The political economy of global warming

Here are three views of the Chicago skyline. The top photo is a rare day with high air pollution in the 1990s, but that was a typical scene in the 1970s and the third is how Chicago looks today:

All big American cities used to have a reputation for being very polluted because they used to be very, very dirty and Chicago in 1970 probably wasn’t even the worst. Here is an actual 1973 photo of the Clark Avenue Bridge in Cleveland. This was one of the major Cleveland bridges over the heavily polluted Cuyahoga River near downtown.  (This bridge was torn down and today the site is near the Interstate 490 bridge.)

And another photo

That picture is so grey, it is shocking that it is a true-color photo!  It is hard to tell there was any color in the world because the pollution made everything look black and white, but there is a red stoplight barely visible through the haze in the middle of the road. 

In the early 1970s, it was completely legal for anyone to spout any sort of toxic waste into America’s air. Below is a 1972 photo of smoke from burning lead-acid car batteries in Houston for recycling. The lead (a potent neuro-toxin) in the batteries is bathed in sulfuric acid (also inherently toxic) and this witch’s brew is encased in the thick plastic battery exterior which produces carcinogenic dioxin when burned. A car battery is extremely toxic even without burning and it and will produce toxic smoke if burned which is why this kind of business model was banned shortly after this photo was taken. Now Americans have to pay a deposit when buying a lead-acid car battery to give a financial incentive to bring used batteries back for safe recycling.

There was also unlimited freedom for anyone to dump any sort of toxic waste in our lakes and rivers. Here is a photo of Cleveland’s 1953 Cuyahoga river fire. The river caught fire in a major way at least 13 times.  The last fire was in 1969 which had flames reportedly reaching five stories high. News reports about that fire went viral nationwide and helped inspire the establishment of the Environmental Protection Agency in 1970 and the Clean Water Act in 1972.

Americans had been so accustomed to rivers being choked with pollution that the idea of rivers catching fire didn’t even seem newsworthy.  This sort of thing never made national news before 1969 and often didn’t even get much attention from the local newspapers. For example the 1952 fire pictured here was one of the most damaging river fires and an even earlier fire is said to have taken three days to put out but those fires weren’t newsworthy outside of the local neighborhood any more than a house fire today would be newsworthy outside of a local neighborhood. It was just a normal part of industrial life in American cities.

Pollution had been steadily getting worse, but the problems grew imperceptibly slowly month by month until there was a sudden awakening of an environmental movement in American culture.  Practically nobody cared about how much lead pollution was dumped in our air and water in the 1950s, but that suddenly began to change and today Americans freak out when a miss-judgement of our government officials causes even just slightly raised lead levels in the drinking water of any of our cities (like Flint Michigan) because Americans now believe that environmental lead poisoning is a crime.  

Today, due to EPA regulations, fish can survive in the Cuyahoga River again, and the EPA recently announced that enough toxins have washed out or stabilized in the sediments that it is finally safe to eat some fish from the river without poisoning yourself if you can get over the yuck factor embedded in the river’s sordid history.  

(For more about how the EPA radically transformed life in American cities and led to their renaissance, Andrew Small wrote a fantastic history with great pictures at CitiLab. One of his famous stories is about an electronics corporation that buried toxic waste in a residential neighborhood and then sold the site to the school board for construction of the Love Canal Elementary School.  The toxic waste killed local residents and caused malformed babies before the EPA spent $400million to clean it up.)

Most people think that economic development inevitably brings pollution as a necessary byproduct and there is some truth to that, particularly for poor nations, but economic development also makes people richer which causes them to want to live in cleaner, healthier places and richer people can afford to spend money to achieve that.

The relationship between economic development and pollution is often called the environmental Kuznets Curve. Although the curve in the graph below is less clear for the US than for France and Germany, sulfur pollution rose with industrialization in all these countries until the advent of the environmental movement in the 1970s and then they all began regulating their air quality which rapidly brought pollution back down again. The United States is a bit of a “pollution haven” in comparison with most other rich countries like France and Germany, but at least pollution has been getting better in the US than it used to be here.

Although the Kuznets Curve idea has validity for most of the visibly obnoxious local pollutants like brown, smelly air and rivers that catch fire, there is no evidence that it applies for other environmental problems that aren’t immediately visible in the urban areas where most environmentalists live such as species extinction and global warming. For these problems, so far economic development has just made them worse. For example, CO2 emissions tend to rise with income.

