Alan Greenspan is Very Overrated: Part II, Global Warming

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"Alan Greenspan is Very Overrated: Part II, Global Warming"

greenspan7big.jpgIf you thought Greenspan was confused about energy (see Part I), his discussion of global warming in The Age of Turbulence is downright stupefying. He opens well:

There can be very little doubt that global warming is real and man-made. (p. 454)

But the next sentence is (I kid you not)

We may have to rename Glacier National Park when its glaciers disappear, in what now looks to be 2030, according to park scientists.

That’s what all the fuss is about — we’ll have to rename one of our national parks in 23 years. This is the Lomborg view. The movie version might be called A “Minor Inconvenience” — That’s Our Truth.

Greenspan then immediately launches into an extended discussion trashing cap-and-trade systems, ultimately claiming:

There is no effective way to meaningfully reduce emissions without negatively impacting a large part of an economy. Net, it is a tax. If the cap is low enough to make a meaningful inroad into CO2 emissions, permits will become expensive and large numbers of companies will experience cost increases that make them less competitive. Jobs will be lost and real incomes of workers constrained.

Unless of course jobs are created in the clean energy industry and people can balance the higher cost of energy with a more efficient use of it, as California has done. That Greenspan does not like a high price for CO2 is not surprising — how much is it really worth to avoid renaming Glacier National Park, anyway? What is stunning is that he makes this particular argument against carbon prices in the very same chapter he calls for a $3 a gallon gasoline tax!

The gas tax is both necessary and good: “we need significantly higher gasoline prices to wean us off gasoline-powered motor vehicles…. The expectation of higher gasoline prices through taxes … would galvanize large technological breakthroughs in the production of ethanol” especially cellulosic ethanol from biomass. “Alternatively, if ethanol fails and gasoline prices are high enough, plug-in hybrids will significantly displace petroleum consumption over time.” (p. 461) Dr. Greenspan — techno-optimist!

But just 6 pages earlier, his alter ego, techno-pessimist Mr. Alan, was calling a carbon price both unnecessary and evil:

Unless we find technologies to delink emissions from output, emissions can be suppressed only through lower production and employment. If we do find those technologies, emissions will fall without cap-and-trade regime. An effective cap-and-trade regime might be expected to create price incentives for developing new technology, but the development process would likely be too protracted for political comfort. (pp. 455-456)

He seems to suffer from bipolar technology disorder. High gas prices jumpstart new technology but high carbon prices don’t. High gas prices apparently create new jobs and new industries, but high carbon prices are “job destroying” and would lead to “a gradual reversal of the gains of postwar liberalization”!!

If not carbon prices, then what:

I fear that a more likely response to global warming will be to quibble until the dangers it poses to national economies become more apparent — until, for example, countries are forced to build dikes around vulnerable cities to stave off rising sea levels and floods. (The Dutch have succeeded with dikes for centuries; the Venetians have been less successful.) Remediation is far more likely than prevention to garner adequate political and popular support. It has the advantage that the costs are borne by the same populace that achieves the benefits. But if there is more to global warming than flooding (for example, adverse weather), that solution will fall short. (p. 456)

Doh. I’m sorry but this paragraph means Greenspan is an ignorant man — a willfully ignorant man. First, is he really unaware that by dissing carbon prices at length and dissing existing technology, he is contributing to inaction? Second, is he truly unaware that global warming has a whole lot more impacts than flooding — for instance widespread drought and desertification? And if sea levels are rising 6 inches a decade for centuries, all the dikes in the world won’t help.

Greenspan is promoting a solution that will fall short. Thank you very much reigning economic guru!

Greenspan devotes his final chapter to imagining the world in 2030, but since he has chosen to remain ignorant about global warming science and impacts, he thinks climate change will have a small impact on energy markets. In fact, if we follow Greenspan’s advice, by the end of the 2020s, the Artic will be ice free, extreme weather will be rampant, and we will be desperate to reduce greenhouse gas emissions.

By 2030, climate change will be the single biggest driver not only of energy markets but of economic markets, as I argue in my book. Any book about our future that doesn’t have a major focus on the impact of global warming is simply not worth reading.

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5 Responses to Alan Greenspan is Very Overrated: Part II, Global Warming

  1. Jeff Goodell says:

    Great analysis, couldn’t agree more. Sometimes I think the willful ignorance of people like Greenspan is more damaging than all the lobbying money of Big Oil and Big Coal.

  2. Ronald says:

    You laid out very well why he falls short of global warming solutions. Thanks for keeping an eye on the ball and explaining where we should be and what we should expect from people writing about the global warming problem.

  3. David B. Benson says:

    Just how old is Mr. wishy-washy Greenspan?

  4. Earl Killian says:

    I am puzzled by Greenspan’s line “It has the advantage that the costs are borne by the same populace that achieves the benefits.” The costs do not go to benefits, but to fixing damage done by someone else. Remember much of the damage will be in places that never emitted much greenhouse gas.