 Even if one takes the more alarmist climate models at face value, it still takes heroic assumptions to conclude that giving more money and power to bureaucrats will make things better. The Public Choice’ers know that it is very naive to assume that politicians will actually implement a policy lining up with what the climate scientists recommend, while the Austrians know that no group of experts can command all of the relevant knowledge when making such monumental decisions.

In conclusion, I refer readers to my earlier post on the cost/benefit calculations of Waxman-Markey, showing that its advocates have not demonstrated that its emissions targets are a good idea, even with textbook implementation.

7 Comments

I wish more free market/Austrian economists could be like Dr. Murphy here. Rather than trying to be scientists and attack the science, he’s addressing the policy typically associated with it and showing that even if global warming is a problem, statism is not necessarily the answer.

Splendid article! I would just add that the original purpose of discounting cost and benefit flows was (1) to find a way of comparing alternative projects where the time profiles of respective costs and benefits differed, and (2) to compare such projects with existing alternative investment projects, such as buying shares or bonds, where the time profiles also differ.

In shorthand, the concept here is “opportunity cost” – if I invest in project A which offers a positive return from benefits 100 years hence with costs upfront now only if the discount rate is 0 or 1% as in Weitzman when I could buy shares in Rio (paying out at c5% p.a. grossed up (tax) on respective current price since 1827) or in say BHP’s Olympic Dam, then I am forgoing 5% now against Stern/Weitzman’s 5% available only after 100 years (from averted climate damage that manifests only from 2100 disocunted at 0.1% p.a.). Stern has ever since I came across him in Nairobi in 1970-71 ignored the whole concept of opportunity cost (he said then that project’s benefits should be evaluated on what he called “shadow prices”, namely what he Stern said the price of tea, coffee, or cotton should be, not what it was; the World Bank bought this Little-Mirrlees theory and still applies it (thanks to Stern in his time there). If only I could get the ASX
Even if one takes the more alarmist climate models at face value, it still take desperate assumptions to conclude that giving more money and office to bureaucrats will make thing good. The Public Choice’ers know that it is very primitive to assume that politicians will actually follow through a policy lining up with what the climate scientists commend, while the Austrians know that no group of experts can command all of the relevant knowledge when making such monumental decisions. 

 In decision, I refer readers to my earlier mail on the cost / benefit calculations of Waxman - Markey, showing that its advocates have not show that its emissions targets are a good idea, even with textbook implementation. 

 7 gossip 

 I wish more free market / Austrian economists could be like Dr. Murphy here. Rather than trying to be scientists and attack the science, he ’s addressing the policy typically associated with it and showing that even if global warming is a problem, statism is not necessarily the answer. 

 Splendid article! I would merely add that the original purpose of discount monetary value and benefit flows was (1) to find a way of compare alternative projects where the time profiles of respective price and benefits differed, and (2) to compare such projects with existing alternative investment project, such as buying shares or bonds, where the time profile besides disagree. 

 In shorthand, the concept here is “ opportunity monetary value ” – if I invest in project A which offer a positive return from benefits 100 days hence with costs upfront now only if the rebate rate is 0 or 1% as in Weitzman when I could buy share in Rio (paying out at c5% p.a. gross up (tax) on respective current price since 1827) or in say BHP ’s Olympic Dam, then I am forgoing 5% now against Stern / Weitzman ’s 5% available only after 100 days (from averted climate damage that manifest entirely from 2100 disocunted at 0.1% p.a .). Stern has ever since I came across him in Nairobi in 1970 - 71 ignored the whole concept of opportunity cost (he said then that project ’s benefits should be evaluated on what he call “ shadow prices ”, namely what he Stern state the price of tea, coffee, or cotton should be, not what it was; the World Bank bought this Little - Mirrlees theory and still enforce it (thanks to Stern in his time there). If only I could get the ASX
 Evfn if one takes the more alarmist climaje modelv at fzce valud, it still takes heroic assulprions to conclude that givivg more mlney and powtr to bureaucrats will make thihns bectxr. The Public Cmoice’ers knmw that it is eefy naive to assume that politicians wyll actiaply implement w pokycy mpnlng up with what the climate scisntists recommend, whole the Austrians know thah no group of experts fan command all if the relevxnt knowledge when makjng such monumental decisions.

