Wednesday, April 29, 2009

People who get us into trouble

I found this latest piece by Robert J. Samuelson via Paul Krugman, who nails some of the most disturbing fallacies in the column:

I don’t think there’s a single thing there that’s right. What on earth do business cycles have to do with it? The models may assume growth based on past trends, but they DO ask whether emissions policy would greatly slow growth — and the answer is no. Consumers aren’t assumed to “quickly” use less — the time frame in these models is decades long. And new supplies don’t “magically” appear — they respond to price incentives, which is what economics usually says.

I don’t especially mean to pick on Samuelson, but this column exemplifies a strange thing about the climate change debate. Opponents of a policy change generally believe that market economies are wonderful things, able to adapt to just about anything — anything, that is, except a government policy that puts a price on greenhouse gas emissions. Limits on the world supply of oil, land, water — no problem. Limits on the amount of CO2 we can emit — total disaster.

Funny how that is.
Ultimately, however it's Samuelson himself who deconstructs his own arguments most accurately:
The selling of the green economy involves much economic make-believe... Actually, no one involved in this debate really knows what the consequences or costs might be. All are inferred from models of uncertain reliability. Great schemes of economic and social engineering are proposed on shaky foundations of knowledge.
Funny because economic make-believe and shaky foundations of knowledge would've probably been the exact words I'd chosen to describe Samuelson's writing with.

1 comment:

Ankit Ashok said...

Very interesting post.

I don't know how these make-believe economist have existed for so long, even after being proven terribly wrong time and again.