Monday, October 30, 2006

Starting The World's Next Depression

A Brit economist says human-induced global warming is a scientific fact, and both Brit political parties plan to fix the problem by - shock! - raising taxes. They're all talking nonsense, and they'll just tank the Brit economy. More seriously a Dem Congress will follow the same route, taking down the entire world.

The set-up (my ellipsis):

The world cannot afford to wait before tackling climate change, Tony Blair said today at the launch of a report preparing the way for new green taxes.

Tony Blair said the Stern Review showed the scientific evidence of global warming was “overwhelming” and its consequences for the planet “disastrous”.

Gordon Brown, the Chancellor, announcing he had recruited the former US Vice President Al Gore as an environment adviser, promised the UK would lead the international response to tackle climate change.

But he warned that consumers would have to play their part, saying there would have to be a “cultural shift” in people’s lifestyles - and that would include new environmental taxes.

The opposition Tories are equally obsessed with global warming taxes - their leader bikes to Parliament with his Lexus following with his paperwork (Greens haven't discovered laptops).

The much lamented Diplomad observed "Human-induced global warming is bullshit, and you know it". Here's why:

1. The Professor of Atmospheric Physics at MIT (a physicist like me, but rather more distinguished) says of the new Brit adviser:
“A general characteristic of Mr. Gore's approach is to assiduously ignore the fact that the earth and its climate are dynamic; they are always changing even without any external forcing. To treat all change as something to fear is bad enough; to do so in order to exploit that fear is much worse.”
Our inability to model atmospheric complexity is what makes long range weather forecasting so useless.

2. The global warming models fail the basic sanity check - they don't predict history. If you run them for the period 1880-2000, they predict an increase of 1.8 - 2.4 degrees centigrade, whereas the actual increase was 0.4 - 0.8 degrees. And there are potential natural causes for this actual warming.

3. Taxes harm economies by diverting expenditure from the efficient mechanism of people spending their own cash on their own needs to the grossly inefficient mechanism of governments spending other peoples' cash on other peoples' needs. That's why the Brit economy took off when Maggie Thatcher dumped its socialist tax regime, which had marginal rates up to 98%.

Nevertheless, the decline of the Brit economy under "green" taxes won't do a lot of harm to the rest of the world - its mainspring is finance, and that can easily migrate to NYC or Frankfurt. The big risk is the US following the same model, as this Brit journo hopes it will under a Dem Congress (my emphasis):
Turning to particular industries and sectors, fears about a Democratic victory also seem overblown...

The one important exception may be oil. An energy tax, offset by increased benefits and tax credits for low-income families, appears to be an idea whose time has come.

Even those Americans who care little about climate change now see the concentration of energy resources in potentially hostile Islamic countries as one of the greatest threats to their long-term security.

But America’s willingness to embrace European-style energy taxation would be very bullish for most non-oil assets around the world — and also probably for the dollar.

Non-oil assets around the world would benefit because any serious prospect of the sort of vast reduction in American oil consumption that would result from an energy or carbon tax, would dramatically shift the balance of global supply and demand.

Of course if the US wants to switch to nuke power (as I believe it should), it just has to ease the regulatory burden - the new plants won't cost taxpayers a cent.

But if there really is a "vast reduction in American oil consumption" before alternatives are available, the US economy will tank. And since the US props up the rest of the world with its trade deficits, the rest of the world will tank too.

This global depression will dwarf the dishonestly projected impact of global warming.