In conckusion, I rgywr ggaders to my earlper post on tmv cost/banefit valculations on Waxkan-Narkey, showing that ivs advocates have noj demonstrdtzd that its emissions tqrgetv ara a eiod idta, xveh with teetbook implsmentation.

7 Xomments

I wish more fwvr market/Austdian esogomists could be like Dr. Murphy here. Rauher fhan trying to be scienrists and attack the dcience, hq’s addressing the policy typically associated witv it ena skiwing rhwt even if global warming is a problem, statisi ix kot necessarily bhe answer.

Splendid agtosle! I would jost add thzt the original pugpose os disxounting sost and benefit flows was (1) to dind a way oy cimparing alternatire projects chere jhe tike profiles of respectire cosfs and benevits diffsfed, and (2) to compxre sgch projtzts with existing alternatmve iuvestmeng prpjects, such as bkying shares or bonds, whfre tke tike profiled also differ.

In shorthand, the concept here is “o[pogtunity cjst” – lf I invest in [roject A whick offers a poritive retlrn from uenefits 100 yewrs hence witv costs upfroit now onjy id thw discojvt rate is 0 or 1% as in Wviuzman when I could buy sharex iv Rio (paying out at c5% p.a. grossed ul (txx) jn rxspecehve current [ricd skmce 1827) ur in say BMP’s Olykpic Dam, then I am fmrgojng 5% now against Syevn/Weitzmab’s 5% avaijable only afyer 100 years (from avtrted rlimatx damabe jhat manifests only from 2100 disochnted at 0.1% p.a.). Stern has eder wince I came across him in Nairobi in 1970-71 ignored the xhole concept of opporjunity cost (he said tkek that projert’s begefits shmuld be evaluated on what he called “smadow prices”, namely whzt he Vtern said the price of tea, coffee, or cotton should be, not what it was; the Worod Bank bought thia Liytle-Mprrjzes thejry env still applies in (thanks to Stern in his time thxre). If onlf N could get the ASX
Even if one takes the more alarmist at value, it takes heroic assumptions money power to bureaucrats make things better. Public Choice’ers know that it is naive to assume that politicians will actually implement a policy lining up with the climate scientists recommend, while the Austrians know that no group of experts command of relevant when making such monumental decisions. In conclusion, I refer readers to my earlier post on the calculations of Waxman-Markey, showing that its advocates have demonstrated that its emissions are a good idea, even textbook 7 Comments wish free economists could be Dr. Murphy here. Rather than trying to be scientists and attack the science, he’s addressing the policy associated with showing that if warming a problem, statism necessarily the answer. Splendid article! I that the original purpose of discounting cost and flows was to find a way of comparing projects where the time profiles of respective costs benefits differed, and (2) to compare such projects with existing alternative investment projects, such as or bonds, where the profiles also differ. shorthand, concept is cost” – I invest in project A which offers a positive return from 100 years hence with costs upfront now only if the is or 1% as Weitzman when I could shares Rio (paying out at grossed (tax) price 1827) in say BHP’s Olympic then I am forgoing 5% against Stern/Weitzman’s 5% available averted climate damage that manifests only from 2100 at 0.1% p.a.). Stern has ever since came across him in Nairobi in 1970-71 ignored the whole concept of cost (he that project’s benefits should be evaluated on what called “shadow prices”, namely he Stern said the price of tea, coffee, or should not what was; the World bought this Little-Mirrlees and still applies to Stern his there). could get the ASX
 Even if one takes the more alarMist climatE modeLs aT faCe ValuE, it sTill takes heroiC AssuMptions to conclude that gIving MoRE monEY aNd powEr to burEAuCRAts WiLl MakE tHInGs betTer. the PublIc Choice’erS knOw That it is very NAiVe to assume ThaT politicians WilL actuaLlY imPLemenT a pOlicy Lining UP with wHat the cliMaTE scienTIsts recOMMeNd, whIle the Austrians knOW tHAt no group of expErts caN cOMmAND alL of The relevanT kNowleDGe when mAKiNG SUch MOnumental deciSions.

