Tuesday, November 20, 2012

Tuesday Links


Greg said...

Climate Change: we're getting the next batch of reports from Establishment NGOs - it must be time for another (useless) climate change conference. On the plus side, signs are appearing that the multinational corporations are starting to realise that platitudes don't work, even if the NGOs don't.

The World Bank has issued a report (pdf) (by the Potsdam Institute), but under the World Bank's own imprimatur. The report is numbingly boring, a notable feat considering the subject matter.

The United Nations Environment Programme's (UNEP) has issued another report on the "emissions gap".

The McKinsey Global Institute and PwC (Pricewaterhouse Coopers) have also issued reports. PwC are refreshingly blunt. From the Guardian piece about the PwC report:-

"Business leaders have been asking for clarity in political ambition on climate change," says partner Leo Johnson. "Now one thing is clear: businesses, governments and communities across the world need to plan for a warming world – not just 2C, but 4C or even 6C."

That's mainly due to the long lifetime of large capital assets and the apparently-low price of coal: coal-burning power plants built ten years ago will keep emitting carbon for the next forty years, and because coal looks cheap, coal burning capacity is expected to increase 50%.

Three notes: A 4ºC global average increase means an average increase of 6ºC over land, with higher values in the interiors of continents and away from the tropics. Hmm, I wonder what that will do to crop yields? Secondly, 4ºC by 2100 means a long-run equilibrium temperature increase of 7ºC, which means at least 20m (60 feet) of sea level rise.

Thirdly, although PwC is realistic, the NGOs still aim to soothe. From the UNEP we get fantasies such as this:-

...["B]y 2050 the [global] building sector could consume 30 per cent less electricity compared to 2005 despite a close to 130 per cent projected increase in built floor area over the same period," it [the UNEP report] says.

We can more than double building floor area, and use less electricity, as air-conditioning requirements increase. O....kay. The UNEP continues:-

The report concludes that if this is to happen, "state of the art building codes may need to become mandatory in the next 10 years in all of the major economies such as the United States, India, China and the European Union".

May need universal mandatory best practice? May need it? Whatever. It's not going to happen, and it's only a third the answer anyway.

What is needed as well is a mandatory retrofit of the existing building stock, and most importantly to double the real price of fossil energy to building users. Fantasies, all three.

Greg said...

I'm reading Acemoglu and Robinson's Why Nations Fail:The Origins of Power, Prosperity, and Poverty, and I can recommend it to your readers, Stuart.

It's yet another book in the macro-history genre, but it contains a compelling argument about the sources of (and prospects for) economic growth in various circumstances, as well as strong criticism of the traditional arguments from geographical, cultural, and ignorance factors ("guns, germs and steel"; "Protestant work ethic"; "rulers mean well but don't know what to do").

The book also has a lot of fun facts about countries. Did you know that in the Ukraine, when school starts in September, all the school-kids get taken out to the countryside to pick cotton for two weeks?

Perhaps unusually for economists, the authors assert that everything depends on politics. Sustained growth requires an unlikely combination: a strong central government, and institutions that force turnover in the membership of government and act to reduce inequality within the country.

(History tells them that centralization alone can give a burst of growth lasting up to about 150 years--shorter in modern times, of course. But without the second condition, growth then stops. And the incentives to create these institutions are usually weak to non-existent.)

I think the book has a useful perspective for thinking about this century's risks and the range of likely responses.