Alarmism is bad, but Indur Goklani's arguments are also bad

Misha Pojarsky wrote a post where he cites Indur Goklani's arguments that everything is actually good and why talk about climate change. I agree that alarmism and hysteria are bad because they distract from normal discussion. I have always said that the curtailment of funding for brown projects in the moment will lead to a systemic shock. I have always said that the "great refusal" is nonsense, and it is necessary to look for market solutions that will allow both increasing welfare and stopping negative externalities. More inclusive and less distorted markets allow for more useful ideas. Ideas are the engine of economic growth and technological progress. Alarmism interferes with this, as do arguments that divert normal discussion to one side.

What's wrong?

The most extreme weather events have not become more extreme, deadly or destructive. On the contrary, due to the development of society, fewer people die from cataclysms.

But they became more frequent and the economic losses from them only increased. In the United States, in the period 1980-2019, there were an average of 6.5 natural disasters with damage over a billion dollars (adjusted for inflation) per year, and in the period 2015-2019 - 13.8 disasters. In the 2010s, the number of such disasters doubled compared to the 2000s from 59 to 119 (original in the FT article, but it is under paywall, the FT article was written according to the report of the World Meteorological Organization).

Of course, one can recall the dusty boiler in the 30s, but it was caused by completely different reasons. First of all - extensive methods of farming. The drought was only a catalyst for disaster. But the trend in recent decades is really bad. And the reason here is the external effects of production activities in general.

Mortality from environmental disasters is indeed falling. Is it due to economic growth and technological progress? Yes, it's connected. The efficiency of evacuation and warning capabilities have increased significantly. But the economic damage also increased.

The data refute claims that increased carbon emissions have lowered human welfare. On the contrary, the level of well-being today is higher than ever.

Firstly, we are not talking about a decrease in the well-being of mankind relative to the previous period, but about losses relative to counterfactuals (and we are talking about a long-term trajectory in general). Secondly, they argue about losses in the moment, but in the long term. A number of models on the basis of which such statements are made do have problems. But the criticism usually does not deny that climate change is taking place, nor does it dismiss the discussion of optimal policies in the face of climate change as pointless—it denies that such estimating models provide reasonable, practical predictions.

Here the problem is rather in Goklani's counterargument itself, it is simply not about what the discussion is about. And what about prosperity in general relative to the previous period?

The negative effects of warming and carbon dioxide emissions are offset by the positive effects of fossil fuel use. The space suitable for human habitation is increasing, not decreasing.

I admit that I looked at the report inattentively, but I did not notice normal estimates of the balance of effects. Where are the quantitative effects of the pros and cons of fossil fuels? I do not see them. And yes, of course, well-being will be positively correlated with energy consumption (as the author of the report writes), this is a trivial observation. Moreover, the money supply will be positively correlated with the welfare in a particular country. Can we print money in order to find a crystal of growth?

Yes, and it's not about that at all. We are talking about indirect (external) effects, that is, externalities.

In general, I share the message that alarmism is not conducive to normal discussion. But such arguments are clearly the same. They are just from the category of #badeconomics.

Grigory Bazhenov 2021-11-17