Measuring economic wellbeing

Humanity has long been confounded by the ever-shifting changes of the Earth. From time immemorial, earthquakes and volcanoes would blight society’s thin hold, farmers would find droughts and floods denying the seasons, while rivers and lakes would inexplicably appear then disappear. For most of civilisation’s short existence, only mystics and religion could justify these events.

In more modern times we have learned to adapt. First, through irrigation and cultivation, we tamed nature’s unpredictable food cycle. Second, with cities and towns, we built more permanent homes, less destructible by the weather. Third, with science and technology, we began to produce our own sources of heat, light and kinetic power.

Just as photosynthesis uses the sun’s energy with water and minerals to create biomass, we now use that same carbon matter – coal, oil and natural gas – to reengineer energy, water and chemicals. And though we still don’t know exactly how it works, we are now pretty close to recreating life artificially.

Yet progress has been so great that humans, along with the wind and the rains, are now having dramatic impact on the environment. Whereas geological time frames were once measured in millions of years, we have now created the Anthropocene, where humanity has left an indelible, geographic mark on the surface of the Earth.

Far from creating a more comfortable, safer world, the artefacts of society – cars, ships, cities, factories – are seen as a danger. And whereas knowledge and innovation helped us surmount the planet’s strange vagaries – knowledge of physics helped sailors find true north rather than rely on a compass lured by unsettled poles – they now leave us afraid.

The visceral denial to global warming is understandable as a knee-jerk reaction to such a very real fear, but rather than put our heads in the sand, or, like people across the millennia, blame conspiracy or some kind of supernatural force, we ought to face these challenges head on. More immediately though, now that the ecological poles have shifted too, so to speak, we need to reorient our economic compasses once again.

The interplay of ecology and economy is often ignored in both commentary and policy, yet like an iceberg hidden by fog, it doesn not appear because it’s not there, but because our tools of common navigation – measures like gross domestic product, market efficiency, labour productivity – simply don’t see it.

The work on social accounting by the late John Hicks, who won the 1972 Nobel in economics for his contribution to general equilibrium theory, states that whereas GDP measures the gross quantity of output (consumption plus investment plus government spending plus net trade or Y=C+I+G+X–M), true growth measures the amount of output an economy can produce without depleting its ability to produce the same output next year.

Analysing output in the way one would analyse the harvesting of fruit from a tree acknowledges that economies, like farms or companies or household budgets, have balance sheets as well as profit statements. But analysing it in true terms not only shows the debt, but the ecological balance sheet as well – water, soil, air and biodiversity – which provides very real economic goods and services, even if improperly measured.

If five years of financial crisis have taught us anything it’s that a focus on output, growth and income to the detriment of assets, liabilities and sustainability is a recipe for disaster. Without noting the equilibrium of the balance sheet the smartest business model can become unstuck. Without noting the equilibrium of ecological balance the smartest societies can become extinct.

The spectre of global warming may seem insurmountable and, at times, politically impossible, but with the clever adjustment of economic measures, markets can be harnessed to find solutions in the same unrepressed spirit that created the problem in the first place. While the media has been rightly subsumed this past week with the idea of thawing permafrosts, the implications of which have been graphically revealed at Doha’s climate negotiations, more heartening developments have flown under the radar.

In the rainforests of Brazil, state-level initiatives to price biodiversity and tighten forestry use have led to local economies that make more money by letting the Amazon stand than felling it for timber.  In the United States, slow but steady growth in environmental industries has meant that Obama’s ‘green jobs’ pledge has become more than a political slogan and a real driver of growth.

In China and India – emerging superpowers better known for obstructing international agreements on carbon emissions – hope lies too. In China, with funding from the World Bank, officials in the country’s arid north have begun to restore the largely eroded Loess Plateau as a major Asian watershed, reversing centuries of devastation through designating specific economic and ecological-use areas with their own attendant systems of incentives and rewards. In India, the challenges of unemployment, low incomes and urban waste have been combined to produce the world’s biggest recycling industry.

More to the point, however, the economic compasses of these two countries are being retooled to include ecology in all economic decisions. By 2015, India hopes to legislate measures of gross environmental productivity (GEP) alongside gross domestic product. In China, a new reform-minded central government is said to be reviewing attempts made nine years ago to launch a similar measure, the GDP quality index, which measures sustainability and social equality, as well as production and ecological impact.

In the West, the entrenchment of GDP and its narrow remit has been hard to dislodge, even though its original use in the Second World War was supposed to be temporary, but the EU’s ‘Beyond GDP’ program grinds on in spite of budget dilemmas and the report of France’s Stiglitz-Sen-Fitoussi commission on economic and social measurement continues to shape that country’s industrial policy. Even in heavily polluting Australia there exists the Treasury’s Wellbeing Framework, though it’s admittedly gathering dust in a political environment more interested in the tactics of scandal.

A future of mismeasured growth in the face of climate change and resource scarcity looks bleak, but if incentives can be adjusted and directions realigned, the solutions to a pressing environmental crisis may come sooner than thought.

Reform to private property and capital structures preceded the industrial revolution and the creation of the letters patent system gave impetus for the modern era’s wave of scientific advancement. Whether for inventor, investor or entrepreneur, incorporating ecology and economy too could usher a new era of reward for people and for planet.

The first step though is changing our core economic concepts and our basic economic measures. This starts first and foremost with our chief financial lodestar: GDP.

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Comments

  1. China has the opportunity to do the greatest good in this area. They have the manpower and political control over the populous that no other country possesses. At a stroke of a pen the new Politburo could mobilise a billion Chinese into building solar panels and wind turbines instead of empty building apartments.

    • China would do that if they thought they could make them and sell them to gullible Westerners. But when it comes to their own energy needs, you can be 100% assured it will be all about China.

      Why do you think they are constantly building new Coal power stations? Because they actually believe the warmist baloney? Lol…

      • Why do you think they are constantly building new Coal power stations?