The reason why CO2 emissions haven’t followed the Kuznets Curve so far is due to political will. Although Americans are passionate about preventing our rivers from catching fire and avoiding smog and brown skies in our cities where American elites like to hang out, we just aren’t as passionate about global warming (yet) so we have not made as many efforts to stop the emissions of greenhouse gasses as we have made to reduce noxious-smelling pollutants like sulfur dioxide.

But most Americans do worry about global warming and have been concerned for decades:

So the problem of inaction is NOT that the majority of Americans don’t care about global warming.  Although polling is never perfectly accurate, many other polling agencies have found the same thing.  Furthermore, they show that a majority of both Republicans and Democrats currently agree that global warming is a problem we need to address. This is one of the rare areas of broad, bipartisan agreement at the grassroots level of politics in an increasingly politically divided America today.

Although there is a surprisingly large minority of Americans who distrust science and believe (like Donald Trump) that climate change is a conspiracy, at least a slight majority of Americans have always trusted the scientific consensus. 

Republicans are unfairly stereotyped as not caring about global warming and it is true that most Republican national political leaders are climate change skeptics, but the majority of Republicans at the grassroots agree with the vast majority of Democrats on this issue.  Here is another poll:

More recent polls show that a majority of Republicans in nearly every congressional district support policies
to mitigate climate change and an overwhelming 74% want more funding for renewable energy research.

So the real question is, if the majority of Americans of both parties are worried about global warming and want to reduce carbon emissions, why don’t our political leaders listen to popular will and take action? This is particularly true of elite Republican politicians who actively fight to block action, but elite Democratic politicians also make big talk about fighting climate change without actually doing much of anything. For example, President Obama talked a lot about it, but he did not take action on the issue during his first year in office when Democrats had a majority of the House and Senate.  They had control over all branches of the federal government except the Supreme Court. Instead Obama prioritized economic stimulus programs first and then healthcare reform took up most of the attention of the Democrats for over a year. By the time they got around to start working on climate change, the Republican party had taken over control of the House and had the power to block legislative action.

The fact that American political party elites have become so ideologically sorted into opposing camps on the issue of global warming is an odd quirk of American politics that isn’t shared in any other democracy in the world.  Most industry lobbies try to buy both parties fairly equally, but the fossil fuel industry is unusual in that it has overwhelmingly thrown its lot in with only one party in America.  This sort of ideological sorting often happens with social issues like abortion, but business lobbies tend to want allies with both sides of the political spectrum so they can have influence regardless of which party wins an election.

The American partisan divide over fossil fuels is a fairly recent phenomenon.  Chris Hayes wrote about how the Republican Party had top leaders speaking out about fighting climate change from the 1980s through John McCain’s 2008 presidential campaign.

…During the 1988 vice-presidential debate, Dan Quayle argued that “the greenhouse effect is an important environmental issue. It’s important for us to get the data in, to see what alternatives we have to the fossil fuels…. We need to get on with it, and in a George Bush administration, you can bet that we will.”
That wasn’t quite the case, but in 1989, Newt Gingrich was one of twenty-five Republican co-sponsors of the Global Warming Prevention Act, which held that “the Earth’s atmosphere is being changed at an unprecedented rate by pollutants resulting from human activities, inefficient and wasteful fossil fuel use, and the effects of rapid population growth in many regions” and that “increasing the nation’s and world’s reliance on ecologically sustainable solar and renewable resources…is a significant long-term solution to reducing fossil-generated carbon dioxide and other pollutants.” In 1990, President George H.W. Bush said at an IPCC event, “We all know that human activities are changing the atmosphere in unexpected and in unprecedented ways.”
While his son did little to curb carbon emissions when he took his turn at the presidency, he did at least give it lip service. Speaking ahead of the 2005 G8 Summit, George W. Bush said, “It’s now recognized that the surface of the earth is warmer, and that an increase in greenhouse gases caused by humans is contributing to the problem.” As part of the 2007 Energy Independence and Security Act, he signed into law minimum efficiency requirements to begin to phase out the use of incandescent bulbs in 2012. (A law that would, in the Obama era, become a top [Tea Party] target, as the Tea Party rallied to support the incandescent bulb as if it were a constitutionally enshrined right.)
And in 2008, somewhat miraculously, John McCain’s platform featured support for a cap-and-trade bill that would have effectively put a price on carbon. But even by that year, you could already feel a seismic shift in the rhetoric. I sat in the Xcel Energy Center in St. Paul in 2008 and watched Sarah Palin lead thousands of people in a thunderous chant of “Drill, baby, drill!”
After Obama’s election, things moved quickly: McCain dropped support for his own legislation to regulate carbon pollution. In 2010, Bob Inglis, a conservative congressman from South Carolina, was soundly defeated by a Tea Party challenger in the Republican primary, due chiefly to Inglis’s refusal to deny the science on climate change. A year later, Gingrich called his appearance alongside Nancy Pelosi in a 2008 ad urging action on climate change the “dumbest single thing I’ve done in years,” recanting his acceptance of the science and embracing denialism. He was not alone—in fact, outright denialism is now more or less the official Republican line. In 2011, and again in January of this year, Republicans on the House Energy and Commerce Committee voted to block the EPA from regulating carbon emissions and against amendments that would acknowledge that climate change is, in fact, happening.

