The error-riddled book Superfreakonomics got the economics dead wrong, too, as Nobelist Krugman and others have noted. Now Harvard Business Review weighs in on how they got the business side wrong. I’m reposting an HBR piece by Andrew Winston, co-author of the best-seller Green to Gold and the author of the new book Green Recovery.
Stephen Dubner and Steven Levitt’s SuperFreakonomics has certainly gotten a lot of people worked up. The point of contention is a chapter about global warming which makes the case that Al Gore and others are getting us way too worked up about the climate problem because the only way to solve it is to convince people to “put aside their self interest and do the right thing even if it’s personally costly.”
The authors go on to explain their solution “” geoengineering “” which purportedly isn’t going to require us to cut back on our energy use or rethink the way we do business. But what they have completely failed to address “” and what the (ahem) lively discussions on the topic have missed as well “” is what the benefits of tackling climate change might be, instead of just the costs.
The authors have missed a major economic issue: the process of shifting our economy to a low-carbon one has enormous upsides completely aside from the benefits to climate balance.
I’m not going to try and take apart their arguments or judge the soundness of their climate science as a whole; there are some others who are already doing a detailed job of that. If you like your climate discussions hot and sarcastic (which can be entertaining), see Joe Romm’s posts on his Climate Progress blog. Or if you like the cool, dispassionate analysis, I’d recommend the Union of Concerned Scientists or the well-respected journalist Eric Pooley’s take on how the authors “” who he says are friends of his “” “flunk” the science.
There’s also been a fascinating back and forth which includes the authors and Nobel laureate economist Paul Krugman. In short, Krugman is not pleased and he lays out some devastating concerns about the mental exercise the authors have undertaken (“We’re not talking about the ethics of sumo wrestling here; we’re talking, quite possibly, about the fate of civilization. It’s not a place to play snarky, contrarian games”).
The brouhaha is truly unfortunate on many levels. It’s not that having a discussion of geo-engineering is a bad thing “” we should explore and assess many options. But the real problem is that the authors of SuperFreakonomics “” and even the big critics who have gotten sucked into it “” seem to have taken too narrow a view of the problem. While the authors clearly believe that there is too much climate-change hype, there is some agreement that there’s a warming problem (or why propose a solution “” the main point of the chapter “” at all?). But the focus of the discussion is entirely on a way to counteract the effects of greenhouse gases, as if there are no other issues related to our reliance on fossil fuels.
Instead, let’s just think about the business benefits of changing our products and processes to reduce carbon emissions, regardless of the atmospheric benefits. How will changing to a lower-carbon economy help companies? Well, there’s real money involved here “” energy and other resources are getting fundamentally more expensive over time as demand around the world rises and supply gets harder to find. Oddly, the SuperFreakonomics authors acknowledge this Econ 101 supply problem in passing with the statement: “In just a few centuries, we will have burned up most of the fossil fuel that took 300 million years…to make.” So why wouldn’t we want to move away from a declining resource?
Put really simply, it saves money to reduce greenhouse emissions. It makes businesses more competitive to use less energy and to help customers do the same. It also creates jobs in a wide range of industries that help build a low-carbon economy “” from the obvious solar panel builders and installers to the less sexy home weatherizers, electric vehicle manufacturers and mechanics, and building efficiency consultants and experts.
The countries and companies that decouple themselves from fossil fuels will slash their costs and increase profits mightily. In fact, as Robert Kennedy, Jr. pointed out in a speech recently, the countries that have already reduced their reliance on fossil fuels “” such as Iceland, with its geothermal energy, and Sweden, with a carbon tax driving down energy use as the country grew “” have made their economies richer and more stable. (Yes, Iceland then bet its wealth on bad investments at the heart of the financial crisis in 2008 and bankrupted itself, but that’s another story.)
As many have repeatedly argued, we also place ourselves at great risk globally by continuing to pour money into oil markets. We send hundreds of billions of dollars a year to parts of the world that don’t like us very much. And we place ourselves at personal risk “” the National Academy of Sciences just estimated, conservatively, that fossil fuels cost $120 billion per year in health costs and cause 20,000 premature deaths (that’s more than six 9/11s if you’re counting).
So while we find new ways to pour attention on “contrarians” and have a debate that most of the rest of the world has already stopped having, we risk our health, fall further and further behind the countries we compete with (China and Germany, for example, in renewables), and become more indebted to our enemies.
Solving climate change is not really about asking people to hold hands and sing “Kumbaya,” but about political will and making it easier for business to create the low-carbon solutions we all need. Regardless of the climate science, the benefits of action and the costs of inaction for business are astronomical “” and worth superfreaking out about.
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Language Intelligence: Lessons on persuasion from Jesus, Shakespeare, Lincoln, and Lady Gaga
One of the economic factors overlooked by delayers is that to replace existing energy generators, new generators will have to be built using energy; one author has put this, very roughly, at 10% of annual energy use for twenty years. The economy now can tolerate this diversion of limited generation capacity to the fabrication of solar, wind, etc. But, in ten or twenty years time, the capacity necessary for SUCCESSFUL replacement of energy generators would likely be much more crippling to the economy if from years 1-10 less than 1% of energy use goes to replacements.
