Economics – Page 135 – a sibilant intake of breath

Ethical consumerism: worthwhile or harmful?

In the December 9th issue of The Economist, which I am just starting today, they come out against organic food, Fair Trade, and the idea that buying locally grown food is superior to relying on big retailers and large commercial farms (Leader and article). Organic food means producing lower yields for the same area of land: a big problem when you have a growing population and a desire to preserve wilderness. Fair Trade keeps farmers in poverty by encouraging farmers to keep growing commodities with volatile prices and low margins; moreover, most of the premium consumers pay goes to the retailer, rather than the farmer. As for local food, they say that large scale farming and food retailing produce food using less energy and resources (sheep are cheaper to farm in New Zealand and ship to the UK than to farm here). The solutions to problems like poverty and climate change, therefore, lie in carbon taxes, reform of agricultural trade policy, and the like.

Fair trade has always been a somewhat problematic concept, in my eyes. The whole basis for the legitimacy of exchange is in the process: the voluntary nature of the agreement means that both people who engage in it must perceive themselves to benefit. Now, there can be problems with this:

The people may be wrong about what is in their interests
Third parties may be affected
The choice to trade may not be voluntary

All of these are real problems in many economic circumstances, but it is not clear why paying more for a label alleviates any of them. If we abandon the idea that the legitimacy of exchange is confirmed through its voluntarism, then we are left with the task of developing a comprehensive framework based on a teleological conception of justice (what people end up with, as opposed to how they get it). Even if that is desirable, achieving it is not simply a matter of paying a few more dollars a week for coffee or bananas.

As for the problems with local and organic food, the issues there are primarily empirical and thus hard for me to evaluate. If the price of carbon emissions was included in that of food (and all other products), I would see little problem in eating tomatoes from Guatemala or apples from New Zealand. Similar criticisms are leveled in Michael F. Maniates’ interesting article Individualization: Plant a Tree, Buy a Bike, Save the World?. Maniates’ major point is that you will never get anywhere with a few token individual gestures. What is necessary is the widespread alteration of the incentives presented to individuals. Otherwise, you have a few people who salve their consciences by walking to work and buying from a farmers’ market, while not actually doing anything to address the problems with which they are supposedly concerned.

While the position taken by both The Economist and Maniates may overstate the point, both are worth reading for those who have accepted uncritically the idea that important change can be brought about through such ethical purchasing.

PS. Unfortunately, Oxford doesn’t have full text access to the journal Global Environmental Politics. If someone at UBC or another school could email me the PDF, it will save me a trip to the library and some photocopying costs, not to mention the integrity of the spine of their August 2001 issue. Here is a link to the page on their site for this article and another to a Google Scholar search that has it as the top hit.

[Update: 1:10am] A friend has sent me a much appreciated copy of the above requested PDF.

Live-blogging Keohane

Anyone interested in reading about Robert Keohane’s presentation to the Global Economic Governance Seminar can do so on my wiki. There is still nearly an hour in the session, so if someone posts a clever question as a comment, I will try to ask it. I doubt anyone will do so in time, but it would be a neat demonstration of the emerging capabilities of internet technology in education.

Since this is a publicly held lecture, I don’t see any reason whatsoever for which the notes should not be available. Those who don’t know who Robert Keohane is may want to have a look at the Wikipedia entry on him.

[Update: 7:30pm] Robert Keohane’s second presentation, given at Nuffield on anti-Americanism, was well argued but not too far off the conventional wisdom. I am here taking “the conventional wisdom” to be that in a survey on Anti-Americanism that I am almost sure ran in The Economist during the last couple of years.

Basically: it does exist, more so in the Middle East than anywhere else. The Iraq war has exacerbated it almost everywhere, but the biggest turn for the worse has been in Europe. The policy impact of Anti-Americanism is not very clear. Finally, lots of what would be taken as a legitimate political stance if expressed by an American at home is taken as Anti-Americanism elsewhere.

Keohane distinguished four sorts of Anti-Americanism, three of which have been expressed on this blog. The first was the kind grounded in the belief that the United States is not living up to its own values: what he called Liberal Anti-Americanism. Guantanamo, and everything that word conjures up, gives you the idea. The second is social Anti-Americanism: for instance, objections to the death penalty of the absence of state funded health care. The third is Anti-Americanism based on fear of encroachment into the domestic jurisdiction of your state, what he called the state sovereignty variety. The last was radical Anti-Americanism, which I would suggest is distinguished more by the language used to express it, the degree to which the positions taken are extreme, and the kind of actions justified using it than by the kind of analysis that underscores the rational components thereof.