Hopefully America’s political party leaders will be able to return to our former consensus about the dangers of climate change again soon.

Bipartisan note:  Although the elites who control the Republican Party have allied themselves with fossil fuel interests since the 1990s, liberal political party elites in democracies worldwide are always in hock to other sources of power.  For example, organized labor always favors more liberal parties and a particularly embarrassing alignment of US Democratic Party elites is their consistent relationship of support with trial lawyers over the decades. It is hard to be less popular than fossil fuel barons, but lawyers are about the least popular occupation and have probably accomplished that feat.

How much of global warming is your fault versus the fault of large corporations?

According to the 2017 IPCC report, just 25 multinational corporations accounted for half of all global emissions of greenhouse gases so although you probably buy products from these corporations and bear some responsibility, you don’t deserve nearly as much blame as the people who control these companies.

% of global emissions

1988-2017

25 worst corporations→

50%

100 worst corporations→

71%

Only a few corporations can be responsible for such a large amount of greenhouse gasses because fossil fuel corporations comprise a disproportionate share of the world’s largest corporations.  Many of the rest of the world’s biggest corporations are in industries that heavily rely on the consumption of fossil fuels such as automobile production. The table below shows that the majority of the 18 biggest corporations in the world (measured in 2017 revenues) are corporations that produce fossil fuel or directly depend on fossil fuel consumption to sustain their entire business model.

And even relatively small fossil-fuel companies like Koch Industries are run by billionaires whose political expenditures have had a big effect on American environmental policy

If America started a modest carbon tax of $20 per ton, the nonpartisan Tax Policy Center estimates that the hardest-hit quintile of Americans would only pay about 0.8% of their income and most Americans would pay less.  In comparison, the median-income quintile paid 13.5% of income in federal taxes in 2016 according to the Peterson Foundation so it would be easy to cut payroll taxes since revenues would be coming in from the carbon tax instead.  

A carbon tax would not hurt American consumers much because it isn’t a big part of their budget and many would switch to renewable electricity and electric cars and thereby avoid paying any tax.  But there are one hundred rich corporations that account for 71% of global carbon emissions and they would be hit very hard by a carbon tax because they can’t avoid losing billions of dollars each.  Sure they would try to pass on some of the tax by charging higher prices to consumers, but that might amount to only 0.8% of income for ordinary Americans.  The corporations would lose most of their income! So they have a big incentive to manipulate our political system and public information to get their way. This is a classic concentrated interest group problem.

A modest revenue-neutral carbon tax could increase most Americans’ disposable income

A revenue-neutral tax increase is one that is exactly offset by reductions in other taxes or by tax rebates–checks sent to Americans in compensation for the tax increase.  The carbon tax revenues could be perfectly offset by reducing the tax burden from the payroll tax which is by far the biggest part of the tax burden on the median-income American or by sending every American a check for the average amount of the tax revenues.  Then only people who burn more carbon than average would be hurt (which tends to be people who are richer than average) and people who burn less would get a net benefit from the carbon tax.

The people who would pay the biggest price by far are the people in the fossil fuel industry and because they would pay a lot more than average, most Americans would less than average.  Plus, a carbon tax would be more efficient than the payroll tax because the carbon tax discourages pollution whereas the payroll tax discourages working.  Thus, a revenue-neutral carbon tax could increase economic efficiency now, reduce inequality, and help save the planet’s future.  Almost everyone wins!

Of course, this is based on a relatively modest carbon tax and if you wanted to rapidly reduce carbon more dramatically, it would require shared sacrifice by everyone (and most fossil fuel companies would be completely destroyed), but we gotta start somewhere and some baby steps like a modest carbon tax could be implemented without any sacrifice by most Americans. 

But the 50 corporations that emit half of the world’s emissions would pay an enormous amount. It is impossible to reduce greenhouse gasses and avoid causing them harm.   On the other side of the ledger, in addition to the diffuse benefits from a healthier, more productive planet, there some some concentrated interest groups in the form of about 106 clean energy corporations worth about $220 billion (according to Bloomberg) that would directly profit from higher demand for their products.

