Today's guest is Steve Horwitz, he is the Charles A. Dana Professor and Chair of the economics department at St. Lawrence University.
Steve recently wrote an article titled, "Make Babies, and Don't Let the Greens Guilt Trip You about It." This was a response to an argument made by the bioethicist Travis Rieder, who was recently profiled by NPR. Rieder argues that it is immoral to have children because of the burden additional humans place on the Earth, in particular because of the risk of catastrophic climate change. Here's how that NPR piece put his argument:
The problem with this sort of reasoning is that it views human beings as consumers and not as producers and innovators. Humans are able to contribute to the division of labour and to come up with ideas. That division of labour allows everyone to become more productive.
Rieder's ideas echo those of Thomas Robert Malthus, and he is wrong for much the same reasons. Malthus anticipated a world where the diminishing returns in agriculture and exponential population growth would lead humanity to subsistence in a few generations. As Malthus predicted, populations did skyrocket, but contra Malthus, people got significantly richer too. What happened?
Innovation happened. Along with that innovation, and contributing to it, was a finer division of labour created by population growth. As Adam Smith wrote, "the division of labour is limited by the extent of the market."
Humans create resources, not by violating thermodynamics, but by discovering better ways to satisfy our needs with the physical matter that exists. Resources are subjective. To a farmer 500 years ago, striking oil was a nuisance. It would ruin his crops and destroy the value of his land. Yet today, the very same oil is a valuable resource because we've discovered how to make it useful. Julian Simon challenged the idea that we're running out of resources, declaring human innovation to be "the ultimate resource."
Rieder and other environmentalists are different from Malthus in that they worry not about more people eating too much food but about them releasing too much carbon. A lot of this comes down to our estimate of the social cost of carbon. Rieder sees this cost as being so high, it outstrips all other concerns. He expects apocalyptic changes in the Earth's climate within twenty years.
Economists are not climate scientists, we aren't trained to be able to perform our own studies on the relationship between carbon emissions and global climate. But what we can do is look at the bulk of the published research. The two things we could say about this to someone like Rieder are, first, that he seems to have based his arguments on the absolute highest estimates of the climate impact of carbon, where a reasonable person might have looked at the median estimates. And second, people who have performed meta-analyses of this literature have found evidence of publication bias towards finding a larger impact, meaning the best estimate would be somewhat below the median estimate once we correct for publication bias. If the kind of climate change Rieder sees coming in twenty years is really more like two hundred years away, it changes the argument a lot.
With the costs of climate change so far out in the future, and the costs of abatement concentrated on the present, our cost-benefit analysis needs to account for the discount factors in such long time spans. The projects that have to be sacrificed today to abate climate change over the next couple centuries have their own benefits that need to be weighed against the costs of releasing greenhouse gasses into the atmosphere. It all comes down to opportunity cost.
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