In response to my point below about the transparently inconsistent reasoning about public goods employed by many defenders of the woeful cap and trade bill, Ryan Avent writes:
This seems almost deliberately dense. In particular, it makes no distinction between the world of billions of daily, anonymous transactions and the world in which a handful of great powers attempt to hammer out a diplomatic agreement. Unsurprisingly, it’s very difficult to get millions of urban denizens to voluntarily come together to build and fund a road network or transit system in the absence of a coercive mechanism. The benefits are too broadly shared, and the incentive to free ride too great. But the smaller the number of players, the more concentrated the benefits, and the easier it is to find a mutually beneficial agreement.
I certainly wasn’t being deliberately dense. Ryan is, as always, quite charitable in allowing that my denseness might have been involuntary. I am grateful. Perhaps it is this very denseness that prevents me from grasping how I was being dense. I persist in thinking that the standard mode of reasoning about collective action problems applies. So I patiently await instruction.
Ryan evidently believes it is almost obvious that the structure of the strategic problem in securing global climate policy coordination is less complex than the problem of putting together standard-issue public goods, like a system of roads. In the case of global climate policy coordination, we’re talking not about diffuse millions but a mere “handful of great powers,” who will enjoy such concentrated benefits from an agreement that the normal worries about credible commitment, assurance, free-riding, and so forth do not really apply. So the absence of a coercive enforcement mechanism is pretty much irrelevant. Not only shouldn’t we worry about the standard logic of interdependent strategic action, but it’s almost deliberately dense to do so. My bad.
If only we’d known that global coordination problems among “a handful of great powers” was such a breeze, we’d have arrived at Kant’s global federation of perpetual peace centuries ago. Come to think of it, why were there two massive World Wars and a Cold War last century? It’s almost as if the great powers were being deliberately dense. But I guess we now know the trick of aligning the perceived interests of great powers: just make some kind of effort to cooperate. Go ahead and move unconditionally, even if your own country’s move actually signals quite clearly that there is next to zero political will to bear the costs of an agreement with teeth. And then what you do is you wait for other great powers to be impressed and encouraged and convinced by the immense advantages that will accrue to them once they jump on board. It’s easy once you know how.
Or maybe that’s not how Ryan thinks it goes. But then how does it go? I still don’t get it.
Other things I don’t get:
(a) The idea that “great powers” are headed by some kind of unified intelligence or agency that can make agreements and just stick with them. I thought the governments of states–even authoritarian ones–were semi-stable coalitions of various and often conflicting interests subject to the vagaries of mass public opinion.
(b) The idea that the benefits of global climate policy coordination — which will not be realized for many decades — will accrue to the relevant state decisionmakers and so provide them with sufficient incentive to make and stick to an agreement, but that the costs of coordination — which will be significant and immediate — will somehow not be borne by those decisionmakers (e.g., “the people” will not complain about these costs in a politically threatening way) and so will not overwhelm the posthumous payoff in the political accounting.
(c) The triviality of time inconsistency problems. I had thought that time inconsistency problems–that the government now cannot really bind the government later–were endemic to politics. This makes it almost impossible for a current government to credibly promise that a policy will persist over time. I had thought you needed some kind of mechanism (which we do not appear to have) to align the incentives of the parade of future decisionmakers to sticking with it over time.
(d) The option value of empty gestures. The Waxman-Markey bill appears to everyone–even advocates like Ryan–to be mostly a bust, if not a complete bust. It remains unclear to me why a transparently bad bill does more to improve the U.S.’s bargaining position than no bill.
I don’t see that Ryan addresses any of this as he goes on:
[T]here are fewer than ten relevant players, and only two really relevant players not already committed to reductions — the US and China. Given that climate negotiations are part of a repeated game between the two great powers (that is, they’re more or less constantly talking about one economic or political issue or another), it seems very likely indeed that an American pre-commitment to emission reductions would facilitate a similar Chinese commitment.
India? Cheap talk?
The repeated game between the U.S. and China looks to me trickier than this. First, it’s better for China in the short and medium term if we tax carbon emissions and they don’t. They sure will be happy to see us go first. (It will, among other things such as encouraging capital flight to China, give them more slack with which to clean up things like SO2 that really do matter to them in the short term.) So then what do we do if they don’t play along? Impose carbon tariffs? Then we have probably just started a trade war with our chief source of inexpensive manufactured goods. Is this the repeated game Ryan has in mind?
Ryan sums up:
Will Wilkinson works for Cato, and Jim Manzi writes for National Review, two great outposts of climate change denialism and do-nothingism. It occurs to me that if more of their compatriots were willing to discuss the issue responsibly, then upwards of 90% of the GOP might not be committed to a policy based on utter stupidity, and a better bill might be feasible. Instead, they’re busily arguing against Waxman-Markey. That’s their right, but it certainly says quite a bit about their priorities.
I wonder if Ryan would like to be more explicit about what he thinks my priorities are. I’ll tell you what I think my priority is: to make people, especially poor people, better off. I am against this bill because I honestly believe it will leave many people worse off and make almost no one other than politically-connected domestic interest groups better off. I think Ryan has a different assessment of its likely effects, but I don’t see any need to slyly impugn his motives. If he thinks his argument is so winning, then it might benefit him to drop this kind of well-poisoning rhetoric, which is beneath him, and start actually winning the argument.