Which side of the debate has more power?

So most taxpayers would see little change in their overall tax burden and would see benefits from a healthier planet and a bunch of small alternative energy corporations would see their profits skyrocket whereas the main costs would be borne by a few enormous fossil fuel companies. Worldwide in 2014 there were about 1,469 private fossil fuel corporations worth about $4,650 billion (plus some enormous government-run fossil fuel producers that aren’t included in this accounting.) The main cost at stake in the climate debate is estimated to be worth over $4,000 billion to those private corporations.  In addition there would be costs to other industries like the automobile corporations that would have to completely reinvent their businesses to produce electric vehicles.

How much is $4,000 billion? Well a million dollars is already a lot of money and stack of $100 bills that totals a worth of $1million would be 3.5 feet high (and weigh 22 pounds).  A stack worth $4,000 billion is four million times bigger–2,520 miles high. That is a lot of money that the fossil fuel corporations have at stake in the climate change debate.

Most people could be made richer by an optimal carbon tax, especially young people who will see the most future benefits. Globally we are subsidizing the fossil fuel industry to the tune of between $540 billion and $5,000 billion a year, so just eliminating the government subsidies would save the rest of us a lot of money and a carbon tax would raise additional government revenues that could be used to reduce income/payroll taxes that burden ordinary American workers. It is unlikely that a carbon tax could be implemented optimally, but even a poorly designed carbon tax could be implemented in a way that still benefited the majority of Americans.  Only the small minority of Americans who get most of their income from the fossil fuel industry would find it costly and it would be extremely costly for them, especially the wealthy elites who control most of the capital in the industry.

So there are two sides to the global warming debate. One side thinks it is a real problem that we should at least start to do something about and the other side that wants to ignore the issue and burn unlimited fossil fuels. Which side do you trust more?

Which side has more power? Although the side that wants to fight climate change has a lot more American people than the pro-fossil-fuel side of the debate, the fossil fuel industry has a LOT more money to spend and so far they have consistently been winning as a result.

Fossil-fuel industry supporters like former Senator Rick Santorum like to claim that climate science is corrupt because, “a lot of these [climate] scientists are driven by the money that they receive.” My reply is to ask, “Is there more money in climate change or climate denialism?” It is a good idea to follow the money and see where it leads. Given the trillions of dollars that the fossil fuel industry has at stake and the fact that this extremely wealthy industry forms a very concentrated interest group, why can’t they afford to pay a tiny fraction of a percent of that money to climate scientists to change the scientific consensus? The fact is that they do hire climate scientists and one of the reason that so many PhD geologists tend to be climate skeptics is that the fossil fuel industry is the dominant private sector employer of geologists, so this scientific community already has close ties with fossil fuel companies.

I work in economics and I have seen private money pour into economic debates. Wealthy interest groups hire lots of economists to research issues at think tanks and interest groups pay grants to academic researchers at universities to direct their research in particular directions. Similarly, industry money tries to corrupt the public health research in order to promote the sale of sugar or tobacco or patented drugs. 

Below is a photo of the heads of the big American tobacco companies swearing in before the US Congress in 1994.  Even after decades of research showing the adverse health effects of tobacco, they were still testifying under oath that the science was wrong! 

Photo of 7 tobacco company CEOs being sworn in before testifying before a U.S. House committee on April 14, 1994 that nicotine is not addictive.

The fossil fuel industry has a lot more money than the tobacco industry and if you track the vast amount of money that the fossil fuel industry spends on influence, you’ll see that they give a lot directly to politicians and they give a lot to PR efforts in schools and the media and lobbying, but very little money on actual climate science research. This is why I never believed there is a scientific case to be made that global warming isn’t happening. If you follow the influence money, the king of industry lobbies completely capitulated in the scientific debate decades ago.

They do pay a few individual climate scientists, but mostly as part of their PR effort to help create the impression in the media that there are “two sides” to the scientific debate. They hardly pay any climate scientists to do any actual research on the climate (although they do pay scientists to critique and criticize other scientists’ work) nor to establish academic conferences of climate skeptics nor academic journals for alternative views of climate science. This is odd to me as an economist because it doesn’t take much money to establish these sorts of scientific institutions and there are lots of them in economics to support widely divergent perspectives about how the economy works. In climate science, there only seems to be schools, institutes, journals, academic societies and conferences dominated by scientists who say climate change is real and who simply disagree about how bad they think it will be. On the other side there are individual scientists but they have not bothered to join together to create any of the organizational infrastructure that is necessary to succeed in an intellectual marketplace. It is as if the fossil fuel industry knows the evidence in support of climate change is so overwhelming that they have given up any attempt to fool the scientists they have not already bought. But it is easier to fool the general public and the politicians have the real power so they are more cost effective to buy than scientists.

