Nobel blogging

First, the Nobel prize in economics has been awarded. No surprise that a guy from the U of Chicago won. I am a little surprised they went with a "conceptual/theoretical" bunch instead of a more "applied" candidate (e.g., Gordon Tullock -- he's going to win eventually, isn't he?), but all-in-all I have nothing to say about this year's winners.

I do, though, have a comment about the peace prize winner. Actually it's a comment by Greg Mankiw, but I'm going to borrow:

Consider a person who

A. takes an important truth developed by others,
B. exaggerates it for dramatic effect,
C. as a result, draws public attention to this important truth, and
D. also brings acclaim to himself as a profound, far-sighted, truth-telling guru.

Who do I have in mind?

Maybe you think it's Al Gore, and if so, you are correct. But I also have in mind the supply-side economists of the 1980s. The more I think about it, the more similar Al Gore and the supply-siders appear.

See, that comparison pretty accurately captures my "problems" with both groups. I think they both highlight some important truths that need to be addressed, but I dislike the "groupthink" mentality they both attract. You know, the feeling that this person/group speaks the truth and any deviation is heresy.

I hope it's not, but I'll admit that it could be misplaced optimism and wishful thinking that make me hold off joining the "stop global warming now" group. I am convinced that the planet is currently warming and I'm mostly convinced that human activity in the 20th century (and now) contributed to the warming. I am not convinced, however, that the consequences are as bleak as some would have me believe.

The biggest problem I have, though, is that if the consequences truly are going to be so catastrophic, well that creates a policy paradox that I don't see how we're going to solve. Voluntary (or even mandated), individual-level efforts will, I believe, have no measurable impact on warming. They might make an individual feel better about himself, but they won't cool the planet. That leaves coordinated government action and I have about as much faith in governments managing climate impact as I do in governments managing wealth creation. Further, any coordinated government plan that gives a pass to China, India, etc. is not going to fix the problem (see note below). On the other hand, why would China, India, etc. agree to a plan that forces them to pass up the "pollute and prosper" policies that allowed most of today's rich countries to become rich? This, of course, leads to rich countries saying, "Well we're not going to cut back if they don't cut back." See the problem?

So in the end, I'm glad the supply-siders got their "bully pulpit" in the 1980s to draw attention to the disincentive effects of high marginal tax rates and I'm really glad (I think) that folks are beginning to pay serious attention to global warming. In the end, I believe the "right" answer to the supply-siders is somewhere in the middle. I truly hope the same is true for global warming, I just don't think we've found that "middle" yet.

Note: I do think coordinated government activity, even if it omits developing countries, can lessen the accumulation of greenhouse gasses, but if the results of current warming trends are going to be as bad as some predict, then developing countries must be reined in as well.

UPDATE: Coincidentally, I received the latest issue of the Journal of Economic Literature in the mail today and it contains two lengthy reviews of the Stern Review on the Economics of Climate Change. While I don't expect either will settle the scientific consensus issue for me, I have great hope they will help me with the cost/benefit issue. I'll report back once I've digested the articles.