Posner and global warming

One of the nice things about blogging and teaching law is that the two often complement each other. Yesterday while searching for additional readings for my first year public law class I stumbled across the fact that legendary US federal judge and incredibly prolific “law and economics” scholar Richard Posner has started his own blog in tandem with fellow L & E pioneer Gary Becker.

Despite being in awe of Posner’s formidable intellect and prodigious output, I’ve never been a major fan of public choice theory (on which L & E is mostly based), but maybe that’s because I don’t really understand it. It seems to me that, when you strip away the Coasian jargon, it doesn’t add very much to a standard pluralist analysis of political systems, except to demonise the interaction between interest groups and governments and suggest that everything would be much better sorted out by markets (which in only some cases is true).

To be candid, I’m hoping Jason Soon and others might go in to bat for public choice theory, and I’ll learn something. I’d have to concede that L & E/public choice can be a very useful tool in some situations, though, and analysis of the interaction between the various stakeholders in tort law is one of them. But I remain to be convinced that L & E has anything terribly useful to contribute to constitutional law, despite providing a link to this article in the Law and Economics Encyclopedia for my students.

I noticed while browsing Posner’s blog that he’s posted several times about global warming, one of my own occasional obsessions. The first post is here and there are several others in the December archives. Interestingly, Posner not only concludes that the Kyoto Protocol is a good thing, but that much stronger carbon taxes are needed (on what is basically a precautionary principle argument, flowing from the fact that the probability of an utterly catastrophic event – rapid major warming – can’t be calculated with present knowledge):

PS – Amanda points out in the comment box that there is a favourable review of Posner’s new book Catastrophe: Risk and Response in the latest New Scientist. Unfortunately it’s subscription access. But there is an earlier (January) NY Times review of Posner’s book by Peter Singer freely available.

But the Protocol, at least without the participation of the United States, is too limited a response to global warming if the focus is changed from gradual to abrupt global warming. …

Because of the enormous complexity of the forces that determine climate, and the historically unprecedented magnitude of human effects on the concentration of greenhouse gases, the possibility that continued growth in that concentration could precipitate¢â¬âand within the near rather than the distant future¢â¬âa sudden warming similar to that of the Younger Dryas cannot be excluded. Indeed, no probability, high or low, can be assigned to such a catastrophe. It may be prudent, therefore, to try to stimulate the rate at which economical substitutes for fossil fuels, and technology both for limiting the emission of carbon dioxide by those fuels when they are burned in internal-combustion engines or electrical generating plants, and for removing carbon dioxide from the atmosphere, are developed. This can be done, in part anyway, by stiff taxes on carbon dioxide emissions. Such taxes give the energy industries, along with business customers of them such as airlines and manufacturers of motor vehicles, a strong incentive to finance R&D designed to create economical clean substitutes for such fuels and devices to “trap” emissions at the source, before they enter the atmosphere. Given the technological predominance of the United States, it is important that these taxes be imposed on U.S. firms, which they would be if we ratified the Kyoto Protocol and by doing so became bound by it.

One advantage of the technology-forcing tax approach over public subsidies for R&D is that the government wouldn’t be in the business of picking winners¢â¬âthe affected industries would decide what R&D to support¢â¬âand another is that the brunt of the taxes could be partly offset by reducing other taxes, since emission taxes would raise revenue as well as inducing greater R&D expenditures. However, subsidies would be necessary for technologies that would have no market, such as technologies for removing carbon dioxide from the atmosphere. There would be no private demand for such technologies because, in contrast to ones that reduce emissions, technologies that remove already emitted carbon dioxide from the atmosphere would not reduce any emitter’s tax burden.

About Ken Parish

Ken Parish is a legal academic, with research areas in public law (constitutional and administrative law), civil procedure and teaching & learning theory and practice. He has been a legal academic for almost 20 years. Before that he ran a legal practice in Darwin for 15 years and was a Member of the NT Legislative Assembly for almost 4 years in the early 1990s.
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Michael Warby
2022 years ago

Surely, if public choice theory thought *everything* was better sorted out by markets, adherents would be anarchocapitalists and advocate abolition of the state?

I would suggest it is more than it tends to suggest that consensual exchange is generally a better way to proceed and coercive mechanisms need extra justification, rather than the other way around. Which does indeed make it pretty mainstream classical liberal.

As to its wider uses, there is the interesting issue, first pointed out to me by Peter Hartley, that politics alwys seems to require a rhetoric of public interest. Does public choice theory have a good explanation for the propensity for such rhetoric? After all, if it was mere self-interested hypocrisy, surely it would be so rapidly discounted as to be useless. Now, people are clearly cynical about politicians’ promises and arguments, but critiques thereof are usually themselves put in terms of public interest rhetoric.

(Note, I am not suggesting the use of such rhetoric is hard to explain, just that getting a public choice explanation might be a tad difficult. But hey, I would be happy for someone to prove me wrong.)

Amanda
2022 years ago

The latest New Scientist has a positive review of Posner’s Catastophe book, which sounds like an expansion on that theme.

Nicholas Gruen
2022 years ago

I agree with you about Public Choice Ken.