The main goal seems to be to produce enough doubts about climate change among the public so that the public is willing to ignore the open bribery of politicians to block action.

One way they manipulate the American media is by paying for loud advocates to advance the narrative that there are “two sides” to the climate science that argue about whether it is real.  The news shows oblige by showing doubters along with consensus scientists as if that is the main issue.  In reality, the median view among climate scientists is that it is absolutely happening, but there are a wide variety of estimates about how bad it will get.  I have met a lot more climate scientists who think global warming will result in hundreds of millions of human deaths than who doubt whether it is happening, but you almost never see the news present the climate debate as one about whether it will merely diminish global GDP or whether it will cause the earth to become uninhabitable.  This is closer to the real center of the debate among actual climate scientists, but the public almost never hears about this, the real center of climate science debate.

A lobbying case study

In 2018 there were several small ballot initiatives that would have hurt Big Carbon companies a little bit and they all lost except one.  That one passed because it was relatively trivial and it was supported by another long-established state industry lobby that wanted to protect the salmon industry rather than to protect the global climate.

If you follow the influence money you immediately see that it simply isn’t a fair fight. The Washington State ballot initiative was the by far most expensive ballot initiative of any sort in Washington history and probably the most expensive climate change fight  in American history. Here are the top donors who opposed it:

They are all fossil fuel companies and all of them are based outside of Washington State except for one. The Washington State tax would have had a trivial effect on most of them since only a small amount of their business is done in Washington State, but they were willing to invest millions of dollars nonetheless.

Below are the top donors on the other side, in favor of the Washington State carbon tax. Which group of donors do you trust more?

These proponents of the carbon tax were mostly Washington residents plus a few out-of-state environmentalists.

The fossil fuel industry blanketed Washington’s media with propaganda about how devastating a carbon tax would be and scared voters into rejecting the initiative. This kind of propaganda effort is sometimes compared with the disinformation campaign that the tobacco industry used to do to try to convince Americans that tobacco is healthy and cast doubt on the scientists who were coming to the consensus that it causes cancer and other illnesses. The fossil fuel industry has many times more revenues available than the tobacco industry and whereas the tobacco industry has remained extremely profitable even after they lost the PR effort over the science of the harms of tobacco, for the fossil fuel industry, this issue is an existential battle. They will be utterly destroyed if they lose.

That is why the fossil fuel industry spends 10 to 30 times more money on lobbying than the renewable energy sector and environmental organizations combined according to research by Robert J. Brulle.

lobby

Mancur Olson’s theory of political economy

In Mancur Olson’s theory of political economy, a minority group like oil producers can conspire to rob resources from the majority of the people even in a democracy.  For example suppose there is a country with 10,000,000 people and a special interest group of 1,000 oil-corporation owners.  If the oil owners can conspire to get a subsidy worth $5 on average from each person in the country, it will be worth $50,000,000 in total and if the oil owners divide it up equally, they will each get $50,000.  So the oil owners have more financial incentive ($50,000) to lobby politicians in favor of the subsidy than the other voters will have to oppose it ($5 each).

The rational voter won’t care about the oil-industry subsidy because it only costs $5 per voter and literally hundreds of other issues are more important to each individual like healthcare, tax rates, unemployment insurance, abortion, policing, racial issues, gender issues, foreign policy, etc.   But for the oil owners, the subsidy is probably their number one issue because probably none of the above issues are worth $50,000 per year.

Concentrated interest groups have additional advantage when you consider the transactions costs of organizing people together into a political coalition.  Any organization of people requires resources for group communications (newsletters and mailings), pooling finances (fundraising and accounting for donations), and management (prioritizing activities and accounting for expenditures).  Suppose it costs $10 per person to coordinate an interest group.  That would make it impossible for the diffuse group of ordinary citizens to finance an interest-group lobby (because $10>$5) whereas the oil owners would still have $49,990 left to gain after paying for the transactions costs of managing their political coalition.  

In addition, there is a learning curve for any political organization and enormous fixed costs in establishing and growing organizations. Any new industry is going to have a harder time organizing a coalition than an old, established industry that has been slowly investing in organizational capacity building and social capital within the group over many decades.