        Perhaps in the past, but I understand the situation has changed recently. From the AFR

        Professor Garnaut told the conference the “awful reality” was that “parts of corporate Australia had dissipated shareholders’ funds by underestimating the seriousness of Chinese commitments to reduce the emissions intensity of economic growth”. This had led to “wasteful over-investment in thermal coal mining and exporting capacity”.

        Professor Garnaut said coal-fired electricity production in August was more than 7 per cent lower than in August 2011. “Coal’s share of energy production was down from 85 per cent in February to 73 per cent in August,” he said.

        Chinese domestic coal production fell 5.3 per cent in August.

        “We have never seen this happen before,” said CLSA’s Shanghai based commodities analyst, Ian Roper. “This is the first time Chinese coal production has fallen outside holiday periods or natural disasters.”

        Non-fossil fuels sources accounted for a record 27 per cent of China’s electricity production in August as renewables soared.

        Despite China’s slowing economy, electricity production has risen 15 per cent this year. But the growth has been in renewables.

        • New coal fired power stations, aargh!

          Are we on the road to climate extinction? Dr. Guy McPherson lays out the case in this speech at Bluegrass Bioneers in Kentucky. Then the World Bank says “Turn Down the Heat”. Daphne Wysham on their coal addiction, and Olivia Maria Serdeczny from the Potsdam Institute in Germany, authors of the report for the Bank. Is collapse our best way out of a Hellish future?

          Download/Listen (14MB)

      • Don’t forget that as manufacturing has moved to China and western developed countries import more manufactured goods, electricity demand has fallen in western countries. Chinese emissions are partly “embedded” in manufactured goods they export.

        Australia’s emissions from our consumption are increasingly done in China as our manufacturing moves/d offshore.

        Carbon tariffs would help protect Australian manufacturers and their employees and ensure that carbon pricing is taken into account in all jurisdictions. Our exporters would get credits of carbon costs, just like they do for GST.

    • In fact China already produces around 25% of panels used globally. Their manufacture is an important industry sector in China. So is apartment building.

      • If the Chinese put their mind to it, and made clean energy the No. 1 priority for the next five year plan, they could do amazing things. Imagine a world where Chinese mass production made renewables cheaper than coal? Surely that would be better contribution to the future of humanity than countless empty cities?

        • They COULD do amazing things. More likely they will simply spend billions and billions of dollars on something completely useless.

          But hey, if the Chinese develop a new technology that provides cheap and clean power, that can sustain base power requirements that isn’t nuclear or hydro (that greens are against of course) I’ll sit up and listen.

          Until then, hands off my cash and stay out of my life please.

        • “If the Chinese put their mind to it, and made clean energy the No. 1 priority for the next five year plan, they could do amazing things.”

          I can tell you for a fact that Chinese Gov’t officials are VERY interested in achieving sustainability and are investing heavily in renewable technologies.

          Now for reality: There is an upper limit to the rate of growth that any manufacturing company can sustain. The maximum rate of growth is about 30% CAGR. Attempting to grow at rates of expansion above this limit, normally only result in higher component prices and reduced throughput. Normally the emergence of competitors is what limits industry wide growth, because it creates profit uncertainty which reduces investment confidence.

          To put this into perspective. To grow $100M p.a. revenue to $1000M p.a. at 30% CAGR takes 10 years.
          Year1 $100M, Year2 $130M….Year10 $1060M

          That’s 10 years of solid 30% growth, which s very hard to sustain and takes disciplined experienced management along with a lot of luck. The asymmetry of growing vs destroying a business is lost on most economists but for businessmen it is reality-101.

          Now when you suggest that China could just pass a law and achieve infinite growth in renewable’s you are ignoring the really hard problems, such as finding skilled labor, training, sustaining efficient growth over a 10year period funding growth from profits. Mind you all of these problems are insignificant compared with the problem of maintaining supply chain efficiency, to meet your growth demands.

          Take for instance PV (an industry that I know a little about). The biggest single impediment to sustained growth is maintaining the supply of a substance called POLY (PolySilicon). It is only recently that China has become self sufficient in Poly and production, there are still a lot of problems with defect densities in their home grown Silicon Wafers (the starting material for most PV)

          Before you suggest that Thin films are the future you have a similar problem of supply chain growth. CaTe is a great material BUT how much Te is required and what percentage of the currently mined Telluride would be absorbed by expanding the demand at 30% CAGR.

          Mundane problems like sustaining supply chain efficiency are the real world reasons for growth limits in manufacturing. If you want to understand the importance of this when dealing with commodities look no further then the Iron-Ore market (lets see over the last 10 years the cost of Iron ore has risen by how much)? for what volume increase?

          • Hmmm, I thought this post would get challenging enough to get a bunch of replies.

            Is anyone else interested in the real world manufacture / supply problems and opportunities created by Solar and wind power reaching cost parity with fossil fuels?

          • It was a good post China Bob, but I don’t have the technical expertise to question it.
            In broad terms, you seem satisfied that China will drive growth in manufacturing output and technology, or have I misinterpreted?

          • Thanks Peter.

            I understand that most participants don’t have in depth knowledge of high tech manufacturing, however I would hope that simple things like lowering costs and improving production efficiency are understandable as concepts that are essential to the real world success of renewables.

            I’ll have to admit it does annoy me somewhat when Climate activists invent a carbon credit system that only seems to reward the financial sector. The final straw is when they have the audacity to berate those that are actually making the components of self sustainability. PV, wind,…

            Compare the US PV industry with its Chinese counterpart and you will find that one is trying to grow volume at low cost, while the other wants to maximize its Market Cap. and develop a comprehensive patent portfolio.

            The Chinese path is delivering production costs of sub $0.50/watt solar cells whereas the US approach tries to maintain Solar as an expensive niche solution deserving hefty governmental subsidies and selling at over $10/W.

