A Case of Posthumous Conscription

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.

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P.S. Robert Murphy points at evidence against the claim that my father would have supported a carbon tax. In a 1999 comment to a recently published book, he wrote:

This encyclopedic and even-handed survey of the evidence of global warming is a welcome corrective to the raging hysteria about the alleged dangers of global warming. Moore demonstrates conclusively that global warming is more likely to benefit than to harm the general public.

It is possible that between then and now he would have reversed his view, but I can see no reason to expect it.

Evaluating Controversial Claims

Someone makes a scientific claim, typically as an argument for some policy. Examples would be current claims with regard to global warming, claims fifty years ago about the consequences of population growth, claims early in the Obama administration about the need for large deficits to bring down unemployment. There are at least four different ways in which an interested observer can decide whether or not to believe the claim.

1. Partisanship. If you support the policy, believe the claim. If you don't, don't. This is probably the most common approach.

2. Evaluate the arguments for yourself. This is  the most entertaining and educational approach but no more reliable than the first—and likely to give the same answer. There is always controversy about the claim among people better equipped to evaluate it than the random observer, although one side or both may try to deny it. In the case of global warming, the relevant claim is not merely that temperatures are going up, or that the reason is human activity, or that they can be expected to go up by enough to cause serious net costs, but all of those plus the additional claim that there are ways of reducing the increase that are worth their cost. To evaluate all of that you need a reasonably expert knowledge of climatology, statistics, ecology, economics, and probably two or three other fields I have not thought of. Since you don't have all that, you end up believing whichever arguments you want to believe.

3. The argument from authority. You try to figure out what the consensus of the people who are experts is or what some authoritative source of information says. An outsider trying to figure out what professionals in a field believe is at risk of overvaluing whatever position has the most support from public sources of information, such as the mass media, or has done the best job of getting its supporters onto the committees of scientific organizations that put out public statements. And even if he could figure it out for one field, that isn't sufficient. Again taking the global warming case, it is not enough to know what the consensus of the climatologists is, even if you can separate the facts from the puffery on that subject. Climatologists are not economists, so  could be correct about the expected temperature increase and wrong about the magnitude or even the sign of its consequences. Economists are not ecologists, so might show the costs they are looking at to be insignificant while missing the effects of climate change on other species. I discussed problems with this approach at greater length in an earlier post.

4. Prediction. Once such a controversy has been going for a while, partisans have a track record. If they have made confident predictions that turned out to be wrong, that is good evidence that they are either dishonest or arguing from an incorrect theory. Figuring out whether the arguments for a theory are right or wrong is much harder than finding out what that theory predicted. Sometimes all the latter takes is  a book or article by its supporters written a few years back.

The clearest case is the population hysteria of the 1960's. Paul Ehrlich's Population Bomb, published in 1968, confidently predicted mass famine in the third world over the next decade, with hundreds of millions of people starving to death. Not only did it not happen, the real world moved in the opposite direction, with calorie consumption per capita in the third world going up, not down. That is very strong evidence that Ehrlich can not be trusted. It is somewhat weaker evidence that the movement of which he was part, whose members generally took him and his arguments seriously, can not be trusted.

Weaker examples apply to my other two cases. Early in Obama's first term, the Administration offered predictions of what the unemployment rate would be without a stimulus and how much lower it would be with the stimulus that the Administration wanted and got. Actual unemployment rates for the next several years were higher with the stimulus than predicted without it. That does not tell us whether the stimulus was a good policy. It is possible, as its supporters argued after the fact, that things were simply worse than they thought. But it is good evidence that predictions made by Administration economists can not be trusted, that either they were deliberately fudging the results or were using models much less reliable than they claimed.

For the case of global warming, we have the IPCC's repeated overpredictions of global temperatures, hurricane rates that are strikingly lower, not strikingly higher, this year than the average, and a number of other predictions to which the real world has failed to conform. Again, that does not show that the underlying argument is wrong. It does show that the people and models that have been generating the mistaken predictions cannot be trusted.

Which is about the most that the interested outside observer can hope to learn.

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P.S. Not surprisingly, a lot of the comments on this post focus on the particular case of global warming rather than the general argument. One commenter provides a link to an article by Chris Landsea on the effect of global warming on the frequency and strength of hurricanes. One conclusion is that global warming by the end of the century might result in a slight increase in the strength of hurricanes and might also result in a substantial decrease in their frequency. 

Another is that the historical record provides no support for the claim that hurricanes have been becoming more frequent or stronger over the past century or so. The reasons that hurricane damage has trended up is that the total value of property in coastal counties has increased. The reason that the number of recorded hurricanes has trended up is probably the large improvement in our ability to detect hurricanes, in particular ones that fail to make land. For details see the article.