A blog post by Santa Clara economist and law professor David Friedman came across one of my social media feeds today, and it resonated with a lot of issues I’ve been thinking about lately. Friedman is taking issue with a particular corner of the climate change debate: the uncertainty over the sign and magnitude of future economic effects of climate change. This uncertainty, he argues, counsels caution: we know it would be very costly to intervene right now; but waiting will allow for more precise assessment of the potential costs of climate change, a longer time frame for spreading those costs over the human population, and–importantly–potential to distribute those costs in a more appropriate way. Here are the key passages for my purposes:
Diking against a meter of sea level change could be a serious problem for Bangladesh if it happened tomorrow. If Bangladesh follows the pattern of China, where GDP per capita has increased twenty fold since Mao’s death, by the time it happens they can pay the cost out of small change.
…William Nordhaus, an economist who has specialized in climate issues … reported his estimate of how much greater the cost of climate change would be if we waited fifty years to deal with it instead of taking the optimal action at once. The number was $4.1 trillion. He took that as an argument for action, writing that “Wars have been started over smaller sums.”As I pointed out in a post here responding to Nordhaus, the cost is spread over the entire world and a long period of time. Annualized, it comes to something under .1% of world GNP.
(Emphasis and link to Nordhaus article added–JNS)
I have no specialized insight into the climate change debate, I have no particular beef against Prof. Friedman or his work, and I carry no particular brief for Prof. Nordhaus or his work. But I think this particular post is a very good encapsulation of how profoundly unhelpful the welfare economics approach is in analyzing problems of social cooperation over long time scales and across disparate populations, and I thought I’d take the opportunity to try to explain why.