            Sorry rant over

          • China Bob, there are people here who will understand the technical aspects, but not many. You will have to learn to post in 30 second sound bytes for the rest.
            FWIW I give thanks every 3 months to the Great God PV when I receive a small cheque instead of a $1000 bill.

          • FWIW, I’m very interested in the opportunities created by Solar and wind power reaching cost parity with fossil fuels, but I’m sick and tired of these threads getting derailed by arguments over climate science.

            I’ll have to admit it does annoy me somewhat when Climate activists invent a carbon credit system that only seems to reward the financial sector.

            I’m not a huge fan of emissions-trading schemes myself, I much prefer something simpler such as James Hansen’s Fee and Dividend approach.

          • Hmmm, I thought this post would get challenging enough to get a bunch of replies.

            I’m a little unsure of exactly what kind of “replies” you’re looking for. I don’t think anyone doubts there are logistical problems behind ramping up investment in renewables, they just tend to get frustrated by the focus on non-renewables, or the belief that cornucopia fairies will save us from ourselves and allow Infinite Growth Forever And Always to continue.

            The Chinese path is delivering production costs of sub $0.50/watt solar cells whereas the US approach tries to maintain Solar as an expensive niche solution deserving hefty governmental subsidies and selling at over $10/W.

            The US is ruled by profiteering corporatists. I don’t think the above should surprise anyone.

  2. Why is a column like this on a blog devoted to economics? I understand that people here tend to accept the global warming nonsense as fact, but honestly, don’t you think it would be wise to at least wait until the hypothesis is even PARTLY proven (it’s not even close to that) before making wild accusations that skeptics are actually “fearful” of some mystical truth? If you are going to talk about economics and the environment is it really that difficult to stick to topics that are actually proven issues, like deforestation in South America or smog in Beijing?

    The only thing skeptics are actually fearful of is a devotion to the cause of global warming by zealots in government that use it as an excuse for the poor policy, usually policies that either raise the cost of living or waste billions of taxpayer money.

    If you are going to bag people that you consider your opponents it is usually a good idea to understand the basic premise of their arguments.

    Also, the world hasn’t even warmed for 16 years while CO2 has increased around 10%. Correlation doesn’t equal causation, but no correlation equals no causation. The hypothesis is disproven completely.

    • Matt – I think discussion and debate abound on development of ideal criteria that provides an ‘holistic’ approach to better inform GDP. It will probably go on for years because at the end of the day – as other elements of this and other economic/finance interests show – it’s the numbers that count.

      “…the devotion to the cause of global warming by zealots in government that use it as an excuse for the poor policy”

      This will be right up your alley – Modelling as Agit-prop:
      The Treasury’s Role in Australia’s
      Carbon Tax Debate

      http://epress.anu.edu.au/wp-content/uploads/2012/11/ch026.pdf

        • Modelling flawed, undermined by partisan ends (your salient point above), results unable to be replicated, egregious timing (no substantial concomitant global response),

          “…estimated reduction in Australian national income that occurs even with
          coordinated global action — for each dollar in revenue the carbon tax raises,

          In other words, the carbon tax has an average excess burden four times greater than that of the most distorting tax identified by the Henry report.

          These results imply that absent any environmental benefits, the carbon tax is extremely distorting in terms of
          its average excess burden — and that average excess burden would presumably
          be even higher if unilateral action causes an even greater decline in Australian national income.

          That the AEB is high is unsurprising, as the carbon tax is a tax on an intermediate input and falls especially heavily on industries in which Australia has a comparative advantage.”

          “In short, this is modelling for a specific political purpose”

          McKibbin!

          • Awesome, thanks mate. Yes, this is certainly what worries me most about this whole fad. Governments are always looking for excuses to expand their power and increase revenue.

            What could be better than “pay us to save the world!”?

          • Hi 3D1K,

            The insane side of this whole global warming carbon credits thing is the business opportunities that it creates.

            I know of a factory in Changdu China that only exists because of the Carbon credits it receives for responsibly destroying the by-products of CFC production. They recently increases CFC production and stock-piling so that they would have more by-products to destroy for European carbon credits.

            I know of another opportunity in Electricity switch gear which involves replacing the existing SEALED switches (containing Sulfur Hexaflorid). turns out the credits for destroying the SF6 is worth much more than the switches.

            Morally I find these opportunities abhorrent, but when I understand what Aussie banks are really doing with Carbon Credits, I figure that I can’t possibly beat them so ….

          • China Bob – my opposition to the carbon tax/ets was indeed the commodification/financialisation aspect – every major global bank had set up carbon trading arms in anticipation of global adoption of ets – you just gotta think it was something ripe to be gamed!

            And like lemmings to the cliff…

          • ” my opposition to the carbon tax/ets was indeed the commodification/financialisation aspect – every major global bank had set up carbon trading arms in anticipation of global adoption of ets ”

            What? You mean a government created market in selling air isn’t a great thing for the world economy!? How could this be?

    • Matt, do you ever re-read your comments?

      You wrote:

      don’t you think it would be wise to at least wait until the hypothesis is even PARTLY proven

      then

      The hypothesis is disproven completely.

      Which makes you view every bit as flawed as a rusted-on “alarmist”.

      The statement that the “hypothesis is disproven completely” is completely absurd. It is neither proven or disproven, there are only probabilities. In the end its all about risk management: what are the odds that the mainstream science is correct? You say zero percent (“completely disproven”). An “alarmist” such as myself might say 90 percent. What’s telling is that the risk-management professionals — the insurance companies — believe the risk is high.

      • That was a typo, it should read “isn’t even partly proven”. Thanks for pointing that out, I didn’t even notice.

        “It is neither proven or disproven, there are only probabilities.”

        Ah the old precautionary fallacy. What are the odds of an alien invasion happening tommorow? You say 0% I say 90% therefore we should prepare of be doomed! But I’ll bet you think I’m nuts right? Think about that for a second. Argumentum ad Populem and argumentum ad verecundiam (from authority) are logical fallacies. Facts are all that matters.

