A recent Forbes article
is headlined "What Would Milton Friedman Do About Climate Change? Tax Carbon." It reports on a forum at the University of Chicago at which several economists, including Michael Greenstone, described as the "Milton Friedman Professor of Economics at the University of Chicago," argued that Friedman would have supported a carbon tax. The evidence for that claim was a 1979 clip from the Phil Donahue show where Milton Friedman argued that if the government is going to do something about emissions, they should use an effluent tax rather than direct regulation. He does not actually say that government should do something about emissions, only that there is a case for doing so and, if it is done, the best way to do it is by a tax on emissions.
To get from there to the conclusion that he would have favored a carbon tax requires at least one further step, a reason to think that he would have believed that global warming due to CO2 emissions produced net negative externalities large enough to justify doing something about them. The problem with that claim is that warming can be expected to produce both negative externalities such as sea level rise and hotter summers and positive ones such as longer growing seasons and milder winters. The effects will be spread out over a long and uncertain future, making their size difficult to estimate. My own conclusion, defended in past posts here (one example
), is that the uncertainties are large enough so that one cannot sign the sum, cannot say whether the net effect will be positive or negative.
I do not know if my father would have agreed but I have at least a little evidence on the subject, more than offered in the Forbes article. The same issue arose in the earlier controversy over population. Just as it is now routinely assumed that warming is bad, it was then routinely assumed that population increase was bad. Forty years ago I wrote a piece
on the subject for the Population Council in which I attempted to estimate the externalities associated with population. I concluded that they were too uncertain for me to tell whether the net effect was good or bad. My father read the piece and commented on it. If he had disagreed he would have said so, and he did not. It is possible that he would have felt differently in the case of climate change, but I can see no reason to expect it.
The article quotes professor Greenstone on the uncertainty:
Estimating the cost is tricky, Greenstone said, but scientists and
economists have models for projecting the cost of each added ton of
carbon on agricultural losses, mortality, sea-level rise, storm surge,
and other climate effects.
It’s a complicated task but I think the best evidence suggests that
it’s probably around $40 a ton,” he said. The U.S. government has
projected the cost of carbon emissions at $37 per ton.
Current estimates of climate sensitivity, the effect on temperature of an increase in CO2, vary by more than a factor of two. One would expect the size of the externality due to an additional ton of CO2 to increase with the temperature increase. A further uncertainty, reflected in the various scenarios of the IPCC report, is the amount of CO2 that will be emitted over the next century. Lockheed Martin has recently claimed
that it will have a working fusion reactor in the near future. I have my doubts that it is true, but if it is, the result should be to reduce CO2 emissions over the course of the next few decades to between half and a quarter of what they would otherwise be. That would sharply reduce warming and thus the cost of additional CO2.
One would expect similar effects from any substantial reduction in the cost of other alternatives to fossil fuels, such as nuclear or solar power, or from a substantial increase in the cost of fossil fuels due to the exhaustion of the more readily accessible sources. Additional uncertainties are associated with the relevant climate science. The IPCC, for example, claimed in its fourth report that warming increased drought, retracted that claim in the fifth report.
Whether or not my view that we cannot sign the externality is correct, I would be very surprised if Professor Greenstone could justify his confidence in the specific number he offered—which happens to be close to the official government estimate. I would be equally surprised if he could offer evidence that Milton Friedman would have taken seriously a government estimate of an uncertain number offered in support of a policy the current administration favored.
Before they died, my parents created a foundation
to promote the idea of school choice. One of the terms on which they created it was that the foundation was to end a fixed number of years after the last of the founders died. The reason for that was my father's concern, possibly based on the examples of the Ford and Rockefeller Foundations, that once the founders were no longer around their names would be used in support of policies they themselves would not have supported.
Of all my father's accomplishments, I believe the one he was proudest of was his role in ending military conscription. I do not think he would be happy to be conscripted, posthumously, for someone else's cause.
Labels: carbon tax, Conscription, Milton Friedman, population