This gives the oil industry in the US another advantage over the new clean-energy industries.  The oil industry first began in 1859 in America and the US was the world’s leading producer for most of history since then (although sometimes dropping as far as third place behind Saudi Arabia or Russia between the mid 1970s and the present).  The US oil companies developed economies of scale and technologies that enabled them to become the biggest oil multinational corporations producing oil around the world in other countries too.  And American thirst for oil was even more extreme that our prodigious domestic production and American was the world’s biggest oil importer for most of the years between the mid 1970s and the present too.  

This history means that oil companies in the US have more money than oil companies in all other nations and a longer history of working together as an industry and this has made the oil special interest group more politically formidable in the US than in any other democracy.  This is why the US is the only democracy that joins with autocratic petrostates like Saudi Arabia and Russia to oppose international agreements that would reduce carbon emissions like the Paris Climate Accord which even the petrostates eventually joined and the US is the only government that has not.

Politicians need votes but they also need money (especially in the American political system), so if there is an issue that the majority of voters don’t know or don’t care about and a small minority of voters cares so much about that they will vote solely based on this issue and more importantly, they will donate thousands of dollars to politicians, then the rational politician will quietly support a subsidy that takes money from the majority of people and transfers it to a wealthy minority.

The four keys for this to work are first, that the minority has to be wealthy enough to be able to effectively bribe politicians. Wealthier people are always more powerful in any political system.  Secondly, the wealthy minority has to appeal to the apathy, ignorance, and/or affinity of the majority group.  For the fossil fuel industry, they cannot rely on apathy in regards to the issue of climate change so they have to spend a lot of money on PR to keep enough of the majority ignorant or fearful of any efforts to slow down the growth of burning carbon to help the politicians they bribe resist the popular will. Thirdly, there cannot be another wealthy interest group that can fight back with equal power.  Fourthly, political-influence investments must be more profitable than other kinds of investments.

Michael Munger made the point that economists assume diminishing marginal productivity of investment in everything and at some point, the marginal productivity of investment in engineering, capital, or research and development will fall below the marginal productivity of investment in political corruption. Munger noted that mature industries have lower marginal productivity of investment in engineering than young, growing industries which means that mature industries like fossil fuels are more likely to spend money on political influence than new industries like solar energy.  

The internet-technology sector is an example of a young, growing industry that has spent relatively little money on lobbying compared with more mature industries like the oil and gas and electric utility industries.  According to Munger’s theory, companies like Microsoft generally spend little money on the political influence game partly because they have to stay focused on spending their resources engineering better products to keep up with competitors at other tech companies and so they prioritize that kind of productive investment.  Oil companies have much worse prospects for increasing their productivity because as oil is gradually depleted, productivity inevitably drops over time, so they have more incentive to shift their invest dollars towards political influence instead. Karam Kang studied the profitability of the oil industry’s lobbying efforts in 2007-8 and found that it was wildly profitable with average returns from lobbying expenditures estimated to be over 130%.

This is why the fossil fuel industry has spent a lot of money on PR to manufacture political support for more burning and to sew doubt about environmental concerns. In nations with a bigger fossil fuel industry, like the US, it has more resources to buy political power and shape public opinion. Pew’s research below shows that in countries with bigger fossil fuel industries, concern about global warming is lower.

Although most Americans are worried about climate change, the level of concern is lower here than in all but a few nations such as China (which is now by far the biggest emitter of carbon gasses).  One reason the US public is less concerned about climate change than most nations is undoubtedly the enormous economic power of the fossil fuel industry in the US.  America’s fossil fuel industry simply has more resources (and a longer history) than in any other democracy.

Concentrated media power also explains much of the divide within the Republican party over climate change.  Whereas political independents and Democrats get news from relatively diverse sources, Fox News has much more power over the public (particularly over Trump voters) than any other single news source.

primarynews

Fox News is staunchly opposed to climate science and alternative energy and its dominance over the information that 40% of Republican voters get helps explain most of the divide within the party over the issue of global warming according to Navigator Research who found that, “non-Fox News watching Republicans are twice as likely as other Republicans to believe in human-caused climate change.”

foxpoll

Is Mancur Olson’s theory of conspiracies just like other conspiracy theories?

Short answer: no.

Most conspiracy theories are ridiculous because they are unsupported by both evidence and theory.  For example, what evidence or theory is there to support the conspiracy theory that climate scientists are part of a hoax paid for by the Chinese?  There is no evidence that the Chinese are actually paying climate scientists around the world and there is no plausible theory for why the Chinese would have a motive to want the world to take drastic action on greenhouse gasses because, as mentioned above, they are the biggest greenhouse gas emitter in the world.  China is also one of the rare countries where public opinion is even more skeptical of global warming than Americans are so that is one of the least likely nations to want to influence scientists to raise more alarms about global warming.  

