Do You Share Elon Musk's Pessimism?

"The biggest problem that we have right now is that we have a breakdown in the market system. Now, I'm ordinarily quite a big believer in the market, because the market is just the sum of individuals' decisions, but when there's a breakdown in the information system of the market, that's where things go awry. And so, because there's no price on carbon emissions, it makes things that are carbon-producing very rewarding, because the true price is not being paid. So, if you're a petro-chemical engineer, you can earn a tremendous amount of money, but you really shouldn't be earning that huge amount of money, because it's...you know...anyway, the market mechanism is broken. It's a classic economic problem: the tragedy of the commons."

- Elon Musk

In keeping with the spirit of yesterday's post, that we need to innovate our way out of this mess in order to preserve our modern and technological way of life, I think it's appropriate to hear from one of the most famous and innovative entrepreneurs alive, Elon Musk. He has, after all, released Tesla's patents in order to bring about an industry-wide acceleration of electric vehicle (EV) technology, though his outlook on our prospects as an industrious species may be less than sanguine.





I gotta admit he makes a strong point. We are facing an uphill battle due in large part to the strange way our oil-based economy is orchestrated and analyzed, with little or no recognition or factorization of externalities, and it will only get steeper the more we procrastinate. The dirty "secret" in the climate science community is that no one really talks about a 2C increase in temperature anymore. Many climatologists are contemplating a 4C increase by 2100, and that quite frankly, folks, all but guarantees a shitstorm of despair for future generations.

The research indicates that fewer clouds form as the planet warms, meaning less sunlight is reflected back into space, driving temperatures up further still. The way clouds affect global warming has been the biggest mystery surrounding future climate change.

Professor Steven Sherwood, at the University of New South Wales, in Australia, who led the new work, said: "This study breaks new ground twice: first by identifying what is controlling the cloud changes and second by strongly discounting the lowest estimates of future global warming in favour of the higher and more damaging estimates."

"4C would likely be catastrophic rather than simply dangerous," Sherwood told the Guardian. "For example, it would make life difficult, if not impossible, in much of the tropics, and would guarantee the eventual melting of the Greenland ice sheet and some of the Antarctic ice sheet", with sea levels rising by many metres as a result.

Having said/posted all that, let's make something very clear here. There is a massive and glaring difference between Musk's pessimism, in light of the difficulties we may be facing, and your average denier. Musk is not asking that we don't even discuss the problem and just throw our hands up in inept despair. He has instead decided to do what he can within the confines of our economic system, both by manufacturing EVs rather than crying over technical hurdles and by attempting to stimulate the industry with the release of his patents. Again, the idea is not to voluntarily return to caves in the mountains, or to sit around and wait until business as usual forces us to do so. The idea is to do whatever we can to preserve the rather advanced society we enjoy at the moment.

Risky Climate Business

You may or may not be aware that back in June some radical, fringe climate change activists, who operate with the clear and open goal of communism in mind according to Steven Goddard, released a report on the economic risks of climate change.

Let's see who made it onto Goddard's neo-McCarthyism blacklist this time by way of their participation in the project which led to this report, shall we?

Michael R. Bloomberg, founder Bloomberg L.P.; Republican/Independent Mayor of NYC

Henry M. Paulson, Jr., former CEO Goldman Sachs; former U.S. Secretary of the Treasury under Bush

Thomas F. Steyer, founder Farallon Capital Management LLC

Henry Cisneros, founder and chairman CityView Capital; former U.S. Secretary of Housing and Urban Development (HUD) under Clinton; former Mayor of San Antonio

Gregory Page, former CEO Cargill, Inc.

Robert E. Rubin, co-chairman Council on Foreign Relations; former U.S. Secretary of the Treasury under Clinton

George P. Shultz, former U.S. Secretary of State under Reagan; former U.S. Secretary of the Treasury under Nixon; former U.S. Secretary of Labor under Nixon; former director Office of Management and Budget under Nixon; former president Bechtel Group

Donna E. Shalala, president University of Miami; former U.S. Secretary of Health and Human Services under Clinton

Olympia Snowe, former Republican U.S. Senator representing Maine

Dr. Alfred Sommer, Dean Emeritus, Bloomberg School of Public Health; University Distinguished Service Professor, Johns Hopkins University

Wow. Quite a list of notable communist party members, huh? I mean, geez, Louise, who knew there were so many Marxist-Leninists hiding in plain American capitalist sight?

