Is global warming a market failure?

[BigBallinStalin]

it is and it isn't. one of the critiques of the system is that it doesn't properly evaluate / monetise things like the carbon sink of large forests. the amazon is worth many billions to humanity but it has no implicit value in a free market until we arbitrarily assign it one.

Well... if businesses have problems in determining the carbon sink, I find it amusing that people push for government ownership. How would government fare any better? In the US it leases parts of the national parks for harvesting the trees, which induces short-term profit while neglecting the long-term profit. Leases only last so long, and governments don't care much about net present values. Why? The land is not privately owned, so the quicker detoriotation of wealth does not affect the bureaucrats, whose bosses aren't facing profit and loss incentives, thus can avoid bankruptcy from mismanagement.

If profit and loss and determining net present value are 'arbitrary', then it's pretty easy to see how much more arbitrary the government would behave.

Regarding the amazon, I'm not sure what the property rights issues are, so I can't comment in depth. It could be valuable if people could own it privately. It could be valuable if the local denizens could more fully exercise their private property rights (I recall the Brazilian government granting some businesses short leases for harvesting some resources from the forest--without of course compensating the locals, which again is a government-caused problem).

[AAFitz]

Again, what has been the past role of the market in cases where death and destruction were the ultimate result.

Poisoning of groundwater and many deaths and illnesses.
Asbestos.
Lead paint.
Poisonous pesticides.
Cigarettes(which absolutely and ultimately have cost the taxpayer more than ever generated in tax dollars or economic benefit.)

The market in each of these cases, pushes forward to continue to deal and deliver death and destruction and the only thing that can ever stop them is the government.

Why would you expect that in a case of global warming, the potential death and destruction of everything human, but not the ones that benefit from the actual causes, would it be expected to act any differently enmasse.

Its just ridiculous to expect the market to care about such things when its primary motives are simply at odds or at best indifferent to the life of its practioners.

[AAFitz]

it is and it isn't. one of the critiques of the system is that it doesn't properly evaluate / monetise things like the carbon sink of large forests. the amazon is worth many billions to humanity but it has no implicit value in a free market until we arbitrarily assign it one.

Well... if businesses have problems in determining the carbon sink, I find it amusing that people push for government ownership. How would government fare any better? In the US it leases parts of the national parks for harvesting the trees, which induces short-term profit while neglecting the long-term profit. Leases only last so long, and government's don't care much about net present values. Why? The land is not privately owned, so the quicker detoriotation of wealth does not affect the bureaucrats, whose bosses aren't facing profit and loss incentives, thus can avoid bankruptcy from mismanagement.

If profit and loss and determining net present value are 'arbitrary', then it's pretty easy to see how much more arbitrary the government would behave.

Regarding the amazon, I'm not sure what the property rights issues are, so I can't comment in depth. It could be valuable if people could own it privately. It could be valuable if the local denizens could more fully exercise their private property rights (I recall the Brazilian government granting some businesses short leases for harvesting some resources from the forest--without of course compensating the locals, which again is a government-caused problem).

The problem is that businesses are absolutely corrupt because their primary goal is to turn a profit. The government may very well not fare any better, but it at least could be comprised of people that are not necessarily paid to produce a profit.

The key is improving the government and the key to that, is eliminating corruption, instead of promoting it which is what we have been doing as of late.

[thegreekdog]

Consumers deciding not to factor global warming into their individual consumption habits does not mean that global warming has no real value when determining the efficiency of our current system.

You're restating your conclusion without providing any reasoning. Why does global warming have real value when determining the efficiency of our current system when its cost is not taken into account by the people participating in the market?

You are trying to suggest that he is defending the current system, which he clearly is not. He is instead suggesting that there indeed is a massive cost to global warming, that a free market would certainly not fix it, and would arguably only make it worse, and that the current system is also ineffective as well.

I don't know if he's defending the current system (I don't think he is). I'm not defending the current system; in fact, I think the biggest impediment to the market adjusting for climate change is the current system. Regulation of public utilities and our tax system (which incentivizes certain industries at the expense or indifference of others) work to limit how the free market can effectively account for climate change. Further, the insistence that the government should be or is the only body to slow or stop climate change also negatively affects how the market can operate. If you're going to wait for someone to give you some fish and that person keeps telling you that you'll get a fish, chances are you aren't going to go grab a fishing pole and do it yourself.

Ok, now you are just avoiding the entire discussion. The point here is more that if fish are the only thing to eat, poisoned or not, you have almost no other choice but to eat them. And when the market has so much power that it essentially makes it impossible to eat anything other than the poisoned fish, you will do just that because dying in the future, even horribly, is still more attractive than dying today.

Arguing that a free market will solve such issues is flawed fundametally as I explained because it simply only cares about commerce and not the consequences of it.

It is you that is fishing here, Im afraid, and avoiding the entire logic of human nature, and the obvious truth of the situation. Instead of suggesting that a group of greedy humans only trying to generate wealth will somehow magically work towards stopping a threat that it has unwittingly created, and since spent billions to continue against all scientific and reasonable logic, is in itself flawed. It is actually quite clear at this stage that only a government, or group of people outside the direct influence of the market could insure against such calamity as the market has proven, time and time again, that it is perfectly happy to pursue profitable endevours that end in death and destruction on a regular basis.