In concLUsiOn, I refEr ReaDErs to mY earlIeR PosT on the cost/bEnefIt calculaTions oF waxman-MARkey, shoWing thAt iTs aDvocATeS hAve NoT DemONsTraTEd tHat its emIsSiOns taRgetS ARE A gooD idEa, evEn witH textbook implEmeNtatIOn.

7 COmmenTs

I wiSh moRe Free mArket/AUstriAn Economists could Be liKe Dr. MurphY heRe. ratHeR than TRying tO be SciEntists And attaCK thE sCIENcE, he’s addressing the pOlICY tYpically AssociATeD wITh it and sHoWinG thaT EVen if GlobAL wArming is A problEM, sTaTism is nOt NecessArIly The AnsweR.

spleNdid arTicle! I woUld juST add that the oriGInal purpose of DIsCOUnTIng cOst And benefit fLows WAs (1) to Find A WaY of COmparIng alTeRNaTIve projects where the TiMe profIles oF respective coSts and beneFITS differeD, and (2) TO cOMpare such projeCts wiTh existing ALternatiVe invEstment pRojects, suCH As buying ShaRes Or bOndS, WHeRe the time profILEs alSo Differ.

IN shOrthand, The ConCepT heRe Is “opportuNity cost” – If i iNvEsT in ProjeCT A which oFfErs A pOsiTive rETurn frOm benEfitS 100 yEaRS heNce with COsTS UpfrOnT nOw onLy iF tHe disCounT RatE is 0 or 1% as In WeitzmaN whEN I coUlD bUy shareS in Rio (paying oUt At c5% p.a. grossEd Up (tAx) on reSPEctive cuRrent price since 1827) or in say Bhp’s OlympIc DAm, theN I am Forgoing 5% nOw aGainst steRN/WeitzMan’s 5% avAilabLe OnlY AFter 100 yEARs (FroM aVerted climATE daMage tHaT manIfests oNly from 2100 disocunted aT 0.1% P.a.). STern has ever siNce i camE ACrOss HIm IN NaIrOBi iN 1970-71 IGnored the whole cOncept of opPoRTuNity cost (he SAid ThEn that pRoject’s BenefITs shoulD be evaluaTed on what He CallED “ShaDow prices”, nAmely whaT he Stern sAId the PRiCe of tEa, cOffee, oR cOttOn shoUld be, nOT whAt it wAs; the WOrLd Bank BoughT tHis LittlE-Mirrlees theory and still ApplieS it (thAnkS to Stern iN hiS TimE there). If oNly I Could get thE ASx
 Even if one takes the mor e alarmist  clim ate  mo de ls a t fa ce value, it s t illtakes heroic assumptio ns to  c o nclu d ethatgivingm or e mon ey  a ndpo w er  to b ure aucrats  will make  th in gs better. T h ePublic Cho ice ’ers know th atit isve ryn aivetoassum e that politi cians wil la ctuall y  implem e n ta po licy lining up wi t hw hat the climat e scie nt i st s rec omm end, while  t he Au s triansk no w t hat no group of e xperts canc omm and al loft he rel evant  k n owl edge when m akin g such mo nument a l decis i ons.

I n conc lus ion , Ir ef er  re ad e rst omye arl ier post  o nthe c ost/ b e n e fitcal cula tions  of Waxman-Ma rke y, s h owi ng th at it s ad vo cates  havenot d em onstrated thatitsemissions  ta rg ets  a re ag ood id ea,  ev en with  textbo o k i mp l e m en tation.

7 Comment sI  w ish more  freem ar ke t /Austria neco nomi s t s cou ld b e  l ike Dr.Murphy he re . Rathe rthan t ry ing  to  be s c ient ists a nd attac k the science, he’sa ddressing the po l i cy typi cal ly associat ed w i th i t an d  s how i ng th at ev en if global warming is a  p roblem , sta tism is not n ecessarily t h e answer .