Paul Martin on economic governance

Former Canadian Prime Minister Paul Martin’s talk was candid, informative and engaging. At a Global Economic Governance Program seminar, he covered a very diverse collection of issues: from China’s hunger for natural resources to the regulation of multinational corporations. I have never seen the room so packed, and the questions were excellent. He managed to get some good laughs, as well. In response to my question about climate change, he said, in part:

“Climate change has long since been recognized as caused by human activity principally.

The net effect is going to be devastating.

Prince Edward Island will disappear; Toronto won’t. That’s a disaster on both sides

That would make a great headline back home, wouldn’t it?”

Generally, he was very open, but there were certainly a few notable questions ducked. He declined to endorse a candidate for the Liberal leadership race when asked, for instance. People should feel free to have a look at my transcript, in which I have tried to quote directly wherever I could type fast enough.

PS. As today’s photo demonstrates, there is a downside to having a camera that takes 2-3 seconds to charge and fire its flash.

Development, equity, and the WTO

My opinion of the World Trade Organization has probably shifted more than that for any other international institution, during the course of university study. The conception of the WTO as some sort of monolithic and powerful body, forcing countries to do things against their will does not seem like an accurate one. Where such pressures do exist, they are more parallel to the WTO (caused and driven by the preferences of member states) than self-arising from within. The inability of the WTO to enforce its rulings on trade – save through the highly problematic vehicle of allowing the country sinned against to raise its own tariffs – seems to underscore how weak the organization really is.

Naturally, all of the above assumes that free trade is generally a good thing. While there are undeniably problems – some of which can be well expressed using an economic framework of analysis – there are myriad advantages to global economic integration. Globalization needs to be modified so as to operate better as a process that aids in poverty reduction; likewise, it needs to become more environmentally balanced. With the Doha Round utterly stalled it isn’t clear how the WTO could contribute to either aim, a reasonable case can be made that it is at least not worsening either. A rules-based system like the WTO seems to hold out at least the possibility of a more just relationship between rich and powerful states and those that are poor. While the system is highly imperfect in practice, it does seem to have a small net positive effect.

All that said, since I need to argue that the WTO is a bad thing for developing countries this Thursday, I should start looking at the most eloquent and well defended expressions of the the position.

People interested in economic issues should have a look at Trade Diversion: a blog run by Jonathan Dingel, an M.Phil student in economics.

Conservatism and the environment

In the northern lower reading room of the Bodeleian, I read a really interesting chapter on ecology and conservatism by Roger Scruton, from the University of Buckingham.¹ He makes a surprisingly solid argument that a greening of conservatism would be more of a return to its roots than a departure into uncertain territory. He evokes the position of Burke that all living people are involved in a trusteeship involving both the living and the dead. The moral onus is to maintain, resist damage, and pass along that which has been inherited.

The problems with this position are twofold, and both problems arise from the parochialism of conservative environmentalism. I have always admired the sensible conservative caution about grand projects and the building of utopias. That said, encouraging enclaves to behave in environmentally responsible ways does nothing to protect those within from their neighbours (or those across the world) who do not behave similarly. When the greatest environmental threat in the world (climate change) arises from collective economic activity, a love of one’s home and country, and the fervent desire to protect both, will come to nothing without international cooperation and the changing of behaviour, using some combination of consent and coercion.

The second problem is that of material equality. Protection of what you have inherited for those who are to follow may be a noble individual pursuit (think of the shame attached to those who squander fortunes and wreck empires), but it is not a path towards greater global justice. Now, greater global justice may be exactly the kind of Utopian project that conservatives are smart to be wary about. That said, there can be moral impulses strong enough to make us embark upon difficult and uncertain projects, simply because it would be profoundly unethical to behave otherwise. When it comes to extreme poverty and the deprivation and danger under which so much of the world’s population lives, I think those impulses are justification enough.

Strategically, it seems essential to foster an emergence of green conservatism in the political mainstream. We cannot oscillate between relatively responsible governments and those that act as wreckers. Moreover, once both sides of the mainstream have accepted how vital the environment is, and the sacrifices that must be made to protect it, there is a better chance that the debate and policy can move forward. If one group is forging ahead with more far-thinking ideas, they risk excessive electoral punishment. If, however, the thinking of both politicians and the population as a whole evolves towards a more serious way of thinking about environmental management, there is a much greater chance that the push will be sustained and effective.