To ignore the past sins of the market is to ignore history, and ultimately in this case, not so much repeat it, as erase it.

I don't think you understood my post.

[AAFitz]

Consumers deciding not to factor global warming into their individual consumption habits does not mean that global warming has no real value when determining the efficiency of our current system.

You're restating your conclusion without providing any reasoning. Why does global warming have real value when determining the efficiency of our current system when its cost is not taken into account by the people participating in the market?

You are trying to suggest that he is defending the current system, which he clearly is not. He is instead suggesting that there indeed is a massive cost to global warming, that a free market would certainly not fix it, and would arguably only make it worse, and that the current system is also ineffective as well.

I don't know if he's defending the current system (I don't think he is). I'm not defending the current system; in fact, I think the biggest impediment to the market adjusting for climate change is the current system. Regulation of public utilities and our tax system (which incentivizes certain industries at the expense or indifference of others) work to limit how the free market can effectively account for climate change. Further, the insistence that the government should be or is the only body to slow or stop climate change also negatively affects how the market can operate. If you're going to wait for someone to give you some fish and that person keeps telling you that you'll get a fish, chances are you aren't going to go grab a fishing pole and do it yourself.

Ok, now you are just avoiding the entire discussion. The point here is more that if fish are the only thing to eat, poisoned or not, you have almost no other choice but to eat them. And when the market has so much power that it essentially makes it impossible to eat anything other than the poisoned fish, you will do just that because dying in the future, even horribly, is still more attractive than dying today.

Arguing that a free market will solve such issues is flawed fundametally as I explained because it simply only cares about commerce and not the consequences of it.

It is you that is fishing here, Im afraid, and avoiding the entire logic of human nature, and the obvious truth of the situation. Instead of suggesting that a group of greedy humans only trying to generate wealth will somehow magically work towards stopping a threat that it has unwittingly created, and since spent billions to continue against all scientific and reasonable logic, is in itself flawed. It is actually quite clear at this stage that only a government, or group of people outside the direct influence of the market could insure against such calamity as the market has proven, time and time again, that it is perfectly happy to pursue profitable endevours that end in death and destruction on a regular basis.

To ignore the past sins of the market is to ignore history, and ultimately in this case, not so much repeat it, as erase it.

I don't think you understood my post.

Its you that does not understand on a basic level. Your view on this is completely illogical and that is why you fail to see the argument against the very nature of your theory. You simply misunderstood that I took some liberty on your ridiculous use of fishing, and given its simplicity and naivety, I had every right to do so.

I absolutely agree that it would be great if the market would kick in and potentially do what is right, but the market itself spends billions essentially perpetuating lies as it does in all such cases about the actual risks involved. If it did not have such power in corrupting the government, it absolutely would be able to make better decisions as to what is best and what is not. Unfortunately, that is a double edged sword as well, since the government decides for itself what how much it can be bribed.....It is therefore our responsibility as voters to elect a government that is far less apt to be as corrupted by the market and so far, we have failed, and no doubt because of our own corruption as well.

[BigBallinStalin]

it is and it isn't. one of the critiques of the system is that it doesn't properly evaluate / monetise things like the carbon sink of large forests. the amazon is worth many billions to humanity but it has no implicit value in a free market until we arbitrarily assign it one.

It does have a value in the free market. It's currently valued at zero.

Global warming is not a market failure. People have made a decision that the cost of global warming is zero (or very low) such that they make purchasing decisions where global warming is not a factor or is a factor outweighed by other factors.

To use a different example, for the most part we purchase organically and locally grown fruits, vegetables, and milk. We pay between 25% and 100% higher dollar costs for these items because we've placed a value on organically and locally grown products that exceeds the additional price we pay for such products.

There seems to be at least a large minority of people in the United States (I can't speak for other countries) who think global warming is problematic enough such that they incessantly talk about it and want to make others' lives more difficult. I think if you examine those people's spending habits, you'll find that they don't actually value global warming enough to affect their purchasing decisions. So is that a failure of the market or a failure of the purchasers (or, as I like to call them, flaming hypocrits).

It is absolutely not a market failure. The market does not care about life or death. It only cares about money. Its only goal is profit as it is a financial being. Its why it cannot be trusted to protect life, because life has no essential value.

Its why the market cannot be trusted when deciding whether to use toxic chemicals, lead paint, asbestos, hazardous waste disposal, etc, etc, etc. The market will always move first to the option that makes money in the short term and always will. The only way to control such hazardous operations of the market is a good regulation body that is unbiased, and not corrupt.

The problem is the unbiased and corrupt is tough to achieve, and our current system has eliminated the many protections meant to even have a chance at achieving one.

Here's what's wrong with Fitz's post. He assumes the market is some decision-making entity, but it isn't. The market is a bunch of buyers and sellers of various commodities and services, and these buyers and sellers have their own means and ends in mind. For example, in the market of doctors, life and death is a crucial aspect which is reflected objectively through profits. If you keep killing people because you're a bad doctor, you'll get fired, thus earning a huge loss.

Fitz will admit that the market itself is not a decision-making entity, but if he applied simple methodological individualism (examine individuals who compose the market), then he wouldn't have been able to lead himself so astray.

Obviously, it's not true that:
"The market does not care about life or death.
It only cares about money.
Its only goal is profit as it is a financial being.
Its why it cannot be trusted to protect life, because life has no essential value."

