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Current Global Warming Alarmism and the Mont Pelerin Society’s Long Term Agenda

English Pages, 8. 9. 2008

(1) I think I have to start with expressing my deep and ever-deeper conviction that the recently created panic as regards dramatic, in the past allegedly unknown global climate changes and their supposedly catastrophic consequences for the future of human civilization must not remain without a resolute answer of the – until now – more or less silent majority of rationally thinking people, especially classical liberals, libertarians and other freedom loving men and women. Not everyone is silent but the current dominance of climate alarmism practically in the whole world can’t be disputed.

Many of us know (or at least should know) that this panic doesn’t have a solid ground, that it has not been set off by rational arguments, that it demonstrates an apparent disregard of the past experience of mankind, and that its substance is not science. It is based, on the contrary, on the abuse of science by a non-liberal, extremely authoritarian, freedom and prosperity despising (and destroying) ideology which I, together with many others, call environmentalism. (2)

Our reaction to that should be clear and uncompromising because we know – and I believe this is the basis of knowledge and of comparative advantage of this group of people – something about the fragility and vulnerability of human society and about the dangers coming from its orchestration and manipulation from above. We can also refer to the existing and undisputable evidence that even in recorded history the current degree of warming of the Earth is not unprecedented. We know as well that day by day more and more climate scientists speak out and challenge global warming alarmism on the basis that the Earth’s climate is much less sensitive to carbon dioxide than the IPCC and other climate campaigners assume. (3)

We should try to explain to everyone who is willing to listen that the global warming story is not an issue belonging to the field of natural sciences only or mostly. It is a Mont Pelerin Society topic par excellence and we should, therefore, take it as an important part of our agenda. We should explain that the current world-wide dispute is not about temperature or C02. It is another variant of the old, well-known debate: freedom and free markets vs. dirigism, political control and regulation, or in other words, spontaneous evolution vs. the masterminding of human activity from above. It is again the old Misesian and Hayekian dilemma asking what is and what should be dominant: human action or human design.

For us these are traditional topics. Some of the arguments used now may be slightly different than in the past but the ambitions of the anointed (to use the apt Thomas Sowell’s term) to restrict freedom and stop human prosperity are here again. In the past, the market was undermined mostly by means of socialist arguments with slogans like: “stop the immiseration of the masses”. Now, the attack is led under a more seductive slogan: stop the immiseration (or perhaps destruction) of the Planet.

This shift seems to me dangerous. The ambitions look more noble, more attractive and more appealing; they are also cleverly and very efficiently oriented towards the far away future and thus practically “immunized” from reality, from existing evidence, from available observations, and from standard testability. They are almost religious. (4)

For all these reasons, these ambitions are not only accepted but loved by the politicians, the media and all their fellow-travelers among public intellectuals. For the same reasons, I consider environmentalism and its currently strongest version – climate alarmism – to be, at the beginning of the 21st century, the most effective and, therefore, the most dangerous vehicle for advocating, drafting and implementing large scale government intervention and for an unprecedented suppression of human freedom.

Feeling very strongly about this danger and trying to oppose it was the main reason for my writing the book “Blue Planet in Green Shackles” (5) with its – hopefully sufficiently explicit – subtitle “What is endangered? Climate or Freedom?”. It has also been the driving force behind my active involvement in the current Climate Change Debate and behind my being the only head of state who openly and explicitly challenged the undergoing global warming hysteria at the UN Climate Change Conference in New York City in September 2007. (6)

I am frustrated by the fact that many people, including some leading politicians, who privately express similar views, are more or less publicly silent. Every day one sees an article about the movements of tens of a degree of Celsius or Fahrenheit, pictures showing the retreat of glaciers, data about the increase of sea level, about the changes in the concentration of CO2 in the atmosphere, but this is not the issue.

We keep hearing one-sided propaganda regarding the greenhouse hypothesis (which is something else than the greenhouse effect), but do not hear serious economic arguments about the inexhaustibility of resources, including energy resources (on condition they are rationally used, which means with the help of undistorted prices and well-defined property rights). We do not see studies about the costs and benefits of currently proposed measures and policies (the conclusions of the recent G8 summit in Japan to decrease the carbon dioxide emissions by 50% worldwide in the next 40 years reminds me of reading Leonid Brezhnev’s 5-year plans some 30 years ago). We do not see well-articulated and to non-specialists understandable articles about the very complicated relationship between different time horizons (discussed in the economic theory by means of discounting). We still look for elementary economic arguments about the rational risk aversion (which would help us to reject the fundamentalist precautionary principle, used by the environmentalists) and I personally look for the reemergence of standard arguments about the role of the market, prices and property rights on the one hand and about the tragic consequences of the inevitable government failure connected with the ambitions to control global climate on the other.

I will shortly touch upon several of these topics. It is necessary to start with the issue of resources because it has always been at the centre of the debate, starting with Thomas Malthus and culminating with the Club of Rome. During the last two centuries, the economists have brought in many easily understandable and this misconception totally devastating counter-arguments but they have not won the public debate. The majority of the people in the world sees that the Earth is not endless and – as a consequence – foresees the imminent exhaustion of scarce resources. We are able to distinguish scarcity and exhaustibility, they are not.