[1] Scruton, Roger. “Conservatism.” in Dobson, Andrew and Robyn Eckersley. “Political Theory and the Ecological Challenge.” Cambridge: Cambridge University Press. 2006.

Experts: scientists and economists

Here’s a little bit of irony:

According to BBC business correspondent Hugh Pym, the report will carry weight because Sir Nicholas, a former World Bank economist, is seen as a neutral figure.

Unlike earlier reports, his conclusions are likely to be seen as objective and based on cold, hard economic fact, our correspondent said.

The idea that economists are more objective than scientists is a very difficult one for me to swallow. While scientific theories are pretty much all testable on the basis of observations, economic theories are much more abstract. Indeed, when people have actually gone and empirically examined economic theories, they have often been found to be lacking.

Part of the problem may be the insistence of media sources in finding the 0.5% of scientists who hold the opposite view from the other 99.5%. While balance is certainly important in reporting, ignoring relative weights of opinion is misleading. In a study published in Science, Naomi Oreskes from the University of California, San Diego examined 10% of all peer-reviewed scientific articles on climate change from the previous ten years (n=928).¹ In that set, three quarters discussed the causes of climate change. Among those, all of them agreed that human-induced CO2 emissions are the prime culprit. 53% of 636 articles in the mainstream press, from the same period, expressed doubts about the antropogenic nature of climate change.

I suppose this says something about the relative levels of trust assigned to different expert groups. Economists study money, so they naturally must know what they are talking about.

[Update: 25 February 2007] I recently saw Nicholas Stern speak about his report. My entry about it contains a link to detailed notes on the wiki.

[1] Oreskes, Naomi. “Beyond the Ivory Tower: The Scientific Consensus on Climate Change.” Science 3 December 2004: Vol. 306. no. 5702, p. 1686. (Oxford full text / Google Scholar)

Inequality a problem in itself?

A serious moral question arose during today’s seminar: Is inequality in wealth a problem, in and of itself?

Specifically, if there are two individuals or states where one is poor and one is rich, and both are getting wealthier but the richer state is getting even richer faster, is this a problem?

Within the question, there are two sub-cases. In the first of those, the growth in the rich state is completely separate from that of the poor state. Imagine they are completely disconnected and have no engagement with one another. Does the fact that the GDP of the rich state has risen by 50% and that of the poor state by only 5% matter, in a moral sense?

The other case is that the 50% growth in the rich state is somehow causally tied to the 5% growth in the poor state. Specifically, the latter would be higher if the former was lower. Now, that is entirely possible, but this is a different moral category. In the first case, one would have to appeal to general moral cosmopolitanism. In the latter case, we can refer to a moral tradition akin to that of the law of tort: you have harmed me, and you owe me something. This does not speak to the fundamentally immorality of inequality.

All contributions to this discussion are encouraged.

[Update: 7:00pm] To be clear, I do not dispute the fact that it is virtuous for the rich to help the poor. I am a firm believer in the moral value of philanthropy. The question above is about obligation, not charity.

Morality of climate inaction

Happy Birthday Sasha W

One of the most interesting statements made at the climate change conference was Henry Shue’s moral categorization for inaction on climate change: he called it ‘the infliction of harm upon the defenceless.’ This, he said, is true independently from whether abrupt and harmful climate change scenarios arise. Given what we know, it is akin to forcing someone to play Russian Roulette: even if there is no bullet in the chamber, when the hammer falls, the imposition of the risk is immoral.

The idea of future generations being in a position of helplessness, relative to us, had not occurred to me before. Historical progress has generally involved increases in human capability. I suppose it is only now that we have the widescale ability to threaten vital biological systems that we stand to undermine whatever new capabilities our forebears will have, both technical and economic, by presenting problems insoluble even with future technology.

Scenarios like the disruption of the Thermohaline circulation circulation of the liberation of methane hydrate from the ocean floors definitely seem insoluble, even given vastly increased capability. Perhaps such arguments can help to generate the impetus in the minds of people and policymakers that will be required to move forward with GHG controls.

Back to the moon? But why?

Apparently, Lockheed-Martin got the contract to serve as prime contractor for a return to the moon, and possibly further travel from there to Mars. Now, when I first heard the ‘back to the moon’ proposal, I assumed it was electoral fluff. How can an agency that decided to scrap such a useful piece of scientific equipment as the Hubble Space Telescope possibly be considering the scientifically pointless mission of putting human beings back on the moon?