Instead, the market is about supplying goods and services to a large variety of buyers who all use the means provided by markets to fulfill their various goals. The claim that "it only cares about money" is obviously incorrect, nor is the only goal profit--but rather the ultimate goals attainable from profiting. You and I profit nearly every time we purchase goods from the grocery store. Does that mean 'we only care about money'? Does it mean that "we cannot be trusted to protect life, because life has no essential value?" No, of course not. Just apply basic economic reasoning to AAFitz's argument, and you can easily see what nonsense it is.

This is false as well: "The market will always move first to the option that makes money in the short term and always will."
Why is it false? Because calculating net present value of an investment accounts for the short-term and long-term. Many businesses use this very basic financial concept, so AAFitz is wrong on this one. If they don't use such a concept, then they'll be less efficient (thus wasteful), but that's on them--and the competition--to improve, and the improvements are reflected through objectively measurable profit and loss.

And what's his solution? A Nirvana fallacy--incorruptible, unbiased government. What's the second solution? Most likely in response it would be: "Well, government's still good enough, so if we ignore the negative consequences of regulation (Crony capitalism, which works around the regulation while shunting competition), then we have ourselves a great alternative, herp derp."

[BigBallinStalin]

it is and it isn't. one of the critiques of the system is that it doesn't properly evaluate / monetise things like the carbon sink of large forests. the amazon is worth many billions to humanity but it has no implicit value in a free market until we arbitrarily assign it one.

Well... if businesses have problems in determining the carbon sink, I find it amusing that people push for government ownership. How would government fare any better? In the US it leases parts of the national parks for harvesting the trees, which induces short-term profit while neglecting the long-term profit. Leases only last so long, and government's don't care much about net present values. Why? The land is not privately owned, so the quicker detoriotation of wealth does not affect the bureaucrats, whose bosses aren't facing profit and loss incentives, thus can avoid bankruptcy from mismanagement.

If profit and loss and determining net present value are 'arbitrary', then it's pretty easy to see how much more arbitrary the government would behave.

Regarding the amazon, I'm not sure what the property rights issues are, so I can't comment in depth. It could be valuable if people could own it privately. It could be valuable if the local denizens could more fully exercise their private property rights (I recall the Brazilian government granting some businesses short leases for harvesting some resources from the forest--without of course compensating the locals, which again is a government-caused problem).

The problem is that businesses are absolutely corrupt because their primary goal is to turn a profit. The government may very well not fare any better, but it at least could be comprised of people that are not necessarily paid to produce a profit.

The key is improving the government and the key to that, is eliminating corruption, instead of promoting it which is what we have been doing as of late.

If you want to eliminate corruption, then you'd want less regulation and less federal government control.

[BigBallinStalin]

I still enjoy TGD's main point about blaming consumers--for failing to account for the long-term costs of their decisions. That does comprise a market failure--in the sense that people are not properly accounting for the full social cost (whatever that means in real words/numbers) when buying or selling something.

However, within the market, you actually see a response to this problem. Businesses going green and are being rewarded by consumers for such behavior. You see the rise in graywater systems and permaculture, and through markets (i.e. all the materials used in marketing) many 'green' environmental groups have encouraged a less pollution-reliant lifestyle. (Note: permaculture would boom as a businesses if governments stopped the price controls, thus abundance and waste, of water).

So, in this sense, there's a market success as well, which people all too often neglect. Another aspect which many neglect are the negative consequences of state intervention within the market place. People are so wont to blame markets for problems fundamentally caused by governments.

[Metsfanmax]

Because those people participating in the market, as well as those who aren't, will eventually have to pay that cost. It is the textbook definition of a negative externality.

That seems like a problem with the people in the market, not the market itself.

It is most certainly a problem with the market itself. For any individual, it is a rational choice to purchase the cheapest form of energy available.

Let's stop there because this is the question being asked. Is the cheapest form of energy available the type of energy that negatively affects climate change? Are you using the term "cheapest" as it applies to dollars and not as it applies to dollars + other factors (like climate change)?

By cheapest I meant the form of energy with the lowest price (in dollars). In most locations in the U.S. that is currently fossil fuels (when considered per kWh).

It is rational for someone to purchase the cheapest form of energy available if that person is appropriately weighing the cost of climate change? I say no. And I blame the person, not the market.

Then why do you continue to purchase that form of energy? Why do most people? Because they're irrational? If so, then your conclusion below (that clever marketing can solve this problem) is erroneous. But either way it's not that simple. Many choices people make (like the source of their electricity) is something they cannot easily change due to geographical unavailability or a monopoly on electricity generation.

By the way, your continued insistence that individuals cannot change the market is just absurd. Yes, one individual cannot make a great difference. Multiple individuals can. Groups of individuals can. It happens on a daily basis. How does the organic food market succeed? How does any purchase of wind power or solar power succeed? How do iphones succeed? Does the government pass a law stating "you must purchase iphones / organic food / wind power and solar power"?

I didn't insist that individuals cannot change the market. I, as an individual, am attempting to change the market right now by lobbying members of Congress to institute a revenue-neutral carbon tax.

