Bryan Caplan  

The Moral Case for Fossil Fuels: Refining the Case

Kling on the Constitution and ... Deadweight Loss from the New C...
The Moral Case for Fossil Fuels is the best book I've read all year, and makes a great holiday gift.  But there's still room for improvement.

1. Epstein centers his moral case around "human life as the standard of value."  This is virtually the only Objectivist jargon he uses.  And when we're talking environmental ethics, it sounds reasonable.  Most people, laymen and philosophers alike, think we should protect the environment primarily for the sake of humanity.  Rhetorically, "human life as the standard of value" works.

Philosophically, however, it's a mess.  Philosophers unfamiliar with Objectivism will assume Epstein's an old-school utilitarian, trying to maximize total human happiness.  But he disavows this view:
My view of the right approach is: Respect individual rights, including property rights. You have a right to your person and property, including the air and water around you. Past a certain point, it is illegal for anyone to affect you or your property. But-- and here's where things get tricky-- it's not obvious what that point is. Let's look at two extremes.

One policy would be: People can pollute or endanger other individuals at will so long as they are viewed as benefiting "the common good." This policy, encouraged by some businesses in the nineteenth century, is immoral. It says that some individuals should be sacrificed for the business and its customers.
Yet in the blink of an eye, Epstein seems to reintroduce "the common good" through the back door:
Here's another bad policy: Any amount of impact on air, water, and land should be illegal. This is simply impossible by the nature of reality-- for example, consider that perhaps our most dangerous emission, contagious disease, can often be transmitted through the air or other life forms in ways we cannot detect or prevent. At any given stage of development, some amount of potentially harmful waste cannot be prevented. For example, the man who invented fire could not protect himself or his neighbors from smoke. Should he be prohibited from using fire? Obviously not, because the right to be protected from pollution exists in a context, which is the right to the pursuit of life more broadly.
Epstein might mean something like, "On the 'common good' view, pollution should be allowed as long as it benefits most people.  On my view, pollution should be allowed as long as it benefits everyone."  But this is an extremely stringent standard, because pollution varies widely from place to place and sensitivity to pollution varies widely from person to person.  In a world of billions, there are bound to be a few asthmatics who live next to coal-fired power plants.  Some are on net better off with more energy and more pollution, especially in the long-run.  But others will be too sensitive (or elderly) to profit from the long-run wonders of fossil fuels.  This is especially clear if NIMBYism is on the table.  If we eschew arguments about "the common good," what's wrong with the position, "The government should allow moderate pollution, but none within 500 feet of me"? 

My challenge for Epstein: Semantics aside, how does your view functionally diverge from the "common good" view you condemn as "immoral"?  If talk about individual rights means anything, shouldn't there be noteworthy cases where you favor stricter pollution controls than utilitarians?  Weaker controls?

2. Epstein powerfully argues that the total benefits of fossil fuels are enormous.  Most people in our society need to hear this.  But this doesn't imply that the marginal benefits of fossil fuels are enormous, or even positive.  This is textbook environmental economics: Most human beings blithely pollute even when the personal benefit of extra pollution is small and the cost to strangers of extra pollution is high.  The textbook solution, of course, is to raise the price of pollution.  In the long-run, this spurs industry to search for cleaner technologies.  In the short-run, though, it deliberately does something rhetorically uncomfortable for Epstein: discourage energy consumption.

I'm sure Epstein understands marginal thinking.  But the word "marginal" appears but once in his book.  Instead, he talks repeatedly about "minimizing" environmental harms.  A typical passage:
[D]evelopment and the fossil fuel energy that powers it carries risks and creates by-products, such as coal smog, that we need to understand and minimize, but these need to be viewed in the context of fossil fuels' overall benefits, including their environmental benefits. And it turns out that those benefits far, far outweigh the negatives-- and technology is getting ever better at minimizing and neutralizing those risks.
This is sloppy thinking. There's only one way to "minimize" the negative effects of coal use: Use zero coal.  To avoid this implication, you have to minimize negative effects subject to some another constraint, such as maintaining 3% economic growth.  But this formulation has a rhetorically unwelcome effect for Epstein: it highlights the trade-off between pollution abatement and other goods.  Epstein is right, of course, to point out all the ways that technology powered by fossil fuels helps clean the environment.  But we nevertheless face trade-offs between pollution abatement and other goods on a daily basis.