If you read the report, you will see why I now have no problem bequeathing unto these somewhat unexpected and unlikely politicians, bureaucrats, and financial sector heavy-hitters the label "climate change activists." It's loaded with some unequivocal, take-no-climate-change-denier-prisoners quotes from them.

"Damages from storms, flooding, and heat waves are already costing local economies billions of dollars—we saw that firsthand in New York City with Hurricane Sandy. With the oceans rising and the climate changing, the Risky Business report details the costs of inaction in ways that are easy to understand in dollars and cents—and impossible to ignore."

-Michael Bloomberg

"I know a lot about financial risks—in fact, I spent nearly my whole career managing risks and dealing with financial crisis. Today I see another type of crisis looming: A climate crisis. And while not financial in nature, it threatens our economy just the same."

-Henry Paulson

"Talking about climate change in terms of U.S. averages is like saying, ‘My head is in the refrigerator, and my feet are in the oven, so overall I’m average.’"

-Tom Steyer

"I think we have to begin by recognizing the reality and severity of this threat to our economies, both United States and globally, and really to life on earth more broadly as we know it. We also have to recognize that this problem needs to be dealt with now. We cannot wait because greenhouse gases in the atmosphere, once they’re there, remain there for centuries so that every year is greater and more severe in terms of greenhouse gas emissions cumulatively than had been the case the year before."

-Robert Rubin

And some striking passages from the report itself:

The signature effects of human-induced climate change—rising seas, increased damage from storm surge, more frequent bouts of extreme heat—all have specific, measurable impacts on our nation’s current assets and ongoing economic activity.

Our findings show that, if we continue on our current path, many regions of the U.S. face the prospect of serious economic effects from climate change.

Within the next 15 years, higher sea levels combined with storm surge will likely increase the average annual cost of coastal storms along the Eastern Seaboard and the Gulf of Mexico by $2 billion to $3.5 billion. Adding in potential changes in hurricane activity, the likely increase in average annual losses grows to up to $7.3 billion, bringing the total annual price tag for hurricanes and other coastal storms to $35 billion.

A defining characteristic of agriculture in the U.S. is its ability to adapt. But the adaptation challenge going forward for certain farmers in specific counties in the Midwest and South will be significant. Without adaptation, some Midwestern and Southern counties could see a decline in yields of more than 10% over the next 5 to 25 years should they continue to sow corn, wheat, soy and cotton, with a 1-in-20 chance of yield losses of these crops of more than 20%.

Greenhouse gas-driven changes in temperature will likely necessitate the construction of up to 95 gigawatts of new power generation capacity over the next 5 to 25 years—the equivalent of roughly 200 average coal or natural gas-fired power plants—costing residential and commercial ratepayers up to $12 billion per year.

We are either facing a new Red Threat, the likes of which would make J. Edgar Hoover blanch, as Goddard would have us believe, or a severe climatic and economic disaster of our own making, as this bipartisan study argues.

I leave it to you, dear reader, to decide which is the likelier case. Yeah, I know, you're gonna be hard-pressed reaching a conclusion.

The Economy Vs. the Climate (Spoiler Alert: NOT Mortal Enemies)

Whatever form you believe climate change policies/solutions should take — technical, economic/regulatory, a mixture, or something else altogether — it's time to drop the prehistoric notion that we can either have a thriving economy OR a healthy environment. The two are not antithetical, incompatible, mutually exclusive, diametrically opposed, etc. Whatever superlative you prefer, the truth is we can have our cake and eat it, too. Here are some very smart people from the Harvard Kennedy School explaining why they've staked their careers on it. I found the discussion about successful cap-and-trade programs, starting at about 28:50 in the video, such as the Reagan administration policy to phase leaded gasoline out of the marketplace, particularly interesting.