Their views are based on the misunderstanding of two elementary, but crucial things. They do not see that there are no resources per se, but only the supply of and the demand for resources, and in addition to it, they tend to confuse the known and unknown deposits of minerals, fuels and other “natural resources” with resources meaningful in the economic sense, resources that human beings are able to make use of – given existing prices and technologies. They do not believe us that the exhaustion of resources does not take place, at least as a large-scale, frequent and mass phenomenon and that the known deposits of economically interesting “resources” have been in the past, even in the recent past, continuously growing, not decreasing. The greater the demand for (and use of) resources is, the more of resources is discovered (and supplied).

This counterintuitive argument is absolutely trivial, apparent and self-evident for us. In the current world-wide confusion this is, however, a minority view which is laughed at and ridiculed, without being taken seriously. We need more books like Julian Simon’s The Ultimate Resource, Indur M. Goklany’s The Improving State of the World, Bjørn Lomborg’s Skeptical Environmentalist (and others). We should try to explain to the silent majority what Julian Simon’s “ultimate resource” is and that the only resource endangered by environmentalists’ plans and activities is man, his inventions and genuine efforts.

I used to live in a world where prices and property rights were made meaningless. It gave me an opportunity to see how irrationally resources were used (and often depleted) and how damaged the environment was as a result. We should not let anyone to again play the market and dictate what to produce, how to produce it, what inputs to use, what technologies to implement. It would result in another, these days world-wide disaster and in the true “immiseration of the masses”, especially in developing countries. We already see some evidence of it.

We should also remind the pessimists of the past human experience with technological progress and explain to them our justified belief in its not only continuation but very probable acceleration in the future. We have plenty of reasons to expect that technological changes will be – as they have been in the past – more important than any imaginable climate changes. There is no need for technologic skepticism and as I have recently argued elsewhere (7), there is no reason to expect that we will enter a stationary world – unless the environmentalists win the debate and stop human progress.

The economists should also mention the important, very probable and for this discussion very relevant future shift in the structure of demand which will be based on the so called income or wealth effect. With higher income and wealth the people demand more of luxury goods, including environmental protection. It is not necessary to radically decrease today’s consumption by coercion, because the much more affluent people in the future will have enough time and motivation to make rational consumption and investment decisions without our today’s “quasi-help”. Economic growth and the accumulation of wealth do not lead to deterioration of the environment and the empirical work in the field of the environmental Kuznets curves gives us reassuring arguments about it.

We should also explain to the non-experts the idea of discounting as the only rational basis for intergenerational comparison. This issue lies at the core of social sciences and especially economics. Everyone who wants to protect future generations should express his or her presumptions about the intergenerational relationship, or, to put it simply, to clarify how he or she sees the future and what weight and importance he or she attaches to it. (8) The environmentalists assume that no matter how distant the future is, it is of equal importance as the present. This is, of course, not true because of the objectively existing preference of the present over the future, which is seen in the discount rate. To say that is neither shortsightedness nor ignorance on our side. It is surprising that even the economically educated environmentalists – such as Nicholas Stern – consider the “social discount rate” to be close to zero. Such an unrealistically low rate overrates the future effects of actions made today (and vice versa).

We have to touch also upon the so called precautionary principle, one of the main arguments of the environmentalists. The people are and should be cautious. It is quite natural. Every rational human being minimizes risk – but not at all costs. The world is full of trade-offs and any policy analyst knows that he or she has to evaluate the costs and benefits of any policy before judging whether or not the policy should be pursued. The precautionary principle, this dogma of environmentalists, leads to an unjustifiable maximization of risk aversion. Attitudes of that kind can finally succeed in blocking and prohibiting everything. Prof. Sternhell (9) says correctly that the precautionary principle “requires a quantitative judgment as otherwise we never cross roads, sit in a bus or even get out of bed” (p. 20). And this “quantitative judgment” is a cost-benefit analysis.

Indur M. Goklany published a whole book about the precautionary principle (10) in which he suggests ways to formulate hierarchical criteria and rank various threats, which is, of course, quite different from the application of the unstructured precautionary principle. Using several well-known examples, he demonstrates the tendency of environmentalists to systematically overestimate the negative impacts of human activities and to forget their positive impacts. Such approach can not bring good outcomes.

Even more frustrating is the fact that we do not pay attention to the abuse of the words “market” and “price” by the current global warming alarmists. They want nothing else than to tax us but speak about the market-friendly “emissions trading schemes” instead. We did not tell them loudly enough that the emissions licenses are implicit taxes and that playing the market reminds us of the plan-versus-market debate (the socialist calculation debate) in the 1930s between Mises and Hayek on the one side and Lange and Lerner on the other. It must not remain forgotten. I agree with Ray Evans when he sees “the Orwellian use of the words ‘market’ and ‘price’ to persuade people to accept a degree of control over their lives which is unprecedented in the Anglosphere, except in time of war” (11). The climate fraternity (to use the clever term of another Australian, Wolfgang Kasper) succeeded in persuading the politicians and the media that these “market friendly” trading schemes are better than simple restrictions and prohibitions. In this respect, I prefer explicit prohibitions. They are much more understandable and, eventually, defeatable.

