Monday, October 14, 2019

Climate Change is Real but We're Not Going to Die

"A Person is Entitled to Their Opinions but the Facts Belong to Everyone" - Don Paarlberg

I first heard about global warming in the mid 1980s in a book with the captivating title "The Future of the North American Granary."  In fact theoretical discussions of the possibility of greenhouse gases causing global warming go back until at least the 1950s if not sooner.  At that time one of the debates was whether particulate pollution would cause global cooling or if the accumulation of CO2 would raise temperatures.  The answer is that the planet is warming, and precipitation patterns are changing.  We are increasingly living in a world with fewer but stronger storms.  Also, with some exceptions it appears that the dry regions are getting drier and the wetter regions are getting wetter.

Despite what you may have heard, the world is not running out of water.  While climate change is impacting some aquifers and water basins, and the water cycle may be accelerating, the total amount of global precipitation is virtually identical from year to year.  If anything rising sea levels will lead to more precipitation.

It is almost certain that in the future sea levels will rise and will become more acidic.  This will reduce the productivity of the oceans and will pressure populations that live in coastal areas.  In other words there is a very good probability that there will be climate refugees in the future, especially from island states in the Pacific, and perhaps from countries with major river deltas such as Bangladesh.  Mosquito borne diseases will likely become more common, as the range of some species expand, and there is less winter kill off. People living in major cities in the West may need to move a few miles inland or adapt buildings that can withstand higher sea levels.  

How the West responds to these refugees will be one of the biggest issues facing developed economies in the next few decades.  One positive aspect of this fact is that the world has time to adjust and handle these refugees if it embraces the bleakness.  However, most nations individually only manage emergencies.

The Current State of Climate Change Debate


It wasn't always like this.  There are at least two examples of environmental policies that effectively addressed major problems.  The first was the Montreal Protocol, which banned chlorofluorocarbons (CFCs) and halons that were creating a hole in the ozone layer.  Since then the hole has become increasingly small.

The second is the cap and trade program that effectively reduced the generation of sulfur dioxide, the primary source of acid rain.  Since this policy was enacted, the health of forests and lakes have improved downwind of major sources of acid rain.

These two policies indicate some two important realities.  The first is that positive action is possible.  The second is that the environment and the planet is more resilient and  self-healing than environmental activists are willing to admit.

Another major concern involves agricultural productivity.  Some areas will be adversely impacted; of the major food exporters, Australia appears to be particularly adversely impacted by climate change.  In addition to warmer temperatures, Australia appears to more more susceptible to both droughts and flooding.  Fruit growing regions in the Midwest and Northeast parts of the U.S. and Canada may face additional pest pressure and the impact of warmer weather followed by frosts, which will kill premature blossoms.

Other parts of the world should see higher productivity.  This includes the Prairies of Canada and the Northern plains of the U.S., although this region, especially the Red River Valley of the North faces considerable flooding potential.  Areas such as Ukraine and Russia also stand to generate increased crop production resulting from climate change.  As a result the net effect of climate change of crop production is difficult to determine at this point.

Environmentalists also decry animal food production as not being sustainable.  Perhaps some methods of raising animals are, but it is difficult to understand how traditional pasture based systems that have been used for thousands of years would have a major impact on the environment.

It should be noted that if climate change is a threat to life on earth there are several potential technical methods to address it.  One is through the use of geoengineering; increasing cloud cover, developing ways for the oceans to capture more carbon or to reflect more light back into the atmosphere are examples.  Genetic engineering could be used to develop crop varieties that drought resistant, heat resistant, and use fewer purchased inputs such as nitrogen fertilizer.  One of the great frustrations in dealing with climate change is that many of advocates of the dangers of climate change are opponents of methods to reduce its impacts.

Climate change is real and the faster policies and technologies are put in place to address it, the smaller the impact will be.  However, the inability of climate change deniers and climate change activists to embrace the bleakness, likely makes the future impacts worse that they would otherwise be.


Thursday, October 10, 2019

The Latest World Economic Forum World Competitiveness Report is Out

The World Economic Forum (think of the UN for people who actually run the world), just put out its annual rankings of global competitiveness.  If you want to sift through 600 pages of data it can be found here http://www3.weforum.org/docs/WEF_TheGlobalCompetitivenessReport2019.pdf.  In it, the competitiveness of 141 different countries are assessed on 12 broad categories.  Unlike many similar reports, the Nordics, while performing well do not dominate the list.

Overall the U.S. ranks second after Singapore, with an overall score of  84. Implicit in these figures is the fact that the U.S. can effectively compete in international markets, and what problems the U.S. faces is largely of its own making.

Large countries such as the U.S. and China score high in market size, and the U.S. ranks first in business dynamism and innovation capability.  The U.S. also ties for first with several other countries in terms of macroeconomic stability.  Inflation and interest rates are low as is unemployment.  For the most part our labor markets are in pretty good shape. Compared to most countries our educational and job training system is reasonably competent although it is not as good as Switzerland, Germany or Finland.  A big problem that perhaps helps explain the disparity of incomes in the U.S. is the low level of workers rights where the U.S. only ranks 81st. 

Despite the positive attributes there are several areas of concern.  The U.S. only ranks 20th in the strength of its institutions, and 99th in terms of shareholder governance.  This might explain the pay levels of senior management.  It also explains why The Economist calls the U.S. a flawed democracy. A nation that is governed by Executive Order and judicial fiat has serious institutional problems that transcend whoever controls the executive branch of federal or state government. 

Policies that address issues relating to corporate governance and worker rights may be more effective than raising taxes on the affluent.  This has not been a major point of discussion in the developing Presidential campaign, and a platform that promotes class warfare has seldom been successful in the U.S.

The U.S. only ranks 55th in terms of healthy life expectancy.  While the average lifespan is approaching 80, the number of healthy years appears to be stuck at around 66 or 67.  Lifestyle probably has more to do with this than the quality and access to health care.  We eat too much, don't exercise enough, and take too many drugs.