However, within the market, you actually see a response to this problem. Businesses going green and are being rewarded by consumers for such behavior. You see the rise in graywater systems and permaculture, and through markets (i.e. all the materials used in marketing) many 'green' environmental groups have encouraged a less pollution-reliant lifestyle. (Note: permaculture would boom as a businesses if governments stopped the price controls, thus abundance and waste, of water).

Yes, that response exists. And indeed, the solution to global warming will require more than just a federal government policy. But businesses are not responding to this signal (or the signal isn't strong enough) fast enough to solve the problem on the timescales that are necessary to avoid serious warming.

[AAFitz]

it is and it isn't. one of the critiques of the system is that it doesn't properly evaluate / monetise things like the carbon sink of large forests. the amazon is worth many billions to humanity but it has no implicit value in a free market until we arbitrarily assign it one.

It does have a value in the free market. It's currently valued at zero.

Global warming is not a market failure. People have made a decision that the cost of global warming is zero (or very low) such that they make purchasing decisions where global warming is not a factor or is a factor outweighed by other factors.

To use a different example, for the most part we purchase organically and locally grown fruits, vegetables, and milk. We pay between 25% and 100% higher dollar costs for these items because we've placed a value on organically and locally grown products that exceeds the additional price we pay for such products.

There seems to be at least a large minority of people in the United States (I can't speak for other countries) who think global warming is problematic enough such that they incessantly talk about it and want to make others' lives more difficult. I think if you examine those people's spending habits, you'll find that they don't actually value global warming enough to affect their purchasing decisions. So is that a failure of the market or a failure of the purchasers (or, as I like to call them, flaming hypocrits).

It is absolutely not a market failure. The market does not care about life or death. It only cares about money. Its only goal is profit as it is a financial being. Its why it cannot be trusted to protect life, because life has no essential value.

Its why the market cannot be trusted when deciding whether to use toxic chemicals, lead paint, asbestos, hazardous waste disposal, etc, etc, etc. The market will always move first to the option that makes money in the short term and always will. The only way to control such hazardous operations of the market is a good regulation body that is unbiased, and not corrupt.

The problem is the unbiased and corrupt is tough to achieve, and our current system has eliminated the many protections meant to even have a chance at achieving one.

Here's what's wrong with Fitz's post. He assumes the market is some decision-making entity, but it isn't. The market is a bunch of buyers and sellers of various commodities and services, and these buyers and sellers have their own means and ends in mind. For example, in the market of doctors, life and death is a crucial aspect which is reflected objectively through profits. If you keep killing people because you're a bad doctor, you'll get fired, thus earning a huge loss.

Fitz will admit that the market itself is not a decision-making entity, but if he applied simple methodological individualism (examine individuals who compose the market), then he wouldn't have been able to lead himself so astray.

Obviously, it's not true that:
"The market does not care about life or death.
It only cares about money.
Its only goal is profit as it is a financial being.
Its why it cannot be trusted to protect life, because life has no essential value."

Instead, the market is about supplying goods and services to a large variety of buyers who all use the means provided by markets to fulfill their various goals. The claim that "it only cares about money" is obviously incorrect, nor is the only goal profit--but rather the ultimate goals attainable from profiting. You and I profit nearly every time we purchase goods from the grocery store. Does that mean 'we only care about money'? Does it mean that "we cannot be trusted to protect life, because life has no essential value?" No, of course not. Just apply basic economic reasoning to AAFitz's argument, and you can easily see what nonsense it is.

This is false as well: "The market will always move first to the option that makes money in the short term and always will."
Why is it false? Because calculating net present value of an investment accounts for the short-term and long-term. Many businesses use this very basic financial concept, so AAFitz is wrong on this one. If they don't use such a concept, then they'll be less efficient (thus wasteful), but that's on them--and the competition--to improve, and the improvements are reflected through objectively measurable profit and loss.

And what's his solution? A Nirvana fallacy--incorruptible, unbiased government. What's the second solution? Most likely in response it would be: "Well, government's still good enough, so if we ignore the negative consequences of regulation (Crony capitalism, which works around the regulation while shunting competition), then we have ourselves a great alternative, herp derp."

herp derp yourself, or arrogant one. Heres whats wrong with your argument. It is flawed because of a deep lack of understanding of true human nature. Whether through denial of history, or a complete lack of understanding of it.

Asserting that I think the market decides something on its own is just a complete failure to understand my complete argument. In fact, I would say it is you who is arguing that the market decides something, or can make it better. Granted in the interest of time, the explaination that it is actually a group of billions of individuals making individual decisions isnt fully as explained, because anyone who does not understand that basic fact is well.....stupid enough to post what youve posted here...

What you have also misunderstood in this case is the use of long term and short term, because you misinterpret them in the context of this discussion, which involves the planetary weather, which is changing, at an ever increasing rate, but with no guaranteed negative consequences for any present when those changes occur. If you go back to the beginning of the industrial revolution and explain that their use of fossil fuels will cause climate change, they will be as stupid as you are now, because they simply dont give a f*ck, because it will never affect them.

It is your assumption that simple market forces will ever work towards solving a future problem that will not necessarily benefit any in that market in any noticeable way.

The herp derp is suggesting that entities that primary objective is to turn a short term profit or cease to exist, will ever work to solve the problems it creates for people that do not exist now.