A simple insight – which is also in Adam Smith – dressed up as a methodology.

The real issue is what is worth formalising – quite a few things – and what is not worth formalising – quite a few things.

A lot of public choice – certainly a lot of the models are a waste of time IMHO – but ‘public choice thinking – like that of Macur Olsen for instance is often well worth the effort.

Ken Parish
Ken Parish
2022 years ago

One of the things that set me thinking afresh about the actual utility of public choice theory was this passage from the constitutional law essay I linked in the primary post:

“Normative constitutional economics thus re-interprets the Pareto criterion in a twofold way: it is not outcomes but rules or procedures that lead to outcomes which are evaluated using the criterion. The evaluation is not carried out by an omniscient scientist or politician but by the concerned individuals themselves: ‘In a sense, the political economist is concerned with “what people want”

Jason Soon
Jason Soon
2022 years ago

there is some predictive/analytical value because the extent to which some assumptions are more appropriate than others in certain contexts is certainly not just a matter of ‘anything goes’. and it is not just pseuo-sciencific cloaking – in fact quite the opposite. the fact that such assumptions are specified in advance and upfront avoids the sort of pointless wrangling ultimately, it is discovered, over cross-purposes assumptions in discussions conducted lacking such formalisation but where early formalisation would have made clear that different assumptions were being used. the modelling should not be regarded as making predictions that more ‘precise’ or anything like that. economics is only capable of pattern predictions or predictions re systemic tendencies (in that sense it is no different from biology) – no one would accuse mathematical models in biology of simply being a pseudoscientific cloak simply because depite being mathemetical they can make no specific predictions

Jason Soon
Jason Soon
2022 years ago

ken
i also think you need to distinguish between positive public choice theory and the kind of normative public choice pursued by Buchanan (which arguably is really just a logical development of Paretian economics) and again different from Coasian economics which has yielded a very robust and much more empirically and historically based economic research programme (which is a net gain for the discipline I would think). Coasian economics or New Institutional Economics now uses lots of business history case studies enlivened by the careful application of micro-econometrics to test its claims (e.g. like the Fisher Body case study see http://esnie.u-paris10.fr/pdf/textes_2003/JLE-Freeland.pdf
I think this sort of research should be highly welcomed in economics and what is economics as envisioned by the likes of Marshall was originally about)
Positive public choice theory is really just a logical development from neoclassical theory except it incorporates more specific assumptions about government (whereas before there were none at all or government was just ignored altogether) and is also a welcome introduction of rigour

Jason Soon
Jason Soon
2022 years ago

PS also I don’t think it’s true to say that Law and Economics is based on Public Choice theory. You could say it is one of the necessary components of L&E since a complete L&E theoretical framework would also attempt to model the conduct of legislators and judges and that one of the factors for consideration in an economic assessment of a particular legal provision is how it will be used in the hands of legislators, etc thus requiring some public choice theory in its assessment but that is quite different from saying that one is foundational to the other.

Michael Warby
2022 years ago

I would like to second Nick’s point about Olson. If you read Ibn Khaldun (the original inventor of the Laffer curve, as Laffer freely admits: indeed, I wonder if Adam Smith had read Ibn Khaldun since many of the ideas in *Wealth of Nations* can be found in Ibn Khaldun) plus Olson (particularly his last, alas posthumous book, *Power and Prosperity*) huge amounts of history make much more sense.

I work for a group which puts on Ancient and Medieval days for schools. In 50 minutes I can take a Year 7 class from hunter-gatherers to the Roman Empire, and it’s basically Cavalli-Sforza + Mancur Olson + Ibn Khaldun.

Jacques Chester
Jacques Chester
2022 years ago

The Austrian economic critique of the Coasian approach, incidentally, is that it rides roughshod over property rights. It counts them as another item to be weighed against a quasi-utilitarian norm, rather than an intrinsic component of economic behaviour.

Rothbard argued that if early Industrial Revolution courts had respected strict property rights, rather than pursuing a primitve Coasian analysis (before Coase came to it), pollution wouldn’t be the globe-spanning problem it is today. I’m inclined to agree.

The problem with Coase, Posner and the Austrians is that they fundamentally disagree on methodology. Austrians believe in a priori reasoning. I’m of the opinion that this is no longer the only way to examine Austrian theory:
http://austrianforum.com/index.php?showtopic=82

Jacques Chester
Jacques Chester
2022 years ago

The Austrian economic critique of the Coasian approach, incidentally, is that it rides roughshod over property rights. It counts them as another item to be weighed against a quasi-utilitarian norm, rather than an intrinsic component of economic behaviour.

Rothbard argued that if early Industrial Revolution courts had respected strict property rights, rather than pursuing a primitve Coasian analysis (before Coase came to it), pollution wouldn’t be the globe-spanning problem it is today. I’m inclined to agree.

The problem with Coase, Posner and the Austrians is that they fundamentally disagree on methodology. Austrians believe in a priori reasoning. I’m of the opinion that this is no longer the only way to examine Austrian theory:
http://austrianforum.com/index.php?showtopic=82

(this may have been posted twice)