Harvard and HBR, Please Examine Thyself
I respect Harvard and HBR, to be clear.
Yet, they both know about Socrates, who advised self-examination.
He (Socrates) also felt strongly that people who might gain some ever-so-slight glimpse of things (in one area of life or another) should nevertheless go back into the cave to try to help others, as much as possible. (See Plato’s “The Republic”, of course.)
So, allow me to point this out: One of ExxonMobil’s longtime Board members is professor William George, at Harvard Business School.
Now, hopefully, I need not go into detail about ExxonMobil today, or about their advertorials in The New York Times, or about their continuing confusions and so forth.
A couple years ago, Rex Tillerson was quoting Bertrand Russell about our responsibilities as humans to the future and about our need to face and address the climate problem. That was in one speech, anyhow!? Indeed, professor George is the very person who suggested that speech, by Tillerson, to me.
Here, I’d just like to ask, straightforwardly, that the Harvard Business Review do an extensive review and excellent article on the ethical responsibilities of corporate Board members and, also, of leading business schools!
There seems to be much too much confusion on those matters, if you ask me.
Sincerely and with respect,
Jeff Huggins
Harvard Business School, Class of 1986
Baker Scholar
The vampire book Superfreakonomics is the quintessential modern non-fiction publishing mistake. Proportional to their levels of self-promotion – they deserve our energetic attention.
Newspapers are often insulted by calling them “fishwrap” – meaning, that is all it is good for…. So the bound pages that SuperFreakonomics calls a book… is it useful for anything else? Door stop? Compost? Bookshelf made from old books http://www.inhabitat.com/2009/04/07/book-shelf-made-from-books/
Thanks Joe, it is nice to have an electronic version of this kerfuffle so that future historians need not be burdened by preserving the physical pages. Maybe the publishing industry will learn something too.
JR,
To begin thanks very much for your posts.
I’m not sure if you saw the Daily Show that aired last night which featured one of the authors of the book – don’t recall exactly which one of them was on; however, John Stewart nonchalantly brushed off the criticism of the climate change chapter as some kind of secular religious overzealousness.
For a comedian/satirist John Stewart is to be respected for his approach to many serious issues, but the way he conducted this interview, essentially trivializing any criticism of the book, led me to believe that he has a very superficial understanding of its faults. Because of his very significant following I feel that his endorsement of geoengineering as a feasible alternative to carbon emissions reductions has the potential to be damaging.
If I were to make a suggestion to you it would be to ask for a venue (perhaps the show itself?) to illustrate the counter argument. It’s needed and something that they would likely bite on. Seems that the SuperFreak publicity tour could use a counterweight.
Thanks again.
Ryan Wiggins
Campaign Director
EndOil/Communities for Clean Ports
4000 Long Beach Blvd. Suite 249
Long Beach, CA 90807
RWiggins@endoil.org
[JR: I'll post Think Progress's comment on the Daily Show.]
You realize, of course, that Sweden generates more nuclear power per capita than any other country in the world (by a wide margin), and that that country is blessed with relatively enormous hydroelectric resources… and STILL has to import electricity. And has slipped from the second richest country in Europe to the … tenth? Is that an example of an energy policy to emulate?
Mika Nystrom MIT ’94 (VIII/VI-1)
I’m surprised Winston doesn’t acknowledge that you have had the business case right for years (e.g., your “Lean and Clean” book).
I second the notion that someone, and preferably many people, should bring Jon Stewart up to speed with the issues and the science.
I admire Jon Stewart, a lot, and he (and his show) are vital elements in the way that BS is ultimately illuminated and good sense ultimately is conveyed, on some key issues.
He and his show are WAY too important to “let be” in terms of confusion. I don’t know him, but certainly my impression is that he wants sense and good thinking and “the genuine interests of humankind” to be advanced. In other words, as far as I can tell, his heart is in the right place. And, of course, he has done some of the best, and most necessary, debunking of stuff in the last ten years.
His understanding and “voice” are key!
If he’s confused on some of these climate and energy matters — as it seems he is — it should be “job one” to try to help him gain his footing, even if that takes private lessons, even if that takes a beer or two, and even if it means getting on a train and going to New York, or whatever.
And another thing: If it turns out that Jon Stewart doesn’t understand these issues, and if it also turns out that Rachel Maddow doesn’t, then I’ll have no TV show that I can watch any more.
Be Well,
Jeff
While I agree with the comments above re: Stewart, I think this points out a fundamental problem we run into constantly when talking to the non-geeks about climate change or peak oil. For lack of a better term, I call it the “head shape problem”. Both PO and CC require people to think in terms of longer time frames than many/most are used to (sometimes in the form of queueing theory, in effect), distinguish between stocks and flows, deal with some truly immense numbers, some of which are expressed in weird (to a newcomer) units, etc.
I don’t think this is a matter of “not enough people know enough science today”, as many are quick to say, but more a case of very specialized knowledge being needed to make sense of a lot of the stuff we read and discuss online.
