October 18, 2008
An open letter from The Viscount Monckton of Brenchley to Senator John McCain about Climate Science and Policy (3)
Public policy and the climate
Global intervention: your proposed remedy for "market failure"
You have said: "For all the good work of entrepreneurs and inventors in finding cleaner and better technologies, the fundamental incentives of the market are still on the side of carbon-based energy. This has to change before we can make the decisive shift away from fossil fuels. ... As a nation, we make our own environmental plans and our own resolutions. But working with other nations to arrest climate change can be an even tougher proposition. China, India, and other developing economic powers in particular are among the greatest contributors to global warming today - increasing carbon emissions at a furious pace - and they are not receptive to international standards ... The United States and our friends in Europe cannot alone deal with the threat of global warming. No nation should be exempted from its obligations. And least of all should we make exceptions for the very countries that are accelerating carbon emissions while the rest of us seek to reduce emissions. If we are going to establish meaningful environmental protocols, then they must include the two nations that have the potential to pollute the air faster, and in greater annual volume, than any nation ever in history. "
By now I hope I have established in your mind the possibility, at the very least, that there is no need whatsoever for any controls on the emission of carbon dioxide into the atmosphere that has previously and harmlessly contained 20 times today's concentration. And I trust that you will at least pass this letter to your advisors and invite them to contact me to verify the truth of the facts which I have spelt out here. You owe your nation and its citizens at least that much consideration before you shut down three-fifths of its economy and transfer three jobs in five to China, increasing the world's "carbon footprint" as you do so.
When Sir Nicholas Stern launched his now-discredited report on the economics of climate change, he made it plain from the outset that his analysis was political, and from a Leftist perspective, by announcing that State intervention on a massive scale was necessary to overcome what he described as "market failure". His then Prime Minister, Tony Blair (a Socialist), also used the phrase "market failure" at the Press Conference at which the Stern report was launched.
What you are suggesting in the above-quoted passage from your speech is dangerously close to the Leftist rhetoric of Stern and Blair. You are saying, in effect, that the free market on its own is incapable of acting fast enough to prevent worldwide damage caused by anthropogenic "global warming", and that there should be a globalization of etatiste interventionism to counter "market failure".
The facts are that the free market can scarcely be blamed for having failed to address an imagined "problem" that has not long been widely talked of; that, now that the free market has been made aware of the imagined "problem", it will be able to deal with the "problem" (to the extent that the "problem" is real) far more quickly and effectively than the State; and that, given the late Milton Friedman's Nobel-prizewinning observation that the State consumes twice as much of the world's resources to achieve a given objective as the free market, it is the State, not the market, that has failed, and it is the State, not the market, that must be cut down to size, regulated, and controlled.
A recent report by an association of manufacturers in the United States, designed to demonstrate how heavy the cost of "carbon trading" would be, said that the consequence of the introduction by the Federal Government of a "cap-and-trade" scheme would be the doubling of electricity prices by 2030. However, the free market has already achieved this doubling in just a couple of years.
This illustrates a central point that your advisors seem to have missed: namely, that even if the fancifully-exaggerated estimates of climate sensitivity generated by the UN's climate panel were correct (and they are not), the world will have largely run out of the fossil fuels that are the alleged cause of the alleged "problem" long before any significant environmental damage can occur. And long before the fossil fuels become exhausted, their price will rise (thanks to the free-market law of supply and demand), so that the market will ration them by price long before any State-imposed system of rationing, whether by "cap-and-trade" or otherwise, could possibly have gained sufficient public acceptance to make any difference.
Therefore the "decisive shift away from fossil fuels" that you say is necessary will occur - and rapidly - quite irrespective of any action by the State. The economic competitors of the Western nations know this perfectly well. Russia, India, and above all China have made it abundantly plain that they do not propose to reduce their "carbon emissions".
China, ingeniously, has said that it will happily reduce its "carbon emissions" to the same level per capita as the West. This would, of course, entail a considerable increase in China's emissions, and she is already the world's largest gross emitter. So, even if the West were to close down all of its industries and transport systems and factories and hospitals and schools and power stations, and even if we were to revert to the Stone Age but without the ability even to light carbon-emitting fires, the growth in China's and India's emissions would entirely replace all of our emissions within little more than a decade.
