Cochrane on Climate Change Policy

Dora and I recently drove from Los Angeles to Carpinteria and on our drive we listened to the new Goodfellows Episode. After a discussion focused on Niall Ferguson’s fashion tips, the conversation pivoted to climate change policy.

Here is Grok’s read of John Cochrane’s transcript remarks;

Cleaned Transcript from the Hoover GoodFellows Podcast (John Cochrane’s response segment)

Host: All right. A question from Andrew of South Africa who writes, “It seems to me the GoodFellows, particularly John Cochrane — yeah, John — are strongly against those who are worried about human-induced climate change. Do you, like your president, believe that climate change is a hoax? Why are you so against moving to clean energy? Surely fossil fuels generate huge waste and we should be focusing on reducing harmful waste in whatever form.”

John Cochrane:

“Well, let me take issue with the question. “Against those who are worried about climate change.” I’m not against anyone. I’m against bad policies, but I’m not against people, and I’m not against moving to clean energy.

I’m against the costly, unproductive policies.Climate change is real. Climate change is caused by human-emitted carbon dioxide, largely. I’m not proclaiming those as verities; I’m just summarizing what the actual science says.

I’m sad, though, that this got turned into a massive green pork project that wastes trillions of dollars, de-industrializes places like Europe, all to no benefit for the climate. So I’m against climate policies that don’t begin to pass a whiff of a cost-benefit test.

California’s $230 billion high-speed train is an example.And the perversion of actual science that has gone on, trying to whip us all into a millenarian cause — Bjorn Lomborg just had a great little op-ed in the Wall Street Journal today on one tiny example. The World Health Organization is once again trying to declare the climate catastrophe — I think we’re up to that now — as a human health emergency because more old people are dying, more people are dying of heat in the heat waves in Europe.

Wait a minute. If you adjust that for age, Europe’s getting older. There’s no change whatsoever. And in fact, fewer people are dying of cold. So that doesn’t mean climate change is good, but people are lying to you, perverting the science in a political agenda that is wasting trillions of dollars to no benefit whatsoever.

I’m all for nuclear power, renewables, solar where appropriate, where you can buy power on an intermittent basis — all those wonderful things that technology and adaptation will bring us to lower carbon emissions.But trillions and trillions of taxpayer dollars into big rat holes in the ground …”

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I am not a macroeconomist. I do agree with this quote. What it makes me think about is what is the total Trillions of dollars that the United States and Europe has spent on low carbon subsidies in the last decade. What is the alternative use of that $ such as reducing each nation’s debt.

Imagine if the U.S and Europe had simply not spent all this $ on subsidies and instead just engaged in free trade with China and imported solar panels, wind turbines and electric vehicles from China. Per ton of carbon emissions avoided,how much cheaper would this free trade strategy have been? If environmentalists prioritize the green economy, why didn’t they support this strategy?

Back in 2011, I published the following piece in the New York Times. It wasn’t well received back then!!

A quote from my piece

The United States will gain from the green tech push taking place in China. Because of specialization and learning-by-doing, the cost of producing solar panels and wind turbines will decline. This is very good news for all sorts of firms ranging from Wal-Mart to Google to the defense department. Each of these “non-green” entities will be increasingly likely to be able to “go off the grid” thanks in large part to China’s investments. In this sense, the United States will experience a “greening” of our industries because we are a net importer of China’s renewables technology exports.

In 2011, our green tech comparative advantage rests with our leading universities. The nerds at our universities know that if they discover a game-changing breakthrough their idea can be mass produced in China. China knows that U.S universities are likely to continue to come up with great ideas and thus it makes sense to have the nimble factories and workers ready to go.

How does the American middle class gain from this trend, even if the clean energy equipment isn’t manufactured here? One perhaps unsatisfying answer is, air quality will improve and greenhouse gas emissions will decline.

15 years ago , I didn’t fully appreciate how much $ the U.S and Europe would spend on their own green subsidies. If Greta sat down with Harvard Kennedy School economists and did a sober cost/benefit analysis, what has been the ambient air pollution progress and global greenhouse gas emissions reduction progress brought about by these investments? Now, you might say that we wouldn’t have the Tesla if these subsidies hadn’t existed. That’s an interesting Counter-Factual.

When Dora and I drive back from Carpinteria to LA in our Tesla, we will talk about that claim.