        As you say, it’s not proven, that’s a fact. As it’s not proven, we should do nothing until it is because the cost of ‘doing something’ is very very real (and unbelievable high) and the benefit could potentially be nothing.

        • I’m pretty sure the world’s insurance companies aren’t concerned about alien invasions or the Mayan apocalypse (just a few short weeks away!)

          They are concerned about climate change, seeing as they’re the ones who pay up when extreme weather events wreak havoc.

          They have assessed the risk, and believe it to be high. I think that is more telling than the highly politicised rantings of denialists and alarmists alike.

          • Hey mate, if you want to buy global warming insurance, by all means throw your money down the drain. Just don’t demand I pay for it at the point of a gun!

          • It has not been scientifically validated that extreme weather events have any proven connection with AGW which as you say above appears a theory asserted on probabilities (which many question).

            Extreme weather events have taken place since life began. One very big one was the Ice Age 😉

            I am agnostic (leaning toward skeptic) on AGW but tend to agree that modest measures to mitigate are a reasonable enough idea. Of course the carbon tax is not one of them.

          • Hey mate, if you want to buy global warming insurance, by all means throw your money down the drain. Just don’t demand I pay for it at the point of a gun!

            Mate, sorry to bust your bubble. But if you are buying HOME and CAR insurance, you are probably paying it already.

          • I agree, it hasn’t been proven that extreme weather events are due to human-induced climate change.

            All I am saying is the world’s insurance companies believe the risk of extreme weather events in the future will increase, presumably because of climate change.

            That’s their call, and they’re the ones paying up when the Katrinas and Sandys hit. Why would they do that if the risk was zero (or near zero)?

            I am agnostic (leaning toward skeptic)

            No you’re not. You are a rusted-on denialist. Its embarrassing that you claim otherwise.

          • Mav, yes I am well aware of the fact that my insurance premiums include certain weather events in them. However, if you read most PDS’ you will find certain things aren’t covered. Here’s a hint though, weather isn’t global warming. Shocking I know right? These are also very small in cost, more important things for car insurance are driving history, type of car and age. Weather barely even gets a mention. Housing insurance it’s all about your area, weather probably plays a bigger part, esspecially if you live on a flood plain, but how much of this premium is due to ‘global warming risk’ I’d say if it’s any, you probably couldn’t even measure it.

            “All I am saying is the world’s insurance companies believe the risk of extreme weather events in the future will increase”

            Wrong, they simply put premiums up when they have a large round of claims. There have been bigger and more damaging disasters in the past but unless insurance companies felt a direct cost of these then premiums are unaffected.

            EG. Hurricane Katrina made many homes in New Oreans almost uninsurable. If insurance companies thought “hey I guess it’s global warming’s fault” then this would push the cost of insurance up everywhere.

            Yet, it didn’t even register a blip here, and I’d be confident they barely moved in other US cities too.

          • Hurricane Katrina made many homes in New Oreans almost uninsurable. If insurance companies thought “hey I guess it’s global warming’s fault” then this would push the cost of insurance up everywhere. Yet, it didn’t even register a blip here, and I’d be confident they barely moved in other US cities too.

            Global reinsurers do in fact model an increased probability of catastrophic weather related to global warming. It doesn’t necessarily hit premiums because they effectively securitise that increased risk via catastrophe bonds – bought by large pension funds. It is just factually incorrect to imply that insurance companies are not taking these risks seriously.

            Insurance is a completely untenable business model when the time comes that a sufficient quantum of people want to claim on events that are not supposed to happen within the realms of a modelled distribution – no premium hike could ever cover for it. Which is why insurance is effectively nationalised in those times of unprecedented stress. Which is why governments are prudent in taking the risk seriously, as well.

          • Spleen – the risks are underwritten and spread across the globe – your premium will rise, that’s one certainty that you can bank on.

      • I largely agree Lorax.

        I’m a climate sceptic – said if before, as I think our ability to model complex systems is very limited (FFS, we cant even model an economy) yet our perception is we are all-knowing.

        But having said that, even if there’s a 10% chance of irreversible deleterious to humans climate change, then prudent risk management says you have to mitigate it.

        And we can’t even say for sure what the probability is – again, like financial markets, modelling probability expectations based on current data does not take into account the fat tail possibilities.

        e.g we could have decades of no global warming/cooling etc and then BANG a tipping point in some microclimate changes another larger climate and then has rolling effects

        Its these sort of risks and how to mitigate that should be debated and analysed, not how “effective the science” or “how gummint is going to ruin us all” etc.

        Again – I’m a sceptic, but I see more effective use of my time, my resources – and that of the country and the world at large – in mitigating an unknown outcome, even if the science is eventually (and its a hypothesis, not a theory – get your grammar correct MattR) completely wrong.

        • Once again, this is nothing but the precautionary principle. It’s a logical fallacy as the size of the potential damage is the reason for action rather than the actual chance of this happening.

          Like I explain below, if we were invaded by aliens the destruction would be outright and non-reverseable. But should we really spend any resources preparing for one? What if it’s calculated that there is a 0.01% chance that it will happen in the next 100 years? I mean that’s a 1 in 1000 chance of all life on Earth being destroyed. Surely that’s a good reason to prepare right?

          Nope, because the precautionary principle is pseudo-science. Unless a cause and effect can be proven beyond a doubt then the only logical action is non-action. “Mitigating” could potentially cost trillions and (by 100 years) whatever the number above trillion is (quadrillion?), how many people could that money lift out of poverty? How many people would be prevented from starving to death over the next 100 years had that money been used to bring cheap and efficient fossil fuel power to the worlds poorest nations?

          The cost is real, the risk is “err maybe, umm I dunno”.

        • Dear Sceptic, please listen to the podcasts I linked above.

          We demand a higher standard from this blog. Get with what’s going on outside the economics sphere, Prince.

          • “demand”

            Thank god people with your totalitarian mindset are not controlling Govt. All “un-believers” would be taken out and shot, I’m sure.