A more common conspiracy theory is that climate scientists can make a lot of money by fabricating evidence for global warming, but this lacks evidence that scientists are fabricating evidence and lacks evidence that researchers get paid more money for research showing that global warming is real.

On the other side of the issue, there is evidence that some of the tiny fraction of climate researchers who support conclusions that are friendly to the fossil fuel interests do get financial support from the fossil fuel industry.  It also falls short even in theory because there isn’t any organized wealthy interest group that would have the motive to pay scientists for biased research promoting the idea that global warming exists whereas there IS an enormously wealthy interest group with a clear motive to finance the opposition, such as the political corruption that lobbied for Ohio’s bill HB6 which subsidizes Ohio’s coal-fired utilities

Scientists can certainly get things wrong, but that is usually due to intellectual fads rather than to organized conspiracy.  A conspiracy is different from a fad.  In theory, a conspiracy requires a motive and a means in order to work.  In evidence, we should require more extraordinary evidence to accept extraordinary claims.  For example, there isn’t any motive for the NASA rank-and-file to conspire to fake the moon landing (a conspiracy that my son’s science teacher was teaching his class in Bluffton Middle School this week and Fox news says is almost as bad as the climate science conspiracy) nor for scientists to fake evidence that the world is flat.  Plus, we trust the same people for their expertise in the operation of GPS, hurricane tracking, and the global air-traffic control system, so why wouldn’t we trust them about the shape of the earth?

If scientists discovered a vast asteroid hurtling towards Earth, the science skeptics would scream “hoax” and urge us to ignore it by claiming that asteroids don’t exist and scientists just are a big group of pranksters who just like to defraud the public for some reason.  Belief that scientists are hoaxing us about climate change is similarly dangerous.  

Another reason to require extraordinary evidence is when there are claims that large numbers of people are involved in a conspiracy over a long period of time. The more people are allegedly involved in a conspiracy and the more time there is, the greater the chance of someone leaking about the conspiracy, particularly if there isn’t anyone with a big self-interest in providing a big incentive to keep everyone quiet.  This is another factor against the alleged conspiracy of climate scientists.  There are probably tens of thousands of climate scientists around the world and the scientific consensus about global warming began to develop at least a half century ago.  It would take a miracle to keep all those people quiet about some sort of conspiracy.

In contrast, it is easy to see the fossil fuel industry’s conspiracy to fight action about climate change if you simply follow the money.  There is vast amounts of influence money they are spending that is in the public record.  There is also plenty of dark money in politics that we cannot easily trace, but we don’t have to just rely on guesses about how much dark money they are using to conspire against climate science because some kinds of political spending must be recorded in the public record and even just that amount is already enormous.

There is also money being contributed by environmentalists in favor of taking action on climate change, but it is a pittance in comparison with what the fossil fuel industry spends and they don’t have as much self-interest in hiding dark-money expenditures because most environmentalists like to take credit for donating to environmental causes publicly.  Environmental causes have popular support that is bipartisan at the grass-roots level which engenders openness and that openness makes it different from a conspiracy which tries to avoid publicity by definition.

Financial markets believe the scientists

Even if you believe the tens of thousands of climate scientists worldwide are conspiring to produce fake science, there are financial markets that track the climate and those markets make predictions that are very close to what the climate models are predicting and if you think you can do better you can make money betting against them.  Since 1999, the Chicago Board of Trade has operated a market for utility companies to help them hedge their risks of an unusually hot summer (high electricity demand for air-conditioning) or an unusually cold winter (high demand for energy for heating).  This futures market essentially allows speculators to bet on what the average temperatures in America will be in the future.  It turns out that the financial markets’ predictions (green line) are extremely close to what the climate scientists predict (blue lines show two common models) which do a good job of predicting the actual weather (red and pink lines show two different measures).

According to a recent paper, the markets and the climate scientists have been in close agreement and they have both done a pretty good job predicting rising temperatures in America.

It is difficult to get a man to understand something, when his salary depends upon his not understanding it.

Chris Hayes explains the existential desperation of the fossil fuel industry by comparing it with the political battle over the expropriation of slave wealth.