I believe that humanity will eventually expand outwards into space. It is advisable due to the small but catastrophic risk of asteroid or comet impact, as well as generally in keeping with an agenda of exploration that I find personally inspiring. The first moon landings were an astonishing demonstration of human ingenuity and American technical and economic might. With present technology, manned spaceflight is a symbolic and political endeavour, not a scientific one. That said, returning to the moon serves no purpose, scientific or political. If we could do it in the 1960s, we can do it again now. Even if you accept the argument that a moon base is necessary for a manned mission to Mars, the enormous question remains of why we should take on such an expedition at this time, with this technology, and the present financial circumstances of the United States.

When it comes to space science, people are very expensive and delicate instruments. Robots might not always work (note all the failed Mars landers), but they don’t require all the food, air, space, and temperature and acceleration control that people do. The things we hope to learn about our solar system and the space beyond are almost certainly better investigated by robots, at this time. And the moon is hardly a profitable place to go looking for new scientific insights. A robot sent somewhere interesting – like Europa – would almost certainly advance science more than sending scores of people to that great airless ball that lights up our night sky and causes our tides.

This plan is especially absurd given the magnitude of public debt in the United States right now. The existing level of federal debt is more than $8.5 trillion, more than $28,000 per person, and the federal budget is sharply in deficit. If we could choose to send people to the moon instead of developing one of the two hugely expensive fighter jets now being rolled out (the F-22 and the Joint Strike Fighter, a $256 billion program), I would be all for it. At least, going back to the moon would do relatively little harm (wasted resources aside). Of course, no such trade-off is being offered. This would be spending over and above the sums already being expended on pricey little projects like the JSF, the DDX destroyer (about $4 billion per ship), and the war in Iraq (more than $300 billion, so far). The comparison to military hardware is a sensible one, since manned spaceflight is, to a large extent, just another massive subsidy to the military aerospace industry. Hopefully, the passing of the mid-term elections will put this white elephant to sleep again.

Sulfate injection to stop global warming?

Apparently, Paul Crutzen, an environmental scientist who shared a Nobel Prize in 1995 for his work on the role of CFCs in ozone layer depletion, thinks we should correct for global warming by injecting two million tonnes per year of sulphate particles into the upper atmosphere. According to Wikipedia: “sulfates occur as microscopic particles (aerosols) resulting from fossil fuel and biomass combustion. They increase the acidity of the atmosphere and form acid rain.” He predicts that the process of injecting them into the upper atmosphere using balloons or artillery would cost between $25 and $50 billion a year, but would save more by mitigating the effects of global warming.

While I am no environmental scientist, what strikes me as most interesting about this is the ‘technical fix’ mindset that it embodies: a bit like those who decided to stabilize dune formation on parts of the Oregon coast by importing Spanish beach grass, or those who have sought to kill off one accidentally imported pest with an intentionally imported predator. Often, such schemes don’t work at all. When they do, they risk working much too well. Thanks to Spanish beach grass, the Oregon dunes will be a thing of the past in a few decades. The point is simply that, at a stage when we really don’t know the consequences of climate change or their magnitude, it seems awfully bold to predict that such a scheme will both work and do more good than harm.

As is so often the case, the most trenchant criticism of such schemes was expressed humorously on The Simpsons:

SKINNER: Well, I was wrong. The lizards are a godsend.

LISA: But isn’t that a bit short-sighted? What happens when we’re overrun by lizards?

SKINNER: No problem. We simply unleash wave after wave of Chinese needle snakes. They’ll wipe out the lizards.

LISA: But aren’t the snakes even worse?

SKINNER: Yes, but we’re prepared for that. We’ve lined up a fabulous type of gorilla that thrives on snake meat.

LISA: But then we’re stuck with gorillas!

SKINNER: No, that’s the beautiful part. When wintertime rolls around, the gorillas simply freeze to death.

The comparison between atmospheric science and ecology is less dubious than one might think. Both systems are complex and dynamic – they feed back upon themselves in ways which are both powerful and difficult to predict. Furthermore, both atmospheric and ecological systems both affect and are affected by other complex systems with which they are integrated. Consider, for instance, how the construction of the Aswan High Dam (the product of political and economic changes, above all) altered the salinity in the eastern Mediterranean, allowing for the migration of species from the Red Sea.

What would the consequences of blasting artillery shells full of sulfates into the upper atmosphere? Far be it for me to speculate. The intentional modification of atmospheric chemistry and physics is something we have never done as a species, though we have done a lot of unintentional tinkering. What I would venture is that it is likely to have unpredictable effects and that it is a particularly curious way of trying to deal with the problem of global warming.

George Monbiot, who I met at a short conference at the Environmental Change Centre, has his own objections.