3. When societies get rich enough, they use technology and laws to clean up the environment.  Epstein is all for this.  A typical passage:
Nineteenth-century coal technology is justifiably illegal today. The hazardous smoke that would be generated is now preventable by far more advanced, cleaner coal-burning technologies. But in the 1800s, it was and should have been perfectly legal to burn coal this way-- because the alternative was death by cold or starvation or wretched poverty.
While this technology-and-law approach sounds very sensible, it pales in comparison to the wisdom of textbook environmental economics.  The essence of the approach: Neither tolerate nor ban pollution.  Instead, put a price on it!  This simultaneously (a) discourages pollution at the margin and (b) encourages anti-pollution innovation.  It also raises revenue, allowing government to reduce taxes on work and savings.  Yes, this approach has some moral and practical problems.  But it's still the story to beat - and Epstein doesn't address it.

The good news is the Epstein is both young and young at heart.  He has ample time and energy to refine the moral case for fossil fuels - and I'm optimistic that he will.

P.S. I'm leaving for family vacation in my favorite state, Florida, today.  Happy holidays to all!  And if you happen to spot me in southern Florida, please say hi.

COMMENTS (6 to date)
Bedarz Iliaci writes:

"On the 'common good' view, pollution should be allowed as long as it benefits most people.

Is this how economists translate the political philosophy term common good?

But in political philosophy common good is that irreducible good that is defined for the whole community. Eg national defense.

Hazel Meade writes:

IMO, the proper approach is to not only put a price on polluton, but also to make sure that said price is directed towards compensating the people who are harmed by pollution.

I've seen plenty of proposals to tax carbon, but I don't think I've ever seen anyone (other than myself) advocate using the funds exclusively to compensate victims of climate change.

Similarly, the same approach could be applied to other forms of pollution, even relatively mundane ones.
For instance, imagine that in a local area around a landfill, the residents receive a small monthly check from a fund paid by the landfill company which compensates them for the smell. Payment levels could be set to whatever level it takes to bring the property values up to the average market prices in surrounding (unaffected) neighorhoods. If the property values are equal, then that is an indication that the negative impact of the landfill is perfectly compensated by the prospect of the monthly compensation payments.

Nathan W writes:

How about "So long as costs of adminsitration do not exceed the benefits of regulating an industry or the costs of enforcing that polluters should compensate those on the receiving end of negative externalities, then there is a case for market intervention".

This should be accompanied by measures to deter people from going out of their way to increase those costs of administration, lest highly legitimate cases of intervention be passed over due to excessive (and I mean the word as a matter of mathematical definition) effort, not to represent their interest in the matter, but to affect the cost-benefit analysis in such a way that the cost of collective action would be "too high" in cases where this collective action would normally have taken place had the polluter not made explicit efforts to increase their costs of coordination and administration of this mutually beneficial structure.

Some people try to argue that they already pay, because they pay taxes on the profits. But that's an empty argument. Everyone pays taxes on profits, whether you profit by helping people to find work or profit from dumping toxins into the atmosphere. There should be explicit cost on pollution so that firms will find less pollutive ways. But sometimes it will be far easier just to regulate.

As for the case of collective action on climate change, the number of different types of actors across socioeconomic situations, legal jurisdictions and temporal periods is difficult to model, let alone treat for practical considerations. For example: who represents the future? Who represents uneducated farmers whose crop productivity will be lower when temperatures rise?

austrartsua writes:

"While this technology-and-law approach sounds very sensible, it pales in comparison to the wisdom of textbook environmental economics. The essence of the approach: Neither tolerate nor ban pollution. Instead, put a price on it! "

That sounds all fine and dandy, but the obvious next questions are: what price? And what counts as pollution? The only way to arrive at these values is through the political process - the prices are artificial, arbitrary, political expressions.

I do not support a CO2 tax because the case for the negative effects of CO2 pollution outweighing the positive effects has not been made - as you will know if you read Epstein's book. Therefore we should not be discouraging CO2 emissions.

Floccina writes:

Bryans argument above is why I support a Carbon tax and basic research but none of the other stuff (CAFE, Ethanhol. cap and trade) meant to reduce co2.

@Hazel Meade rather than compensating those harmed I think we could use the co2 tax money to pay out for removal of co2 from the air. I think it might not be so expensive to reach equilibrium.

Henry Bowman writes:
I've seen plenty of proposals to tax carbon, but I don't think I've ever seen anyone (other than myself) advocate using the funds exclusively to compensate victims of climate change.

Well, that would be difficult to do, as thus far there are none.

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