          • GSM, exactly right. For a blog that prides itself on presenting fact based views that go against mainstream thought, the prevailing attitude on this issue seems extremely contradictory “AGW is real and anyone who disagrees should be slimed and attached!”

            Although it could simply be a few commentors, I don’t know.

        • Chris, I have more faith in science and the scientific method than I do in ideologies — left or right, authoritarian or libertarian, green or brown — ultimately they’re all belief systems that don’t require evidence for you to accept them.

          Science does.

          When the evidence changes, the scientific consensus changes rapidly. Look what happened when it was discovered the expansion of the universe was accelerating in the late 1990s. Initially many cosmologists did not believe the result. It was only after the experiments were repeated and the results confirmed that the idea became widely accepted, and new theories (such as “dark energy”) were developed to explain the observation.

          We’ve had more than 30 years for contradictory evidence on climate change. None has appeared. Sure there have been countless claims by “skeptics” that the science is flawed but none have proven convincing enough to be published in a single scientific journal.

          If there was scientist out there who was sitting on some truly compelling evidence, evidence as compelling as the Type 1A supernova data that completely overturned cosmology a decade ago, do you really think it would still be a secret?

          Either that, or you believe in a scientific conspiracy of truly epic proportions, which just seems extraordinarily unlikely to me. Lets face it, if someone had compelling evidence AGW was wrong, there would be a Nobel Prize in it for them. They’re not going to shut up, and the scientific journals aren’t going to censor it.

          • “When the evidence changes, the scientific consensus changes rapidly. ”

            Profoundly untrue, there are countless cases of scientists keeping their views despite having them completely discredited. Many people have built entire careers, massive grants and businesses around this idea. It could snow in Brisbane tomorrow, they would still sing the same old tune. After all, if you had spend 20 years of your life pushing a career that had made you millions of dollars, would you accept it if someone showed your claims to be wrong or would you fight it tooth and nail?

            At any rate, agumentum ad populum is a logical fallacy (once more), there is NO ‘consensus’ amongst scientists, politicians use this argument and no scientists worth their weight says “this is what the consensus says therefore it’s right.” It doesn’t take a million scientists to prove a hypothesis, it only takes one.

            “We’ve had more than 30 years for contradictory evidence on climate change. None has appeared.”

            Complete and utter baloney right there. Firstly, skeptics don’t need to provide any counter evidence of anything. Warmists are making the extraordinary claims, therefore warmists need to provide extraordinary evidence. We simply need to point out where the theory is wrong and the facts that counter it. We also simply need to point out that pretty much every predition made by warmists turns out to be wrong.

            EG. I can predict that if I hold a ball in my hand and let go it will fall to the floor. Now, tell me, where will the temperature go in the next 10 years? How about the next year? How about tomorrow?

            Stop claiming you are all about the ‘science’ if you can’t even get the very basic’s of scientific method even half right.

          • MattR, I wonder if you realise you’re using the same argument about “not proved, no consensus” that creationists use against evolution? 😯

            Colour me unsurprised. 🙄

          • Profoundly untrue, there are countless cases of scientists keeping their views despite having them completely discredited.

            Let’s have some examples of the scientific _consensus_ not changing in the face of compelling counter-evidence.

            At any rate, agumentum ad populum is a logical fallacy (once more), there is NO ‘consensus’ amongst scientists, politicians use this argument and no scientists worth their weight says “this is what the consensus says therefore it’s right.” It doesn’t take a million scientists to prove a hypothesis, it only takes one.

            A hypothesis is never proven. It is only ever supported by increasing amounts of evidence.

            It can be disproven. Which of the hypotheses underpinning climate change have been disproven ?

            Warmists are making the extraordinary claims, therefore warmists need to provide extraordinary evidence.

            There aren’t any particularly extraordinary claims in climate change theory, and they’re all supported by mountains of evidence.

            We simply need to point out where the theory is wrong and the facts that counter it.

            Then do it. There’s probably a Nobel prize in it for you if you can.

            We also simply need to point out that pretty much every predition made by warmists turns out to be wrong.

            This is what’s called lying.

            Stop claiming you are all about the ‘science’ if you can’t even get the very basic’s of scientific method even half right.

            It’s patently obvious you know SFA about “the scientific method”, other than maybe having heard the term somewhere in high school.

          • Revert2Mean, I wonder if you know that by using the term ‘consensus’ you are using the same arguments that the supporters of the “piltdown” man used? I also wonder what would happen to the world if someone saying “that isn’t proven” automatically means they are the same as creationists.

            I guess if I say “here are some magic beans” and you say “prove it” that makes you the same as a creationist right?

            Actually, it’s funny, because warmists use the exact same methods that the church uses to silence critics yet you support THAT kind of argument.

            Colour me unsurprised indeed.

          • drsmithy,

            “Let’s have some examples of the scientific _consensus_ not changing in the face of compelling counter-evidence.”

            Gladly, Galileo, Darwin, G.S. Miller (from the Piltdown hoax) and that’s just off the top of my head.

            Stephen Hawking is a prime example of someone who cannot prove his theories yet continues to spend his remaining life trying to do so.

            But you do get me wrong, eventually people accept the facts, just not right away. You might die thinking that a harmless odourless element required for life on Earth is going to kill us all. By then the rest of us will have forgotten all about it.

            Watch the series “A history of science” for plenty of examples of people finding conclusive evidence of a certain theory and having it take decades for the establishment to accept it.

            “A hypothesis is never proven. It is only ever supported by increasing amounts of evidence.”

            This is nothing but useless semantics. Replace ‘proven’ with strong, undeniable evidence to show that to the best of our knowledge it is almost certainly the case, it’s just easier to say ‘proven’. Talk about nit picking.

            Actually, it clearly CAN’T be disprove to people like you. Like I stated earlier, CO2 has risen about 10% yet temperature has dropped. The hypothesis fails the reality test, how many predictions have actually come true? More snow, less snow, more rain, less rain. There’s a new one every other week.

