The Concentration of World Output

One of the reasons Levitt & Dubner give for thinking that avoiding catastrophic global climate change via binding emissions reductions isn’t workable is “the fact that greenhouse gases do not adhere to national boundaries.” In other words, the fact that there’s a difficult coordination problem. And it’s true, there is a tricky coordination problem. That said, one shouldn’t actually overstate the degree of difficult coordination involved. The fact of the matter is that global economic output is pretty highly concentrated. Look up the IMF’s figures for 2008 GDP and you’ll see that the United States and the EU together account for a majority of the world economy:


The dropoff after the big four is pretty enormous with Russia, Canada, and Brazil clocking in at around a third the size of the Chinese economy. Realistically from a legitimacy point of view you’re not going to see those four large economies get together on an agreement and then coerce everyone else into following suit. But coordinated and determined coercion by those four—or even by the US and EU alone—could probably be made to work. More realistically you can go from a Big Four to a Big Eight that includes Russia, Brazil, India, and Indonesia and you’re looking at about all the coordination that’s needed. A Canada or South Korea or Mexico or Cambodia isn’t in a position to play spoiler and just refuse to play by whatever general set of rules fit high-, medium-, and low-income countries.

Back to Levitt & Dubner, for some reason they write during the course of this discussion that “the United States has in recent years sporadically attempted to lower its emissions,” which is false, and then implies that the issue is that China and India won’t go along. It’s true that we could wind up in a situation where Sino-Indian recalcitrance is the key obstacle to progress, but in reality the United States of America, historically speaking by far the largest contributor to the problem, has made no attempt to lower its emissions. Nor has the USA made any effort to play a constructive role in solving the global coordination problem. Fortunately, thanks to the Waxman-Markey bill that’s passed the House, the Kerry-Boxer bill pending in the Senate, and the looming negotiations in Copenhagen that stuff might change. But it won’t if people listen to Levitt & Dubner and give up in advance, concluding that past efforts have failed when in fact no efforts have been made.