The leaders of slave power were fighting a movement of dispossession. The abolitionists told them that the property they owned must be forfeited, that all the wealth stored in the limbs and wombs of their property would be taken from them. Zeroed out… Today, we rightly recoil at the thought of tabulating slaves as property. It was precisely this ontological question—property or persons?—that the war was fought over. But suspend that moral revulsion for a moment and look at the numbers: Just how much money were the South’s slaves worth then? A commonly cited figure is $75 billion [in today’s money] … In order to get a true sense of how much wealth the South held in bondage, it makes far more sense to look at slavery in terms of the percentage of total economic value it represented at the time. And by that metric, it was colossal… According to calculations made by economic historian Gavin Wright, slaves represented nearly half the total wealth of the South on the eve of secession. “In 1860, slaves as property were worth more than all the banks, factories and railroads in the country put together,” civil war historian Eric Foner tells me. “Think what would happen if you liquidated the banks, factories and railroads with no compensation.” …The scientific consensus is that human civilization cannot survive in any recognizable form a temperature increase this century more than 2 degrees Celsius (3.6 degrees Fahrenheit). Given that we’ve already warmed the earth about 0.8 degrees Celsius, that means we have 1.2 degrees left—and some of that warming is already in motion. Given the relationship between carbon emissions and global average temperatures, that means we can release about 565 gigatons of carbon into the atmosphere by mid-century. Total. That’s all we get to emit if we hope to keep inhabiting the planet in a manner that resembles current conditions. Now here’s the terrifying part. The Carbon Tracker Initiative, a consortium of financial analysts and environmentalists, set out to tally the amount of carbon contained in the proven fossil fuel reserves of the world’s energy companies and major fossil fuel–producing countries. That is, the total amount of carbon we know is in the ground that we can, with present technology, extract, burn and put into the atmosphere. The number that the Carbon Tracker Initiative came up with is… 2,795 gigatons. Which means the total amount of known, proven extractable fossil fuel in the ground at this very moment is almost five times the amount we can safely burn. …the work of the climate movement is to find a way to force the powers that be, from the government of Saudi Arabia to the board and shareholders of ExxonMobil, to leave 80 percent of the carbon they have claims on in the ground. That stuff you own, that property you’re counting on and pricing into your stocks? You can’t have it. Given the fluctuations of fuel prices, it’s a bit tricky to put an exact price tag on how much money all that unexcavated carbon would be worth, but one financial analyst puts the price at somewhere in the ballpark of $20 trillion. So in order to preserve a roughly habitable planet, we somehow need to convince or coerce the world’s most profitable corporations and the nations that partner with them to walk away from $20 trillion of wealth. …It is almost always foolish to compare a modern political issue to slavery, because there’s nothing in American history that is slavery’s proper analogue. So before anyone misunderstands my point, let me be clear and state the obvious: there is absolutely no conceivable moral comparison between the enslavement of Africans and African-Americans and the burning of carbon to power our devices. …[but] when you consider the math …you must confront the fact that the climate justice movement is demanding that an existing set of political and economic interests be forced to say goodbye to trillions of dollars of wealth. It is impossible to point to any precedent other than abolition. …[We] have reason to be suspicious of the fossil fuel companies. …Globally, the industry spends $1.8 billion a day on exploration. As one longtime energy industry insider pointed out to me, fossil fuel companies are spending much more on exploring for new reserves than they are posting in profits.

And they are spending a lot of money on the political fight to preserve that investment.  The money we can track may just be the tip of the iceberg now that Citizen’s United made it even easier for corporations to influence our political system.  Dark money has been pouring in and election influence is being bought.

The 2nd biggest political problem preventing climate action after fossil lobbyists is us.

Fighting climate change is politically popular among both the Republican and Democratic grass roots, so without the influence money the fossil fuel lobby spends, we would undoubtedly make a little more progress, but possibly not that much because most Americans don’t care that much about climate change. In particular, most Americans don’t want to sacrifice much to solve climate change. They want to fight it, but only if it doesn’t cost much.

That includes conservatives and liberals. Conservatives may be less interested in gas taxes than liberals, but liberals also dislike the fact that carbon taxes are regressive and might result in an expanded use of nuclear power. As the Obama administration showed, climate change took a backseat to his bid for universal health care and Bernie Sanders probably talks more about free college than expensive carbon.

Last, but not least, if we want to get the fossil fuel to stop sabotaging our efforts to address climate change, it might require us to essentially bribe them into cooperating and nobody outside of the industry wants to spend billions on that. But dealing with climate change will probably take all of those efforts and more (unless we get some remarkable technological breakthroughs) and most people just don’t want to significantly change their way of life now just so that the planet remains as habitable in a few decades.


For more about the economics of climate change or the political economy of the biggest global environmental success in human history, click on the links.

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Posted in Environment, Globalization & International
One comment on “The political economy of global warming
  1. […] This post will examine the first two of these areas. The third area, political economy, will be examined in a later post. […]

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