----- Original Message -----
From: Michael Tobis
Newsgroups: gmane.science.general.global-change
Sent: Wednesday, December 13, 2006 9:03 AM
Subject: [Global Change: 1061] Re: economics and anthropogenic climate change:
an analogy
Where I feel like I'm a voice crying out in the wilderness is as follows. Most people who are uncomfortable with economics as conventionally practiced simply want to offer intuition as a guide. The world is too crowded and complicated for this to work. We are better off with a broken theory than no theory at all, but it seems to me we need a new theory.
I appreciate that I am not totally alone on this, and I admit that I don't have a coherent set of ideas as to how to achieve an appropriate objective function, so that we have something besides romantic angst to offer in opposition to purportedly rational economic thinking.
I'd like to engage mathematically inclined people in thinking about what a rational quantitative alternative to growth addiction might look like, how we might preserve as much as possible of our commercial infrastructure and prosperity, how we could minimize the extent to which established interests (other than, perhaps, economists themselves) would feel threatened. It may not be necessary to abandon this attachment to endless "growth" on a finite planet. An alternative, which might be less risky, is to define the quantity that grows so that it is constrained to be harmless.
Many thanks for your thoughts which I found very helpful and enlightening.
mt
Michael, you seem to be expecting too much of economics, especially where value determination is
concerned. The prevailing values of a society are determined politically, not economically (as
Sociologist James Coleman pointed out in _Foundations of Social Theory_). Economists take the
social discount rate as exogenous, since "there is no accounting for taste" (see SAR
WGIII "Intertemporal Equity, Discounting, and Economic Efficiency"). Valuation is not an
objective function, it is an intersubjective function.
Your alternative, "to define the quantity that grows so it is constrained to be harmless" would appear to describe the actual situation (atmospheric CO2/GHG concentrations, sea level, mean surface temperature, Tetris tub water level), and policy formation is an appropriate response.
Given the establishment of social policy to constrain these quantities, economists may then enter the picture and offer a number of tools for managing efficient and equitable social welfare maximization. The decision to build new coal plants or new nuclear plants tilts further in the direction of nuclear if CO2 emission is monetized: monetization of CO2 emission, and emission trading, require acts of policy formation.
Berkeley economists, Stanford entomologists, and various and assorted other campus radicals can
rage all they want at the failure of "conventional economics" to solve climate change,
but it takes a Blair or Schwarzenegger to make a CO2 emissions trading market that gives
"conventional economics" a chance to work on the problem as a practical, rather than
theoretical or academic, matter.
The lone economist in your analogy is making decisions based on perceived
marginal costs and utility with value weights attached to alternatives. In
reality, the economist is not alone, there is a nagging significant other who
exerts influence on the value weights.
-dl
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