Again, to suggest that I think a perfect government can be created overnight or ever is just fucking stupid, and to not recognize that my suggestion is that we must all ignore the stupidity and fantasy of people like you, and work towards improving it one candidate at a time. Similarly to suggest that a better, and constructive government is equally if not more ridiculous. You simply ignore the many things that government has created, and protected us from, despite the market (overwhelming majority of power of wealth based organizations) best attempts at killing us.

Bigballinstallin has created a fantasy world in which he believes that the quest for profit will protect its markets peoples lives.

It is instead the people who fear for their lives, that must elect a government that will actually protect them.

Its not the government that too greatly corrupts the market that is the problem, its the market that too greatly corrupts the government, which is why you completely fail to understand the actual situation you claim so arrogantly to understand...and so obviously foolishly. Derptiy.

[AAFitz]

I still enjoy TGD's main point about blaming consumers--for failing to account for the long-term costs of their decisions. That does comprise a market failure--in the sense that people are not properly accounting for the full social cost (whatever that means in real words/numbers) when buying or selling something.

However, within the market, you actually see a response to this problem. Businesses going green and are being rewarded by consumers for such behavior. You see the rise in graywater systems and permaculture, and through markets (i.e. all the materials used in marketing) many 'green' environmental groups have encouraged a less pollution-reliant lifestyle. (Note: permaculture would boom as a businesses if governments stopped the price controls, thus abundance and waste, of water).

So, in this sense, there's a market success as well, which people all too often neglect. Another aspect which many neglect are the negative consequences of state intervention within the market place. People are so wont to blame markets for problems fundamentally caused by governments.

And consumers failing to account for the long-term costs of their individual decisions absolutely is why the market will fail in such situations.

The number of reasons that consumers make bad decisions is the exact reason why a government must be there to protect them from some, that will never be good decisions.

Using lead paint while cheaper will always be a poor decision. Companies would absolutely sell lead paint, and consumers absolutely would buy it use it and there would be a massive cost.

Individually, consumers cannot possibly have enough time to research all the pros and cons of every product. They cannot possibly have time or the resources to research the safety or lack thereof of every product.

Its the same with asbestos. The corporations that mined and produced it absolutely spent millions trying to continue to sell it to customers that couldnt possibly know the actual safety hazzards. Years went by, and in a large part because government officials were corrupted, and instead of making the correct choice of banning it immediately, which in the long run would absolutely have been cheaper than the negative health effects and cleanup. The promise of current profits, and the risk of reduced profits means the market absolutely pushed forward with a substance that absolutely killed people needlessly, and still costs money today.

Thats what a free market will always do. It will ignore death and future costs, in favor of current profits and rewards because the people who reap the profits and rewards, are very often not the ones that pay the costs, or the deaths.

Cigarrettes are a perfect example of how the market will never solve the problem. The majority people that bribed and corrupted the government largely never saw the consequences of their selling of cancer sticks. And many that still do will similarly never see any consequences. The market actually may benefit from the use of cancersticks, because dollars are generated, jobs are generated, retirements of those who do not contribute to the market any more are generated, the doctors have jobs, the pharmaceutical companies create drugs. It is a perfect market in many ways. In a very real economic way, it should continue if not be increased.

The only reason there is any problem is that it ends lives, creates suffering, and in a very real way, only because the majority of its users started an an early age, when market decisions if not all decisions were hardly made with all of the information available to them.

The number examples is countless.

Your denial of them is tragic, and your inability to apply them to climate change is ignorant, naive, if not completely stupid, because you actually have all the information at your disposal, but choose to ignore it and create a fantasy land based on anything but actual history or the actual reality in which we live.

You are living in a fantasy land believing in the power of the free market to solve all problems, especially those that are not economic in nature.
It is the very nature of a free market that requires a governing body to draw the line when economic objectives, are vastly outweighed for the good of society, or in this case, very likely, humanity itself.

Seriously, grow up.

[patches70]

It is instead the people who fear for their lives,

Haha, Fitz saying that reminded me of this-

[thegreekdog]

Because those people participating in the market, as well as those who aren't, will eventually have to pay that cost. It is the textbook definition of a negative externality.

That seems like a problem with the people in the market, not the market itself.

It is most certainly a problem with the market itself. For any individual, it is a rational choice to purchase the cheapest form of energy available.

Let's stop there because this is the question being asked. Is the cheapest form of energy available the type of energy that negatively affects climate change? Are you using the term "cheapest" as it applies to dollars and not as it applies to dollars + other factors (like climate change)?

By cheapest I meant the form of energy with the lowest price (in dollars). In most locations in the U.S. that is currently fossil fuels (when considered per kWh).

It is rational for someone to purchase the cheapest form of energy available if that person is appropriately weighing the cost of climate change? I say no. And I blame the person, not the market.

Then why do you continue to purchase that form of energy? Why do most people? Because they're irrational? If so, then your conclusion below (that clever marketing can solve this problem) is erroneous. But either way it's not that simple. Many choices people make (like the source of their electricity) is something they cannot easily change due to geographical unavailability or a monopoly on electricity generation.

Yes, people are constrained in their ability to purchase electricity (to use one example). They are constrained because of government intervention (and because of circumstance, to your point). Why is that the fault of "the market?"

[thegreekdog]

AA, I'm not going to quote all your posts and I don't want to get in a shouting match, but you have and continue to completely ignore any points that I'm making (and that BBS is making). You wish for a government body to draw the line. In the United States, we've had 200 plus years of the government drawing lines, most of which exacerbate the problems you point out. Our government is based upon the ability for money to influence policy. This is not a free market concept at all (in case you think it is).

