Reply to Shellenberger and Nordhaus
by Jim Manzi
The Conversation
August 21st, 2008
Michael Shellenberger and Ted Nordhaus (for convenience, "S&N") and I appear to agree on a lot that runs counter to environmental orthodoxy. At the level of practical policy recommendations, I believe that S&N:
- Oppose a cap-and-trade system or similar regulatory structure to force reduction of carbon dioxide emissions.
- Oppose a carbon tax imposed for this purpose (though they are open to it as one of many potential means of raising government revenue).
- Support a large government-funded research program as the primary method to help address the potential climate problems that may result from greenhouse gas emissions.
That is a huge amount of common ground.
As they say, our primary disagreement is about the scope of this research program. This disagreement is substantial, both quantitatively and qualitatively, as I will describe in this reply. Most of these disagreements, however, are amenable to rational discussion, but more importantly, to trial-and-error learning and practical compromise as we learn what works and what doesn't.
At the simplest level, S&N propose annual program spending on the order of $50 billion per year, and I propose spending on the order of $5 billion per year. The primary driver of this 10:1 difference is in the kinds of programs that we believe are the appropriate focus of the program.
In my essay I set forth a simple set of criteria for what should be included:
We should limit government investments to those topics that meet specific criteria. They should be related to detecting or ameliorating the effects of global warming, should serve a public rather than a private need, and should provide no obvious potential source of profit to investors if successful. Important examples include improved global climate prediction capability, visionary biotechnology to capture and recycle carbon dioxide emissions, or geo-engineering projects to change the albedo of the earth's surface or atmosphere.
I presume that S&N agree that such research should be aggressively pursued through government funding. So, our disagreement can be further narrowed to my argument about what should not be included in such a program:
On the other hand, most technologies that would contribute to the ongoing long-run transition of the economy away from fossil fuels, like more efficient fuel cells for autos or lower-cost solar power sources, need no government funding, since there is ample profit motive to develop them.
They appropriately ask: why not? In very short form, because political allocation of economic resources is almost never effective in overcoming with long-term challenges.
S&N say:
Non-incremental progress ("breakthroughs") and sharp price declines may occur with printed ("nano") solar panels, air (CO2) capture devices, and new battery technologies – though probably only if we subsidize their mass manufacture and deployment.
"[P]robably only if we subsidize their mass manufacture and deployment…" Why? The key issue, I believe, is the idea of subsidizing mass manufacture and deployment, beyond simply invention.
This distinction explains a lot about S&N's points of disagreement with my essay. S&N say that:
What Manzi doesn't mention is that the Pentagon's total R&D budget for 2008 was $78 billion, not DARPA's $3 billion.
But of course, the Department of Defense operates the United States military. To the extent that S&N argue that the U.S. government ought to operate large sections of the energy industry, then of course, total government-controlled technical spending would be much higher. By analogy, if the DOD operated all military contractors, and consolidated their budgets within the government, the DOD R&D spending would be yet enormously higher than it is today.
This is why the mass scale of spending on actual operation of scale energy-producing facilities is so important to the S&N plan. Inevitably, this requires a political body to begin allocating assets. Here is what S&N propose:
While a DARPA for energy R&D might be a good model, spending on deployment and infrastructure should be overseen by a diverse group of experts, perhaps modeled after the military base closings commission, whose recommendations could only receive an up or down vote from Congress (no amendments, no earmarks).
This is literal "rule by experts." Without wanting to re-argue the Socialist Calculation Debate in this forum, the central dispute between us is between markets and governments as directors of economic activity.
The economies of the developed world seem to be on a long-term glide path of de-carbonization. S&N believe that we can accelerate this trend by spending a lot of government money. Just because we want a specific kind of breakthrough (or more to the point, probably many smaller breakthroughs) doesn't mean we can set up a government department, fund it lavishly, and expect to get what we want. "Develop cleaner, cheaper energy" is kind of like "develop faster, cheaper computers." It requires complex coordination of many actors, responding to changing circumstances and trade-offs, and decades of effort. Markets did and do a much better job of this than government agencies, and they do so for almost every other comparable challenge. It seems to me that they are likely to do this for energy as well.
Now, in order to highlight what I see as the central issue, I have been discussing this at a level of abstraction that is almost cartoonish. The relationship between government spending on R&D, infrastructure, large-scale "moon landing" style projects, and subsequent technological and economic development is complex and, to put it mildly, not completely understood. While I have a strong, and I believe well-founded, predisposition against government direction of economic resources in non-emergency situations, I think that an almost technical dialogue could be very productive over time to consider various proposed projects on a case-by-case basis. The virtues of such an approach are that no one project would cause irrevocable commitment of massive resources, and society could learn on a trial-and-error basis at a relatively low cost which of these proposed types of investments seem to work.