All that we should achieve, if we inflicted upon ourselves a severe enough system of rationing actually to reduce our emissions by the three-fifths you have suggested, would be to transfer our industries, our workers' jobs, our emissions, and our well-controlled environmental pollution to China, which is opening one or two new coal-fired power stations every week, and whose record of pollution is currently the worst on the planet. What conceivable economic benefit could such a policy have, even if China's dictators were prepared to go along with it (which they are not)?
Some defects of your proposed "cap-and-trade" policy
You have said: "For the market to do more, government must do more ... The most direct way to achieve this is through a system that sets clear limits on all greenhouse gases, while also allowing the sale of rights to excess emissions. And this is the proposal I will submit to the Congress if I am elected president - a cap-and-trade system to change the dynamic of our energy economy ... As part of my cap-and-trade incentives, I will also propose to include the purchase of offsets from those outside the scope of the trading system ... The cap-and-trade system will create jobs, improve livelihoods, and strengthen futures across our country. ... We need to set a better example in Washington, by consistently applying the best environmental standards to every purchase our government makes."
Sir, never did I think to see a Republican uttering the words, "For the market to do more, government must do more." It is, of course, the other way about. For the market to do more, government must do less. Remember the Friedman multiple: government consumes twice as much - and hence emits twice as much carbon - to do any given thing than the private sector.
Your proposal to introduce "cap-and-trade" would require a vast, complex, costly, bureaucratic nightmare of controls, regulations, intrusions, and interferences that would swiftly and forever destroy the economic vigor and prominence of the United States. And, in doing so, it would actually increase the "carbon footprint" of the nation, by transferring into the inefficient public sector a range of activities that - to the extent that they were necessary or desirable at all - would be far more efficiently and cheaply and hence non-emittingly done than the same activities done by the public sector.
The facts are that "cap-and-trade" is a concept invented by the Environmental Defense Fund - no friends of the Republican party. We shall see, when I reach the final section of this letter, the catastrophic worldwide effect of a previous intervention in politics by this organization. Given the unsatisfactory track record of this organization, which has long been bitterly and implacably inimical to the Western freedoms for which the Republican party stands, it is no less than breathtaking that you could so insouciantly advocate the introduction of a system of arbitrary, State-controlled rationing at that organization's instigation.
What is "cap-and-trade"? Let us spell it out. First and foremost, it is a complex regime of State-inflicted rationing, by which government officials interfere in the free market by arbitrarily deciding which industries shall or shall not be permitted to emit, and how much each of them shall have the right to emit. The economic distortions caused by this system would be monstrous. Favored industries, with generous permissions to emit, would gain sudden and immense economic advantages at the expense of unfashionable industries, with strictly-curtailed permissions to emit. The industries not favored by the State would either go under or go off-shore. They would leave behind an increasingly unemployed and disenchanted workforce, which would never forgive the Republican party for so deliberate, so baseless and so insensate a destruction of their livelihoods.
For you cannot escape the central flaw of the Environmental Defense Fund's "cap-and-trade" system. If carbon trading is to work, it will not be cheap; and, if it is cheap, it will not work. And when I say it will not be cheap, I am not talking purely in financial terms but in human terms. If you introduce cap-and-trade, you will destroy millions, and probably tens of millions, of jobs throughout the United States and in all sectors of the economy.
And those jobs - the livelihoods of working people and their families throughout the Republic - will have been sacrificed for no environmental benefit whatsoever: for whatever we cease to make, China will make in our place; whatever we cease to emit, China will emit in our place, and will emit in greater quantities because her systems of power generation are far less efficient than our own.
You will not only destroy the livelihoods of tens of millions: you will also increase the planet's total emissions of carbon dioxide. I am not worried by the extra emissions, for they will be harmless; but, if you actually believe (per impossibile) what you have said in your speech about the imagined dangers of increased emissions of carbon dioxide, then you had better abandon "cap-and-trade" at once: for the policy you propose would be calculated to increase the world's carbon footprint, not to reduce it.
The chimera of "market rewards for alternative energy"
You have said: "As never before, the market would reward any person or company that seeks to invent, improve, or acquire alternatives to carbon-based energy."
The facts are that the greatest market incentive is price. While fossil fuels were plentiful, cheap and not in heavy worldwide demand, there was no market incentive to develop new technologies. Now, the price of oil has increased by 1000% in five years, thanks to the free-market law of supply and demand. Therefore, the market has already multiplied by ten the rewards for developing and deploying alternatives to oil.