[Metsfanmax]

Because those people participating in the market, as well as those who aren't, will eventually have to pay that cost. It is the textbook definition of a negative externality.

That seems like a problem with the people in the market, not the market itself.

It is most certainly a problem with the market itself. For any individual, it is a rational choice to purchase the cheapest form of energy available.

Let's stop there because this is the question being asked. Is the cheapest form of energy available the type of energy that negatively affects climate change? Are you using the term "cheapest" as it applies to dollars and not as it applies to dollars + other factors (like climate change)?

By cheapest I meant the form of energy with the lowest price (in dollars). In most locations in the U.S. that is currently fossil fuels (when considered per kWh).

It is rational for someone to purchase the cheapest form of energy available if that person is appropriately weighing the cost of climate change? I say no. And I blame the person, not the market.

Then why do you continue to purchase that form of energy? Why do most people? Because they're irrational? If so, then your conclusion below (that clever marketing can solve this problem) is erroneous. But either way it's not that simple. Many choices people make (like the source of their electricity) is something they cannot easily change due to geographical unavailability or a monopoly on electricity generation.

Yes, people are constrained in their ability to purchase electricity (to use one example). They are constrained because of government intervention (and because of circumstance, to your point). Why is that the fault of "the market?"

It has nothing to do with "fault," and I did not use that word. Market failure is not inherently a pejorative term. It describes the simple situation where the price of a product does not reflect the true costs to society of that product. In an energy market completely free from government intervention, could you envision a likely scenario in which the price of electricity generated from fossil fuels incorporated the global warming potential of those fossil fuels? I cannot either. Even if those markets matched the classical market theory closely (which admittedly is hard for electricity generation in present times because of the massive capital investment required for coal and nuclear power plants) then you would have a serious difficulty in getting people to not use fossil fuels. Say some noble group of people (we shall call them Californians) decides to stop consuming fossil fuels altogether. Well, demand for fossil fuels just declined significantly because there are a lot of these Californians. That means the price will drop. Consequently, fossil fuels will get snapped up even more by the other group who is not interested in being so noble (we will call them Texans). This rebound effect means that a significant part of the gains from this shift are offset. So it is very unlikely even in a deregulated market to achieve the effect you are talking about, and blaming the government on that market failure is a red herring.

[notyou2]

Is global warming a market failure?

By definition, yes. If negative externalities are not included in the cost of production, then it is failing the market. It is comparable to not take the cost of nuclear wastew into the equation on nuclear energy.

Thorium provides a much more efficient form of nuclear energy than does uranium, because it is much more abundant, it can be fully used in the cycle, has a much easier form of waste management, is scalable, and non-polluting. It is also relatively cheap to set-up. A working plant was set up by ORNL in the sixties and ran for ten years on $1b.

Building with green technology will also greatly reduce energy requirements. An architect in Thailand decreased air conditioning requirements by more than 90% by simply setting up a system where a drop of water fell at a set rate into the air intake, which greatly increases the cooling effect. In south-east Asia, this could be huge. According to the economics/history professor at Harvard, air conditioning in Asia could ruin the planet, but with this system embedded into new construction, the problem will dissipate. Of course it is not being done.

Solar gains/shading could eliminate most of the energy requirements if construction were built with green materials. Traditionally, all houses around the world took into account the sun and were built accordingly. These days we tend to block out the sun's warmth in winter and let its heat in in summer, which is the height of tomfoolery. It would appear almost as if the builders were working for the energy companies.

Once building energy is reduced we can look to infrastructure requirements. A lot of our energy is just shipped around like a joke. England imports about as much coal as they export. Nova Scotia exports its natural gas and imports oil. And just about all manufactured goods are imported. In a farming area in Canada, the average food item travels 1600 miles to reach a plate. In the typical construction, there are seven layers to a building envelope, requiring an international infrastructure. Meanwhile, we have better material which gain be produced anywhere, requires a single layer and reduces energy requirements to zero in the building and lifetime of the building.

We have and have had much better solutions for fueling our transportation needs for a long time. The first cars were all electric, we've had compressed air cars, diesel cars operate at the same mpg as hybrids but last longer and use more common materials.

In just about everything, we could do a lot better. But then we would save, and when every individual saves, the market loses. And therefore we will not see these things.

The reason that global warming marketing is failing is because it is meant to.

Please provide a source for this Thailand architect and his "new" cooling method.

Thanks

[BigBallinStalin]

..........................

Its not the government that too greatly corrupts the market that is the problem, its the market that too greatly corrupts the government, which is why you completely fail to understand the actual situation you claim so arrogantly to understand...and so obviously foolishly. Derptiy.

None of what you stated rectifies your previous stance.

Seeking substitutes like logical fallacies doesn't convince any reasonable reader, so there's no point in continuing this. I've already addressed your final paragraph here. Here's a sneak-peak: it also demonstrates that you're wrong.

[BigBallinStalin]

The main issue is that people have to be real about the limits of government and the reactions of individuals within markets. Consistent adherence to greater government only exacerbates the corruption of government by markets (crony capitalism) because the government will increasingly infringe upon the property rights of all individuals, hence the better organized will be incenticized to reap the greatest gains via public policy while the least organized bear the greatest costs. This is Public Choice 101, and again insisting on more government while demonizing markets completely reveals a lack of understanding about those two processes of social change.

