My experience in life is that whenever you think you’ve imagined the worst possible outcome of a course of actions you learn that you’ve been unduly optimistic. The editors of the Wall Street Journal reacted to Secretary of State John Kerry’s pitch for the Obama Administration’s energy policy:
Secretaries of State may want to stop making statements in the form of questions, à la “Jeopardy.” First Hillary Clinton declared “what difference at this point does it make?” regarding the reasons that four Americans died in Benghazi. Then on Monday John Kerry told graduates of Boston College that even if he’s wrong about climate change, it won’t cost a thing.
“The solution is actually staring us in the face. It is energy policy. Make the right energy policy choices and America can lead a $6 trillion market with four billion users today and growing to nine billion users in the next 50 years,” Mr. Kerry said in his commencement address, referring to climate change. Then came the odd poser.
“If we make the necessary efforts to address this challenge—and supposing I’m wrong or scientists are wrong, 97% of them all wrong—supposing they are, what’s the worst that can happen?” Mr. Kerry said. “We put millions of people to work transitioning our energy, creating new and renewable and alternative; we make life healthier because we have less particulates in the air and cleaner air and more health; we give ourselves greater security through greater energy independence—that’s the downside.”
with their own scenario of downside risk:
The “worst that can happen” is that we spend trillions of dollars trying to solve a problem that we can’t do anything to stop; that we misallocate scarce resources in a way that slows economic growth; that slower growth leads to less economic opportunity for Boston College grads and especially the world’s poor, and that America and the world become much less wealthy and technologically advanced than we would otherwise. All of which would make the world less able to cope with the costs of climate change if Mr. Kerry is right.
Leave aside Mr. Kerry’s instantiation of the fallacy of the broken window. I think that even the WSJ editors are being unduly optimistic. An even worse scenario is that my speculation that carbon emissions increase faster than linearly with wealth and income is correct, that solar and wind power remain at most backup power for the foreseeable future, and that global demand for oil continues to grow, as you would expect if the Jevons paradox holds. In that case none of the neoliberal strategies that have been proposed for reducing carbon emissions, e.g. a carbon tax or “cap and trade”, will have anything but the smallest effect on emissions, we will encourage increased oil and coal consumption by the Chinese and Indians, we will have more carbon emissions and, presumably, a greater risk of climate volatility, with lower economic growth and fewer jobs than we would otherwise have had.
We can’t imagine the worst thing that could happen.