Schelling interview, Part III: Waxman-Markey is a hodge-podge

In Part II of my discussion of Conor Clarke's Thomas Schelling interview, I mentioned how Schelling is concerned about the specifics of international commitment and thinks America needs to bring a specific bill to Copenhagen if anything meaningful is to be achieved there. Unfortunately, he is not a fan of Waxman-Markey:

TS: And so I think what is needed -- if we had a good bill, and I don' think the Waxman-Markey bill is anything to be proud of -- is to take a good bill and display it to other large countries, and say, "This is what we plan to do. What do you plan to do?" And then hash it out over the next year.

CC: I can of see why saying "we're going to reduce the total amount of emissions in the world by X percent" might be kind of a vague, aspirational goal for a global climate conference. But for a nation, why can't it be very concrete? Why can't we say, We want this level of emissions, and we're going to introduce a price mechanism -- a tax or a cap and trade system -- and we're going to let the private sector sort out the rest?

TS: Well, my only objection to Waxman-Markey is that it's such a hodgepodge, with all kinds of escape valves. And I don't think it's specific enough on what the cap will be from year to year to year. And also, it's 1,200 pages. And 1,200 pages implies that it's an awfully complicated hodgepodge.

... my actual feeling is that the best you can hope for with this Waxman-Markey bill is that it'll take a few years to discover that it's a huge nuisance of the problem, and they ought to find a way to simplify it. And the way to simplify it is to put the cap on the fossil fuels, not on different industries.

I think here Schelling falls into the trap many economists do with climate policy, opining on the "best" or "simplest" mechanisms without acknowledging (understanding?) the operative political constraints in a representative democracy. Robert Stavins of Harvard's Kennedy School is an exception here. Sadly, in the end, the best American climate bill is the strongest one that can gather at least 218 votes in the House and 60 in the Senate, which is assuredly far from the "best" or the strongest in absolute terms. Classic "great is the enemy of good" (in the original Voltaire interpretation, not the Jim Collins reversal).

Schelling interview, Part II: The importance of specificity in international commitments

One interesting part of Conor Clarke's Thomas Schelling interview was Schelling's take on the nature of international cooperation on climate change. The man won the Nobel Prize for game theory, so it's worth paying attention:

CC: What do you think of Waxman-Markey bill, the American Clean Energy and Security Act? It sets a cap on emissions, but as I understand it the real value is in the effect it might have at Copenhagen.

TS: Well let me first respond about Copenhagen. I don't think anything's going to be accomplished at Copenhagen. But they might agree that they will cap the global temperature increases at 2 degrees Celsius -- that's one of these useless things that people love to talk about. Or they might come up with an agreement that the amount of CO2 in the atmosphere should not exceed 450 parts per million. Again, that's no commitment because it's just setting a goal that's supposed to be aspirational.

CC: And you say that because there's no enforcement mechanism?

TS: Not just because there's no enforcement mechanism. I don't worry much about enforcement. I think that if the major countries reach an agreement they'll do their best to do what they said they would do. But if you say what you're going to do is get emissions down by 15% in 20 years, none of them knows what that means. That's not a commitment to something they're going to do; that's a commitment to some vague aspirational goal or something.

Schelling is very emphatic on the importance of committing to specific, measurable actions, and cites NATO as a successful example:

TS: [In NATO], their commitments were not, "How much will we reduce the likelihood of a Soviet attack?" or, "How much will we slow down a soviet attack?" The commitments were about how many young men they would draft into their armed forces. About how much they would spend on guns and ammunition and vehicles. How much real estate they would provide for military housing and pipelines and military maneuvers. They were all commitments to things they could do. So you could look and see that the French were doing what they said they would do. And the French themselves would know if they were dong what they said they would do.

So in Schelling's view, the importance of having American climate legislation in place by Copenhagen is less in showing global leadership (something at best neutral and at worst detrimental in a standard game theory framework) and more in having something concrete around which to negotiate, rather than meaningless emissions targets. This differs from (and I believe complements well) the standard argument for urgency on the Senate climate bill.

Schelling interview, Part I: How much will climate change affect the U.S.?

Conor Clarke at the Atlantic conducted a rich interview with Thomas Schelling, who won the 2005 Nobel Prize in Economics for his work on game theory, on the topic of climate change (part 1, part 2). It is worth reading in full and I hope to blog on various specific parts at some point.

As Conor says in his intro:

CC: Climate change presents the world with an incredibly complicated bargaining arrangement. The big costs will be born by future generations, and born more heavily by countries other than the United States. The responsiblity for those costs is also distributed unevenly around the world, and there is no enforcement mechanism for a global agreement. And underscoring all of this is a great deal of uncertainty about what will happen 50, 100, or 500 years in the future.

I was hoping Schelling could help me make sense of this.

Schelling completely agrees with the challenge of selling climate change in the U.S.:

TS: I do think that one of the difficulties is that most of the beneficiaries [of minimizing climate change] aren't yet born. More than that: Most of the beneficiaries will be born in what we now call the developing world. By 2080 or 2100 five-sixths of the population, at least, will be in places like China, India, Indonesia, Africa and so forth. And what I don't know is whether Americans are really willing to understand that and do anything for the benefit of the unborn Chinese.

And later he is more explicit that he believes the chances of a catastrophic effect on the U.S. are low, and American prosperity will allow the U.S. to largely adapt to any changes:

TS: If I were to come clean to the American public I would say that, except for a very low probability of a very bad result -- which is the disintegration of the West Antarctic ice sheet, which would put Washington DC under water -- we are probably going to outgrow any vulnerability we have to climate change. And in case we'll be able to afford to buy food or import it is necessary. You know, very little of the US economy is susceptible to climate. All of agriculture is less than 3% of our gross product. Forestry may be endangered. Fisheries may be endangered. But recreation might actually benefit!

So if we can double our GDP in the next 70 or 80 years, even if we lose some of our GDP from climate change -- even if we lose 10% of our GDP from climate change -- we're still ahead so much that the effect of climate change wouldn't be noticed. But it would be pretty disastrous in a lot of the less developed parts of the world.

This is the sort of argument that environmental purists and pragmatic climate bill advocates alike despise (although Freeman Dyson might applaud Schelling's hard-headedness). And Schelling himself acknowledges they will make it much harder to sell climate policy domestically:

TS: It's a tough sell. And probably you have to find ways to exaggerate the threat.

CC: And when you say, "exaggerate the costs" do you mean, American politicians should exaggerate the costs to the American public, to get American support for a bill that will overwhelmingly benefit the developing world?

TS: [Laughs] It's very hard to get honest people.

As Conor says, "weighing the costs and benefits of climate change is both morally fraught and empirically uncertain," and he lists seven reasons why "climate change change questions aren't just math puzzles." I'll add another question we need a moral framework for, which has bothered me for a while - to what extent is it permissible to "exaggerate" the immediacy of climate change to convince American voters to support climate change legislation that, due to behavioral discounting of the distant future, isn't in their "pseudo-rational" best interest? Schelling himself is clearly ambivalent:

TS: But I tend to be rather pessimistic. I sometimes wish that we could have, over the next five or ten years, a lot of horrid things happening -- you know, like tornadoes in the Midwest and so forth -- that would get people very concerned about climate change. But I don't think that's going to happen.

Should we be rooting for another Katrina now, to save the earth for the children of our human brethren in the developing world?