[BigBallinStalin]

I still enjoy TGD's main point about blaming consumers--for failing to account for the long-term costs of their decisions. That does comprise a market failure--in the sense that people are not properly accounting for the full social cost (whatever that means in real words/numbers) when buying or selling something.

However, within the market, you actually see a response to this problem. Businesses going green and are being rewarded by consumers for such behavior. You see the rise in graywater systems and permaculture, and through markets (i.e. all the materials used in marketing) many 'green' environmental groups have encouraged a less pollution-reliant lifestyle. (Note: permaculture would boom as a businesses if governments stopped the price controls, thus abundance and waste, of water).

So, in this sense, there's a market success as well, which people all too often neglect. Another aspect which many neglect are the negative consequences of state intervention within the market place. People are so wont to blame markets for problems fundamentally caused by governments.

And consumers failing to account for the long-term costs of their individual decisions absolutely is why the market will fail in such situations.

The number of reasons that consumers make bad decisions is the exact reason why a government must be there to protect them from some, that will never be good decisions...............................

Your denial of them is tragic, and your inability to apply them to climate change is ignorant, naive, if not completely stupid, because you actually have all the information at your disposal, but choose to ignore it and create a fantasy land based on anything but actual history or the actual reality in which we live.

You are living in a fantasy land believing in the power of the free market to solve all problems, especially those that are not economic in nature.
It is the very nature of a free market that requires a governing body to draw the line when economic objectives, are vastly outweighed for the good of society, or in this case, very likely, humanity itself.

Seriously, grow up.

I actually know how to address your concern about cigarrettes and lead paint, but honestly, you have no sincere desire for rational discourse. You see things your way and believe them to be true--regardless of how logical the opposition may be.

Just reread your post--especially the strawman arguments. Wow, you should be embarrassed.

(Also, notice your implicit assumption of government being able to obtain optimal long-term cost forecasts--better than any market. Again, nirvana fallacy, so no surprise there, but that's all I'm willing to share with you).

[BigBallinStalin]

However, within the market, you actually see a response to this problem. Businesses going green and are being rewarded by consumers for such behavior. You see the rise in graywater systems and permaculture, and through markets (i.e. all the materials used in marketing) many 'green' environmental groups have encouraged a less pollution-reliant lifestyle. (Note: permaculture would boom as a businesses if governments stopped the price controls, thus abundance and waste, of water).

Yes, that response exists. And indeed, the solution to global warming will require more than just a federal government policy. But businesses are not responding to this signal (or the signal isn't strong enough) fast enough to solve the problem on the timescales that are necessary to avoid serious warming.

What is 'fast enough'?

What are the benefits and costs of the 'serious warming'?

Worst-case scenario is estimated to cost the USG $2bn per year for about 20 years--assuming businesses do what they're doing now (so, no change in growth rate for adapting to climate change), and that's the highly unlikely worst-case scenario.


I still don't see how a "federal government policy" should be involved--other than massive deregulation of many industries and ending the monopoly on the USD. Those would increase efficiency, thereby lowering waste (and pollution), but you won't get those policies.

I don't even see how government can better foresee and react to the long-term problems than the market. If things get costly from climate changes, then all they need to do is raise taxes and sling some more money to their friends. It doesn't matter because they face no profit and loss incentive. Hey, greater bugdet costs would be even more rewarded, so why wouldn't they delay the reaction to the problem?

[BigBallinStalin]

It has nothing to do with "fault," and I did not use that word. Market failure is not inherently a pejorative term. It describes the simple situation where the price of a product does not reflect the true costs to society of that product.

How so?

[mrswdk]

Biofuel continues to retain a significant presence as a consumer choice in Brazil because: a) petroleum is taxed relatively highly and b) the Brazilian government mandates a certain percentage of biofuel usage.

[_sabotage_]

Is global warming a market failure?

By definition, yes. If negative externalities are not included in the cost of production, then it is failing the market. It is comparable to not take the cost of nuclear wastew into the equation on nuclear energy.

Thorium provides a much more efficient form of nuclear energy than does uranium, because it is much more abundant, it can be fully used in the cycle, has a much easier form of waste management, is scalable, and non-polluting. It is also relatively cheap to set-up. A working plant was set up by ORNL in the sixties and ran for ten years on $1b.

Building with green technology will also greatly reduce energy requirements. An architect in Thailand decreased air conditioning requirements by more than 90% by simply setting up a system where a drop of water fell at a set rate into the air intake, which greatly increases the cooling effect. In south-east Asia, this could be huge. According to the economics/history professor at Harvard, air conditioning in Asia could ruin the planet, but with this system embedded into new construction, the problem will dissipate. Of course it is not being done.

Solar gains/shading could eliminate most of the energy requirements if construction were built with green materials. Traditionally, all houses around the world took into account the sun and were built accordingly. These days we tend to block out the sun's warmth in winter and let its heat in in summer, which is the height of tomfoolery. It would appear almost as if the builders were working for the energy companies.