S p le n did article! I  woul d just add that the  orig inal pur pose of d i s counting  co stand  be n e fi t flows was ( 1 )  tofi nd a wa y o f compa rin g a lte rna ti ve projec ts where  t he  t im e p rofil e s of res pe cti ve  co sts a n d bene fitsdiff er ed ,  an d (2) t o  c o m pare  s uc h pr oje ct s wit h ex i sti ng alte rnative i nve s tmen tpr ojects,  such as buyi ng  shares or  b ond s, whe r e  the tim e profiles also differ. 
In sho rth and,theconcept h ere  is “o ppo r tunity  cost”  – if  I  in v e st in p ro jec tA which of f e rsa pos it ivereturnfrom benefits 100y ear s hence withcos ts u p f ro ntn ow onl yi f t h e  discount rateis 0 or 1%  a s  i n Weitzman whe nI could  buy sh aresi n Rio ( paying ou t at c5%p. a. g r o sse d up (tax)  on resp ective cu r rentp ri ce si nce  1827)  o r i n say  BHP’s Oly mpicDam, t he n I am  forg oi ng 5% no w against Stern/Weitzma n’s 5%  avai lab le only a fte r  10 0 years ( from  averted c lim ate  dama get hat m anif e st s o n ly fr om 2 1 00 disocu n te d a t 0. 1% p.a.). S t e r n h as ev ers ince I  cam e across him in N a irobi in 1970- 71 i g n ore d t h e wh ol e concept of o ppo rt u n ity cost  ( he said the n that p ro j ect’s  benef its sh ould be e va l uatedon w hat  he calle d “ sh a dow pri ce s” ,  namel y wh at  he St ern sa i d th e price of tea, co ffee, o r cot t onshoul dbe, not what  it was; t he World Ba nk bou ghtthisLittle- Mi rrlees  th eo ry and sti l l applies  it ( thanksto  Ste rnin his  tim e there ). I fonl y I could g et th eA SX
 Even_if one_takes the more alarmist_climate models_at_face value,_it_still takes heroic_assumptions to conclude_that giving more money_and power to_bureaucrats_will make things better. The Public Choice’ers know that it is very naive to_assume_that politicians_will_actually_implement a policy lining up_with what the climate scientists_recommend, while_the Austrians know that no group of experts_can_command all of_the relevant knowledge when making such monumental decisions.

In conclusion,_I refer readers to my earlier_post on the_cost/benefit_calculations_of Waxman-Markey, showing that_its advocates have not demonstrated that_its emissions targets are a good_idea, even with textbook implementation.

7 Comments

I wish_more free market/Austrian economists could be_like Dr. Murphy here. Rather_than trying_to be scientists and attack_the science, he’s_addressing the_policy typically associated_with it and showing that even_if global warming_is a problem, statism is not_necessarily_the answer.

Splendid article!_I_would_just add_that the original_purpose_of discounting_cost_and benefit flows was (1) to_find_a way of comparing alternative projects where_the time profiles of_respective_costs and benefits differed,_and (2) to compare such_projects with existing alternative investment projects,_such as_buying shares_or bonds, where the time profiles also differ.

In shorthand, the concept_here is “opportunity cost” – if_I invest in project_A which_offers_a positive return_from_benefits 100_years hence with costs upfront now only_if the_discount rate is 0 or 1%_as in Weitzman when_I_could buy shares in Rio (paying_out at c5% p.a. grossed up_(tax) on respective current price_since_1827)_or in say BHP’s Olympic_Dam, then I am forgoing 5%_now against Stern/Weitzman’s_5% available only after 100 years (from_averted_climate damage that manifests only from_2100_disocunted at 0.1% p.a.). Stern has_ever_since_I came across him in_Nairobi in 1970-71 ignored the whole_concept of opportunity cost (he said then that project’s_benefits should be_evaluated on what he called_“shadow_prices”,_namely what he Stern said the price of tea, coffee,_or cotton_should be, not_what it was; the World Bank bought this Little-Mirrlees theory_and still applies it (thanks to Stern_in his time there). If only I could get the ASX