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Friday, June 4, 2010

Fixing Global Warming for Fun If Not Profit

Free-rider problem overcome.

Amateur global-warming skeptics can make me uncomfortable. Don’t get me wrong: I am skeptical that either human activities or natural phenomena are creating the conditions for catastrophic global warming. The case for an approaching calamity indeed seems riddled with problems. Those recently exposed emails certainly sounded damaging.

But as I’ve pointed out before, I’m an agnostic. I’m no climate scientist, so I have no direct way to size up the conflicting scientific claims. But I do know one thing: It’s a bad idea to choose which scientists to believe on the basis of their political-economic beliefs.

So why do many skeptics make me uncomfortable? Because I sense that under the surface some of them are saying, “Global warming had better not be happening because if it is I see no way for the free market to fix it. Therefore I would have to accept major government intervention, and I don’t want to have to do that.” The first problem here is that anyone harboring this attitude is likely to be less than objective in assessing the conflicting scientific claims. The temptation to favor a weaker argument in your direction over a stronger argument in the other will be hard to resist. After all, much is at stake.

When I raise this point with free-market advocates, some interlocutors in effect throw up their arms and say there is no way voluntary efforts could address catastrophic global warming. It’s the standard case regarding public goods: Free riders and prisoner’s dilemmas would thwart voluntary remedial efforts. Each individual would rationally calculate that he can let others make the sacrifices necessary to bringing about the improvement while continuing to do what he has been doing. That way he’ll get the benefits for free. The problem is that if everyone, or most everyone, follows this strategy the public good is never produced.

To be specific, if we stipulate that catastrophic (but reversible) global warming is happening, why would anyone voluntarily change his behavior to mitigate it? One person’s effort would make no difference anyway, so why be the chump? Let the others do it.

We’re doomed.

Unless there’s something wrong with the public-goods argument, as I and others think there is. (See, for example, Gene Callahan’s Freeman article “How a Free Society Could Solve Global Warming.”)

What About Government Failure?

It’s really odd to hear a free-market advocate resign himself to a government solution to the supposed global-warming “market failure.” In every other area where government is proffered as the fix for market failure, free-market advocates immediately fire back that government is itself riddled with free-rider problems. There’s a growing if belated literature on government failure. How can government be the answer to a public-goods problem when it suffers the same defect that allegedly plagues the thing to which it is supposed to be superior? How can government solve the public-goods problem when it itself is a public “good.” (I mean that strictly in the technical sense, of course.)

All the goods that government in theory is said to produce are public in nature; they would benefit most everyone. But that means the benefits would redound not only to those who contribute to their production but also to those who don’t, the free riders. Therefore, special interests should never fail to trump the general interest, since smaller groups are less affected by the free-rider problem than larger groups.

Income-tax rate cuts, for example, would benefit everyone, even people who did nothing to help achieve them, say, by contributing money to taxpayer organizations. In theory, then, income-tax cuts should be virtually impossible to achieve.

But income-tax cuts have been enacted in the past. In fact, far bigger things that should have been fatally plagued by the free-rider problem have happened, such as revolutions. They should have been impossible according to the theory. Everyone should have been hanging back waiting for everyone else to overthrow the oppressor. It’s a great way to gain freedom without taking any risks—except if everyone thought that way, no revolution would have occurred. But revolutions have occurred.

So in the political realm the free-rider problem can be overcome. We know it. It’s in the history books. But if it can be overcome in that realm, why not in others? It seems hasty to say it can’t happen. In fact, it has, for example in the effort to end the slave trade, which required a change in public sentiment. So global warming might be amenable to purely voluntary remedies, perhaps not via the traditional for-profit business plan but rather through a voluntary social movement that promoted an ethic encouraging and pressuring people and firms to cease their destructive activities.

The key is ideology, the set of explicit or implicit beliefs that motivates people to act one way or another in public matters even though individually they may reap minimal if any concrete benefits from their own marginal efforts. People are capable of acting to achieve things other than personal monetary profits. Homo economicus is an inadequate picture of the human race, a gross and misleading oversimplification.

“Ideology therefore becomes the wild card that accounts for public spirited mass movements that overcome the free-rider problem…, for ideology can motivate people to do more to effect social change than the material rewards to each individual would justify,” Jeffrey Rogers Hummel wrote (pdf) in another context.

Obviously there’s much more to say on the matter, but for now be aware that serious global warming would be no reason to abandon economic (or other) freedom. We can have our scientific objectivity and our liberty too.

  • Sheldon Richman is the former editor of The Freeman and a contributor to The Concise Encyclopedia of Economics. He is the author of Separating School and State: How to Liberate America's Families and thousands of articles.