Once building energy is reduced we can look to infrastructure requirements. A lot of our energy is just shipped around like a joke. England imports about as much coal as they export. Nova Scotia exports its natural gas and imports oil. And just about all manufactured goods are imported. In a farming area in Canada, the average food item travels 1600 miles to reach a plate. In the typical construction, there are seven layers to a building envelope, requiring an international infrastructure. Meanwhile, we have better material which gain be produced anywhere, requires a single layer and reduces energy requirements to zero in the building and lifetime of the building.

We have and have had much better solutions for fueling our transportation needs for a long time. The first cars were all electric, we've had compressed air cars, diesel cars operate at the same mpg as hybrids but last longer and use more common materials.

In just about everything, we could do a lot better. But then we would save, and when every individual saves, the market loses. And therefore we will not see these things.

The reason that global warming marketing is failing is because it is meant to.

Please provide a source for this Thailand architect and his "new" cooling method.

Thanks

Dr Soontorn Boonyatikarn of Chulalongkorn University.

[Metsfanmax]

However, within the market, you actually see a response to this problem. Businesses going green and are being rewarded by consumers for such behavior. You see the rise in graywater systems and permaculture, and through markets (i.e. all the materials used in marketing) many 'green' environmental groups have encouraged a less pollution-reliant lifestyle. (Note: permaculture would boom as a businesses if governments stopped the price controls, thus abundance and waste, of water).

Yes, that response exists. And indeed, the solution to global warming will require more than just a federal government policy. But businesses are not responding to this signal (or the signal isn't strong enough) fast enough to solve the problem on the timescales that are necessary to avoid serious warming.

What is 'fast enough'?

Depends on how much warming we're willing to accept. But if we take the nominal target people widely discuss -- 450 ppm CO2, or possibly equivalently a two-degree Celsius average global warming, there's basically no way that the world is on target to make this under the 'business as usual' emissions scenarios.

What are the benefits and costs of the 'serious warming'?

This is too in-depth to get into in this thread. I'm not aware of any impacts of the warming that are net beneficial to humanity collectively. Some regions will win out compared to others (even though basically everyone is losing out in the long run). Warming will make it nicer to live in extreme latitude countries, and also increase agricultural output there. This comes at the expense of increased drought and decreased agricultural productivity in mid-latitude countries; sub-Saharan Africa will be especially hard hit, and those are some of the poorest countries to begin with. Some of the environmental costs are: increased damage from severe weather events; increase in sea level globally leading to flooding of coastal cities and submergence of island nations; more severe droughts and monsoons; and biodiversity impacts from ocean acidification. These environmental impacts then trigger social costs. Resources in many developing nations will grow significantly scarcer, leading to significant security concerns regarding resource wars. Some view global warming as the most serious threat to U.S. security. Climate refugees will seek asylum in other nations, stretching the resources of those nations as well, leading to increased social tension.

Worst-case scenario is estimated to cost the USG $2bn per year for about 20 years--assuming businesses do what they're doing now (so, no change in growth rate for adapting to climate change), and that's the highly unlikely worst-case scenario.

Some context for this is helpful, like a source and description of what went into the analysis. But the most important obvious issue with this statement is that the worst impacts of global warming will happen more than 20 years from now. As you can see from the above, it's highly unlikely that we're just talking about $2 billion per year in damages when this is the greatest long-term security threat to the U.S.

I would also argue that we have a moral obligation to reduce emissions external to the damage we're doing to ourselves. Developing nations played a tiny role in creating this problem but will suffer the brunt of the damage. So we should either be paying those damages (which, if you followed the recent Warsaw climate talks, we're not willing to do) or preventing them from occurring.

I still don't see how a "federal government policy" should be involved--other than massive deregulation of many industries and ending the monopoly on the USD. Those would increase efficiency, thereby lowering waste (and pollution), but you won't get those policies.

Well, you haven't provided any evidence that this massive deregulation will actually result in a net decrease of emissions -- you're just speculating. An increase in efficiency could be fully offset by an increased demand for fossil fuels. Also, it is a fool's errand to suggest that deregulation of the energy industry is possible to the extent that you suggest. Much better to trade poor government policy (command-and-control) for smarter government policy (clear price signal).

I don't even see how government can better foresee and react to the long-term problems than the market. If things get costly from climate changes, then all they need to do is raise taxes and sling some more money to their friends. It doesn't matter because they face no profit and loss incentive. Hey, greater bugdet costs would be even more rewarded, so why wouldn't they delay the reaction to the problem?

The government isn't the one that should be solving the global warming problem -- they should just be creating the solutions under which the market can fix the problem. That is the nature of the carbon tax proposal. Also, the carbon tax should be revenue-neutral, so that government does not increase in size just for fixing this problem.

It has nothing to do with "fault," and I did not use that word. Market failure is not inherently a pejorative term. It describes the simple situation where the price of a product does not reflect the true costs to society of that product.

How so?

The price I would pay for gasoline in a deregulated market has not anywhere had future damages from global warming factored into it. Yet we will have to pay for those damages eventually.

[thegreekdog]

Also, it is a fool's errand to suggest that deregulation of the energy industry is possible to the extent that you suggest.

I don't disagree with this.

Much better to trade poor government policy (command-and-control) for smarter government policy (clear price signal).

I do, however, disagree with this.

While I agree that deregulation of the energy industry likely will not have the desired effect for many years, I also do not foresee smarter government policy occuring (unless we can somehow get rid of rent-seeking, which we won't).