Since there is no longer any spare capacity in the system of oil production, and since most oilfields are in nations with unstable regimes at least as inimical to the West as your friends in the Environmental Defense Fund, and since China, India, Indonesia, Russia, and Brazil are growing rapidly and using more and more oil, the market will continue to increase the price of oil and, therefore, the incentive to find and fund alternative technologies. On any view, that is market success, not "market failure".
What, then, would happen if you were to introduce a State-inflicted rationing system on an economy already reeling under the oil-price shock? Even if there were a scientific case for cutting carbon emissions (which there is not), there is now not the slightest economic case for doubling the damage already caused by the increase in oil prices by imposing "cap-and-trade" on top.
If you were to impose "cap-and-trade" on top of steep and inexorably-continuing increases in the price of oil, you would merely drive the economy from recession to destruction. In short, the market has already done your job for you. Gasoline prices are higher than they could ever have been under a "cap-and-trade" regime; so are electricity prices. You can safely leave the market to bring about reductions in carbon emissions. No State intervention is either necessary or desirable.
Capital in the service of freedom: Smith's "invisible hand"
You have said: "It is very hard to picture venture capitalists, corporate planners, small businesses and environmentalists all working to the same good purpose. But such cooperation is actually possible in the case of climate change, and this reform will set it in motion."
Sir, please re-read Adam Smith's Inquiry into the Nature and Causes of the Wealth of Nations. It was Smith - the world's first economist, and one of its best - who first drew attention to the fact that entrepreneurs are guided as if by "an invisible hand" to provide what their customers want and need. Capitalism is built upon this foundation. It is precisely because entrepreneurs only prosper by giving people what they want that capital and liberty go everywhere hand in hand.
Directly contrary to what you say, it is not in the least hard to picture venture capitalists, corporate planners, and small businesses working together to the same good purpose. However, environmentalists are not always working to a good purpose. They are a narrow, special-interest group just like any other. It would be foolish to ignore the fact that, after the Berlin Wall fell, many on the Left found a new home in the environmental movement, seeing it as the new hope for the destruction of the Western, capitalist hegemony that they so detest.
One of the founders of Greenpeace - a man with a genuine concern for the environment but otherwise with no political opinions - has told me that he was compelled to leave the movement after a year, when the international Socialist Left took it over and used its true objectives as a mere front for what is in all material respects indistinguishable from Communism.
His testimony - and other founders of Greenpeace have agreed with him - ought to alert you to the reality that the environmental movement in general, and the "global warming" alarmists in particular, may have an agenda that is political rather than environmental - an agenda that is a serious, strategic threat to the peace, security, prosperity, and liberty of the West, and an immediate and pressing threat to the very survival of the poorest peoples of the world.
At the very least, there is an obvious coincidence of interest between those who persistently exaggerate the supposed adverse consequences of "global warming", as you have done in your speech, and those who have long planned and intended to dismantle and destroy the economies and liberties of the free and prosperous West from within. In our schools, the slick, relentless propaganda of the alarmists - based not on fact but on fear - infects the minds of innocent children. Gripping children in a self-serving, manipulative state of fear robs them of their childhood.
In our newspapers and on our television channels, the same half-baked but ingenious propaganda is shamelessly peddled, with little or no attempt either at balance or at genuine identification and presentation of the scientific truth. Among our classe politique, "global warming" is seen not as a crusade to "Save The Planet", but rather as a priceless opportunity to extend the empires of the new and growing aristocracy of overpaid, over-privileged bureaucrats and the politicians who cravenly serve them, and to increase the taxes and imposts inflicted on the people, and to intrude into every aspect of our lives, from the light-bulbs we use to the automobiles we drive.
It is to this admittedly powerful coincidence of interests between the international Left and the powerful educational, media, and political lobby groups that your speech has imprudently pandered. You, of all people, who have served your country and the cause of freedom so gallantly, and who have been tortured and imprisoned to keep us free, ought to be alive to the threat to our liberty that the perversion of environmentalism that is the "global warming" scare ineluctably entails.
As Francis Bacon wrote in one of his Essays, "Walled towns, stored arsenals and the like be to no avail except the spirit of the people be stout and warlike." If the spirit even of a courageous warrior such as you is no longer stout or warlike, what is the point in maintaining armed forces to defend our freedoms and our interests throughout the globe? What is the point of keeping troops in Iraq or Afghanistan, bases in Guam or Diego Garcia, intelligence operations in Cyprus or Beirut?
