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Global Warming: Public Choice Problems and Perverse Incentives

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A guest post by Zebulen Riley:

Recent high temperatures have global warming activistsconfusing weather and climate. Americans must keep their cool during this heatwave, rather than melt down in the face of pressure from advocates for sweepingclimate change policies.  These self-styleddefenders of the ecosystem demand heavy government intervention in the economyto mitigate rising global temperatures and sea levels, and, of course, to savethe polar bears.  However, simpleeconomic analysis reveals that it is unreasonable to believe government capableof solving any kind of climate crisis.  

Public choice theory shows that regardless of whether the activistsare right or wrong about the science of climate change, they’re dangerouslywrong about how to approach it. Public choice economics extends the behavioralassumptions of economics to government. That is, just as economists assume that people engage in rational,self-interested behavior in daily market transactions, public choice theoryassumes politicians and bureaucrats engage in rational, self-interestedbehavior in political decision-making. To assume that people become entirely selfless promoters of the publicgood upon entering politics is fitting for a 7th grade civicstextbook, but not for real life.  Ofcourse, the goal of serving the people can motivate some to become involved ingovernment, but politicians who advocate heavy regulation to combat globalwarming act in self-interested ways, just like everyone else.

When citizens feel guilty about their environmental footprintand buys carbon offsets to ease their conscience, a former vice president cashesin at the bank. When a wind farm was built off the coast of beautiful NantucketSound, destroying the view from his living room, a late Massachusetts Senatorcried foul.  And when scrubbers weremandated for companies burning “dirty coal,” a late Senator from the state thatproduced the supposedly offensive dirty coal required scrubbers be used instates that burned cleaner coal in the first place.  Self-interested behavior in Washington perfectlyillustrates the attitude toward combating climate change: It’s great as long asI’m reaping the benefits and avoiding the costs.  Because legislators have an incentive toshift the cost of fighting global warming to citizens outside their constituency,environmental regulations are imposed where they are most politicallyeffective, not environmentally effective. With thousands of legislators and bureaucrats, each trying to cost-shiftonto the other, there is little reason to believe government action will be efficientin reducing the United States’ environmental footprint (whatever size it maybe).

Cost-shifting occurs internationally as well.  Just like hypocritical senators love windfarms in someone else’s backyard, nations that would suffer serious financialcost to combat global warming prefer that other countries wreck their own economiesinstead.  Just as it is in anindividual’s self-interest to shift the cost of environmental regulation ontoothers, it is in a nation’s self-interest to free ride on the costly efforts ofother nations.  When the United Statesreduces its pollution, the rest of the world benefits at U.S. expense.  Thus, there is an incentive for the rest ofthe world to do nothing and “free ride” off the U.S.  Without legally enforceable anti-pollutioncontracts between every country (a dubious proposition), a free rider problemwill always exist when trying to mitigate global climate change.

If average temperatures are indeed on the rise, a singlecountry taking unilateral action will be insufficient to bring an end to globalwarming.  Because environmentalregulations are most politically supported when the beneficiaries of those regulationsdon’t bear the costs, politicians and voters will always try to shift theregulatory costs to others.  Regulations,thus, are designed to be politically effective, not environmentally effective.  And without legally enforceable contractsbetween every country, too few nations would contemplate the radicalenvironmental and energy policies to reduce global temperatures, and trillionsof dollars worth of economic resources will be wasted for naught.

No serious climate scientist argues that unless urgentaction is taken Earth will spontaneously combust from rising temperatures.  Most peer reviewed studies project mildwarming over the next century.  Ratherthan losing our cool and spending trillions of dollars on the cause of “fightingglobal warming,” Americans would do better to acknowledge government’sinability to meaningfully affect world temperatures and recognize the perverseinternational incentives that make the dream of reversing global warming a near-impossiblefeat.

 

Zebulen Riley is an associatepolicy analyst with the National Taxpayers Union Foundation.