            A better question is which parts can YOU ‘prove’?

            “There aren’t any particularly extraordinary claims in climate change theory, and they’re all supported by mountains of evidence.”

            Too bad they aren’t supported by reality or facts hey? Too bad about that old chestnut.

            “Then do it. There’s probably a Nobel prize in it for you if you can.”

            Again, CO2 up 10% temperature down, where’s my prize? There’s plenty more facts where that came from too.

            The rest of your comment is pure ad hominem. Booooring, heard it all before.

          • Gladly, Galileo, Darwin, G.S. Miller (from the Piltdown hoax) and that’s just off the top of my head.

            I think you need to elaborate. These all appear to be examples of scientific evidence changing the consensus to match the facts (sans the simple disregarding of said evidence by religion).

            Stephen Hawking is a prime example of someone who cannot prove his theories yet continues to spend his remaining life trying to do so.

            Theories are never proven. Hawking can continue to build evidence that supports his theories.

            You might die thinking that a harmless odourless element required for life on Earth is going to kill us all.

            If you think CO2 is “harmless”, I suggest you try spending some time in a sealed room that is full of it.

            This is nothing but useless semantics.

            No, it’s not. It is one of the fundamental tenets of science. The reason it is a fundamental tenet and not just a matter of semantics, is because it implicitly requires ongoing skepticism.

            Actually, it clearly CAN’T be disprove to people like you. Like I stated earlier, CO2 has risen about 10% yet temperature has dropped.

            You’re lying again.

            http://www.skepticalscience.com/graphics.php?g=47

            A better question is which parts can YOU ‘prove’?

            That it’s warming ?

            http://www.skepticalscience.com/graphics.php?g=47

            That CO2 causes warming ?

            http://www.skepticalscience.com/empirical-evidence-for-co2-enhanced-greenhouse-effect.htm

            That CO2 levels are increasing ?

            http://www.skepticalscience.com/co2-levels-airborne-fraction-increasing.htm

            That human activity is significantly responsible ?

            http://www.skepticalscience.com/human-co2-smaller-than-natural-emissions.htm
            http://www.skepticalscience.com/co2-increase-is-natural-not-human-caused.htm

            Too bad they aren’t supported by reality or facts hey?

            They’re all quite well supported by evidence.

            Again, CO2 up 10% temperature down, where’s my prize?

            Nowhere, because you need an actual argument, not just a statistical lie.

            http://www.skepticalscience.com/graphics.php?g=47

          • Go DrSmithy,

            they keep on with the uninformed BS to support their agenda, and you just patiently keep knocking them down with well argued reason that is supported by facts.

            I actually think that it’s a generational thing with most science denialists being of the boomer generation while the more highly educated later generations having no problem accepting the idea that perhpas human activity IS having an effect on the whole planet

          • I actually think that it’s a generational thing with most science denialists being of the boomer generation while the more highly educated later generations having no problem accepting the idea that perhpas human activity IS having an effect on the whole planet

            I think it’s simply because they haven’t got any skin in the game. After all, it’s going to be decades before any serious effects start to hit, and probably double that before the average well-off westerner starts to hurt.

            Heck, even those of us in our thirties are unlikely to be really disadvantaged by climate change.

        • Lorax, just to be clear I’m a sceptic because I just dont know enough and I dont pretend to know that I know the vagaries of climate science.

          I’m married to a much smarter woman than I who is a research scientist, and even she doesn’t know for certain – the point being, the evidence POINTS to a solid hypothesis.

          So maybe I’m using the wrong word? I mean sceptic as in – this is interesting, let me have a look at your ideas. etc. before I come up with an agree/disagree/maybe conclusion sceptic.

          Sceptic/skeptic? I’m not a denialist – true I’m a trader by profession, but I’m not that stupid.

          My specialty is risk and on that the outcome if very certain. Hedge it FFS – oh and it can be done in a way that has win/win offsets for 3rd world or even 1st world prosperity.

          Anyway….

          • Your logic is sound, it’s a version of Pascals Wager – and Pascal was a wise man who understood the risk of being wrong.

        • “’m a climate sceptic – said if before, as I think our ability to model complex systems is very limited (FFS, we cant even model an economy) yet our perception is we are all-knowing.

          But having said that, even if there’s a 10% chance of irreversible deleterious to humans climate change, then prudent risk management says you have to mitigate it.”
          ————————————–

          That is a position that can be respected, and is certainly wise.

          Ignoring the risk of climate change, even if you don’t ‘believe in it’, is like waking up in the morning with your room full of smoke, thinking, meh, there is a 90% chance its the neighbors house, i’m going back to sleep….

          • And spending $10,000 a year to insure a car worth $5,000 is just plain stupid, wouldn’t you agree?

          • “And spending $10,000 a year to insure a car worth $5,000 is just plain stupid, wouldn’t you agree?”

            In what way is an irreplaceable planet comparable with a $5,000 car?
            Planet irreplaceable, understand?
            I must admit to being shocked that you would seriously put future survival for the species into dollar terms. Its a rather horrifying attitude showing incredibly limited intellectual depth.

            http://en.wikipedia.org/wiki/Psychopathy

    • I wish you hadn’t derailed the comments so early. My post was primarily about alternatives to GDP measurement that look more holistically at social and economic outputs. Even if you don’t accept that humans can or do cause climate change I think my primary point is valid.

      • Look I understand this and you certainly have a valid point in that regards (to an extent), I just strongly disagree with the way that it was made.

        Sorry if you think I derailed the thread, this certainly wasn’t my intention.

      • Mining BoganMEMBER

        If a bear growls on a blog and there is no body there to hear it, does it make a noise?

        Seems the answer is no.

      • I empathise, but put a toe into to the global warming debate, the piranhas are aroused. But I like the concept of viewing ‘growth’ whatever ‘that is’ in more holistic terms. I think it holds potential for greater honesty or at least clarity, understanding. The Legatum work demonstrates that a multitude of threads are needed to weave a healthy, robust, generous and indeed profitable economic society. Each needs the other.