In giving naïve and uncritical credence to the pseudo-scientific gibberish that is "global warming", you have adopted a policy long beloved of our own Foreign Office - that of the pre-emptive cringe. You have declared to the enemies of liberty and of capital that they have won; and that the opening words of your Declaration of Independence about "life, liberty, and the pursuit of happiness" are henceforth irrelevant, meaningless, and one with the Treaty of Westphalia, which Pope Innocent X described as "null, void, invalid, damnable, reprobate, inane, and empty of meaning for all time."
The heavy cost of the economic destruction you propose
You have said: "We will cap emissions according to specific goals, measuring progress by reference to past carbon emissions. By the year 2012, we will seek a return to 2005 levels of emission ... by 2020, a return to 1990 levels ... and so on until we have achieved at least a reduction of sixty percent below 1990 levels by the year 2050. ... In pursuit of these objectives, we cannot afford to take economic growth and job creation for granted ... We want to turn the American economy toward cleaner and safer energy sources. And you can't achieve that by imposing costs that the American economy cannot sustain."
Let us translate what you have said into plain English. You have said that within 42 years - the working lifetime of a high-school graduate today - the policies which you propose to introduce will have shut down, deliberately, consciously, and to no environmental benefit whatsoever, more than three-fifths of the entire United States economy. You propose to throw your nation back in the direction of the Stone Age - electricity one day a week if that, automobiles replaced by horses and carts, elevators replaced by stairs, all aircraft grounded, the conquest of space abandoned, factories silent, at least one hundred million jobs destroyed and transferred to China, the machine-press and combine-harvester replaced by the hammer and sickle.
You have naively assumed that, somehow, new technologies will emerge to replace fossil fuels and nuclear power (for, like oil and gas, uranium will also be largely exhausted and at best prohibitively expensive by the year 2050). Let us briefly examine the credibility of this assumption. At present, fossil fuels and nuclear power, between them, provide more than 98% of the energy we use. So-called "renewable energy" accounts for less than 2%. Even the UN's climate panel no longer believes that you can close down 98% of your nation's power supplies and retain anything more active than a Stone Age economy.
Already, some 60 coal-fired power-plants have been refused zoning consent for construction in the United States. You have been culpably silent in the face of this attack on the economic lifeblood of your nation, and on the jobs and prospects of the working people who extract the coal and convert it into the electric power your nation needs. I say "culpably", because proven reserves of coal will last for at least 300 years, whereas all other major sources of electric power, fossil or nuclear, will be either exhausted or prohibitively expensive within 50 years.
The pretext for this potentially-fatal, self-inflicted wound on your nation's economy is that the burning of fossil fuels will enrich the atmospheric concentration of "greenhouse gases", causing a dangerous warming of the planet which must be prevented at all costs. If you have done me the kindness of reading the first part of this letter, you will have been given good reason - with dozens of references to learned papers in the peer-reviewed, scientific journals - to disbelieve any such apocalyptic nonsense.
At the very least, I implore you and your advisors to look very much more closely at the supposed science behind the notion that the planet would be at risk if the concentration of carbon dioxide in the atmosphere were once again to reach a concentration one-tenth of that which occurred - without disaster - in the Cambrian Era. One only has to mention that single fact to draw the attention of any reasonably impartial mind to the probability that the supposed threat posed to our planet by "global warming" must have been exaggerated beyond all reason.
The carbon footprint of the economic interferences you propose
You have said: "Over time, an increasing fraction of permits for emissions could be supplied by auction, yielding federal revenues that can be put to good use. Under my plan, we will apply these and other federal funds to help build the infrastructure of a post-carbon economy. We will support projects to advance technologies that capture and store carbon emissions. We will assist in transmitting wind- and solar-generated power from states that have them to states that need them. We will add to current federal efforts to develop promising technologies, such as plug-ins, hybrids, flex-fuel vehicles, and hydrogen-powered cars and trucks. We will also establish clear standards in government-funded research, to make sure that funding is effective and focused on the right goals."
It is understandable that you should have made a conscious decision, in framing your policies for the Presidency, to adopt a "One-Nation" approach, reaching out to those in the Democrat party whose central belief is in government of the people, by the bureaucracy, and for the bureaucracy - in short, in the tyrannical, anti-democratic system of command-economy administration that we in Europe would call Communism, or Fascism, or International Socialism: there is little to choose between them except in the numbers of people they kill.
