Home > Uncategorized > “This was it seems Nordhaus’ plan all along.”

“This was it seems Nordhaus’ plan all along.”

from Ken Zimmerman

Bichler and Nitzan get into the details of how “capitalization” is used to deny climate change in their article, ”How to use capitalization to minimize the cost of climate change and win a Nobel for ‘sustainable growth.’” The title says it all. William D. Nordhaus won the Nobel prize in economics for a climate model that minimized the cost of rising global temperatures and undermined the need for urgent action. Nordhaus’ “racket” created low-ball estimates of the costs of future climate change and high-ball estimates of the costs of containing the threat contributed to a lost decade in the fight against climate change, lending intellectual legitimacy to denial and delay. At any time t, the present value (PVt) of future climate change — or, in plain words, the cost to society if it were to bear the brunt of climate change at time t rather than in the future — involves two separate considerations: (1) the estimated cost to be incurred n periods into the future (Ct+n), and (2) the discount rate at which these costs are to be brought back to present value (r). Nordhaus “monkeyed” with both. Vastly overestimating the costs to manage climate change today and underestimating the future cost of climate change effects with a phony-up discount rate. Nordhaus does not have the credentials to achieve the first and can achieve the second only indirectly through an absurd discount rate of 6%. At this rate the present value of $100 of climate change cost incurred 100 years from the present is less than $0.25. So, why act today? It cost us (the planet of us) little to nothing to wait another 20 or 30 years, or even longer. “The nice thing about these discount-rate ‘adjustments’ is that, unlike the commotion stirred by debates over the actual cost of climate change, here there are no messy quarrels with scientists, no raised eyebrows from journalists and no outcries from the cheated public. Only contented politicians and delighted capitalists. This was it seems Nordhaus’ plan all along.  read more

  1. Rob
    April 19, 2019 at 9:32 am

    None of the physical scientists suggested that accumulating CO2 was not a problem, or that we should simply wait and see. 

    But that’s precisely what the economists’ chapters, as well as the synthesis, argued. The report’s first chapter, written by Nordhaus, National Research Council staff member Jesse Ausubel, and a consultant named Gary Yohe (an economics professor at Wesleyan University), focused on future energy use and carbon dioxide emissions. The long and detailed chapter began by acknowledging the “widespread agreement that anthropogenic carbon dioxide emissions have been rising steadily, primarily driven by the combustion of fossil fuels.” Their focus, however, was not so much on what was known, but on what was not known: the “enormous uncertainty” beyond 2000, and the “even greater uncertainty” about the “social and economic impacts of possible future trajectories of carbon dioxide. (Merchants of Doubt: How a Handful of Scientists Obscured the Truth on Issues from Tobacco Smoke to Global Warming” by Naomi Oreskes, Erik M. Conway, http://a.co/a9HX9RO)

    It just gets sicker and more inhumane from there. Nordhaus and inhumane ilk like him are a totally self-centered and would sentence or children and grandchildren to the consequences of his evil. May such rot in hell (if such only existed) for their sins.

  2. Ikonoclast
    April 20, 2019 at 5:38 am

    In retrospect, the victory of neoliberalism seems to have been almost inevitable. Given that the cosmos, the world and human history are not fully deterministic, then it cannot have been entirely inevitable but rather clearly the chances were always very high that neoliberalism would triumph. This judgement seems eminently reasonable given that even now, when the scientific evidence is very clear that more neoliberalism will destroy the climate, the environment and the world’s ecosystems and species, we still get ever more neoliberalism and dissent is still ineffective.

    Neoliberalism (late stage capitalism) is clearly a power system which can ignore all real world scientific evidence debunking it and still continue on the same path. This is a system which dissenting ideas alone, even the most scientifically supportable ideas, cannot bring down. The evidence for this is its progress to date. It is too powerful an implementation of instrumental reason and unempirical rationalism. It has too great a hold on the minds of most humans and too great a hold on production and the current momentum of production. Only natural phenomena crisis events can collapse the system now. These events will occur naturally and soon historically speaking, without any radical action.

    Radicalism should pay no attention to bringing down the system. That is both impossible and unnecessary. The system will bring itself down. Radicalism must be concerned with what can be salvaged and what form the salvaged world will take.

  3. Ken Zimmerman
    April 28, 2019 at 2:06 am

    Bill Nordhaus and Paul Romer won the Nobel prize in economics for developing tools to show how market economy affects nature and knowledge, dating back several decades.

    The PR about Nordhaus was spectacular. Nordhaus became the first person to design simple, but dynamic and quantitative models of the global economic-climate system, now called integrated assessment models (IAMs). His tools allow us to simulate how the economy and climate would co-evolve in the future under alternative assumptions about the workings of nature and the market economy, including relevant policies. His models address questions about the desirability of different global scenarios and specific policy interventions. The official announcement is worded thusly, “The Royal Swedish Academy of Sciences has decided to award the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2018 to William D. Nordhaus, Yale University, New Haven, USA ‘for integrating climate change into long-run macroeconomic analysis’.”

    But the mathematics of these “achievements” conceals a lot. The number values Norshaus chooses have no basis in any research or data other than that Nordhaus chose them. This is particularly so with estimates of the cost of climate change today and in the future. The procedure is to discount future costs and benefits back to the present time so they can be compared to current actual costs and benefits. This makes the choice of discount rate a critical part of the process. Nordhaus has chosen, at random it seems a discount rate of 6%. This rate reduces to insignificance any future costs of climate change in today’s money. For a financial analyst this translates to lack of justification to invest millions or even thousands today to fix problem impacts 50 or 100 years from now that have trivial impact on societal costs. Nordhaus’ calculations say nothing about the impacts of future climate change on human health, the livability of the plant for our and other species, or the welfare of human societies. I’ve played these games myself. Not for the stakes Nordhaus plays for, but still to win a legal or political argument. It is standard practice, for example to calculate the future value of a power plant for each of the 50 years of its expected life. Even though everyone at the table knows the value of the plant will be determined periodically (3-5 years) by regulators who will ignore all the present value calculations made before the plant went on line.

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