        Keep up the cool work Bear Feller. Cheers.

    • […] don’t you think it would be wise to at least wait until the hypothesis is even PARTLY proven (it’s not even close to that) […]

      Hypotheses are never proven. They are either supported by evidence, or disproven.

      Mountains of evidence support the hypotheses behind climate change, and they are yet to be disproven. Ergo, to the best probability science can deliver, climate change is real.

      Also, the world hasn’t even warmed for 16 years while CO2 has increased around 10%. Correlation doesn’t equal causation, but no correlation equals no causation. The hypothesis is disproven completely.

      This is what’s called lying with statistics. Or just lying, for those who don’t make a distinction about method.

      http://www.skepticalscience.com/graphics.php?g=47

  3. Ewww. The denialist brigade has arrived.

    I’m convinced denialism will inflict more damage on humanity than Nazism, Communism and Capitalism combined.

    • Better stock up on tin food then buddy. The end is nigh! Lol…

      Also, capitalism has done more good than any other ideology in history. It’s certainly got it’s drawbacks and flaws (people are flawed too), but it’s lifted the poorest out of abject poverty to a point where they no longer need to worry about having shelter or starving to death and can even enjoy a certain level of luxury that before only the well off enjoyed (chronic drug users and those with mental issues asside).

      Besides if it wasn’t for capitalism, you wouldn’t be able to post on an economics blog about how evil capitalism is. Says it all really.

      • Never said capitalism was all bad.

        If AGW is real — and we should know for sure in about 90 years — history will record denialism as the most damaging ideology of all time.

          • I hate to disagree. We don’t know for sure any more than MattR knows that the hypothesis has been completely disproven.

            There are only probabilities that one outcome or the other is correct. Certainly there’s a huge amount of evidence that human-induced climate change is real, and (to the best of my knowledge) no evidence that contradicts it*

            So lets say the probabilities are 95% / 5%. That’s still not “for sure”.

            * Knock yourself out MattR. Show me a paper published in Science or Nature that seriously calls into question the science behind AGW.

          • And there is it, warmists get frustrated and start blustering all over the place.

            There are plenty of papers that call into question the highly dubious science of man made global warming. Feel free to do your own research, anything I find will be met with the warmists stock standard “omg, that’s like so not a credible source and stuff! The facts that they bring up aren’t actually facts cuz, like the source man.”

            The fact is, warmists have the hypothesis, therefore you need to provide the evidence. This is a very basic premise of science. Yet, for some reason, in this issue, you fools seem to think it’s OK to simply turn it around.

            Here’s something for you, prove god doesn’t exist, go on, prove it. I say he does exist and you can’t prove he does, therefore I’m right and you’re wrong. You see the problem there? That’s essentially what you’re doing.

            Fact, CO2 has risen over the last 16 years, fact, the worlds temperature has dropped. Funny thing about facts, they don’t lie.

        • And if it’s not? Where did all the money go? What was it spent on? How many of the poorest in the world would have benefited had we NOT spent all that money on a non-problem?

          I actually have to laugh at your “90 years” number, just a few years ago it was “in 10 years we will all know!” 50 years ago it was “global cooling will kill us all!”

          At least this time you pick a number that means you will be long gone before you ever have to answer for it.

          AGW as an ideology will be long gone in 10 years, it’s already on a downward death spiral. The only reason it’s hanging in there is because of the billions upon billions of dollars the industry stands to lose.

          • Its my view that human-induced climate change can be plausibly denied by people such as yourself until at least 2100.

            Global cooling was discredited by evidence and observation fairly early — within 10 years. I would love for global warming to be similarly discredited in the near future, because I find the alternative thoroughly depressing.

            Lets cling to that small area of agreement.

          • Great, so I guess you are arguing that we wait 100 years before we do anything right? I’d say that’s reasonable.

            But that’s not what you’re saying is it?

          • No, because the evidence is overwhelming that climate change is, and will become, a serious threat to civilisation.

            Prudent risk management suggests we should do something to mitigate that risk.

            Similarly, insurance companies are raising premiums in locations that models suggest are prone to increased risks from climate change.

          • Exactly, you don’t care about the actual facts, merely ideology. There is absolutely NO evidence that climate change is a threat to civilisation. Climate has been changing since the DAWN of civilisation and it’s only got strong and strong. People have merely adapted to their surroundings as they see fit.

            Insurance companies are well within their right to raise premiums for whatever reason they want. Insurance is unbelievable competetive however, people will still take the best deal. If one company are silly enough to raise their premiums for ‘global warming risk’ (they aren’t) that’s fine, if 3 or 4 of their competitors don’t, guess who loses?

            There is yet to be a single case of ‘climate change’ causing a single cent of damage. Not a single case. Insurers raise premiums at your own peril.

          • Matt, don’t forget the millions of manhours spent brainwahing naive young minds in Govt educated institutions that AGW will end the earth tomorrow.

            You are 100% correct. Not one piece of the AGW hypothesis has been proven, in fact the revers is true. The climate ITSELF has failed to prove the models of the AGW cult.

            In the meantime, the Leftist zealots insist we throw our economy under a bus because of the brainwash induced anxiety that the “potential” exists. Sorry, before I sacrifice my family’s future I want to see some kind of worthwhile proven evidence that such a irreversible cost is remotely worth it.

          • And if it’s not? Where did all the money go? What was it spent on? How many of the poorest in the world would have benefited had we NOT spent all that money on a non-problem?

            The horror !

            I actually have to laugh at your “90 years” number, just a few years ago it was “in 10 years we will all know!” 50 years ago it was “global cooling will kill us all!”

