incentives for dismissing the mounting although still inconclusive evidence that the globe is warming are strong indeed-think West Virginia et al. For their part, Democrats cannot help but be tempted by the opportunity for government expansion that acceptance of the global warming thesis and their proposed solutions entail.

Since we can’t be certain that the globe is warming, and we can’t be certain that it isn’t, we are in the position of a homeowner deciding whether to buy fire insurance. Ask yourself whether your home will burn down, and you will be asking the wrong question. Ask yourself whether there is a possibility that your home will burn down, and you will be asking the right question, the answer to which is “yes.” From this it follows that buying insurance against the probability of such a catastrophe is a good idea.

Similarly, ask yourself whether the globe is warming, and you would have to confess that you do not know with certainty. Ask whether there is a possibility that the globe is warming, and the answer is of course “yes.” And because we cannot dismiss the possibility that we are facing a change in our climate, prudence counsels that we do something. The obvious next question is: What?

We could pile regulations upon regulations, hoping that some of them will have the desired effect-Californiacate the entire country and let the inefficiencies mount. That, as we have learned, would impose costs that often are often commensurate with the benefits only in the eyes of the burgeoning agencies that set about putting flesh on the bare-bones legislation sent to them by Congress. Their regulations will prove enduring beyond any useful life they might have, as the President’s difficulties in getting several of them rolled back demonstrate. Alternatively, we could sign on to a Green New Deal, commit trillions to a variety of measures of uncertain effect, and ignore the opportunity cost of such a trillion-dollar commitment.

My own view is that the “What To Do?” question presents conservative believers in markets with an opportunity. Two, in fact: to correct a massive flaw in the way the price system is operating, and to do something about the outbreak of fiscal imprudence that is careening us toward an unpleasant reckoning with unsustainable trillion-dollar deficits. And for which the solution proposed by print-to-pay believers in Modern Monetary Theory is likely to prove ruinous.

Yes, that means taking another look at carbon taxes, alleged by their opponents to be a sure path to enforced retirement for any politician daring to support them. That might once have been true, but no longer: Poll after poll shows that voters do not share Trump’s opinion that global warming is a hoax, or libertarians’ opinion that it is a sneaky way of turning over to government a larger share of the national income. Pew reports that in 2018, about six in ten Americans (59 percent) said that global climate change was affecting their local community “a great deal or some.”

A carbon tax would advance two long-held Republican/conservative objectives. First, by relying on consumers to make choices based on properly computed prices rather than government directives, it would allow the prices of carbon-inclusive products to reflect all of the costs of producing and distributing those products. As things now stand, only privately incurred costs are included; social costs are not. Although we cannot be absolutely certain that climate change is causing severe weather-rising sea levels and the like-prudence counsels that we plan on the assumption that that CO2 emissions are culpable, and make consumers bear some of that cost. Because quantification is difficult, the best path is to start with a low fee, and watch the results.

Second, a carbon tax that contributes to reducing the deficit does not increase the long-run burden of taxation. Instead, it reduces the debt burden of future generations-it is ultimately an inter-generational transfer of the tax burden to ourselves from our progeny.

The alternatives for Republican candidates are not attractive. They can join Trump in declaring global warming a hoax, but that is an increasingly difficult sell, one that invites accusations of ignoring an existential threat. They can sign on to the Democrats’ Green New Deal, the widely varying cost estimates of which are summarized by the reliable Doug Holtz Eakin, the President of the American Action Forum, as falling in the range of $50 trillion to $90 trillion. That would require huge new taxes or a debased currency, or both. They can duck the issue entirely, relying on vague statements of concern that are unlikely to survive demands for specificity. Or they can say: “We will propose a modest tax that will reduce emissions and deficits, while also reducing the mountain of debt that our children and grandchildren are poised to inherit.”

There are, of course, other possible answers to the “What To Do” question. Regulation might prove attractive to those who feel it offers a certainty of outcomes that carbon taxes do not, and that the cost of regulation is a small price to pay for such certainty. For those who count environmental issues among their top concerns, some version of a Green New Deal might be their answer. Some might prefer conceding that the planet is warming, but prefer devising and funding steps to ameliorate the impact of that change, rather than trying to reverse it.

In any case, formulating the right question is the key to getting answers that are sensible and reflect the variety of personal priorities and individual circumstances that must be balanced when setting policy.