I have no idea how to fix this, as many of the attempts to avoid the weird units–”X will reduce CO2 emissions by the same amount as taking 10,000 cars off the road!”–are often highly misleading.
I’ve found this blog interesting, yet I must admit I don’t think I can judge the merits of the argument. I’m a relatively bright guy, yet the arguments on this issue just aren’t very convincing for either side.
And I think this is problem for environmentalists. Ryan Wiggins makes the point that Stewart only had a superficial understanding of the issue. Well I think that’s going to be the case for 99% of the population. I have strong knowledge of econ/stats/math/science (although not in atmospheric sciences), and whenever I’ve had anyone try to prove either position, there are so many questions I can ask regarding causality that I always leave the conversation not completely convinced.
My point is that Stewart and others who aren’t experts in this field I think are not lazy. I think the experts are currently providing very poor guidance — unless their goal is for it to simply be an academic exercise, rather than a policy one.
To Ken Jackson (Comment 9)
I understand your point, of course, that lots of people aren’t scientists and that we mustn’t assume that people will be able to understand unless very clear explanations are provided. So, I agree with those aspects of your point.
But you seem to be offering an additional point or question as well. You mention, for example, questions of causality. Could you provide the largest question of causality that you feel you have?
For example, some people who don’t really understand the science of the matter might think, “well, if there is some correlation between higher temperatures and higher CO2 concentrations, then how do we know whether the higher Ts cause the higher CO2 or the higher CO2 contributes to the higher Ts, or both, but if both, what is the first and main driver?” In other words, “what causes what?”
Yet, of course, we also know (independently) that CO2 absorbs certain bands of radiation, and we know why, and we know that such energy is then converted to kinetic energy, i.e., temperature. So, by these (and other) means we can understand causality much better. Indeed, that’s part of what the eighteen scientific organizations (who sent a recent letter to the Senate) mean by multiple independent lines of evidence.
So, what specific question of causality has you in considerable doubt, and does the doubt you imply relate to climate change itself, or are you talking about something specifically related to whether geoengineering is a good idea or not?
Thanks,
Jeff
here we go again…
TSX drops triple digits on fears recovery is stalled
http://www.cbc.ca/money/story/2009/10/28/tsx-oil-drop.html
@Mika (#5):
Sweden generates less than half of its electrical power by nuclear means; the country you are thinking of is France (which depends on nuclear power for about two-thirds of its electricity consumption).
Sweden does indeed import about 5% of its electricity, presumably because it makes economic sense. Norway, after all, has even larger hydroelectric resources, and the countries participate in the Nordic energy market, one of the first liberalized energy markets in Europe.
Note that Sweden is currently the eleventh richest country in the world in terms of per capita GDP according to this year’s CIA world factbook, with 7 European nations ahead of it. The US occupies the 17th position. Being the eight richest country in Europe means you’re a very, very rich country; nothing to scoff at. We could do a lot worse than to emulate Sweden.
Best wishes,
Leo
Maybe others have pointed this out already, but I haven’t seen it (I haven’t read the unauthorized preview PDF, nor all the rebuttals from e.g. Krugman, just the headlines and posts like this. Here’s my beef with L&D:
One huge gap in the Superfreaks’ reasoning is in this bit: ‘the only way to solve it is to convince people to “put aside their self interest and do the right thing even if it’s personally costly.” ‘ So they prefer a centralized, top-down, government-by-fiat techno-fix, which might be impossible to implement through any kind of democratic process? Geoengineering is sure to be a bigger hot potato than carbon pricing.
And aren’t these guys supposed to be economists? How can they claim that it is just too hard to get people to change their behavior? Two words: price signal. If you apply a price to an externality, the rationally-self-interested public will immediately adjust their behavior in proportion to that price signal.
I would in fact be far clearer simply to have a carbon tax or comparable cost imposed through capped emission permits, tradeable if you prefer; with that, we would get a real, direct *market* signal of what our carbon footprint is for each product or service. No more of these wild guesstimate reports “what is the carbon footprint of dog food / imported wines / paintball / Chilean sea bass / etc?” Those are the exact questions we would rely on the market to answer for us, once we have agreed together to have a common price signal to internalize the GHG externalities.
I’ll note that no less than Wal*Mart has undertaken to post the carbon footprint of every product on their shelves over the next few years – that’s an enormous challenge, and only such a giant could impose this extra work on all their suppliers. L&D imply that all we are going to do is get that info on the shelf display, without any price signal, and then leave it to the goodwill of consumers to factor in carbon footprint as an ethical factor outside of actual cost, and on top of whatever other ethical concerns we bring to the store (no sweatshops, is it 100% recycled/recyclable? etc.)
–
Jim Prall
Toronto, Canada
Or, do people think that when L&D say it is “too hard” to “change behavior”, are they really saying it will be too hard to enact policy to impose a carbon price? That might be a better starting point, if that was what they really meant. But it doesn’t sound like they even give the possibility of a carbon price signal the time of day, before launching off into geo-desperate-tinkering (those who wear the Iron Ring might object to cloaking these schemes in the mantel of their profession!)