            This is another lie.

            http://www.realclimate.org/index.php/archives/2005/01/the-global-cooling-myth/

          • I’ve yet to speak to a single Government educated, school aged person who believes the world is going to end tomorrow because of global warming, although the more sensitive among them may be susceptible to melodramatic overstatement of the issue. This I blame more on personality type than government intervention, and can be addressed via decreased intake of marijuana and Morrissey albums.

            Those millions of public servant (i.e. teacher) manhours are generally spent on teaching grammar, reading, maths – you know, all of those crazy lefty skills completely useless in the real world !

            I don’t think your analogy about throwing our economy under a bus is quite right (and economic data in this regard has failed to match the rhetoric of the alarmist cult). If you were told there was an increased probability (but not certainty) of cardi-vascular disease related to your diet and lifestyle – wouldn’t your actions fall on the side of giving yourself the benefit of the doubt ? Even if it would not be a confirmed fact until the point that you actually died ? Even at personal cost to yourself ? If it disadvantaged you relative to someone else who chose to ignore the same warning ?

            I’m a bit rusty on what fallacy that might be – I’m sure some kind soul will let me know where I have offended.

          • via decreased intake of … Morrissey albums

            Funnily enough, when responding to one of MattR’s comments earlier today a Morrissey lyric popped into my head…

            because people like you
            make me feel so tired
            when will you die?
            when will you die?
            when will you die?
            when will you die?
            when will you die?
            because people like you
            make me feel so old inside
            please die

            Can’t think why.

        • Hope for the best, prepare for the worst.

          P.S. ‘prepare for the worst’ doesn’t mean sticking your head neck deep in the sand.

          • Nor does it mean throwing your economy under a bus as you and the other AGW fanatics are recommending in fact insisting on.

          • GSM exactly, but hey, I’m more than happy to start a ‘global warming insurance’ company. Just $50 a month and you can be covered for all things related to man-made global warming.

            Enjoy putting in a claim on that one hahaha.

          • Completely agree guys. I would happily let it all burn, even though its our only planet, for a percentage of the profit.

            Unbelievable. You really don’t get it do you.

  4. Good Post…

    The basic issue is that the vast bulk of punters dont realise there is a problem until it is right upon them and creating an immediate impulse.

    The denial of human based global warming (and other environmental impacts) is the same impulse that denied a link between smoking and lung cancer (quite successfully for a long time) – yelling prove it prove it more prove it again, and clutching at whatever straws it can to deny the possibility. They are basically playing the same game plan – pay scientists to do their bidding, point out gaps in the logic, information, data etc. Science plods along behind filling in the gaps providing the logic etc.

    In the margin between the established science and the denial comes room for manouevre for whatever administrative address is possible. Everyone knows where this road leads – humans have an impact on the environment, and need to manage that impact in some way – it is simply the speed with which we reach nuanced forms of that address (carbon emissions trading, bans on chemicals etc and adopt mitigation, take responsibility for events etc).

    I dont think anyone is credibly arguing that the world is not warming up at a considerable rate – the mainstream argument is about the degree to which this is human related, with a further argument at national levels about who (which nations in a world of nation states) should bear costs associated with historical warming influences, as well as those present and future, and the impacts this has on economic growth. The tenor of this debate discussion or whatever you want to call it, will become more heated as the ‘wellbeing’ (and particularly ‘economic wellbeing’) of various nations becomes more overtly impacted by the warming.

    Either way I think we are a long long way past the point where we can actually do something to prevent global warming – so it becomes a matter of what we do about, when we do it, and who pays (of course).

  5. In 1878 the “Princess Alice” sank on the River Thames in London. Many who ended up in the water didn’t drown, they were poisoned.”..the twice-daily release of 75 million imperial gallons of raw sewage from sewer outfalls had occurred one hour before the collision”. Back then, they didn’t see that they were harming their environment either….

  6. its interesting how much debate there is about pro or anti agreement with climate change. I wonder how many actually have any qualifications in the area or done any actual research?

    There are clearly externalities which are not being factored into the economics.

    I for one am glad to see an article which attempts to find meaninful metrics to bring the analysis of what is a scarce resource and how to manage it at both a macro and a micro level encouraging.

    Thanks to the Author 🙂

    Something to consider on the Alarmist vs Denial camps. Why not put your name in a register so we know who voted for our destruction when it occurs.

    • Unfortunately people get very emotional about this and in their research tend to believe the facts that fit their preexisting world view.

      I do hope that entrepeneurs and companies will see an advantage in doing more with less (less inputs, less harmful outputs) and measure themselves in those terms, however there is a tremendous amount of inertia in moving that way. It is too easy at the moment to keep doing what we’re doing.

      Governments can’t and won’t do it for us because of the political pushback (see many posts above) against any change. I only hope human innovation finds a way before we’re all toast..

  7. Revert2Mean said:

    At some stage the mods here must decide whether or not the site is going to agree with scientists or deniers, and delete comments accordingly.

    For the record, the only comments that will be deleted – and users asked to leave – will be those that are derogatory/attack the poster and plus just plain bullshit. Also, please refrain from telling us what we should allow or not allow in our living room.

    On that note, GSM, MattR and Revert2Mean, take the rest of the day off, go outside and smell the “not proven/proven/warmist/denialist” air.

  8. Good post, interesting topic.
    Shame about the comments; I pretty quickly gave up on searching for gems amongst the zealots (I presume there are a few interesting comments that add to Flashman’s topic in there somewhere). The stench of self-righteous indignation and arrogance is too overwhelming.
    The only entity who/which KNOWS whether mankind is f#@cking up the universe is G O D.
    There are so many interesting posts at MB today, for the life of me, I can’t figure why anyone who is offended by Flashman’s post felt the need to waste their time posting copious comments of protest here. As for objecting to the topic even appearing on MB. WTF? Are you the topic Nazi?

    I notice the quote in TP’s comment above – I agree with R2M’s comment. I think the mods allowed commenters to trash Flashman’s post. Not all comments of objection needed to be deleted, but 99 (and it looks as though most of the 99 are trashers) is excessive.