With respect, however, your proposal vastly to increase the powers and intrusions and costs of the federal administration at the expense of the rights and freedoms and prosperity of the individual citizen goes very much too far. Every attempt made by any government to dictate the future shape or size or direction of its national economy by the fiat of its ruling elite has ended in failure. Your proposal to command the reshaping of the economy from the center has no merit, not merely because there is no scientific or economic need for it, but because, even if there were, it cannot and will not work.
Remember Friedman's multiple. The State consumes twice as much resources as the private sector in performing any given function. Therefore, if you truly believe that the planet is menaced by an insignificant and harmless increase in the atmospheric concentration of a trace gas that is essential to life, then your first duty as President will be to do the reverse of what you propose: in short, to shut down all unnecessary functions of the federal administration altogether, and to transfer as many as possible of the remainder to the private sector, which has already done a better job of disincentivizing the consumption of fossil fuels in just two years than your proposed "cap-and-trade" system is expected to do in almost a third of a century.
We can no longer afford the luxury of over-extended, over-ambitious, centralized government. The framers of your Constitution intended that power and wealth should be and remain in the hands of the people. Your proposal to concentrate vast additional powers in the hands of government is not merely doomed to ignominious failure; it is not merely guaranteed to increase your nation's "carbon footprint" under the guise of taking steps to reduce it; it is an explicit and abject abandonment of the liberty for which the Republican party stands. If you continue to advocate a policy so purposeless and so self-defeating, you will lose the Presidential race, and lose it spectacularly: and you will deserve to lose.
Your pointless devotion to the pointless Kyoto protocol
You have said: "I will not permit eight long years to pass without serious action on serious challenges. I will not accept the same dead-end of failed diplomacy that claimed Kyoto."
Let me, once again, put the facts before you. During the "eight long years" of the Presidency of the current leader of your party, the United States has succeeded in reducing its "carbon emissions", while the European Union has not; and, during those "eight long years", there has been no increase whatsoever in global mean surface temperature; during seven of those "eight long years", worldwide temperature has actually fallen; and, during those "eight long years", more and more peer-reviewed scientific papers have queried every major tenet of the "consensus" that you believe in.
Under the previous administration - that of Clinton and Gore - the Senate voted unanimously, 95-0, to reject the Kyoto Protocol and any other treaty that imposed upon the United States obligations to reduce its "carbon emissions" that were not also imposed upon China, India, and other substantial emitters worldwide. Faced with this clear and entirely sensible expression of united will on the part of all parties in the Senate, combined with the rickety and uncertain scientific case for global panic, why should George Bush have diverted federal energies and funds towards the chimera of "climate change" with any sense of urgency, or in any greater amounts than those which his administration has already so generously spent? Besides, the United States appears to have acted with a greater sense of urgency than most countries that signed Kyoto - for, unlike most of them, it has reduced its "carbon emissions".
The Kyoto Protocol would have failed whether or not the United States had agreed to participate. Why? First and foremost, because nearly every nation that is obliged by that Protocol to reduce its "carbon emissions" to the levels that obtained in 1990 by 2010 will fail to meet its target unless (as some countries have done) it artificially increases the amount of emissions that it made in 1990. As the European Union's dictators lecture the world about the need to control their emissions, its own emissions relentlessly rise year by year, even as those of the United States fall.
Secondly, the Kyoto Protocol was designed to allow its signatories to evade their responsibilities under it. There is no mechanism in the Protocol for enforcing emission control on defalcating signatories: even if the were, there is (thank Goodness) no international army or police force strong enough to carry out the task of enforcement.
And the Protocol was designed to allow, and even to encourage, fraud. Not only have signatories fiddled their 1990 emissions to allow themselves the right to emit more in 2010 than they did in 1990; many of them have set up "cap-and-trade" schemes, such as that which you have proposed, and have then fiddled the operation of the schemes. The European dictatorship, for instance, allowed each of its satrapies to trade quantities of emissions that exceeded their current total emissions by a comfortable margin. That is why the European "cap-and-trade" scheme collapsed.
Kyoto expires in 2010. So far, there is no agreed international mechanism to replace it. Nor is there any need for one - whether urgent or otherwise. The "climate problem" is in truth a non-problem: and the correct policy for addressing a non-problem is to have the courage to do nothing.