The “warmists” (another nice term) succeeded also in creating incentives which led to the rise of very powerful rent-seeking groups. These rent seekers profit

- from trading the licenses to emit carbon dioxide;
- from constructing unproductive wind, sun and other equipments able to produce only highly subsidized electric energy;
- from growing non-food crops which produce non-carbon fuels at the expense of producing food (with well-known side effects);
- from doing research, writing and speaking about global warming, etc.

The rent-seeking critique of public choice theorists (some of them distinguished members of our Society) some three-four decades ago was a revolutionary correction of the idealization of all kinds of ambitious policy makers who wanted to realize their plans like benevolent despots. I am afraid that this rent-seeking aspect of global warming debate has not been sufficiently explained to the ordinary people. Politicians use the rent-seeking business people as their fellow-travelers because they usually have considerable influence and enough money to play a decisive role.

I did not speak here about climatology or IPCC assessment reports (12). Without using strong words and lengthy arguments, it is enough to say here now that I do agree with Prof. Sternhell that “climate-anthropogenic carbon dioxide nexus justifies watching and research, but it does not justify the currently proposed expensive, probably unnecessary, disruptive and probably futile measures.” (13)

I conclude with my request (made at the International Conference on Climate Change, organized in March 2008 in New York City by the Heartland Institute) that “we have to restart the discussion about the very nature of government and about the relationship between the individual and society,” (14) because as I said many times: the current dispute is not about climatology, it is about freedom. And I would add “about prosperity and living conditions of billions of people.” To avoid a disaster, “we should trust in the rationality of man and in the outcome of spontaneous evolution of human society, not in the virtues of political activism.” (15)

Václav Klaus, Tokyo, 8. September 2008

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1 - Mont Pelerin Society General Meeting speech, Hotel New Otani, Tokyo, September 8, 2008.

2 - The term climatism is also worth being considered, especially as an explicit and understandable opposition to climatology. In his article “Climatology Versus Climatism” Vinod K. Dar correctly says that “Climatology is a science. Climatism is an ideology” and that “today, public discussion about the climate is dominated, maybe monopolized by climatists ... in the public climate discussion climatologists have been the silent majority”. (http://www.rightsidenews.com/200807231515/energy-and-environment/climatology-versus-climatism.html).

3 - S. F. Hayward, K. P. Green, and J. Schwartz correctly describe the current situation: “It is possible that we may know less than we did ten years ago precisely because the intense focus on the most scientifically challenging parts of climate behavior is actually revealing more about what we do not know and more evidence that is inconsistent with or directly contradictory to the anthropogenic greenhouse warming paradigm promoted by the IPCC and climate campaigners”. AEI Environmental Policy Outlook, no. 4, December 2007. http://www.aei.org/publications/pubID.27185/pub_detail.asp

4 - In one “green” hotel in California they supposedly have Al Gore’s book “An Inconvenient Truth” next to the Bible in every room.

5 - Published by the Competitive Enterprise Institute, Washington, D.C., May 2008 (Originally published under the title Modrá, nikoli zelená planeta published by Dokořán, s.r.o., Prague, Czech Republic, 2007). The German, Dutch, English, Russian and Spanish versions were published between December 2007 and July 2008. Other translations are under preparation.

6 - Speech at the Climate Change Conference, United Nations, New York, September 24th, 2007. /clanky/1638

7 - Is Schumpeter’s Vision of the End of Capitalism Relevant?, Speech at the Competitive Enterprise Institute Annual Dinner, 28 May 2008, Washington D.C.; see /clanky/1548 or http://cei.org/cei_files/fm/active/0/90823_CEI-web.pdf

8 - See my technical article with D. Tříska: “Towards a Critique of the Concepts of Solidarity and Discrimination as Applied in Inter-Temporal Analyses of the so-called Global Problems”, Politická ekonomie, December 2007 (in Czech).

9 - “The Abused Science of Climate Change”, Quadrant, June 2008

10 - “The Precautionary Principle. A Critical Appraisal of Environmental Risk Assessment”, Cato Institute, Washington, D.C., 2001.

11 - “The Chilling Costs of Climate Catastrophism”, Quadrant, June 2008, p. 12

12 - See some comments on it in Chapter 6 of my book and a perfect short summary in already quoted Hayward and others article, mentioned in note no. 3.

13 - “The Abused Science of Climate Change”, Quadrant, June 2008, p. 20

14 - “From Climate Alarmism to Climate Realism”; speech at the 2008 International Conference on Climate Change, New York, March 4, 2008. See www.klaus.cz or http://www.heartland.org/Article.cfm?artId=22902

15 - Speech at the Climate Change Conference, United Nations, New York, September 24th, 2007. /clanky/1638