A few MR readers have written in and asked for a more detailed assessment of Jeff Sachs's new book Common Wealth: Economics for a Crowded Planet. I'd like to go through some of the core chapters of the book, focusing not so much on the book itself but on whether I agree with Sachs's arguments and if not, why not. Today we start with global warming and there's enough material here I am putting it under the fold...
Here is a good Sachs article, summarizing his views, namely that a carbon tax is not nearly enough to solve the problem. He writes:
technologies developed in the rich world will need to be adopted
rapidly in poorer countries. Patent protection, while promoting
innovation, could slow the diffusion of these technologies to
low-income countries unless compensatory actions are taken. As with
medicines, patent protection may be double edged: promoting innovation
but slowing diffusion to the poor.
Economists like to set corrective prices and then be done with it,
leaving the rest of household and business decisions to the magic of
the market. This hands-off approach will not work in the case of a
major overhaul of energy technology. We will need large-scale public
funding of research, development and demonstration projects;
intellectual property policies to promote rapid dissemination to poor
countries; and the promotion of public debate and acceptance of new
options. We will need to back winners, at least provisionally, to get
new systems moving.
While this makes a great deal of sense, I am already feeling the "yikes are we reallly up to that?" response. Sachs also writes:
Consider three potentially transformative low-emissions technologies:
carbon capture and sequestration (CCS), plug-in hybrid automobiles and
concentrated solar-thermal electricity generation. Each will require a
combination of factors to succeed: more applied scientific research,
important regulatory changes, appropriate infrastructure, public
acceptance and early high-cost investments to “ride the learning curve”
to lower costs in the long term. A failure on one or more of these
points could kill the technologies.
Again, this more than makes sense. It is a sober breath of fresh air in a debate that too often looks for easy palliatives. My worry, however, comes in Sachs’s fairly optimistic-sounding book. He stresses that for no more than one percent of global gdp per year, we can avoid a doubling of carbon emissions, relative to pre-industrial levels, by 2050.
I am much more pessimistic, partly for reasons Sachs already outlines. I won’t recapitulate all of my previous writings on the topic (follow the links here), so let me give a kind of "splat" response: Chinese CO2 emissions are much worse than we had thought, China resists outside pressure, Chinese governance is often of very poor quality, China is currently subsidizing energy consumption, China thinks it is our problem to solve, China won’t automatically keep on becoming prosperous, the super eco-conscious Europeans in fact haven’t made much of a dent in the problem in terms of percentage change, the U.S. has done better on carbon emissions than most of the Kyoto signatories, the price of oil rose fivefold in a relatively short period of time without much helping, a gradual increase in carbon taxes (in a Hotelling model) can lead to more extraction today thus worsening the problem, and if the rich countries massively cut their carbon consumption the prices of coal and oil would plummet and the incentive for someone to buy and smoke the stuff will be all that much stronger. Valuable stuff in the ground tends to be dug up and used. And by the way, curing the ozone problem was easy and even a "simple" international organization such as WTO gets tied up in gridlock.
Did I mention that some of the world’s nations might even benefit from global warming, most of all Russia, and thus they might wish to sabotage various partial solutions and that Russia holds a permanent seat on the Security Council of the UN? And that geo-engineering is massively risky and might be considered by some countries to be an act of war?
That’s not even all the arguments I can think of. And no, they are not arguments for ignoring the problem but they are arguments against optimism. As I read Sachs, the core message is: "We can solve this problem if we try."
I would sooner start with the list of these problems. Yikes, and yes I know it might scare some people into simply letting things slide. But if action is to have any chance of succeeding we need to understand the problem. I’d like the book — and yes I know this is a popular book, but even popular books should advance the debate — to start with the tough stuff and tell us what to do.
Maybe the technical costs of Sachs’s fix are one percent of global gdp. But when we consider the imperfections of institutions, I fear that the costs are much much higher. At the end of Sachs’s article he writes:
By 2010 at the latest, the world should be breaking ground on
demonstration CCS coal-fired plants in China, India, Europe and the
U.S.; the wealthy nations should be helping to finance and build
concentrated solar-thermal plants in states that border the Sahara; and
highly subsidized plug-in hybrids should be rolling off the assembly
line. Only these steps will enable us to peer much farther down the
path of truly transformative change.
Under one meaning of the word "should," this may sound just right. Under another meaning of the word "should," it’s further reason for thinking the proffered formula doesn’t have much chance of success.